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REGISTRATION NO. 333 -[______]
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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AES IRONWOOD, L.L.C.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 4930 54-145-7537
(State of incorporation (Primary Standard Industrial (I.R.S. Employer Identification
or organization) classification Code Number) Number)
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<TABLE>
<S> <C>
305 PRESCOTT ROAD CT CORPORATION SYSTEM
LEBANON, PA 17042 111 EIGHTH AVENUE
(717) 228-1328 NEW YORK, NY 10011
(Address, including zip code, and telephone number, (212) 894-8940
including area code, of registrant's principal (Name, address, including zip code, and telephone
executive offices) number, including area code, of agent for service)
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It is respectfully requested that the Commission send copies of all notices,
orders and communications to:
MICHAEL B. BARR
HUNTON & WILLIAMS
1900 K STREET, NW
WASHINGTON, DC 20006
(202) 955-1500
(202) 778-2201 (FAX)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable following the effectiveness of this
Registration Statement.
If the Securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier
registration statement for the same offering. [ ] ________
If this form is a post-effective amendment filed pursuant to Rule 462
(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier registration statement for the
same offering. [ ] ________
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
TITLE OF EACH MAXIMUM MAXIMUM
CLASS OF AMOUNT TO OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED UNIT (1) PRICE (1) FEE
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<S> <C> <C> <C> <C>
8.857% Exchange Senior
Secured Bonds due
2025........ $308,500,000 100% $308,500,000 $85,763
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f) under the Securities Act of 1933.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
COMPANY MAY NOT EXCHANGE THE BONDS UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THE NEW BONDS AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THE
NEW BONDS IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED NOVEMBER 22, 1999
PROSPECTUS
$308,500,000
AES IRONWOOD, L.L.C
Offer to Exchange All Outstanding
8.857% Exchange Senior Secured Bonds due 2025
For All Old 8.857% Senior Secured Bonds due 2025
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THE NEW BONDS:
o Interest Payments: Interest on the new bonds will be payable
quarterly in arrears on February 28, May 31, August 31 and
November 30 of each year, beginning August 31, 1999.
o Security: The new bonds are secured ratably with all of our other
senior debt by a lien on and security interest in shared
collateral, which consists of substantially all of our assets. In
addition, the indenture accounts, the debt service reserve
account and the debt service reserve letter of credit (other than
to the extent of the debt service reserve letter of credit
provider's right to specific proceeds thereunder) are separate
collateral solely for the benefit of the holders of the new
bonds.
o Ranking: The new bonds rank pari passu in right of payment with
all other present and future senior debt and senior in right of
payment to all subordinated debt.
o Listing: The new bonds will not be listed on any security
exchange or Nasdaq.
THE EXCHANGE OFFER:
o Expiration: 5:00 p.m. New York City time on ______, 2000, unless
otherwise extended.
o Tendered Bonds: All old bonds that are validly tendered and not
validly withdrawn at the expiration of the exchange offer will be
exchanged for an equal principal amount of new bonds that are
registered under the Securities Act of 1933.
o Tax Consequences: The exchange of old bonds for new bonds will
not be a taxable event for U.S. federal income tax purposes.
You should carefully consider the risk factors beginning on page 16 of this
prospectus before participating in the exchange offer or investing in the new
bonds issued in the exchange offer.
We are not making this exchange offer in any state or jurisdiction where it is
not permitted.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is , 1999.
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TABLE OF CONTENTS
Page
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PROSPECTUS SUMMARY............................................................1
SUMMARY OF THE EXCHANGE OFFER.................................................4
SUMMARY OF THE TERMS OF THE NEW BONDS.........................................7
SUMMARY OF INDEPENDENT ENGINEER'S REPORT.....................................12
SUMMARY OF INDEPENDENT POWER CONSULTANT'S REPORT.............................15
RISK FACTORS.................................................................16
USE OF PROCEEDS..............................................................23
CAPITALIZATION...............................................................23
SELECTED FINANCIAL DATA......................................................24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION..................25
OUR BUSINESS.................................................................27
OUR MANAGEMENT...............................................................29
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...............................31
SUMMARY OF PRINCIPAL PROJECT CONTRACTS.......................................32
Page
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ROLE OF THE INDEPENDENT ENGINEER.............................................66
THE EXCHANGE OFFER...........................................................68
DESCRIPTION OF THE NEW BONDS.................................................77
SUMMARY OF PRINCIPAL FINANCING DOCUMENTS.....................................85
PLAN OF DISTRIBUTION........................................................112
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS.............................112
LEGAL MATTERS...............................................................113
EXPERTS.....................................................................113
WHERE YOU CAN FIND MORE INFORMATION.........................................113
INDEX TO FINANCIAL STATEMENTS...............................................F-1
ANNEX A: GLOSSARY OF DEFINED TERMS.........................................A-1
ANNEX B: INDEPENDENT ENGINEER'S REPORT.....................................B-1
ANNEX C: INDEPENDENT POWER CONSULTANT'S REPORT.............................C-1
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This prospectus is part of a registration statement we filed with the
Securities and Exchange Commission. You should rely only on the information or
representations provided in this prospectus. We have not authorized any person
to provide information other than that provided in this prospectus. We are not
making an offer of these securities in any jurisdiction where the offer is not
permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the front of this prospectus.
Each broker-dealer that receives new bonds for its own account under
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such new bonds. The letter of transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of new bonds
received in exchange for old bonds where such old bonds were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. We have agreed that, starting on the expiration date of the exchange
offer and ending on the close of business 180 days after the expiration date, we
will make this prospectus available to any broker-dealer for use in connection
with any such resale. See "PLAN OF DISTRIBUTION."
UK SELLING RESTRICTIONS
The new bonds may not be offered or sold in or into the United Kingdom
except to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purposes of
their businesses (or in other circumstances that do not constitute an offer to
the public in the United Kingdom for the purposes of the Public Offers of
Securities Regulations 1995), and this prospectus may only be issued or passed
on to persons in the United Kingdom if such persons are of a kind described in
article 11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or if such persons are persons to whom this prospectus
may otherwise lawfully be issued or passed on.
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PROSPECTUS SUMMARY
This summary highlights selected information from this prospectus but
does not contain all of the information that is important to you. To understand
all of the terms of the exchange offer and to attain a more complete
understanding of our business and financial situation, you should read carefully
this entire prospectus. In this prospectus, the terms "Company," "we," "our,"
"ours," and "us" refer to AES Ironwood L.L.C. The term "AES" refers to The AES
Corporation. The term "AES Ironwood, Inc." refers to AES Ironwood, Inc. The term
"AES Prescott" refers to AES Prescott, L.L.C. The term "old bonds" refers to our
senior secured bonds due 2025 that we issued on June 25, 1999. The term "new
bonds" refers to the exchange senior secured bonds offered in the exchange
offer. The term "bonds" refers to both the old bonds and the new bonds. For an
explanation of specific technical terms used in this prospectus, please read
"GLOSSARY OF TECHNICAL TERMS."
Our Company, AES Ironwood, Inc. and AES Prescott
Our Company was formed to develop, construct, own, operate and maintain
a gas-fired electric generating power plant in Lebanon County, Pennsylvania. In
this prospectus we refer to this power plant as "our Facility." We refer to the
power plant (including its equipment and facilities) and its financing,
development and construction (including the related contracts) as "our Project."
All of the equity interests in our Company are owned by AES Ironwood, Inc., a
wholly owned subsidiary of AES. AES Ironwood, Inc. currently has no operations
outside of its activities in connection with our Project and does not anticipate
undertaking any operations not associated with our Project. AES Ironwood, Inc.
also owns all of the equity interests in AES Prescott, which will provide
development, construction management and operations and maintenance services to
us. AES Prescott has no operations outside of its activities in connection with
our Project.
The AES Corporation
AES is a leading global power company committed to supplying
electricity in a socially responsible way. AES sells and markets power from
electric generating and distribution companies, largely through subsidiaries and
affiliates. AES was one of the original entrants in the independent power market
and today is one of the world's largest independent power companies based on net
equity ownership of generating capacity (in megawatts) in operation or under
construction. AES currently employs approximately 44,500 people around the
world. As of December 31, 1998 and for the year then ended, AES had assets of
approximately $10 billion, revenues of $2.4 billion and a net income before
extraordinary items of $311 million.
AES currently owns or has an interest in 108 power facilities totaling
over 36,000 megawatts in 16 countries including the United States, Canada,
Australia, Argentina, Brazil, the Dominican Republic, India, Pakistan, Panama,
the Netherlands, Hungary, Kazakhstan, Mexico, China and the United Kingdom.
Approximately 25% of the AES power generation operating portfolio consists of
gas-fired electric generating facilities. In addition to our Facility, AES is
currently in the process of adding 5,594 megawatts to its operating portfolio.
AES also owns interests in 14 distribution companies in eight countries
that sell electricity directly to commercial, industrial, governmental and
residential customers. Those distribution companies serve approximately 15
million customers. In addition, AES recently acquired CILCORP, Inc., the parent
company of Central Illinois Light Company, a regulated utility. Both of those
companies are now wholly owned subsidiaries of AES. See "CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS."
Our Facility
Our Facility consists of a 705 megawatt (net) gas-fired combined cycle
electric generating facility with oil-firing capability. Our Company will sell
all of our Facility's capacity, and provide fuel conversion and ancillary
services, to Williams Energy Marketing & Trading Company (the "Power Purchaser")
under a long-term power purchase agreement. After the expiration of the 20-year
term of the power purchase agreement, we will enter into other power purchase
agreements or operate our Facility as a merchant plant.
Our Facility will be located in South Lebanon Township, Lebanon County,
Pennsylvania on property owned by our Company. Our Facility will be designed,
engineered, procured and constructed for us by Siemens Westinghouse Power
Corporation (the "Contractor") under a fixed-price, turnkey construction
agreement. The Contractor is a wholly owned subsidiary of Seimens Corporation
which is, in turn, a wholly owned subsidiary of Seimens A.G. Among other
components, our Facility will use two Siemens Westinghouse model 501G combustion
turbines with hydrogen-cooled
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generators, two unfired heat recovery steam generators and one multicylinder
steam turbine with a hydrogen-cooled generator. The Contractor will provide us
with specific combustion turbine maintenance services and spare parts for an
initial term of between 8 and 10 years (depending on the timing of scheduled
outages) under a maintenance service agreement. Under the power purchase
agreement, the Power Purchaser or its affiliates will supply fuel necessary to
allow us to provide capacity, fuel conversion and ancillary services to the
Power Purchaser. AES Prescott will provide development, construction management
and operations and maintenance services for our Facility under an operations
agreement. We will provide installation, operation and maintenance of facilities
necessary to interconnect our Facility to Metropolitan Edison Company's
transmission system under an interconnection agreement.
Power Purchase Agreement and Related Security
Under the terms of the power purchase agreement, our Company will, for
a term of 20 years beginning on the commercial operation date of our Facility,
sell all of our Facility's net capacity, and provide fuel conversion and
ancillary services to the Power Purchaser. The Power Purchaser is obligated to
pay us for our Facility capacity, which payments are expected to be adequate to
cover our debt service and our fixed operation and maintenance costs and, at the
same time, provide us a return on equity. The Power Purchaser will be obligated
to pay us whether or not the Power Purchaser requires our Facility to generate
energy and even if the Power Purchaser is unable to take any energy, so long as
our Facility is available for operation. The Power Purchaser is also obligated
to supply us with all of the fuel necessary to provide net capacity, ancillary
services and fuel conversion services to the Power Purchaser. The Williams
Companies, Inc. will provide us with a guaranty of the Power Purchaser's payment
obligations to us under the power purchase agreement and to pay damages if the
Power Purchaser fails to pay us. Williams' payment obligations under the
guaranty are capped at an amount equal to 125% of the sum of the principal
amount of the new bonds plus the maximum debt service reserve account required
balance. We have provided to the Power Purchaser a guaranty issued by AES of
specific payment obligations if our Facility does not achieve commercial
operation by the date specified in the power purchase agreement. AES's liability
under the guaranty is capped at $30 million. We may at our option, and under
specific conditions described in the power purchase agreement, we will be
required to, replace the guaranty issued by AES with a letter of credit issued
by a commercial bank, and the repayment obligations with respect to drawings
under such letter of credit will be a senior debt obligation of our Company.
Construction Agreement and Related Guaranty
Under a construction agreement, the Contractor will design, engineer,
procure and construct our Facility on a fixed-price, turnkey basis. The
Contractor's obligations under the construction agreement will be guaranteed by
Siemens Corporation. The contract price payable to the Contractor is to be paid
in installments in accordance with the payment and milestone schedule included
in the construction agreement. The contract price may be adjusted as set forth
in the construction agreement, including as a result of unexpected or
uncontrollable events or modifications to the scope of work to be provided by
the Contractor. The Contractor has guaranteed that our Facility will be
mechanically complete and specific performance requirements will be satisfied by
the date which is 23-1/2 months after our Company has given full notice to
proceed to the Contractor, which we did on June 8, 1999. If our Facility does
not satisfy the applicable completion requirements by the date guaranteed by the
Contractor and such failure is not excused in accordance with the terms of the
construction agreement, the Contractor will be obligated to pay us delay
liquidated damages in the amounts specified in the construction agreement. The
Contractor has guaranteed specific availability levels for our Facility and if
those levels are not demonstrated during a 45-day period before final acceptance
of our Facility by us, we may withhold specified payments to the Contractor. The
Contractor has also guaranteed specific output and heat rate performance levels
for our Facility on natural gas and fuel oil, which if the Contractor cannot
meet may result in the Contractor having to pay us performance liquidated
damages in the amounts specified in the construction agreement. The total
liability of the Contractor for delays in completion, together with its
liability for any performance shortfalls, is limited in the aggregate to an
amount equal to 45% of the contract price. The construction agreement also
contains a sub-limit on the Contractor's liability for delays in completion of
our Facility in an amount equal to 20% of the contract price. The total
aggregate cap on liability of the Contractor under the construction agreement
(including the liquidated damages we have discussed, but excluding specified
indemnity obligations) is limited to an amount not to exceed the contract price,
as adjusted.
Maintenance Services Agreement
Under a maintenance services agreement, the Contractor will provide our
Company with specific combustion turbine parts, shop repairs of combustion
turbine parts and scheduled outage technical field assistance services. We will
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pay for such parts, repairs and services on a monthly basis, in an amount to be
determined based on the number of equivalent baseload hours accumulated by our
Facility. The maintenance services agreement includes specific warranties
applicable to the combustion turbine parts and shop repairs provided under the
agreement, and if a combustion turbine part supplied fails to conform to the
applicable warranty, the Contractor either must replace that non-conforming part
at its cost and expense (if the non-conformity arose during the applicable
warranty period) or credit us for the purchase of future combustion turbine
parts (if the non-conformity arose after the applicable warranty period but
before to the expiration of the expected useful life of that combustion turbine
part). The maintenance services agreement will remain in effect in respect of a
combustion turbine until 10 years from its initial synchronization or its eighth
planned outage, whichever occurs first.
Operations Agreement
Under an operations agreement, AES Prescott will provide development
and construction management services and, after the commercial operation date,
operating and maintenance services for our Facility for a period of 27 years.
AES Prescott will be responsible for, among other things, preparing plans and
budgets related to start-up and commercial operation of our Facility, providing
qualified operating personnel, making repairs, purchasing consumables and spare
parts (not otherwise provided under the maintenance services agreement) and
providing other services as needed according to industry standards. AES Prescott
will be compensated for these services on a cost plus fixed-fee basis. The
fixed-fee portion of the payments will be subordinated to the payment of other
operation and maintenance costs, debt service on senior debt and deposits into
the debt service reserve and major maintenance reserve accounts. Under a
services agreement between AES Prescott and AES, AES will provide to AES
Prescott all of the personnel and services necessary for AES Prescott to comply
with its obligations under the operations agreement.
Interconnection Agreement
Under an interconnection agreement, our Company will install, operate
and maintain the facilities necessary to interconnect our Facility to
Metropolitan Edison Company's transmission system. We will be responsible for
all of the costs of construction and operation and maintenance of the
interconnection facilities. The Power Purchaser has agreed to pay for specific
costs of the interconnection facilities and transmission system reinforcements
necessary to connect our Facility to Metropolitan Edison Company's transmission
system and to transport our Facility's output. Metropolitan Edison Company must
complete its portion of the interconnection facilities and specific transmission
system reinforcements necessary to permit dispatch of the full output of our
Facility by August 31, 2000. Under the Energy Policy Act of 1992, transmission
owners are required to provide open access to their transmission systems on
terms at least as favorable as they provide to themselves and their affiliates.
--------------------
We are a Delaware limited liability company with principal executive
offices located at 305 Prescott Road, Lebanon, Pennsylvania 17042. Our telephone
number is (717) 228-1328.
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SUMMARY OF THE EXCHANGE OFFER
We summarize the terms of the exchange offer below. You should read the
discussion under the heading "THE EXCHANGE OFFER" beginning on page 68 for
further information regarding the exchange offer and resale of the new bonds.
The Exchange Offer: We are offering to exchange up to $308,500,000
aggregate principal amount of new bonds, which have
been registered under the Securities Act, for up to
$308,500,000 aggregate principal amount of old bonds,
which were issued by us on June 25, 1999 in a private
offering. In order for your old bonds to be
exchanged, you must properly tender them prior to the
expiration of the exchange offer. All old bonds that
are validly tendered and not validly withdrawn will
be exchanged. We will issue new bonds on or promptly
after the expiration of the exchange offer. Old bonds
may be exchanged for new bonds only in integral
multiples of $1,000.
Registration Rights
Agreement: We sold the old bonds on June 25, 1999 to the initial
purchasers of the old bonds. Simultaneously with that
sale we signed a registration rights agreement with
the initial purchasers which requires us to conduct
this exchange offer.
You have the right pursuant to the registration
rights agreement to exchange your old bonds for new
bonds with substantially identical terms. This
exchange offer is intended to satisfy this right.
After the exchange offer is complete, you will no
longer be entitled to any exchange or registration
rights with respect to your old bonds.
Consequences of Failure
to Exchange Your
Outstanding Bonds: If you do not exchange your old bonds for new bonds
pursuant to the exchange offer, you will continue to
be subject to the restrictions on transfer provided
in the old bonds and the indenture. In general, the
old bonds may not be offered or sold unless
registered under the Securities Act, except pursuant
to an exemption from, or in a transaction not subject
to, the Securities Act and applicable state
securities laws. We do not currently plan to register
the old bonds under the Securities Act. To the extent
that old bonds are tendered and accepted in the
exchange offer, the trading market for untendered and
tendered but unaccepted old bonds will be adversely
affected.
Expiration Date: The exchange offer will expire at 5:00 p.m., New York
City time, on ______, 2000, or such later date and
time to which we extend it, in which case the term
"expiration date" shall mean the latest date and time
to which the exchange offer is extended.
Withdrawal of Tenders: You may withdraw your tender of old bonds at any time
prior to the expiration date by delivering written
notice of your withdrawal to the exchange agent in
accordance with the withdrawal procedures set forth
in this prospectus. We will return to you, without
charge, promptly after the expiration or termination
of the exchange offer any old bonds that you tendered
but that were not accepted for exchange. The new
bonds will be issued on or promptly after the
expiration date.
Conditions to
the Exchange Offer: We will not be required to accept old bonds for
exchange if the exchange offer would violate
applicable law or any legal action has been
instituted or threatened that would impair our
ability to proceed with the exchange offer. The
exchange offer is not conditioned upon any minimum
aggregate principal amount of old bonds being
tendered. We reserve the right to terminate the
exchange offer if certain specified conditions have
not been satisfied and to waive any condition or
otherwise amend the terms of the exchange offer in
any respect. Please read the section "THE EXCHANGE
OFFER--Conditions to the Exchange Offer" on page 68
for more information regarding the conditions to the
exchange offer.
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Procedures for
Tendering
Old Bonds: If your old bonds are held through The Depository
Trust Company and you wish to participate in the
exchange offer, you may do so through the automated
tender offer program of The Depository Trust Company.
If you tender under this program, you will agree to
be bound by the letter of transmittal that we are
providing with this prospectus as though you had
signed the letter of transmittal. By signing or
agreeing to be bound by the letter of transmittal,
you will represent to us that, among other things:
o any new bonds that you receive will be acquired
in the ordinary course of your business;
o you have no arrangement or understanding with
any person or entity to participate in the
distribution of the new bonds;
o you are not engaged in and do not intend to
engage in the distribution of the new bonds;
o if you are a broker-dealer that will receive new
bonds for your own account in exchange for old
bonds, you acquired those bonds as a result of
market-making activities or other trading
activities and you will deliver a prospectus, as
required by law, in connection with any resale
of such new bonds; and
o you are not our "affiliate," as defined in Rule
405 of the Securities Act.
Please do not send your letter of transmittal or
certificates representing your old bonds to us. Those
documents should only be sent to the exchange agent.
Questions regarding how to tender and requests for
information should be directed to the exchange agent.
Special Procedures for
Beneficial Owners: If you own a beneficial interest in old bonds that
are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee, and
you wish to tender the old bonds in the exchange
offer, you should contact the registered holder
promptly and instruct the registered holder to tender
on your behalf.
Consequences of Not
Complying with
Exchange Offer
Procedures: You are responsible for complying with all exchange
offer procedures. You will only receive new bonds in
exchange for your old bonds if, prior to the
expiration date, you deliver to the exchange agent
the letter of transmittal, properly completed and
duly executed, along with any other documents or
signature guarantees required by the letter of
transmittal, as well as certificates for the old
bonds or a book-entry confirmation of a book-entry
transfer of the old bonds into the exchange agent's
account at The Depository Trust Company.
Any old bonds you hold and do not tender, or which
you tender but which are not accepted for exchange,
will remain outstanding. You will not have any
appraisal or dissenters' rights in connection with
the exchange offer.
You should allow sufficient time to ensure that the
exchange agent receives all required documents before
the expiration of the exchange offer. Neither we nor
the exchange agent has any duty to inform you of
defects or irregularities with respect to the tender
of your old bonds for exchange.
Guaranteed Delivery
Procedures: If you wish to tender your outstanding bonds and
cannot comply, prior to the expiration date, with the
applicable procedures under the automated tender
offer program of The Depository Trust Company, you
must tender your outstanding bonds according to the
guaranteed delivery procedures described in "THE
EXCHANGE OFFER-Guaranteed Delivery Procedures"
beginning on page 68.
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U.S. Federal Income
Tax Consideration: The exchange of old bonds for new bonds in the
exchange offer will not be a taxable event for U.S.
federal income tax purposes. Please read "UNITED
STATES FEDERAL INCOME TAX CONSIDERATIONS" on page
112.
Use of Proceeds: We will not receive any cash proceeds from the
issuance of new bonds. We intend to use the net
proceeds from the sale of the old bonds, together
with an approximately $50 million equity
contribution, to:
o fund the engineering, procurement, construction,
testing and commissioning of the Facility;
o pay certain fees and expenses in connection with
the financing and development of the Project;
and
o pay Project costs, including interest on the
bonds.
Risk Factors: See "RISK FACTORS" for a discussion of factors which
bondholders should consider prior to exchanging old
bonds for new bonds.
The Exchange Agent
We have appointed The Bank of New York as exchange agent for the
exchange offer. You should direct questions and requests for assistance,
requests for additional copies of this prospectus or of the letter of
transmittal and requests for the notice of guaranteed delivery to the exchange
agent addressed as follows: The Bank of New York, 101 Barclay Street, 7E, New
York, New York 10286; (212) 815-5988. Eligible institutions may make requests
by facsimile at (212) 815-6339.
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SUMMARY OF THE TERMS OF THE NEW BONDS
The exchange offer relates to the exchange of up to $308,500,000
principal amount of new bonds for an equal principal amount of old bonds. The
form and terms of the new bonds are substantially identical to the form and
terms of the old bonds, except the new bonds will be registered under the
Securities Act. Therefore, the new bonds will not bear legends restricting their
transfer and will not be entitled to registration under the Securities Act. The
new bonds will evidence the same debt as the old bonds, which they replace, and
both the old bonds and the new bonds are governed by the same indenture.
Issuer: AES Ironwood, L.L.C.
Securities Offered: $308,500,000 aggregate principal amount of 8.857%
Exchange Senior Secured Bonds due 2025.
Interest: Our Company will pay interest on the new bonds
quarterly in arrears on each February 28, May 31,
August 31 and November 30, beginning on the first
payment date after the last date to which interest
has been paid.
Final Maturity Date: November 30, 2025.
Principal Repayment: Our Company will pay principal on the new bonds in
installments quarterly on each February 28, May 31,
August 31 and November 30, commencing February 28,
2002 to the registered owners on the immediately
preceding record date as set forth under "DESCRIPTION
OF THE NEW BONDS--Payment of Interest and Principal."
Ratings: The new bonds are expected to be rated "BBB-" from
S&P and "Baa3" from Moody's, the same ratings borne
by the old bonds. See "DESCRIPTION OF THE NEW
BONDS--Ratings."
Summary of
Coverage Ratios: You will find projected coverage ratios with respect
to the bonds in the projections included in the
Independent Engineer's Report, which we have attached
as Annex B, and these ratios are subject to the
qualifications, limitations and exclusions set forth
in the Independent Engineer's Report. The following
ratios reflect the base case assumptions set forth in
the Independent Engineer's Report.
<TABLE>
<CAPTION>
Post-Power
During Power Purchase
Full Term Purchase Agreement
of the Bonds Agreement Term Period
------------ -------------- ---------
<S> <C> <C> <C>
Debt Service Coverage
Minimum................... 1.45 1.45 5.77
Average................... 2.30 1.46 5.81
Interest Coverage
Minimum................... 1.58 1.58 18.45
Average................... 11.13 2.59 47.03
</TABLE>
As set forth in the Independent Engineer's Report,
these projections are subject to risks, uncertainties
and other factors which could cause actual results to
differ materially from those stated. We cannot assure
that these projected coverage ratios will be
achieved. See "ANNEX B: INDEPENDENT ENGINEER'S
REPORT" and "RISK FACTORS."
Optional Redemption: We may redeem any of the new bonds, in whole or in
part, at any time at a redemption price equal to:
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<PAGE>
o 100% of the principal amount; plus
o accrued interest; plus
o a Make-Whole Premium calculated using a discount
rate equal to the interest rate on comparable
U.S. Treasury securities plus 50 basis points.
Mandatory
Redemption: We must redeem all of the new bonds, in whole or in
part, at a redemption price equal to 100% of the
principal amount plus accrued interest if:
o our Company receives casualty proceeds, eminent
domain proceeds or specific performance
liquidated damages from the Contractor under the
construction agreement; and
o in each case, specified additional conditions
are satisfied.
We must redeem all of the new bonds, in whole or in
part, at a redemption price equal to 100% of the
principal amount plus accrued interest if our Company
receives proceeds under the Williams Guaranty if we
terminate the power purchase agreement as a result of
an event of default by the Power Purchaser. See
"DESCRIPTION OF THE NEW BONDS--Mandatory Redemption."
Resale of the Exchange
Senior Bonds: Our Company believes that beneficial interests in the
new bonds may be offered for resale, resold and
otherwise transferred by most owners thereof without
further compliance with the registration and
prospectus delivery requirements of the Securities
Act; provided that:
o you are acquiring the new bonds in the ordinary
course of your business;
o you are not participating, and have no
arrangement or understanding with any person to
participate, in the distribution of the new
bonds; and
o you are not an insider or a related party of AES
Ironwood, L.L.C.
This belief is based upon existing interpretations of
the staff of the SEC's Division of Corporation
Finance set forth in several no-action letters issued
to third parties unrelated to us and subject to
important restrictions described in "EXCHANGE
OFFER--Purpose and Effect of the Exchange Offer." We
do not intend to seek our own no-action letter. If
our belief is not accurate and you transfer a new
bond without delivering a prospectus meeting the
requirements of the Securities Act or without an
exemption from such requirements, you may incur
liability under the Securities Act. We do not and
will not assume or indemnify you against such
liability. There can be no assurance that the staff
of the SEC's Division of Corporation Finance would
make a similar determination about the new bonds as
it has in no-action letters about exchanges of the
securities of other companies.
Each broker-dealer that receives new bonds for its
own account in the exchange offer must acknowledge
that it will deliver a prospectus in connection with
any resale of those new bonds. This prospectus, as it
may be amended or supplemented from time to time, may
be used by a broker-dealer in connection with those
resales.
Old bonds that are not tendered for exchange will
continue to be subject to transfer restrictions and
will not have registration rights. Therefore, the
market for secondary resales of any old bonds that
are not tendered for exchange is likely to be
minimal.
Equity Contributions: Our Company and AES Ironwood, Inc. have entered into
an equity subscription agreement under which AES
Ironwood, Inc. agreed to contribute up to $50,149,285
to our Company to fund Project Costs. AES Ironwood,
Inc.'s obligation under the equity subscription
agreement will be supported by an acceptable letter
of credit or an acceptable bond. AES Ironwood, Inc.
will fund amounts available under the equity
subscription agreement when all funds in the
construction account have been used or during the
continuation of an event of default under
8
<PAGE>
the indenture, whichever occurs first. We have the
option of treating a portion or all of the equity
contribution as affiliate subordinated debt. Subject
to the conditions set forth in the equity
subscription agreement and the collateral agency
agreement (including achievement of final completion
of our Facility, funding of all required amounts and
deposits under the collateral agency agreement and
absence of any default), any equity which remains
committed under the equity subscription agreement but
unfunded after the Commercial Operation Date may be
canceled.
Ranking: The new bonds:
o rank equally in right of payment with all other
present and future senior debt; and
o rank senior in right of payment to all
subordinated debt.
Collateral: The new bonds will be secured ratably with all other
senior debt of our Company by a lien on and security
interest in the collateral.
o The indenture accounts, the debt service reserve
account and the debt service reserve letter of
credit (other than to the extent of the letter
of credit provider's right to specific proceeds)
will constitute separate collateral solely for
the benefit of the holders of the bonds.
o The collateral for the benefit of holders of
senior debt (including holders of the new bonds)
will include:
o all revenues of our Company;
o the project accounts (other than the debt
service reserve account);
o all real and personal property of our
Company;
o proceeds of insurance, condemnation and
liquidated damages payments, if any;
o all project contracts;
o all ownership interests in our Company;
and
o the equity contribution and all rights
under the equity subscription agreement.
See "RISK FACTORS."
Limited Recourse: All obligations in connection with the new bonds will
be obligations solely of our Company. The bondholders
will have no claim against or recourse to the holders
of our ownership interests or any of our affiliates
or any of their incorporators, stockholders,
directors, officers or employees for the repayment of
the new bonds, except to the extent of their
obligations under the transaction documents,
including the equity contribution and the pledge of
AES Ironwood, Inc.'s ownership interests in our
Company.
Debt Service
Reserve Account: We will be required to fund or provide for the
funding of a debt service reserve account on the
commercial operation date, the guaranteed completion
date or December 31, 2002, whichever occurs first, in
an amount sufficient to pay principal and interest
due on the bonds on the next two payment dates plus,
if we provide a letter of credit in lieu of funding
the debt service reserve account, six months of
interest on the maximum amount of the letter of
credit. We anticipate satisfying this requirement by
providing a letter of credit issued by Dresdner Bank
AG, New York Branch or another financial institution
rated at least "A" by S&P and "A2" by Moody's.
Change in Control: While the new bonds are outstanding, the indenture
requires AES to maintain directly or indirectly at
least 51% of both of the voting and economic
interests in our Company. If AES desires to reduce
its voting or economic interest in our Company below
51%, either we must receive confirmation of the
initial ratings of the bonds or the holders of at
least 66-2/3% in aggregate principal amount of the
bonds must approve the change in ownership.
Other Principal
Covenants: The indenture contains limitations on, among other
actions:
o incurring additional indebtedness;
o granting liens on our Company's property;
9
<PAGE>
o distributing equity and paying subordinated
indebtedness issued by affiliates of our
Company;
o entering into transactions with affiliates;
o amending, terminating or assigning of project
contracts; and
o fundamental changes or disposition of assets.
See "SUMMARY OF PRINCIPAL FINANCING
DOCUMENTS--Indenture--Negative Covenants."
Form, Denomination and
Registration of Bonds: New bonds will be issued in fully registered form
without coupons in denominations of U.S.$100,000 and
any integral multiple of US$1,000 in excess thereof
and will be represented by one or more global bonds,
each registered in the name of a nominee of DTC.
Beneficial interests in the global bonds will be
shown on, and transfers thereof will be effected only
through, the book-entry records maintained by DTC and
its direct and indirect participants, including
Euroclear and Cedel.
Governing Law: The new bonds, the indenture and the other principal
financing documents, other than the mortgage, are
governed by the laws of the State of New York. The
mortgage is governed by the laws of the Commonwealth
of Pennsylvania.
Intercreditor
Arrangements: The collateral agency agreement requires the vote of
senior parties holding at least 33-1/3% of the
combined exposure to direct specified actions of the
collateral agent, including the exercise of remedies
following an event of default under the debt service
reserve letter of credit and reimbursement agreement,
the construction period letter of credit and
reimbursement agreement or the indenture or a
bankruptcy event with respect to our Company. The
bonds will represent approximately 95% (without
giving effect to any construction period letter of
credit) of the combined exposure, and, in respect of
matters voted on by the senior parties, the trustee
will vote all bonds according to the votes of a
majority of bondholders voting. See "SUMMARY OF
PRINCIPAL FINANCING DOCUMENTS--Collateral Agency
Agreement."
Accounts and
Flows of Funds: Following the commercial operation date, project
revenues will be deposited in accounts established
under the financing documents and held by the trustee
and the collateral agent. In most circumstances,
operating revenues will be applied in the following
order:
o operating and maintenance costs (including any
working capital loans);
o fees, costs and expenses of the trustee,
collateral agent, debt service reserve letter
of credit provider and on any construction
period letter of credit provider;
o interest payments on the bonds, debt service
reserve letter of credit loans and on any
construction period letter of credit loans;
o principal payments on the bonds and on any
construction period letter of credit loans;
o replenishment of the debt service reserve
account and principal payments on debt service
reserve letter of credit loans;
o required deposits in the major maintenance
reserve account;
o non-dispatch payments to the Power Purchaser;
o fuel conversion volume rebate payments to the
Power Purchaser;
o subordinated bonuses to the Contractor, if any;
o repayment of third-party subordinated debt; and
o subject to the restricted payments test,
permitted distributions to persons holding
ownership interests in our Company.
Under circumstances involving a termination or
non-renewal of the debt service reserve letter of
credit or specified delays in repayment of the
principal amount of debt service reserve letter of
credit loans, principal repayments of drawings on
the debt service reserve letter of credit will be
made at the same priority as principal on the new
bonds. Under certain circumstances, if no default or
event of default under the indenture is continuing,
we may from time to time withdraw funds then
deposited in specified accounts established under
the financing documents so long as we provide to the
collateral agent acceptable credit support to ensure
repayment of the withdrawn
10
<PAGE>
funds. See "SUMMARY OF PRINCIPAL FINANCING
DOCUMENTS--Collateral Agency Agreement--Payments
During Operating Period" and "--Advances."
Independent Engineer: The Independent Engineer is responsible for
confirming the reasonableness of specific statements
and projections made in specified certificates
required to be provided, including with respect to:
o satisfaction of specific requirements under the
construction agreement;
o the cost of and occurrence of the completion of
rebuilding, repairing or restoring our Facility
following an event of loss or event of eminent
domain;
o under specified circumstances, the calculation
of debt service coverage ratios and the
consistency of assumptions made in connection
therewith;
o whether any termination, amendment or
modification of any project contract would
reasonably be expected to have a material
adverse effect; and
o specified tests required for the issuance of
additional debt.
Risk Factors: You should carefully consider "RISK FACTORS" on page
16 before participating in the exchange offer.
11
<PAGE>
SUMMARY OF INDEPENDENT ENGINEER'S REPORT
Stone & Webster Management Consultants, Inc., with the assistance of
Stone & Webster Engineering Corporation, has prepared the Independent Engineer's
Report concerning specific technical, environmental and economic aspects of our
Facility. We have attached the Independent Engineer's Report as Annex B to this
prospectus. Stone & Webster is a leading consulting engineering firm which
devotes a substantial portion of its resources to providing services related to
the technical, environmental and economic aspects of power projects. The
Independent Engineer's Report includes, among other things, a conceptual design
review of our Facility, a review of the significant project contracts and a
review of financial projections, including annual revenues, expenses and debt
service coverage for our Facility during the period the bonds are scheduled to
remain outstanding.
For purposes of reviewing the projected operating results, Stone &
Webster relied on specific assumptions regarding material contingencies and
other matters that are not within the control of our Company, Stone & Webster or
any other person. These assumptions are inherently subject to significant
uncertainties, and actual results will differ, perhaps materially, from those
projected. See "RISK FACTORS."
Subject to the information contained, and the assumptions and
qualifications made, in the Independent Engineer's Report. Stone & Webster
expressed the opinions that:
1. Our Facility design, as specified in the construction agreement, is
in accordance with standard industry practice. The Contractor possesses the
organization and personnel to execute its obligations under the construction
agreement and the maintenance services agreement, and is familiar with the
construction and maintenance of large electrical generation facilities. Our
Project construction schedule proposed by the Contractor is achievable and is
consistent with the terms of the power purchase agreement.
2. Stone & Webster views the 501G combustion turbine as an advancement
in high-temperature advanced technology combustion turbines for the Contractor
and is typical of the normal design evolution for manufacturers. Many of the
design concepts incorporated in the 501G are rooted firmly in the 501 series and
are complemented by improvements which have been tested in the 501F series or
predicted by extensive modeling or full scale testing. The first 501G unit is
expected to begin commercial operation later in 1999. The various 501G
components and designs have been individually shop tested and computer analyzed.
The Contractor's 501G is gaining commercial acceptance as demonstrated by the
fact that 17 of the Contractor's 501Gs have been sold to date in the United
States.
3. The combustion turbines for our Project are scheduled to become the
third and fourth 501Gs in operation. As a result, our Project will benefit from
approximately 25 months of facility start-up, extensive testing and operating
experience of the first installation of 501Gs (McIntosh Project) and
approximately nine months of such experience from the second installation of
501Gs (Millenium Project). Because the 501G has no commercial operating
experience, the initial unit availability of the 501G may be lower in the early
years of operation than is the case with combustion turbine units currently in
operation that use mature technology. Lower initial unit availability has been
reflected in the base case and a sensitivity case has been included in the
projected operating results utilizing lower availability than that set forth in
the base case.
4. A sustained period of commercial operation at full load conditions
followed by an inspection of the combustion turbine is necessary to predict with
any certainty the types of start-up and operational problems, if any, that the
501G may encounter. However, our Project will benefit from the start-up testing
and inspection programs implemented by the Contractor at the McIntosh and
Millenium units. The Contractor has also invested in, and has stated that it
will make available to our Project, a complete set of risk parts for the entire
combustion turbine gas path. In addition, under the maintenance services
agreement, the Contractor will provide combustion turbine spare parts to our
Project. This full set of gas path risk parts to be made available by the
Contractor and the maintenance services agreement long term spare parts program
will minimize the duration of any unscheduled combustion turbine-related outages
that require the replacement of parts by having the most commonly replaced parts
readily available. In addition, the Contractor has the resources and
capabilities to resolve any problem that may arise with the 501Gs.
5. The steam turbine and electrical generator designs are acceptable
and in accordance with standard industry practice.
12
<PAGE>
6. If designed and constructed in accordance with the construction
agreement and operated and maintained in accordance with the maintenance
services agreement and the operations agreement, our Facility should be capable
of meeting the net output contract requirements specified in the projected
operating results.
7. The liquidated damages provisions of the construction agreement are
reasonable. The one-year warranty period is acceptable based on the commercial
terms of the construction agreement in conjunction with the one-year warranty in
the maintenance services agreement. These two agreements, although independent,
are complementary and afford our Project a greater degree of protection than is
available from the construction agreement alone. Under both agreements, the
Contractor is obligated to notify AES Ironwood of any engineering or design
defects that may be manifested in any of the Contractor's fleet of 501Gs. In
addition, the risk of a component failure occurring after the one year
construction agreement warranty is mitigated because the projected operating
results indicate our Project will have adequate revenues to insure the purchase
of components that can be reasonably assumed to require replacement. Component
failures associated with casualty events are generally covered by insurance
policies. The performance testing plan, as specified in the construction
agreement, is acceptable, customary and should adequately demonstrate our
Project's performance.
8. The Power Purchaser possesses the organization and personnel to
execute its obligations under the power purchase agreement and is familiar with
the provision of fuel to, and purchase of electricity from, large electrical
generation facilities.
9. Williams has executed specific agreements with Texas Eastern
Transmission Corporation ("TETCO") to provide natural gas delivery services to
AES Ironwood, Inc. These agreements require TETCO to construct, own and operate
an approximate three-mile pipeline from the TETCO mainline to our Facility.
Stone & Webster has not, however, independently verified the design of the
natural gas pipeline which will interconnect our Facility to the interstate gas
pipeline that will serve our Facility nor its proposed construction schedule.
10. Our Facility can feasibly be electrically integrated into the PJM
power pool market, and no known transmission limitations will inhibit the
feasible evacuation of our Facility's full net capacity both under summer and
winter conditions.
11. Stone & Webster will independently verify the design of the make-up
water supply pipeline when it becomes available. The proposed pipeline
construction schedule appears reasonable and achievable. Stone & Webster does
not know of any reason why the City of Lebanon Authority should be unable to
perform its obligations under the effluent supply agreement.
12. AES Prescott, as an affiliate of AES and with the assistance of the
Contractor under the terms of the maintenance services agreement, should be
capable of operating and maintaining our Facility in accordance with standard
industry practices.
13. The technical requirements described in the project contracts are
comprehensive, reasonable and achievable as well as consistent within and
between the various documents.
14. The Phase I environmental site assessments conducted by an
independent environmental consultant which indicated no significant
environmental issues were performed in accordance with standard industry
practice and their results appear reasonable.
15. A majority of our Project's required permits have been acquired and
our Project's permit acquisition plan for those permits not yet required is
reasonable.
16. Our Company has received a determination that our Facility is an
exempt wholesale generator under the applicable rules of the Federal Energy
Regulatory Commission.
17. Assuming our Facility is constructed, operated and maintained in
accordance with the terms of the construction agreement, the power purchase
agreement, the operations agreement and the maintenance services agreement, then
it is reasonable to assume that our Facility will be able to operate in a manner
consistent with applicable permit limits for a period at least equal to the term
of the bonds.
18. The construction agreement price is competitive relative to similar
facilities and our Project's proposed operating and maintenance expenses are
consistent with other comparable projects.
13
<PAGE>
19. The technical assumptions utilized in the Hagler Bailly PJM Market
Study Analysis are reasonable.
20. Stone & Webster reviewed the technical and commercial assumptions
and the calculation methodology of our Project financial pro forma model. The
technical assumptions assumed in the projected operating results are reasonable
and are consistent with the project contracts. The financial pro forma model
fairly presents, in Stone & Webster's judgment, projected revenues and projected
expenses under the base case assumptions. Therefore, the projected operating
results are a reasonable forecast of our Company's financial results under the
base case assumptions.
21. The principal amount of the bonds, when combined with the equity
contributions and interest earned during the construction period, should be
sufficient to pay the costs of constructing our Project and interest on the
bonds through the end of the construction period.
22. The projected revenues from the sale of capacity are more than
adequate to pay the annual operating and maintenance expenses (including
provisions for major maintenance), other operating expenses and debt service
based on Stone & Webster's studies and analyses of our Project and the
assumptions set forth in the Independent Engineer's Report. The average and
minimum debt service coverage ratios for the full term of the bonds are 2.30x
and 1.45x, respectively. The average and minimum debt service coverage ratios
during the term of the power purchase agreement are 1.46x and 1.45x,
respectively. The average and minimum debt service coverage ratios during the
post-power purchase agreement period for the debt are 5.81x and 5.77x,
respectively.
23. Assuming deficiencies of up to 6% for heat rate and 5% for
capacity, the average debt service coverage ratios, over the term of the bonds,
after payment of liquidated damages due to a failure to achieve heat rate and
capacity guarantees, are projected to remain approximately the same as the debt
service coverage ratios in the base case.
The Independent Engineer's Report should be read by all prospective
investors in its entirety.
14
<PAGE>
SUMMARY OF INDEPENDENT POWER CONSULTANT'S REPORT
Hagler Bailly Consulting, Inc. (or the "Independent Power Consultant")
has prepared the Independent Power Consultant's Report, which we have attached
as Annex C to this prospectus. Hagler Bailly is an independent consulting firm
which provides various energy-related consulting services, including services
related to the marketing and fuel supply aspects of power projects.
The Independent Power Consultant's Report includes, among other things,
o a forecast of our Facility's dispatch profile during the period
after the end of the power purchase agreement term and
o a forecast of electric energy prices during the power purchase
agreement term and electric energy and capacity prices during the
period after the end of the power purchase agreement term.
Subject to the information contained, and the assumptions and other
limitations stated, in the Independent Power Consultant's Report, including the
qualifications set forth in the forward of such report, Hagler Bailly has
expressed the opinions (among others) that:
1. Our Facility's dispatch position on the supply curve will be highly
competitive and well below the highest priced baseload coal plant during the
period after the end of the power purchase agreement term (and during the term
of the power purchase agreement) due to our Facility's high efficiency, low
production costs and the influence of demand growth in conjunction with unit
retirements.
2. Our Facility is expected to have an average capacity factor of 90.7%
during the period after the end of the power purchase agreement term. The
addition of new, more efficient gas-fired power generation facilities in PJM
power pool market over time will not affect our Facility's dispatch.
3. Even in the two macroeconomic "downside sensitivity" cases of low
demand growth and high gas prices, our Facility's average capacity factor
remains significantly high at 89.6% during the period after the end of the power
purchase agreement term.
4. During the term of the power purchase agreement, the economics of
our Project are not sensitive to fuel prices because the costs of fuel are the
responsibility of the power purchaser under the power purchase agreement's fuel
tolling provisions.
The Independent Power Consultant's Report, including the qualifications
set forth in the forward of such report, should be read by all bondholders in
its entirety.
15
<PAGE>
RISK FACTORS
Before tendering your old bonds for new bonds or investing in the new
bonds, you should be aware that there are various risks involved in your
investment. We have discussed below the material risks that you should consider
in making your investment decision. You should consider carefully these risk
factors, together with all of the other information included in this prospectus.
IF THE COMMERCIAL OPERATIONS OF OUR FACILITY ARE SIGNIFICANTLY DELAYED, OR ARE
OTHERWISE UNABLE TO GENERATE SUFFICIENT CASH FLOW, WE MAY NOT BE ABLE TO PAY OUR
OPERATING EXPENSES OR SERVICE THE BONDS.
Construction of our Facility currently is scheduled to be completed
within 23-1/2 months from the date the Contractor receives a full notice to
proceed under the construction agreement. Our Company will not receive any
material revenues unless and until our Facility achieves commercial operation.
Once our Facility commences operation, principal and interest on the bonds will
be payable principally from revenues received by us under the power purchase
agreement. Operation and maintenance expenses of our Facility generally are
payable before payment of debt service with respect to the bonds. No
representation or assurance can be made that our Facility will be successfully
constructed or that, if our Facility is successfully constructed, revenues will
be sufficient to pay the operation and maintenance expenses of our Facility and
principal of and interest on the bonds. We have no assets other than our
Facility, the project contracts and other assets and contract rights related to
our Facility.
Until our Facility commences operation, debt service on the bonds will
be payable solely from funds on deposit in the construction account (which
deposits were made with a portion of the net proceeds from the issuance of the
old bonds), any investment earnings, specific contingency and other funds held
under the collateral agency agreement and the indenture, insurance proceeds, if
any, and liquidated damages payable under the construction agreement. The
construction interest account under the indenture will contain an amount
sufficient to pay interest on the bonds only through 45 days following the
guaranteed provisional acceptance date under the construction agreement (without
giving effect to any extensions). Thus, if there is a prolonged delay beyond the
guaranteed provisional acceptance date in our Facility's attaining commercial
operation, we cannot assure that sufficient sources of funds will be available
to make payments of principal of, premium, if any, and interest on the bonds.
During the term of the power purchase agreement, our Company's ability
to make payments of principal, premium, if any, and interest on the bonds
will be substantially a function of (i) the ability of our Facility to operate
at levels which provide sufficient revenues from sales to the Power Purchaser
after the payment of all operation and maintenance expenses and specific other
expenses paid prior to debt service and (ii) the ability of the Power Purchaser
to make required payments under the power purchase agreement. Fixed payments
under the power purchase agreement may be reduced significantly or eliminated
during periods when our Facility's availability fails to meet required levels
under the power purchase agreement. With specific exceptions, fixed payments
will not be made by the Power Purchaser during unexpected or uncontrollable
events which prevent our Facility from operating. Following the expiration of
the term of the power purchase agreement, our ability to make payments of
principal of, premium, if any, and interest on the bonds will be substantially
a function of:
o our ability to find purchasers of electric generating capacity
and energy from our Facility,
o the availability of adequate market prices for capacity, energy
and ancillary services,
o our ability to procure sufficient quantities of fuel at
competitive prices and
o the ability of our Facility to operate at levels which provide
sufficient revenues from the sale of electric generating
capacity, energy and ancillary services to power purchasers after
the payment of all operation and maintenance expenses and certain
other expenses paid prior to service.
IN THE EVENT THAT WE EXHAUST THE PROCEEDS FROM THE BONDS, THE EQUITY
CONTRIBUTION AND THE LIQUIDATION OF THE COLLATERAL, THE HOLDERS OF THE BONDS
WILL HAVE LIMITED OR NO RECOURSE IN THE EVENT OF A DEFAULT.
Because our Company is a special-purpose company, our ability to make
payments of principal, premium, if any, and interest on the bonds will be
entirely dependent on the performance of our obligations under the project
contracts and financing documents. Our obligations under the financing documents
will be obligations solely of our Company, secured solely by the collateral. If
we default in our obligations under the financing documents, we cannot assure
that realization on the collateral would provide sufficient funds to repay all
amounts due on the bonds.
None of the owners of ownership interests in our Company (nor any
affiliate, incorporator, stockholder, partner, officer, director or employee of
our Company) will guarantee the payment of the bonds or has any obligation with
respect
16
<PAGE>
to the payment of the bonds. The collateral includes a pledge of AES Ironwood,
Inc.'s ownership interests in our Company, and under the equity subscription
agreement, AES Ironwood, Inc. has agreed to contribute in the aggregate up to
$50,149,285 to us to fund project costs. However, neither AES Ironwood, Inc. nor
any of its affiliates has any obligation to contribute sums in excess of the
amount required to be advanced under the equity subscription agreement. If the
proceeds of the bonds and the equity contribution required under the equity
subscription agreement are insufficient to fund the successful development,
construction, start-up and testing of our Facility, we may not have other
sources of funds available to complete our Facility.
The bonds will be secured by liens on substantially all of the assets
of our Company related to our Facility, including all of the project contracts.
If a default occurs under the indenture or other financing documents, we cannot
assure that an exercise of remedies, including foreclosing on the assets in a
judicial proceeding, would provide sufficient funds to repay all amounts due on
the bonds. As result of specific provisions of the documents under which we
obtained our rights in and to the site, it is unlikely that the real estate
comprising a portion of the collateral could be used for any purpose other than
an electric generating facility.
IF THE PARTIES THAT WE DEPEND ON BREACH THEIR OBLIGATIONS TO US, OUR CASH FLOW
AND ABILITY TO SERVICE THE BONDS MAY BE IMPAIRED.
During the term of the power purchase agreement, our Company is
dependent on the Power Purchaser for revenues from sales of capacity, ancillary
services and energy from our Facility and on the Power Purchaser and its
affiliates for fuel supply and transportation. We are dependent on Metropolitan
Edison Company for connection of our Facility to the electric transmission grid,
as well as on other third-party sources of goods and services which constitute
the principal inputs to our Facility's operations. Any material breach by any of
these parties of their obligations under the project contracts could adversely
affect our cash flows and could impair our ability to make payments of principal
of and interest on the bonds.
The other parties to the project contracts have the right to terminate
and/or withhold payments or performance under the contracts if specific events
occur. If a project contract were to be terminated due to nonperformance by us
or by the other party to the contract, our ability to enter into a substitute
agreement having substantially equivalent terms and conditions is uncertain.
IF THE POWER PURCHASER'S FINANCIAL CONDITION DETERIORATES OR IT BREACHES ITS
OBLIGATIONS TO US AND CANNOT BE ADEQUATELY REPLACED, WE MAY NOT BE ABLE TO
SERVICE THE BONDS.
The Power Purchaser currently is our Company's sole customer for
purchases of capacity, ancillary services and energy. The Power Purchaser's
payments under the power purchase agreement are expected to provide all of our
revenues during the term of the power purchase agreement. It is uncertain
whether we would be able to find another purchaser on similar terms for our
Facility's output if the Power Purchaser were not performing under the power
purchase agreement. If another purchaser or purchasers could be found, we cannot
assure that the price paid by that purchaser or purchasers would be sufficient
to enable us to make payments in respect of the bonds. Any material failure by
the Power Purchaser to make capacity and fuel conversion payments under the
power purchase agreement could therefore have a material adverse effect on
revenues and our ability to make payments in respect of the bonds.
The ability of the Power Purchaser to meet its obligations under the
power purchase agreement will be dependent on the Power Purchaser's financial
condition generally, and the Power Purchaser's financial condition will in part
be dependent upon its ability to sell our Facility's capacity and electric
energy at adequate prices.
As we have described in this prospectus, Williams will provide to our
Company a guaranty of the Power Purchaser's obligations under the power purchase
agreement to make fixed payments and to pay damages if the Power Purchaser fails
to make such payments. Williams' obligations under that guaranty are capped at
an amount equal to 125% of the sum of (i) the principal amount of the bonds plus
(ii) the maximum debt service reserve account required balance. If the power
purchase agreement is terminated due to an event of default by the Power
Purchaser, we might recover sufficient amounts from Williams under the guaranty
to repay all outstanding principal of and accrued interest on the bonds and our
other senior debt.
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IF WE ENCOUNTER SIGNIFICANT CONSTRUCTION DELAYS, ANY LIQUIDATED DAMAGES,
CONTINGENCY FUNDS, OR INSURANCE PROCEEDS MAY BE INSUFFICIENT TO SERVICE THE
BONDS.
As with any major construction undertaking, completion of our Facility
could be delayed or prevented, or cost overruns could be incurred, as a result
of numerous factors, including shortages of material, labor disputes, weather
interferences, difficulties in obtaining necessary permits or in meeting permit
conditions or unforeseen engineering, environmental or geological problems. We
cannot assure that any available liquidated damages or contingency funds or the
proceeds of any insurance and warranties would be sufficient to pay for any
significant cost overruns or redeem a sufficient principal amount of the bonds
so that projected debt service coverage ratios can be achieved or maintained. In
particular, our Company is required to pay principal of and interest on the
bonds without regard to any unexpected or uncontrollable events under the
construction agreement.
If as a result of unexpected or uncontrollable events specified in the
construction agreement or specified acts or omissions of our Company, completion
of our Facility is delayed or prevented, or our Facility cannot achieve
operation in accordance with design specifications and performance guarantees,
the Contractor would not be obligated to pay liquidated damages. Under these
circumstances, no proceeds of insurance may be available to us or any proceeds
that are available may not be sufficient to pay our debt service or increased
costs. Generally, the Contractor would not be obligated to pay liquidated
damages for events or circumstances that adversely affect its ability to
perform its obligations under the construction agreement to the extent that
the events or circumstances are beyond its reasonable control and are not caused
by its or its subcontractors' negligence or lack of due diligence and could not
have been avoided by the use of its reasonable efforts. In addition, the date
for achievement of provisional acceptance and the guaranteed provisional
acceptance under the construction agreement could be subject to adjustment as
a result of unexpected or uncontrollable events.
The power purchase agreement requires that the Commercial Operation
Date occur by no later than June 30, 2001, which may be extended under the terms
of the power purchase agreement to no later than December 31, 2002. If the
Commercial Operation Date fails to occur by that date, as so extended, the Power
Purchaser will be permitted to terminate the power purchase agreement.
Under the construction agreement, our Company is responsible for a
number of matters in connection with the construction, completion and start-up
of our Facility. While we believe that we have made adequate arrangements to
assure timely performance of our responsibilities, we are relying on other
parties to enable us to perform our responsibilities under the construction
agreement and we cannot be certain that the other parties will meet their
obligations under their contracts. See "SUMMARY OF PRINCIPAL PROJECT
CONTRACTS--Construction Agreement."
BECAUSE THE FACILITY HAS NOT YET BEEN CONSTRUCTED AND OUR COMPANY HAS NO
OPERATING HISTORY, VARIOUS UNEXPECTED EVENTS MAY INCREASE OUR EXPENSES
OR REDUCES OUR REVENUES AND IMPAIR OUR ABILITY TO SERVICE THE BONDS.
Because our Facility has not yet been constructed, it has no operating
history. As with any new business venture of this size and nature, operation of
our Facility could be affected by many factors, including start-up problems, the
breakdown or failure of equipment or processes, the performance of our Facility
below expected levels of output or efficiency, failure to operate at design
specifications, labor disputes, changes in law, failure to obtain necessary
permits or to meet permit conditions, government exercise of eminent domain
power or similar events and catastrophic events including fires, explosions,
earthquakes and droughts. The occurrence of these events could significantly
reduce or eliminate revenues or significantly increase the expenses of our
Facility, thereby jeopardizing the ability of our Company to make payments on
the bonds. In addition, the liability of AES Prescott for failure to perform
under the operations agreement is subject to specific limitations and AES
Prescott is not required to post a performance bond. The proceeds of any
available insurance and limited warranties may not be adequate to cover our lost
revenues or increased costs. See "SUMMARY OF PRINCIPAL PROJECT CONTRACTS--Power
Purchase Agreement" and "--Operations Agreement."
The Siemens Westinghouse 501G combustion turbines to be used in our
Facility are the manufacturer's latest development in combustion turbines whose
fundamental design basis is based upon the Siemens Westinghouse 501 series.
However, the 501G combustion turbine currently has no significant operating
experience and may have unit availability lower than combustion turbine units
using mature technologies. Thus, we cannot assure that our Project will not
incur problems relating to start-up, commissioning and performance that could
jeopardize the achievement of Provisional Acceptance, timely commencement of
commercial operations of our Facility or the performance of our Facility during
its commercial operation. For a discussion of the 501G technology and related
risks, see "ANNEX B: INDEPENDENT ENGINEER'S REPORT--Facility Design."
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FOLLOWING THE EXPIRATION OF THE POWER PURCHASE AGREEMENT, OUR FACILITY IS
EXPECTED TO BECOME A MERCHANT FACILITY AND WE CANNOT ASSURE THAT WE WILL BE ABLE
TO FIND ADEQUATE PURCHASERS OR OTHERWISE COMPETE EFFECTIVELY IN THE MERCHANT
MARKET.
At the end of the term of the power purchase agreement, at which time
27.1% of the bonds are expected to remain outstanding, our Facility is expected
to become a merchant facility (i.e., an electric generation facility with no
dedicated long-term power purchase agreement) and the Power Purchaser's
obligation to provide fuel will cease. If the power purchase agreement is
terminated prior to its stated term as a result of an event of default or
otherwise, our Facility could enter a merchant phase sooner than the anticipated
termination date of the power purchase agreement. Given the uncertainty
regarding the performance of our Facility, future environmental regulation,
competition from other generating facilities, including possibly some owned by
AES and its affiliates, fuel prices and other market conditions that may prevail
in the future in the PJM power pool market, we cannot assure that our Company
will be able to find purchasers or otherwise compete effectively in the merchant
market.
Also, there are current legal and regulatory limitations on our ability
to operate our Facility on a merchant basis. Our rate schedule when filed with
the Federal Energy Regulatory Commission (the "FERC") will be limited to sales
to the Power Purchaser. Under current law, before we could engage in sales to
any other entities, our Company would be required to seek additional
market-based rate authority from the FERC. Although we do not currently
anticipate that we would encounter material difficulty in obtaining this
additional market-based rate authority, we cannot assure that the FERC will
grant this authority. In addition, our status as an exempt wholesale generator
under federal law prohibits us from making retail sales of electricity in the
United States. We currently anticipate that electric energy generated by our
Facility will be sold primarily in the wholesale market both during the term of
the power purchase agreement and after our Facility becomes a merchant plant.
Nevertheless, if we were to desire to participate directly in the retail
electric market when that market develops, we would be precluded from doing so
absent a change in federal law. Under current federal law, however, we would not
be precluded from making sales to a power marketer, including an affiliate,
which could in turn make retail sales.
COMPLIANCE WITH ENVIRONMENTAL AND OTHER REGULATORY MATTERS COULD CAUSE
SIGNIFICANT DELAYS AND EXPENSES THAT MAY IMPAIR OUR ABILITY TO SERVICE THE
BONDS.
General
Our Company is subject to a number of statutory and regulatory
standards and required approvals relating to energy, labor and environmental
laws. Although the necessary environmental permits for the commencement of
construction of our Facility have been obtained, we are required to comply with
the terms of our environmental permits and to obtain other permits for the
construction and operation of our Facility. Several of our permits have not yet
been obtained, and some cannot be obtained until our Facility has commenced
operation. Under specific circumstances, delay in receipt of or failure to
obtain such permits could delay completion of the construction of our Facility
or prevent the operation of our Facility.
Some permits that have been obtained by our Company in connection with
our Facility will require amendment prior to commercial operation of our
Facility and others will require renewal or reissuance during the life of our
Facility. While we have no reason to believe that such permits cannot be amended
or will not be renewed or reissued, our inability to amend, renew or obtain
reissuance of these permits in the future could cause the suspension of
construction or operation of our Facility.
The permits that have been obtained and that will be obtained contain
ongoing requirements. Failure to satisfy and maintain any permit conditions or
other applicable requirements could delay or prevent completion of the
construction of our Facility, prevent the operation of our Facility and/or
result in additional costs. If our Facility attains commercial operation, we
cannot assure that our Facility will operate within the limits established by
the permits or approvals. See "OUR BUSINESS--Permits and Regulatory Approvals"
and "ANNEX B: INDEPENDENT ENGINEER'S REPORT--Environmental and Permitting."
Energy Regulatory Matters
Our Company believes that it has obtained all material energy-related
federal, state and local approvals required as of the date of this prospectus to
construct and operate our Facility. Although not currently required, additional
regulatory approvals, including, without limitation, renewals, extensions,
transfers, assignments, reissuances or similar actions may be required in the
future due to a change in laws and regulations, a change in our power purchasers
or for other reasons. We cannot assure that we will be able to (i) obtain all
required regulatory approvals that we do not yet
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have or that we may require in the future, (ii) obtain any necessary
modifications to existing regulatory approvals or (iii) maintain required
regulatory approvals. Delay in obtaining or failure to obtain and maintain in
full force and effect any regulatory approvals, or amendments, or delay or
failure to satisfy any such conditions or applicable requirements, could prevent
operation of our Facility or sales to third parties, or could result in
additional costs to us. Our business also could be materially and adversely
affected as a result of statutory or regulatory changes or judicial or
administrative interpretations of existing laws and regulations that impose more
comprehensive or stringent requirements on us.
THE INSURANCE WE HAVE OBTAINED MAY BE INADEQUATE IN THE EVENT OF A TOTAL LOSS OR
TAKING OF OUR FACILITY, AND WE CANNOT ASSURE THAT THE INSURANCE PROCEEDS WE
RECEIVE WILL BE SUFFICIENT TO SATISFY ALL OF OUR INDEBTEDNESS.
Our Company is obligated under the financing documents and other
project contracts to obtain and keep in force comprehensive insurance with
respect to our Facility, including general liability insurance and machinery
coverage, business interruption insurance, delay in start-up insurance and
all-risk property damage insurance, including, among other things, damage caused
by fire, floods or hurricanes. We cannot assure that such insurance coverage
will be available in the future at commercially reasonable costs or that the
amounts for which we are insured or amounts which we receive under insurance
coverage will cover all losses. If there is a total loss or taking of our
Facility, we cannot assure that the insurance proceeds we receive will be
sufficient to satisfy all our indebtedness, including for the redemption of the
bonds as required under the indenture. See "SUMMARY OF PRINCIPAL FINANCING
DOCUMENTS--Indenture."
THE ABILITY OF OUR COMPANY TO INCUR ADDITIONAL INDEBTEDNESS MAY IMPAIR OUR
ABILITY TO SERVICE THE BONDS.
Our Company may issue additional bonds and we may incur additional
indebtedness at any time or from time to time, in accordance with the terms of
the indenture. Any additional bonds will be, and any additional senior debt may
be, secured by the collateral ratably with all our senior secured indebtedness.
The issuance of additional bonds (other than for refinancing purposes) or
additional senior debt would create additional claims against the collateral
under the security documents and could result in a reduction in debt service
coverage ratios and cash available to make payments of principal of and interest
on the bonds. See "SUMMARY OF PRINCIPAL FINANCING DOCUMENTS--Indenture."
Subject to limitations set forth in the indenture, our Company is
permitted to incur subordinated debt (which may be secured by a junior lien on
the collateral) for purposes allowed under the indenture. Although subordinated
debt would be subject to limitations contained in the collateral agency
agreement concerning the ability of the holders of subordinated debt to declare
defaults, exercise remedies or institute specified legal proceedings, the
incurrence of subordinated debt would increase our leverage and the total debt
service payable by us. In addition, the holders of subordinated debt may be our
secured creditors and therefore have the rights available to secured creditors
under federal and state law.
DRAWINGS UNDER LETTERS OF CREDIT MAY INCREASE PAYMENTS OF DEBT SERVICE ON SENIOR
DEBT.
Drawings under the debt service reserve letter of credit will be
converted into debt service reserve letter of credit loans which will mature
five years after the date of the loans. Interest on debt service reserve letter
of credit loans is payable at the same level in the flow of funds as payments of
interest on other senior debt (including the bonds). Principal on debt service
reserve letter of credit loans is generally payable out of available cash flow
after the payment of principal on the bonds. In specific circumstances, however,
principal payments on any drawings under the debt service reserve letter of
credit will be made at the same level in the flow of funds as payments of
principal on the bonds.
If the construction period letter of credit is issued and our Facility
is not completed within the time period specified in the power purchase
agreement, as the period may be extended, the Power Purchaser may draw on such
construction period letter of credit. Drawings under the construction period
letter of credit will be converted into construction period letter of credit
loans under any construction period letter of credit reimbursement agreement
that will mature in 10 years from the conversion. Principal of and interest on
any construction period letter of credit loans under the construction period
letter of credit reimbursement agreement will be made at the same respective
levels in the flow of funds as payments of principal and of interest on the
bonds.
Thus, drawings on the construction period letter of credit and, in
specific circumstances, drawings under the debt service reserve letter of
credit, will increase payments of debt service on senior debt. We cannot assure
that revenues of our Company from sales of capacity and fuel conversion services
under the power purchase agreement or otherwise would be sufficient to cover
such increases in debt service payments. The lenders under the debt service
reserve letter of credit reimbursement agreement and the construction period
letter of credit reimbursement agreement will be secured ratably with the bonds
by a lien on and security interest in the collateral.
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THE COLLATERAL AGENCY AGREEMENT CONTAINS PROVISIONS THAT MAY LIMIT THE REMEDIES
THAT COULD BE EXERCISED IN RESPECT OF THE EVENT OF DEFAULT (OTHER THAN A
BANKRUPTCY EVENT OF DEFAULT) UNLESS AND UNTIL THE REQUIRED SENIOR PARTIES HAVE
DIRECTED THE COLLATERAL AGENT TO DO SO.
The senior parties and our Company have entered into a collateral
agency agreement designating the collateral agent as the agent for each of the
senior parties. The collateral agency agreement requires the affirmative vote of
senior parties holding at least a majority of the outstanding combined exposure
to direct specific actions of the collateral agent, including the exercise of
remedies following a trigger event. Because the affirmative vote of these
required senior parties is required before the collateral agent can exercise
remedies under the collateral agency agreement and the other security documents
following most events of default if an event of default under the indenture were
to occur, no remedies could be exercised in respect of the event of default
(other than a bankruptcy event of default) unless and until the required senior
parties have directed the collateral agent to do so. If the holders of the bonds
do not constitute holders of at least a majority of the outstanding combined
exposure, the trustee and the holders of the bonds may not be able to direct the
collateral agent to exercise remedies in respect of an event of default under
the indenture without the affirmative vote of other senior parties. In addition,
under the terms of the other financing documents, we may not terminate, amend or
otherwise modify any provision of the indenture, any other security document or
any subordinated loan agreement, if the termination, amendment or modification
could, in the reasonable opinion of the creditors who are parties to the other
financing documents, reasonably be expected to have a material adverse effect on
the rights and benefits of such creditors. See "SUMMARY OF PRINCIPAL FINANCING
DOCUMENTS--Collateral Agency Agreement."
PROJECTIONS AND THE ASSUMPTIONS UNDERLYING THOSE PROJECTIONS USED IN THE
PROJECTIONS ARE INHERENTLY SUBJECT TO SIGNIFICANT UNCERTAINTIES AND ACTUAL
RESULTS MAY DIFFER, PERHAPS MATERIALLY, FROM THOSE PROJECTED AND SHOULD NOT BE
UNDULY RELIED UPON.
The financing of our Facility has been structured on the basis of
assumptions and projections with respect to our Facility's potential revenue
generating capacity and associated costs over the term of the bonds. Stone &
Webster has evaluated the technical, environmental and economic aspects of our
Project. The Independent Engineer's Report contains a discussion of the many
assumptions utilized in preparing these projections. Investors should review the
Independent Engineer's Report in its entirety.
Projections of future operations and the economic results of those
operations included in the Independent Engineer's Report have been prepared by
our Company and reviewed by Stone & Webster on the basis of present knowledge
and assumptions which Stone & Webster and our Company believe to be reasonable.
Our independent auditors have not examined, reviewed or compiled the projections
and, accordingly, do not express an opinion or any other form of assurance with
respect to them. After the issuance of the bonds, neither we nor Stone & Webster
will provide the holders of the bonds with revised projections or any report of
the differences between the projections and actual operating results later
achieved by our Project.
For purposes of preparing the projections, assumptions were made, of
necessity, with respect to completion of construction, availability and
performance of our Facility, dispatch levels, capital expenditures, operation
and maintenance expenditures, the revenues our Company will receive for capacity
and electric energy, the availability of fuel, the tax treatment of our Company,
general business and economic conditions and several other material
contingencies and other matters that are not within our control and the outcome
of which cannot be predicted by us, Stone & Webster, or any other person with
any certainty of accuracy. These assumptions and the other assumptions used in
the projections are inherently subject to significant uncertainties and actual
results will differ, perhaps materially, from those projected. Accordingly, the
projections are not necessarily indicative of current values or future
performance and neither we, Stone & Webster, nor any other person assumes any
responsibility for their accuracy. Therefore, no representation is made or
intended, nor should any be inferred, with respect to the likely existence of
any particular future set of facts or circumstances. If actual results are
materially less favorable than those shown or if the assumptions used in
formulating the projections prove to be incorrect, our ability to make payments
of principal of, premium, if any, and interest on the bonds may be adversely
affected.
FAILURE TO BE YEAR 2000 COMPLIANT MAY DISRUPT OUR BUSINESS AND OPERATIONS.
While our Facility is not expected to be operational until 2001,
certain of our activities during construction of our Facility may be disrupted
if our computer hardware and software and those of our suppliers, financial
institutions and contractors are not year 2000 compliant. The areas where we are
potentially exposed to such risks include our computer systems as well as
products and services purchased from and supplied by third parties.
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We have no ability to ensure that our suppliers, financial institutions
and contractors are year 2000 compliant. We may suffer an adverse impact on our
business and operations, including our ability to make payments under
contracts, if our suppliers, financial institutions and contractors or others
with which we conduct business are not year 2000 compliant.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS.
This prospectus includes forward-looking statements. We have based
these forward-looking statements on our current expectations and projections
about future events based upon our knowledge of facts as of the date of this
prospectus and our assumptions about future events. These forward-looking
statements are subject to various risks and uncertainties that may be outside of
our control, including, among other things:
o construction delays and cost overruns;
o operational reliability of our Facility;
o availability and terms of capital and capital market
conditions;
o unanticipated changes in interest rates and rates of
inflation;
o general industry trends;
o competition;
o power costs and availability;
o availability of qualified personnel;
o fuel costs and availability;
o changes in, or the failure or inability to comply with,
governmental regulations, including, among other things,
environmental regulations;
o changes in tax laws;
o weather conditions and other natural phenomena;
o unanticipated changes in operating expenses and capital
expenditures;
o inability of various counterparties to meet their obligations
with respect to financial instruments;
o failure of the primary power purchaser to comply with its
obligations to us;
o adequacy of insurance;
o each of the factors discussed in the "Risk Factors" section
beginning on page 16; and
o other factors described in this prospectus.
We use words like "anticipate," "estimate," "project," "plan," "expect" and
similar expressions to help identify forward-looking statements in this
prospectus.
In light of these and other risks, uncertainties and assumptions, the
actual events or results may be very different from those expressed or implied
in the forward-looking statements in this prospectus or may not occur. We have
no obligation to publicly update or revise any forward-looking statement,
whether as a result of new information, future events or otherwise.
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USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the new
bonds. In consideration for issuing the new bonds, we will receive in exchange a
like principal amount of old bonds. The old bonds surrendered in exchange for
the new bonds will be retired and canceled and cannot be reissued. Accordingly,
issuance of the new bonds will not result in any change in our capitalization.
We intend to use the net proceeds from the sale of the old bonds, together with
an approximately $50 million equity contribution, to:
o fund the engineering, procurement, construction, testing and
commissioning of the Facility;
o pay certain fees and expenses in connection with the financing
and development of the Project; and
o pay Project costs, including interest on the bonds.
CAPITALIZATION
The following table sets forth our capitalization as of September 30,
1999. The following information should be read in conjunction with the
consolidated financial statements and related notes thereto and the other
financial information contained elsewhere in this prospectus. See "SELECTED
FINANCIAL DATA" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION."
Long-Term Debt:
Long-term Bonds $308,500,000
============
Funds available from the issuance of the old bonds will be drawn from
time to time to fund construction of our Facility. Once the available old bond
proceeds have been used, AES Ironwood, Inc. agrees to fund up to approximately
$50.1 million of Project costs to be contributed to us pursuant to the equity
subscription agreement between AES Ironwood, Inc. and our Company.
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SELECTED FINANCIAL DATA
The selected financial data of our Company presented below, which
consists of our summary balance sheet information as of September 30, 1999,
should be read in conjunction with "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION" and with our financial statements appearing elsewhere in
this prospectus. Our Company, which is in the development stage, began
construction of our Facility in June 1999 and has no operating revenues. All
construction costs and all project development costs have been capitalized and
will continue to be capitalized until the commencement of commercial operation
of our Facility. Accordingly, only balance sheet data is presented and no ratio
of earnings to fixed charges has been computed since it would not be meaningful.
The balance sheet information as of September 30, 1999 and the statement of
operations for the period ended September 30, 1999 has been derived from the
financial statements of our Company which have been audited by Deloitte Touche
LLP, independent public accountants, whose report appears elsewhere in this
prospectus.
AES Ironwood, L.L.C.
(Development Stage Enterprise)
As of and for the period ended September 30, 1999
(thousands)
Assets
Current Assets $ 1,065
Investments Held by Trustee (1) 99,590
Land 528
Construction in Progress 216,139
Deferred Financing Costs 2,290
Certificate of Deposit 385
---------
Total Assets $ 319,997
=========
Liabilities & Member's Deficit
Current Liabilities $ 4,124
Bond Financing 308,500
Other Long-Term Liabilities 9,231
Member's Deficit (1,858)
Total Liabilities & Member's Deficit $ 319,997
=========
Operating Expenses:
General and Administrative Expenses $ 162
---------
Net Operating loss $ 162
---------
Interest Income 1,999
Interest Expense (3,695)
NET LOSS $ (1,858)
=========
Cash Paid for Construction
in Progress Since Inception $ 204,388
=========
- ---------
(1) This amount consists of funds held pending expenditure by our Company for
construction of our Facility, interest payments to bondholders during the
construction period, and investment earnings thereon.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General
Our Company was formed on October 30, 1998, to develop, construct, own,
operate and maintain our Facility. Our Company is in the development stage and
has no operating revenues. The total cost of the construction of our Facility is
estimated to be approximately $359 million.
Equity Contributions
Under the equity subscription agreement, AES Ironwood, Inc. is
obligated to contribute up to approximately $50.1 million to our Company to fund
project costs. AES Ironwood, Inc.'s obligation to make the contributions is, and
will be, supported by an acceptable letter of credit or an acceptable bond.
Results of Operations
For the period from June 25, 1999 (inception) through September 30,
1999, costs pertaining to the cost of the construction of our Facility have been
capitalized as Construction Work in Progress and are included as assets on the
balance sheet. The cost of purchasing land for construction of our Facility has
been separately identified on the balance sheet.
From June 25, 1999 through September 30, 1999, general and
administrative costs of $162,000 were incurred. These costs did not directly
relate to construction and are included as expenses in the Statement of
Operations.
A portion of the proceeds from the sale of the old bonds have not yet
been expended on construction and were invested by the Trustee. The interest
income earned on these invested funds is included in the Statement of
Operations.
The interest expense incurred on the portion of the old bond proceeds
expended during the construction period is capitalized to Construction in
Progress and is included on the balance sheet. Interest expense incurred on the
old bond proceeds not spent on construction of our Facility are included as
interest expense in the Statement of Operations.
For the period from June 25, 1999 through September 30, 1999,
non-capitalizable costs plus interest expense and less interest income resulted
in a net loss on the September 30, 1999 Statement of Operations of approximately
$1.9 million. The results of operations may not be comparable with the results
of operations during future periods, especially when our Facility begins
commercial operations in 2001.
Liquidity and Capital Resources
Our Company believes that the net proceeds from the sale of the old
bonds, together with the equity contribution, will be sufficient to (i) fund the
engineering, procurement, construction, testing and commissioning of our
Facility, (ii) pay certain fees and expenses in connection with the financing
and development of our Project and (iii) pay project costs, including interest
on the bonds.
In order to provide liquidity in the event of cash flow shortfalls, the
debt service reserve account will contain an amount equal to the debt service
reserve account required balance through cash funding, issuance of the debt
service reserve letter of credit or a combination of the two.
Business Strategy and Outlook
Our Company's overall business strategy is to market and sell all of
its net capacity, fuel conversion and ancillary services to the Power Purchaser
during the term of the power purchase agreement. After expiration of the power
purchase agreement, we anticipate selling Facility capacity, ancillary services
and energy under a power purchase agreement or into the Pennsylvania/New
Jersey/Maryland power pool market. We intend to cause our Facility to be
managed, operated and maintained in compliance with the project contracts and
all applicable legal requirements.
Year 2000 Compliance
Our Company has undertaken an assessment of areas within its existing
business and operations that could be adversely affected by the failure of our
computer hardware and software essential to our business or operations to
continue to function with accuracy, in the case of dates or time periods
occurring after December 31, 1999, at least as effectively and reliably as in
the case of dates or time periods occurring before January 1, 2000. We have made
reasonable efforts to ensure that we will be year 2000 compliant on a timely
basis taking into account the business and operations which we are currently
conducting. We are also asking each of our key suppliers, contractors and
financial institutions whether they will be year 2000 compliant in all material
respects. For purposes hereof, "key suppliers, contractors and financial
institutions" refer to those suppliers, contractors and financial institutions
whose business failure
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or significant disruptions would, with reasonable probability, materially
adversely affect our business and operations. Based on the foregoing, we believe
that we will be year 2000 compliant on a timely basis.
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OUR BUSINESS
General
Our Company is a Delaware limited liability company formed to develop,
construct, own, operate and maintain our Project and manage the production of
electric generating capacity, ancillary services and energy at our Facility.
After the commercial operation date, our sole business will be the ownership and
operation of our Project. We own the land on which our Facility will be located.
Our Facility will be designed, engineered, procured and constructed for us by
Siemens Westinghouse Power Corporation on a fixed-price, turnkey basis under the
construction agreement. The Contractor will provide combustion turbine
maintenance services and spare parts with respect to our Facility for an initial
term of between 8 and 10 years (depending on the timing of scheduled outages)
under the maintenance services agreement. AES Prescott, a wholly owned
subsidiary of AES, will provide development, construction management and
operations and maintenance services for the project under the operations
agreement.
Our Company has entered into a power purchase agreement for a term of
20 years under which the Power Purchaser has committed to purchase all of the
net capacity, fuel conversion and ancillary services of our Facility. We
anticipate that during the term of the power purchase agreement substantially
all of our revenues will be derived from payments made under the power purchase
agreement.
Competition
Under the power purchase agreement, the Power Purchaser will be
required to purchase all of our Facility's capacity and energy. Therefore,
during the term of the power purchase agreement, competition from other capacity
and energy providers will only become an issue if the Power Purchaser breaches
its agreement and ceases to purchase our capacity and energy or the power
purchase agreement is otherwise terminated or not performed in accordance with
its terms. Following the term of the power purchase agreement, we anticipate
selling Facility capacity, ancillary services and energy under a power purchase
agreement or into the PJM power pool market. At such time, we will face
competition from other generating facilities selling into the PJM power pool
market including, possibly, other facilities owned by AES or its affiliates.
Employees
Our Company has no employees and does not anticipate having any
employees in the future. Under the operations agreement, AES Prescott will
manage the development and construction of and will operate and maintain our
Facility. The direct labor personnel and the plant operations management will be
employees of AES provided to AES Prescott under the services agreement.
Insurance
Our Company as owner of our Facility will maintain a comprehensive
insurance program as required under the indenture and underwritten by recognized
insurance companies. Among other insurance policies, we will maintain commercial
general liability insurance, permanent property insurance for full replacement
value of our Facility and business interruption insurance covering at least 12
months of debt service and fixed operation and maintenance expenses. We have
obtained title insurance in an amount equal to the principal amount of the
bonds.
AES Prescott, as operator of our Facility, will maintain, among other
insurance policies, workers' compensation insurance (or evidence of
self-insurance), if required, and comprehensive automobile bodily injury and
property damage liability insurance.
Legal Proceedings
Our Company is not party to any legal proceedings.
Permits And Regulatory Approvals
AES Prescott, as operator of our Facility, and our Company, as owner of
our Facility, must comply with numerous Federal, state and local regulatory
requirements including environmental requirements in the operation of our
Facility.
On March 31, 1999, we received a determination of Exempt Wholesale
Generator Status from FERC. On March 29, 1999, our Company received its
Prevention of Significant Deterioration Permit ("Air Permit") from the
Pennsylvania Department of Environmental Protection. The appeal period in
respect of the Air Permit expired on May 3, 1999 and no appeal of the Air Permit
was filed.
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<PAGE>
Our Company is subject to a number of statutory and regulatory
standards and required approvals relating to energy, labor and environmental
laws. Although the necessary environmental permits for the commencement of
construction of our Facility have been obtained, we are required to comply with
the terms of our environmental permits and to obtain other permits for the
construction and operation of our Facility. Several of such permits have not yet
been obtained, and some cannot be obtained until operation of our Facility has
commenced. Under specific circumstances, delay in receipt of or failure to
obtain such permits could delay completion of the construction of our Facility
or prevent the operation of our Facility.
Some permits that our Company has obtained in connection with our
Facility will require amendment prior to commercial operation of our Facility
and others will require renewal or reissuance during the life of our Facility.
While we have no reason to believe that such permits cannot be amended or will
not be renewed or reissued, our inability to amend, renew or obtain reissuance
of these permits in the future could cause the suspension of construction or
operation of our Facility.
The permits that have been obtained and that will be obtained contain
ongoing requirements. Failure to satisfy and maintain any such permit conditions
or other applicable requirements could delay or prevent completion of the
construction of our Facility, prevent the operation of our Facility and/or
result in additional costs. See "ANNEX B: INDEPENDENT ENGINEER'S
REPORT--Environmental and Permitting."
28
<PAGE>
OUR MANAGEMENT
Management
Our Company is a Delaware limited liability company and has no
employees. We are managed by our Board of Directors under the terms of the
Limited Liability Company Agreement of AES Ironwood, L.L.C., dated as of
November 1, 1998. The following table sets forth the names, ages and positions
of our directors and executive officers and their positions with our Company.
Our directors are elected annually and each elected director holds office until
the director's successor is elected and qualified or the director resigns or is
removed. Our officers are elected from time to time by vote of the Board of
Directors.
Name Age Position(s)
- ---- --- -----------
John Ruggirello............ 49 President
Barry Sharp................ 40 Director, Vice President and Chief
Financial Officer
William Luraschi........... 36 Vice President and Secretary
Patricia Rollin............ 38 Vice President
Stephen Dahm............... 54 Vice President
Kevin Polchow.............. 38 Vice President
Bart Rossi................. 51 Vice President
William Hoagland........... 38 Treasurer
Maureen Shearer............ 36 Assistant Secretary
Dennis Bakke............... 54 Director
Roger Naill................ 52 Director
John Ruggirello, 48, has served as President of AES Ironwood, L.L.C.
since November 1998. He is Senior Vice President of AES. Mr. Ruggirello also
serves as the President of AES Enterprise, a business development and plant
operations division serving the Mid-Atlantic United States since 1994. Prior to
his current position, Mr. Ruggirello was plant manager of AES Beaver Valley.
Barry Sharp, 40, has served as Director, Vice President and Chief
Financial Officer of AES Ironwood, L.L.C. since November 1998. He is currently
Senior Vice President and Chief Financial Officer of AES. He joined AES as
Director of Finance and Administration in 1986. Prior to AES, he held various
positions with Arthur Anderson & Company and Marriott.
William Luraschi, 36, has served as Vice President of AES Ironwood,
L.L.C. since November 1998. He is currently Vice President, Secretary and
General Counsel of AES. He joined AES as General Counsel in 1995. Prior to
joining AES, he was an attorney at the law offices of Chadbourne and Parke.
Patricia Rollin, 38, has served as Vice President of AES Ironwood,
L.L.C. since November 1998. She is also a Vice President of AES Enterprise. She
served as Director of Investor Relations of AES from 1994 through 1995. She
joined AES Corporate Strategic Planning in 1984.
Stephen Dahm, 54, has served as Vice President of AES Ironwood, L.L.C.
since November 1998. He is a Project Director of AES Ironwood, L.L.C. Prior to
joining AES Ironwood, L.L.C., he served as Vice President and Project Director
for AES Lal Pir and PakGen. Mr. Dahm joined AES in 1994 after 18 years with
Bechtel.
Kevin Polchow, 38, has served as Vice President of AES Ironwood, L.L.C.
since November 1998. Mr. Polchow is currently the Tax Director of AES. He
assumed that position in 1994. Prior to joining AES, Mr. Polchow served as a
Senior Manager at Deloitte and Touche.
Bart Rossi, 51, has served as Vice President of AES Ironwood, L.L.C.
since November 1998. Mr. Rossi is currently a Project Engineering Director at
AES. He assumed that position in 1996. Prior to joining AES, Mr. Rossi served as
a Chief Engineer for Ebasco Services, Inc.
William Hoagland, 38, has served as Vice President of AES Ironwood,
L.L.C. since November 1998. Mr. Hoagland is currently Director of Finance and
Administration of AES and has held that position since 1994. Prior to joining
AES, Mr. Hoagland was an auditor at Deloitte and Touche.
Maureen B. Shearer, 36, has served as Secretary of Ironwood, L.L.C.
since November 1998. She is currently Corporate Paralegal of AES and has held
that position since 1995. She joined AES as an Executive Assistant in 1989.
Prior to joining AES, Ms. Shearer served active duty with the U.S. Coast Guard.
Dennis Bakke, 53, has served as Director of the AES Ironwood, L.L.C.
since November 1998. He is currently the President and CEO of AES. He assumed
this position in 1994. He became the President and Chief Operating Officer of
AES in 1987 and served as Executive Vice President from 1981 to 1987.
Roger F. Naill, 52, has served as Director of AES Ironwood, L.L.C.
since November 1998. He is Senior Vice President of AES and heads the AES
Corporate Strategic Planning Group. He assumed that position in 1981.
29
<PAGE>
Each of the officers and directors listed above is currently an
officer, director or employee of AES or an AES affiliate and receives
compensation from AES or the affiliate. No cash or non-cash compensation is
currently proposed to be paid in the current calendar year by our Company to any
of the officers and directors listed above.
AES Prescott will perform development and construction management and
operations and maintenance services for our Company on a reimbursable cost, plus
fixed-fee basis under the operations agreement. Siemens Westinghouse Power
Corporation will perform engineering, procurement and construction services for
us on a fixed-price, turnkey basis under the construction agreement. Siemens
Westinghouse Power Corporation will perform maintenance services for us on a
reimbursable cost, plus fixed-fee basis. See "SUMMARY OF PRINCIPAL PROJECT
CONTRACTS--Construction Agreement," "--Maintenance Services Agreement," and
"--Operations Agreement."
30
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Affiliations
Our Company, AES Ironwood, Inc. and AES Prescott are each wholly owned
indirect subsidiaries of AES. Our Company, AES Ironwood, Inc. and AES have
entered into an equity subscription agreement under which AES Ironwood, Inc. has
agreed to contribute up to $50,149,285 to us to fund project costs and AES has
agreed to contribute to AES Ironwood, Inc. sufficient funds for AES Ironwood,
Inc. to make such contributions.
Other Relationships and Related Transactions
AES. AES is a leading global power company committed to supplying
electricity in a socially responsible way. AES currently has assets in excess of
$10 billion and employs approximately 44,500 people around the world. Under a
services agreement, AES will supply to AES Prescott all of the personnel and
services necessary for AES Prescott to comply with its obligations under the
operations agreement.
AES Ironwood, Inc. AES Ironwood, Inc. is a Delaware corporation and a
wholly owned subsidiary of AES. AES Ironwood, Inc. currently has no operations
outside of its activities in connection with our Project and does not anticipate
undertaking any operations not associated with our Project. AES Ironwood, Inc.
owns all of the ownership interests in our Company and AES Prescott and, under
the pledge agreement, AES Ironwood, Inc. has pledged to the collateral agent all
of its ownership interests in our Company.
AES Prescott. AES Prescott is a Delaware limited liability company and
wholly owned subsidiary of AES Ironwood, Inc. and was established on October 30,
1998. Our Company has entered into the operations agreement with AES Prescott
under which AES Prescott will manage the development and construction of and
will operate and maintain our Facility. The direct labor personnel and the plant
operations management will be provided to AES Prescott by AES under the services
agreement entered into by AES Prescott and AES.
31
<PAGE>
SUMMARY OF PRINCIPAL PROJECT CONTRACTS
The following chart sets forth the parties to our Project Contracts and
each such contract is described in more detail below:
<TABLE>
<S> <C>
|--------------------------| -------------------------------|
|Guaranty of Obligation of | | |
| Power Purchaser to Make | ------------------| Operations Agreement |
| Fixed Payments |----------------| | | |
|--------------------------| | | |------------------------------|
| The Williams | | | | AES Prescott, L.L.C. |
| Companies, Inc. | | | | |
|--------------------------| | | |------------------------------|
| | |
| | |
| | |
| | |
|--------------------------| | | |------------------------------|
| Power Purchase | | | ------| Interconnection Agreement |
| Agreement |----------| | | | |------------------------------|
|--------------------------| | | | | | Metropolitan Edison |
| Williams Energy | | | | | | Company |
| Marketing & Trading | | | | | |------------------------------|
| Company | | | | |
|--------------------------| |----------------------------------| |
| |----|
| | |------------------------------|
|--------------------| | |---| Water Supply/Real Estate |
| | AES IRONWOOD, L.L.C. | | | Agreements |
|------------|-------------| | |------- |------------------------------|
| EPC Contract | | | | City of Lebanon Authority/ |
|--------------------------| | | | Pennsy Supply, Inc. |
| Siemens Westinghouse | |----------------------------------| |------------------------------|
| Power Corporation | | |
|--------------------------| | |
| | |
| | | |------------------------------|
| | | | Maintenance Services |
| | |-----------------| Agreement |
|--------------------------| | |------------------------------|
| Guaranty | | | Siemens Westinghouse |
|--------------------------|----------------| | Power Corporation |
| Siemens Corporation | |------------------------------|
|--------------------------|
</TABLE>
The following summaries of selected provisions of the principal Project
Contracts are qualified in their entirety by reference to the full text of the
actual agreements. All capitalized terms used in the following summaries and not
otherwise defined in this prospectus have the meanings given such terms in the
respective Project Contract.
Power Purchase Agreement
Our Company and Williams Energy Marketing & Trading Company (the "Power
Purchaser") (our Company and the Power Purchaser, collectively, the "Parties",
and each individually, a "Party", for the purpose of this summary) have entered
into an Amended and Restated Power Purchase Agreement, dated as of February 5,
1999 (as amended, the "Power Purchase Agreement"), for the sale to the Power
Purchaser of all of the electric energy and capacity produced by our Facility as
well as ancillary services and fuel conversion services.
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<PAGE>
Term
The term of the Power Purchase Agreement extends for 20 years after the
first Contract Anniversary Date, which is the last day in the month in which the
Commercial Operation Date occurs. The Commercial Operation Date occurs when
o the Initial Start-Up Testing of our Facility has been
successfully completed,
o our Company has received all approvals from PJM, and
o our Company has obtained all required permits and
authorizations for operation of our Facility.
If the Commercial Operation Date has not occurred by June 30, 2001 for
any reason including without limitation the continued existence of or delay
caused by a Force Majeure event affecting our Company (other than any delay
caused by any act or failure to act by the Power Purchaser or an Affiliate
thereof, where such action is required under the Power Purchase Agreement), the
Power Purchaser shall have the right to terminate the Power Purchase Agreement;
provided, that our Company can extend the Commercial Operation Date to December
31, 2001
o if it provides an opinion from a third-party engineer that the
Commercial Operation Date will occur no later than December
31, 2001 or, but for an Interconnect Delay the Commercial
Operation Date would be achieved by December 31, 2001 (the
"Free Extension Option"), or
o by giving the Power Purchaser written notice of such extension
no later than April 30, 2001, and paying to the Power
Purchaser a specified amount (for which our Company believes
it has made adequate provision in our Project Budget) by no
later than June 30, 2001 (the "First Paid Extension Option").
If our Company qualifies for the Free Extension Option or elects the
First Paid Extension Option, if the Commercial Operation Date has not occurred
by December 31, 2001 (the "Final CO Date") for any reason, other than as a
result of an Interconnect Delay or any act or failure to act by the Power
Purchaser or an affiliate thereof, where such action is required under the Power
Purchase Agreement, the Power Purchaser shall have the right to terminate the
Power Purchase Agreement; provided, that our Company can extend the Final CO
Date to and including December 31, 2002 by giving the Power Purchaser written
notice of the estimated extension required no later than October 31, 2001 and
paying to the Power Purchaser specific amounts for each day of such extension
(the "Second Paid Extension Option").
If our Company elects the Second Paid Extension Option and the
Commercial Operation Date does not occur by December 31, 2002 for any reason
whatsoever including without limitation the continued existence of or delay
caused by a Force Majeure event affecting our Company (other than as a result of
an Interconnect Delay or any act or failure to act by the Power Purchaser or an
Affiliate thereof, where such action is required under the Power Purchase
Agreement), the Power Purchaser shall have the absolute right to terminate the
Power Purchase Agreement.
Purchase and Sale of Capacity and Services
During the Term, commencing with the Commercial Operation Date, our
Company shall sell and make available to the Power Purchaser on an exclusive
basis, and the Power Purchaser shall purchase and pay for, our Facility Capacity
and Ancillary Services.
In addition, during the Term, commencing with the Commercial Operation
Date, our Company shall perform for the Power Purchaser on an exclusive basis,
and the Power Purchaser shall purchase and pay for, Fuel Conversion Services.
Fuel Conversion and Other Services
As instructed by our Company, the Power Purchaser shall deliver or
cause to be delivered to our Company at the Gas Delivery Point and Oil Delivery
Point on an exclusive basis all quantities of Natural Gas and Fuel Oil,
respectively, as required by our Company
o to generate Net Electric Energy and/or Ancillary Services,
o to perform Start-Ups,
o to perform Shutdowns, and
o to operate our Facility during any period other than a
Start-Up, Shutdown or Dispatch Period for any reason.
33
<PAGE>
The Power Purchaser shall be responsible for the construction of all
Gas Interconnection Facilities. If such Gas Interconnection Facilities have not
been constructed and/or the Power Purchaser is unable for any reason to deliver
Natural Gas to our Facility by the date that our Facility would otherwise be
prepared to begin Initial Start-Up Testing, and but for the failure to provide
such Natural Gas our Facility is otherwise ready, or would otherwise have been
ready, to begin such testing, then the Power Purchaser shall commence making
payments to our Company for each day of such delay beginning on the Start-Up
Testing Date and continuing until the date that Natural Gas is delivered to our
Facility for Initial Start-Up Testing, in an amount for each such day of delay
which is equal to one-thirtieth of the applicable Total Fixed Payment. Upon the
expiration of the Power Purchase Agreement or any termination of the Power
Purchase Agreement as the result of the Power Purchaser's default thereunder,
our Company shall have the right to purchase the Gas Interconnection Facilities
from the Power Purchaser, or if the Power Purchaser does not own such Gas
Interconnection Facilities, the Power Purchaser shall assign to our Company all
of its rights to transportation services using such Gas Interconnection
Facilities.
The Power Purchaser shall be responsible for the cost of procurement
and installation of the Oil Metering Equipment. The Power Purchaser shall be
solely responsible for all costs and expenses related to the supply and
transportation of Natural Gas and Fuel Oil to the Gas Delivery Point and Oil
Delivery Point, respectively. Our Company shall be responsible for all costs and
expenses related to the transportation of Natural Gas and Fuel Oil at and from
the Gas Delivery Point and Oil Delivery Point to our Facility. At the request of
our Company, instead of delivering Fuel Oil to the applicable Oil Delivery
Point, the Power Purchaser shall deliver or cause to be delivered such
quantities of Fuel Oil as requested by our Company to any off-site storage
facility approved by the Power Purchaser and delivery thereto shall be deemed
delivery to the Oil Delivery Point. Our Company shall be responsible for all
costs and expenses related to the transportation of such Fuel Oil from the
off-site storage facility to our Facility.
Our Company shall be responsible for the installation, operation and
maintenance at the Site, at our Company's sole cost and expense, of Fuel Oil
storage tank(s) capable of storing a volume of usable Fuel Oil sufficient to
operate our Facility at maximum Facility Capacity output for two continuous
days. Our Company shall not be obligated to operate our Facility on Fuel Oil for
more than an Operating Hour equivalent that is consistent with our Company's air
permit.
Pricing and Payments
For each month of the Term after the Commercial Operation Date, the
Power Purchaser shall pay our Company for Facility Capacity, successful
Start-Ups and associated Shutdowns, Ancillary Services and Fuel Conversion
Services at the applicable rates set forth in the Power Purchase Agreement. Each
monthly payment by the Power Purchaser will consist of a Total Fixed Payment, a
Fuel Conversion Payment and a Start-Up Payment. The Total Fixed Payment, which
is payable regardless of Facility dispatch by the Power Purchaser but is subject
to adjustment based on Facility availability, is calculated by multiplying a
Fixed Capacity Rate for each Contract Year by our Facility Capacity in the
billing month and is anticipated to be sufficient to cover our Company's debt
service and fixed operating and maintenance costs and to provide a return on
equity to our Company. The Fuel Conversion Payment is intended to cover our
Company's variable operating and maintenance costs and escalates annually based
on an escalation index set forth in the Power Purchase Agreement. In addition,
our Company may receive heat rate bonuses or be required to pay heat rate
penalties.
Prior to the Commercial Operation Date, and during specific Facility
tests thereafter, our Company will purchase Natural Gas from the Power
Purchaser. The Power Purchaser will sell to our Company such Natural Gas at
prices specified in the Power Purchase Agreement, and our Company will sell to
the Power Purchaser at the Electric Delivery Point any Net Electric Energy
produced during such periods at 90% of the Energy Market Clearing Price.
The Power Purchaser shall be entitled to an annual fuel conversion
volume rebate ("FCVR") if its dispatch of our Facility exceeds specified levels
and specified monthly non-dispatch payments if, under specific circumstances,
our Facility is not available for dispatch. All FCVR payments and non-dispatch
payments shall be made to the Power Purchaser after debt service and specified
other payments but prior to any distribution to holders of equity interests in
our Company. FCVR payments shall be paid to the Power Purchaser within 30 days
after the end of the Contract Year in which such payments have been earned and
non-dispatch payments shall be paid to the Power Purchaser within 20 days after
the end of the month on which a payment obligation arises. FCVR payments and any
non-dispatch payments owed to the Power Purchaser and not paid when due shall be
paid, together with interest thereon, when funds become available to our Company
at the priority level described above.
34
<PAGE>
Project Development
Our Facility shall be located at the Site; provided, that if our
Company is unable to obtain all required permits and approvals for such Site
within one year after the Execution Date, the Parties shall in good faith seek
to identify a mutually agreeable alternative site within the PJM region to be
acquired by our Company as a location for our Facility; provided, further, that
if such alternate site is not agreed to by the Parties within an additional
one-year period, the Power Purchase Agreement will terminate with no further
liability to either Party.
Our Company shall provide to the Power Purchaser not later than 10 days
after the completion of Initial Start-Up Testing, pertinent written data
substantiating our Facility's capability to provide Facility Capacity.
Our Company shall, at its own cost and expense, obtain as and when
required all approvals, permits, licenses and other authorizations from
governmental authorities as may be required for it to construct, operate and
maintain our Facility, the Interconnection Facilities and Protective Gas
Apparatus and to perform its obligations under the Power Purchase Agreement, and
during the term, our Company shall obtain all such additional governmental
approvals, permits, licenses and authorizations as may be required with respect
to our Facility as soon as practicable.
Initial Start-Up Testing; Commercial Operation
Our Company shall provide to the Power Purchaser (i) written notice, at
least 30 days in advance, of the expected Commercial Operation Date and (ii) a
copy of the notice of Commercial Operation within 5 days after the Commercial
Operation Date. The Power Purchaser shall have the right to be present at
Initial Start-Up Testing of our Facility.
Interconnection and Metering Equipment
At its sole cost and expense, our Company shall own and design,
construct, install and maintain, or be responsible for the design, construction,
installation and maintenance of our Facility, the Interconnection Facilities and
Protective Gas Apparatus needed to generate and deliver Net Electric Energy
and/or Ancillary Services to the Electric Delivery Point in order to fulfill its
obligations under the Power Purchase Agreement, including all Interconnection
Facilities and Protective Gas Apparatus that may be located at any switchyard
and/or substation to be built at our Facility. Our Facility, Interconnection
Facilities and Protective Gas Apparatus shall be designed, constructed and
completed in a good and workmanlike manner and in accordance with Accepted
Electrical Practices (with respect to our Facility and Interconnection
Facilities) or in accordance with standard gas industry practices (with respect
to Protective Gas Apparatus), such that the expected useful life of our
Facility, the Interconnection Facilities and Protective Gas Apparatus shall be
not less than the Term of the Power Purchase Agreement.
Our Company shall be solely responsible for the negotiation and
execution of the Interconnection Agreement with the Host Utility under which the
Host Utility will own and be responsible for the Electric Metering Equipment and
the design, installation, construction and maintenance of the electrical
facilities and protective apparatus, including any transmission equipment and
related facilities, necessary to interconnect the Host Utility's electrical
system with our Facility at the Electric Delivery Point. The Power Purchaser
shall reimburse our Company for the reasonable Host Utility costs (i.e.,
transmission facility upgrades, Host Utility protective apparatus and other
equipment, Host Utility electric meters, and Host Utility costs for PJM and
other required interconnection-related studies) incurred, or to be reimbursed,
by our Company under the Interconnection Agreement up to a maximum amount which
is in excess of the costs anticipated to be incurred by our Company under the
Interconnection Agreement.
The Power Purchaser shall be responsible for the installation,
maintenance and testing of the Gas Metering Equipment (to the extent not
otherwise installed, maintained and tested by the supplier of gas transportation
services) and Oil Metering Equipment, as reasonably approved by our Company.
All Electric Metering Equipment, Gas Metering Equipment and Oil
Metering Equipment, whether owned by our Company or by a third party, shall be
operated, maintained and tested in accordance with Accepted Electrical
Practices, in the case of the Electric Metering Equipment, and in accordance
with applicable industry standards, in the case of the Gas Metering Equipment
and Oil Metering Equipment.
Operation; Dispatch
Our Facility, the Interconnection Facilities and the Protective Gas
Apparatus shall be operated in accordance with Accepted Electrical Practices and
applicable requirements and guidelines reasonably adopted by the Host Utility
from time to time and applied consistently to the Host Utility's electric
generating facilities (with respect to our Facility
35
<PAGE>
and Interconnection Facilities) or in accordance with standard gas industry
practices (with respect to Protective Gas Apparatus). If a conflict between the
terms and conditions of the Power Purchase Agreement and Host Utility
requirements, the Host Utility requirements shall control.
Our Company shall operate our Facility in parallel with the Host
Utility's electrical system with governor control and the Net Electric Energy to
be delivered by our Company under the Power Purchase Agreement shall be
three-phase, 60 hertz, alternating current at a nominal voltage acceptable to
the Host Utility at the Electric Delivery Point, shall not adversely affect the
voltage, frequency, waveshape or Power Factor of power at the Electric Delivery
Point and shall be delivered to the Electric Delivery Point in a manner
acceptable to the Host Utility.
The Power Purchase Agreement acknowledges that the Host Utility has the
right to require our Company to disconnect our Facility from the Host Utility's
electrical system (or otherwise curtail, interrupt or reduce deliveries of Net
Electric Energy) for specific safety or emergency reasons. If our Facility has
been disconnected for such reasons, the Power Purchaser shall continue to be
obligated to make Total Fixed Payments for at least 24 hours after the
occurrence of such disconnection of our Facility by the Host Utility.
Our Company shall use commercially reasonable efforts to correct
promptly any condition at our Facility which necessitates the disconnection of
our Facility from the Host Utility's electrical system or the reduction,
curtailment or interruption of electrical output of our Facility.
The Power Purchaser shall have the exclusive right to Schedule the
operation of our Facility or a Unit in accordance with the provisions of the
Power Purchase Agreement; provided, however, that such scheduling shall be
consistent with the design limitations of our Facility, applicable law,
regulations and permits, and manufacturers' reasonable recommendations for
operating limits with respect to our Facility and major components thereof.
During Initial Start-Up Testing and up to two times each year
thereafter, our Company shall demonstrate, in accordance with the
then-applicable criteria of PJM, applicable generally to independent power and
utility generating facilities in PJM of similar technology, the capability of
our Facility to produce and maintain, as required for such demonstration, our
Facility Capacity.
Maintenance
At all times during the Term of the Power Purchase Agreement, our
Company shall, at its sole cost and expense, maintain our Facility, the
Protective Gas Apparatus, and, consistent with the terms of the Interconnection
Agreement, the Interconnection Facilities. Said maintenance shall be performed
in accordance with Accepted Electrical Practices (with respect to our Facility
and Interconnection Facilities) or in accordance with standard gas industry
practices (with respect to Protective Gas Apparatus) and manufacturers'
recommended maintenance procedures and in accordance with the maintenance
provisions of the Power Purchase Agreement.
Metering, Billing, Payment and Taxes
Net Electric Energy delivered by our Company to the Power Purchaser
shall be metered at the Electric Delivery Point, using the Host Utility's
Electric Metering Equipment on an hour-by-hour basis, or such shorter intervals
as may be necessary to implement the Power Purchase Agreement, are technically
feasible using such metering equipment, and are agreed to by the Host Utility.
Our Company shall provide to the Power Purchaser a monthly statement
using the Host Utility's meters, or back-up Electric Metering Equipment
installed by our Company if the Host Utility's electric meters are not
functional. Such statement shall set forth the amount of Net Electric Energy
delivered by our Company to the Power Purchaser in each hour and our Company's
computation of the amount due from the Power Purchaser to our Company and such
other amounts as may then be due and payable by the Power Purchaser to our
Company. The Power Purchaser shall pay our Company the net amount shown to be
due to our Company on the monthly statement. Overdue payments shall accrue
interest from, and including, the due date to, but excluding, the date of
payment at the Late Payment Interest Rate. If either Party, in good faith,
disputes a monthly statement, such Party shall provide to the other Party a
written explanation of the basis for the dispute and shall make payment of the
portion of such monthly statement not disputed no later than the due date. To
the extent any disputed amount is later determined to be properly due and
payable, it shall be paid within 10 days of such determination, together with
interest accrued at the Late Payment Interest Rate from the due date to the date
payment is made, if made within 10 days of such determination, and if not paid
within 10 days of such determination, together with interest accrued after such
10 days period to the date payment is made at the Late Payment Interest Rate
plus 1% per annum.
36
<PAGE>
Except as otherwise specified in the Power Purchase Agreement, each
Party shall have the right to set off against any and all amounts owed by it
under the Power Purchase Agreement past due amounts owed to it under the Power
Purchase Agreement by the other Party.
The payments by the Power Purchaser to our Company do not include
reimbursement for, and the Power Purchaser is liable for and shall pay, cause to
be paid, or reimburse our Company if our Company has paid, all Taxes imposed on
or with respect to Natural Gas or Fuel Oil or the use or consumption or
transportation thereof (other than any of such Taxes for which our Company is
liable as described in the following paragraph or on Net Electric Energy or the
use and consumption thereof after the Electric Delivery Point). The Power
Purchaser shall indemnify, defend and hold harmless our Company from any
liability for such Taxes.
Except as provided in the previous paragraph and except for specified
taxes that may be imposed in the future, the payments by the Power Purchaser to
our Company include full reimbursement for, and our Company shall be liable for
and shall pay, or cause to be paid, or reimburse the Power Purchaser if the
Power Purchaser has paid, all Taxes. If the Power Purchaser is required to remit
any Tax for which our Company is responsible, the amount shall be deducted from
any sums due to our Company. Our Company shall indemnify, defend and hold
harmless the Power Purchaser from any liability for such Taxes.
Dispute Resolution
If our Company and the Power Purchaser are in dispute with respect to
specified matters relating to the Term, Gas Interconnection Facilities,
Maintenance and billing and metering, and our Company and the Power Purchaser do
not resolve the dispute within seven days of our Company or the Power Purchaser
notifying the other Party in writing of the existence of such dispute, a
committee consisting of two officers of our Company and two officers of the
Power Purchaser shall meet and attempt in good faith to resolve such dispute. If
such committee does not resolve the dispute within seven days following their
initial meeting, then a single Third Party Engineer shall be designated to
consider and decide the issues raised by such dispute unless both Parties
determine that further discussions by the committee are merited. The selection
of such Third Party Engineer shall be made from the list of engineers set forth
in the Power Purchase Agreement.
Each of our Company and the Power Purchaser shall designate in writing
to the other Party from time to time a representative who shall be authorized to
resolve any dispute relating to the subject matter of the Power Purchase
Agreement not referred to in the preceding paragraph.
If any dispute is not resolved between the Parties within 30 days from
the date on which a Party provided to the other Party a written notice of such
dispute, then such dispute shall be settled exclusively and finally by
arbitration in accordance with the procedures described in the Power Purchase
Agreement, except for disputes described in the second preceding paragraph.
The dispute resolution provisions of the Power Purchase Agreement shall
survive the termination or expiration of the Power Purchase Agreement.
Representations and Warranties
Our Company makes representations and warranties regarding the
following: organization and existence, power and authority, due authorization
and no conflicts, enforceability, compliance with laws and environmental-related
litigation.
The Power Purchaser makes representations and warranties regarding the
following: organization and existence, power and authority, due authorization
and no conflicts, enforceability and compliance with laws.
Liability; Dedication
Nothing in the Power Purchase Agreement shall be construed to create
any duty, standard of care or liability to any person not a Party to the Power
Purchase Agreement.
Notwithstanding anything contained in the Power Purchase Agreement,
except with respect to third-party claims, neither Party shall be liable to the
other Party, its Affiliates, directors, officers, partners, agents, employees,
successors or assigns, for claims for incidental, special, punitive, indirect or
consequential damages of any nature arising out of, connected with or resulting
from performance or nonperformance of the Power Purchase Agreement, including,
without limitation, claims in the nature of lost revenues, income or profits
(other than payments specifically provided for and properly due under the Power
Purchase Agreement) or losses, damages or liabilities under any financing,
lending or
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construction contracts, agreements or arrangements to which our Company may be
party irrespective of whether such claims are based upon warranty, negligence,
strict liability, contract, operation of law or otherwise. The provisions of
this paragraph shall survive the termination or expiration of the Power Purchase
Agreement.
No undertaking by either Party under any provision of the Power
Purchase Agreement shall constitute the dedication of that Party's electrical or
gas reserves, system, equipment, or facilities, or any portion thereof, to the
other Party or to the public.
Indemnity
Subject to the provisions of the Power Purchase Agreement, each Party
shall indemnify, hold harmless and defend the other Party, its Affiliates,
directors, officers, partners, agents and employees from and against any Loss,
to the extent arising out of, in connection with or resulting from the
indemnifying Party's breach of any of the representations or warranties made in,
or the indemnifying Party's failure to perform any of its obligations under, the
Power Purchase Agreement, or the indemnifying Party's design, installation,
construction, ownership, operation, repair, relocation, replacement, removal or
maintenance of, or the failure of, any of such Party's equipment and/or
facilities, including, but not limited to, the Interconnection Facilities, our
Facility, Gas Interconnection Facilities and Protective Gas Apparatus and any
Natural Gas or Fuel Oil facilities, and/or any appurtenances thereto, and any
electric transmission facilities used in connection with the Power Purchase
Agreement; provided, however, that neither Party shall have any indemnification
obligations in respect of any Loss to the extent caused by such other Party's
gross negligence, bad faith or willful misconduct.
As between the Parties, the Power Purchaser shall be deemed to be in
exclusive possession and control (and responsible for any damages or injury
resulting therefrom or caused thereby) of Natural Gas and Fuel Oil up to the
Fuel Delivery Points and the Net Electric Energy and Ancillary Services at and
from the Electric Delivery Point, and our Company shall be deemed to be in
exclusive possession and control (and responsible for any damages or injury
resulting therefrom or caused thereby) of Natural Gas and Fuel Oil at and from
the Fuel Delivery Points and the Net Electric Energy and Ancillary Services up
to the Electric Delivery Point. Risk of loss related to Natural Gas and Fuel Oil
shall transfer from the Power Purchaser to our Company at the applicable Fuel
Delivery Point and risk of loss related to the Net Electric Energy and Ancillary
Services shall transfer from our Company to the Power Purchaser at the Electric
Delivery Point. The Power Purchaser shall indemnify, defend and hold harmless
our Company from and against any Loss arising out of or in any way relating to
the Power Purchaser's possession or control of Natural Gas and Fuel Oil up to
the Fuel Delivery Points or its possession and control of the Net Electric
Energy and Ancillary Services at and after the Electric Delivery Point, and our
Company shall indemnify, defend and hold harmless the Power Purchaser from and
against any Loss arising out of or in any way relating to our Company's
possession or control of Natural Gas and Fuel Oil at and from the Delivery Point
or its possession and control of the Net Electric Energy and Ancillary Services
prior to the Electric Delivery Point.
The foregoing indemnification provisions of the Power Purchase
Agreement shall survive the termination or expiration of the Power Purchase
Agreement.
Insurance
Our Company shall keep our Facility continuously insured against loss
or damage in the amounts and for the risks that property of similar character is
usually so insured by entities owning and operating like properties.
Our Company and the operator of our Facility (and their respective
successors and assigns) shall each procure or cause to be procured and shall
maintain in effect continuously during the Term of the Power Purchase Agreement
with companies rated "A-," "IX" or better by A.M. Best the following minimum
insurance coverage for our Facility: Workers' compensation; Employer's
Liability; Commercial General Liability; Bodily Injury; Property Damage; Blanket
Contractual; Underground, Explosion and Collapse Hazard; Products and Completed
Operations Hazard; Broad Form Property Damage; Personal Injury; Automobile
Liability (Owned, Hired, Non-owned) Bodily Injury and Property Damage; and
Commercial Umbrella Liability.
Our Company shall procure and maintain in effect continuously during
the Term of the Power Purchase Agreement, "all risk" property insurance in
sufficient amounts to cover and otherwise insure for the full replacement cost
of our Facility and business interruption insurance covering 100% of our
Company's continuing fixed operating expenses and debt service for a period of
at least 12 months arising from any loss insured against by our Company's "all
risk" property insurance (with a maximum deductible of 60 days).
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All insurance policies except Workers' Compensation Insurance, shall
name the Power Purchaser as an additional insured.
Our Company's casualty insurance (other than its Workers' Compensation
Insurance) shall include provisions or endorsements (i) stating that such
insurance is primary insurance with respect to the interest of the Power
Purchaser and that any insurance maintained by the Power Purchaser is excess and
not contributory insurance with the insurance required under the Power Purchase
Agreement, and (ii) providing that such policies shall not be canceled or their
limits of liability reduced except upon 60 days prior written notice to the
Power Purchaser.
Force Majeure
A Party shall be excused from performing its obligations under the
Power Purchase Agreement and shall not be liable in damages or otherwise to the
other Party if and to the extent such Party declares that it is unable to
perform or is prevented from performing an obligation under the Power Purchase
Agreement by a Force Majeure condition, except for any obligations and/or
liabilities under the Power Purchase Agreement to pay money, which shall not be
excused, and except to the extent an obligation accrues prior to the occurrence
or existence of a Force Majeure condition; provided, that:
o the Party declaring its inability to perform by virtue of
Force Majeure, as promptly as practicable after the occurrence
of the Force Majeure condition, but in no event later than 5
days thereafter, gives the other Party written notice
describing, in detail, the nature, extent and expected
duration of the Force Majeure condition;
o the suspension of performance is of no greater scope and of no
longer duration than is reasonably required by the Force
Majeure condition;
o the Party declaring Force Majeure uses all commercially
reasonable efforts to remedy its inability to perform; and
o as soon as the Party declaring Force Majeure is able to resume
performance of its obligations excused as a result of the
Force Majeure condition, it shall give prompt written
notification thereof to the other Party.
Irrespective of whether the Force Majeure condition is declared by the
Power Purchaser or our Company, the time period of a Force Majeure shall be
excluded from the calculation of all payments under the Power Purchase Agreement
and the Power Purchaser shall be under no obligation to pay our Company any of
the payments described in the Power Purchase Agreement; provided, that, if the
Power Purchaser declares a Force Majeure, it shall, subject to the Power
Purchaser's right to terminate the Power Purchase Agreement if such Force
Majeure has not been fully corrected or alleviated within 18 months of such
declaration, continue to pay our Company only the applicable monthly Total Fixed
Payment as described in the Power Purchase Agreement until the earlier of (i)
the termination of the Force Majeure condition or (ii) the termination of the
Power Purchase Agreement; and provided further, that if a Force Majeure declared
by our Company due to an action or inaction of the Host Utility that prevents
our Company from delivering Net Electric Energy to the Electric Delivery Point,
the Power Purchaser shall continue to pay the applicable portion of the Total
Fixed Payment for the first 24 hours of such period.
Notwithstanding anything to the contrary contained in the Power
Purchase Agreement, except as may expressly be provided in the Power Purchase
Agreement, the term Force Majeure shall not include or excuse a Party's
performance:
o Except as otherwise set forth in the Power Purchase Agreement,
the failure to complete our Facility by or to achieve the
Commercial Operation Date as extended under the Power Purchase
Agreement, which failure is caused by, arises out of or
results from the acts or omissions of our Company, and/or from
the acts or omissions of any third party, unless, and then
only to the extent that, any such acts or omissions of such
third party (i) would itself be excused under the Power
Purchase Agreement by virtue of a Force Majeure condition, or
(ii) is the result of a failure of the Power Purchaser to
provide fuel to our Facility under the Power Purchase
Agreement;
o Any reduction, curtailment or interruption of generation or
operation of our Facility, or of the ability of the Power
Purchaser to accept or transmit Net Electric Energy, whether
in whole or in part, which reduction, curtailment or
interruption is caused by or arises from the acts or omissions
of any third party providing services or supplies to the Party
claiming Force Majeure, including any vendor or supplier to
either Party of materials, equipment, supplies or services, or
any inability of the Host Utility to deliver Net Electric
Energy to
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the Power Purchaser, unless, and then only to the extent that,
any such acts or omissions would itself be excused under the
Power Purchase Agreement as a Force Majeure;
o Any outage, whether or not due to the fault or negligence of
our Company, of our Facility attributable to a defect or
inadequacy in the manufacture, design or installation of our
Facility that prevents, curtails, interrupts or reduces the
ability of our Facility to generate Net Electric Energy or the
ability of our Company to perform its obligations under the
Power Purchase Agreement; or
o To the extent that the Party claiming Force Majeure failed to
prevent or remedy the Force Majeure condition by taking all
commercially reasonable acts (short of litigation, if such
remedy requires litigation) and, except as otherwise provided
in the Power Purchase Agreement, failed to resume performance
under the Power Purchase Agreement with reasonable dispatch
after the termination of the Force Majeure condition; or
o To the extent that the claiming Party's failure to perform was
caused by lack of funds; or
o To the extent the Power Purchaser is unable to perform due to
a shortage of Natural Gas or Fuel Oil supply not caused by an
event of Force Majeure; or
o Because of an increase or decrease in the market price of
electric energy/capacity, Natural Gas or Fuel Oil, or because
it is uneconomic for such Party to perform its obligations
under the Power Purchase Agreement.
Neither Party shall be required to settle any strike, walkout, lockout
or other labor dispute on terms which, in the sole judgment of the Party
involved in the dispute, are contrary to its interest.
The Power Purchaser shall have the right to terminate the Power
Purchase Agreement if Force Majeure has been declared by our Company and the
effect of said Force Majeure has not been fully corrected or alleviated within
18 months after the date said Force Majeure was declared; provided, however,
that the Power Purchaser shall not have the right to terminate the Power
Purchase Agreement if (i) the Force Majeure was caused by the Power Purchaser or
(ii) the Force Majeure event does not prevent or materially limit the Power
Purchaser's ability to sell Facility Capacity into or through the PJM Market or
to a third party.
Events of Default; Termination; Remedies
The following shall constitute events of default under the Power
Purchase Agreement:
o breach of any term or condition of the Power Purchase
Agreement, including, but not limited to, (i) any failure to
maintain or to renew any security, (ii) any breach of a
representation, warranty or covenant or (iii) failure of
either Party to make a required payment to the other Party;
o our Facility is not available to provide Fuel Conversion
Services to the Power Purchaser during any period of 180
consecutive days after the occurrence of the Commercial
Operation Date, except as may be excused by Force Majeure or
the absence of available Natural Gas, or if such
non-availability is caused by act or failure by the Power
Purchaser where such action is required by the Power Purchase
Agreement;
o our Company sells or supplies Net Electric Energy, Ancillary
Services or capacity from our Facility, or agrees to do the
same, to any person or entity other than the Power Purchaser,
without the prior approval of the Power Purchaser;
o failure by our Company for 30 consecutive days to perform
regular and required maintenance, testing or inspection of the
Interconnection Facilities, our Facility and/or other electric
equipment and facilities;
o failure by our Company for 30 consecutive days to correct or
resolve a material violation of any code, regulation and/or
statute applicable to the construction, installation,
operation or maintenance of our Facility, the Interconnection
Facilities, Protective Gas Apparatus or any other electric
equipment and facilities required to be constructed and
operated under the Power Purchase Agreement when such
violation impairs the continued ability of our Company to
perform its obligations under the Power Purchase Agreement;
o involuntary bankruptcy or insolvency of either Party and
continues for more than 60 days;
o voluntary bankruptcy or insolvency by either Party;
o any modifications, alterations or other changes to our
Facility by or on behalf of our Company which prevent our
Company from fulfilling, or materially diminish our Company's
ability to fulfill, its obligations, duties,
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rights and responsibilities under the Power Purchase Agreement
and which after reasonable notice and opportunity to cure, are
not corrected;
o there shall be outstanding for more than 60 days any
unsatisfied final, non-appealable judgment against our Company
in an amount exceeding $500,000, unless the existence of such
unsatisfied judgment shall not materially affect our Company's
ability to perform its obligations under the Power Purchase
Agreement; and
o AES shall cease to own, directly or indirectly, beneficially
and of record, at least 50 percent of the equity interests in
our Company, or shall cease to possess the power to direct or
cause the direction of the management or policies of our
Company, or any person (other than AES or an Affiliate)
authorized to act as a power marketer by FERC or any Affiliate
of such person shall own, directly or indirectly, beneficially
or of record, any of the equity interests in our Company.
Upon the occurrence of any event of default (other than an event of
default described in clause (g) above, for which no notice shall be required or
opportunity to cure permitted), the Party not in default, to the extent such
Party has actual knowledge of the occurrence of such event of default, shall
give prompt written notice of the default to the defaulting Party. Such notice
shall set forth, in reasonable detail, the nature of the default and, where
known and applicable, the steps necessary to cure such default. The defaulting
Party shall have 30 days (two Business Days in the case of a default under
clause (a)(iii) above) following receipt of such notice either to cure such
default or commence in good faith all such steps as are necessary and
appropriate to cure such default if such default cannot be completely cured
within 30-day period.
If the defaulting Party fails to cure such default or take such steps
as provided under the preceding paragraph, and immediately upon the occurrence
of any event of default described in clause (g) above, the Power Purchase
Agreement may be terminated by the non-defaulting Party, without any liability
or responsibility whatsoever, by written notice to the Party in default hereof.
The Power Purchase Agreement shall thereupon terminate and the non-defaulting
Party may exercise all such rights and remedies as are available to it to
recover damages caused by such default.
Security
Our Company agrees to compensate the Power Purchaser for any actual
damages it suffers or incurs as the result of the Power Purchaser's reliance
upon the delivery of Facility Capacity, Ancillary Services and Fuel Conversion
Services, to the extent said damages cannot be mitigated fully. Our Company
further agrees that the damages the Power Purchaser may suffer under these
circumstances will be any and all reasonable costs incurred by the Power
Purchaser in excess of costs that would have been incurred had the Commercial
Operation Date occurred on or before June 30, 2001, as such date may be extended
under the Power Purchase Agreement.
As required by the Power Purchase Agreement, the Company provided to
the Power Purchaser a guaranty of our Company's performance and payment
obligations under the Power Purchase Agreement from AES in the amount of $30
million ("Guaranty Amount"), which guaranty shall terminate on the Commercial
Operation Date. At any time that AES's senior unsecured debt is no longer rated
Investment Grade by Standard & Poor's or Moody's, or at any time at our
Company's option, our Company shall provide such financial security for the
Guaranty Amount as specified in the following paragraph. Upon the provision of
the guaranty or other financial security referred to in this paragraph, the
guaranty provided by AES under the provisions of the original Power Purchase
Agreement shall be canceled and returned to our Company.
Our Company shall provide to the Power Purchaser, within 30 days after
a reduction in the unsecured debt rating of AES as described above, or at any
time if payment is so secured at our Company's option, security in the form of a
single letter of credit, satisfactory to the Power Purchaser in form and
substance, upon which the Power Purchaser may draw if our Facility does not
achieve the Commercial Operation Date by the date specified in the Power
Purchase Agreement, as such date may be extended. If said security contains an
expiration date, either express or implied, our Company shall renew said
security not later than 30 days prior to said expiration date and shall
contemporaneously therewith provide written notice of said renewal to the Power
Purchaser. If our Company fails to renew said security as set forth above, the
Power Purchaser is entitled to demand and receive payment thereunder on or after
three days after written notice of such failure is provided to our Company, and
in such event the amount so drawn shall be deposited in an interest bearing
escrow account and shall be returned to our Company at the Commercial Operation
Date unless otherwise drawn on by the Power Purchaser in satisfaction of our
Company's obligations under the foregoing security provisions. The requirement
for said security shall terminate upon the Commercial Operation Date.
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The letter of credit referred to above shall be issued by a financial
institution that meets and at all times during the term of such letter of credit
maintains the following criteria: (i) a U.S. or foreign bank rated "C" or better
by Thompson Bankwatch; or (ii) a U.S. or foreign bank, surety company or
financial institution whose senior debt has the rating listed below by two of
the three rating agencies: Standard & Poor's: "A-" or better; Moody's: "A3" or
better; Duff & Phelps: "A-" or better.
If such bank, surety company or financial institution fails to maintain
such criteria, then upon 30 days, written notice from the Power Purchaser, our
Company is required to obtain equivalent security from another bank, surety
company or financial institution meeting the above stated criteria. The form and
substance of any such letter of credit shall be reasonably satisfactory to the
Power Purchaser.
The Power Purchaser has provided to our Company a guarantee, issued by
The Williams Companies, Inc. ("Williams"), of the Power Purchaser's performance
and payment obligations under the Power Purchase Agreement; provided, that if
Williams is no longer rated Investment Grade the guarantee shall, within 30 days
after the loss of such rating, be replaced by a guarantee from another Affiliate
of the Power Purchaser that is rated Investment Grade or by other security
acceptable to us, including a letter of credit which meets the requirements of
the Power Purchase Agreement.
Assignment
Neither the Power Purchase Agreement nor any rights, duties, interests
or obligations thereunder may be assigned, transferred, pledged or otherwise
encumbered or disposed of, by operation of law or otherwise without the prior
written consent of the other Party; except that
o the Power Purchaser, at any time after reasonable advance
notice to our Company and without the consent of our Company,
may assign the Power Purchase Agreement and any of its rights,
interests, duties or obligations thereunder to any Affiliate
of the Power Purchaser or any other entity; provided, that (a)
such Affiliate or such other entity's long-term unsecured debt
at such time is rated Investment Grade by Standard & Poor's
and Moody's or that such Affiliate or such other entity's
obligations under the Power Purchase Agreement are guaranteed
by an Affiliate whose long-term unsecured debt at such time is
rated Investment Grade by Standard & Poor's and Moody's and
(b) any assignee shall agree to be bound by all of the terms
and conditions of the Power Purchase Agreement to the same
extent as the Power Purchaser;
o our Company, at any time, and from time to time, after
reasonable advance notice to the Power Purchaser and without
the consent of the Power Purchaser, may assign the Power
Purchase Agreement and any of its rights, interests, duties or
obligations thereunder as collateral security to any Lender;
provided, that the assignee shall agree to be bound by all of
the terms and conditions of the Power Purchase Agreement to
the same extent as our Company if the Lender exercises its
rights under such assignment; and
o our Company shall have the right at any time without the
consent of the Power Purchaser to assign the Power Purchase
Agreement and its rights, interests, duties and obligations
thereunder to any Affiliate; provided, that such Affiliate
assumes in writing all of the obligations and duties of our
Company thereunder and the guaranty/security required under
the Power Purchase Agreement remains in effect. The Power
Purchase Agreement shall inure to the benefit of and bind the
parties thereto, including any permitted assignee or
successor.
Except as otherwise specified in the foregoing assignment provisions,
no assignment or disposition of rights under the Power Purchase Agreement shall
o relieve or in any way discharge our Company or the Power
Purchaser from the performance of their respective obligations
and liabilities under the Power Purchase Agreement or
o alter, amend, diminish or otherwise impair the Power
Purchaser's or our Company's rights under the Power Purchase
Agreement.
Our Company agrees that it shall not sell, transfer, assign, lease or
otherwise dispose of our Facility or any substantial portion thereof or interest
therein necessary to perform our Company's obligations under the Power Purchase
Agreement to any person that is a FERC authorized power marketer or an Affiliate
thereof without the prior written consent of the Power Purchaser, which consent
shall not be unreasonably withheld.
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Except as specifically provided for in the foregoing assignment
provisions, any assignment or transfer of the Power Purchase Agreement or any
rights, duties or interests thereunder or any disposition of our Facility or any
portion thereof or interest therein by any Party without the written consent of
the other Party as provided therein shall be void and of no force or effect.
Each Party shall reimburse the other for the reasonable costs and
expenses (including reasonable legal fees and expenses) incurred in connection
with a Party's agreement to review, execute and deliver any instruments,
agreements or documents that may be used in connection with any assignment
requested by a Party or otherwise permitted under the Power Purchase Agreement.
Choice of Law
The Power Purchase Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of New York, regardless of
the conflicts of laws provisions of such laws.
Confidentiality
The Parties agree that all information relating to the Power Purchase
Agreement shall not be used for any purpose other than as contemplated by the
Power Purchase Agreement and shall be kept confidential in accordance with a
Confidentiality Agreement.
EPC Contract
Our Company (as assignee of AES Ironwood, Inc.) and Seimens
Westinghouse Power Corporation (the "Contractor") (our Company and the
Contractor, collectively, the "Parties", and each individually, a "Party", for
the purposes of this summary) have entered into an Agreement for Engineering,
Procurement and Construction Services, dated as of September 23, 1998, as
amended (the "EPC Contract"), on a fixed-price turnkey basis, for the Contractor
to perform services in connection with the design, engineering, procurement,
site preparation and clearing, civil works, construction, start-up, training and
testing and to provide all materials and equipment (excluding operational spare
parts), machinery, tools, construction fuels, chemicals and utilities, labor,
transportation, administration and other services and items (collectively and
separately, the "Services") for a new, approximately 705 MW gas-fired
combined-cycle power electric generating facility (the "Facility") located in
Lebanon, Pennsylvania.
The Contractor's Services and Other Obligations
The Contractor shall complete our Project by performing or causing to
be performed all of the Services. The Services shall include: engineering and
design; construction and construction management; providing Design Documents,
Instruction Manuals, a Project Procedures Manual and Quality Assurance Plan to
our Company; procurement of all materials, equipment and supplies and all
Contractor and Subcontractor labor and manufacturing and related services;
providing a spare parts list; providing all labor and personnel; obtaining some
Applicable Permits and providing information to assist our Company in obtaining
other Applicable Permits; performing inspection, expediting, quality
surveillance and traffic services; transporting, shipping, receiving and
marshalling all materials, equipment and supplies and other items; providing
storage for all materials, supplies and equipment and procurement or disposal of
all soil and gravel (including remediation and disposal of specific Hazardous
Materials); providing for design, construction and installation of Electrical
Interconnection Facilities (including Electric Metering Equipment, automatic
regulation equipment, Protective Apparatus and control system equipment) and
reviewing other utility interconnections to our Facility (including gas and
water pipelines); performing Performance Tests and Power Purchase Agreement
Output Tests; providing for start-up and initial operation functions; providing
specified spare parts, waste disposal services, chemicals, consumables and
utilities.
The Services shall also include: training our Company's personnel prior
to Provisional Acceptance; providing our Company and its designee with access to
the Site; obtaining additional necessary Real Estate Rights; clean-up and waste
disposal (including Hazardous Materials brought to the Site by the Contractor or
the Subcontractors); submitting a Project Schedule and Progress Reports; payment
of Contractor Taxes; employee identification and security arrangements;
protecting adjoining utilities and public and private lands from damage; paying
appropriate royalties and license fees; providing final releases and waivers to
our Company; posting collateral or providing other assurances if major
Subcontractors fail to furnish final waivers; maintaining labor relations and
project labor agreements; providing further assurances; coordinating with other
contractors; and causing Siemens Corporation to execute and deliver the EPC
Guaranty.
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Construction and Start-up
Except for specific Services the performance of which has already
commenced, the Contractor shall commence performance of the Services on the date
specified in the Notice to Proceed from our Company. The Contractor shall
perform the Services in accordance with Prudent Utility Practices, generally
accepted standards of professional care, skill, diligence and competence
applicable to engineering, construction and project management practices, all
Applicable Laws, all Applicable Permits, the Real Estate Rights, the Quality
Assurance Plan, the Electrical Interconnection Requirements, the Environmental
Requirements and safety precautions set forth in the EPC Contract, and all of
the requirements necessary to maintain the warranties granted by the
Subcontractors under the EPC Contract. The Contractor shall perform the Services
in accordance with our Project Schedule and shall cause
o each Construction Progress Milestone to be achieved on or
prior to the applicable Construction Progress Milestone Date,
o either Provisional Acceptance or Interim Acceptance of our
Facility to occur on or prior to the Guaranteed Provisional
Acceptance Date and
o Final Acceptance of our Facility to occur on or before the
Guaranteed Final Acceptance Date.
The Contractor shall perform the Services such that our Facility, when
operated in accordance with the Instruction Manual and the Power Purchase
Agreement Operating Requirements (regardless of whether our Facility is operated
at 705 MW or at a different output) on Gas and on Fuel Oil, respectively, as of
Provisional Acceptance, Interim Acceptance and Final Acceptance, will comply
with all Applicable Laws and Applicable Permits, the Electrical Interconnection
Requirements and the Guaranteed Emissions Limits in accordance with the
Completed Performance Test requirements.
Contract Price and Payment
The adjusted Contract Price (including Base Scope Changes through the
date hereof) is $238 million and commencing on the Commencement Date is to be
paid in installments in accordance with the Payment and Milestone Schedule
("Scheduled Payments"). The Contract Price may be adjusted as a result of Scope
Changes (as described below). Our Company shall make Scheduled Payments to the
Contractor upon receipt of the Contractor's Payment Request unless the
Independent Engineer fails to confirm the matters certified to by the Contractor
in such request, in which case our Company may defer such Scheduled Payments
until such condition is satisfied. Our Company shall withhold from each
Scheduled Payment 5% (other than our Project Completion Payment) of such payment
until after Final Acceptance ("Retainage"). At Final Acceptance, our Company
shall pay all Retainage except for $1,000,000 and 150% of the cost of completing
all Punch List items. Our Company shall pay our Project Completion Payment
(including all remaining Retainage) within 30 days after Project Completion.
Upon the termination of the EPC Contract, the Contractor shall be entitled to a
Termination Payment equal to the Scheduled Payments due and owing, Retainage and
termination costs incurred by the Contractor and Subcontractors. Our Company is
not obligated to make any payment to the Contractor at any time the Contractor
is in material breach of the EPC Contract (unless the Contractor is diligently
pursuing a cure). All payments are subject to release of claims.
Our Company's Services
Our Company's responsibilities include: designating a representative
for our Project; furnishing the Contractor access to the Site; securing
specified Applicable Permits and Real Estate Rights; providing specified
start-up personnel; furnishing water, water delivery facilities, specified spare
parts, water disposal services and consumables; providing permanent utilities
for the start-up, testing and operation of our Facility; providing fuel supply
arrangements; providing electrical interconnection facilities arrangements;
furnishing approvals; administering third-party contracts; causing AES to
provide the AES Pre-financial Closing Guaranty.
If our Company fails to meet any of its obligations under the EPC
Contract, then, to the extent that the Contractor was reasonably delayed in the
performance of the Services as a direct result thereof, an equitable adjustment
to one or more of the Contract Price, the Guaranteed Completion Dates, the
Construction Progress Milestone Dates, the Payment and Milestone Schedule and
our Project Schedule, and, as appropriate, such other provisions of the EPC
Contract that may be affected thereby, shall be made by agreement between our
Company and the Contractor.
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Completion and Acceptance of our Project
Mechanical Completion
Mechanical Completion shall be achieved when:
o All equipment and facilities necessary for the full, safe and
reliable operation of our Facility have been properly
constructed, installed, insulated and protected where
required, and correctly adjusted, and can be safely used for
their intended purposes in accordance with the Instruction
Manual and all Applicable Laws and Applicable Permits;
o The tests required for Mechanical Completion that are
identified in the EPC Contract have been successfully
completed;
o Our Facility is fully and properly interconnected and
synchronized with the electrical system of the Utility in
accordance with the Electrical Interconnection Requirements,
and all features and equipment of our Facility are capable of
operating simultaneously; and
o The complete performance by the Contractor of all the Services
relating to our Facility under the EPC Contract, except for
any remaining Punch List items, Performance Tests, Power
Purchase Agreement Output Tests and Reliability Run applicable
thereto, in compliance with the standards of performance set
forth in the EPC Contract, such that our Facility meets all of
the requirements set forth in the EPC Contract applicable
thereto but excluding the achievement of the Guaranteed
Emission Limits and the Performance Guarantees.
When the Contractor believes that it has achieved Mechanical
Completion, it shall deliver to our Company the Notice of Mechanical Completion.
Within 10 days of receipt of the Notice of Mechanical Completion, if it is
satisfied that the Mechanical Completion requirements have been met, our Company
shall deliver to the Contractor a Mechanical Completion Certificate. If
reasonable cause exists for doing so, our Company shall notify the Contractor in
writing that Mechanical Completion has not been achieved, stating the reasons
therefor. If Mechanical Completion has not been achieved as so determined by our
Company, the Contractor shall promptly take such action or perform such
additional Services as will achieve Mechanical Completion of our Facility and
shall issue to our Company another Notice of Mechanical Completion. Such
procedure shall be repeated as necessary until Mechanical Completion of our
Facility has been achieved.
Performance Tests and Power Purchase Agreement Output Tests
Once Mechanical Completion has been achieved, the Contractor shall
perform the Performance Tests and Power Purchase Agreement Output Tests in
accordance with criteria set forth in the EPC Contract. The Contractor shall
give our Company notice of the Performance Tests and Power Purchase Agreement
Output Tests. Our Company shall arrange for the disposition of output during
start-up and testing. The Contractor may declare the Performance Test or the
Power Purchase Agreement Output Test to be a Completed Performance Test or a
Completed Power Purchase Agreement Output Test, respectively, if during such
tests the operation of our Facility complies with Applicable Laws, Applicable
Permits, Guaranteed Emissions Limits and other required standards.
Provisional Acceptance
Provisional Acceptance shall be achieved when:
o The Contractor has caused a completed Performance Test in
which our Facility, while operating on Gas, demonstrates
during a minimum of two 2-hour tests an average net electrical
output and a net heat rate of 95% (or higher) of the Gas-based
Electrical Output Guarantee and 108% (or lower) of the
Gas-based Heat Rate Guarantee;
o The Contractor has caused a completed Power Purchase Agreement
Output Test in which our Facility demonstrates during a
continuous period of 100 hours achievement of 95% (or higher)
of the Gas-based Electrical Output Guarantee, while operating
on Gas and to our Company's reasonable satisfaction, the other
capabilities required to be demonstrated under the EPC
Contract; and
o Our Facility has achieved, and continues to satisfy, the
requirements of Mechanical Completion.
When the Contractor believes that it has achieved Provisional
Acceptance of our Facility, it shall deliver to our Company a Notice of
Provisional Acceptance. If it is satisfied that the Provisional Acceptance
requirements have been
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met, our Company shall deliver to the Contractor a Provisional Acceptance
Certificate. If reasonable cause exists for doing so, our Company shall notify
the Contractor in writing that Provisional Acceptance of our Facility has not
been achieved, stating the reasons therefor. If our Company determines that
Provisional Acceptance of our Facility has not been achieved, the Contractor
shall promptly take such action or perform such additional Services as will
achieve Provisional Acceptance and, if the Contractor believes that Provisional
Acceptance of our Facility has been achieved, shall issue to our Company another
Notice of Provisional Acceptance. Unless Interim Acceptance or Final Acceptance
of our Facility shall have previously occurred, such procedure shall be repeated
as necessary until Provisional Acceptance of our Facility has been achieved.
Upon the earliest to occur of Provisional Acceptance, Interim Acceptance and
Final Acceptance of our Facility, our Company shall take possession and control
our Facility and shall thereafter be solely responsible for the operation and
maintenance thereof. After our Company takes possession and control of our
Facility, the Contractor shall have reasonable access to our Facility to
complete the Services.
Interim Acceptance
Interim Acceptance shall be achieved when:
o The Contractor has caused a Completed Performance Test in
which our Facility, while operating on Gas, demonstrating
during such Performance Test an average net electrical output
and a net heat rate (each as measured and corrected to the
design operating conditions, all in accordance with the
procedures set forth in the EPC Contract) of 95% (or higher)
of the Gas-based Electrical Output Guarantee (but in no event
lower than the percentage of the Gas-based Electrical Output
Guarantee demonstrated by the applicable Completed Performance
Test and Completed Power Purchase Agreement Output Test at
Provisional Acceptance, if applicable) and 104% (or lower) of
the Gas-based Heat Rate Guarantee;
o If neither Provisional Acceptance nor Interim Acceptance of
our Facility has theretofore occurred, the Contractor has
caused a Completed Power Purchase Agreement Output Test in
accordance with the EPC Contract to be concluded in which our
Facility demonstrates (i) a level of achievement of 95% (or
higher) of the Gas-based Electrical Output Guarantee, while
operating on Gas, and (ii) to the Utility's reasonable
satisfaction, the other capabilities required to be so
demonstrated under the EPC Contract;
o Our Facility has achieved, and continues to satisfy the
requirements for the achievement of, Mechanical Completion;
and
o The Contractor has completed performance of the Services
except for (i) Punch List items and (ii) Services that are
required by the terms of the EPC Contract to be completed
after the achievement of Interim Acceptance.
When the Contractor believes that it has achieved Interim Acceptance of
our Facility, it shall deliver to our Company Notice of Interim Acceptance. If
it is satisfied that the Interim Acceptance requirements have been met, our
Company shall deliver to the Contractor an Interim Acceptance Certificate. If
reasonable cause exists for doing so, our Company shall notify the Contractor in
writing that Interim Acceptance of our Facility has not been achieved, stating
the reasons therefor. If our Company determines that Interim Acceptance has not
been achieved, the Contractor shall promptly take such action or perform such
additional Services as will achieve Interim Acceptance and, if the Contractor
believes that Interim Acceptance of our Facility has been achieved, shall issue
to our Company another Notice of Interim Acceptance. Unless Final Acceptance of
our Facility shall have previously occurred, such procedure shall be repeated as
necessary until Interim Acceptance of our Facility has been achieved.
Final Acceptance
Final Acceptance shall be achieved when:
o The Contractor has caused a Completed Performance Test in
accordance with the EPC Contract to be concluded in which our
Facility, while operating separately on Gas and on Fuel Oil,
demonstrates during such Performance Test an average net
electrical output and a net heat rate of 100% (or higher) of
each of the corresponding Gas-based and Fuel Oil-based
Electrical Output Guarantees and 100% (or lower) of each of
the corresponding Gas-based and Fuel Oil-based Heat Rate
Guarantees;
o If neither Provisional Acceptance nor Interim Acceptance of
our Facility shall have theretofore occurred or if Company
shall have requested that a new Completed Power Purchase
Agreement Output Test be conducted in connection with Final
Acceptance of our Facility, the Contractor has caused a
Completed Power Purchase Agreement Output Test in accordance
with the EPC Contract to be concluded in which our Facility
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demonstrates (i) a level of achievement of 100% (or higher) of
the Gas-based Electrical Output Guarantee, while operating on
Gas, and (ii) to the Utility's reasonable satisfaction, the
other capabilities required to be so demonstrated under the
EPC Contract;
o our Facility has achieved, and continues to satisfy the
requirements for the achievement of, Mechanical Completion;
o the Reliability Guarantee has been achieved under the EPC
Contract; and
o the Contractor has completed performance of the Services
except for (i) Punch List items and (ii) Services that are
required by the terms of the EPC Contract to be completed
after the achievement of Final Acceptance (such as the
Contractor's warranty obligations).
The Reliability Guarantee shall have been achieved if and only if our
Facility demonstrates an Average Equivalent Availability of not less than 92%
while operating over a period of at least 45 consecutive days in accordance with
Applicable Laws, Applicable Permits, the Electrical Interconnection
Requirements, the Power Purchase Agreement Operating Requirements, the
Guaranteed Emissions Limits, the Instruction Manual and the Power Purchase
Agreement.
When the Contractor believes that it has achieved Final Acceptance of
our Facility, it shall deliver to our Company a Notice of Final Acceptance. If
it is satisfied that the Final Acceptance requirements have been met, our
Company shall deliver to the Contractor a Final Acceptance Certificate. If
reasonable cause exists for doing so, our Company shall notify the Contractor in
writing that Final Acceptance has not been achieved, stating the reasons
therefor. If our Company determines that Final Acceptance has not been achieved,
the Contractor shall promptly take such action or perform such additional
Services as will achieve Final Acceptance and shall issue to our Company another
Notice of Final Acceptance. Such procedure shall be repeated as necessary until
Final Acceptance has been achieved or deemed to have occurred.
At any time, by giving notice to the Contractor, our Company in its
sole discretion may elect to effect Final Acceptance, in which case Final
Acceptance shall be deemed effective as of the date of such notice, and the
Contractor shall have no liability to our Company for any amounts thereafter
arising as Performance Guarantee Payments (other than any Interim Period Rebates
that arose prior to such election by our Company) for failure of our Facility to
achieve any or all of the Performance Guarantees applicable thereto.
At any time after Provisional Acceptance or Interim Acceptance of our
Facility has been achieved, the Contractor may, after exhausting all reasonable
repair and replacement alternatives in order to achieve the applicable
Performance Guarantees for Final Acceptance, and provided that the Reliability
Guarantee shall have been achieved, give to our Company notice of its intention
to elect to declare Final Acceptance. In such event, the Contractor may elect to
use the results of the most recent eligible Completed Performance Test for the
purpose of determining our Facility's level of achievement of the Performance
Guarantees. Final Acceptance shall be deemed effective as of the last to occur
of (i) the date of our Company's receipt of the declaration and report of the
final Completed Performance Test, or, as applicable, the most recent Completed
Performance Test, (ii) the date of our Company's receipt of the declaration and
report of any additional Completed Power Purchase Agreement Output Test required
by our Company in connection with Final Acceptance and (iii) the effective date
of the achievement of the Reliability Guarantee.
If on or before the Guaranteed Final Acceptance Date (i) our Facility
has achieved either Provisional Acceptance or Interim Acceptance, (ii) the most
recent Completed Performance Test has satisfied the relevant provisions of the
EPC Contract and (iii) the Reliability Guarantee has been achieved, then Final
Acceptance of our Facility shall be deemed to occur on the Guaranteed Final
Acceptance Date. If (i) on or before the Guaranteed Final Acceptance Date, our
Facility has achieved at least Provisional Acceptance or Interim Acceptance and
has achieved all other requirements for Final Acceptance except for the
Reliability Guarantee and (ii) within 90 days after the Guaranteed Final
Acceptance Date, the Reliability Guarantee has been achieved and all other
requirements for Final Acceptance continue to be satisfied at such time, then
Final Acceptance of our Facility shall be deemed to occur on the date on which
the Reliability Guarantee is achieved.
Project Completion
Project Completion shall be achieved under the EPC Contract when:
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o Final Acceptance of our Facility shall have occurred and the
Performance Guarantees with respect to our Facility shall have
been achieved (or in lieu of achievement of the Performance
Guarantees, applicable rebates under the EPC Contract shall
have been paid, or our Company shall have elected Final
Acceptance);
o The Reliability Guarantee shall have been achieved;
o The Contractor shall have demonstrated during the Completed
Performance Test that the operation of our Facility does not
exceed the Guaranteed Emissions Limits;
o The requirements for achieving Mechanical Completion of our
Facility shall continue to be met;
o The Punch List items shall have been completed in accordance
with the EPC Contract; and
o The Contractor shall have performed all of the Services, other
than those Services (such as the Contractor's warranty
obligations) which by their nature are intended to be
performed after Project Completion.
When the Contractor believes that it has achieved Project Completion,
it shall deliver to our Company a Notice of Project Completion. If it is
satisfied that the Final Acceptance requirements have been met, our Company
shall deliver to the Contractor a Project Completion Certificate. If reasonable
cause exists for doing so, our Company shall notify the Contractor in writing
that Project Completion has not been achieved, stating the reasons therefor. If
our Project Completion has not been achieved as so determined by our Company,
the Contractor shall promptly take such action or perform such additional
Services as will achieve Project Completion and shall issue to our Company
another Notice of Project Completion. Such procedure shall be repeated as
necessary until Project Completion is achieved.
The Contractor shall be obligated to achieve Project Completion within
180 days after Final Acceptance of our Facility. If the Contractor does not
achieve our Project Completion on or before our Project Completion Deadline or
if our Company determines that the Contractor is not proceeding with all due
diligence to complete the Services in order to achieve Project Completion by
such deadline, our Company may retain another contractor to complete such work
at Contractor's expense.
Price Rebate for Failure to Meet Guarantees
Completion Dates
The Contractor guarantees that (i) at least one of Provisional
Acceptance, Interim Acceptance or Final Acceptance of our Facility shall be
achieved on or before the Guaranteed Provisional Acceptance Date and (ii) Final
Acceptance of our Facility shall be achieved on or before the Guaranteed Final
Acceptance Date.
If none of Provisional Acceptance, Interim Acceptance or Final
Acceptance of our Facility occurs by the date that is 45 days after the
Guaranteed Provisional Acceptance Date, the Contractor shall pay our Company
$110,000 per day ("Provisional Acceptance Late Completion Payments") for each
day Provisional Acceptance, Interim Acceptance or Final Acceptance is later than
the Guaranteed Provisional Acceptance Date (but in no event shall the aggregate
amount of such payments be greater than the Delay LD SubCap).
If none of Provisional Acceptance, Interim Acceptance and Final
Acceptance of our Facility occurs on or before the date that is 40 days after
the Guaranteed Provisional Acceptance Date, the Contractor shall, on such date,
submit for approval by our Company and the Independent Engineer a Plan to
accelerate the performance of the Services as necessary in order to achieve (i)
at least one of Provisional Acceptance, Interim Acceptance and Final Acceptance
of our Facility by the date that is 12 months after the Guaranteed Provisional
Acceptance Date and (ii) Final Acceptance of our Facility by the Guaranteed
Final Acceptance Date. If the Plan is not approved by our Company and the
Independent Engineer, the Contractor shall revise the Plan and resubmit a
revised Plan for approval by our Company and the Independent Engineer.
If Provisional Acceptance, Interim Acceptance and Final Acceptance
(whichever is the earlier to occur) of our Facility occurs prior to the
Guaranteed Provisional Acceptance Date (the "Early Completion Bonus Trigger
Date"), our Company shall pay the Contractor $50,000 per day ("Early Completion
Bonus") for each day by which Provisional Acceptance, Interim Acceptance and
Final Acceptance precedes the Early Completion Bonus Trigger Date (but in no
event shall the aggregate amount of such bonus exceed $3,000,000).
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Performance Guarantees
Electrical Output
If the average net electrical output of our Facility at Provisional
Acceptance or Interim Acceptance (whichever is the earlier to occur) is less
than the Gas-based Electrical Output Guarantee, then the Contractor shall pay
our Company, as a rebate, for each day during the Interim Period, an amount
equal to $0.22 per day for each kilowatt by which such average net electrical
output is less than such Gas-based Electrical Output Guarantee.
Upon Final Acceptance, if the average net electrical output of our
Facility during the Gas-fired portion of the Completed Performance Test is less
than the Gas-based Electrical Output Guarantee, then our Company shall pay the
Contractor, as a rebate, an amount equal to $550 for each kilowatt by which such
an average net electrical output is less than the Gas-based Electrical Output
Guarantee and (ii) the Fuel Oil-based portion of the Completed Performance Test
is less than the Fuel Oil-based Electrical Output Guarantee, then the Contractor
shall pay our Company, as a rebate, an amount equal to $30 for each kilowatt by
which such average net electrical output is less than the Fuel Oil-based
Electrical Output Guarantee.
Upon Final Acceptance, if the average net electrical output of our
Facility during the Gas-fired portion of the Completed Performance Test is
greater than the Gas-based Electrical Output Guarantee, then the Contractor
shall pay our Company as a bonus, an amount equal to 50% of the net incremental
revenues received by Company during the period of the first three years
following the Commercial Operation Date as a result of (i) any power purchase
agreement concluded with a Utility whereby the Utility purchases such Excess
Output, (ii) any short-term sales of such Excess Output, and (iii) any spot
sales of such Excess Output, in each of the cases (i) through (iii) above after
subtracting all incremental costs and Taxes associated with such Excess Output
(provided, however, that the aggregate amount of any such bonus shall in no
event exceed $275 per kilowatt of Excess Capacity).
Heat Rate Guarantees
If the average net heat rate of our Facility at Provisional Acceptance
and/or Interim Acceptance (if having occurred before Final Acceptance) exceeds
the Gas-based Heat Rate Guarantee, then the Contractor shall pay our Company, as
a rebate, for each day during the Interim Period, an amount equal to $44 per day
for each BTU/KwH by which such measured net heat rate is greater than such
Gas-based Heat Rate Guarantee.
Upon Final Acceptance, if the net heat rate of our Facility during (i)
the Gas-fired portion of the Completed Performance Test exceeds the Gas-based
Heat Rate Guarantee, then the Contractor shall pay our Company, as a rebate, an
amount equal to $162,300 for each BTU/KwH by which such measured heat rate is
greater than the Gas-based Heat Rate Guarantee, and (ii) the Fuel Oil-fired
portion of the Completed Performance Test exceeds the Fuel Oil-based Heat Rate
Guarantee, then the Contractor shall pay our Company, as a rebate, an amount
equal to $17,000 for each BTU/KwH by which such measured heat rate is greater
than the Fuel Oil-based Heat Rate Guarantee.
Upon Final Acceptance, if the average net heat rate during the
Gas-fired portion of the Completed Performance Test is less than the Gas-based
Heat Rate Guarantee, then our Company shall pay the Contractor, as a bonus, an
amount equal to $40,000 for each BTU/KwH by which such measured heat rate is
less that the Gas-based Heat Rate Guarantee (provided, however, that the
aggregate amount of any such bonus shall in no event exceed $3,000,000).
Liability and Damages
Limitation of Liability
In no event shall the Contractor's liability (i) for Provisional
Acceptance Late Completion Payments, exceed in the aggregate an amount equal to
20% of the Contract Price (the "Delay LD SubCap") and (ii) for all Provisional
Acceptance Late Completion Payments and Performance Guarantee Payments, exceed
in the aggregate an amount equal to 45% of the Contract Price (the "Total LD
SubCap").
Consequential Damages
Neither Party nor any of its contractors, subcontractors or other
agents providing equipment, material or services for our Project shall be liable
for any indirect, incidental, special or consequential loss or damage of any
type.
Aggregate Liability of Contractor
The total aggregate liability of the Contractor and any of its
Subcontractors (including, without limitation, liabilities covered by the Delay
LD SubCap and the Total LD SubCap) to our Company shall not in any event exceed
an
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amount equal to the Contract Price (provided, however, that such limitation of
liability shall not apply to obligations to remove liens or to make
indemnification payments).
Warranties and Guarantees
The Contractor warrants and guarantees that during the applicable
Warranty Period
o all machinery, equipment, materials, systems, supplies and
other items comprising our Project shall be new and of
first-rate quality which satisfies utility-grade standards and
in accordance with Prudent Utility Practices and the
specifications set forth in the EPC Contract, suitable for the
use in generating electric energy and capacity under the
climatic and normal operating conditions and free from
defective workmanship or materials,
o it will perform all of its design, construction, engineering
and other Services in accordance with the EPC Contract,
o our Project and its components shall be free from all defects
caused by errors or omissions in engineering and design, as
determined by reference to Prudent Utility Practices, and
shall comply with all Applicable Laws, all Applicable Permits,
the Electrical Interconnection Requirements, the Power
Purchase Agreement Operating Requirements and the Guaranteed
Emissions Limits and
o the completed Project shall perform its intended functions of
generating electric energy and capacity as a complete,
integrated operating system as contemplated in the EPC
Contract. If our Company notifies the Contractor within 30
days after the expiration of the applicable Warranty Period of
any defects or deficiencies discovered during the applicable
Warranty Period, the Contractor shall promptly reperform any
of the services at its own expense to correct any errors
omissions, defect or deficiencies and, in the case of
defective or otherwise deficient machinery, equipment,
materials, systems supplies or other items, replace or repair
the same at its own expense. The Contractor warrants and
guarantees that, to the extent our Company has made all
payments then due to the Contractor, title to our Facility and
all work, materials, supplies and equipment shall pass to our
Company free and clear of all liens, other than any Permitted
Liens. Other than the warranties and guarantees provided in
the EPC Contract there are no other warranties of any kind,
whether statutory, express or implied relating to the
Services.
During the applicable Warranty Period, the Contractor shall promptly
notify our Company of any engineering and design defects which are manifested in
any of the Contractor's fleet of 501G combustion turbines under construction,
start-up or testing or in operation during such Warranty Period and which could
reasonably be expected to be common to the fleet or this Facility. Upon such a
notification from the Contractor of a fleet-wide or common defect and otherwise
upon notification from our Company no later than 30 days after the expiration of
the applicable Warranty Period of any defects or deficiencies in our Project or
any component thereof, our Company shall, subject to the provisions of the EPC
Contract, make our Facility or such subject Equipment available to the
Contractor for the Contractor to re-perform, replace or, at the Contractor's
option, repair the same at the Contractor's expense such that it is in
compliance with the standards warranted and guaranteed, all in accordance with
the EPC Contract.
Force Majeure
Force Majeure Event
A "Force Majeure Event" shall mean any act or event that prevents the
affected Party from performing its obligations (other than the payment of money)
under the EPC Contract or complying with any conditions required to be complied
with under the EPC Contract if such act or event is beyond the reasonable
control of and not the fault of the affected Party and such Party has been
unable by the exercise of due diligence to overcome or mitigate the effects of
such act or event. Force Majeure Events include, but are not limited to, acts of
declared or undeclared war, sabotage, landslides, revolution, terrorism, flood,
tidal wave, hurricane, lightning, earthquake, fire, explosion, civil
disturbance, insurrection or riot, act of God or the public enemy, action
(including unreasonable delay or failure to act) of a court or public authority,
or strikes or other labor disputes of a regional or national character that are
not limited to only the employees of the Contractor or its Subcontractors and
that are not due to the breach of a labor contract or Applicable Law by the
Party claiming Force Majeure or any of its Subcontractors. Force Majeure Events
do not include (i) strikes, work stoppages and labor disputes or unrest of any
kind that involve only employees of the Contractor or any Subcontractors (except
as expressly provided in the foregoing sentence), (ii) late delivery of
materials or equipment (except to the extent caused by a Force Majeure Event)
and (iii) economic hardship.
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Excused Performance
If either Party is rendered wholly or partly unable to perform its
obligations because of a Force Majeure Event, that Party will be excused from
whatever performance is affected by the Force Majeure Event to the extent so
affected; provided, that:
o the non-performing Party gives the other Party prompt notice
describing the particulars of the occurrence;
o the suspension of performance is of no greater scope and of no
longer duration than is reasonably required by the Force
Majeure Event;
o the non-performing Party exercises all reasonable efforts to
mitigate or limit damages to the other Party;
o the non-performing Party uses its best efforts to continue to
perform its obligations under the EPC Contract and to correct
or cure the event or condition excusing performance; and
o when the non-performing Party is able to resume performance of
its obligations, that Party shall give the other Party written
notice to that effect and shall promptly resume performance
under the EPC Contract.
Scope Changes
Scope Changes
Our Company may order Scope Changes to the Services, in which event one
or more of the Contract Price, the Construction Progress Milestone Dates, the
Guaranteed Completion Dates, the Payment and Milestone Schedule, our Project
Schedule and the Performance Guarantees shall be adjusted accordingly, if
necessary. All Scope Changes shall be authorized by a Scope Change Order and
only our Company or our Company's Representative may issue Scope Change Orders.
As soon as the Contractor becomes aware of any circumstances which the
Contractor has reason to believe may necessitate a Scope Change, the Contractor
shall issue to our Company a Scope Change Order Notice at the Contractor's
expense. If our Company desires to make a Scope Change, in response to a Scope
Change Order Notice or otherwise, it shall submit a Scope Change Order Request
to the Contractor. The Contractor shall promptly review the Scope Change Order
Request and notify our Company in writing of the options for implementing the
proposed Scope Change and the effect, if any, each such option would have on the
Contract Price, the Guaranteed Completion Dates, the Construction Progress
Milestone Dates, the Payment and Milestone Schedule, our Project Schedule and
the Performance Guarantees.
No Scope Change Order shall be issued and no adjustment of the Contract
Price, the Guaranteed Completion Dates, the Construction Progress Milestone
Dates, the Payment and Milestone Schedule, our Project Schedule or the
Performance Guarantees shall be made in connection with any correction of
errors, omission, deficiencies, or improper or defective work on the part of the
Contractor or any Subcontractors in the performance of the Services. Changes due
to changes in Applicable Laws or Applicable Permits occurring after the date of
the EPC Contract shall be treated as Scope Changes.
Effect of Force Majeure Event
If and to the extent that any Force Majeure Events affect the
Contractor's ability to meet the Guaranteed Completion Dates, or the
Construction Progress Milestone Dates, an equitable adjustment in one or more of
such dates, the Payment and Milestone Schedule and our Project Schedule shall be
made by agreement of our Company and the Contractor. No adjustment to the
Performance Guarantees and, except as otherwise expressly set forth below, the
Contract Price shall be made as a result of a Force Majeure Event. If the
Contractor is delayed in the performance of the Services by a Force Majeure
Event, then:
o to the extent that the delay(s) are, in the aggregate, six
months or less, the Contractor shall absorb all of its costs
and expenses resulting from said delay(s); and
o to the extent that the delay(s) are, in the aggregate, more
than six months, the Contractor shall be reimbursed by our
Company for those incremental costs and expenses resulting
from said delay(s) which are incurred by the Contractor after
said six-month period.
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Price Change
An increase or decrease in the Contract Price, if any, resulting from a
Scope Change requested by our Company or made under the EPC shall be determined,
upon the mutual agreement of the Parties.
Continued Performance Pending Resolution of Disputes
If a dispute regarding the amount of any increase or decrease in the
Contractor's costs with respect to a Scope Change, the Contractor shall proceed
with the performance of such Scope Change promptly following our Company's
execution of the corresponding Scope Change Order.
If Hazardous Materials were not identified in an environmental site
assessment report delivered by our Company to the Contractor prior to the
Commencement Date and were not brought onto the Site by the Contractor or any of
its Subcontractors, then the Contractor shall be entitled to a Scope Change
under the EPC Contract.
Indemnification
Contractor Indemnity
The Contractor shall fully indemnify, save harmless and defend our
Company, its parents, subsidiaries and other affiliates, the Financing Parties,
and the directors, officers, agents, employees, successors and assigns of each
of them (the "Company Indemnified Parties"), from and against any and all
losses, costs, damages, injuries, liabilities, claims, demands, penalties,
interest and causes of action, including without limitation reasonable
attorneys' fees (collectively, the "Damages"),
o directly or indirectly arising out of, resulting from or
related to any third-party claims associated with the EPC
Contract (including without limitation any such claims for
damage to or destruction of property of, or death of or bodily
injury to, persons to the extent caused or contributed to by
the Contractor's or any Subcontractor's negligence or
intentionally wrongful act in the performance of the Services
or otherwise relating to the EPC Contract or our Project,
whether or not our Company Indemnified Parties are
contributorily negligent);
o in favor of any governmental authority or other third party to
the extent caused by (a) failure of the Contractor or any
Subcontractor to comply with Applicable Laws and Applicable
Permits as required by the EPC Contract, (b) failure of the
Contractor or any Subcontractor to properly administer and pay
Taxes or (c) nonpayment of amounts due as a result of
furnishing materials or services to the Contractor or any
Subcontractor in connection with the Services;
o by reason of any claims or suits arising out of claims of
infringement of any domestic or foreign patent rights,
copyrights or other intellectual property, proprietary or
confidentiality rights with respect to materials and
information used by the Contractor or any Subcontractor in
performing the Services or in any way incorporated in or
related to our Project; or
o resulting from (a) any Hazardous Material which has been
brought onto the Site by any Contractor Responsible Party
(other than any Company Accepted Hazardous Materials), (b) the
Contractor's failure to notify our Company promptly of the
presence of any Hazardous Material on, or the release of any
Hazardous Material on or from, the Site, and such failure has
a material adverse effect on our Company or our Project, or
(c) to the extent that any Contractor Responsible Party has
negligently aggravated the condition resulting from the
presence of any Hazardous Material on, or the release of any
Hazardous Material on or from, the Site.
Company Indemnity
Our Company shall fully indemnify, save harmless and defend the
Contractor, its parent, subsidiaries and other affiliates, and the directors,
officers, agents, employees, successors and assigns of each of them (the
"Contractor Indemnified Parties") from and against all Damages resulting from
the presence of any Hazardous Material on, or the release of any Hazardous
Material on or from, the Site, other than (i) any Hazardous Material that may be
described in an environmental site assessment, if any, that our Company delivers
to the Contractor prior to the Commencement Date and for which the Contractor
has not refused to accept responsibility and (ii) any Hazardous Materials
brought onto the Site by any Contractor Responsible Party (but excluding any
Hazardous Materials that are contained, consistent with Prudent Utility
Practices, in part of the Services accepted by our Company at the time of
Provisional Acceptance, Interim Acceptance or Final Acceptance of our Facility
and had been expressly identified in a Material Safety Data Sheet
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delivered to our Company by the Contractor prior to our Company's acceptance
thereof ("Company Accepted Hazardous Materials")).
Insurance
General
The Contractor shall provide and maintain the following types of
insurance at all times while the Contractor or any Subcontractor is performing
the Services: Workers' Compensation Insurance and Employers' Liability
Insurance; Commercial General Liability Insurance; Business Automobile Liability
Insurance; Commercial Umbrella and/or Excess Insurance; "All-Risk" Builder's
Risk Insurance; and Ocean Marine Cargo Insurance. Before permitting any of its
Subcontractors to perform any Services at the Site, the Contractor shall obtain
a certificate of insurance from each such Subcontractor evidencing that such
Subcontractor has obtained insurance in such amounts and against such risks as
is consistent with the Contractor's customary practices for such types of
subcontracts for projects of similar type and capacity to our Project. All
insurance policies supplied by the Contractor shall include a waiver of any
right of subrogation of the insurers and of any right of the insurers to any
set-off, counterclaim or deduction.
Cost of Premiums
Construction Insurance: The Contractor shall bear responsibility for
payment of all premiums for insurance coverage required to be provided by the
Contractor.
Operating Insurance: Our Company shall be responsible for obtaining, on
such terms and conditions as our Company and its Financing Parties reasonably
deem to be appropriate, "all-risk" property insurance (including "business
interruption" coverage) for our Facility for the period commencing with the
first to occur of Provisional Acceptance, Interim Acceptance and Final
Acceptance (the "Operating Insurance").
Risk of Loss
With respect to our Facility, until the Risk Transfer Date, the
Contractor (not our Company) shall bear the risk of loss and full responsibility
for the costs of replacement, repair or reconstruction resulting from any damage
to or destruction of our Facility or any materials, equipment, tools and
supplies, which are purchased for permanent installation in or for use during
construction of our Facility.
After the Risk Transfer Date with respect to our Facility, our Company
shall bear all risk of loss and full responsibility for repair, replacement or
reconstruction with respect to any loss, damage or destruction to our Facility
which occurs after such Risk Transfer Date.
Deductibles
The Contractor shall be responsible for deductibles for any losses
covered by insurance required to be provided by the Contractor; provided,
however, that our Company shall be responsible for the following:
o deductibles in connection with any such Project losses that
are covered by Builder's Risk insurance and Ocean Marine Cargo
insurance, in each case only up to the permitted deductibles
and only to the extent that the deductibles are in respect of
losses caused by the negligence or intentional misconduct of
our Company; and
o deductibles in connection with any such Project losses that
are covered by the "Delay in Start-Up" insurance.
Additional Insureds
All Contractor and Company furnished insurance coverages (with the
exception of Workers Compensation Insurance) shall include our Company, the
Contractor, the Financing Parties, the Utility and all their assignees,
subsidiaries and affiliates as additional insureds, as their respective
interests may appear and, with respect to the "All Risk" Builder's Risk
Insurance, shall designate the Financing Parties (as identified by our Company)
as loss payees for losses in excess of $1 million.
No Limitation of Liability
The required coverages shall in no way affect, nor are they intended as
a limitation of, the Contractor's liability with respect to its performance of
the Services except as expressly provided elsewhere.
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Insurance Primary
All policies of insurance provided by the Contractor shall be written
as primary and noncontributing with respect to any other similar coverage that
our Company, the Financing Parties, the Utility and their assignees,
subsidiaries and affiliates may carry.
Termination
Termination for Company's Convenience
Our Company may for its convenience terminate any part of the Services
or all remaining Services at any time upon 30 days' prior written notice to the
Contractor specifying the part of the Services to be terminated and the
effective date of termination. Our Company may elect to suspend completion of
all or any part of the Services upon 10 days' prior written notice to the
Contractor (or, in Emergency situations, upon such prior notice as circumstances
permit).
Termination by Contractor
If our Company fails to pay to the Contractor any payment and such
failure continues for 20 days, then (i) the Contractor may suspend its
performance of the Services upon 10 days' prior written notice to our Company,
which suspension may continue until such time as such payment (plus accrued
interest thereon) is paid to the Contractor, and/or (ii) if such payment has not
been made prior to the commencement of a suspension by the Contractor under
clause (i) above, the Contractor may terminate the EPC Contract upon 60 days'
prior written notice to our Company; provided, that such termination shall not
become effective if such payment (plus accrued interest thereon) is made to the
Contractor prior to the end of such notice period. In the event of such a
suspension, an equitable adjustment to one or more of the Contract Price, the
Guaranteed Completion Dates, the Construction Progress Milestone Dates, the
Payment and Milestone Schedule and our Project Schedule, and, as appropriate,
such other provisions of the EPC Contract that may be affected thereby, shall be
made by agreement between our Company and the Contractor. If our Company has
suspended completion of all or any part of the Services in accordance with the
EPC Contract for a period in excess of two years in the aggregate, the
Contractor may, at its option, at any time thereafter so long as such suspension
continues, give written notice to Company that the Contractor desires to
terminate such suspended Services. Unless our Company orders the Contractor to
resume performance of such suspended services within 10 days of the receipt of
such notice from the Contractor, such suspended Services shall be deemed to have
been terminated by our Company for its convenience. If the occurrence of one or
more Force Majeure Events prevents the Contractor from performing the Services
for a period of 365 consecutive days, the Contractor may, at its option, give
written notice to our Company of its desire to terminate the EPC Contract.
Consequences of Termination
o Upon any termination, our Company may, provided, that if such
termination is pursuant to any default the Contractor shall
have been paid all amounts due and owing to it under the EPC
Contract (and provided further, that it shall not be deemed to
constitute a waiver by the Contractor of any rights to payment
it may have as a result of a non-default related termination
in the event of a termination pursuant to a default), at its
option elect to have itself (or its designee, which may
include any other AES affiliate or any third-party purchaser)
(i) assume responsibility for and take title to and possession
of our Project and any or all work, materials or equipment
remaining at the Site and (ii) succeed automatically, without
the necessity of any further action by the Contractor, to the
interests of the Contractor in any or all items procured by
the Contractor for our Project and in any and all contracts
and subcontracts entered into between the Contractor and any
Subcontractor with respect to the equipment specified in the
EPC Contract, and with respect to any or all other
Subcontractors selected by our Company which are materially
necessary to the timely completion of our Project, the
Contractor shall use all reasonable efforts to enable our
Company (or its designee) to succeed to the Contractor's
interests thereunder.
o If any termination occurs, our Company may, without prejudice
to any other right or remedy it may have, at its option,
finish the Services by whatever method our Company may deem
expedient.
Surviving Obligations
Termination of the EPC Contract (i) shall not relieve the Contractor or
our Company of its obligations with respect to the confidentiality of the other
Party's information, (ii) shall not relieve the Contractor or our Company of any
obligation which expressly or by implication survives termination of the EPC
Contract and (iii) except as otherwise provided in any provision of the EPC
Contract expressly limiting the liability of either Party, shall not relieve
either Party
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of any obligations or liabilities for loss or damage to the other Party arising
out of or caused by acts or omissions of such Party prior to the effectiveness
of such termination or arising out of such termination, and shall not relieve
the Contractor of its obligations as to portions of the Services already
performed or as to obligations assumed by the Contractor or our Company prior to
the date of termination.
Default and Remedies
Contractor's Default
The Contractor's events of default include: voluntary bankruptcy or
insolvency; involuntary bankruptcy or insolvency; materially adverse misleading
or false representation or warranty; improper assignment; failure to maintain
required insurance; failure to comply with Applicable Laws or Applicable
Permits; cessation or abandonment of the performance of Services; termination or
repudiation of, or default under the EPC Guaranty; failure to supply sufficient
skilled workers or suitable material or equipment; failure to make payment when
due for labor, equipment or materials; non-occurrence of Provisional Acceptance,
Interim Acceptance, Final Acceptance and Construction Progress Milestones; and
failure to remedy non-performance or non-observance of any provision in the EPC
Contract.
Company's Rights and Remedies
If the Contractor is in default of its obligations, our Company shall
have any or all of the following rights and remedies (in addition to any other
rights and remedies that may be available to our Company under the EPC Contract
or at law or in equity) and the Contractor shall have the following obligations:
o Our Company may, without prejudice to any other right or
remedy our Company may have under the EPC Contract or at law
or in equity, terminate the EPC Contract in whole or in part
immediately upon delivery of notice to the Contractor. In case
of such partial termination, the Parties shall mutually agree
upon a Scope Change Order to make equitable adjustments
(including the reduction and/or deletion of obligations of the
Parties commensurate with the reduced scope the Contractor
shall have after taking into account such partial termination)
to one or more of the Guaranteed Completion Dates, the
Construction Progress Milestone Dates, the Contract Price, the
Payment and Milestone Schedule, our Project Schedule, the
Performance Guarantees and such other provisions of the EPC
Contract which may be affected thereby, as appropriate. If the
Parties are unable to reach mutual agreement as to said Scope
Change Order and the dispute resolution procedures set forth
in the EPC Contract are invoked, such procedures shall give
due consideration to customary terms and conditions under
which the Contractor has entered subcontracts with third party
prime contractors covering services substantially similar to
those Services which are not being terminated.
o If requested by our Company, the Contractor shall withdraw
from the Site, shall assign to our Company such of
Contractor's subcontracts (to the extent permitted therein) as
our Company may request, and shall remove such materials,
equipment, tools and instruments used by, and any debris and
waste materials generated by, the Contractor in the
performance of the Services as our Company may direct, and our
Company, without incurring any liability to the Contractor
(other than the obligation to return to the Contractor at the
completion of our Project such materials that are not consumed
or incorporated into our Project, solely on an "as is, where
is" basis without any representation or warranty of any kind
whatsoever), may take possession of any and all designs,
drawings, materials, equipment, tools, instruments, purchase
orders, schedules and facilities of the Contractor at the Site
that our Company deems necessary to complete the Services.
Assignment
Consent Required
The Contractor and our Company shall have no right to assign or
delegate any of their respective rights or obligations under the EPC Contract
either voluntarily or involuntarily or by operation of law, except that, (i) the
Contractor may, without our Company's approval, and provided that such
assignment could not reasonably be expected to have a material adverse effect on
our Company or our Project, assign all (but not less than all) of its rights or
obligations to a parent, sister or subsidiary company; provided, that such
assignee is directly or indirectly wholly owned by the EPC Guarantor and the EPC
Guaranty issued by the EPC Guarantor is still in full force and effect, and (ii)
our Company may, without the Contractor's approval, assign any or all of its
rights under the EPC Contract (a) as collateral security to the Financing
Parties and (b) to any transferee of our Project or a substantial portion
thereof; provided, that such assignee has financial and operational capabilities
that are either substantially similar to those of our Company at
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such time or otherwise are such that the assignment could not reasonably be
expected to have a material adverse effect on the Contractor's rights and
obligations under the EPC Contract.
Successors and Assigns
All of the rights, benefits, duties, liabilities and obligations of the
Parties shall inure to the benefit of and be binding upon their respective
permitted successors and permitted assigns.
Dispute Resolution
Dispute Resolution
If a dispute arises between our Company and the Contractor regarding
the application or interpretation of any provision of the EPC Contract, the
aggrieved Party shall promptly give notice in writing to the other Party
invoking the dispute resolution provisions and the Parties shall negotiate in
good faith and attempt to resolve such dispute. If the Parties fail to resolve
the dispute within 30 days after delivery of such notice, each Party shall have
the right to require, by written notice to the other Party containing a brief
description of the dispute, that each Party nominate and have a senior officer
of its management meet with the other Party's nominated senior officer at the
Site, or at any other mutually agreed location, within 15 days of such request,
in order to attempt to resolve the dispute. Should the Parties be unable to
resolve the dispute to their mutual satisfaction within 15 days after such
meeting, each Party shall have the right to pursue any and all remedies
available to it under the EPC Contract or available to it at law or in equity.
If any dispute involves technical issues (including, without limitation, as to
the adequacy of any Plan submitted by the Contractor), either Party could
request that such matter be referred to a mutually acceptable independent expert
for resolution in an expedited manner under procedures and timing to be mutually
agreed upon by the Parties.
Performance During Dispute
Notwithstanding the existence of a dispute between our Company and the
Contractor and regardless of whether such dispute is the subject of dispute
resolution, the Contractor shall not be entitled to suspend or otherwise delay
the performance of the Services.
Representations and Warranties
The Contractor makes representations and warranties regarding the
following: organization and qualification; power and authority; no conflict;
validity and binding effect; litigation; patents, licenses, franchises;
compliance with laws; and disclosure.
Our Company makes representations and warranties regarding the
following: organization and qualification; power and authority; no conflict;
validity and binding effect; litigation; compliance with laws; and disclosure.
Maintenance Services Agreement
Our Company (as assignee of AES Ironwood, Inc.) and Siemens
Westinghouse Power Corporation (the "Contractor") (our Company and the
Contractor, collectively, the "Parties", and each individually, a "Party", for
the purpose of this summary) have entered into the Maintenance Program Parts,
Shop Repairs and Scheduled Outage TFA Services Contract (the "Maintenance
Services Agreement"), dated as of September 23, 1998, by which the Contractor
will provide us with, among other things, combustion turbine parts, shop repairs
and scheduled outage technical field assistance services.
The Maintenance Services Agreement became effective on the date of
execution and unless terminated early, shall terminate upon completion of shop
repairs performed by the Contractor following the eighth planned outage (each
such planned outage, a "Scheduled Outage") of the applicable Combustion Turbine
or 10 years from initial synchronization of the applicable Combustion Turbine,
whichever occurs first.
Scope of Work
During the term of the Maintenance Services Agreement, and in
accordance with the Scheduled Outage plan, the Contractor is required to do the
following:
o deliver the type and quantity of New Program Parts for
installation of the Combustion Turbine;
o repair/refurbish Program Parts and equipment for the
Combustion Turbine;
o provide Miscellaneous Hardware;
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o provide our Company with Material Safety Data Sheets for all
hazardous materials the Contractor intends to bring/use on the
Site; and
o provide the services of a maintenance program engineer to
manage the Combustion Turbine maintenance program. The
Contractor will also provide technical field assistance
("TFA") which involves advice and consultation for the
disassembly, inspection and assembly of various equipment.
Our Company is responsible for, among other things:
o storing and maintaining parts, materials and tools to be used
in or on the Combustion Turbine;
o maintaining and operating the Combustion Turbine consistently
with the warranty conditions;
o ensuring that its operator and maintenance personnel are
properly trained;
o transporting Program Parts in need of repair/refurbish; and
o providing the Contractor, on a monthly basis, with the number
of equivalent starts determined in accordance with the
appropriate current service bulletin (the "Equivalent Starts")
and the number of equivalent base load hours determined in
accordance with the appropriate current service bulletin
("EBH") incurred by each Combustion Turbine.
Our Company and the Contractor will jointly develop the Scheduled
Outage plan. The Scheduled Outage plan will be consistent with the terms and
conditions of the Power Purchase Agreement.
Early Replacement
If it is determined that due to Normal Wear and Tear a Program Part(s)
for the Combustion Turbine has failed or will not last until the next Scheduled
Outage, and such part has to be repaired before the scheduled replacement
period, the Contractor will replace such Program Part by moving up a New Program
Part which is otherwise scheduled to be delivered at a later date. The Contract
Price for such replacement will not be affected if the replacement date is less
than or equal to one year earlier than the Scheduled Outage during which such
Program Part was scheduled to be replaced. If the actual replacement date for a
Program Part is more than one year earlier than the Scheduled Outage at which
point the Program Part was scheduled to be replaced, such early replacement will
result in an adjustment to the Payment Schedule. The Contractor has the final
decision with regard to the replacement or refurbishment associated with any
Program Part. If our Company disputes the Contractor's decision, our Company may
seek to resolve such dispute in accordance with the dispute resolution
procedures discussed below.
Parts Life Credit
After applicable warranty periods set forth in the Maintenance Services
Agreement and the EPC Contract, the Contractor will provide a parts life credit
if a Program Part requires replacement due to Normal Wear and Tear prior to
meeting its expected useful life. The Contractor has the final decision with
regard to actual parts life and the degree of repair or refurbishment associated
with any Program Parts. The parts life credit will be calculated in terms of
EBHs and Equivalent Starts. The price of the replacement part will be adjusted
by the net percentage increase or decrease in the Consumer Price Index (the
"Escalation Factor"). If our Company disputes the Contractor's decision, our
Company may seek to resolve such dispute in accordance with the dispute
resolution procedures discussed below.
Contract Price and Payment Terms
The Contractor will invoice our Company monthly and payments are then
due within 25 days. The fees assessed by the Contractor will be based on the
number of EBHs accumulated by the applicable Combustion Turbine as adjusted by
the Escalation Factor. The "Contract Price" will be the aggregate number of fees
as adjusted plus any additional payment amount mutually agreed to by the parties
under a Change Order.
Unscheduled Outages and Unscheduled Outage Work
If during the Term of the Maintenance Services Agreement an outage
occurs that is not otherwise a Scheduled Outage (an "Unscheduled Outage")
resulting from (i) the non-conformity of New Program Parts; (ii) the failing of
a Shop Repair; (iii) a Program Part requiring replacement due to Normal Wear and
Tear prior to achieving its expected life in terms of EBHs or Equivalent Starts;
or (iv) the failure of a Service, performed by the Contractor, our Company shall
hire the Contractor (to the extent not supplied by the Contractor as a warranty
remedy under the Contractor's warranties under the Maintenance Services
Agreement) to supply any additional parts, Miscellaneous Hardware, Shop Repairs
and TFA Services under a Change Order. Our Company will be entitled to any
applicable parts life credit with respect to Program Parts as well as a discount
for TFA Services. If such Unscheduled Outage occurs within a specified number of
EBHs of a Scheduled Outage and it was anticipated that the additional parts,
Miscellaneous Hardware, Shop Repairs and TFA
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Services to be used in such Unscheduled Outage were to be used during the
upcoming Scheduled Outage, the upcoming Scheduled Outage shall be moved up in
time to become the Unscheduled Outage/moved-up Scheduled Outage. Our Company
shall not be required to pay any additional money for such Program Parts,
Miscellaneous Hardware, Shop Repairs and TFA Services.
If any Program Parts are delivered by the Contractor within 15 days of
receipt of such Change Order, our Company will pay to the Contractor the price
for the Program Part set forth in the Maintenance Services Agreement plus a
specified percentage. Any Program Part delivered after 30 days of such Change
Order will cost our Company the price set forth in the Maintenance Services
Agreement minus a specified percentage.
The remedies set forth in the Maintenance Services Agreement, and
discounts on any TFA Services purchased by our Company from the Contractor,
shall constitute the Contractor's sole liability and our Company's exclusive
remedies for Unscheduled Outages whether claims of our Company are based in
contract, in tort, or otherwise. If the Contractor fails to send a TFA Services
representative by the end of the second day following written receipt of the
Unscheduled Outage, our Company may hire another qualified person, at its cost,
to perform the work. If such hired party proceeds to disassemble the Combustion
Turbine to determine the case of the Unscheduled Outage and the Contractor still
has not provided personnel to assist with such inspection, our Company can elect
to terminate the Maintenance Services Agreement on the basis that the Contractor
has failed to perform a material obligation.
Changes in Operating Restrictions
The Maintenance Services Agreement requires that each Combustion
Turbine will be operated in accordance with the requirements of the Power
Purchase Agreement and Prudent Utility Practices, with 8,000 EBH/year and 100
Equivalent Starts per year by using natural gas fuel or liquid fuel and water.
Should the actual operations differ from these operating parameters which causes
a Scheduled Outage to be planned/performed earlier or later than as expected,
then, under a Change Order, an adjustment in the scope, schedule, and price
shall be made.
Warranties
The Contractor warrants that the New Program Parts, Miscellaneous
Hardware and any Shop Repairs shall conform to standards of design, materials
and workmanship consistent with generally accepted practices of the electric
utility industry. The warranty period with respect to Program Parts, Hardware
and Shop Repair is until the earlier of one year from the date of installation
of the original Program Part or Hardware, a specific number of starts or fired
hours after installation of such Program Parts and Hardware, or three years from
the date of delivery of the original Program Part, Hardware, and in the case of
Shop Repair, three years from completion of the work. Warranties on the Program
Parts and Hardware shall not expire more than one year after the conclusion of
the Maintenance Services Agreement. The Contractor will repair or replace any
Program Part or Hardware, at its cost, if notified of any failure or
non-conformity of such Program Part or Hardware during such warranty period.
The Contractor also warrants that the Services of its personnel and
technical information transmitted will be competent and consistent with Prudent
Utility Practices and the Services will comply in all material respects with
Laws and will be free from defects in workmanship for a period of one year from
the date of completion of that item of Services. The warranties on such Services
shall expire no later than one year after the termination or end of the term of
the Maintenance Services Agreement.
In addition, the Contractor warrants any Program Part removed during a
Scheduled Outage and delivered by our Company to the designated facility for
repair will be repaired and delivered by the Contractor within 26 weeks. If the
Contractor does not deliver the Program Part within this time frame or does not
provide a New Program Part in lieu of the Program Part being Shop Repaired and
an outage occurs which requires such a Program Part, the Contractor will pay our
Company liquidated damages for each day the Program Part is not repaired and
delivered the aggregate of which liquidated damage payments shall not exceed a
maximum annual cap. If upon reaching the maximum cap on aggregate liquidated
damages, the Contractor still has not repaired and delivered such Program Part,
our Company may elect to terminate the Maintenance Services Agreement because
the Contractor shall be considered to have failed to perform its material
obligations.
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Except for the express warranties set forth in the Maintenance Services
Agreement, the Contractor makes no other warranties or representations of any
kind. No implied statutory warranty of merchantibility or fitness for a
particular purpose applies.
The warranties provided by the Contractor are conditioned upon (i) our
Company's receipt, handling, storage, operation and maintenance of our Project,
including any Program Parts and Miscellaneous Hardware, being done in accordance
with the terms of the Combustion Turbine instruction manuals; (ii) operation of
the Combustion Turbine in accordance with the terms of the Maintenance Services
Agreement; (iii) repair of accidental damage done consistently with the
equipment manufacturer's recommendations; (iv) our Company providing the
Contractor with access to the Site to perform its services under the Maintenance
Services Agreement; and (v) hiring the Contractor to provide TFA Services,
Program Parts, Shop Repairs and Miscellaneous Hardware required to dissemble,
repair and reassemble the Combustion Turbine.
Insurance
The Contractor shall maintain in full force and effect during the Term
of the Maintenance Services Agreement the following required insurance coverage:
commercial general liability, workers' compensation, umbrella excess liability
and business automobile liability. All such policies of workers' compensation
must provide a waiver of subrogation rights against our Company.
Our Company shall maintain in full force and effect during the Term of
the Maintenance Services Agreement the following required insurance coverage:
property insurance, commercial general liability, workers' compensation,
umbrella excess liability and business automobile liability insurance. The
policies of property insurance and workers' compensation must include waivers of
subrogation rights against the Contractor.
Termination
Our Company may terminate the Maintenance Services Agreement if (i)
specific bankruptcy events affecting the Contractor occur; (ii) the Contractor
fails to perform or observe in any material respect any provision in the
Maintenance Services Agreement and fails to (a) promptly commence to cure and
diligently pursue the cure of such failure or (b) remedy such failure within 45
days after the Contractor receives written notice of such failure; (iii) our
Company terminates the EPC Contract due to the EPC Contractor's default
thereunder or due to our Company's inability to obtain construction financing or
environmental operating permits; or (iv) the EPC Contractor terminates the EPC
Contract for any reason other than our Company's default thereunder.
Notwithstanding the foregoing, our Company may terminate the Maintenance
Services Agreement at any time for its convenience following the completion of
the first Major Outage of both Combustion Turbine Generators. In addition, the
Maintenance Services Agreement will automatically terminate if (i) our Company
terminates the EPC Contract for reasons other than (a) the default of the EPC
Contractor and (b) our Company's inability to obtain permits for our Project or
(ii) the EPC Contractor terminates the EPC Contract for our Company's default
thereunder. If such termination, the Contractor shall discontinue any work or
services being performed and continue to protect our Company's property. The
Contractor shall transfer title to and deliver any New Program Parts and
Miscellaneous Hardware already purchased by our Company. Our Company shall pay
the Contractor those amounts owed at the time of termination.
The Contractor may also terminate the Maintenance Services Agreement
if: (i) our Company fails to make payments or (ii) specific bankruptcy events
affecting our Company occur. The Contractor cannot terminate the Maintenance
Services Agreement if our Company pays outstanding amounts due within 90 days.
Upon termination, the Contractor shall stop all work, place no additional
orders, protect our Company's property and deliver such property to our Company
upon our Company's instructions. The Contractor will be entitled to payment for
work performed up until its termination of the Maintenance Services Agreement,
all outstanding fees and reasonable costs associated with the termination.
Indemnification
To the fullest extent permitted by Law, each Party shall defend,
indemnify and hold harmless the other Party from and against liability resulting
from injury to or death of persons and from damage to or loss of third-party
property, caused by or arising in whole or in part out of, but only to the
extent of the negligent acts or omissions of the Party while performing its
obligations under the Maintenance Services Agreement. Each Party's indemnity
obligation under the Maintenance Services Agreement shall not apply to any
liabilities arising out of or relating to events or circumstances occurring more
than one year after end of the Term of the Maintenance Services Agreement.
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Limitation of Liability
Each party agrees that, except to the extent liquidated damages
provided in the Maintenance Services Agreement are so considered, neither the
Contractor, nor its Suppliers, nor our Company will under any circumstances be
liable for: any indirect, special, incidental or consequential loss or damage
whatsoever; damage to or loss of property or equipment; loss of profits or
revenues; loss of use of material, equipment or power system; increased costs of
any kind, including but not limited to capital cost, fuel cost and cost of
purchased or replacement power, or claims of customers of our Company.
Our Company agrees that the remedies provided in the Maintenance
Services Agreement are exclusive and that under no circumstances shall the total
aggregate liability of the Contractor during a given year exceed 100% of the
Contract Price payable to the Contractor for that given year under the
Maintenance Services Agreement. Our Company further agrees that under no
circumstances shall the total aggregate liability of the Contractor for
liquidated damages during a given year exceed a specified percentage of the
Contract Price payable to the Contractor for that given year under the
Maintenance Services Agreement. Our Company further agrees that under no
circumstances shall the total aggregate liability of the Contractor exceed a
specified percentage of the Contract Price payable to the Contractor under the
Maintenance Services Agreement.
Force Majeure
Neither Party will be liable for failure to perform any obligation or
delay in performance, excluding payment, to the extent such failure or delay is
caused by any act or event beyond the reasonable control of the affected party
or the Contractor's Suppliers; provided, that such act or event is not the fault
or the result of negligence of the affected Party and such Party has been unable
by exercise of reasonable diligence to overcome or mitigate the effects of such
act or event ("Force Majeure"). Force Majeure includes: any act of God; act of
civil or military authority; act of war whether declared or undeclared; act
(including delay, failure to act, or priority) of any governmental authority;
civil disturbance; insurrection or riot; sabotage; fire; inclement weather
conditions; earthquake; flood; strikes, work stoppages or other labor
difficulties of a regional or national character which are not limited to only
the employees of the Contractor or its subcontractors or suppliers and which are
not due to the breach of an applicable labor contract by the party claiming
Force Majeure; embargo; fuel or energy shortage; delay or accident in shipping
or transportation to the extent attributable to another Force Majeure; changes
in Laws which substantially prevents a party from complying with its obligations
in conformity with its requirements under the Maintenance Services Agreement or
failure or delay beyond its reasonable control in obtaining necessary
manufacturing facilities, labor, or materials from usual sources to the extent
attributable to another Force Majeure; or failure of any principal contractor to
provide equipment to the extent attributable to another Force Majeure. Force
Majeure shall not include: (i) economic hardship, (ii) changes in market
conditions or (iii) except due to an event of force majeure, late delivery of
Program Parts or other Equipment.
If a delay in performance is excusable due to a Force Majeure, the date
of Delivery or time for performance of the work will be extended by a period of
time reasonably necessary to overcome the effect of such Force Majeure and if
the Force Majeure lasts for a period longer than 30 days and such delay directly
increases the Contractor's costs or expenses, our Company, after reviewing the
Contractor's additional direct costs and expenses, will reimburse the Contractor
for its reasonable additional direct costs and expenses incurred after 30 days
from the beginning of the Force Majeure resulting from said delay.
Dispute Resolution
The Parties may pursue any and all remedies available to it at law or
in equity if they are unable to resolve any disputes after negotiations. The
Parties may refer any disputes involving technical issues to an independent
expert for resolution. The findings of such independent expert would be binding
upon the Parties.
The Contractor shall indemnify our Company from any fines, penalties,
expense, loss or liability (including the costs of clean-up) incurred by our
Company as a result of (i) the Contractor's failure to meet its obligations
under the Maintenance Services Agreement or (ii) any spills of Hazardous Waste
or oil, petroleum or petroleum products to the environment which are
attributable to and occur during the Contractor's performance (or the
performance of its contractors or subcontractors) of the Workscope Obligations
at the Site under the Maintenance Services Agreement.
Our Company shall indemnify the Contractor from any fines, penalties,
expense, loss or liability incurred by the Contractor as a result of our
Company's failure to meet its obligations under the Maintenance Services
Agreement. Our Company shall have no responsibility or liability with regard to
any Hazardous Waste or oil, petroleum or petroleum
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products which were spilled by the Contractor, or any other of its contractors
or subcontractors performing Workscope Obligations at the Site.
Fleetwide Issue Notification
During the Term of this Agreement, if the Contractor becomes aware of a
fleetwide issue involving the Siemens Westinghouse 501G Combustion Turbine which
may have a deleterious effect on our Company's Combustion Turbines, the
Contractor shall, within a reasonable time of becoming aware of such fleetwide
issues, notify our Company thereof, and if such fleetwide issue requires an
additional repair or replacement of a Program Part or Miscellaneous Hardware to
be performed, such additional repair or replacement shall be performed in
accordance with the provisions of the Maintenance Services Agreement.
Interconnection Agreement
Our Company and Metropolitan Edison Company (the "Transmitting
Utility") (our Company and the Transmitting Utility, collectively, the
"Parties", and each individually, a "Party", for purposes of this summary) have
entered into a Generation Facility Transmission Interconnection Agreement, dated
as of March 23, 1999 (the "Interconnection Agreement"), for the installation,
operation and maintenance of the facilities necessary to interconnect our
Company's generation facility in South Lebanon, Pennsylvania (the "Facility") to
the transmission system of the Transmitting Utility. Under the Interconnection
Agreement, each of our Company and the Transmitting Utility will construct, own,
operate and maintain specific facilities and protective apparatus (the
"Interconnection Facilities"). Our Company will be responsible for all of the
costs of construction, operation and maintenance of the Interconnection
Facilities, including those owned by the Transmitting Utility.
Scope
The Interconnection Agreement will become effective on the effective
date established by FERC and will continue in full force and effect until a
mutually agreeable termination date not to exceed the retirement date for our
Facility.
Transmitting Utility's Obligations
The Transmitting Utility will install, own, operate and maintain, at
the cost and expense of our Company, a portion of the Interconnection
Facilities, including, but not limited to specific substation protective
relaying equipment and a 230 kV power circuit breaker, all as more fully
described in Appendix B to the Interconnection Agreement. The facilities to be
installed by the Transmitting Utility, together with the facilities to be
installed by our Company, are those necessary to allow the interconnection of
our Facility with the transmission system of the Transmitting Utility.
The Transmitting Utility is to complete the installation of the
facilities necessary to permit our Company to energize the switch yard and to
begin commissioning of our Facility by June 30, 2000. If those facilities are
completed prior to June 30, 2000, the Transmitting Utility will be paid an early
completion bonus of $5,000 for each day of early completion up to and including
30 days (May 31, 2000). If those facilities are completed after June 30, 2000,
the Transmitting Utility will pay delay damages of $5,000 for each day of delay
up to and including 42 days (August 11, 2000). Our Company will also have the
ability to take over the completion of these facilities if it becomes apparent
that the Transmitting Utility will not be able to complete them within such 42
day-period, the Transmitting Utility has not proposed a reasonable recovery
plan, and our Company can demonstrate that it is able to complete the facilities
more quickly than the Transmitting Utility.
The Transmitting Utility is to complete the installation of its portion
of the Interconnection Facilities and specific transmission system
reinforcements necessary to permit the dispatch of the full output of our
Facility by August 31, 2000.
Company's Obligations
Our Company will install, own, operate and maintain a portion of the
Interconnection Facilities, including, but not limited to, a 230 kV switchyard,
including generator step up transformers, instrument transformers, revenue
metering, power circuit breakers, control and protective relay panels,
supervisory control and data acquisition equipment, and protective relaying
equipment, all as more fully described in Appendix B to the Interconnection
Agreement.
Our Company will reimburse the Transmitting Utility for its actual
costs of installing the Interconnection Facilities. Our Company's payments to
the Transmitting Utility consist of an advance payment of $500,000 on the
execution date of the Interconnection Agreement, another payment of $40,000
within 30 days of the execution date of the
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Interconnection Agreement (for work undertaken by the Transmitting Utility prior
to December 17, 1998), a payment of $1,000,000 at Financial Closing and monthly
invoices for the work performed, which have payment terms of net 30 days from
the date of each invoice. The advance payments by our Company reimburse the
Transmitting Utility for costs incurred prior to the execution of the
Interconnection Agreement and will be used by the Transmitting Utility to offset
interest during construction, with any remaining amounts being applied to
invoices during the later stages of completing the portion of the
Interconnection Facilities that are the responsibility of the Transmitting
Utility. Our Company may assign to the purchaser of the output of our Facility
the payment obligations to the Transmitting Utility for installing the
Interconnection Facilities.
Our Company is obligated to modify its portion of the Interconnection
Facilities as may be required to conform to changes in Good Utility Practice or
as required by PJM Interconnection, L.L.C. ("PJMI"), which is the independent
system operator that operates the Transmission System to which our Facility will
be interconnected.
Our Company is obligated to keep our Facility insured against loss or
damage in accordance with the minimum coverages specified in the Interconnection
Agreement.
Operation and Maintenance of Interconnection Facilities
The Parties are obligated to operate and maintain their respective
portions of the Interconnection Facilities in accordance with Good Utility
Practices and the requirements and guidelines of PJMI and the Transmitting
Utility.
The Transmitting Utility will have the right to disconnect our Facility
from its Transmission System and/or curtail, interrupt or reduce the output of
our Facility when operation of our Facility or the Interconnection Facilities
adversely affects the quality of service rendered by the Transmitting Utility or
interferes with the safe and reliable operation of its Transmission System or
the regional transmission system. The Transmitting Utility, however, is
obligated to use reasonable efforts to minimize any such disconnection,
curtailment, interruption or reduction in output.
In accordance with Good Utility Practice, the Transmitting Utility may
remove the Interconnection Facilities from service as necessary to perform
maintenance or testing or to install or replace equipment on the Interconnection
Facilities or the Transmission System. The Transmitting Utility is obligated to
use due diligence to restore the Interconnection Facilities to service as
promptly as practicable.
In addition, if our Company fails to operate, maintain, administer, or
insure our Facility or its portion of the Interconnection Facilities, the
Transmitting Utility may, following 30 days notice and opportunity to cure such
failure, disconnect our Facility from the Transmission System.
Revenue Metering
Revenue meters, which are part of the Interconnection Facilities, will
be installed to measure the transfer of electrical energy between the Parties at
the Point of Interconnection. After installation, the ownership of such revenue
meters will be transferred to the Transmitting Utility. Our Company also has the
right to install its own telemetering equipment or other communications
equipment to retrieve such information. The revenue meters are to be tested at
least once every two years, or more frequently at the request of our Company.
Any revenue meter found to be inaccurate by greater than 1% is to be adjusted,
repaired or replaced.
Force Majeure
If either Party is delayed in or prevented from performing or carrying
out its obligations under the Interconnection Agreement by reason of Force
Majeure, such Party shall not be liable to the other Party for or on account of
any loss, damage, injury or expense resulting from or arising out of such delay
or prevention; provided, however, that the Party encountering such delay or
prevention shall use due diligence to remove the cause or causes thereof.
Liability and Indemnification
Neither Party will be liable to the other for incidental, special,
indirect or consequential damages. Our Company is obligated to indemnify the
Transmitting Utility for claims, liabilities, costs, damages, losses and
expenses for damage to property, injury to or death of any persons to the extent
caused by any act or omission, negligent or otherwise, relating to the design,
construction, ownership, operation, or maintenance of our Facility or our
Company's portion of the Interconnection Facilities. Our Company also is
obligated to indemnify the Transmitting Utility for any taxes that may be
imposed if our Company's payment (or failure to pay) to the Transmitting Utility
of the costs associated with the purchase or installation of any portion of the
Transmitting Utility's Interconnection Facilities are treated as a contribution
in aid of construction by the taxing authorities.
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Default
The events of default under the Interconnection Agreement are:
o breach of a material term or condition and uncured failure to
provide a required schedule, report or notice;
o failure or refusal of a Party to permit the representatives of
the other Party access to maintenance records, or its
Interconnection Facilities or Protective Apparatus;
o appointment by a court of a receiver or liquidator or trustee
that is not discharged within 60 days, issuance by a court of
a decree adjudicating a Party as bankrupt or insolvent or
sequestering a substantial part of its property that has not
been discharged within 60 days after its entry, or filing of a
petition to declare a Party bankrupt or to reorganize a Party
under the Federal Bankruptcy Code or similar state statute
that has not been dismissed within 60 days;
o voluntary filing by a Party of a petition in bankruptcy or
consent to the filing of a bankruptcy or reorganization
petition, an assignment for the benefit of creditors, an
admission by a Party in writing of its inability to pay its
debts as they come due, or consent to the appointment of a
receiver, trustee, or liquidator of a Party or any part of its
property; and
o failure to provide the other Party with reasonable written
assurance of the Party's ability to perform any of the
material duties and responsibilities under the Interconnection
Agreement within 60 days of a reasonable request for such
assurance.
Upon an event of default, the non-defaulting Party may give notice of
such event of default to the defaulting Party. The defaulting Party will have 60
days following the receipt of such notice to cure the default or to commence in
good faith the steps necessary to cure a default that cannot be cured within
that 60-day period. If the defaulting Party fails to cure its default within 60
days or fails to take the steps necessary to cure a default that cannot be cured
within a 60-day period, the non-defaulting Party will have the right to
terminate the Interconnection Agreement.
The Transmitting Utility will have the right to operate and/or to
purchase specific equipment, facilities and appurtenances from our Company that
are necessary for the Transmitting Utility to operate and maintain its
Transmission System if (i) our Company commences bankruptcy proceedings or
petitions for the appointment of a trustee or other custodian, liquidator, or
receiver, (ii) a court issues a decree for relief of our Company or appoints a
trustee or other custodian, liquidator, or receiver for our Company or a
substantial part of our Company's assets and such decree is not dismissed within
60 days or (iii) our Company ceases operation for 30 consecutive days without
having an assignee, successor, or transferee in place.
Operations Agreement
Our Company and AES Prescott have entered into a Management and
Operations Services Agreement, dated as of June 1, 1999 (the "Operations
Agreement"), by which AES Prescott will provide development and construction
management services and, after the Commercial Operation Date, operating and
maintenance services for our Facility for a period of 27 years. Under the
Operations Agreement, AES Prescott will be responsible for, among other things,
preparing plans and budgets related to start-up and commercial operation of our
Facility, providing qualified operating personnel, making repairs, purchasing
consumables and spare parts (not otherwise provided under the Maintenance
Services Agreement) and providing other services as needed according to industry
standards. AES Prescott will be compensated for such services on a cost plus
fixed-fee basis. Under the Services Agreement between AES Prescott and AES, AES
will provide to AES Prescott all of the personnel and services necessary for AES
Prescott to comply with its obligations under the Operations Agreement.
Effluent Supply Agreement
Our Company (as assignee of AES Ironwood, Inc.) and City of Lebanon
Authority (the "Authority") (our Company and the Authority collectively, the
"Parties", and each individually, a "Party", for the purpose of this summary)
have entered into the Effluent Supply Agreement, dated as of March 3, 1998 (the
"Effluent Supply Agreement") by which the Authority will provide Effluent to be
used by our Company at the electric generating facility to be constructed in
South Lebanon Township, Pennsylvania.
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Supply of Effluent
Effluent Supply
Subsequent to completion of the Pipeline and throughout the Term of the
Effluent Supply Agreement, the Authority shall make available to our Company a
supply of Effluent not less than 2,160,000 gallons per day. In the event of a
shortfall, our Company may elect to accept potable water from the Authority in
accordance with the Effluent Supply Agreement.
Our Company shall not be obligated to purchase any minimum amount of
Effluent and shall be entitled to seek and obtain water from other available
sources. The Authority shall use its best efforts to comply with requests by our
Company for excess Effluent (which shall not exceed (i) 4,600,000 gallons per
day or (ii) 1,679,000,000 gallons per calendar year). In addition, the Authority
shall use its best efforts to meet our Company's minimum Effluent requirements.
Compensation
Our Company will pay the Authority monthly for all Effluent delivered
to the Point of Delivery during the prior month. The base rate for Effluent
supplied shall be: (i) for 0-2,160,000 gallons per day, $0.29 per thousand
gallons and (ii) for 2,160,000 or greater gallons per day, $0.21 per thousand
gallons (such rates shall be subject to annual escalation in accordance with
GDPIPD).
Service Interruptions
The Authority shall have a reasonable period of time (not to exceed 18
hours) to make repairs and to restore service upon a temporary interruption in
Effluent delivery attributable to a break or leak in the Pipeline.
Non-Conforming Effluent
Our Company shall have the right to reject all Non-Conforming Effluent.
Pipeline and Real Estate Rights
Concerning the Pipeline
Our Company shall be solely responsible, at its cost and expense, for
constructing and installing the Pipeline.
Our Company and the Authority shall cooperate in good faith to obtain
the necessary Real Estate Rights for constructing, operating, maintaining and
accessing the Pipeline.
Operation and Maintenance
The Authority shall operate and maintain the Pipeline in accordance
with the Effluent Supply Agreement, and as compensation, our Company shall pay
to the Authority $18,250 per year, which amount will escalate annually in
accordance with the GDPIPD.
Capital Improvements
The Effluent Supply Agreement provides for Capital Improvements.
Potable Water
The Authority shall make available to our Company on a continuous basis
a potable water supply of not less than 50 gallons per minute. Our Company shall
not be obligated to purchase a minimum amount of potable water, but shall pay
the Authority for potable water accepted at the Potable Delivery Point at the
rate applicable to our Company set forth in the Authority's applicable rate
schedule.
Force Majeure
If either Party shall be unable to carry out any obligation under the
Effluent Supply Agreement due to Force Majeure, the Effluent Supply Agreement
shall remain in effect, but such obligation shall be suspended for the period
necessary as a result of the Force Majeure; provided, that: (i) the
non-performing Party gives the other Party written notice not later than 48
hours after the occurrence of the Force Majeure describing the particulars of
the Force Majeure; (ii) the suspension of performance is of no greater scope and
of longer duration than is required by the Force Majeure; and (iii) the
non-performing Party uses its best efforts to remedy its inability to perform.
Notwithstanding the foregoing, the settlement of strikes, lockouts, and other
labor disputes shall be entirely within the discretion of the affected Party,
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and such Party shall not be required to settle any strike, lockout or other
labor dispute on terms which it deems inadvisable.
Term
The term of the Effluent Supply Agreement shall be 25 years unless
terminated early as a result of (i) our Company's inability to obtain financing
for our Project; (ii) our Company's inability to obtain necessary approvals to
construct and operate our Project; (iii) failure by our Company to deliver the
Commencement Notice by December 31, 2004, or (iv) the occurrence of any event of
default.
Early Termination for Event of Default
A Party may terminate the Effluent Supply Agreement (i) upon a
Bankruptcy Event of the other Party or (ii) if the other Party fails to perform
or observe any of its material obligations under the Effluent Supply Agreement
within the time contemplated by the Effluent Supply Agreement and such failure
continues for a period of time greater than 30 days from the defaulting Party.
Governing Law
The Effluent Supply Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania.
Pennsy Agreements
Our Company (as assignee of AES Ironwood, Inc.) and Pennsy Supply, Inc.
("Pennsy") have entered into an Agreement Relating to Real Estate, dated as of
October 22, 1998, under which Pennsy has agreed to grant to our Company specific
easements and the right to pump water from Pennsy-owned property. The easements,
which are primarily for access and utility purposes, would run from property
owned by our Company (on which it will develop and construct its electric
generating facility) across property owned by Pennsy and require that our
Company-owned property be used as a power plant. Pennsy has also agreed to grant
to our Company easements with respect to storm-water facilities and construction
of a rail spur. Pennsy will make water available to our Company during
construction and testing of our Facility and for as long as our Company operates
our Facility, and our Company will bear all costs and expenses with respect to
water-pumping. In consideration for the easements and the water-pumping rights,
our Company has agreed to convey to Pennsy title to a parcel of land adjacent to
the property owned by our Company.
Our Company and Pennsy have also entered into an Easement and Right of
Access Agreement, dated as of April 15, 1999, under which Pennsy has granted to
our Company the rights and easements referred to in the prior paragraph as well
as specific other rights and easements required by our Company for the
construction and operation of our Facility.
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ROLE OF THE INDEPENDENT ENGINEER
Stone & Webster will initially serve as the Independent Engineer in
accordance with the Indenture.
Under a consulting services agreement (the "Independent Engineer
Agreement") with our Company, and in accordance with the Indenture, the
Independent Engineer is responsible for confirming the reasonableness of
statements and projections made in specified certificates required to be
provided, including with respect to
o satisfaction of certain requirements under the EPC Contract;
o the cost of and occurrence of the completion of rebuilding,
repairing or restoring of our Facility following an Event of
Loss;
o under specified circumstances, the calculation of debt service
coverage ratios and the consistency of assumptions made in
connection with such calculations;
o whether any termination, amendment or modification of any
Project Contract would reasonably be expected to have a
Material Adverse Effect; and
o specified tests required for the issuance of additional debt.
The Trustee may remove the Independent Engineer if at any time the
Independent Engineer becomes incapable of acting or is, or is reasonably likely
to be, adjudged bankrupt or insolvent or a receiver is appointed for, or any
public officer shall take charge or control of, the Independent Engineer or its
property or its affairs for the purpose of rehabilitation, conservation or
liquidation, and shall appoint a successor Independent Engineer. Within 30 days
of receipt by the Trustee of a written notification from our Company to the
effect that the Independent Engineer has failed to carry out its obligations in
a timely manner, and in other circumstances, the Trustee must remove the
Independent Engineer and appoint a successor Independent Engineer from those
engineers then listed on a schedule to the Indenture. We will pay for all
services performed by the Independent Engineer and its reasonable costs and
expenses related to such services.
If our Company and the Independent Engineer are in dispute in respect
of a notice, plan, report, certificate or budget and we are unable to resolve
the dispute within seven days of the Independent Engineer expressing its
disagreement with such notice, plan, report, certificate or budget, a single
independent engineer (the "Third-Party Engineer") will be designated to consider
and decide the issues raised by such dispute. The selection of such Third-Party
Engineer will be made from the list of engineers described below. We must
designate the Third-Party Engineer from such list not later than the third day
following the expiration of the seven-day period described above and such
designation shall become effective in three days. Within three days of the
designation of a Third-Party Engineer, our Company and the Independent Engineer
will submit to the Third-Party Engineer a notice setting forth in detail such
person's position in respect of the issues in dispute. Such notice shall include
supporting documentation, if appropriate.
The Third-Party Engineer must complete all proceedings and issue his
decision with regard to the issues in dispute as promptly as reasonably
possible, but in any event within 10 days of the date on which he is designated
as Third-Party Engineer, unless the Third-Party Engineer reasonably determines
that additional time is required in order to give adequate consideration to the
issues raised. In such case the Third-Party Engineer must state in writing his
reasons for believing that additional time is needed and shall specify the
additional period required, which such period shall not exceed 10 days without
our Company's agreement.
If the Third-Party Engineer determines that the position set forth in
the Independent Engineer's notice is correct, it must so state and must state
the corrective actions to be taken by our Company. In such case, we shall
promptly take such actions. We shall thereafter bear all costs which may arise
from actions taken under the Third-Party Engineer's decision. If the Third-Party
Engineer determines that the position set forth in the Independent Engineer's
notice is not correct, it must so state and must state the appropriate actions
to be taken by us. In such case, we shall take such actions and for purposes of
the Indenture, the Independent Engineer and the Trustee shall be deemed to have
approved, confirmed, concurred in or consented to the notice, plan, report,
certificate or budget in dispute. The decision of the Third-Party Engineer will
be final and non-appealable. We shall bear all reasonable costs incurred by the
Third-Party Engineer in connection with this dispute resolution mechanism.
The Third-Party Engineer will be chosen from the list of qualified
engineers set forth in a schedule to the Indenture. Such list will also be used
by the Trustee to choose a successor Independent Engineer. At any time either
our Company or the Trustee may remove a particular engineer from the list by
obtaining the other person's reasonable
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consent to such removal. However, neither our Company nor the Trustee may remove
a name or names from the list if such removal would leave the list without at
least two names, unless, at the same time, our Company and the Trustee
reasonably agree to the addition of one or more names to such list. During
January of each year, our Company and the Independent Engineer will review the
current list of Third-Party Engineers and give notice to the Trustee of any
proposed additions to the list and any intended deletions. Intended deletions
will automatically become effective 30 days after the Trustee received notice
unless the Trustee makes a written objection within 30 days and provided that
such deletions do not leave the list fewer than two names. Proposed additions to
the list will automatically become effective 30 days after the Trustee received
notice unless the Trustee makes a written objection within 30 days. We may add a
new name or names to the list of Third-Party Engineers at any time; provided,
however, that no person will be added to such list or authorized to act as
Third-Party Engineer unless such person is a competent firm of professional
engineers or consultants with a national reputation.
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THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
In connection with the issuance of the old bonds, we entered into a
registration rights agreement. Under the registration rights agreement, we
agreed to:
o prepare and file a registration statement with the SEC for an
exchange of the new bonds for the old bonds under the
Securities Act;
o use our reasonable efforts to cause the registration statement
to become effective within 180 days following the original
issuance of the old bonds;
o keep the exchange offer open for acceptance for a period of
not less than 30 days (or longer, if required by law) after
the date the registration statement is declared effective by
the SEC; and
o accept for exchange all old bonds validly tendered by and not
withdrawn in accordance with the terms of the exchange offer
registration statement.
As soon as practicable after the exchange offer registration statement
becomes effective, we will offer the holders of old bonds who are not prohibited
by any law or policy of the SEC from participating in this exchange offer the
opportunity to exchange their old bonds for new bonds registered under the
Securities Act that are substantially identical to the old bonds, except that
the new bonds will not contain terms with respect to transfer restrictions,
registration rights and additional interest.
Under limited circumstances, we will use our reasonable best efforts to
cause the SEC to declare effective a shelf registration statement with respect
to the resale of the old bonds and keep the statement effective for up to two
years after the effective date of the shelf registration statement. These
circumstances include:
o if any changes in law or their interpretations by the staff of
the SEC do not permit us to effect the exchange offer as
contemplated by the registration rights agreement;
o if the exchange offer is not consummated within 220 days after
June 25, 1999, or by January 31, 2000;
o if any of Lehman Brothers, Morgan Stanley Dean Witter or
Dresdner Kleinwort Benson North America, as initial purchasers
of the old bonds, so requests with respect to old bonds held
by it following consummation of the exchange offer; and
o if any holder of the old bonds notifies us that it is not
permitted to participate in the exchange offer or has
participated in the exchange offer and has received new bonds
that are not freely tradeable.
Interest in addition to the interest otherwise due will accrue on the
bonds at a rate of 0.5% per annum if the exchange offer is not consummated or
the shelf registration statement is not declared effective by the SEC on or
prior to 220 days after June 25, 1999, or by January 31, 2000. Any additional
interest shall accrue on the old bonds from and including the date on which the
circumstances giving rise to such additional interest shall occur to but
excluding the date on which all such circumstances have been cured. Any such
additional interest will be payable on the bond payment dates.
To exchange your old bonds for transferable new bonds in the exchange
offer, you will be required to make the following representations:
o any new bonds that you receive will be acquired in the
ordinary course of your business;
o you have no arrangement or understanding with any person or
entity to participate in the distribution of the new bonds;
o you are not our "affiliate," as defined in Rule 405 of the
Securities Act;
o you are not a broker-dealer, and you are not engaged in and do
not intend to engage in the distribution of the new bonds; and
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o if you are a broker-dealer that will receive new bonds for
your own account in exchange for old bonds, you acquired those
bonds as a result of market-making activities or other trading
activities and you will deliver a prospectus, as required by
law, in connection with any resale of such new bonds.
In addition, if we are required to file a shelf registration statement,
we may require you to deliver information to be used in connection with the
shelf registration statement in order to have your bonds included in the shelf
registration statement. A holder who sells old bonds under the shelf
registration statement generally will be required to be named as a selling
security holder in the related prospectus and to deliver a prospectus to
purchasers. Such a holder will also be subject to the civil liability provisions
under the Securities Act in connection with such sales and will be bound by the
provisions of the registration rights agreement that are applicable to such a
holder, including indemnification obligations.
The description of the registration rights agreement contained in this
section is a summary only. For more information, you may review the provisions
of the registration rights agreement that we filed with the SEC as an exhibit to
the registration statement of which this prospectus is a part.
Resale of New Bonds
Based on the interpretations of the SEC staff in no-action letters
issued to third parties, we believe that new bonds issued under the exchange
offer may be offered for resale, resold and otherwise transferred by you as the
holder of the new bonds without compliance with the registration and prospectus
delivery provisions of the Securities Act, if:
o you are not our "affiliate" within the meaning of Rule 405
under the Securities Act;
o such new bonds are acquired in the ordinary course of your
business;
o you do not intend to participate in the distribution of such
new bonds; and
o if you are a broker-dealer that will receive new bonds for
your own account in exchange for old bonds, you acquired those
bonds as a result of market-making activities or other trading
activities and you will deliver a prospectus, as required by
law, in connection with any resale of such new bonds.
If you do not satisfy the above conditions, you
o cannot rely on such interpretations by the SEC staff; and
o must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a
secondary resale transaction.
We do not intend to seek our own no-action letter, and there can be no
assurance that the SEC staff would make a similar determination with respect to
the new bonds as it has in prior no-action letters issued to other parties. In
November 1998, the SEC proposed certain changes to the regulatory structure for
offerings registered under the Securities Act. The SEC has stated that, if these
proposals are adopted, the SEC staff will repeal its interpretations set forth
in prior no-action letters. We cannot predict whether these proposals will be
adopted or, if they are adopted, when and in what form they will be adopted.
Unless an exemption from registration is otherwise available, any
bondholder intending to distribute new bonds should be covered by an effective
registration statement under the Securities Act containing the selling
bondholder's information required by Item 507 of Regulation S-K under the
Securities Act. This prospectus may be used for an offer to resell, resale or
other retransfer of new bonds only as specifically described in this prospectus.
Please read the section captioned "Plan of Distribution" for more details
regarding the transfer of new bonds.
Terms of the Exchange Offer
Upon the terms and subject to the conditions described in this
prospectus and in the letter of transmittal, we will accept for exchange any old
bonds properly tendered and not withdrawn prior to the expiration date. We will
issue new bonds in principal amount equal to the principal amount of old bonds
surrendered under the exchange offer. Old bonds may be tendered for new bonds
only in integral multiples of $1,000.
The exchange offer is not conditioned upon any minimum aggregate
principal amount of old bonds being tendered for exchange.
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As of the date of this prospectus, $308,500,000 aggregate principal
amount of the old bonds are outstanding. This prospectus and the letter of
transmittal are being sent to all registered holders of old bonds. There will be
no fixed record date for determining registered holders of old bonds entitled to
participate in the exchange offer.
We intend to conduct the exchange offer in accordance with the
provisions of the registration rights agreement, the applicable requirements of
the Securities Act and the Securities Exchange Act and the rules and regulations
of the SEC. Old bonds that are not tendered for exchange in the exchange offer
will remain outstanding and continue to accrue interest and will be entitled to
the rights and benefits such holders have under the indenture relating to the
bonds and the registration rights agreement.
We will be deemed to have accepted for exchange properly tendered old
bonds when we have given oral or written notice of the acceptance to the
exchange agent and complied with the applicable provisions of the registration
rights agreement. The exchange agent will act as agent for the tendering holders
for the purposes of receiving the new bonds from us.
If you tender old bonds in the exchange offer, you will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
letter of transmittal, transfer taxes with respect to the exchange of old bonds.
We will pay all charges and expenses, other than applicable taxes described
below, in connecting with the exchange offer. It is important that you read the
section labeled "--Fees and Expenses" for more details regarding fees and
expenses incurred in the exchange offer.
We will return any old bonds that we do not accept for exchange for any
reason without expense to their tendering holder as promptly as practicable
after the expiration or termination of the exchange offer.
Neither AES Ironwood, L.L.C. nor its board of directors makes any
recommendation to holders of the old bonds as to whether to tender or refrain
from tendering all or any portion of their old bonds in the exchange offer. In
addition, no one has been authorized to make any such recommendation. Holders of
the old bonds must make their own decision whether to tender pursuant to the
exchange offer, and, if so, the aggregate amount of old bonds to tender after
reading this prospectus and the letter of transmittal and consulting with their
advisers, if any, based on their financial position and requirements.
Expiration Date
The exchange offer will expire at 5:00 p.m., New York City time
________, 2000, unless, in our sole discretion, we extend it.
Extensions, Delays in Acceptance, Termination or Amendment
We expressly reserve the right, at any time or various times, to extend
the period of time during which the exchange offer is open. We may delay
acceptance of any old bonds by giving oral or written notice of such extension
to their holders. During any such extensions, all old bonds previously tendered
will remain subject to the exchange offer, and we may accept them for exchange.
In order to extend the exchange offer, we will notify the exchange
agent orally or in writing of any extension. We will notify the registered
holders of old bonds of the extension no later than 9:00 a.m., New York City
time, on the Business Day after the previously scheduled expiration date.
If any of the conditions described below under "--Conditions to the
Exchange Offer" have not been satisfied, we reserve the right, in our sole
discretion:
o to delay accepting for exchange any old bonds;
o to extend the exchange offer; or
o to terminate the exchange offer
by giving oral or written notice of such delay, extension or termination to the
exchange agent. Subject to the terms of the registration rights agreement, we
also reserve the right to amend the terms of the exchange offer in any manner.
Any such delay in acceptance, extension, termination or amendment will
be followed as promptly as practicable by oral or written notice thereof to the
registered holders of old bonds. If we amend the exchange offer in a manner that
we determine to constitute a material change, we will promptly file a
post-effective amendment to the registration statement and disclose such
amendment by means of a prospectus supplement when the post-effective amendment
has
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<PAGE>
been declared effective by the SEC. The supplement will be distributed to the
registered holders of the old bonds. Depending upon the significance of the
amendment and the manner of disclosure to the registered holders, we will extend
the exchange offer if the exchange offer would otherwise expire during any such
period of delay.
Conditions to the Exchange Offer
Despite any other term of the exchange offer, we will not be required
to accept for exchange, or exchange any new bonds for, any old bonds, and we may
terminate the exchange offer as provided in this prospectus before accepting any
old bonds for exchange, if in our reasonable judgment:
o the exchange offer, or the making of any exchange by a holder
of old bonds, would violate applicable law or any applicable
interpretation of the staff of the SEC; or
o any action or proceeding has been instituted or threatened in
any court or by or before any governmental agency with respect
to the exchange offer that, in our judgment, would reasonably
be expected to impair our ability to proceed with the exchange
offer.
In addition, we will not be obligated to accept for exchange the old
bonds of any holder that has not made to us the representations described under
"--Purpose and Effect of the Exchange Offer," "--Procedures for Tendering" and
"Plan of Distribution" and such other representations as may be reasonably
necessary under applicable SEC rules, regulations or interpretations to make
available to us an appropriate form for registration of the new bonds under the
Securities Act.
We expressly reserve the right to amend or terminate the exchange offer
and to reject for exchange any old bonds not previously accepted for exchange,
upon the occurrence of any of the conditions to the exchange offer specified
above. We will give oral or written notice of any extension, amendment,
non-acceptance or termination to the registered holders of the old bonds as
promptly as practicable.
These conditions are for our sole benefit, and we may assert them or
waive them in whole or in part at any time or at various times in our sole
discretion. If we fail at any time to exercise any of these rights, this failure
will not mean that we have waived our rights. Each such right will be deemed an
ongoing right that we may assert at any time or at various times.
In addition, we will not accept for exchange any old bonds tendered,
and will not issue new bonds in exchange for any such old bonds, if at such time
any stop order has been threatened or is in effect with respect to the
registration statement of which this prospectus constitutes a part or the
qualification of the indenture relating to the bonds under the Trust Indenture
Act of 1939.
Procedures for Tendering
How to Tender Generally
Only a holder of old bonds may tender such old bonds in the exchange
offer. To tender in the exchange offer, a holder must:
o complete, sign and date the letter of transmittal, or a
facsimile of the letter of transmittal;
o have the signature on the letter of transmittal guaranteed if
the letter of transmittal so requires; and
o mail or deliver such letter of transmittal or facsimile to the
exchange agent prior to the expiration date; or
o comply with the automated tender offer program procedures of
The Depository Trust Company, or DTC, described below.
In addition, either:
o the exchange agent must receive, prior to the expiration date,
a timely confirmation of book-entry transfer of such old bonds
into the exchange agent's account at DTC according to the
procedure for book-entry transfer described below or a
properly transmitted agent's message; or
o the holder must comply with the guaranteed delivery procedures
described below.
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<PAGE>
To be tendered effectively, the exchange agent must receive any
physical delivery of the letter of transmittal and other required documents at
its address provided above under "Prospectus Summary--The Exchange Agent" prior
to the expiration date.
The tender by a holder that is not withdrawn prior to the expiration
date will constitute an agreement between the holder and us in accordance with
the terms and subject to the conditions described in this prospectus and in the
letter of transmittal.
The method of delivery of the Letter of Transmittal and all other
required documents to the exchange agent is at your election and risk. rather
than mail these items, we recommend that you use an overnight or hand delivery
service. In all cases, you should allow sufficient time to assure delivery to
the exchange agent before the expiration date. you should not send the Letter of
Transmittal to us. You may request your brokers, dealers, commercial banks,
trust companies or other nominees to effect the above transactions for you.
How to Tender if You Are a Beneficial Owner
If you beneficially own old bonds that are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and you wish to
tender those bonds, you should contact the registered holder promptly and
instruct it to tender on your behalf.
Signatures and Signature Guarantees
You must have signatures on a letter of transmittal or a notice of
withdrawal (as described below) guaranteed by a member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States, or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934,
that is a member of one of the recognized signature guarantee programs
identified in the letter of transmittal, unless the old bonds are tendered:
o by a registered holder who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery
Instructions" on the letter of transmittal; or
o for the account of a member firm of a registered national
securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondence in the United States, or an
eligible guarantor institution.
If the letter of transmittal or any bonds or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, those
persons should so indicate when signing. Unless waived by us, they should also
submit evidence satisfactory to us of their authority to deliver the letter of
transmittal.
Tendering Through DTC's Automated Tender Offer Program
The exchange agent and DTC have confirmed that any financial
institution that is a participant in DTC's system may use DTC's automated tender
offer program to tender. Participants in the program may, instead of physically
completing and signing the letter of transmittal and delivering it to the
exchange agent, transmit their acceptance of the exchange offer electronically.
They may do so by causing DTC to transfer the old bonds to the exchange agent in
accordance with its procedures for transfer. DTC will then send an agent's
message to the exchange agent.
The term "agent's message" means a message transmitted by DTC, received
by the exchange agent and forming part of the book-entry confirmation, to the
effect that:
o DTC has received an express acknowledgment from a participant
in its automated tender offer program that is tendering old
bonds that are the subject of such book-entry confirmation;
o such participant has received and agrees to be bound by the
terms of the letter of transmittal or, in the case of an
agent's message relating to guaranteed delivery, that such
participant has received and agrees to be bound by the
applicable notice of guaranteed delivery; and
o the agreement may be enforced against such participant.
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<PAGE>
Determinations Under the Exchange Offer
We will determine in our sole discretion all questions as to the
validity, form, eligibility, time of receipt, acceptance of tendered old bonds
and withdrawal of tendered old bonds. Our determination will be final and
binding. We reserve the absolute right to reject any old bonds not properly
tendered or any old bonds our acceptance of which would, in the opinion of our
counsel, be unlawful. We also reserve the right to waive any defect,
irregularities or conditions of tender as to particular old bonds. Our
interpretation of the terms and conditions of the exchange offer, including the
instructions in the letter of transmittal, will be final and binding on all
parties. Unless waived, all defects or irregularities in connection with tenders
of old bonds must be cured within such time as we shall determine. Although we
intend to notify holders of defects or irregularities with respect to tenders of
old bonds, neither we, the exchange agent nor any other person will incur any
liability for failure to give such notification. Tenders of old bonds will not
be deemed made until such defects or irregularities have been cured or waived.
Any old bonds received by the exchange agent that are not properly tendered and
as to which the defects or irregularities have not been cured or waived will be
returned to the tendering holder, unless otherwise provided in the letter of
transmittal, as soon as practicable following the expiration date.
When We Will Issue New Bonds
In all cases, we will issue new bonds for old bonds that we have
accepted for exchange under the exchange offer only after the exchange agent
timely receives:
o old bonds or a timely book-entry confirmation of such old
bonds into the exchange agent's account at DTC; and
o a properly completed and duly executed letter of transmittal
and all other required documents or a properly transmitted
agent's message.
Return of Old Bonds Not Accepted or Excepted
If we do not accept any tendered old bonds for exchange for any reason
described in the terms and conditions of the exchange offer or if old bonds are
submitted for a greater principal amount than the holder desires to exchange,
the unaccepted or non-exchanged old bonds will be returned without expense to
their tendering holder. In the case of old bonds tendered by book-entry transfer
into the exchange agent's account at DTC according to the procedures described
below, such non-exchanged old bonds will be credited to an account maintained
with DTC. These actions will occur as promptly as practicable after the
expiration or termination of the exchange offer.
Your Representation to Us
By signing or agreeing to be bound by the letter of transmittal, you
will represent to us that, among other things:
o any new bonds that you receive will be acquired in the
ordinary course of your business;
o you have no arrangement or understanding with any person or
entity to participate in the distribution of the new bonds;
o you are not engaged in and do not intend to engage in the
distribution of the new bonds;
o if you are a broker-dealer that will receive new bonds for
your own account in exchange for old bonds, you acquired those
bonds as a result of market-making activities or other trading
activities and you will deliver a prospectus, as required by
law, in connection with any resale of such new bonds; and
o you are not our "affiliate," as defined in Rule 405 of the
Securities Act.
Book-Entry Transfer
The exchange agent will establish an account with respect to the old
bonds at DTC for purposes of the exchange offer promptly after the date of this
prospectus. Any financial institution participating in DTC's system may make
book-entry delivery of old bonds by causing DTC to transfer such old bonds into
the exchange agent's account at DTC in accordance with DTC's procedures for
transfer.
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<PAGE>
Guaranteed Delivery Procedures
If you wish to tender your outstanding bonds but you cannot deliver the
letter of transmittal or any other required documents to the exchange agent or
comply with the applicable procedures under DTC's automated tender offer program
prior to the expiration date, you may tender if:
o the tender is made through a member firm of a registered
national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States, or an
eligible guarantor institution;
o prior to the expiration date, the exchange agent receives from
such member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc.,
commercial bank or trust company having an office or
correspondent in the United States, or eligible guarantor
institution either a properly completed and duly executed
notice of guaranteed delivery by facsimile transmission, mail
or hand delivery or a properly transmitted agent's message and
notice of guaranteed delivery:
o setting forth your name and address, the registered
number(s) of your outstanding bonds and the principal
amount of outstanding bonds tendered;
o stating that the tender is being made thereby; and
o guaranteeing that, within three (3) New York Stock
Exchange trading days after the expiration date, the
letter of transmittal or facsimile thereof, together
with the outstanding bonds or a book-entry
confirmation, and any other documents required by the
letter of transmittal will be deposited by the
eligible guarantor institution with the exchange
agent; and
o the exchange agent receives such properly completed and
executed letter of transmittal or facsimile thereof, as well
as a book-entry confirmation, and all other documents required
by the letter of transmittal, within three (3) New York Stock
Exchange trading days after the expiration date.
Upon request to the exchange agent, a notice of guaranteed delivery
will be sent you if you wish to tender your outstanding bonds according to the
guaranteed delivery procedures described above.
Withdrawal of Tenders
Except as otherwise provided in this prospectus, you may withdraw your
tender at any time prior to the expiration date.
For a withdrawal to be effective:
o the exchange agent must receive a written notice of withdrawal
at one of the addressees listed under "Prospectus Summary--The
Exchange Agent," or
o you must comply with the appropriate procedures of DTC's
automated tender offer program system.
Any notice of withdrawal must:
o specify the name of the person who tendered the old bonds to
be withdrawn; and
o identify the old bonds to be withdrawn, including the
principal amount of such old bonds.
If old bonds have been tendered under the procedure for book-entry
transfer described above, any notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawn old bonds and
otherwise comply with the procedures of DTC.
We will determine all questions as to the validity, form, eligibility
and time of receipt of notice of withdrawal, and our determination shall be
final and binding on all parties. We will deem any old bonds so withdrawn not to
have been validly tendered for exchange for purposes of the exchange offer.
Any old bonds that have been tendered for exchange but that are not
exchanged for any reason will be credited to an account maintained with DTC for
the old bonds. This crediting will take place as soon as practicable after
withdrawal, rejection of tender or termination of the exchange offer. You may
retender properly withdrawn old bonds by following one of the procedures
described under "--Procedures for Tendering" above at any time on or prior to
the expiration date.
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Exchange Agent
The Bank of New York has been appointed exchange agent of the exchange
offer. Questions and requests for assistance and requests for additional copies
of this prospectus or of the letter of transmittal should be directed to the
exchange agent addressed as follows:
By Registered Mail or Certified Mail By Overnight Courier
The Bank of New York The Bank of New York
101 Barclay Street, 7E 101 Barclay Street, 7E
New York, NY 10286 New York, NY 10286
Attention: Terance Rawlins Attention: Terence Rawlins
By Telephone By Facsimile
(212) 815-5988 (212) 815-6339
Fees and Expenses
We will bear the expenses of soliciting tenders. The principal
solicitation is being made by mail; however, we may make additional solicitation
by telegraph, telephone or in person by our officers and regular employees and
those of our affiliates.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to broker-dealers or other soliciting
acceptances of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and reimburse it for its related
reasonable out-of-pocket expenses.
We will pay the cash expenses to be incurred in connection with the
exchange offer. They include:
o SEC registration fees;
o fees and expenses of the exchange agent and trustee;
o accounting and legal fees and printing costs; and
o related fees and expenses.
Transfer Taxes
We will pay all transfer taxes, if any, applicable to the exchange of
old bonds under the exchange offer. The tendering holder, however, will be
required to pay any transfer taxes, whether imposed on the registered holder or
any other person, if:
o certificates representing old bonds for principal amounts not
tendered or accepted for exchange are to be delivered to, or
are to be issued in the name of, any person other than the
registered holder of old bonds tendered;
o tendered old bonds are registered in the name of any person
other than the person signing the letter of transmittal; or
o a transfer tax is imposed for any reason other than the
exchange of old bonds under the exchange offer.
If satisfactory evidence of payment of any transfer taxes payable by a bond
holder is not submitted with the letter of transmittal, the amount of such
transfer taxes will be billed directly to that tendering holder.
Consequences of Failure to Exchange
If you do not exchange your old bonds for new bonds under the exchange
offer, you will remain subject to the existing restrictions on transfer of the
old bonds, and the market for secondary resales is likely to be minimal. In
general, you may not offer or sell the old bonds unless they are registered
under the Securities Act, or if the offer or sale is exempt from registration
under the Securities Act and applicable state securities laws. Except as
required by the registration rights agreement, we do not intend to register
resales of the old bonds under the Securities Act. Unless they are
broker-dealers selling under certain circumstances, holders of old bonds will no
longer have any rights under the registration rights agreement.
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Accounting Treatment
We will record the new bonds in our accounting records at the same
carrying value as the old bonds, which is the aggregate principal amount of the
old bonds, as reflected in our accounting records on the date of exchange.
Accordingly, we will not recognize any gain or loss for accounting purposes in
connection with the exchange offer. Participation in the exchange offer is
voluntary, and you should carefully consider whether to accept. You are urged to
consult your financial and tax advisors in making your own decision on what
action to take.
Further Bond Acquisition
We may in the future seek to acquire untendered old bonds in open
market or privately negotiated transactions, through subsequent exchange offers
or otherwise. We have no present plans to acquire any old bonds that are not
tendered in the exchange offer or to file a registration statement to permit
resales of any untendered old bonds.
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DESCRIPTION OF THE NEW BONDS
General
The following description of specific provisions of the new bonds does
not purport to be complete and is subject to, and qualified in its entirety by
reference to the new bonds and the indenture. Unless otherwise specified, the
description applies to all of the new bonds.
We will issue new bonds under the indenture dated as of June 25, 1999
between our Company and the Trustee. This is the same indenture under which the
old bonds were issued. Copies of the indenture and the other financing documents
are available for inspection during normal business hours at the offices of the
Trustee. The new bonds will be issued in fully registered form without coupons
and in denominations of $100,000 and any integral multiple of $1,000 in excess
thereof.
The indenture permits our Company to issue new bonds and any future
senior secured indebtedness under a supplemental indenture as may be authorized
from time to time in accordance with the indenture. We may also issue any other
series of debt issued under the indenture through a supplemental indenture on
terms established by us subject to the indenture. See "SUMMARY OF PRINCIPAL
FINANCING DOCUMENTS--Indenture--Supplemental Indentures."
The new bonds will be direct obligations of our Company and will be
secured by the Collateral to the same extent as the old bonds.
Principal Amount, Interest Rate and Stated Maturity
We will issue the new bonds in the aggregate principal amount of
$308,500,000. The new bonds will bear interest at the rate per annum set forth
on the cover of this prospectus and have a final maturity date of November 30,
2025.
Payment of Interest and Principal
We will pay interest on the new bonds quarterly in arrears on each
February 28, May 31, August 31 and November 30, commencing August 31, 1999, to
the registered owners on the immediately preceding record date, as such
information appears on the register of our Company.
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We will pay principal on the new bonds in installments semiannually on
each February 28, May 31, August 31 and November 30, commencing February 28,
2002, to the registered owners on the immediately preceding record date as
follows:
PERCENTAGE OF ORIGINAL PRINCIPAL AMOUNT PAYABLE
<TABLE>
<CAPTION>
YEAR FEBRUARY 28 MAY 31 AUGUST 31 NOVEMBER 30 ANNUAL TOTAL
- ---- ----------- ------ --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
2002 0.1600% 0.1600% 0.1600% 0.1600% 0.6400%
2003 0.3850% 0.3850% 0.3850% 0.3850% 1.5400%
2004 0.5150% 0.5150% 0.5150% 0.5150% 2.0600%
2005 0.5700% 0.5700% 0.5700% 0.5700% 2.2800%
2006 0.5800% 0.5800% 0.5800% 0.5800% 2.3200%
2007 0.7400% 0.7400% 0.7400% 0.7400% 2.9600%
2008 0.9200% 0.9200% 0.9200% 0.9200% 3.6800%
2009 0.7800% 0.7800% 0.7800% 0.7800% 3.1200%
2010 0.8150% 0.8150% 0.8150% 0.8150% 3.2600%
2011 1.0300% 1.0300% 1.0300% 1.0300% 4.1200%
2012 0.7600% 0.7600% 0.7600% 0.7600% 3.0400%
2013 0.9600% 0.9600% 0.9600% 0.9600% 3.8400%
2014 1.2900% 1.2900% 1.2900% 1.2900% 5.1600%
2015 1.2400% 1.2400% 1.2400% 1.2400% 4.9600%
2016 1.3550% 1.3550% 1.3550% 1.3550% 5.4200%
2017 1.4650% 1.4650% 1.4650% 1.4650% 5.8600%
2018 1.0100% 1.0100% 1.0100% 1.0100% 4.0400%
2019 1.2050% 1.2050% 1.2050% 1.2050% 4.8200%
2020 1.6250% 1.6250% 1.6250% 1.6250% 6.5000%
2021 1.6500% 1.6500% 1.2000% 1.2000% 5.7000%
2022 1.3900% 1.3900% 1.3900% 1.3900% 5.5600%
2023 1.5000% 1.5000% 1.5000% 1.5000% 6.0000%
2024 1.5500% 1.5500% 1.5500% 1.5500% 6.2000%
2025 1.7300% 1.7300% 1.7300% 1.7300% 6.9200%
=======
100%
</TABLE>
At the direction of our Company, the Trustee shall round principal
amounts to be redeemed to the nearest $1,000.
Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months and, for any period shorter than a full month, on the basis
of the actual number of days elapsed. Interest on the new bonds will accrue from
the most recent date to which interest has been paid on the old bonds.
Payment and Paying Agents
Principal, Make-Whole Premium, if any, and interest in respect of the
new bonds will be payable at the office of the Paying Agent in the County of New
York, The City of New York. The Trustee will serve as the principal Paying Agent
and Transfer Agent. The new bonds may be presented for payment of principal at
the office of any Paying Agent. Payments in respect of principal of the new
bonds will be made only against surrender of the new bonds. Payment in respect
of interest on any interest payment date with respect to any new bond will be
made to the person in whose name the new bond is registered on February 1, May
1, August 1 and November 1 (each a "Regular Record Date"), as the case may be,
immediately preceding such interest payment date, except that interest payable
at maturity will be payable to the person to whom the principal of the new bond
is paid. All payments of principal and interest with respect to certificated new
bonds, if any, will be made by dollar check drawn on a bank in The City of New
York or, for bondholders of at least U.S.$1,000,000 in aggregate principal
amount of bonds, by wire transfer to a dollar account maintained by the payee
with a bank in The City of New York; provided, that a written request from the
bondholder to that effect designating the account is received by the Trustee or
the Paying Agent no later than the Regular Record Date immediately preceding
such interest payment date. Unless such designation is revoked, any such
designation made by such person with respect to such certificated bonds will
remain in effect with respect to any future payments with respect to such
certificated bonds
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payable to such person. Payments with respect to global bonds will be made to
DTC or its nominee, as bondholder, under DTC's rules, regulations and
procedures.
If any payment in respect of a new bond is due on a day that is, at any
place of payment, not a business day, the bondholder will not be entitled to
payment of the amount due until the next succeeding business day at such place
and will not be entitled to any further interest or other payment in respect of
any such delay.
The indenture provides that any money paid by our Company to the
Trustee for any payment with respect to the new bonds that remains unclaimed for
two years will be repaid to us, and thereafter the bondholder will look only to
us for payments thereof as an unsecured creditor, and we shall not be liable to
pay any taxes or other duties in connection with such payment; provided,
however, that unless otherwise provided by applicable law, the right to receive
payment of principal and interest on any new bond (whether at maturity,
redemption or otherwise) will become void at the end of 5 years from the
relevant date thereof (or such shorter period as may be prescribed by applicable
law).
Subject to specific limitations set forth in the indenture, we reserve
the right at any time to vary or terminate the appointment of the Securities
Registrar or any Paying Agent or Transfer Agent with or without cause (upon
giving 30 days' written notice to the Securities Registrar, such Paying Agent or
Transfer Agent, as the case may be, and the Trustee) and to appoint another
Securities Registrar or additional or other Paying Agents or Transfer Agents and
to approve any change in the specified offices through which any Paying Agent or
Transfer Agent acts; provided, that we will at all times maintain a Securities
Registrar, Paying Agent and Transfer Agent in the County of New York, The City
of New York.
Optional Redemption
Our Company may redeem all of the new bonds of each series, in whole or
in part, at our option at any time, at a redemption price equal to the
outstanding principal amount plus accrued and unpaid interest to the redemption
date, together with the applicable Make-Whole Premium.
Mandatory Redemption
Event of Loss and Event of Eminent Domain
If either an Event of Loss or an Event of Eminent Domain shall occur,
as soon as reasonably practicable but no later than the date of receipt by our
Company or the Collateral Agent of Casualty Proceeds or Eminent Domain Proceeds,
as the case may be, we shall make a reasonable good faith determination as to
whether (i) our Facility or any portion can be rebuilt, repaired or restored to
permit operation of our Facility or a portion on a commercially feasible basis
and (ii) the Casualty Proceeds or the Eminent Domain Proceeds, as the case may
be, together with any other amounts that are available to us for such
rebuilding, repair or restoration are sufficient to permit such rebuilding,
repair or restoration of our Facility or a portion thereof. Our determination
shall be evidenced by a Certificate as to Redemption filed with the Collateral
Agent which, if we determine that our Facility or a portion thereof can be
rebuilt, repaired or restored to permit operation thereof on a commercially
feasible basis and that the Casualty Proceeds or the Eminent Domain Proceeds, as
the case may be, together with any other amounts that are available to us for
such rebuilding, repair or restoration, are sufficient, shall also set forth a
reasonable good faith estimate by us of the total cost of such rebuilding,
repair or restoration. We shall deliver to the Collateral Agent at the time it
delivers the Certificate as to Redemption a certificate of the Independent
Engineer, dated the date of the Certificate as to Redemption, confirming that,
based upon reasonable investigation and review of the determination made by us,
the Independent Engineer believes the determination and the estimate of the
total cost, if any, set forth in the Certificate as to Redemption to be
reasonable.
Our Company must redeem all of the new bonds upon an Event of Loss or
an Event of Eminent Domain:
o in whole, at a redemption price equal to 100% of the principal
amount together with any accrued and unpaid interest through
the redemption date, within 90 days after receipt by the
Trustee of Casualty Proceeds or Eminent Domain Proceeds if our
Facility is substantially destroyed and cannot be rebuilt,
repaired or restored to permit operation on a commercially
feasible basis or an Event of Eminent Domain has occurred and
our Facility cannot be operated on a commercially feasible
basis, as the case may be. Our obligation to redeem the bonds
upon an Event of Loss or an Event of Eminent Domain under the
foregoing circumstances is not limited to the Casualty
Proceeds or Eminent Domain Proceeds actually received; or
o in part, at a redemption price equal to 100% of the principal
amount together with any accrued and unpaid interest through
the redemption date, within 90 days after receipt by the
Trustee of Casualty Proceeds or Eminent Domain Proceeds if a
portion of our Facility is destroyed or taken but our Facility
can be rebuilt,
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repaired or restored to permit operation on a commercially
feasible basis. The aggregate amount of the new bonds to be
redeemed under this paragraph will equal the amount received
by the Trustee for such purpose in accordance with the
provision of the collateral agency agreement; provided,
however, that the new bonds shall not be subject to mandatory
redemption when the proceeds not used for rebuilding, repair
or restoration do not exceed $5 million and we certify to the
Trustee, which certification is confirmed by the Independent
Engineer, that (i) such proceeds are not needed for
rebuilding, repair or restoration of our Facility or (ii) not
using such proceeds for the rebuilding, repair or restoration
of our Facility would not reasonably be expected to result in
a Material Adverse Effect.
Any Eminent Domain Proceeds and Casualty Proceeds received by the
Trustee under the two preceding paragraphs shall be deposited in the Redemption
Subaccount.
Upon Receipt of Performance Liquidated Damages under the EPC Contract
If our Company receives performance liquidated damages under the EPC
Contract, we shall, as soon as reasonably practicable, make a reasonable good
faith determination as to whether:
o it is technically feasible to modify, repair or replace any
portion of our Facility in order to remedy the circumstances
giving rise to the obligation of the Contractor to pay such
performance liquidated damages;
o the performance liquidated damages, together with any other
amounts that are available to us for such modification, repair
or replacement, are sufficient to permit such modification,
repair or replacement, including the making of all required
payments of interest and principal on our Company's
Indebtedness during such modification, repair or replacement;
o the projected average Senior Debt Service Coverage Ratio
(after giving effect to such modification, repair or
replacement and the application of the performance liquidated
damages to accomplish the same) during the Power Purchase
Agreement Term (taken as one period) and the Post-Power
Purchase Agreement Period (taken as one period) would be equal
to or greater than the projected average Senior Debt Service
Coverage Ratio set forth in the base case projections for each
such period included in this prospectus; and
o the projected minimum Senior Debt Service Coverage Ratio
(after giving effect to such modification, repair or
replacement and the application of the performance liquidated
damages to accomplish the same) during the Power Purchase
Agreement Term and the Post-Power Purchase Agreement Period
would be equal to or greater than the projected minimum Senior
Debt Service Coverage Ratio set forth in the base case
projections for each such period included in this prospectus.
Our determination shall be evidenced by an Officer's Certificate (together with
such supporting detail as the collateral agent or the Independent Engineer may
reasonably request) filed with the collateral agent which, if we determine that
such portion of our Facility can be modified, repaired or replaced and that the
other statements set forth above are true, shall also set forth our reasonable
good faith estimate of the total cost of such modification, repair or
replacement. We shall deliver to the collateral agent at the time we deliver the
Officer's Certificate referred to above a certificate of the Independent
Engineer, dated the date of the Officer's Certificate, stating that, based upon
reasonable investigation and review of the determinations, assumptions,
conclusions and estimates of costs made by us, the Independent Engineer believes
the determinations, assumptions, conclusions and estimates of costs set forth in
the Officer's Certificate to be reasonable.
If the requirements of the preceding paragraph are satisfied, the
collateral agent shall apply the amounts received from the Contractor to the
payment, or reimbursement to the extent the same have been paid or satisfied by
our Company, of the costs of modification, repair and replacement of that
portion of our Facility that requires modification, repair or replacement in
order to remedy the circumstances giving rise to the obligation of the
Contractor to pay such performance liquidated damages. Upon receipt of an
Officer's Certificate of our Company, confirmed by the Independent Engineer,
certifying that
o all modifications, repairs or replacements of that portion of
our Facility that requires modification, repair or replacement
in order to remedy the circumstances giving rise to the
obligation of the Contractor to pay performance liquidated
damages have been completed and
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o the projected debt service coverage ratio tests referred to in
the immediately preceding paragraph continue to be met, the
collateral agent shall transfer all remaining proceeds of the
performance liquidated damages to us or to whomever we in
writing direct.
If the requirements of the preceding paragraph are not satisfied, then
our Company must redeem the new bonds:
o in part, at a redemption price equal to 100% of the principal
amount together with any accrued and unpaid interest through
the redemption date, within 90 days after receipt by the
Trustee of performance liquidated damages to be used to redeem
a portion of the new bonds. The aggregate amount of the new
bonds to be redeemed under this paragraph is limited to the
amount of performance liquidated damages actually received.
o Any performance liquidated damages under the EPC Contract
received by the Trustee under the preceding paragraph shall be
deposited in the Redemption Subaccount.
Upon Receipt of Proceeds Under the Williams Guaranty
If the power purchase agreement is terminated as a result of an event
of default by the Power Purchaser thereunder and our Company receives proceeds
under the Williams Guaranty in respect thereof, we must redeem the new bonds, in
whole or in part, at a redemption price equal to 100% of the principal amount
together with any accrued and unpaid interest to the redemption date, as soon as
reasonably practicable, but in any event within 90 days of the receipt of such
proceeds. After the payment of specific administrative fees, the aggregate
amount of the new bonds to be redeemed under this paragraph (including accrued
and unpaid interest) will equal an amount which is equal to the amount paid
under the Williams Guaranty multiplied by a fraction the numerator of which is
the then outstanding principal amount of the new bonds and accrued and unpaid
interest and the denominator of which is the principal of and accrued and unpaid
interest on all Senior Debt including the new bonds.
Ratings
The new bonds are expected to be rated "BBB-" by S&P and "Baa3" by
Moody's. Such ratings reflect only the views of the rating agencies at the time
the rating is issued, and any explanation of the significance of such ratings
may only be obtained from the rating agency. There is no assurance that any such
credit ratings will remain in effect for any given period of time or that such
ratings will not be lowered, suspended or withdrawn entirely by the rating
agency, if, in the rating agency's judgment, circumstances so warrant. Any such
lowering, suspension or withdrawal of any rating may have an adverse effect on
the market price or marketability of the new bonds.
Book-Entry, Delivery and Form
The new bonds will initially be represented by one or more permanent
global bonds in definitive, fully registered book-entry form that will be
registered in the name of Cede & Co., the global bond holder, as nominee of DTC.
The global bonds will be deposited on behalf of the acquirors of the new bonds
represented thereby with a custodian for DTC for credit to the respective
accounts of the acquirors or to such other accounts as they may direct at DTC.
See "The Exchange Offer--Book-Entry Transfer."
The Global Bonds
We expect that under procedures established by DTC:
o upon deposit of the global bonds with DTC or its custodian,
DTC will credit on its internal system portions of the global
bonds that shall be comprised of the corresponding respective
amounts of the global bonds to the respective accounts of
persons who have accounts with such depositary; and
o ownership of the bonds will be shown on, and the transfer of
ownership thereof will be effected only through, records
maintained by DTC or its nominee, with respect to interests of
persons who have accounts with DTC ("participants"), and the
records of participants, with respect to interests of persons
other than participants.
So long as DTC or its nominee is the registered owner or holder of any
of the bonds, DTC or such nominee will be considered the sole owner or holder of
such bonds represented by the global bonds for all purposes under the indenture
and under the bonds represented thereby. No beneficial owner of an interest in
the global bonds will be able to transfer such interest except in accordance
with the applicable procedures of DTC in addition to those provided for under
the indenture.
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Payments on the bonds represented by the global bonds will be made to
DTC or its nominee, as the case may be, as the registered owner of the global
bonds. None of our Company, the trustee or any paying agent under the indenture
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in the global
bonds or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interest.
We expect that DTC or its nominee, upon receipt of any payment on the
bonds represented by the global bonds, will credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the global bonds as shown in the records of DTC or its nominee. We also expect
that payments by participants to owners of beneficial interests in the global
bonds held through such participants will be governed by standing instructions
and customary practice as is now the case with securities held for the accounts
of customers registered in the names of nominees for such customers. Such
payment will be the responsibility of such participants.
Transfers between participants in DTC will be effected in accordance
with DTC rules and will be settled in immediately available funds.
DTC has advised us that DTC will take any action permitted to be taken
by a holder of bonds, including the presentation of bonds for exchange as
described below, only at the direction of one or more participants to whose
account the DTC interests in the global bonds are credited and only in respect
of the aggregate principal amount as to which such participant or participants
has or have given such direction. However, if there is an event of default under
the indenture, DTC will exchange the global bonds for certificated securities
that it will distribute to its participants.
DTC has advised us as follows:
o DTC is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning
of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency"
registered under the provisions of Section 17A of the
Securities Exchange Act of 1934;
o DTC holds securities that its participants deposit with DTC
and facilitates the settlement among participants of
securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized
book-entry changes in participants' accounts, thereby
eliminating the need for physical movement of securities
certificates;
o Direct participants include securities brokers and dealers,
banks, trust companies, clearing corporations and other
organizations;
o DTC is owned by a number of its participants and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc.
and the National Association of Securities Dealers, Inc.;
o Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that
clear through or maintain a custodial relationship with a
direct participant, either directly or indirectly; and
o The rules applicable to DTC and its participants are on file
with the SEC.
Although DTC is expected to follow these procedures in order to
facilitate transfers of interests in the global bonds among participants of DTC,
it is under no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither our Company nor the trustee will have any
responsibility for the performance by DTC or its direct or indirect participants
of their respective obligations under the rules and procedures governing their
operations.
Certificated Securities
As of the date of this prospectus, all of the interests in old bonds
are in book-entry form. It is not expected that any old bonds will be in
registered certificated form at the time of the exchange. It is expected that
all old bonds before the exchange, and all bonds outstanding after the exchange,
will be represented by global certificates for bonds in bearer form held by The
Bank of New York as depositary and that DTC will have a book-entry interest in
those bonds. Beneficial interests in those bonds will be held through
participants in DTC acting as securities intermediaries. Therefore, references
in this section to bonds are references to beneficial interests in the bonds in
book-entry form except
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where the discussion is explicitly about certificated bonds, and references to
owners are to owners of those beneficial interests.
Interests in the global bonds will be exchanged for certificated
securities if:
o DTC or any successor depositary (the "Depositary") notifies us
that it is unwilling or unable to continue as depositary for
the global bonds, or DTC ceases to become a "clearing agency"
registered under the Securities Exchange Act of 1934, and a
successor depositary is not appointed by us within 90 days;
o an Event of Default has occurred and is continuing with
respect to the bonds and the registrar has received a request
from the Depositary to issue certificated securities within 30
days of such request; or
o we determine not to have the bonds represented by global
bonds.
Upon the occurrence of any of the events described in the preceding
sentence, we will cause the appropriate certificates securities to be delivered.
Neither our Company nor the Trustee will be liable for any delay by the
Depositary or its nominee in identifying the beneficial owners of the related
bonds. Each such person may conclusively rely on instructions from the
Depositary or the nominee for all purposes, including the registration and
delivery and the respective principal amounts, of the new bonds to be issued.
Owners of old bonds should instruct the brokers, dealers, commercial
banks or trust companies with whom they have securities accounts or their
nominees to tender for them. Exchanges by owners will be represented by an
exchange of global certificates for old bonds held by the depositary for global
certificates for new bonds. If fewer than all old bonds are tendered for
exchange, the depositary will hold separate global certificates for bonds
representing the appropriate aggregate amounts of remaining old bonds and of new
bonds.
Same-Day Settlement and Payment
The indenture requires that payments in respect of the bonds
represented by the global bonds (including principal, premium, if any, and
interest) be made by wire transfer of immediately available funds to the
accounts specified by the global bond holder. With respect to certificated
bonds, if any, our Company will make all payments of principal, premium, if any,
and interest by wire transfer of immediately available funds to the accounts
specified by the holders thereof or, if no such account is specified, by mailing
a check to each such holder's registered address. Secondary trading in long-term
bonds and debentures of corporate issues is generally settled in clearinghouse
or next-day funds. In contrast, bonds represented by the global bonds are
expected to be eligible to trade in the PORTAL market and to trade in DTC's
Same-Day Funds Settlement System, and any permitted secondary market trading
activity in such bonds will, therefore, be required by DTC to be settled in
immediately available funds. We expect that secondary trading in the
certificated bonds will also be settled in immediately available funds.
Because of time zone differences, the securities account of a Euroclear
System or Cedel Bank participant purchasing an interest in global bonds from a
participant in DTC will be credited, and any such crediting will be reported to
the relevant Euroclear or Cedel participant, during the securities settlement
processing day (which must be a Business Day for Euroclear or Cedel) immediately
following the settlement date of DTC. DTC has advised us that cash received in
Euroclear or Cedel as a result of sales of interests in a global bond by or
through a Euroclear or Cedel participant to a participant in DTC will be
received with value on the settlement date of DTC but will be available in the
relevant Euroclear or Cedel cash account only as of the Business Day for
Euroclear or Cedel following DTC's settlement date.
Year 2000
DTC management is aware that some computer applications, systems, and
the like for processing data that are dependent upon calendar dates, including
dates before, on, and after January 1, 2000, may encounter "Year 2000 problems."
DTC has informed its participants and other members of the financial community
that it has developed and is implementing a program so that its systems, as the
same relate to the timely payment of distributions (including principal and
income payments) to securityholders, book-entry deliveries, and settlement of
trades within DTC, continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase which is expected to be
completed within approximate time frames.
However, DTC's ability to perform property its services is also
dependent upon other parties, including but not limited to issuers and their
agents, as well as third-party vendors from whom DTC licenses software and
hardware, and third-party vendors on whom DTC relies for information or the
provision of services, including, telecommunication and electrical utility
service providers, among others. DTC has informed the financial community that
it is contacting (and
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will continue to contact) third-party vendors from whom DTC acquires services
to: (i) impress upon them the importance of such services being Year 2000
compliant and (ii) determine the extent of their efforts for Year 2000
remediation (and, as appropriate, testing) of their services. In addition, DTC
is in the process of developing such contingency plans as it deems appropriate.
Limited Recourse Nature of the New Bonds
All obligations in connection with the new bonds are obligations solely
of our Company. The bondholders shall have recourse only to the Collateral and
our Company for repayment of the new bonds. No holder of ownership interests in
our Company or any other Affiliate of our Company or any of their respective
incorporators, stockholders, directors, officers or employees will guarantee the
payment of the new bonds. The bondholders shall have no claim against or
recourse to the holders of the ownership interests in our Company or any other
Affiliate of our Company or their respective incorporators, stockholders,
directors, officers or employees by operation of law or otherwise for the
repayment of the new bonds.
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SUMMARY OF PRINCIPAL FINANCING DOCUMENTS
The following summaries of selected provisions of the Indenture and the
other Financing Documents are qualified in their entirety by reference to the
full text of the Indenture and the other Financing Documents, including the
definitions therein. Capitalized terms used herein and not otherwise defined in
this Offering Circular have the meanings given to them in the Indenture or the
other Financing Documents.
Indenture
Accounts
Indenture Accounts
The following accounts (the "Indenture Accounts") have been established
by the Trustee: the Bond Payment Account, including the Interest Payment
Subaccount, the Principal Payment Subaccount and the Redemption Subaccount, and
the Construction Interest Account. All amounts from time to time held in each
Indenture Account shall be held in the name of the Trustee subject to the lien
and security interest granted under the Indenture and in the custody of the
Depositary Bank on behalf of the Trustee.
Bond Payment Account
The Trustee shall deposit (i) all funds held in the Bond Payment
Account and all funds received by it for the payment of interest on the bonds
into the Interest Payment Subaccount for disbursement in accordance with the
Indenture and (ii) all funds received by it for the payment of principal on the
bonds (including any funds transferred from the Redemption Subaccount) into the
Principal Payment Subaccount for disbursement in accordance with the Indenture.
Construction Interest Account
The Trustee shall deposit all funds received by it for the payment of
interest on the bonds from and including the date of original issuance of the
bonds then outstanding to and through the Commercial Operation Date into the
Construction Interest Account. The Trustee will disburse from the Construction
Interest Account the amount required to pay interest on the bonds when due
(whether on an Interest Payment Date or upon call for redemption or by
acceleration or otherwise). On the Commercial Operation Date and upon our
Company's delivery to the Collateral Agent and the Trustee of a Commercial
Operation Certificate, the Trustee shall transfer all funds remaining in the
Construction Interest Account to the Bond Payment Account for deposit in the
Interest Payment Subaccount.
Interest Payment Subaccount, Principal Payment Subaccount and Redemption
Subaccount
(a) The Trustee is authorized and directed to disburse from the
Interest Payment Subaccount, the amount required to pay interest on the bonds
when due (whether on an Interest Payment Date or upon call for redemption or by
acceleration or otherwise).
(b) The Trustee is authorized and directed to disburse from the
Principal Payment Subaccount, the amount required to pay principal on the bonds
when due (whether on a principal payment date or upon call for redemption or by
acceleration or otherwise).
(c) The Trustee is authorized and directed to disburse funds from the
Redemption Subaccount (when amounts on deposit therein equal or exceed
$5,000,000) for the redemption of bonds in accordance with the Indenture. The
foregoing notwithstanding, the Trustee shall transfer funds remaining in the
Redemption Subaccount for more than one year and not applied to the redemption
of bonds under the Indenture to the Principal Payment Subaccount for application
by the Trustee in accordance with the Indenture.
Affirmative Covenants
Our Company will make the following affirmative covenants:
Payment of Principal, Premium, if any, and Interest
Our Company shall duly and punctually pay, or cause to be paid, the
principal of, premium, if any, and interest on, and all other amounts payable in
respect of, the bonds in accordance with their terms and the terms of the
Indenture and of the related Series Supplemental Indenture.
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Reporting Requirements
Our Company shall furnish to the Senior Parties:
(a) as soon as practicable and in any event within 60 days after the
end of the first, second and third quarterly accounting periods of each fiscal
year of our Company (commencing with the quarter ending September 30, 1999), an
unaudited balance sheet of our Company as of the last day of such quarterly
period and the related statements of income and cash flows, and reports of all
dividends and other distributions paid to owners during such quarterly period
prepared in accordance with GAAP and (in the case of second and third quarterly
periods) for the portion of the fiscal year ending with the last day of such
quarterly period, setting forth in each case in comparative form corresponding
unaudited figures from the preceding fiscal year and accompanied by a written
statement of an Authorized Representative of our Company to the effect that such
financial statements fairly represent our Company's financial condition and
results of operations at and as of their respective dates;
(b) as soon as practicable and in any event within 120 days after the
end of each fiscal year of our Company (commencing with the fiscal year ended
December 31, 1999), a balance sheet of our Company as of the end of such year
and the related statements of income and cash flow during such year setting
forth in each case in comparative form corresponding figures from the preceding
fiscal year, accompanied by an audit report thereon of a firm of independent
public accountants of recognized national standing;
(c) at the time of the delivery of the financial statements provided
for in clause (a) and (b) above, an Officer's Certificate to the effect that, to
the best of such officer's knowledge, (i) our Company is in compliance with all
of its material obligations under the terms of the Transaction Documents the
non-performance of which has resulted or could reasonably be expected to result
in a Material Adverse Effect and (ii) to the best of such officer's knowledge,
no Default or Event of Default has occurred and is continuing or, if any Default
or Event of Default has occurred and is continuing, specifying the nature and
extent thereof and what action our Company is taking or proposes to take in
response thereto; and
(d) each of the following items:
(i) promptly after our Company obtains actual knowledge of the
occurrence thereof, written notice of the occurrence of any event or condition
which constitutes an Event of Default and an Officer's Certificate of our
Company setting forth the details thereof and the action which our Company is
taking or proposes to take with respect thereto;
(ii) promptly after our Company obtains actual knowledge of the
occurrence thereof, written notice of the occurrence of any Event of Eminent
Domain or any Event of Loss and an Officer's Certificate of our Company setting
forth the details thereof and the action which our Company is taking or proposes
to take with respect thereto; and
(iii) until the occurrence of the Commercial Operation Date, within 45
days after the end of each fiscal quarter of our Company (commencing with its
quarter ending September 30, 1999), a quarterly construction report describing
the progress of our Facility's construction and expenditure of funds.
(e) Our Company shall furnish or cause to be furnished to the Senior
Parties no later than six months prior to the expiration of the term of the
Power Purchase Agreement (the "Term Expiration Date") a report (an "Independent
Forecast") prepared by an independent consultant which sets forth projections of
(i) electricity prices for the PJM Market (or if such market no longer exists at
such time, any successor market or substitute market as determined in good faith
by our Company which approximates, to the extent practicable, such region) and
(ii) gas prices on a delivered basis to our Facility, in each case on at least
an annual basis through the final maturity date for the bonds; provided, that if
(A) our Company enters into a Replacement Power Purchase Agreement, effective as
of the Term Expiration Date and extending to at least the final maturity date
for the bonds, (B) the projected Senior Debt Service Coverage Ratio through the
final maturity date for the bonds, based on the provisions of such Replacement
Power Purchase Agreement shall be greater than 2.0 to 1 and (C) the senior
unsecured long term debt of such power purchaser(s) under such agreement(s) is
rated at least Investment Grade, our Company shall not be required to provide
the forecast referenced herein.
(f) Upon the request of any bondholder (or the Trustee on behalf of a
holder of a beneficial interest in the bonds), our Company shall furnish such
information as is specified in paragraph (d)(4) of Rule 144A to such bondholder
(and holders of beneficial interests in the bonds) to a prospective purchaser of
the bonds (and prospective purchasers of beneficial interests in the bonds) who
is a Qualified Institutional Buyer or Institutional Accredited Investor or to
the Trustee for delivery to such bondholder or prospective purchaser of the
bonds, as the case may be, unless, at the time of
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such request, our Company is subject to the reporting requirements of Section 13
or 15(d) of the Securities Exchange Act.
(g) All such information provided to the Senior Parties under clauses
(a), (b), (c) and (d) above shall also be provided by the Trustee (i) to the
bondholders and (ii) to holders of beneficial interests in the bonds or
prospective purchasers of the bonds or beneficial interests in the bonds upon
written request to the Trustee (which may be a single continuing request). Our
Company shall furnish the Trustee, upon its request, with sufficient copies of
all such information to accommodate the requests of the holders of beneficial
interests in the bonds.
(h) The information specified in paragraphs (a), (b), (c), (d) and (e)
above shall be provided to each Rating Agency concurrently with its delivery to
the Senior Parties.
Insurance
Our Company shall maintain or cause to be maintained in accordance with
the terms of the Indenture the following insurance coverages: (i) during
construction of our Facility, builder's risk (with full replacement cost
coverage), delayed start-up (providing coverage for at least 18 months of
projected continuing expenses and Senior Debt Service and any liquidated
damages, with not greater than a 30-day deductible or, with respect to the
combustion turbine, with not greater than a 60-day deductible), comprehensive
general liability, workers' compensation and employer's liability, automobile
liability and umbrella liability; and (ii) subsequent to transfer of care,
custody and control of our Facility to our Company, all risk property and boiler
and machinery insurance (covering full replacement cost, subject to reasonable
and customary deductibles and sublimits), business interruption (providing
coverage of 12 months of debt service and fixed operation and maintenance
expenses and having not greater than a 60-day deductible), comprehensive general
liability, workers' compensation and employer's liability, automobile liability
and umbrella liability (minimum limit of $9 million per occurrence and
aggregate). All policies of insurance except workers' compensation and
automobile liability policies shall name the Collateral Agent and the Power
Purchaser as additional insureds. If at any time any of the required insurance
shall no longer be available on commercially reasonable terms (as confirmed by
the Independent Insurance Adviser), our Company shall procure substitute
insurance coverage reasonably satisfactory to the Independent Insurance Advisor
that is the most equivalent to the required coverage and that is available on
commercially reasonable terms.
Maintenance of Existence, Liens and Governmental Approvals
Our Company shall at all times:
(a) preserve and maintain in full force and effect (i) its existence as
a limited liability company and its good standing under the laws of the State of
Delaware and (ii) 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;
(b) obtain and maintain in full force and effect all Governmental
Approvals (including, without limitation, maintaining compliance with
Environmental Laws) and other consents and approvals required at any time in
connection with the construction, maintenance, ownership or operation of our
Facility;
(c) preserve and maintain good and marketable title to its properties
and assets (subject to no Liens other than Permitted Liens); and
(d) preserve and maintain Liens of the Senior Parties on the
Collateral.
Operating and Maintenance
Our Company shall, or shall cause the Operator to, use, maintain and
operate our Facility and the Site in compliance with generally accepted Prudent
Operating and Maintenance Practices and the material provisions of all relevant
Project Contracts.
Compliance with Applicable Laws
Our Company shall comply with, and shall ensure that our Facility is
constructed and operated in compliance with, and shall make such alterations to
our Facility and the Site as may be required for compliance with, all Applicable
Laws, Environmental Laws and Governmental Approvals, except where noncompliance
would not reasonably be expected to result in a Material Adverse Effect.
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Project Contracts; Williams Guaranty; Operation of our Facility
Our Company shall (i) perform and observe in all material respects its
covenants and agreements contained in any of our Project Contracts, (ii)
enforce, defend and protect all of its rights contained in any of our Project
Contracts and (iii) take all reasonable and necessary actions to prevent the
termination or cancellation of any of our Project Contracts, except in case of
(i) and (ii) above, where such non-performance could not reasonably be expected
to have a Material Adverse Effect.
Our Company (i) shall fully enforce its rights under the Williams
Guaranty and the Power Purchase Agreement with respect to substitute security
under the circumstances provided for therein and (ii) shall not, without the
consent of bondholders holding a majority in outstanding principal amount of the
bonds, make a demand for or take any legal action under the Williams Guaranty
if, as a result of payments made under such demand or legal action by our
Company, the aggregate amount available under the Williams Guaranty would be
less than or equal to the principal amount of the then outstanding Senior Debt,
including without limitation, the undrawn portions of the maximum amounts of any
DSR Letter of Credit or CP Letter of Credit. Our Company shall (i) upon any
payment event of default or other event of default under the Power Purchase
Agreement, exercise its rights to terminate the Power Purchase Agreement in
accordance with its terms, (ii) if of any termination of the Power Purchase
Agreement, fully enforce its rights under the Williams Guaranty and (iii) use
any amounts obtained under the Williams Guaranty to redeem the bonds in
accordance with the Indenture and to pay principal and interest on our Company's
other Senior Debt in accordance with the Financing Documents and in each case in
accordance with the Collateral Agency Agreement.
Our Company shall (i) exercise all of its rights under the Operations
Agreement to terminate such agreement if (a) a bankruptcy event in respect of
the Operator has occurred and is continuing and (b) the Operator has failed to
perform any material obligation under the Operations Agreement and (ii) exercise
its rights under the Operations Agreement to cause the Operator to terminate the
Services Agreement under the terms of that agreement if (a) a bankruptcy event
in respect of AES has occurred and is continuing and (b) AES has failed to
perform any material obligation under the Services Agreement.
Annual Budget
Not less than 30 days prior to (i) the anticipated Commercial Operation
Date, and thereafter (ii) the commencement of each Fiscal Year, our Company
shall provide to the Senior Parties and the Rating Agencies an Annual Budget.
The first Annual Budget shall cover the period from the Commercial Operation
Date through the end of the Fiscal Year in which the Commercial Operation Date
occurs, and if such period consists of less than six months, for the immediately
succeeding Fiscal Year. Each Annual Budget shall specify the estimated sales of
capacity and energy under the Power Purchase Agreement and any Replacement Power
Purchase Agreement and all other sales of capacity and energy, the estimated
rates and revenues for each category of such sales, all Operating and
Maintenance Costs, a manpower forecast, a periodic inspection, maintenance and
repair schedule, a description of all Required Capital Expenditures and the
underlying operating assumption and implementation plans for the Fiscal Year
covered by such Annual Budget. Our Company shall operate and maintain our
Facility, or cause our Facility to be operated and maintained, in accordance
with the Annual Budget other than deviations resulting from operating
requirements under our Project Contracts or Prudent Operating and Maintenance
Practices.
Insurance Report
Within 30 days after the end of each Fiscal Year, our Company shall
submit to the Senior Parties and each Rating Agency that currently is rating any
of the bonds then outstanding a certificate (i) listing all insurance being
carried by, or on behalf of, our Company under the Indenture and (ii) certifying
that all insurance policies required to be maintained under our Project
Contracts and the Indenture are in full force and effect and all premiums
therefor have been fully paid.
Inspection
The Senior Parties shall have the right, upon reasonable advance
written notice to our Company, to inspect our Facility and the Site from time to
time; provided, that our Company shall have the right to specify reasonable
dates and times for any such inspection in order to avoid any material
interference with operation of our Facility.
Construction of our Facility
Our Company shall cause the construction of our Facility to be
prosecuted and completed with diligence and continuity (except for interruptions
provided for in the EPC Contract or due to events of force majeure, which events
of
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force majeure our Company shall use its best efforts to mitigate), in a good
and workmanlike manner and in accordance with sound, generally accepted building
and engineering practices, all material applicable Governmental Requirements and
the EPC Contract. Our Company shall at all times cause a complete set of the
current and (when available) as-built plans (and all supplements thereto)
relating to our Facility to be maintained on the Site or the Contractor's
offices and available for inspection by the Independent Engineer.
Contractor Performance Tests; Final Acceptance
The Independent Engineer shall have the right to witness and verify the
performance tests required by the EPC Contract. Our Company shall not, without
the prior written confirmation by the Independent Engineer, either (i) grant the
Final Acceptance Certificate to the Contractor under the EPC Contract or (ii)
elect to effect Final Acceptance under the EPC Contract.
Casualty Proceeds; Eminent Domain Proceeds
Our Company shall cause all Casualty Proceeds and Eminent Domain
Proceeds to be deposited in the Restoration Account under the Collateral Agency
Agreement.
Payment of Taxes and Impositions
Our Company will pay or cause to be paid, before any fine, interest or
penalty is imposed thereon, all Impositions. If, under any Applicable Law, any
Impositions may at the option of our Company be paid in installments (whether or
not interest shall accrue on the unpaid balance thereof), our Company shall have
the right; provided, that no Event of Default shall then exist, to exercise such
option and to pay or cause to be paid such Impositions and any accrued interest
thereon in installments as they fall due and before any fine, penalty, further
interest or cost may be added thereto.
Our Company will pay all taxes and other governmental charges
(including without limitation, stamp taxes) assessed by any Governmental
Authorities and imposed on the Collateral Agent, its successors or assignees, by
reason of the Collateral Agent's ownership of the Mortgage or the other Security
Documents or payable by either our Company or the Collateral Agent upon any
modification, amendment, extension and/or consolidation thereof. Our Company
will also pay any tax imposed directly or indirectly on the Mortgage in lieu of
a tax on the Mortgaged Property or any part thereof, whether by reason of (i)
the passage after the date of the Mortgage of any law of the Commonwealth of
Pennsylvania deducting from the value of real property for the purposes of
taxation any lien thereon, (ii) any change in the laws for the taxation of
mortgages or debts secured by mortgages for state or local purposes, (iii) a
change in the means of collection of any such tax or (iv) any tax, now or
hereafter assessed against the Mortgage or assessed against, or withheld from,
any payments made by our Company under the Indenture.
Our Company will not claim or demand or be entitled to any credit or
credits for the payment of any Impositions, and no deduction shall otherwise be
made or claimed from the taxable value of the Mortgaged Property, or any part
thereof, by reason of the Mortgage.
Preservation of Lien of Mortgage
Our Company will (i) preserve its right, title and interest in and to
the Mortgaged Property and will warrant and defend the same against any and all
claims and demands whatsoever, (ii) continue to have full power and lawful
authority to encumber and convey the Mortgaged Property as provided in the
Mortgage and (iii) maintain and preserve the priority of the lien of the
Mortgage until all of the obligations under the Financing Documents are paid and
performed in full.
Negative Covenants
Our Company will make the following negative covenants:
Limitations on Additional Indebtedness
Our Company shall not create or incur or suffer to exist any
Indebtedness or lease obligations except for:
o the bonds;
o indebtedness incurred under the DSR LOC Reimbursement
Agreement or any CP LOC Reimbursement Agreement;
o letters of credit and other financial obligations arising
under our Project Contracts;
o Affiliate Subordinated Debt;
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o purchase money obligations incurred to finance discrete items
of equipment not comprising an integral part of our Project
that extend only to the equipment being financed and that do
not in the aggregate have annual debt service or lease
obligations exceeding $5 million (escalated at GDPIPD);
o trade accounts payable (other than for borrowed money)
arising, and accrued expenses incurred, in the ordinary course
of business so long as such trade accounts payable are payable
within 90 days of the date the respective goods are delivered
or the respective services are rendered;
o obligations in respect of surety bonds or similar instruments
in an aggregate amount not exceeding $5 million at any one
time outstanding;
o any lines of credit for working capital purposes in the
maximum amount of $5 million;
o Senior Debt used for an expansion of our Facility; provided,
however, that such Senior Debt may not be issued unless (a)
(1) the projected average Senior Debt Service Coverage Ratio
(after giving effect to such Senior Debt) is at least 1.50 to
1.0 through the end of the Power Purchase Agreement Term
(taken as one period) and at least 2.50 to 1.0 during the
Post-Power Purchase Agreement Period (taken as one period) and
(2) the projected minimum Senior Debt Service Coverage Ratio
(after giving effect to such Senior Debt) is at least 1.30 to
1.0 through the end of the Power Purchase Agreement Term and
at least 2.15 to 1.0 during the Post-Power Purchase Agreement
Period; (b) our Company provides a Ratings Reaffirmation from
each of the Rating Agencies; and (c) the Trustee does not,
within 60 days of notice to holders of the bonds setting forth
a summary of the terms of such Senior Debt and a description
of the facilities to be constructed with the proceeds of such
Senior Debt, receive an instruction from persons holding a
majority in principal amount of the bonds not to permit the
issuance of such Senior Debt; and
o Senior Debt or Subordinated Debt (from persons who are not
Affiliates of our Company) for Required Modifications and
Optional Modifications; provided, however, that our Company
may issue (a) Senior Debt on a parity basis with the bonds
only for Required Modifications and only if (1) the projected
average Senior Debt Service Coverage Ratio (after giving
effect to such Senior Debt) is at least 1.30 to 1.0 through
the end of the Power Purchase Agreement Term (taken as one
period) and at least 2.0 to 1.0 during the Post-Power Purchase
Agreement Period (taken as one period) or (2) our Company
provides a Ratings Reaffirmation from each of the Ratings
Agencies; (b) Subordinated Debt for Required Modifications
only if (1)(A) the projected average Total Debt Service
Coverage Ratio (after taking into account such Subordinated
Debt) is at least 1.20 to 1.0 through the end of the Power
Purchase Agreement Term (taken as one period) and at least
1.65 to 1.0 during the Post-Power Purchase Agreement Period
(taken as one period) and (B) the projected minimum Total Debt
Service Coverage Ratio (after giving effect to such
Subordinated Debt) is at least 1.1 to 1.0 through the Power
Purchase Agreement Term and at least 1.35 to 1.0 during the
Post-Power Purchase Agreement Period, or (2) our Company
provides a Ratings Reaffirmation from each of the Ratings
Agencies; or (c) Subordinated Debt for Optional Modifications
only if our Company provides a Ratings Reaffirmation from each
of the Ratings Agencies. In the case of clauses (b) and (c) of
the preceding proviso, the final maturity date of such
Subordinated Debt shall not be earlier than the final maturity
date for the bonds and the average life of such Subordinated
Debt must be no shorter than the average remaining life of the
bonds (collectively, "Permitted Indebtedness").
Restricted Payments
Our Company shall not make any Restricted Payments unless the
Distribution Conditions set forth in the Collateral Agency Agreement have been
satisfied. See "SUMMARY OF PRINCIPAL FINANCING DOCUMENTS--Collateral Agency
Agreement--Distribution Account."
Prohibition of Change in Control
Our Company shall not engage in, or suffer to occur, any Change in
Control, where Change in Control means any failure by AES, at all times while
bonds are outstanding, to maintain directly or indirectly at least a 51% voting
and economic interest in our Company, unless prior to giving effect to the
reduction in the voting or economic interest of AES in our Company either (i)
each of the Rating Agencies provides a Ratings Reaffirmation to the Trustee or
(ii) the reduction in AES's voting or economic interest has been approved by
bondholders holding at least 66-2/3% in aggregate principal amount of the bonds.
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Nature of Business
Our Company shall not engage in any business other than the
development, financing, construction and operation and maintenance of our
Facility as contemplated by our Project Contracts.
Amendments to Project Contracts
Our Company shall not, except as otherwise expressly set forth in the
Financing Documents, terminate, amend or modify (other than immaterial
amendments or modifications as certified by our Company) any of our Project
Contracts to which it is a party, or consent to any assignment by another party
thereto, unless (i) our Company certifies to the Senior Parties that such
termination, amendment, modification or assignment is not reasonably expected to
result in a Material Adverse Effect and such termination, amendment,
modification or assignment is not reasonably expected to materially increase the
likelihood of the occurrence of a future Material Adverse Effect and (ii) the
Independent Engineer does not within 10 Business Days of receipt of such
certificate disagree in writing to the certification provided under clause (i);
provided, however, that our Company shall not, (a) amend or modify the Power
Purchase Agreement unless in addition to the requirements of clauses (i) and
(ii) above, our Company certifies that such amendment or modification would not
cause our Company's net operating revenues to decrease by more than 5% and such
certification is confirmed by the Independent Engineer, (b) except as otherwise
expressly set forth in the Financing Documents, terminate the Power Purchase
Agreement or consent to any release of, assignment by or change in the identity
of the Power Purchaser unless (1) within 90 days of such termination or consent
resulting from an event of default by the Power Purchaser under the Power
Purchase Agreement, or prior to any such termination or consent or for any other
reason our Company (A) enters into a Replacement Power Purchase Agreement or (B)
provides the Senior Parties and each of the Ratings Agencies with a Power
Marketing Plan and (2) our Company provides to the Trustee and the Collateral
Agent a Ratings Reaffirmation from each Rating Agency within such 90-day period
or prior to such termination or consent, as the case may be, or (c) release or
modify in any way the Williams Guaranty unless our Company obtains substitute
security therefor under the Power Purchase Agreement.
Prohibition on Fundamental Changes and Disposition of Assets
Our Company shall not enter into any transaction of merger or
consolidation, change its form of organization or its business, liquidate or
dissolve itself (or suffer any liquidation or dissolution), except as permitted
in the Indenture. Our Company shall not amend its governing instruments except
where such amendment could not reasonably be expected to result in a Material
Adverse Effect. Our Company shall not purchase or otherwise acquire all or
substantially all of the assets of any other person; provided, that our Company
may maintain ownership interests in subsidiaries if such subsidiaries are
involved in operation, maintenance or fuel supply for our Facility. In addition,
except as contemplated by our Project Contracts or permitted under the
Indenture, or as authorized by the first and second provisos below, our Company
shall not sell, lease (as lessor) or transfer (as transferor) any property or
assets material to the operation of our Facility except in the ordinary course
of business to the extent that such property is worn out or is no longer useful
or necessary in connection with the operation of our Facility; provided,
however, that our Company shall not sell, lease or transfer any of such property
or assets without the written approval of the Collateral Agent, if the aggregate
fair market value of all sales, leases and transfers in the current Fiscal Year
exceeds $5 million escalated at the GDPIPD; provided, further, that our Company
may loan useful spare parts to other electric power generating facilities owned
by an Affiliate of our Company without prior approval of the Trustee or the
Collateral Agent on the conditions that, with respect to any spare part whose
value is in excess of $50,000: (i) at the time of the loan the recipient of the
spare part enters into an enforceable obligation to replace the spare part in
kind, or to pay an amount equal to the replacement value of the spare part to
our Company, within 30 days of our Company's demand for the same and (ii) our
Company certifies to the Collateral Agent that the spare part shall not be
necessary for a planned outage or for scheduled maintenance of our Facility
prior to being replaced, and such certificate is confirmed by the Independent
Engineer.
Liens
Our Company shall not create or suffer to exist or permit any lien upon
or with respect to any of its properties, other than Permitted Liens.
Transactions with Affiliates
Our Company shall not enter into any Affiliate Transaction other than
(i) the Operations Agreement and the Equity Subscription Agreement and (ii)
transactions in the ordinary course of business on fair and reasonable terms no
less favorable to our Company than our Company would obtain in an arm's length
transaction with a person that is not an Affiliate of our Company.
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Change Orders
Our Company shall not initiate or approve any change order under the
EPC Contract that individually exceeds $5,000,000 or when aggregated with all
other change orders exceeds $10,000,000, unless our Company certifies in writing
to the Collateral Agent that (i) such change order is technically feasible, (ii)
such change order is not reasonably expected to materially and adversely affect
the operation or reliability of our Facility, (iii) the implementation of such
change order is not reasonably expected to cause the Commercial Operation Date
to occur after the Date Certain and (iv) adequate funds are available to our
Company to fund such change orders and other Project Costs through the
Commercial Operation Date, and such certification is confirmed by the
Independent Engineer.
Events of Default
Events of Default under the Indenture shall include the following:
The term "Event of Default," whenever used herein, means any of the
following events (whatever the reason for such event and whether voluntary or
involuntary, affected by question of law, or under or in compliance with any
Applicable Law) and such event shall continue to be an Event of Default if and
for so long as it shall not have been remedied:
(a) Our Company shall fail to pay any principal, interest or premium,
if any, including any Make-Whole Premium, on a bond when the same becomes due
and payable, whether at scheduled maturity or required prepayment or by
acceleration or otherwise and such failure shall continue for 10 or more days;
or
(b) Any representation or warranty made by our Company in the Indenture
shall prove to have been false or misleading in any respect as of the time made,
confirmed or furnished and the inaccuracy has resulted or is reasonably expected
to result in a Material Adverse Effect and the circumstances surrounding such
misrepresentation shall continue uncured for 30 or more days from the discovery
thereof; provided, that if our Company commences efforts to cure the factual
situation resulting in such misrepresentation within such 30-day period, our
Company may continue to effect such cure of the misrepresentation, and such
misrepresentation shall not be deemed an Event of Default, for an additional 60
days so long as an Authorized Representative of our Company certifies that no
other Event of Default has occurred and is continuing and our Company is
diligently pursuing the cure; or
(c) Our Company shall fail to maintain insurance in accordance with the
Indenture; or
(d) Our Company shall fail to perform or observe covenants or
agreements in the Indenture with respect to the following: maintenance of
existence and governmental approvals; nature of business; compliance with
Applicable Laws; amendments to project contracts; prohibition on fundamental
changes and disposition of assets; liens; indebtedness; or restricted payments;
and such failure shall continue uncured for more than 30 days after our Company
has actual knowledge of such failure; or
(e) A Change in Control shall have occurred; or
(f) Our Company shall fail to perform or observe any of its covenants
or agreements contained in any other provision of the Indenture not referred to
above and such failure shall continue uncured for more than 30 days after our
Company has actual knowledge of such failure; provided, that if our Company
commences efforts to cure such default within such 30-day period and is
diligently attempting to cure such default (and certifies to the Trustee the
steps it is taking), our Company may continue to effect such cure of the default
(and such default shall not be deemed an "Event of Default" hereunder) for an
additional 60 days so long as our Company certifies that no other Event of
Default has occurred and is continuing and our Company is diligently pursuing
such cure; or
(g) Our Company or, so long as AES has any outstanding obligations
under any Acceptable Credit Support, AES or, so long as AES Ironwood, Inc. has
any outstanding obligations under the Equity Subscription Agreement, AES
Ironwood, Inc. 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 of all or substantially all 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 of the benefit of its creditors, (iv) commence a
voluntary case under the Bankruptcy Code, (v) file a petition seeking to take
advantage of any law relating to bankruptcy, insolvency, reorganization,
winding-up or the composition or readjustment of debts, (vi) fail to controvert
in a timely and appropriate manner, or acquiesce in writing to, any petition
filed against such person in an involuntary case under the Bankruptcy Code or
(vii) take any corporate or other action for the purpose of effecting any of the
foregoing; or
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(h) A proceeding or case shall be commenced without the application or
consent of our Company or, so long as AES has any obligations under any
Acceptable Credit Support, AES or, so long as AES Ironwood, Inc. has any
outstanding obligations under the Equity Subscription Agreement, AES Ironwood,
Inc. in any court of competent jurisdiction, seeking (i) its liquidation,
reorganization, dissolution, winding-up or the composition or readjustment of
debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the
like of such person under any law relating to bankruptcy, insolvency,
reorganization, winding-up or the composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or any order, judgment or decree
approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of 90 or more consecutive days, or any
order for relief against such person shall be entered in an involuntary case
under the Bankruptcy Code (each event described herein and in (g) above is
hereinafter referred to as a "Bankruptcy Event"); or
(i) A final and non-appealable judgment or judgments for the payment of
money in excess of $15,000,000 shall be rendered against our Company, and the
same remain unpaid or unstayed for a period of more than 60 or more consecutive
days from the date of entry thereof; or
(j) An "Event of Default" has occurred and is continuing under the DSR
LOC Reimbursement Agreement, the CP LOC Reimbursement Agreement or any other
Indebtedness of our Company the holder of which (or an agent or trustee
therefor) is a party to the Collateral Agency Agreement (other than Indebtedness
incurred under the Indenture), or an "Event of Default" has occurred and is
continuing in respect of any other Indebtedness of our Company in excess of
$15,000,000; or
(k) With respect to any Project Contract: (i) such Project Contract is
declared unenforceable by a Governmental Authority, (ii) any other party thereto
denies it has a material obligation under such Project Contract or (iii) any
other party thereto defaults in respect of its obligations under such Project
Contract, and in the case of each event described in clause (i), (ii) or (iii),
such event would be likely to result in a Material Adverse Effect; provided,
however, that none of such events shall be an Event of Default under the
Indenture if within 180 days (90 days in respect of the Power Purchase Agreement
or the EPC Contract) from the occurrence of such event (A) the other party
resumes performance or enters into an alternative agreement with our Company or
(B) our Company enters into a replacement contract or contracts with another
party or parties which (1) contains, as certified by our Company, substantially
equivalent terms and conditions or, if such terms and conditions are no longer
available on a commercially reasonable basis, the terms and conditions then
available on a commercially reasonable basis and (2) either (I) our Company
provides to the Trustee and the Collateral Agent a Ratings Reaffirmation from
each Rating Agency or (II) our Company certifies that it would, after giving
effect to the alternative agreement, maintain a projected minimum Senior Debt
Service Coverage Ratio in any year during the remaining term of the bonds equal
to or greater than the lesser of (x) the projected minimum annual Senior Debt
Service Coverage Ratio which would have been in effect had performance under the
original Project Contract continued and (y) 1.25 to 1.0 or (C) in the case of
the Power Purchase Agreement, our Company delivers to the Trustee and Collateral
Agent a Power Marketing Plan and obtains a Ratings Reaffirmation from each
Ratings Agency; or
(l) Any grant of a Lien contained in the Security Documents shall cease
to be effective to grant a perfected Lien to the Trustee or the Collateral Agent
on a material portion of the Collateral described therein with the priority
purported to be created thereby; provided, however, that our Company shall have
10 days from actual knowledge thereof to cure any such cessation; or
(m) The construction of our Facility is permanently abandoned; or
(n) AES Ironwood, Inc. fails to perform or breaches any of its payment
obligations under the Equity Subscription Agreement and such failure or breach
continues for 10 Business Days or more; or
(o) Any Acceptable Credit Provider fails to perform or breaches any of
its payment obligations under any Acceptable Credit Support and such failure or
breach continues for 10 Business Days or more.
Remedies upon Default
(a) If one or more Events of Default shall have occurred and be
continuing, then:
(i) in the case of a Bankruptcy Event, the entire principal amount of
the bonds then outstanding, all interest accrued and unpaid thereon, and all
premium payable under the bonds and the Indenture, if any, shall automatically
become due and payable without presentment, demand, protest or notice of any
kind, all of which are waived; or
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(ii) in the case of any other Event of Default, the Trustee may, and
upon written direction of the bondholders of not less than 33-1/3% of the
aggregate principal amount of the bonds then outstanding, the Trustee shall, by
notice to our Company, declare the entire principal amount of the bonds, all
interest accrued and unpaid thereon, and all premium payable under the bonds and
the Indenture, if any, to be due and payable, whereupon the same shall become
due and payable without presentment, demand, protest or further notice of any
kind, all of which are waived; or
(iii) the Trustee shall (if the Required Bondholders request in writing
to the Trustee) direct the Collateral Agent (to the extent permitted under the
Collateral Agency Agreement) to take possession of all the Collateral and, under
the Collateral Agency Agreement, to sell the Collateral, as and to the extent
permitted under the Collateral Agency Agreement.
(b) If an Event of Default occurs and is continuing and is known to the
Trustee (as described in the Indenture), the Trustee shall mail to each
bondholder a notice of the Event of Default within 30 days after the occurrence
thereof. Except in the case of an Event of Default in payment of principal of or
interest on any bond, the Trustee may withhold the notice to the bondholders if
a committee of its trust officers in good faith determines that withholding the
notice is in the interest of the bondholders.
(c) At any time after the principal of the bonds shall have become due
and payable upon a declared (but not an automatic) acceleration as provided in
the Indenture, and before any judgment or decree for the payment of the money so
due, or any portion thereof, shall be entered, the bondholders of not less than
a majority in aggregate principal amount of the bonds then outstanding, by
written notice to our Company and the Trustee, may rescind and annul such
declaration and its consequences if:
(i) there shall have been paid to or deposited with the Trustee a sum
sufficient to pay
(A) all overdue installments of interest on the bonds,
(B) the principal of and premium, if any, on any bonds
that have become due otherwise than by such
declaration of acceleration and interest thereon at
the respective rates provided in the bonds for late
payments of principal or premium,
(C) to the extent that payment of such interest is
lawful, interest upon overdue installments of
interest at the respective rates provided in the
bonds for late payments of interest, and
(D) all sums paid or advanced by the Trustee under the
Indenture and the reasonable compensation, expenses,
disbursements, and advances of the Trustee, its
agents and counsel, and
(ii) all Events of Default, other than the non-payment of the principal
of the bonds that has become due solely by such acceleration, have been cured or
waived as provided in the Indenture.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
Except as otherwise specifically provided in the Indenture, the holders
of a majority in principal amount of the bonds shall have the right to direct
the time, place and method of conducting any proceeding for any remedy available
to the Trustee or exercising any power conferred on the Trustee; provided, that
(i) such direction shall not conflict with any law or the Indenture or the
Collateral Agency Agreement and (ii) the Trustee may take any other action
deemed proper by the Trustee which is not inconsistent with such direction.
All rights and remedies available to the bondholders, or to the Trustee
with respect to the Collateral, or otherwise under the Security Documents, are
subject to the Collateral Agency Agreement, including the ability to enforce any
remedy and the limitations on the Trustee's ability to vote the interests
represented by the bonds.
Affiliate Cure Rights
Any Affiliate of our Company shall, at its option, have the right (but
not the obligation) to cure any Events of Default for which cures are
applicable.
Trustee
The Bank of New York (as successor to IBJ Whitehall Bank & Trust
Company) will act as the Trustee under the Indenture. The Indenture provides
that the Trustee will not be liable in connection with the performance of its
duties thereunder, except for its own gross negligence, bad faith or willful
misconduct. The Trustee may become the owner
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of any bonds, with the same rights it would have if it were not the Trustee, and
may carry any monies held by the Trustee on deposit with itself and shall not
have any liability for interest upon any such monies.
The Trustee may resign at any time and be discharged from its duties
and obligations under the Indenture by giving written notice to our Company and
upon appointment and acceptance of a successor. The Trustee may be removed at
any time by the holders of not less than a majority in principal amount of the
bonds then outstanding. Our Company or any holder who has been a bona fide
holder of a Security for at least six months, may remove the Trustee if (i) the
Trustee fails to comply with the provisions of the Indenture regarding
conflicting interests, (ii) the Trustee ceases to be eligible as required under
the Indenture and fails to resign after written request, (iii) the Trustee
becomes bankrupt or insolvent or (iv) the Trustee fails to carry out its
obligations in a timely manner. Notwithstanding the foregoing, no resignation or
removal of the Trustee and no appointment of a successor trustee shall become
effective until the acceptance of appointment by the successor trustee.
Except during the continuance of an Event of Default under the
Indenture, the Trustee will perform only such duties as are specifically set
forth in the Indenture. During the existence of an Event of Default, the Trustee
will exercise such of the rights and powers vested in it by the Indenture, and
use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs.
The Indenture contains limitations on the rights of our Company to
obtain payments of claims in specific cases or to realize on specific property
received by it in respect of any such claim as security or otherwise. The
Trustee is permitted to engage in other transactions with our Company; provided,
however, that if it acquires any "conflicting interest" (as defined in the
Indenture), it must eliminate such conflict or resign as Trustee under the
Indenture.
Supplemental Indentures
Supplemental Indentures and Amendments without the Consent of Bondholders
Without the consent of the bondholders, our Company and the Trustee, at
any time and from time to time, may enter into one or more supplemental
indentures in form reasonably satisfactory to the Trustee and may amend any of
the other Financing Documents, for any of the following purposes:
o to establish the form and terms of bonds of any series
permitted by the Indenture;
o to evidence the succession of another entity to our Company
and the assumption by any such successor of the covenants of
our Company under the bonds and the Indenture;
o to evidence the succession of a new Trustee or a co-trustee or
separate trustee under the Indenture;
o to add to the covenants of our Company, for the benefit of the
bondholders, or to surrender any right or power conferred upon
our Company under the Indenture;
o to convey, transfer and assign to the Trustee, and to subject
to the Lien of the Indenture, additional properties or assets
and to correct or amplify the description of any property at
any time subject to the Lien of the Indenture or to assure,
convey and confirm unto the Trustee any property subject or
required to be subject to the Lien of the Indenture;
o to facilitate the issuance of bonds in uncertificated form;
o to change or eliminate any provision of the Indenture;
provided, however, that if such change or elimination would
adversely affect the interests of the holders of any bonds of
any series, such change or elimination shall become effective
with respect to such series only when no bond of such series
remains outstanding;
o to comply with changes in Applicable Law; provided, however,
that no such amendment or supplement shall result in a
Material Adverse Effect or otherwise adversely affect the
interests of the holders of any bonds in any material respect;
o to make any changes required by S&P or Moody's or any other
nationally recognized securities rating agency as a condition
to the issuance or maintenance of the then current rating on
the bonds or any series thereof; provided, that any such
change shall not result in a Material Adverse Effect or
otherwise adversely affect the interests of the holders of any
bonds in any material respect; or
o to cure any ambiguity, to correct or supplement any provision
of the Indenture that may be defective or inconsistent with
any other provision of the Indenture, or to make any other
provisions with respect to matters
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or questions arising under the Indenture; provided, that such action
shall not adversely affect the interest of the bondholders of any
series in any material respect.
Supplemental Indentures with the Consent of Bondholders
With the consent of the bondholders of not less than a majority in
aggregate principal amount of the bonds of all series then outstanding, the
Trustee and our Company may, and the Trustee shall, enter into one or more
supplemental indentures for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of, the Indenture; provided,
however, that no such supplemental indenture shall, without the consent of the
bondholder of each outstanding bond directly affected thereby: (i) change the
Stated Maturity of any bond (or, if the principal thereof is payable in
installments, the Stated Maturity of any such installment), or of any payment of
interest thereon, or the dates or circumstances of payment of premium, if any,
on, any bond, or change the principal amount thereof or the interest thereon or
any premium payable upon the redemption thereof, or change the place of payment
where, or the coin or currency in which, any bond or the premium, if any, or the
interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment of principal or interest on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption
Date) or such payment of premium, if any, on or after the date such premium
becomes due and payable; or (ii) except for Permitted Liens, permit the creation
of any lien prior to or, pari passu with the Lien of any of the Security
Documents with respect to any of the Collateral, or terminate the Lien on any
Collateral or deprive any bondholder of the security afforded by the Lien of the
Indenture; or (iii) reduce the percentage in principal amount of the bonds then
outstanding, the consent of whose bondholders is required for any such
supplemental indenture, or the consent of whose bondholders is required for any
waiver (of compliance with specified provisions of the Indenture or specified
defaults under the Indenture and their consequences) provided for in the
Indenture, or reduce the requirements for quorum or voting; or (iv) modify
specified provisions of the Indenture relating to remedies following an Event of
Default (except to increase the percentage of the principal amount of the bonds
required to waive past defaults).
Satisfaction and Discharge
Our Company may terminate the Indenture by delivering all bonds then
outstanding to the Trustee for cancellation and by paying all sums payable under
the Indenture and by effecting delivery of officer's certificates and an Opinion
of Counsel stating that all conditions precedent have been satisfied.
In addition to the foregoing, bonds then outstanding shall, prior to
the stated maturity thereof, be deemed to be paid, and the indebtedness of our
Company in respect thereof shall be deemed to be satisfied and discharged, at
any time all the conditions set forth below have been satisfied:
(i) our Company shall have irrevocably deposited with the Trustee, in
trust, monies or permitted investments in an amount which shall be sufficient to
pay when due, without reinvestment, the principal of and premium, if any, and
interest due and to become due on the bonds then outstanding on or prior to the
Stated Maturity of the final installments of principal thereof or upon
redemption or prepayment;
(ii) our Company shall have delivered to the Trustee, a Company order
stating that monies deposited with the Trustee or in permitted investments shall
be held by the Trustee, in trust, as provided in the Indenture;
(iii) in the case of redemption or prepayment of the bonds then
outstanding, the notice requisite to the validity of such redemption or
prepayment shall have been given, or irrevocable authority shall have been given
by our Company to the Trustee to give such notice; and
(iv) there shall have been delivered to the Trustee an Opinion of
Counsel to the effect that as a result of a change in Applicable Law after the
date of the Indenture such satisfaction and discharge of the indebtedness of our
Company with respect to the bonds then outstanding shall not be deemed to be, or
result in, a taxable event with respect to holders of bonds then outstanding for
purposes of United States Federal income taxation unless the Trustee shall have
received documentary evidence that the bondholders either are not subject to, or
are exempt from, United States Federal income taxation.
Collateral Agency Agreement
Project Accounts
The following trust accounts (the "Project Accounts") will be
established and created with and in the name of the Collateral Agent:
Construction Account; Revenue Account; Operating and Maintenance Account; Debt
Service Reserve Account; DSR LOC Reimbursement Fund; CP LOC Reimbursement Fund;
Restoration Account; Major
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Maintenance Reserve Account; Fuel Conversion Volume Rebate Account; Subordinated
Debt Account; and Distribution Account.
Collection of Project Revenues
Our Company shall arrange for the direct payment to the Collateral
Agent of all Project Revenues, and to the extent any such Project Revenues are
at any time received by us prior to the Commercial Operation Date, we shall hold
all such revenues and other such amounts in trust for the Collateral Agent and
shall transfer to the Collateral Agent for deposit of such Project Revenues in
the Construction Account in each case as soon as reasonably practical but no
later than three Business Days after receipt thereof (duly endorsed, if
necessary, to the Collateral Agent).
Advances
Notwithstanding any other provision of the Collateral Agency Agreement
to the contrary, our Company may, by delivering an Officer's Certificate to the
Collateral Agent, withdraw funds on deposit in or credited to any of the
Available Accounts ("Advances"); provided, however, that, at the time of the
making of such Advance: (i) no Default or Event of Default shall have occurred
and be continuing and the Officer's Certificate of our Company shall so certify
and (ii) our Company's obligations to repay such Advances shall be supported by
Acceptable Credit Support. The Collateral Agent may conclusively rely on such
Officer's Certificate certifying that all conditions for withdrawals from the
Available Accounts have been met. Our Company shall repay immediately or cause
to be repaid any Advances to the extent that the funds on deposit in such
Available Accounts are insufficient to make the necessary withdrawals and
transfers. In addition, our Company shall cause to be repaid immediately the
aggregate amount of all Advances upon the occurrence of (i) a default in the
payment of principal of, premium, if any, or interest on the bonds or under the
DSR LOC Reimbursement Agreement, the CP LOC Reimbursement Agreement or any
working capital facility, (ii) any Event of Default, (iii) any default by an
Acceptable Credit Provider in respect of its obligations under its Acceptable
Credit Support or (iv) the failure of our Company to provide, within five
Business Days, Acceptable Credit Support in respect of its obligations to repay
Advances upon the failure of the Acceptable Credit Provider to meet the
requirements of the definition thereof. Any amounts so repaid shall be allocated
to and deposited in the Available Accounts to which such repayment is required
to be made as directed by our Company in an Officer's Certificate.
Construction Account
On the date of original issuance of the old bonds, the net proceeds of
the sale of the old bonds received by our Company were transferred to the
Collateral Agent for deposit in the Construction Account.
On that date, the Collateral Agent applied the amounts in the
Construction Account to the payment, or reimbursement, to the extent the same
had been paid or satisfied by our Company, of Project Costs. Each requisition
after that date shall be submitted to the Collateral Agent no less than three
Business Days in advance of the drawing date and shall include the following:
(i) a certification that the proceeds thereof shall be used solely to
pay Project Costs in accordance with the Indenture;
(ii) a certification that work performed to date has been
satisfactorily performed in a good and workmanlike manner and according to the
EPC Contract;
(iii) a statement that undisbursed funds in the Construction Account,
together with funds available under the Equity Subscription Agreement and other
available sources of funds, are reasonably expected to be sufficient to complete
our Facility according to the EPC Contract by the Date Certain;
(iv) a statement that no Default or Event of Default under the
Indenture, the DSR LOC Reimbursement Agreement, the CP LOC Reimbursement
Agreement or any working capital facility has occurred and is continuing;
(v) a statement that all proceeds of prior requisitions have been
expended or applied under the provisions of the Financing Documents and that the
items for which amounts are requested in the subject requisition have not been
the basis for a previous requisition;
(vi) a certification that required insurance, material Governmental
Approvals and necessary Project Contracts are in full force and effect; and
(vii) a certification that specified representations set forth in the
Indenture are true and correct in all material respects.
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If our Company cannot satisfy the requirements of clauses (i) or (v) of
the preceding paragraph, the Collateral Agent shall not release funds from the
Construction Account in respect of such Requisition until such clauses are
satisfied. If our Company cannot satisfy clauses (ii), (iii), (iv), (vi) or
(vii) of the preceding paragraph, but the Collateral Agent receives a
requisition signed by our Company (the contents of which shall be confirmed by
the Independent Engineer) (a) specifying and identifying the failure, and the
causes for the failure, to satisfy the requirements of such clauses (ii), (iii),
(iv), (vi) or (vii) of the preceding paragraph and (b) certifying that (1) the
requirements of clauses (i) and (v) of the preceding paragraph are satisfied,
(2) there exists no Bankruptcy Event in respect of our Company or AES Ironwood
and (3) each of the EPC Contract, the Power Purchase Agreement, required
insurance policies and material Governmental Approvals needed for construction
of our Facility is in full force and effect, then the Collateral Agent shall
disburse funds in accordance with such requisition. Within fifteen (15) days of
receipt of such requisition, the Collateral Agent shall give notice to the
Senior Parties describing such failure and specifying that, unless the Required
Senior Parties give notice to the Collateral Agent of their objection to payment
of further requisitions containing any such specified failures, the Collateral
Agent shall continue to make payment of such requisitions from available funds
in the Construction Account, unless the Collateral Agent shall have received, by
the second Business Day prior to the time of payment of such requisition, notice
of objection from the Required Senior Parties.
Notwithstanding the foregoing, the Collateral Agent will not release
funds from the Construction Account in respect of a requisition if a Trigger
Event shall have occurred and be continuing until the Collateral Agent
determines that such Trigger Event is no longer continuing or the Required
Senior Parties give instructions to the Collateral Agent as to application of
funds.
Payments on Commercial Operation Date
Not later than 10 days after receipt by the Collateral Agent of a
certificate of our Company (the "Commercial Operation Certificate") (the
contents of which shall be confirmed in writing by the Independent Engineer)
certifying, among other things, that (i) all conditions to the commencement of
commercial operation under the Power Purchase Agreement have been satisfied,
(ii) the CP Letter of Credit has been terminated or drawn, (iii) all permits
then required have been obtained and (iv) no default is continuing, the
Collateral Agent shall, after retaining in the Construction Account the amount,
if any, specified by our Company as necessary to pay Project Costs which are not
then due and payable, transfer all remaining funds in the Construction Account
(plus any amounts available under and under the Equity Subscription Agreement to
the extent necessary to fund first through fifth below) by wire transfer to the
following accounts and recipients in the following order of priority:
first, to the Operating and Maintenance Account, an amount to the
extent available, as specified by our Company but in any event, no less than
one-month's non-fuel Operating and Maintenance Costs;
second, to the Bond Payment Account, an amount, to the extent
available, as specified by our Company for funding of the Interest Payment
Subaccount and Principal Payment Subaccount;
third, to the Debt Service Reserve Account, an amount as specified by
our Company equal to the DSRA Required Balance to the extent not already funded
or provided through a DSR Letter of Credit;
fourth, if applicable, to the CP LOC Provider, an amount equal to the
principal of and interest on any CP LOC Loans outstanding on the Commercial
Operation Date;
fifth, to the Major Maintenance Reserve Account, an amount as specified
by our Company equal to any initial deposit required therein; and
sixth, to the Revenue Account, any remaining amounts.
Payments During Operating Period
After the transfer specified in the above paragraphs regarding payments
on the Commercial Operation Date and upon receipt by the Collateral Agent of,
not less than 3 Business Days prior to the date of the proposed transfer, an
Officer's Certificate of our Company detailing the amounts to be paid, the
Collateral Agent shall transfer all remaining funds in the Revenue Account by
wire transfer in the following order of priority:
first, as and when required, (i) to any working capital provider, an
amount certified by our Company as the amount, if any, then payable under any
working capital facility; and (ii) as and when requested, to the Operating and
Maintenance Account, the amount certified by our Company as necessary for
payment of Operating and Maintenance Costs;
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second, on a monthly basis, (i) to the Trustee and the Collateral
Agent, any amounts certified by our Company as the amounts then due and payable
in respect of Trustee Claims and Collateral Agent Claims, respectively; (ii) to
any DSR LOC Provider, any amounts certified by our Company as the amounts then
due and payable in respect of DSR LOC Provider Claims; and (iii) to any CP LOC
Provider, any amounts certified by our Company as the amounts then due and
payable in respect of CP LOC Provider Claims; provided, however, that if funds
in the Revenue Account are insufficient on any date to make the payments
specified in this paragraph second, distribution of funds shall be made ratably
to the specified recipients;
third, on a monthly basis, (i) to the Trustee, for deposit in the
Interest Payment Subaccount, an amount equal to one-third of the interest
becoming due on the bonds on the next succeeding bond payment date; (ii) to the
DSR LOC Reimbursement Fund, (a) an amount equal to one-third of the interest
becoming due on any DSR LOC Loan on the next succeeding bond payment date, plus
one-third of any fees becoming due under the DSR LOC Reimbursement Agreement on
the next succeeding bond payment date, (b) an amount equal to one-third of the
interest becoming due on any DSR Bond on the next succeeding bond payment date
and (c) an amount equal to one-third of the interest becoming due on any DSR LOC
Term Loan on the next succeeding bond payment date; and (iii) to the CP LOC
Reimbursement Fund, an amount equal to one-third of the interest becoming due on
any CP LOC Loan on the next succeeding bond payment date, plus one-third of any
fees becoming due under the CP LOC Reimbursement Agreement on the next
succeeding bond payment date; provided, however, that if funds in the Revenue
Account are insufficient on any date to make the payments specified in this
paragraph third, distribution of funds shall be made ratably to the specified
recipients;
fourth, on a monthly basis, (i) to the Trustee, for deposit in the
Principal Payment Subaccount, an amount equal to one-third of the principal
becoming due on the bonds on the next succeeding bond payment date; (ii) to the
DSR LOC Reimbursement Fund, (a) an amount equal to one-third of the principal
becoming due on any DSR Bond on the next succeeding bond payment date, and (b)
an amount equal to one-third of the principal becoming due on any DSR LOC Term
Loan on the next bond payment date; and (iii) to the CP LOC Reimbursement Fund,
an amount equal to one-third of the principal becoming due on any CP LOC Loan on
the next succeeding bond payment date; provided, however, that if funds in the
Revenue Account are insufficient on any date to make the payments specified in
this paragraph fourth, distribution of funds shall be made ratably to the
specified recipients;
fifth, on a monthly basis, first, to the DSR LOC Provider, an amount
equal to the outstanding principal amount of any DSR LOC Loans that have not
been converted to DSR Term Loans or DSR Bonds, and second, to the Collateral
Agent for deposit in the Debt Service Reserve Account, an amount necessary to
fund the Debt Service Reserve Account up to the DSRA Required Balance (taking
into account any amounts remaining available to be drawn under the DSR Letter of
Credit); provided, however, that if amounts available for drawing under the DSR
Letter of Credit are not being reinstated to the full extent of payments made to
the DSR LOC Provider and funds in the Revenue Account are insufficient on any
date to make the payments specified in this paragraph fifth, distribution of
funds shall be made ratably to the specified recipients;
sixth, on a monthly basis, to the Major Maintenance Reserve Account,
amounts necessary to cause the balance thereof to be equal to the minimum
balance required at such time under the Annual Budget;
seventh, on a monthly basis, to our Company for payment by our Company
to the Power Purchaser, the amount, if any, certified by our Company as required
to make any Non-Dispatch Payments (as defined in the Power Purchase Agreement)
to the Power Purchaser under the Power Purchase Agreement;
eighth, on a monthly basis, to the Fuel Conversion Volume Rebate
Account, an amount equal to one-twelfth of the amount specified by our Company
that would be owed to the Power Purchaser at the end of the then current Fiscal
Year under the Power Purchase Agreement;
ninth, on a monthly basis, if any Subordinated Debt is outstanding, to
the Subordinated Debt Account, (x) an amount equal to one-third or one-sixth
(depending on the interest payment schedule of such debt) of the interest
becoming due on such Subordinated Debt on the next succeeding interest payment
date for such debt, plus (y) one-third or one-sixth (depending on the
amortization schedule of such debt) of the principal becoming due on such
Subordinated Debt on the next applicable principal payment date; and
tenth, on a monthly basis, to the Contractor, an amount equal to any
subordinated bonuses payable to the Contractor under the EPC Contract;
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eleventh, on a monthly basis, to the Distribution Account, any
remaining amounts for payment of distributions to holders of ownership interests
(including any payment in respect of principal or interest then due on Affiliate
Subordinated Debt); provided, that the Distribution Conditions set forth in the
Collateral Agency Agreement are satisfied.
When making the transfers specified above, each transfer shall be
adjusted as necessary, taking into account investment gains or losses in such
Project Account or Indenture Account and further adjusting such transfers by the
amount of any prior over-fundings or any prior shortfalls in such Project
Account or Indenture Account, to ensure that the aggregate amounts so
transferred to such Project Accounts or Indenture Accounts are sufficient to pay
the amount due and payable from such Project Accounts and Indenture Accounts on
the applicable payment date.
Debt Service Reserve Account
The Collateral Agent shall hold the DSR Letter of Credit as security
agent for the Trustee and the DSR LOC Provider to the extent of its interest
therein. Upon the occurrence of the Commercial Operation Date, the Debt Service
Reserve Account shall be funded, if necessary, from monies available in the
Construction Account for such purpose in an amount up to the DSRA Required
Balance. Subsequent to the Commercial Operation Date, the Debt Service Reserve
Account shall be funded, if necessary, from monies transferred from the Revenue
Account. When determining (i) the amount, if any, required to be deposited into
the Debt Service Reserve Account from time to time or (ii) whether the Debt
Service Reserve Account has deposited therein the DSRA Required Balance, amounts
on deposit in the Debt Service Reserve Account shall be aggregated with the
amount available to be drawn under the DSR Letter of Credit.
When there are insufficient monies in the Bond Payment Account on any
bond payment date to pay the interest or principal then due on the bonds, the
Collateral Agent shall, upon receipt prior to such bond payment date of an
Officer's Certificate of our Company, in the following order of priority: first,
withdraw monies on deposit in the Debt Service Reserve Account; and second, draw
on the DSR Letter of Credit in accordance with the terms and provisions thereof
up to the amount available for such purpose thereunder, in each case, to the
extent necessary to make such interest or principal payment on the bonds and
transfer such monies to the Trustee for deposit in the Bond Payment Account for
application against such payment.
If the Collateral Agent receives a written notice from our Company
stating that there has been a reduction in the long-term debt rating of the DSR
LOC Provider below the Required Rating, or if a Responsible Officer of the
Collateral Agent otherwise becomes aware of such reduction, and the DSR Letter
of Credit has not been replaced within the time period specified therefor, the
Collateral Agent shall draw on the DSR Letter of Credit in the amount necessary
to fund the Debt Service Reserve Account up to the DSRA Required Balance (as
certified in an Officer's Certificate of our Company delivered to the Collateral
Agent, calculated without aggregating therewith the amount available to be drawn
under the DSR Letter of Credit but taking into account amounts then on deposit
in or credited to the Debt Service Reserve Account), whereupon the Collateral
Agent shall deposit the proceeds of such drawing in the Debt Service Reserve
Account.
If the Collateral Agent receives a notice from the DSR LOC Provider
stating that the DSR LOC Provider shall terminate the DSR Letter of Credit on
the date specified in such notice, the Collateral Agent shall, within 3 Business
Days of receipt of such notice, draw on the DSR Letter of Credit in an amount
equal to the amount necessary to fund the Debt Service Reserve Account up to the
DSRA Required Balance (calculated without aggregating therewith the amount
available to be drawn under the DSR Letter of Credit but taking into account
amounts then on deposit in or credited to the Debt Service Reserve Account),
whereupon the Collateral Agent shall deposit the proceeds of such drawing in the
Debt Service Reserve Account and the DSR Letter of Credit shall thereupon
automatically terminate.
If a Trigger Event shall have occurred and be continuing and the
Collateral Agent has received the written request of the Required Senior Parties
contained in Senior Party Certificates and such notice has not been rescinded,
then the Collateral Agent, upon receipt of an Officer's Certificate of our
Company setting forth the DSRA Required Balance, shall draw on the DSR Letter of
Credit in an amount equal to the amount necessary to fund the Debt Service
Reserve Account up to the DSRA Required Balance (calculated without aggregating
therewith the amount available to be drawn under the DSR Letter of Credit),
whereupon the Collateral Agent shall distribute the proceeds of such drawing,
together with other amounts available in the Debt Service Reserve Account, to
the Trustee, and the DSR Letter of Credit shall thereupon automatically
terminate.
If, subsequent to the Commercial Operation Date, monies transferred to
the DSR LOC Provider under clause third under "Payments During Operating Period"
above are insufficient to repay the interest on any DSR LOC Loans due or
becoming due on the first day of such month, the Collateral Agent, upon receipt
of a certificate of an Authorized
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Officer of the DSR LOC Provider notifying the Collateral Agent of the existence,
and setting forth the amount, of such shortfall, within two Business Days of
receipt of such certificate shall draw on the DSR Letter of Credit in an amount
equal to the amount of such shortfall and transfer such amount to the DSR LOC
Provider in payment (in whole or part) of such interest on such DSR LOC Loans.
Notwithstanding the foregoing, in no event shall any draw on the DSR Letter of
Credit described in this paragraph individually or in the aggregate with all
other such draws, less any draws previously reimbursed, exceed six months of
interest on the maximum stated amount of the DSR Letter of Credit.
Unless the DSR Letter of Credit is not extended or replaced or unless
there has been a DSR LOC Event of Default as described under "SUMMARY OF
PRINCIPAL FINANCING DOCUMENTS--DSR LOC Reimbursement Agreement," amounts
available for drawing under the DSR Letter of Credit shall be reinstated
immediately to the extent of any reimbursement of principal of DSR LOC Loans
(but not DSR Bonds or DSR LOC Term Loans).
If our Company and the DSR LOC Provider shall agree to issue or
reinstate the DSR Letter of Credit in an amount that, when aggregated with cash
on deposit in the Debt Service Reserve Account would exceed the DSRA Required
Balance (the amount of such excess being referred to hereinafter as the "Excess
Amount"), the Collateral Agent shall, within 2 Business Days of receipt by the
Collateral Agent of (i) such reissued or reinstated DSR Letter of Credit, and
(ii) an Officer's Certificate of our Company, transfer an amount equal to the
Excess Amount to the Revenue Account for application in accordance with the
applicable provisions of the Collateral Agency Agreement; provided, that the
amount of the DSR Letter of Credit may not exceed the DSRA Required Balance.
Distribution Account
The Distribution Account shall be funded from funds transferred from
the Revenue Accounts in accordance with the Collateral Agency Agreement. On any
date on which the conditions set forth below (the "Distribution Conditions") are
satisfied, funds on deposit in or credited to the Distribution Account may be
distributed to, or as directed by, our Company for the payment of Affiliate
Subordinated Debt, the making of distributions to the holders of ownership
interests in our Company or any other lawful purpose, upon receipt by the
Collateral Agent of an Officer's Certificate of our Company requesting such a
distribution and certifying that:
(a) all of our Project Accounts and the Bond Payment Account shall be
funded to their required levels;
(b) no (i) Default or Event of Default under the Indenture, (ii)
default or event of default under the DSR LOC Reimbursement Agreement, (iii)
default or event of default under any CP LOC Reimbursement Agreement or (iv)
default under any working capital arrangements, if any, shall have occurred and
be continuing;
(c) the Commercial Operation Date has occurred and at least one
complete fiscal quarter thereafter has elapsed;
(d) if the requested distribution is to be made during the Power
Purchase Agreement Term, (i) the Senior Debt Service Coverage Ratio for the
preceding four fiscal quarters (or, with respect to any date prior to the first
anniversary of the Commercial Operation Date, for the number of complete fiscal
quarters since the Commercial Operation Date) measured as one period, is greater
than or equal to 1.2 to 1 and (ii) based on projections prepared by our Company
on a reasonable basis, the projected Senior Debt Service Coverage Ratio for the
succeeding four fiscal quarters (including the quarter in which such
distribution is to be made) (or, with respect to any date within the 12-month
period prior to the end of the Power Purchase Agreement Term, the number of
complete fiscal quarters, if any, until the end of the Power Purchase Agreement
Term) is projected to be greater than or equal to 1.2 to 1; and
(e) if the requested distribution is to be made on or after the date
which is six months prior to the end of the Power Purchase Agreement Term, (i)
the Senior Debt Service Coverage Ratio for the preceding four fiscal quarters
(or, with respect to any date within the first 12 months of the Post-Power
Purchase Agreement Period, the number of complete fiscal quarters, if any, since
the start of the Post-Power Purchase Agreement Period) measured as one period,
is greater than or equal to 1.70 to 1.0 (or 1.2 to 1.0 with respect to such
period occurring prior to the end of the Power Purchase Agreement Term) and (ii)
based on projections prepared by our Company on a reasonable basis, the
projected Senior Debt Service Coverage Ratio for the succeeding eight fiscal
quarters (including the fiscal quarter in which such distribution is to be made)
or, with respect to any date within the 24-month period prior to the final
maturity date for the bonds, the number of complete fiscal quarters, if any,
until such final maturity date for the bonds, in each case measured as one
period, is projected to be greater than or equal to 1.70 to 1 (or 1.2 to 1 with
respect to such period occurring prior to the end of the Power Purchase
Agreement Term), each as certified by an authorized officer of our Company;
provided, however, that,
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(A) if distributions are blocked because our Company fails to
satisfy the conditions of clause (e)(ii) above, then in lieu of the
coverage ratio test set forth in such clause, the projected Senior Debt
Service Coverage Ratio through the final maturity date for the bonds,
measured as one period, shall be 1.70 to 1 in order to satisfy such
clause (e)(ii) in respect of amounts then on deposit in the
Distribution Account;
(B) for purposes of calculating the projected Senior Debt
Service Coverage Ratios in clauses (e)(ii) above, our Company shall use
(1) for electricity prices, either (x) the electricity prices
forecasted in the most recent Independent Forecast furnished to the
Trustee, in each case, during the relevant period of calculation, or
(y) if and to the extent that electricity sales during the relevant
period of calculation are made under one or more power sales agreements
at prices other than prices which are by their terms market prices, the
electricity prices under such power sales agreements and (2) for gas
prices, either (x) the gas prices forecasted in the most recent
Independent Forecast furnished to the Trustee, in each case, during the
relevant period of calculation, or (y) if and to the extent that gas
purchases during the relevant period of calculation are made under one
or more gas purchase agreements at prices other than prices which are
by their terms market prices, the gas prices under such gas purchase
agreements;
(C) if, and to the extent that, (1) at least 75% of our
Facility Capacity is subject to one or more power sales agreements on
terms (other than pricing) substantially similar to the Power Purchase
Agreement (but excluding the provision for gas to be supplied for fuel
conversion services by the Power Purchaser) or on commercially
reasonable terms (other than pricing) typical of power sales agreements
entered into at such time for the same term, in each case with a term
of not less than one year during the relevant period of calculation,
and (2) at least 75% of the gas supply for our Facility is subject to
one or more gas supply agreements on commercially reasonable terms
(other than pricing) typical of gas supply agreements entered into at
such time for the same term, in each case with a term of not less than
one year during the relevant period of calculation (compliance with
such requirements to be certified by our Company), then clause (e)
above shall be deemed satisfied, if the Senior Debt Service Coverage
Ratio and the projected Senior Debt Service Coverage Ratio referred to
in such clause (e) are each equal to or greater than 1.30 to 1 for the
portions of the time periods referred to in such clause (e) in which
such agreements were or are to be in effect, as certified by our
Company; and
(D) if amounts on deposit in or credited to the Revenue
Account are insufficient to make the transfers described in priorities
first through sixth above under "Payments During Operating Period,"
amounts on deposit in or credited to the Distribution Account will be
transferred to the Revenue Account to the extent necessary and applied
in accordance with the Collateral Agency Agreement.
Restoration Account
All Casualty Proceeds and Eminent Domain Proceeds shall be deposited
into the Restoration Account. Subject to the provisions described below, the
Collateral Agent shall apply the amounts in the Restoration Account to the
payment, or reimbursement to the extent the same have been paid or satisfied by
our Company, of the costs of rebuilding, repair and restoration of our Facility
or any part thereof that has been affected by an Event of Loss or an Event of
Eminent Domain.
The Collateral Agent is authorized to disburse from the Restoration
Account the amount required to be paid for the repair or replacement of our
Facility or any part thereof as specified in the preceding paragraph. The
Collateral Agent is authorized and directed to issue its checks or transfer
funds electronically for each disbursement from the Restoration Account, upon
receipt of a Restoration Certificate signed by an Authorized Representative of
our Company, and approved by the Independent Engineer; provided, however, that
no such approval of the Independent Engineer shall be required if less than
$5,000,000 is requested under such requisition or requisitions in any one Fiscal
Year. The Collateral Agent shall be entitled to rely on all certifications and
statements in such Restoration Certificate. The Collateral Agent shall keep and
maintain adequate records pertaining to the Restoration Account and all
disbursements therefrom and shall file an accounting thereof with our Company
and the Independent Engineer within three months following the last Business Day
of each Fiscal Year.
If an Event of Loss or an Event of Eminent Domain shall occur with
respect to any Collateral, our Company shall (i) diligently pursue all its
rights to compensation against any person with respect to such Event of Loss or
Event of
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Eminent Domain, (ii) in the reasonable judgment of our Company compromise or
settle any claim against any person with respect to such Event of Loss or Event
of Eminent Domain and (iii) hold all amounts of Casualty Proceeds or Eminent
Domain Proceeds (including instruments) received in respect of any Event of Loss
or Event of Eminent Domain (after deducting all reasonable expenses incurred by
it in litigating, arbitrating, compromising or settling any claims) in trust for
the benefit of the Collateral Agent segregated from other funds of our Company
and will promptly transfer to the Collateral Agent for deposit in the
Restoration Account such Casualty Proceeds or Eminent Domain Proceeds.
If either an Event of Loss or an Event of Eminent Domain shall occur,
as soon as reasonably practicable but no later than the date of receipt by our
Company or the Collateral Agent of Eminent Domain Proceeds or Casualty Proceeds,
as the case may be, our Company shall make a reasonable good faith determination
as to whether (i) our Facility or any portion thereof can be rebuilt, repaired
or restored to permit operation of our Facility or a portion thereof on a
commercially feasible basis and (ii) the Casualty Proceeds or the Eminent Domain
Proceeds, as the case may be, together with any other amounts that are available
to our Company for such rebuilding, repair or restoration, are sufficient to
permit such rebuilding, repair or restoration of our Facility or a portion
thereof, including the making of all required payments of interest and principal
on our Company's Indebtedness during such rebuilding, repair or restoration. The
determination of our Company shall be evidenced by a Certificate as to
Redemption filed with the Collateral Agent which, if our Company determines that
our Facility or a portion thereof can be rebuilt, repaired or restored to permit
operation thereof on a commercially feasible basis and that the Casualty
Proceeds or the Eminent Domain Proceeds, as the case may be, together with any
other amounts that are available to our Company for such rebuilding, repair or
restoration, are sufficient, shall also set forth a reasonable good faith
estimate by our Company of the total cost of such rebuilding, repair or
restoration. Our Company shall deliver to the Collateral Agent at the time it
delivers the Certificate as to Redemption a certificate of the Independent
Engineer, dated the date of the Certificate as to Redemption, stating that,
based upon reasonable investigation and review of the determination made by our
Company, the Independent Engineer believes the determination and the estimate of
the total cost set forth in the Certificate as to Redemption to be reasonable.
If, following an Event of Loss or Event of Eminent Domain, the
determination is made that our Facility cannot be rebuilt, repaired or restored
to permit operation on a commercially feasible basis or that the Casualty
Proceeds or the Eminent Domain Proceeds, together with any other amounts that
are available to our Company for such rebuilding, repair or restoration, are not
sufficient to permit such rebuilding, repair or restoration, all of the Casualty
Proceeds or the Eminent Domain Proceeds, as the case may be, shall be
distributed as provided below.
If, following an Event of Loss or Event of Eminent Domain, the
determination is made that the entire Facility can be rebuilt, repaired or
restored to permit operation on a commercially feasible basis and that the
Casualty Proceeds or the Eminent Domain Proceeds, together with any other
amounts that are available to our Company for such rebuilding, repair or
restoration, are sufficient to permit such rebuilding, repair or restoration,
all of the Casualty Proceeds or the Eminent Domain Proceeds, as the case may be,
together with such other amounts as are available to our Company for such
rebuilding, repair or restoration, shall be deposited in the Restoration Account
and applied as provided below.
If, following an Event of Loss or Event of Eminent Domain, the
determination is made that a portion of our Facility can be rebuilt, repaired or
restored to permit operation on a commercially feasible basis and that the
Casualty Proceeds or the Eminent Domain Proceeds, together with any other
amounts that are available to our Company for such rebuilding, repair or
restoration, are sufficient to permit such rebuilding, repair or restoration,
(i) an amount equal to the estimate of the total cost of such rebuilding, repair
or restoration set forth in the Certificate as to Redemption filed with the
Collateral Agent shall be deposited in the Restoration Account and applied as
provided below, and (ii) the amount, if any, by which all of the Casualty
Proceeds or the Eminent Domain Proceeds, as the case may be, exceed the estimate
of the total cost shall be distributed as provided below.
If our Company receives Casualty Proceeds or Eminent Domain Proceeds,
as the case may be, from an Event of Loss or an Event of Eminent Domain that do
not exceed in the aggregate $5,000,000 during any Fiscal Year of our Company,
our Company shall not have to make the good faith determination referred to
above and the Casualty Proceeds or the Eminent Domain Proceeds, as the case may
be, shall be deposited in the Restoration Account and applied for the
rebuilding, repair or restoration of our Facility without any approval of the
Independent Engineer.
Application of Casualty and Eminent Domain Proceeds and Buy-Down Amounts
If the determination is made that all or a portion of our Facility is
incapable of being rebuilt, repaired or restored to permit operation on a
commercially feasible basis, all Casualty Proceeds or Eminent Domain Proceeds
received by the Collateral Agent and not deposited in the Restoration Account
shall be distributed by the Collateral Agent within five
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Business Days of receipt in the following order of priorities: first, to the
Collateral Agent, the DSR LOC Provider, the CP LOC Provider and the Trustee,
ratably, in an amount equal to the amounts owed in respect of the Collateral
Agent Claims, the Trustee Claims, the DSR LOC Provider Claims and the CP LOC
Provider Claims, respectively, due and payable as of the date of such
distribution; second, to the Senior Parties, ratably, an amount equal to the
unpaid amount of all Financing Liabilities owed to the Senior Parties, including
the amount required to be applied to a mandatory redemption of the bonds under
the Indenture; third, to the Subordinated Debt Providers, ratably, an amount
equal to the unpaid amount owed to such Subordinated Debt Providers by our
Company under any Subordinated Loan Agreement; and fourth, to our Company or its
successors or assigns or to whomever may be lawfully entitled to receive the
same or as a court of competent jurisdiction may direct, any surplus then
remaining from such proceeds.
At the time the Collateral Agent is to make a distribution under clause
second in the immediately preceding paragraph, the Collateral Agent shall
deposit, with the same priority as such distribution, ratably into two separate
trust accounts, to be maintained by the Collateral Agent, the first to contain
an amount up to the amount equal to the maximum amount available to be drawn
under the DSR Letter of Credit (taking into account, without duplication, in the
case of the DSR Letter of Credit, the maximum amount which may become available
to be drawn in the future by reason of an increase in the DSRA Required
Balance), and not represented by a DSR LOC Loan, DSR LOC Term Loan or DSR Bond,
and the second to contain an amount up to the amount available to be drawn under
any CP Letter of Credit (and not represented by a CP LOC Loan); provided,
however, if funds available are insufficient to make all payments required under
clause second of the preceding paragraph and the required deposits provided for
in this sentence, distribution of funds shall be made ratably to the specified
recipients. The Collateral Agent shall hold such funds in such separate accounts
until receipt of a written notice or notices from the DSR Letter of Credit
Provider and/or the CP LOC Provider, as the case may be (which such notice or
notices shall be contemporaneously delivered by the DSR LOC Provider and/or the
CP LOC Provider to the other Senior Parties), to the effect that either (i) a
drawing has been made on its letter of credit or (ii) its letter of credit has
expired or terminated without a drawing being made thereunder. Upon receipt of a
notice or notices specified in clause (i) of the preceding sentence, the
Collateral Agent shall distribute to the DSR LOC Provider and/or the CP LOC
Provider, as the case may be, that proportionate share of the amount in the
relevant separate account referred to above, equal to such drawing's
proportionate share of the letter of credit collateralized by such account. Upon
receipt of a notice or notices specified in clause (ii) of the second preceding
sentence, the Collateral Agent shall distribute from the relevant separate
account (in accordance with clauses second, third and fourth above and without
regard to this paragraph) to the appropriate persons an amount equal to the
amount in such separate account.
All Buy-Down Amounts shall be deposited into a separate account
maintained by the Depositary Bank on behalf of the Collateral Agent. If the
requisite Officer's Certificate of our Company is delivered, the Collateral
Agent is authorized to disburse from such separate account the amount required
to be paid for the modification, repair or replacement of that portion of our
Facility that requires modification, repair or replacement in order to remedy
the circumstances giving rise to the obligation of the Contractor under the EPC
Contract to pay such Buy-Down Amounts.
As soon as reasonably practicable following receipt by our Company or
the Collateral Agent of Buy-Down Amounts, our Company shall make a reasonable
good faith determination as to whether (i) it is technically feasible to modify,
repair or replace that portion of our Facility that requires modification,
repair or replacement in order to remedy the circumstances giving rise to the
obligation of the Contractor under the EPC Contract to pay such Buy-Down
Amounts, (ii) the Buy-Down Amounts, together with any other amounts that are
available to our Company for such modification, repair or replacement, are
sufficient to permit such modification, repair or replacement, including the
making of all required payments of interest and principal on our Company's
Indebtedness during such modification, repair or replacement, (iii) the
projected average Senior Debt Service Coverage Ratio (after giving effect to
such modification, repair or replacement and the application of the Buy-Down
Amounts to accomplish the same) during the Power Purchase Agreement Term (taken
as one period) and the Post-Power Purchase Agreement Period (taken as one
period) is equal to or greater than the projected average Senior Debt Service
Coverage Ratio set forth in the base case projections for each such period set
forth in this Offering Circular and (iv) the projected minimum Senior Debt
Service Coverage Ratio (after giving effect to such modification, repair or
replacement and the application of the Buy-Down Amounts to accomplish the same)
during the Power Purchase Agreement Term and the Post-Power Purchase Agreement
Period is equal to or greater than the projected minimum Senior Debt Service
Coverage Ratio for each such period set forth in the base case projections set
forth in this Offering Circular.
Upon receipt of an Officer's Certificate of our Company, confirmed by
the Independent Engineer, certifying that all modifications, repairs or
replacements of that portion of our Facility that requires modification, repair
or replacement in order to remedy the circumstances giving rise to the
obligation of the Contractor under the EPC Contract to pay Buy-
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Down Amounts have been completed, the Collateral Agent shall transfer all funds
remaining in such separate account first, to such Accounts as are specified in
the Collateral Agency Agreement and second, to our Company or to whomsoever our
Company in writing directs.
If our Company cannot provide the Officer's Certificate to permit the
application of Buy-Down Amounts toward the modification, repair or replacement
of that portion of our Facility or the Independent Engineer fails to confirm
such Officer's Certificate, the Collateral Agent shall distribute all Buy-Down
Amounts ratably (based on the amount owing to the specified recipient) to (i)
the Trustee in respect of the amount of the bonds then outstanding for
redemption of bonds in accordance with the Indenture, (ii) the DSR LOC Provider
in respect of the outstanding amount of DSR Loans and (iii) the CP LOC Provider
in respect of the outstanding amount of any CP LOC Loan.
At the time the Collateral Agent is to make a distribution under the
immediately preceding paragraph, the Collateral Agent shall deposit into two
separate trust accounts to be maintained by the Collateral Agent, the first to
contain an amount up to the amount available to be drawn under the DSR Letter of
Credit (taking into account, without duplication, in the case of the DSR Letter
of Credit, the maximum amount which may become available to be drawn in the
future by reason of an increase in the DSRA Required Balance), and not
represented by a DSR LOC Loan, a DSR Term Loan or DSR Bond, and the second to
contain an amount up to the amount available to be drawn under any CP Letter of
Credit (and not represented by a CP LOC Loan); provided, however, if funds
available are insufficient to make all payments required under clause second of
the first paragraph of this section entitled "Application of Casualty and
Eminent Domain Proceeds and Buy-Down Amounts" and the required deposits provided
for in this sentence, distribution of funds shall be made ratably to the
specified recipients. The Collateral Agent shall hold the funds in such separate
account until receipt of a written notice or notices from the DSR LOC Provider
and/or the CP LOC Provider, as the case may be (which such notice or notices
shall be contemporaneously delivered by the DSR LOC Provider and/or the CP LOC
Provider to the other Senior Parties), to the effect that either (i) a drawing
has been made on the letter of credit or (ii) the letter of credit has expired
or terminated without a drawing being made thereunder. Upon receipt of a notice
or notices specified in clause (i) in the preceding sentence, the Collateral
Agent shall distribute to the DSR LOC Provider and/or CP LOC Provider, as the
case may be, that proportionate share of the amount in the relevant separate
account referred to above, equal to such drawing's proportionate share of the
letter of credit collateralized by such account. Upon receipt of a notice or
notices specified in clause (ii) in the second preceding sentence, the
Collateral Agent shall distribute from the relevant separate account to the
appropriate persons an amount equal to the amount in such separate account.
Exercise of Rights Under Security Documents
The Collateral Agency Agreement provides, among other things, that: (i)
if a Trigger Event shall have occurred and be continuing, and only in such
event, upon the written request of the Required Senior Parties contained in
Senior Party Certificates, the Collateral Agent, on behalf of the Trustee, the
DSR LOC Provider, the CP LOC Provider and any other Senior Party that is a party
to the Collateral Agency Agreement, will be permitted to take any and all
actions and to exercise any and all rights, remedies and options which it may
have under the Security Documents or the Collateral Agency Agreement; provided,
however, that if the underlying event which caused the Trigger Event is a
Bankruptcy Event in respect of our Company of which the Collateral Agent shall
have received written notice, no written request of the Required Senior Parties
shall be required in order to permit the Collateral Agent following such Trigger
Event to take any and all actions and to exercise any and all rights, remedies
and options which it may have under the Security Documents or the Collateral
Agency Agreement; (ii) the Senior Parties will give each other and the
Collateral Agent written notice of the occurrence of an Event of Default and of
a Trigger Event as soon as practicable after the occurrence thereof; (iii) the
Senior Parties acknowledge and agree that all funds held by the Trustee in
accordance with Article 5 of the Indenture are held for the benefit of the
bondholders; (iv) the Senior Parties acknowledge and agree that all funds held
in the Debt Service Reserve Account by the Collateral Agent is held for the
benefit of the Trustee (on behalf of the bondholders); (v) no Senior Party and
no class or classes of Senior Parties shall have any right (a) to direct the
Collateral Agent to take any action in respect of the Collateral other than in
accordance with the Collateral Agency Agreement or (b) to take any action with
respect to the Collateral (1) independently of the Collateral Agent or (2) other
than to direct the Collateral Agent in writing to take action in accordance with
the Collateral Agency Agreement; and (vi) the Senior Parties acknowledge and
agree that if (a) there is an Event of Default under the Indenture and such
Event of Default is not caused directly or indirectly by a default or event of
default under the Power Purchase Agreement and (b) they direct the Collateral
Agent to accelerate the bonds, the Collateral Agent shall be obligated to
provide the Power Purchaser the opportunity for 90 days to purchase our Facility
for an amount equal to the greater of (x) the Fair Market Value of our Facility
and (y) all Financing Liabilities due and owing to the Senior Parties and any
Subordinated Debt Provider, and if
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the Power Purchaser offers to purchase our Facility for such amount within such
period, the Collateral Agent shall take such actions as required to consummate
such sale as directed by the Required Senior Parties in Senior Party
Certificates.
In giving directions and otherwise exercising rights under the Security
Documents and the Collateral Agency Agreement, the Trustee shall vote (or
otherwise represent) that portion of the Combined Exposure represented by all
bonds then outstanding according to the votes of a majority of the principal
amount of bonds held by responding bondholders. The Trustee shall not make
requests, give directions or vote on a proportional basis.
Application of Foreclosure Proceeds
Following the receipt of proceeds under the Williams Guaranty as a
result of a termination of the Power Purchase Agreement or a foreclosure or
other exercise of remedies following a Trigger Event, the proceeds of any sale,
disposition or other realization by the Collateral Agent or by a Senior Party
upon the Collateral under the Security Documents shall be distributed in the
following order of priorities: first, to the Collateral Agent, the Trustee, the
DSR LOC Provider and the CP LOC Provider, ratably, all administrative fees,
costs and expenses owed to such parties under the Financing Documents; second,
to the Senior Parties, ratably (based on the amount owing to the specified
recipients), an amount equal to the unpaid amount of all Financing Liabilities
owed to or required to be deposited for the account of such Senior Parties by
our Company; third, to any Subordinated Debt Providers, ratably, an amount equal
to the unpaid obligations owed to or required to be deposited for the account of
such Subordinated Debt Providers by our Company under any Subordinated Loan
Agreement; and fourth, to our Company (or its successors or assigns) or to
whomever may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct, any surplus remaining after giving effect to clauses
first, second and third above.
Subordination Provisions
Any Subordinated Debt shall be subordinate and subject in right of
payment to the prior payment of all Senior Debt. Unless and until all Senior
Debt (whether of principal of and interest and premium or prepayment or
liquidation penalty on such Senior Debt and fees and expenses incurred with
enforcement of the same) has been paid in full in cash, (i) no payment on
account of any Subordinated Debt shall be made to any Subordinated Debt Provider
by our Company or by the Collateral Agent or the Depositary Bank on behalf of
our Company and (ii) no Subordinated Debt Provider shall ask, demand, sue for,
take or receive from our Company, by set-off or any other manner, or seek any
other remedy allowed at law or in equity against our Company for breach of our
Company's obligations under any instrument representing Subordinated Debt.
Upon any insolvency, bankruptcy or similar proceeding relating to our
Company or its creditors, or any liquidation, dissolution or other winding-up of
our Company, or any assignment for the benefit of creditors or any other
marshaling of assets and liabilities of our Company, the Senior Parties shall be
entitled to receive payment in full in cash of all amounts due or to become due
on or in respect of all Senior Debt, or provision shall be made for such
payment, before any Subordinated Debt Provider shall be entitled to receive any
payment with respect to Subordinated Debt.
Subject to the payment in full in cash of all Senior Debt, the
Subordinated Debt Providers shall be subrogated to the rights of the Senior
Parties to receive payments and distributions of cash, property and securities
applicable to the Senior Debt until such Subordinated Debt shall be paid in full
in cash.
Third-Party Engineer Dispute Resolution
The Collateral Agency Agreement provides that if our Company and the
Independent Engineer are in dispute in respect of a notice, plan, report,
certificate or budget and they are unable to resolve the dispute within seven
days of the Independent Engineer expressing its disagreement with such notice,
plan, report, certificate or budget, a single independent engineer (the
"Third-Party Engineer") shall be designated to consider and decide the issues
raised by such dispute. For a more detailed description of the Third-Party
Engineer dispute resolution provisions set forth in the Indenture, see "ROLE OF
THE INDEPENDENT ENGINEER."
DSR LOC Reimbursement Agreement
Dresdner Bank AG, New York Branch (the "DSR LOC Provider"), under a
Debt Service Reserve Letter of Credit and Reimbursement Agreement (the "DSR LOC
Reimbursement Agreement"), has agreed to provide the DSR Letter of Credit for
use by our Company in connection with our Project. The Financing Documents
require that the Debt Service Reserve Account be funded in an amount equal to
the DSRA Required Balance on or before the anticipated Commercial Operation
Date. Accordingly, our Company has entered into the DSR LOC Reimbursement
Agreement in order to satisfy such obligation.
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The DSR LOC Provider will issue the DSR Letter of Credit on or before
the earlier to occur of the Commercial Operation Date, the Guaranteed Completion
Date or the Date Certain for the account of our Company in an amount up to
$17,529,452 (the "DSR LOC Maximum Stated Amount") to be held by the Collateral
Agent to serve as a debt service reserve facility for our Project. There will be
no condition precedent to the DSR LOC Provider's obligation to issue the DSR
Letter of Credit, other than the occurrence of the earliest of the dates
specified in the first sentence of the following paragraph.
The Collateral Agent shall have the right to make Drawings on the DSR
Letter of Credit beginning on the earliest of (i) the Commercial Operation Date,
(ii) the Guaranteed Completion Date and (iii) the Date Certain. The Collateral
Agent may make drawings under the DSR Letter of Credit upon the occurrence of
the following events: (i) there being insufficient monies in the Bond Payment
Account on any Interest Payment Date or principal payment date to pay interest
or principal then due (after application of funds from the Debt Service Reserve
Account); (ii) upon receipt of a notice from our Company that the long-term debt
rating of such DSR LOC Provider is less than A as determined by S&P or A2 as
determined by Moody's (collectively, the "Required Rating") and the DSR Letter
of Credit has not been replaced within the time period specified therein; (iii)
if a Trigger Event under the Collateral Agency Agreement shall have occurred and
be continuing; (iv) upon receipt of a notice from the DSR LOC Provider that the
DSR Letter of Credit will not be extended or replaced by the close of business
on the day 45 days prior to its stated expiration date; and (v) if, subsequent
to the Commercial Operation Date, moneys transferred to the DSR LOC Provider
from the Revenue Account are insufficient to repay the interest on any DSR LOC
Loans. The Collateral Agent will apply the proceeds of each such drawing: (a) in
the case of clauses (i) and (v) of the preceding sentence, to payment of the
relevant obligation and (b) in the case of clauses (ii), (iii) and (iv) of the
preceding sentence, to the Debt Service Reserve Account until there shall be
deposited therein an aggregate amount equal to the DSRA Required Balance.
Subject to the conditions of drawing, the DSR Letter of Credit will,
unless extended, mature, expire or terminate on the earlier to occur of (i) five
years from the date of issuance of the DSR Letter of Credit and (ii) the
occurrence of a DSR LOC Event of Default (such date referred to in clause (i) or
(ii), as the same may be extended, the "Expiration Date"); provided, however,
that the DSR Letter of Credit shall not be terminated upon the occurrence of a
DSR LOC Event of Default without the DSR LOC Provider first giving the
Collateral Agent and the Trustee written notice thereof at least 60 days prior
to such termination during which period the Collateral Agent shall be entitled
to draw on such DSR Letter of Credit as described above under "Collateral Agency
Agreement--Debt Service Reserve Account." The DSR LOC Provider shall also
provide a copy of such written notice to our Company at the time such notice is
given to the Collateral Agent and the Trustee.
Our Company shall have the right to terminate or reduce the DSR Letter
of Credit upon the receipt by the DSR LOC Provider of notice from the Trustee
consenting to such termination or reduction.
The DSR Letter of Credit is subject to renewal for additional periods
of one or more years at the sole discretion of the agent under the DSR LOC
Reimbursement Agreement.
The amount available for drawing under the DSR Letter of Credit will be
reduced upon (i) making draws thereunder, (ii) the reduction of the DSRA
Required Balance and (iii) certain deposits of cash in the Debt Service Reserve
Account.
DSR LOC Loans
Each Drawing on the DSR Letter of Credit shall constitute the making by
the DSR LOC Provider of a loan to our Company (a "DSR LOC Loan"). Our Company
shall pay interest on the unpaid principal amount of each outstanding DSR LOC
Loan from the date such DSR LOC Loan is made until such principal amount has
been repaid in full at a rate per annum equal, at the option of our Company, to
either (i) the Adjusted Base Rate plus 1% or (ii) the Eurodollar Rate plus the
Applicable Margin. The Adjusted Base Rate shall equal the higher of (i) the
Federal Funds Rate plus 50 basis points and (ii) the rate of interest officially
announced or published by the DSR LOC Provider as its "prime" or "reference"
rate. The Eurodollar Rate shall be determined by reference to the offered rates
that appear on Telerate page 3750 for deposits in Dollars two London banking
days prior to the date on which such rate is to become applicable to a DSR LOC
Loan.
Each DSR LOC Loan will be evidenced by a note in favor of the DSR LOC
Provider (the "DSR LOC Loan Note"). Our Company shall pay the interest on any
DSR LOC Loan out of cash available in the Revenue Account at the same level in
the flow of funds as interest on other Senior Debt and shall repay the principal
amount of any DSR LOC Loans out of cash available in the Revenue Account after
payment of debt service on all Senior Debt other than principal
107
<PAGE>
of DSR LOC Loans. Each DSR LOC Loan will mature five years after the date such
DSR LOC Loan is made (the "Maturity Date").
Unless the DSR Letter of Credit is not extended or replaced or unless
there has been a DSR LOC Event of Default as described under "SUMMARY OF
PRINCIPAL FINANCING DOCUMENTS--DSR LOC Reimbursement Agreement," amounts
available for drawing under the DSR Letter of Credit shall be reinstated
immediately to the extent of any reimbursement of principal of DSR LOC Loans
(but not DSR Bonds or DSR LOC Term Loans).
Non-renewal of DSR Letter of Credit
If the DSR Letter of Credit is not extended or replaced at least 45
days prior to its termination date, or the credit rating of the DSR LOC Provider
is less than the Required Rating and our Company does not within 45 days replace
the DSR Letter of Credit with a letter of credit issued by a financial
institution which meets the Required Rating, the Collateral Agent will draw on
the DSR Letter of Credit (such drawing on the DSR Letter of Credit due to
non-extension or non-replacement of the DSR Letter of Credit, a "DSR LOC Term
Loan") in an amount equal to the lesser of (i) the amount available to be drawn
under such letter of credit and (ii) the difference between (x) the DSRA
Required Balance and (y) amounts then on deposit in the Debt Service Reserve
Account, and will deposit such drawing into the Debt Service Reserve Account. A
DSR LOC Term Loan will amortize under a "mortgage-style" amortization schedule
and the maturity date of any DSR LOC Term Loan shall be 10 years after the date
such loan is made. Interest on and principal of any DSR LOC Term Loan will be
paid, respectively, at the same levels as interest on and principal of the
bonds.
Conversion into DSR Bonds
If by the date 30 months after the making of a DSR LOC Loan, our
Company shall have failed to repay at least 50% of the original amount of such
DSR LOC Loan, or if by the maturity date of such DSR LOC Loan our Company shall
have failed to repay such DSR LOC Loan in full, then from and after the
applicable date, such DSR LOC Loan may, at the option of the DSR LOC Provider,
be converted into a new security (a "DSR Bond") having a principal amount equal
to the remaining principal amount of the DSR LOC Loan so converted. Each DSR
Bond shall be amortized on the same amortization schedule as the bonds and
mature on the same maturity date as the bonds. Interest on and principal of any
DSR Bond will be paid, respectively, at the same levels as interest on and
principal of the bonds.
Covenants
The covenants of our Company contained in the Indenture shall be
incorporated by reference (with appropriate substitution of parties) in the DSR
LOC Reimbursement Agreement as if set forth in full in the DSR LOC Reimbursement
Agreement.
DSR LOC Events of Default
Each of the following shall be an event of default (a "DSR LOC Event of
Default") under the DSR LOC Reimbursement Agreement: (i) any amount due under
the DSR LOC Reimbursement Agreement or any DSR LOC Note is not paid in full
within 15 days after the due date thereof; (ii) an "Event of Default" under the
Indenture shall occur and be continuing or (iii) an "Event of Default" under the
CP LOC Reimbursement Agreement shall occur and be continuing.
Remedies
Upon the occurrence and during the continuation of a DSR LOC Event of
Default, at the request of the Banks holding 66 2/3 percent or more of the DSR
Letter of Credit commitment (the "Required DSR LOC Banks"), the DSR LOC Provider
may (i) after notice as required in the Financing Documents, terminate the DSR
Letter of Credit, (ii) declare all amounts owing under the DSR LOC Reimbursement
Agreement and any DSR Note to be forthwith due and payable (including amounts
not yet advanced under the DSR Letter of Credit, which shall upon being so
advanced be and become immediately due and payable), whereupon such obligations
shall become and be due and payable, without presentment, demand or protest;
(iii) terminate the ability of our Company to cause the reinstatement of the
Stated Amount through the reimbursement of drawings; and (iv) terminate the
ability of our Company to continue any DSR loans as, or to convert DSR loans to,
Eurodollar Rate Loans; provided, that the DSR LOC Provider shall not have the
right to exercise any other remedies except in accordance with the provisions of
the Collateral Agency Agreement.
CP LOC Reimbursement Agreement
Dresdner Bank AG, New York Branch (the "CP LOC Provider"), under a
Construction Period Letter of Credit and Reimbursement Agreement (the "CP LOC
Reimbursement Agreement"), has agreed at the option of our Company or if
required under the terms of the Power Purchase Agreement to provide the CP
Letter of Credit for use by our Company
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<PAGE>
in connection with our Project. The CP Letter of Credit (i) may be issued upon
the request of our Company if AES, in its sole discretion, elects to withdraw
the guaranty AES posted in favor of the Power Purchaser under the Power Purchase
Agreement or (ii) prior to the achievement of the Commercial Operation Date,
shall be issued within 10 Business Days of the CP LOC Provider receiving written
notice from our Company that the senior unsecured debt of AES is no longer rated
Investment Grade by each of the Rating Agencies.
The CP LOC Provider will issue the CP Letter of Credit for the account
of our Company in an amount up to $30,000,000 (the "CP LOC Maximum Stated
Amount") and in favor of the Power Purchaser. The Power Purchaser may make
drawings under the CP Letter of Credit if our Facility has not achieved the
Commercial Operation Date by the date specified in the Power Purchase Agreement,
as such date may be extended in accordance with the provisions of the Power
Purchase Agreement.
Subject to the conditions of drawing, the CP Letter of Credit will
mature, expire or terminate on the earliest to occur of (i) the date on which
the CP LOC Provider receives notice from the Power Purchaser that the Commercial
Operation Date has occurred; (ii) four years from the date of issuance of the CP
Letter of Credit; and (iii) the occurrence of a CP LOC Event of Default;
provided, however, that the CP Letter of Credit shall not be terminated upon the
occurrence of a CP LOC Event of Default without the CP LOC Provider first giving
the Collateral Agent and the Power Purchaser written notice thereof at least 45
days prior to such termination (such date referred to in clause (i), (ii) or
(iii), the "Expiration Date"). The CP LOC Provider shall also provide a copy of
such written notice to our Company at the time such notice is given to the
Collateral Agent and the Power Purchaser.
Our Company shall have the right to terminate or reduce the CP Letter
of Credit upon the receipt by the CP LOC Provider of notice from the Power
Purchaser consenting to such termination or reduction. The amount available for
drawing under the CP Letter of Credit will be reduced upon making draws
thereunder.
CP LOC Loans
Each Drawing on the CP Letter of Credit shall constitute the making by
the CP LOC Provider of a loan (a "CP LOC Loan"). Our Company shall pay interest
on the unpaid principal amount of each outstanding CP LOC Loan from the date
such CP LOC Loan is made until such principal amount has been repaid in full at
a rate per annum equal, at the option of our Company, to either (i) the Adjusted
Base Rate plus the Applicable Margin or (ii) the Eurodollar Rate plus the
Applicable Margin. The Adjusted Base Rate shall equal the higher of (i) the
Federal Funds Rate plus 0.50% and (ii) the rate of interest officially announced
or published by the CP LOC Provider as its "prime" or "reference" rate. The
Eurodollar Rate shall be determined by reference to the offered rates that
appear on Telerate page 3750 for deposits in Dollars two London banking days
prior to the date on which such rate is to become applicable to a CP LOC Loan.
The CP LOC Loan will be evidenced by a note in favor of the CP LOC
Provider (the "CP LOC Loan Note"). Our Company shall pay the interest on and
repay the principal amount (based on mortgage-style amortizations) of any CP LOC
Loan out of cash available in the Revenue Account at the same level as interest
on and the principal of the bonds. Each CP LOC Loan will mature 10 years after
the date such CP LOC Loan is made (the "Maturity Date").
Covenants
The covenants of our Company contained in the Indenture shall be
incorporated by reference (with appropriate substitution of parties) in the CP
LOC Reimbursement Agreement as if set forth in full in the CP LOC Reimbursement
Agreement.
CP LOC Events of Default
Each of the following shall be an event of default (a "CP LOC Event of
Default") under the CP LOC Reimbursement Agreement: (i) any amount due under the
CP LOC Reimbursement Agreement or any CP LOC Note is not paid in full within 15
days after the due date thereof; (ii) an "Event of Default" under the Indenture
shall occur and be continuing; and (iii) an "Event of Default" under the DSR LOC
Reimbursement Agreement shall occur and be continuing.
Remedies
Upon the occurrence and during the continuation of a CP LOC Event of
Default, at the request of the Banks holding 66 2/3 percent or more of the CP
Letter of Credit commitment (the "Required CP LOC Banks"), the CP LOC Provider
may (i) terminate the CP Letter of Credit, (ii) declare all amounts owing under
the CP LOC Reimbursement Agreement and any CP LOC Note to be forthwith due and
payable, (including amounts not yet advanced under the CP
109
<PAGE>
Letter of Credit, which shall upon being so advanced be and become immediately
due and payable), whereupon such obligations shall become and be due and
payable, without presentment, demand or protest and (iii) terminate the ability
of our Company to continue CP LOC Loans as or to convert CP LOC Loans to
Eurodollar Rate Loans; provided, that the CP LOC Provider shall not have the
right to exercise any other remedies except in accordance with the provisions of
the Collateral Agency Agreement.
Equity Subscription Agreement
Under an Equity Subscription Agreement entered into by and among our
Company, AES Ironwood, Inc. and the Collateral Agent, AES Ironwood, Inc. has
agreed to contribute equity (or make or cause to be made Affiliate Subordinated
Loans) to our Company from time to time during the Construction Period (each an
"Equity Contribution") at the request of the Collateral Agent, if the amounts
then on deposit in the Construction Account are insufficient to make the
transfers required to pay Project Costs as specified in the Collateral Agency
Agreement. The obligation of AES Ironwood, Inc. to make Equity Contributions
will be supported by an Acceptable Letter of Credit(s) or an Acceptable Bond(s).
AES Ironwood, Inc.'s obligation to make Equity Contributions will commence when
all proceeds of the offering of the old bonds have been utilized but will not at
any time exceed, in the aggregate, $50,149,285. All Equity Contributions will be
deposited in the Construction Account and applied as set forth under
"DESCRIPTION OF THE PRINCIPAL FINANCING DOCUMENTS--Collateral Agency
Agreement--Construction Account."
The Equity Subscription Agreement also provides that upon the
occurrence of an Event of Default under the Indenture, AES Ironwood, Inc. will
be obligated to make an Equity Contribution to our Company in an amount equal to
$50,149,285 less the aggregate of all Equity Contributions previously deposited
into the Construction Account. Any such Equity Contribution following an Event
of Default will be deposited in the Construction Account and may be used to
prepay bonds and other outstanding senior Permitted Indebtedness in accordance
with the terms of the Collateral Agency Agreement.
Subject to specified conditions under the Equity Subscription
Agreement, any "excess" equity which remains committed but unfunded at Final
Acceptance may be canceled. Conditions to the cancellation of such "excess"
equity commitments include (i) the absence of any Default or Event of Default
under the Indenture or any other Financing Document, (ii) achievement of Final
Completion, (iii) the occurrence of the Commercial Operation Date and (iv)
funding of all Accounts (including the Debt Service Reserve Account) under, and
to the extent required by, the Indenture and the Collateral Agency Agreement.
Consents to Assignments
In connection with the collateral assignment of all contract rights
held by our Company, including rights under our Project Contracts, the
Collateral Agent will receive an executed consent to assignment from third
parties party to such Project Contracts. In each such consent, the applicable
third party will, in respect of our Project Contracts to which it is a party,
among other matters, (i) consent to the collateral assignment thereof to the
Collateral Agent on behalf of the Senior Parties, (ii) agree to pay all amounts,
if any, receivable by our Company thereunder directly into the Revenue Account
created under the Collateral Agency Agreement, (iii) agree to matters concerning
the exercise of remedies by the Collateral Agent upon an Event of Default under
the Collateral Agency Agreement and (iv) agree to the exercise by the Senior
Parties of specific cure rights with respect to our Project Contracts.
Mortgage
Our Company, as mortgagor, will enter into the Mortgage and will
mortgage and grant a security interest to the Collateral Agent for the benefit
of the Senior Parties all of our Company's right, title and interest in and to
all real property interests (including fee interests, easement interests and
leasehold interests, if any) of our Company to the Site, our Facility and any
easements and all fixtures, equipment and improvements thereon, all accounts
(subject to the terms of the Indenture) and personal property now owned or
hereafter acquired. Our Company's rights in any leases affecting such real
property (including rights to receive income) will be assigned by our Company to
the Collateral Agent under the Assignment of Leases and Income.
The Events of Default under the Mortgage incorporate by reference those
provided in the Indenture. Under the terms of the Mortgage, the Collateral Agent
may, upon the occurrence and during the continuance of an Event of Default and
satisfaction of conditions contained in the Collateral Agency Agreement, take
possession of all collateral covered by the Mortgage.
110
<PAGE>
Proceeds from the exercise of remedies under the Mortgage will be
applied in accordance with the Security Documents and the Collateral Agency
Agreement.
Security Agreement
Our Company will enter into the Security Agreement with the Collateral
Agent for the benefit of the Senior Parties providing for the granting of a
security interest in all of our Company's personal property interests including,
but not limited to, all contract rights, equipment, receivables, accounts,
insurance proceeds, eminent domain proceeds, rights under any governmental
approval (to the extent permitted by applicable law) and patents and trademarks,
including all proceeds thereof and all documents evidencing all monies and
investment therein. Upon the occurrence of a Trigger Event under the Collateral
Agency Agreement, remedies may be exercised under the Security Agreement.
Under the terms of the Security Agreement, the Collateral Agent may,
upon the occurrence and during the continuance of an Event of Default and
satisfaction of conditions contained in the Collateral Agency Agreement, take
possession of all of the Collateral covered by the Security Agreement.
Proceeds from the exercise of remedies under the Security Agreement
will be applied in accordance with the Security Documents.
Pledge Agreement
Under the Pledge Agreement to be entered into by AES Ironwood, Inc. in
favor of the Collateral Agent, AES Ironwood, Inc. will pledge to the Collateral
Agent, acting on behalf of the Senior Parties, all of its ownership interests in
our Company (and all rights under or derived therefrom) currently owned or later
acquired and all distributions, cash, instruments and other property and
proceeds (and all rights associated therewith) from time to time receivable or
otherwise distributable with respect to or in exchange for such ownership
interests.
111
<PAGE>
PLAN OF DISTRIBUTION
Except as described below, a broker-dealer may not participate in the
exchange offer in connection with a distribution of the new bonds. Each
broker-dealer that receives new bonds for its own account under the exchange
offer must acknowledge that it will deliver a prospectus in connection with any
resale of the new bonds. Based on SEC staff interpretations, a broker-dealer
could use this prospectus, as it may be amended or supplemented from time to
time, in connection with resales of new bonds received in the exchange offer
where the beneficial interests in old bonds for which they were exchanged were
acquired as a result of market-making activities or other trading activities.
Our Company has agreed that for a period not to exceed 270 days, it will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until 120 days after the
consummation of the exchange offer, all dealers effecting transactions in the
new bonds may be required to deliver a prospectus.
The information set forth above concerning SEC staff interpretations is
not intended to constitute legal advice, and broker-dealers should consult their
own legal advisors with respect to these matters.
Our Company will not receive any proceeds from the exchange offer or
any sale of new bonds by broker-dealers. New bonds received by broker-dealers
for their own account under the exchange offer may be sold from time to time in
one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the new bonds or a combination
of those methods of resale, at market prices prevailing at the time of resale,
at the time of resale, at prices related to those prevailing market prices or
negotiated prices. Any resale may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in the form of
commissions or concessions from any broker-dealer and/or the purchasers of any
new bonds. Any broker-dealer that resells new bonds that were received by it for
its own account under the exchange offer and any broker or dealer that
participates in a distribution of the new bonds may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
resale of new bonds and any commissions or concessions received by any of those
persons may be deemed to be underwriting compensation under the Securities Act.
Any broker or dealer registered under the Exchange Act who holds old bonds that
were acquired for its own account as a result of market-making activities or
other trading activities (other than old bonds acquired directly from our
Company) may exchange those old bonds under the exchange offer; however, that
broker or dealer may be deemed to be an "underwriter" within the meaning of the
Securities Act and must, therefore, deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of the new
bonds received by the broker or dealer in the exchange offer. This prospectus
delivery requirement may be satisfied by the delivery by that broker or dealer
of this prospectus. The Letter of Transmittal states that by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
Our Company has agreed to pay the expenses of registration of the new
bonds and will indemnify the holders of the new bonds (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
Prior to the exchange offer, there has been no public market for the
old bonds. Our Company does not intend to apply for listing of the new bonds on
any securities exchange. There can be no assurance that an active market for the
new bonds will develop. To the extent that a market for the new bonds develops,
the market value of the new bonds will depend on market conditions (including
yields on alternative investments), general economic conditions, our Company's
financial condition and other conditions. Those conditions might cause the new
bonds, to the extent that they are actively traded, to trade at a significant
discount from face value. Our Company has not entered into any arrangement or
understanding with any person to distribute the new bonds to be received in the
exchange offer.
Our Company has not agreed to compensate broker-dealers who effect the
exchange of old bonds on behalf of holders.
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
Because the new bonds will be identical to the old bonds in all
relevant economic respects, the exchange of the old bonds for the new bonds will
not be treated as an exchange for United States federal income tax ("USFIT")
purposes. Consequently, there will be no USFIT consequences to the exchange, and
holders of the new bonds will continue to account for the bonds for such
purposes as if the exchange had not taken place.
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<PAGE>
LEGAL MATTERS
The validity of the new bonds will be passed upon for our Company by
Hunton & Williams, New York, New York.
EXPERTS
The Independent Engineer Report included as Annex B to this prospectus
has been prepared by Stone & Webster Management Consultants, Inc. and is
included herein in reliance upon the authority of such firm and its affiliates
as experts in the review of the design, construction and operation of electric
generating facilities. The Independent Power Consultant's Report included as
Annex C to this prospectus has been prepared by Hagler Bailly and is included
herein in reliance upon the authority of such firm as experts in the analysis of
power markets, including future market demand, future market prices for electric
energy and capacity and related matters, for electric generating facilities.
This document has been prepared by our Company management and includes
financial statements audited by Deloitte & Touche LLP as stated in their
Independent Auditors' Report accompanying those financial statements. These
financial statements are included in this prospectus in reliance upon the
Independent Auditors' Report of such firm given upon their authority as experts
in accounting and auditing. Our Company's management is responsible for the
accuracy and completeness of this document, including the Prospective Financial
Information appearing in Annex B, and Deloitte & Touche LLP makes no warranty as
to any of the information contained herein, nor any representations except as
contained in its Independent Auditors' Report.
WHERE YOU CAN FIND MORE INFORMATION
Upon consummation of the exchange offer, our Company will be subject to
the informational requirements of the Exchange Act and, in accordance therewith,
will file reports and other information with the SEC. Reports and other
information filed by our Company with the SEC can be inspected without charge
and copied, upon payment of prescribed rates, at the public reference facilities
maintained by the SEC located at Room 1024, 450 Fifth Street, NW, Washington, DC
20549, and at the regional offices of the SEC located at 7 World Trade Center,
13th Floor, New York, New York 10048 and the Northwest Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material and any part thereof will also be available by mail from the Public
Reference Section of the SEC, located at 450 Fifth Street, NW, Washington, DC
20549, at prescribed rates.
The AES Corporation and The Williams Companies, Inc. are subject to the
informational requirements of the Exchange Act and, in accordance therewith,
file reports, proxy statements and other information with the SEC. Such reports,
proxy statements and other information may be inspected without charge and
copied, upon payment of prescribed rates, at the offices of the SEC located at
Room 1024, 450 Fifth Street, NW, Washington, DC 20549, and at the regional
offices of the SEC located at 7 World Trade Center, 13th Floor, New York, New
York 10048 and the Northwest Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material and any part thereof will
also be available by mail from the Public Reference Section of the SEC, located
at 450 Fifth Street, NW, Washington, DC 20549.
The SEC also maintains a Website that contains reports and other
information regarding registrants that file electronically with the SEC. The
address of that site is (http:\\www.sec.gov).
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<PAGE>
AES IRONWOOD, L.L.C.
(A Development Stage Enterprise, An Indirect Wholly-Owned
Subsidiary of the AES Corporation, Inc.)
Index to Financial Statements for the Period
from June 25 through September 30, 1999
Page
----
Independent Auditors' Report....................................... F-2
Balance Sheet...................................................... F-3
Statement of Operations............................................ F-4
Statement of Changes In Member's Deficit........................... F-5
Statement of Cash Flows............................................ F-6
Notes to Financial Statements...................................... F-7
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Member of AES Ironwood, L.L.C.:
We have audited the accompanying balance sheet of AES Ironwood, LLC, (a
development stage enterprise) (the Company), which is an indirect wholly-owned
subsidiary of the AES Corporation, as of September 30, 1999, and the related
statements of operations, changes in member's equity, and cash flows for the
period from June 25, 1999 (inception) through September 30, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
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 audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of AES Ironwood, LLC, as of September 30, 1999,
and the results of its operations and its cash flows for the period from June
25, 1999 (inception) through September 30, 1999, in conformity with generally
accepted accounting principles.
November 12, 1999
F-2
<PAGE>
AES IRONWOOD, LLC (A Development Stage Enterprise)
BALANCE SHEET
SEPTEMBER 30, 1999
(In Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash $ 573
Interest receivable 492
---------
Total current assets 1,065
LAND 528
CONSTRUCTION IN PROGRESS 216,139
CERTIFICATE OF DEPOSIT 385
DEFERRED FINANCING COSTS, net of accumulated amortization of $23 2,290
INVESTMENTS HELD BY TRUSTEE, at cost which approximates market value 99,590
---------
TOTAL ASSETS $ 319,997
=========
LIABILITIES AND MEMBER'S DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 724
Accrued interest 2,429
Payable to AES 430
Payable to affiliates 541
---------
Total current liabilities 4,124
RETENTION PAYABLE 9,231
BONDS PAYABLE 308,500
---------
Total liabilities 321,855
---------
COMMITMENTS (Notes 4, 5, 6 and 7)
MEMBER'S DEFICIT:
Common stock ($1 par value, 10 shares authorized, none issued or outstanding) -
Accumulated deficit (1,858)
---------
Total member's deficit (1,858)
---------
TOTAL LIABILITIES AND MEMBER'S DEFICIT $ 319,997
=========
</TABLE>
See notes to financial statements.
F-3
<PAGE>
AES IRONWOOD, LLC (A Development Stage Enterprise)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JUNE 25, 1999 (INCEPTION) THROUGH SEPTEMBER 30, 1999
(In Thousands)
- --------------------------------------------------------------------------------
OPERATING EXPENSES:
General and administrative costs $ (162)
-------
Operating loss (162)
OTHER INCOME/EXPENSE:
Interest income 1,999
Interest expense (3,695)
-------
NET LOSS $(1,858)
=======
See notes to financial statements.
F-4
<PAGE>
AES IRONWOOD, LLC (A Development Stage Enterprise)
STATEMENT OF CHANGES IN MEMBER'S DEFICIT
FOR THE PERIOD FROM JUNE 25, 1999 (INCEPTION) THROUGH SEPTEMBER 30,1999
(In Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stock Accumulated
Shares Amount Deficit Total
------ ------ ------- -----
<S> <C> <C> <C> <C>
Balance, June 25, 1999 - $ - $ - $ -
Net loss - - (1,858) (1,858)
------ ------ ------- -------
Balance, September 30, 1999 - $ - $(1,858) $(1,858)
====== ====== ======= =======
</TABLE>
See notes to financial statements.
F-5
<PAGE>
AES IRONWOOD, LLC (A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JUNE 25, 1999 (INCEPTION) THROUGH SEPTEMBER 30, 1999
(In Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net loss $ (1,858)
Amortization of deferred financing costs 23
Change in:
Interest receivable (492)
Accrued interest 1,219
---------
Net cash used in operating activities (1,108)
---------
INVESTING ACTIVITIES:
Payments for construction in progress $(204,388)
Payments for land (528)
Payments to debt service reserve (99,590)
---------
Net cash used in investing activities (304,506)
---------
FINANCING ACTIVITIES:
Proceeds from project debt issuance 308,500
Payments for deferred financing costs (2,313)
---------
Net cash provided by financing activities 306,187
---------
NET CHANGE IN CASH AND CASH EQUIVALENTS 573
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -
---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 573
=========
SUPPLEMENTAL DISCLOSURE:
Interest paid $ 4,933
=========
</TABLE>
See notes to financial statements.
F-6
<PAGE>
AES IRONWOOD LLC(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM JUNE 25, 1999 (INCEPTION) THROUGH SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
1. ORGANIZATION
AES, Ironwood, LLC (the Company) was incorporated on October 13, 1998, in
the state of Delaware, to develop, construct and operate a 705 megawatt
(MW) gas-fired combined cycle electric generating facility in South
Lebanon Township, Pennsylvania (the Plant). The Company was considered
dormant until June 25, 1999 at which time the Project Financing and
certain related agreements were consummated (hereinafter, inception.) The
Plant, currently under construction, will consist of two Westinghouse 501
G combustion turbines, two heat recovery steam generators and one steam
turbine. The Plant will produce and sell electricity, as well as provide
fuel conversion and ancillary services, solely to Williams Energy
Marketing and Trading Company (Williams) under a power purchase agreement
(the PPA), with a term of 20 years, that will commence on the Plant's
anticipated commercial operation date, June 30, 2001 (see Note 5).
The Company is in the development stage and is not expected to generate
any operating revenues until the Plant achieves commercial operations. As
with any new business venture of this size and nature, operation of the
Plant could be affected by many factors. Construction of the Plant is
expected to be completed in 2001. Management of the Company believes that
the assets of the Company are realizeable.
The Company is a wholly-owned subsidiary of AES Ironwood, Inc. (Ironwood),
which is a wholly-owned subsidiary of The AES Corporation (AES).
On June 25, 1999, the Company issued $308.5 million in senior secured
bonds (see Note 3) for the purpose of providing financing for the
construction of the Plant and to fund, through the construction period,
interest payments to the bondholders.
Pursuant to an Equity Subscription Agreement, Ironwood has agreed to
contribute up to approximately $50.1 million to the Company to fund
construction after the bond proceeds have been fully utilized (see Note
4).
2. SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents - The Company considers unrestricted cash on
hand, deposits in banks, and investments with original maturities of three
months or less to be cash and cash equivalents for the purpose of the
statement of cash flows.
Investments Held by Trustee - The Company is required to maintain a
construction funding account for the payment of certain qualifying
construction costs and a construction interest account from which
quarterly interest payments are to be made. As of September 30, 1999,
these amounts were fully funded with cash in money market accounts. The
balances in the construction funding account and the construction interest
account were approximately $53 million and $47 million, respectively, as
of September 30, 1999.
Construction in Progress - Costs incurred in developing the Plant,
including progress payments, engineering costs, management and development
fees, interest, and other costs related to construction are capitalized.
Total interest capitalized on the project financing debt was approximately
$3.7 million,
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through September 30, 1999. Certain costs related to construction
activities were paid by AES prior to the issuance of the bonds. These
amounts include approximately $105.4 million of construction progress
payments and approximately $20.1 million in costs and fees. These costs
are reflected within construction in progress, and were reimbursed to AES
out of the bond proceeds.
Deferred Financing Costs - Financing costs are deferred and are being
amortized using the straight-line method over the expected period for
which the financing was obtained, which does not differ materially from
the effective interest method of amortization.
Accounts Payable and Contract Retention Payable - Amounts currently
payable for construction billings and those amounts billed by the
Contractor in accordance with the engineering, procurement and
construction contracts but retained by the Company until construction is
complete are included in accounts payable and contract retention payable,
respectively. These liabilities are expected to be paid from restricted
cash balances or equity funding from Ironwood.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires the Company to make
estimates and assumptions that affect reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities as of the
date of the financial statements, as well as the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Income Taxes - The Company is a limited liability corporation and is
treated as a partnership for tax purposes. Therefore, it does not pay
income taxes, and no provision for income taxes has been reflected in the
accompanying financial statements.
Comprehensive Income - In 1999 the Company adopted Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income (SFAS 130)
which establishes rules for the reporting of comprehensive income and its
components. The adoption of SFAS 130 had no impact on the Company's
financial statements as it had no items of other comprehensive income.
Start-Up Costs - In 1999 the Company adopted AICPA Statement of Position
(SOP) 98-5, Reporting on the Costs of Start-Up Activities which requires
that start-up and organization costs be expensed as incurred. As such, no
such costs have been capitalized in the accompanying balance sheet.
3. NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities, which established standards
for the accounting and reporting of derivative financial instruments and
hedging activities. The standard will be adopted by the Company during
fiscal year 2001. The Company is currently evaluating the impact of the
adoption of SFAS No. 133.
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4. BONDS PAYABLE
On June 25, 1999, the Company issued $308.5 million of 8.857% senior
secured bonds due 2025 (the Bonds) to qualified institutional buyers
and/or institutional accredited investors, pursuant to a transaction
exempt from registration under the Securities and Exchange Act of 1933
(the Act) in accordance with Rule 144A of the Act. The net proceeds of the
bonds (after deferred financing costs), approximately $306 million, are to
be used to fund the construction of the Plant and, during the construction
period, for interest payments to bondholders.
Interest on the Bonds is payable quarterly in arrears. Quarterly principal
payments on the Bonds will commence on February 28, 2002. The final
maturity date for the Bonds is November 30, 2025.
Principal & Interest Repayment Schedule - (in thousands)
<TABLE>
<CAPTION>
Year Principal and Interest
----------------------
<S> <C>
1999 (including amounts paid through September 30, 1999) $ 11,847
2000 27,324
2001 27,324
2002 29,233
2003 31,742
2004 32,780
2005-2025 617,500
--------
Total Payments 777,750
Less Interest portion (469,250)
--------
Principal $ 308,500
=========
</TABLE>
Future Maturities of Debt - Scheduled maturities of the bonds at December
31 are (in thousands):
2000 $ -
2001 -
2002 1,974
2003 4,751
2004 and thereafter 301,775
--------
TOTAL $308,500
========
Optional Redemption - The Bonds are subject to optional redemption, in
whole or in part, at any time at a redemption price equal to 100% of the
principal amount plus accrued interest, together with a premium calculated
using a discount rate equal to the interest rate on comparable U.S.
Treasury securities plus 50 basis points.
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Mandatory Redemption - The Bonds are subject to mandatory redemption, in
whole or in part, at a redemption price equivalent to 100% of the
principal amount plus accrued interest under certain situations pursuant
to receiving insurance proceeds or liquidating damages from failure under
the engineering, procurement, and construction contract, or in certain
instances in which payments are made under the PPA with Williams under the
event of default, at which time the Company has terminated the PPA.
Registration Rights - The Company is obligated to register the Bonds under
the Act with the Securities and Exchange Commission within 220 days of the
initial sale of the Bonds. Failure to register the Bonds under the Act
will result in the interest rate payable on the Bonds, currently fixed at
8.875%, to increase by 50 basis points.
Collateral for the Bonds consists of the Plant and related facilities, all
agreements relating to the operation of the project, the bank and
investment accounts of the Company, and all ownership interests in the
Company, as prescribed under the Bond Indenture Agreement (the Indenture).
The Company is also bound by a collateral agency agreement (the Collateral
Agreement) and an equity subscription agreement (the Equity Subscription
Agreement).
Indenture Agreement - The Indenture contains limitations on the Company
incurring additional indebtedness, granting liens on the Company's
property, distributing equity and paying subordinated indebtedness issued
by affiliates of the Company, entering into transactions with affiliates,
amending, terminating or assigning any of the Company's contracts and
fundamental changes or disposition of assets.
Collateral Agreement - The Collateral Agreement requires the Company to
fund or provide the funding for a debt service reserve fund, which is
expected to commence on June 30, 2001. The amount required for funding the
debt service reserve fund is equal to six months scheduled payments of
principal and interest on the bonds.
Equity Subscription Agreement - The Company, along with Ironwood, has
entered into an Equity Subscription Agreement, pursuant to which Ironwood
has agreed to contribute up to approximately $50.1 million to the Company
to fund project costs. This amount is secured by an acceptable bond issued
by Ironwood. Ironwood will fund these amounts as they come due upon the
earlier of (a) expenditure of all funds that have been established for
construction or (b) the occurrence and during the continuation of an event
of default, as defined under the Indenture. A portion of this equity
requirement may be made in the form of affiliate debt, between Ironwood
and the Company, which is subordinate to the Bonds.
Covenants - The Indenture, Collateral, and Equity Agreements contain
specific covenants and requirements to be met by the Company.
5. POWER PURCHASE AGREEMENT
The Company and Williams have entered into a PPA for the sale of all
electric energy and capacity produced by the Plant, as well as ancillary
services and fuel conversion services. The term of the PPA is 20 years,
commencing when the construction of the Plant is complete and the Plant is
commercially viable to produce electricity and related capacity, as well
as to provide ancillary and fuel conversion services. Payment obligations
to the Company are guaranteed by The Williams Companies, Inc. Such payment
obligations under the guarantee are capped at an amount equal to 125% of
the sum of the principal amounts of the bonds plus the maximum debt
service reserve account required balance. The Company has provided
Williams a guaranty issued by AES of specific payment obligations
should the Plant not achieve commercial
F-10
<PAGE>
operation by June 30, 2001. AES's liability under the guaranty is capped
at $30 million. The Company has the option, and may be required under
specific conditions described in the PPA, to replace the guaranty issued
by AES with a letter of credit issued by a commercial bank. In such case,
the repayment obligations with respect to drawings under the letter of
credit are to be a senior debt obligation of the Company.
Fuel Conversion and Other Services - As instructed by the Company,
Williams has the obligation to deliver, on an exclusive basis, all
quantities of natural gas and fuel oil required by the Plant to generate
electricity or ancillary services, to start-up or shut-down the plant, and
to operate the Plant during any period other than a start-up, shut-down,
or required dispatch by Williams for any reason.
6. COMMITMENTS AND CONTINGENCIES
Turnkey Construction Agreement - The Company has entered into a
fixed-price turnkey agreement with Siemens Westinghouse (the Contractor)
for the design, engineering, procurement, and construction of the Plant.
The Contractor will provide the Company with specific combustion turbine
maintenance services and spare parts for an initial term of between eight
and ten years under a maintenance service agreement. As of September 30,
1999, the Company was liable to the Contractor for a retention payment as
part of the total contract price due at the completion of the contract for
approximately $9.2 million.
Water Supply - The Company has entered into a contract with the City of
Lebanon Water Authority (the Authority) for the purchase of 50 percent of
the water use of the Plant. The contract has a term of 25 years. Costs
associated with the use of water by the Plant under this contract are
based on gallons used per day at prices specified under the contract
terms. The Company has also entered into an agreement with Pennsy Supply
Quarry (Pennsy) which will provide the remaining 50 percent of the water
use of the Plant.
Interconnection Agreement - The Company has entered into an
interconnection with GPU Energy (GPU) to transmit the electricity
generated by the Plant to the transmission grid so that it may be sold as
prescribed under the Company's PPA. The Agreement is in effect for the
life of the Plant, yet may be terminated by mutual consent of both GPU and
the Company, under certain circumstances as detailed in the Agreement.
Costs associated with the Agreement are based on electricity transmitted
via GPU at a variable price, the PJM (Pennsylvania/New Jersey/Maryland)
Tariff, as charged by GPU to the Company, which is comprised of both
service cost and asset recovery cost, as determined by GPU and approved by
the Federal Energy Regulatory Committee (FERC).
Letters of Credit - The Company also has a letter of credit agreement
outstanding to fund the construction of an access road from a local road
to the plant under construction. In connection with this letter of credit,
the Company has made a deposit as collateral for approximately $385,000
into a certificate of deposit account, which equals the amount available
under this agreement.
Surety Bond Agreement - Ironwood has a surety bond agreement for $50.1
million in relation to its equity subscription agreement. Annual
commitment fees will be assessed based on the amount outstanding during
the year.
7. RELATED PARTY TRANSACTIONS
Effective June, 1999 the Company entered into a 27-year development and
construction management agreement with AES Prescott, LLC (Prescott),
another wholly-owned subsidiary of Ironwood, to provide certain support
services required by the Company for the development and construction of
the Plant. Under this agreement Prescott will also provide operations
management services for the Plant once
F-11
<PAGE>
commercial operation is attained. Minimum amounts payable under the
contract during the construction period are $125,000 per month. Once
commercial operation is achieved, payments for operations management
services will be approximately $400,000 per quarter.
During the construction period, the construction management fees will be
paid to Prescott from the restricted cash balance or from equity funding.
Through September 30, 1999, $500,000 in construction management fees were
incurred, were charged to construction in progress, and are payable to
Prescott.
8. FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values of the Company's financial instruments have been
determined using available market information. The estimates are not
necessarily indicative of the amounts the Company could realize in a
current market exchange. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair
value amounts.
The fair value of the Company's restricted investments approximates their
carrying value. The estimated fair value of the Bonds as of September 30,
1999, based on quoted market prices of similarly rated bonds with similar
maturities, does not differ materially from their carrying value.
9. SEGMENT INFORMATION
Under the provisions of Statement of Financial Accounting Standards No.
131, Disclosures about Segments of an Enterprise and Related Information,
the Company's business is expected to be operated as one reportable
segment, with operating income or loss being the measure of performance
evaluated by the chief operating decision maker. As described in Notes 1
and 4, the Company's primary customer will be Williams Energy Marketing
and Trading Company, which is expected to provide all of the revenues of
the Company during the term of the PPA.
* * * * * *
F-12
<PAGE>
-------------------------------------------------------
ANNEX A
GLOSSARY OF DEFINED TERMS
-------------------------------------------------------
<PAGE>
GLOSSARY OF DEFINED TERMS
The following terms shall have the following meanings and such meanings
are equally applicable to both the singular and plural forms of the terms
defined. Any term defined below by reference to any agreement or instrument
shall have such meaning whether or not such agreement or instrument is in
effect. Unless otherwise specified, any agreement or instrument defined or
referred to below shall include any amendments, modifications and supplements
thereto and waivers thereof made in accordance with the terms of such agreement
or instrument. Any reference to a person includes the successors and permitted
assigns of such person.
"Acceptable Bond" means a bond issued by an insurance company rated at
least "A" by Standard & Poor's and "A2" by Moody's in the form attached to the
Equity Subscription Agreement.
"Acceptable Credit Provider" means (i) in the case of an unconditional
guaranty, AES (if and for so long as its long-term unsecured debt is rated at
least Investment Grade and not lower than the then current lowest rating of the
bonds by each of S&P and Moody's) and (ii) in the case of an irrevocable letter
of credit, a bank or trust company with a combined capital and surplus of at
least $1,000,000,000 whose long-term unsecured debt is rated at least "A" by S&P
or "A2" by Moody's.
"Acceptable Credit Support" means (i) an unconditional guaranty in the
form prescribed in the Collateral Agency Agreement, or (ii) an irrevocable
letter of credit (which is not an obligation of our Company and is not secured
by the Collateral), in either case from an Acceptable Credit Provider.
"Acceptable Letter of Credit" means an irrevocable letter of credit in
the form attached to the Equity Subscription Agreement.
"AES" means The AES Corporation, a Delaware corporation.
"AES Ironwood, Inc." means AES Ironwood, Inc., a Delaware corporation.
"AES Prescott" means AES Prescott, L.L.C., a Delaware limited liability
company.
"Affiliate" means, with respect to any person, any other person
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, such person. For purposes of this definition, the term
"control" (including the correlative meanings of the terms "controlling",
"controlled by" and "under common control with"), as used with respect to any
person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such person, whether
through the ownership of voting stock or other equity interests or by contract
or otherwise.
"Affiliate Subordinated Debt" means an unsecured, subordinated loan or
loans from any Affiliate of our Company under an Affiliate Subordinated Loan
Agreement.
"Affiliate Subordinated Debt Provider" means any Affiliate of our
Company providing Affiliate Subordinated Debt under an Affiliate Subordinated
Loan Agreement.
"Affiliate Subordinated Loan" means a loan made under an Affiliate
Subordinated Loan Agreement.
"Affiliate Subordinated Loan Agreement" means a binding agreement
providing nonrecourse, unsecured debt financing from an Affiliate Subordinated
Debt Provider to our Company on terms and conditions which meet the requirements
set forth in the Indenture and the Collateral Agency Agreement.
"Affiliate Transaction" means any transaction or agreement between our
Company and any Affiliate of our Company other than (i) the Operations Agreement
and the Equity Subscription Agreement (and any Affiliate Subordinated Loan
Agreement referenced therein) and (ii) transactions in the ordinary course of
business on fair and reasonable terms no less favorable to our Company than our
Company would obtain in an arm's length transaction with a person that is not an
Affiliate of our Company.
"Air Permit" means the Prevention of Significant Deterioration Permit,
dated March 29, 1999, from the Pennsylvania Department of Environmental
Protection.
"Annual Budget" means the annual budget prepared by our Company for
each Fiscal Year in accordance with the requirements of the Indenture.
"Applicable Law" means any constitution, statute, law, rule,
regulation, ordinance, judgment, order, decree, Governmental Approval, or any
published directive, guideline, requirement or other governmental restriction
which has the
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<PAGE>
force of law, or any determination by, or interpretation of any of the foregoing
by, any judicial authority, binding on a given person whether in effect as of
the date of any Financing Documents or thereafter and in each case as amended
(including, without limitation, all Environmental Laws and any of the foregoing
pertaining to land use or zoning restrictions).
"Applicable Procedures" means the rules and procedures of DTC, its
nominee, Euroclear or Cedel, as applicable.
"Assignment of Leases and Income" means the Assignment of Leases and
Income, by and between our Company and the Collateral Agent.
"Authorized Representative" of any person means the individual or
individuals authorized to act on behalf of such person by the board of
directors, managing member, management committee, board of control or any other
governing body of such person as designated from time to time in a certificate
of such person with specimen signatures.
"Available Accounts" means our Project Accounts other than the
Construction Account and the Debt Service Reserve Account.
"Available Cash Flow" means, with respect to each application of funds
required under the Collateral Agency Agreement as of any specified date, all
funds remaining in the Revenue Account as of such date and available to be
applied as set forth in the Collateral Agency Agreement after all prior
applications of funds in the Revenue Account required on such date.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, Title II of
the United States Code, as amended, and any other Applicable Law with respect to
bankruptcy, insolvency or reorganization that is successor thereto.
"Bankruptcy Event" means the occurrence or commission of either of the
following: (i) our Company or, so long as AES has any outstanding obligations
under any Acceptable Credit Support, AES or, so long as AES Ironwood, Inc. has
any outstanding obligations under the Equity Subscription Agreement, AES
Ironwood, Inc. shall (a) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of all or substantially all of its property, (b) admit in writing its
inability, or be generally unable, to pay its debts as such debts become due,
(c) make a general assignment of the benefit of its creditors, (d) commence a
voluntary case under the Bankruptcy Code, (e) file a petition seeking to take
advantage of any law relating to bankruptcy, insolvency, reorganization,
winding-up, or the composition or readjustment of debts, (f) fail to controvert
in a timely and appropriate manner, or acquiesce in writing to, any petition
filed against such person in an involuntary case under the Bankruptcy Code or
(g) take any corporate or other action for the purpose of effecting any of the
foregoing; or (ii) a proceeding or case shall be commenced without the
application or consent of our Company or, so long as AES has any obligations
under any Acceptable Credit Support, AES or, so long as AES Ironwood, Inc. has
any outstanding obligations under the Equity Subscription Agreement, AES
Ironwood, Inc., in any court of competent jurisdiction, seeking (a) its
liquidation, reorganization, dissolution, winding-up, or the composition or
readjustment of debts or (b) the appointment of a trustee, receiver, custodian,
liquidator or the like of such person under any law relating to bankruptcy,
insolvency, reorganization, winding-up, or the composition or adjustment of
debts, and such proceeding or case shall continue undismissed, or any order,
judgment or decree approving or ordering any of the foregoing shall be entered
and continue unstayed and in effect, for a period of 90 or more consecutive
days, or any order for relief against such person shall be entered in an
involuntary case under the Bankruptcy Code.
"Bond Payment Account" means the Bond Payment Account established under
the Indenture.
"Business Day" means any day other than a Saturday or Sunday or other
day on which banks in New York, New York, are authorized or required by law or
executive order to remain closed.
"Cash Available for Debt Service" means, in respect of a specified
period, all funds (i) deposited in the Revenue Account (other than amounts
transferred to such account from the Major Maintenance Reserve Account, the
Distribution Account or the Construction Account), if such specified date
occurred prior to the date of determination or (ii) projected by our Company on
a reasonable basis to be deposited, if such specified period is to occur
subsequent to the date of determination, in the Revenue Account during such
period minus all funds transferred to (a) our Company for payment of Operating
and Maintenance Costs, (b) the Trustee, Collateral Agent, DSR LOC Provider and
the CP LOC Provider in respect of Trustee Claims, Collateral Agent Claims, DSR
LOC Provider Claims and CP LOC Provider Claims, respectively, and (c) a working
capital provider in respect of payments on working capital loans during such
period.
"Casualty Proceeds" means all insurance proceeds (including title
insurance proceeds) or other amounts actually received on account of an Event of
Loss, except proceeds of business interruption insurance.
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<PAGE>
"Certificate as to Redemption" means the certificate filed by an
Authorized Representative of our Company, in the case of an Event of Loss or
Event of Eminent Domain, in order to determine: (i) whether our Facility can be
rebuilt, repaired or restored and (ii) the availability of Casualty Proceeds or
Eminent Domain Proceeds for such rebuilding, repairing or restoring.
"Change in Control" means any failure by AES, at all times while bonds
are outstanding, to maintain directly or indirectly at least a 51% voting and
economic interest in our Company, unless prior to giving effect to the reduction
in AES's voting or economic interest in our Company either (i) each of the
Rating Agencies provides a Ratings Reaffirmation to the Trustee or (ii) the
reduction in AES's voting or economic interest has been approved by bondholders
holding at least 66-2/3% in aggregate principal amount of the bonds.
"Collateral" means: (i) all revenues of our Company; (ii) our Project
Accounts (other than the Debt Service Reserve Account); (iii) all real and
personal property of our Company; (iv) proceeds of insurance, condemnation and
liquidated damages payments, if any; (v) all Project Contracts; (vi) all
ownership interests in our Company; (vii) the Equity Contribution and all rights
under the Equity Subscription Agreement; and (viii) in respect of the
bondholders only, the Indenture Accounts, the Debt Service Reserve Account and
the DSR Letter of Credit (other than the DSR LOC Provider's right to specific
proceeds under the DSR Letter of Credit).
"Collateral Agency Agreement" means the Collateral Agency and
Intercreditor Agreement, by and among our Company, the Trustee, the Collateral
Agent, the DSR LOC Provider, the CP LOC Provider and the Depositary Bank.
"Collateral Agent" means The Bank of New York and any successor or
assign as Collateral Agent under the Collateral Agency Agreement.
"Collateral Agent Claims" means all obligations of our Company, now or
hereafter existing, to pay fees, costs, expenses, liabilities or indemnities to
the Collateral Agent under the Collateral Agency Agreement.
"Combined Exposure" means, as of any date of calculation, the sum
(calculated without duplication) of the following, to the extent the same is
held by or represented by a Senior Party: (i) the aggregate principal amount of
all bonds then outstanding; (ii) the aggregate principal amount of all
outstanding Permitted Indebtedness (other than the bonds, DSR Bonds, DSR LOC
Loans, DSR LOC Term Loans, CP LOC Loans, Subordinated Debt and Affiliate
Subordinated Debt); (iii) the aggregate amount of all available undrawn
financing commitments under the documents governing the Permitted Indebtedness
(other than the bonds, Subordinated Debt, Affiliate Subordinated Debt, the DSR
LOC Reimbursement Agreement and the CP LOC Reimbursement Agreement) which the
creditors party to such documents have no right to terminate; (iv) the maximum
amounts available to be drawn under the DSR Letter of Credit and the CP Letter
of Credit (taking into account, without duplication, in the case of the DSR
Letter of Credit, the maximum amount which may become available to be drawn in
the future by reason of an increase in the DSRA Required Balance); and (v) the
amount, without duplication, of any unreimbursed drawing under the DSR Letter of
Credit and the CP Letter of Credit.
"Commercial Operation Date" means the date on which Commercial
Operation as defined in the Power Purchase Agreement is achieved, no later than
December 31, 2002.
"Consents to Assignment" means the consents to assignments set forth in
a schedule to the Indenture.
"Construction Account" means the Construction Account established under
the Collateral Agency Agreement.
"Construction Interest Account" means the Construction Interest Account
established under the Indenture.
"Contractor " means Siemens Westinghouse Power Corporation, a Delaware
corporation.
"CP Letter of Credit" means the letter of credit issued under the CP
LOC Reimbursement Agreement as provided by our Company to the Power Purchaser in
satisfaction of the requirements of Section 19.2 of the Power Purchase
Agreement.
"CP LOC Issuing Bank" means Dresdner Bank AG, New York Branch or any
other financial institution providing the CP Letter of Credit under the CP LOC
Reimbursement Agreement.
"CP LOC Loan" means a loan resulting from a drawing on the CP Letter of
Credit.
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"CP LOC Provider" means the Agent under the CP LOC Reimbursement
Agreement acting for and on behalf of the Banks party thereto and the CP LOC
Issuing Bank; provided, however, that references to the long-term debt rating of
the CP LOC Provider shall be deemed to refer to the debt rating of the CP LOC
Issuing Bank.
"CP LOC Provider Claims" means all obligations of our Company, now or
hereafter existing, to pay administrative fees, costs, expenses, liabilities or
indemnities to the CP LOC Provider under the CP LOC Reimbursement Agreement.
"CP LOC Reimbursement Agreement" means the Construction Period Letter
of Credit and Reimbursement Agreement, by and among the CP LOC Provider, our
Company and the Banks named therein, under which the CP LOC Provider may issue
the CP Letter of Credit.
"Date Certain" means the final date, December 31, 2002, by which our
Facility must commence commercial operation under the Power Purchase Agreement.
"Debt Service Reserve Account" means the Debt Service Reserve Account
established under the Collateral Agency Agreement.
"Default" means an event or condition that, with the giving of notice
or lapse of time, or both, would become an Event of Default.
"Depositary Bank" means The Bank of New York and any successor or
assign as Depositary Bank under the Collateral Agency Agreement and the
Indenture.
"Distribution Account" means the Distribution Account established under
the Collateral Agency Agreement.
"DSR Bond" has the meaning specified under "SUMMARY OF PRINCIPAL
FINANCING DOCUMENTS--DSR LOC Reimbursement Agreement--Conversion into DSR
Bonds."
"DSR Letter of Credit" means a letter of credit provided by our Company
in respect of all or a portion of the DSRA Required Balance.
"DSR LOC Issuing Bank" means Dresdner Bank AG, New York Branch or any
other financial institution providing the DSR Letter of Credit under the DSR LOC
Reimbursement Agreement.
"DSR LOC Loan" means a loan resulting from a drawing on the DSR Letter
of Credit.
"DSR LOC Provider" means the Agent under the DSR LOC Reimbursement
Agreement acting for and on behalf of the Banks party thereto and the DSR LOC
Issuing Bank; provided, however, that references to the long-term debt rating of
the DSR LOC Provider shall be deemed to refer to the debt rating of the DSR LOC
Issuing Bank.
"DSR LOC Provider Claims" means all obligations of our Company, now or
hereafter existing, to pay administrative fees, costs, expenses, liabilities or
indemnities under the DSR LOC Reimbursement Agreement.
"DSR LOC Reimbursement Agreement" means the Debt Service Reserve Letter
of Credit and Reimbursement Agreement, by and among the DSR LOC Provider, our
Company and the Banks named therein, under which the DSR LOC Issuing Bank will
issue the DSR Letter of Credit.
"DSR LOC Term Loan" means a loan resulting from conversion of a DSR LOC
Loan to a DSR LOC Term Loan, or a draw on the DSR Letter of Credit, after the
occurrence of a Step-Up Event.
"DSR Note" means any note issued under the DSR LOC Reimbursement
Agreement evidencing DSR LOC Loans, DSR LOC Term Loans or DSR Bonds.
"DSRA Required Balance" means an amount equal to the next succeeding
two quarterly scheduled payments of principal and interest due on the bonds
plus, if a DSR Letter of Credit is to be provided, six months of interest on the
maximum amount of such DSR Letter of Credit.
"DTC" means The Depositary Trust Company.
"DTC Bonds" means bonds represented by the global bonds and held in
book-entry form by DTC or its nominee.
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"Effluent Supply Agreement" means the Effluent Supply Agreement, dated
as of March 3, 1998, between our Company (as assignee of AES Ironwood, Inc.) and
City of Lebanon Authority.
"Eminent Domain Proceeds" means all amounts and proceeds actually
received in respect of any Event of Eminent Domain.
"Environmental Law" means any Governmental Requirement in effect from
time to time governing or relating to (i) the environment, (ii) releases or
threatened releases of Hazardous Materials including, without limitation,
investigation, monitoring and abatement of such releases and (iii) the
manufacture, handling, transport, use, treatment, storage or disposal of
Hazardous Materials or materials containing Hazardous Materials.
"EPC Contract" means the Agreement for Engineering, Procurement and
Construction Services, dated as of September 23, 1998, as amended, by and
between our Company (as assignee of AES Ironwood, Inc.) and the Contractor.
"EPC Guarantor" means Siemens Corporation and its successors and
permitted assigns, as guarantor under the Siemens Guaranty.
"Equity Contribution" means the equity contribution required to be made
by AES Ironwood, Inc. under the Equity Subscription Agreement.
"Equity Subscription Agreement" means the Equity Subscription
Agreement, by and among our Company, AES Ironwood, Inc. and the Collateral
Agent, under which AES Ironwood, Inc. shall agree to make specific equity
contributions to our Company.
"Event of Default" has the meaning specified under `SUMMARY OF
PRINCIPAL FINANCING DOCUMENTS--Indenture--Events of Default."
"Event of Eminent Domain" means any compulsory transfer or taking or
transfer under threat of compulsory transfer or taking of all or a material
portion of our Facility by any Governmental Authority for more than one year
unless such transfer or taking is the subject of a Good Faith Contest.
"Event of Loss" means an event which causes all or a material portion
of our Facility to be damaged, destroyed or rendered unfit for normal use for
any reason whatsoever including through a failure of title.
"FERC" means the Federal Energy Regulatory Commission or any successor
agency thereto.
"Final Acceptance" has the meaning set forth in the EPC Contract.
"Financing Documents" means the Indenture, the bonds, the DSR LOC
Reimbursement Agreement and any evidence of indebtedness thereunder entered
into, the CP LOC Reimbursement Agreement and any evidence of indebtedness
thereunder entered into, the Equity Subscription Agreement, the Collateral
Agency Agreement and the Security Documents.
"Financing Liabilities" means all indebtedness, liabilities and
obligations of our Company (of whatsoever nature and howsoever evidenced
including, but not limited to, principal, interest, fees, reimbursement
obligations, collateralization or deposit obligations, penalties, indemnities
and legal expenses, whether due after acceleration or otherwise) under or under
the Indenture, the bonds and any evidence of indebtedness thereunder entered
into, the DSR LOC Reimbursement Agreement and any evidence of indebtedness
thereunder entered into, the CP LOC Reimbursement Agreement and any evidence of
indebtedness thereunder entered into, the Collateral Agency Agreement and any
evidence of indebtedness thereunder entered into, any working capital facility
and any evidence of indebtedness thereunder entered into, and the Security
Documents, to the extent arising on or prior to the final maturity date for the
bonds, in each case, direct or indirect, primary or secondary, fixed or
contingent, now or hereafter arising out of or relating to any such agreements.
"Fiscal Year" means the period of time beginning on January 1 of each
year and ending on December 31 of such year; provided, that the initial Fiscal
Year commenced on the date of initial issuance of the old bonds and shall end on
December 31, 1999.
"Fuel Conversion Volume Rebate Account" means the Fuel Conversion
Volume Rebate Account established under the Collateral Agency Agreement.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time.
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"GDPIPD" means the Gross Domestic Product Implicit Price Deflator for a
calendar year as published in the United States Department of Commerce, Bureau
of Analysis publication entitled "Survey of Current Business." If the Gross
Domestic Product Implicit Price Deflator ceases to exist or is no longer
available, our Company, with the approval of the Independent Engineer (such
approval not to be unreasonably withheld or delayed), shall designate a
substitute index that is reasonably similar to the Gross Domestic Product
Implicit Price Deflator.
"Good Faith Contest" means the contest of an item if: (i) the item is
diligently contested in good faith by appropriate proceedings timely instituted;
(ii) adequate reserves or bonding are established in accordance with GAAP with
respect to the contested item; and (iii) during the period of such contest, the
enforcement of any contested item is effectively stayed.
"Governmental Approval" means any authorization, consent, approval,
concession privilege, waiver, exemption, variance, registration, filing,
certification, permission, permit and license with or notice to any Governmental
Authority.
"Governmental Authority" means the federal government of the United
States, any state of the United States or political subdivision thereof, and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any other governmental entity,
instrumentality, agency, authority or commission.
"Governmental Requirement" means any Applicable Law or Governmental
Approval applicable to our Company or our Facility.
"Guaranteed Completion Date" means the date which is 24 months after
the delivery by our Company to the Contractor of the Notice to Proceed, as such
term is defined in the EPC Contract.
"Hazardous Materials" means (i) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, and transformers or other equipment that
contain dielectric fluid containing polychlorinated biphenyls ("PCBs") and any
other chemicals, materials or substances which are now or hereafter become
defined as or included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely hazardous wastes", "restricted
hazardous wastes", "toxic substances" or "toxic pollutants", or words of similar
import, under Environmental Laws, including but not limited to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. ss. 9601 et seq.); the Hazardous Material Transportation Act, as amended
(42 U.S.C. ss. 1801 et seq.); the Resource Conservation and Recovery Act, as
amended (42 U.S.C. ss. 6901 et seq.); the Toxic Substances Control Act, as
amended (15 U.S.C. ss. 2601); the Clean Air Act, as amended (42 U.S.C. ss. 7401
et seq.); the Federal Water Pollution Control Act, as amended (33 U.S.C. ss.
1251 et seq.); or (ii) any other chemical, material, substance or waste declared
to be hazardous or toxic by any Governmental Authority, exposure to which is now
or hereafter prohibited, limited or regulated by any Governmental Authority.
"Impositions" means all duties, taxes, assessments, dues, charges,
fees, excises, levies, license and permit fees, impositions, water rates, sewer
rents and other charges, ordinary or extraordinary, whether foreseen or
unforeseen, of any kind whatsoever, (i) now or hereafter levied or assessed or
imposed against or upon or in respect of the Mortgaged Property (as defined in
the Mortgage) or (ii) which now is or may be levied or assessed against the
Income (as defined in the Mortgage) by virtue of any present or future law, as
well as all income taxes, assessments and other governmental charges levied and
imposed by any Governmental Authority upon or against our Company in respect of
the Mortgaged Property or any part thereof, to the extent the same is in lieu of
or in substitution of the items described in clause (i). Impositions shall not
include any taxes imposed on the net income, gross receipts or any franchise
taxes of the Trustee or Collateral Agent, except as provided in this Indenture.
"Indebtedness" of any person means, at any date, without duplication,
(i) all obligations of such person for borrowed money (including obligations
with respect to letters of credit issued for the account of such person), (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 (excluding accounts payable and
similar obligations arising in the ordinary course of business which are not
more than 90 days past due), (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 the debt portion of any leveraged lease not
required to be capitalized, (v) all obligations of other persons of the type
referred to in clauses (i) through (iv) of this definition guaranteed by such
person, whether or not secured by a Lien or other security interest on any asset
of such person and (vi) all Indebtedness of another person secured by a Lien on
any property owned by the first person (whether or not such indebtedness has
been assumed or guaranteed by such first person).
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"Indenture" means the Trust Indenture, by and among our Company, the
Trustee and the Depositary Bank pursuant to which the old bonds were issued and
the new bonds will be issued.
"Indenture Accounts" means those accounts created and established under
the Indenture, including the Bond Payment Account, the Construction Interest
Account, the Interest Payment Subaccount, the Principal Payment Subaccount and
the Redemption Subaccount.
"Independent Engineer" means, initially, Stone & Webster Management
Consultants, Inc., and thereafter any other engineering or consulting entity
acting as independent engineer under the Financing Documents.
"Independent Engineer Agreement" means the consulting services
agreement between Stone & Webster and our Company.
"Independent Forecast" means a report furnished by our Company to the
Senior Parties no later than six months prior to the expiration of the term of
the Power Purchase Agreement, prepared by an independent consultant which sets
forth projections of (i) electricity prices for the PJM Market (or if such
market no longer exists at such time, any successor market or substitute market
as determined in good faith by our Company which approximates, to the extent
practicable, such region) and (ii) gas prices on a delivered basis to our
Facility, in each case on at least an annual basis through the final maturity
date for the bonds.
"Independent Insurance Advisor" means, initially, AON Risk Services,
Inc., or another nationally recognized insurance advisory firm appointed as
insurance advisor by our Company.
"Initial Start-Up Testing" means our Company's operation and testing of
our Facility prior to the Commercial Operation Date, including performance
tests, to determine, among other things, the operating characteristics of our
Facility, our Facility capacity and our Facility's ability to meet our Company's
obligations under the Power Purchase Agreement.
"Interconnection Agreement" means the Generation Facility Transmission
Interconnection Agreement, dated as of March 23, 1999, by and between our
Company and Metropolitan Edison Company d/b/a GPU Energy.
"Interest Payment Date" means each February 28, May 31, August 31 and
November 30, commencing August 31, 1999.
"Interest Payment Subaccount" means the Interest Payment Subaccount of
the Bond Payment Account established under the Indenture.
"Investment Grade" means a rating in one of the four highest categories
(without regard to subcategories within such rating categories) by S&P and
Moody's (or an equivalent rating by another nationally recognized credit rating
agency if none of such corporations is rating the subject debt instrument).
"Lien" means any mortgage, pledge, security interest, hypothecation,
collateral assignment, encumbrance, lien (statutory or other), or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction).
"Maintenance Services Agreement" means the Maintenance Program Parts,
Shop Repairs and Scheduled Outage TFA Services Contract, dated as of September
23, 1998, by and between our Company (as assignee of AES Ironwood, Inc.) and the
Contractor.
"Major Maintenance Reserve Account" means the Major Maintenance Reserve
Account created under the Collateral Agency Agreement.
"Make-Whole Premium" means an amount calculated as of the date (the
"Determination Date") set for the redemption or repurchase of any of the bonds
as follows:
(a) the average life of the remaining scheduled payments of principal
in respect of bonds then outstanding (the "Remaining Average Life") shall be
calculated as of the Determination Date;
(b) the yield to maturity shall be calculated for the United States
Treasury security having an average life equal to the Remaining Average Life and
trading in the secondary market at the price closest to the principal amount
thereof (the "Primary Issue"); provided, however, that if no United States
Treasury security has an average life equal to the Remaining Average Life, the
yields (the "Other Yields") for the two maturities of United States Treasury
securities having
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average lives most closely corresponding to such Remaining Average Life and
trading in the secondary market at the price closest to the principal amount
thereof shall be calculated, and the yield to maturity for the Primary Issue
shall be the yield interpolated or extrapolated from such Other Yields on a
straightline basis, rounding in each of such relevant periods to the nearest
month;
(c) the discounted present value of the then remaining scheduled
payments of principal and interest (but excluding that portion of any scheduled
payment of interest that is actually due and paid on the Determination Date) in
respect of bonds then outstanding shall be calculated as of the Determination
Date using a discount factor equal to the sum of (x) the yield to maturity for
the Primary Issue, plus (y) 50 basis points; and
(d) the amount of Make-Whole Premium in respect of bonds to be redeemed
or repurchased shall be an amount equal to (x) the discounted present value of
such bonds to be redeemed determined in accordance with clause (c) above, minus
(y) the unpaid principal amount of such bonds; provided, however, that the
Make-Whole Premium shall not be less than zero.
"Material Adverse Effect" means (i) a material adverse change, or an
event or occurrence which would reasonably be expected to result in a material
adverse change, in the financial condition, or results of operation of our
Company, or operation of our Facility or (ii) any event or occurrence of
whatever nature which would materially and adversely change (a) our Company's
ability to perform its obligations under the Financing Documents or (b) the
Senior Parties' security interests in the Collateral under the Security
Documents.
"Moody's" means Moody's Investors Services, Inc.
"Mortgage" means the Mortgage, by and between our Company and the
Collateral Agent.
"MW" means megawatt.
"MWh" means megawatt-hour.
"New bonds" means bonds offered by our Company to the bondholders in
exchange for the old bonds, which offered bonds shall be identical to the old
bonds except that the offered bonds shall not have transfer restrictions.
"New York Uniform Commercial Code" means the Uniform Commercial Code,
as in effect in the State of New York.
"Officer's Certificate" means a certificate delivered to the Trustee or
the Collateral Agent, as applicable, that has been signed by an Authorized
Representative of our Company or an Authorized Representative of the board of
directors of our Company.
"Operating and Maintenance Account" means the Operating and Maintenance
Account established under the Collateral Agency Agreement.
"Operating and Maintenance Costs" means all actual cash maintenance and
operation costs to be incurred and paid for with respect to our Facility in any
particular period, including franchise, sales, property and other similar taxes
(but not taxes on or measured by net income), payments for the supply and
transportation of fuels, insurance, consumables, payments under any lease,
payments under our Project Contracts (including payments under the Operations
Agreement, but excluding payments made under the EPC Contract and any payments
under our Project Contracts that are expressly subordinated), repair and
replacement costs for equipment included in our Facility, reasonable legal fees
and expenses paid by our Company in connection with the management, maintenance
or operation of our Facility, fees paid in connection with obtaining,
transferring, maintaining or amending any Governmental Approvals, employee
salaries, wages and other employment-related costs and reasonable general and
administrative expenses, all fees, expenses and other payments due to and all
indemnities and other arrangements providing for the payment of amounts to the
lenders, arrangers, underwriters, Initial Purchasers, independent consultants,
their agents, counsel and employees in connection with the Indebtedness of our
Company (but excluding transaction costs associated with the offering and
issuance of the bonds), but exclusive in all cases of (i) non-cash charges,
including depreciation or obsolescence charges or reserves therefor,
amortization of intangibles or other bookkeeping entries of a similar nature,
(ii) all interest charges, (iii) all commitment fees, underwriting fees and
other similar fees due and payable in connection with Indebtedness of our
Company, (iv) maintenance costs funded from amounts on deposit in the Major
Maintenance Reserve Account and (v) solely for purposes of priority of payment,
fees (but not costs) payable to the Operator, except to the extent that there
are sufficient funds available in the Revenue Account to make all required
payments and deposits specified in first through sixth specified under "SUMMARY
OF PRINCIPAL FINANCING DOCUMENTS--Collateral Agency Agreement--Payments During
Operating Period."
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"Operations Agreement" means the Development and Operations Services
Agreement, by and between our Company and the Operator.
"Operator" means AES Prescott.
"Opinion of Counsel" means a written opinion of counsel for any person
either expressly referred to in the Indenture or otherwise satisfactory to the
Trustee which may include, without limitation, counsel for our Company, whether
or not such counsel is an employee of any of such person.
"Optional Modifications" means all material modifications to our
Facility that are not Required Modifications to the extent that our Company
certifies and the Independent Engineer confirms, which confirmation may not be
unreasonably withheld or delayed, that such modifications: (i) are not
reasonably likely to result in a Material Adverse Effect; (ii) are technically
feasible; and (iii) are reasonably expected to improve the operation or
reliability of our Facility.
"Paying Agent" means any person acting as Paying Agent under the
Indenture.
"Pennsy Agreements" means (i) the Agreement Relating to Real Estate,
dated as of October 22, 1998, by and between our Company (as assignee of AES
Ironwood, Inc.) and Pennsy Supply, Inc. and (ii) the Easement and Right of
Access Agreement, dated as of April 15, 1999, by and between our Company and
Pennsy Supply, Inc.
"Permitted Indebtedness" has the meaning specified under "SUMMARY OF
PRINCIPAL FINANCING DOCUMENTS--Indenture--Negative Covenants--Indebtedness."
"Permitted Liens" means, collectively, (i) Liens specifically created,
required or permitted by the Financing Documents; (ii) Liens for taxes which are
either not yet due, are due but payable without penalty or are the subject of a
Good Faith Contest by our Company; (iii) any exceptions to title which are
contained in the title insurance policy for the Site; (iv) such minor defects,
easements, rights of way, restrictions, irregularities, encumbrances and clouds
on title and statutory liens that do not materially impair the property affected
thereby and that do not individually or in the aggregate materially impair the
value of the security interests granted under the Security Documents; (v)
deposits or pledges to secure statutory obligations or appeals; release of
attachments, stay of execution or injunction; performance of bids, tenders,
contracts (other than for the repayment of borrowed money) or leases, or for
purposes of like general nature in the ordinary course of business; (vi) Liens
in connection with workmen's compensation, unemployment insurance or other
social security or pension obligations; (vii) legal or equitable encumbrances
deemed to exist by reason of the existence of any litigation or other legal
proceeding if the same is the subject of a Good Faith Contest (excluding any
attachment prior to judgment, judgment lien or attachment in aid of execution on
a judgment); and (viii) mechanic's, workmen's, materialmen's, construction or
other like Liens arising in the ordinary course of business or incident to the
construction or improvement of any property in respect of obligations which are
not yet due or which are the subject of a Good Faith Contest.
"PJM Market" means the control area recognized by the North American
Electric Reliability Council as the "PJM Control Area."
"Pledge Agreement" means the Pledge and Security Agreement by and among
AES Ironwood, Inc., our Company and the Collateral Agent.
"Post-Power Purchase Agreement Period" means that period commencing six
months prior to the end of the Power Purchase Agreement Term and ending on the
final maturity date for the bonds during which our Facility will be operated as
a merchant plant.
"Power Marketing Plan" means a marketing and procurement plan prepared
by or on behalf of our Company which describes in reasonable detail our
Company's plan to (i) procure gas to be burned at our Facility and (ii) sell
electric power from our Facility without a Replacement Power Purchase Agreement.
"Power Purchaser" means Williams Energy Marketing & Trading Company, a
Delaware corporation.
"Power Purchase Agreement Guarantor" means The Williams Companies,
Inc., a Delaware corporation.
"Power Purchase Agreement Term" means that period during which the
Power Purchaser is obligated to purchase our Facility capacity under the terms
of the Power Purchase Agreement.
"Principal Payment Subaccount" means the Principal Payment Subaccount
of the Bond Payment Account established under the Indenture.
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"Project" means our Facility, together with associated equipment and
facilities and the development, construction and financing thereof.
"Project Accounts" has the meaning specified under "SUMMARY OR
PRINCIPAL FINANCING DOCUMENTS--Collateral Agency Agreement--Project Accounts."
"Project Contracts" means the Power Purchase Agreement, the Williams
Guaranty, the EPC Contract, the Siemens Guaranty, the Interconnection Agreement,
the Maintenance Services Agreement, the Operations Agreement, the Services
Agreement, the Effluent Supply Agreement, the Pennsy Agreements and each other
material contract or agreement related to the development, construction,
ownership, operation or maintenance of our Facility, including specific
agreements with respect to spare parts but excluding any Financing Document or
Security Document.
"Project Costs" means all costs of developing, financing, constructing,
testing and initial operation of our Facility, including but not limited to: (i)
all amounts payable under the EPC Contract including any contractor bonuses,
site acquisition and preparation costs, costs of acquisition and construction of
fuel handling and processing equipment, any electric interconnection and
transmission upgrade costs payable by our Company under the Power Purchase
Agreement, all water interconnection costs payable by our Company and all gas
interconnection costs payable by our Company; (ii) all development costs and
fees, which shall be paid to, or as designated by, our Company on the Closing
Date; (iii) all other Facility-related costs, including but not limited to
fuel-related costs, fees and expenses payable under the Operations Agreement and
expenses to complete the construction and financing of our Facility; (iv)
start-up and testing costs and initial working capital costs; (v) initial
reserve fund requirements; (vi) fees and costs payable during construction with
respect to any DSR Letter of Credit, CP Letter of Credit and any other letters
of credit or security provided under any Project Contract; (vii) legal and other
transaction costs and financing-related fees; (viii) any other out-of-pocket
expenses related to the financing; and (ix) interest on the bonds.
"Prudent Operating and Maintenance Practices" means those practices,
methods and acts that at a particular time, in the exercise of reasonable
judgment in light of the facts known or that should have been known, would have
been expected to accomplish the goals established in the Annual Operating Plan,
including such goals as efficiency, reliability, economy and profitability, in a
manner consistent with law, regulation, safety, and environmental protection.
With respect to our Facility, Prudent Operating and Maintenance Practices of the
electrical generating industry include taking reasonable actions to provide (i)
adequate materials, resources and supplies, to the extent within the control of
Operator, available to meet our Facility's needs; (ii) a sufficient number of
operators who are available and adequately trained to operate our Facility; and
(iii) the timely performance of preventive, routine, and non-routine maintenance
and repairs, as exemplified and generally described in the Operations Agreement.
"Rating Agency" means each of Moody's and S&P; provided, that such
rating agency maintains a rating on the bonds.
"Ratings Reaffirmation" means a reaffirmation by each of the Rating
Agencies of their then current credit ratings of any bonds then outstanding,
giving effect to any transactions giving rise to a request for such
reaffirmation.
"Redemption Subaccount" means the Redemption Subaccount of the Bond
Payment Account established under the Indenture.
"Regular Record Date" means, for the Stated Maturity of any bond, or
for the Stated Maturity of any installment of principal thereof or payment of
interest thereon, the first day of the month (whether or not a Business Day) in
which such Stated Maturity occurs, or any other date specified for such purpose
in the form of any bond attached to the Series Supplemental Indenture relating
to such bonds.
"Replacement Power Purchase Agreement" means one or more power purchase
agreements between our Company and one or more persons, under which our Company
sells, in aggregate, all or substantially all of the capacity and/or associated
electric energy from our Facility to such person or persons at a commercially
reasonable price for a term of not less than the remaining term of the Power
Purchase Agreement.
"Required Bondholders" means, at any time, the persons that at such
time own a majority in aggregate principal amount of the bonds then outstanding.
"Required Modifications" means, collectively, those modifications
reasonably necessary for our Facility to (i) remain in compliance with all
material Applicable Laws and Governmental Approvals and (ii) maintain, at a
minimum, the capacity production levels contemplated by the projected operating
results included herein, in either case, as confirmed by the Independent
Engineer.
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"Required Rating" means a rating of at least "A" by S&P and "A2" by
Moody's.
"Required Senior Parties" means, at any time, persons that at such time
hold at least a 33-1/3% of the Combined Exposure.
"Restoration Account" means the Restoration Account established under
the Collateral Agency Agreement.
"Restricted Payments" means, collectively, (i) distributions including
payments of dividends to holders of ownership interests in our Company; (ii)
payments of principal, interest or premium, if any, on and any repurchase of any
Affiliate Subordinated Debt; (iii) prepayments of any Subordinated Debt; and
(iv) the repurchase by our Company of any ownership interests in our Company.
"Revenue Account" means the Revenue Account established under the
Collateral Agency Agreement.
"S&P" means Standard & Poor's Rating Group, a division of the
McGraw-Hill Companies, Inc.
"Security Agreement" means the Security Agreement, by and between our
Company and the Collateral Agent.
"Security Documents" means, collectively, (i) the Mortgage, (ii) the
Collateral Agency Agreement, (iii) the Security Agreement, (iv) the Indenture,
(v) the Consents to Assignment, (vi) the Pledge Agreement and (vii) the
Assignment of Leases and Income.
"Security Registrar" means any person acting as Security Registrar
under the Indenture.
"Senior Debt" means, collectively, the bonds and any other Indebtedness
outstanding which ranks pari passu with the bonds upon liquidation or
foreclosure, including any amounts owed to a working capital provider, the DSR
LOC Provider and the CP LOC Provider; provided, however, that no Indebtedness of
our Company shall rank senior to the bonds.
"Senior Debt Service" means, for any period, an amount calculated by
our Company as equal to the aggregate of (i) all amounts payable by our Company
during such period in respect of principal of, and interest and premium, if any,
on, the bonds; (ii) all amounts payable by our Company during such period to the
provider of any other Senior Debt; and (iii) all amounts payable by our Company
during such period as fees and other expenses (including any interest thereon)
to any fiduciary acting in such capacity under any of the Security Documents.
"Senior Debt Service Coverage Ratio" means for any period, the ratio of
(i) Cash Available for Debt Service for such period to (ii) the amount of Senior
Debt Service due and payable for such period.
"Senior Parties" means the Trustee, the Collateral Agent, the DSR LOC
Provider, the CP LOC Provider and any working capital provider and each
successor to any of such persons.
"Series Supplemental Indenture" means an indenture supplemental to the
Indenture entered into by our Company and the Trustee for the purpose of
establishing, in accordance with the Indenture, the title, form and terms of the
bonds of any series; "Series Supplemental Indentures" means each and every
Series Supplemental Indenture.
"Services Agreement" means the Services Agreement by and between AES
and the Operator.
"Siemens Guaranty" means the Guaranty, dated as of September 23, 1998,
by Siemens Corporation and in favor of our Company.
"Site" means the location of our Facility in South Lebanon Township,
Lebanon County, Pennsylvania, as further described in the Mortgage.
"Stated Maturity" means, when used with respect to any bond or any
installment of principal thereof or payment of interest thereon, the date
specified in such bond as the fixed date on which such bond or such installment
of principal or payment of interest is due and payable.
"Step-Up Event" means, in respect of any DSR Letter of Credit, (i) such
DSR Letter of Credit has not been extended or replaced within 45 days prior to
the termination date of such DSR Letter of Credit or (ii) the credit rating of
the DSR LOC Issuing Bank is less than the Required Rating and such DSR Letter of
Credit has not been replaced within 45 days of the failure to satisfy the
requirements of the Required Rating with a replacement letter of credit issued
by an issuer that satisfies the requirements of the Required Rating and, in each
case, the Collateral Agent has drawn on such DSR Letter of Credit in an amount
sufficient to fund the Debt Service Reserve Account up to the DSRA Required
Balance.
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"Subordinated Debt" means all Indebtedness of our Company issued by a
Subordinated Debt Provider under a Subordinated Loan Agreement and subordinated
in right of payment to the bonds in accordance with the terms of the Collateral
Agency Agreement.
"Subordinated Debt Account" means the Subordinated Debt Account
established under the Collateral Agency Agreement.
"Subordinated Debt Provider" means any person (other than an Affiliate
of our Company) providing Subordinated Debt under a Subordinated Loan Agreement.
"Subordinated Loan Agreement" means a binding agreement with a
Subordinated Debt Provider providing non-recourse debt financing to our Company
for application toward the payment of Project Costs or Operating and Maintenance
Costs on terms and conditions which meet the requirements of the Collateral
Agency Agreement.
"Taxes" or "Tax" means any tax, charge, impost, tariff, duty or fee of
any kind charged, imposed or levied, directly or indirectly, by any Governmental
Authority, including any value-added tax, sales tax, stamp duty, import duty,
withholding tax (whether on income, dividends, interest payments, fees,
equipment rentals or otherwise), tax on foreign currency loans or foreign
exchange transactions, excise tax, property tax, registration fee or license,
water tax or environmental, energy or fuel tax including any interest, penalties
or other additions thereon.
"Third-Party Engineer" means a single independent engineer or
consultant designated under the Collateral Agency Agreement or a Project
Contract from a pre-established list to consider and decide a dispute between
our Company and the Independent Engineer, or the applicable parties.
"Total Debt Service" means, for any period, an amount calculated by our
Company as equal to the aggregate of (i) all amounts payable by our Company
during such period in respect of Senior Debt Service; (ii) all amounts payable
by our Company during such period in respect of principal of, and interest, and
premium, if any, on Subordinated Debt and any other Indebtedness permitted under
the Indenture and incurred by our Company; and (iii) all amounts payable by our
Company during such period as fees and other expenses (including any interest
thereon) to any fiduciary acting in such capacity with respect to any
Indebtedness referred to in clause (ii) of this definition.
"Total Debt Service Coverage Ratio" means for any period, the ratio of
(i) Cash Available for Debt Service for such period to (ii) the amount of Total
Debt Service due and payable for such period.
"Transaction Documents" means our Project Contracts and the Financing
Documents.
"Transfer Agent" means The Bank of New York and any successor or assign
in such capacity under the Indenture.
"Trigger Event" means (i) an "Event of Default" under the Indenture and
an acceleration of the indebtedness issued thereunder; (ii) an "Event of
Default" under the DSR LOC Reimbursement Agreement and an acceleration of the
indebtedness incurred by our Company thereunder; (iii) an "Event of Default"
under the CP LOC Reimbursement Agreement and an acceleration of the indebtedness
incurred by our Company thereunder; (iv) an "Event of Default" or the equivalent
under any working capital facility and an acceleration of the indebtedness
incurred by our Company thereunder; or (v) a Bankruptcy Event in respect of our
Company and the expiration of the shortest applicable grace period.
"Trustee" means The Bank of New York and any successor or assign in
such capacity under the Indenture.
"Trustee Claims" means all obligations of our Company, now or hereafter
existing, to pay fees, costs, expenses, liabilities or indemnities to the
Trustee under the Indenture.
"Williams Guaranty" means the Guaranty, dated as of February 5, 1999,
by the Power Purchase Agreement Guarantor in favor of our Company.
A-12
<PAGE>
------------------------------------------------------------
ANNEX B
INDEPENDENT ENGINEER'S REPORT
------------------------------------------------------------
<PAGE>
[GRAPHIC OMITTED]
Stone & Webster
Management Consultants, Inc.
- --------------------------------------------------------------------------------
Independent Technical Consultant's Report
on the
AES Ironwood, L.L.C.. Power Project
June 18, 1999
Prepared by
Stone & Webster Management Consultants, Inc.
B-1
<PAGE>
LEGAL NOTICE
This report was prepared by Stone & Webster Management Consultants, Inc. with
the assistance of its affiliated company, Stone & Webster Engineering
Corporation, together hereafter referred to as Stone & Webster, expressly for
Lehman Brothers Inc. ("Lehman Brothers"). Neither Stone & Webster, Lehman
Brothers, nor any person acting on their behalf: (a) makes any warranty, express
or implied, with respect to the use of any information or methods disclosed in
this report; or (b) assumes any liability with respect to the use of any
information or methods disclosed in this report.
B-2
<PAGE>
Table of Contents
<TABLE>
<S> <C>
1. Executive Summary.............................................................................5
1.1 PROJECT DESCRIPTION...........................................................................6
1.2 CONCLUSIONS...................................................................................7
2. Scope of Work................................................................................12
3. Facility Design..............................................................................13
3.1 FACILITY DESCRIPTION.........................................................................13
3.2 SITE LOCATION AND DESCRIPTION................................................................13
3.3 COMBUSTION TURBINE GENERATOR.................................................................14
3.4 HEAT RECOVERY STEAM GENERATOR................................................................20
3.5 STEAM TURBINE................................................................................20
3.6 ELECTRIC GENERATOR...........................................................................21
3.7 BALANCE OF PLANT SYSTEMS.....................................................................21
3.8 FUEL SYSTEMS.................................................................................26
3.9 ELECTRICAL SYSTEMS...........................................................................28
3.10 SWITCHYARD...................................................................................28
3.11 INSTRUMENT AND CONTROL SYSTEMS...............................................................29
3.12 CIVIL AND STRUCTURAL DESIGN..................................................................29
3.13 INTERCONNECTIONS.............................................................................32
4. Environmental and Permitting.................................................................36
4.1 ENVIRONMENTAL SITE ASSESSMENT................................................................36
4.2 PERMITTING...................................................................................36
5. Project Agreements...........................................................................40
5.1 POWER PURCHASE AGREEMENT.....................................................................40
5.2 INTERCONNECTION AGREEMENT....................................................................43
5.3 ENGINEERING, PROCUREMENT, AND CONSTRUCTION SERVICES..........................................43
5.4 MANAGEMENT AND OPERATIONS AGREEMENT..........................................................48
5.5 SERVICES AGREEMENT...........................................................................49
5.6 EFFLUENT SUPPLY AGREEMENT....................................................................49
5.7 AGREEMENT RELATING TO REAL ESTATE............................................................50
5.8 MAINTENANCE PROGRAM PARTS, SHOP REPAIRS AND SCHEDULED OUTAGE TFA SERVICES CONTRACT...........50
6. Principal Project Participants...............................................................52
6.1 AES IRONWOOD, LLC............................................................................52
6.2 AES PRESCOTT, LLC............................................................................52
6.3 WILLIAMS ENERGY MARKETING & TRADING COMPANY..................................................52
6.4 SIEMENS WESTINGHOUSE POWER CORPORATION.......................................................53
</TABLE>
B-3
<PAGE>
<TABLE>
<S> <C>
7. Assessment of Projected Operating Results....................................................54
7.1 OVERVIEW.....................................................................................54
7.2 PRINCIPAL CONSIDERATIONS AND ASSUMPTIONS.....................................................54
7.3 PROJECT COST.................................................................................56
7.4 POWER PRODUCTION.............................................................................57
7.5 REVENUES.....................................................................................58
7.6 OPERATING EXPENSES...........................................................................59
7.7 FINANCING ASSUMPTIONS........................................................................61
7.8 PROJECTED OPERATING RESULTS..................................................................62
7.9 SENSITIVITY ANALYSES.........................................................................62
7.10 LIQUIDATED DAMAGES ANALYSES..................................................................65
</TABLE>
Exhibit I
Base Case
Increased O&M Sensitivity (Case #1)
Increased Heat Rate Sensitivity (Case #2)
Decreased Availability Sensitivity (Case #3)
Hagler Bailey High Gas Price Sensitivity (Case #4)
Hagler Bailly Low Demand Growth Sensitivity (Case #5)
Exhibit II
Document Log
B-4
<PAGE>
1. Executive Summary
Stone & Webster Management Consultants, Inc. is pleased to provide this report
(the "Report") which summarizes our independent technical review (the "Review")
of the proposed AES Ironwood Project (the "Project"). The Project will consist
of a nominal 705 megawatt ("MW") net combined cycle electric generating facility
(the "Facility") to be located in South Lebanon Township, Pennsylvania and the
associated Project documents and agreements.
The Review was conducted by Stone & Webster Management Consultants, Inc. with
the assistance of Stone & Webster Engineering Corporation (collectively, "Stone
& Webster"). The Review was conducted by Stone & Webster for the purpose of
producing this Report on behalf of Lehman Brothers as Initial Purchaser of
certain bonds (the "Bonds") to be issued by AES Ironwood, LLC ("AES Ironwood"),
pursuant to Rule 144A under the Securities Act of 1933, as amended, to finance
the construction and initial start-up and testing of the Facility. The Bonds are
to be offered in the United States to qualified institutional buyers and
institutional accredited investors and in offshore transactions complying with
Regulation S under the Securities Act of 1933 as amended.
The scope of the Review included the conceptual design and interfaces of the
Project; the proposed Siemens Westinghouse Power Corporation ("SWPC") 501G
combustion turbine technology; the projected performance of the Project; the
Phase I site assessments for the Project; the issued permits for the Project;
the technical assumptions utilized in the Pennsylvania/New Jersey/Maryland
("PJM") Market Study prepared by Hagler-Bailly Consulting Inc. ("Hagler Bailly")
and dated June 1, 1999; and the Project's projected operating results through
validation of the Project pro forma and verification of the model results (the
"Projected Operating Results").
Stone & Webster also reviewed the principal contracts and agreements associated
with the Project. These included the Power Purchase Agreement dated February 5,
1999 ("PPA"), the Generation Facility Transmission Interconnection Agreement
with Metropolitan Edison Company ("MET-ED") dated March 23, 1999
("Interconnection Agreement"), the Engineering, Procurement and Construction
Services Agreement dated September 23, 1998 as amended ("EPC Contract"), the
Effluent Supply Agreement dated March 3, 1998 ("ESA"), the Maintenance Program
Parts, Shop Repairs and Scheduled Outage TFA Services Contract dated September
23, 1998 ("Maintenance Services Agreement") and the Agreement Relating to Real
Estate dated October 22, 1998 (collectively the "Project Agreements"). Stone &
Webster reviewed the Project Agreements from a technical and economic standpoint
to assess the adequacy, compatibility, and reasonableness of their terms and
conditions. Stone & Webster made no determination as to the validity and
enforceability of the Project documents and permits. However, for the purposes
of this Report, we have assumed the Project Agreements and contracts will be
fully enforceable in accordance with their respective terms and that all parties
will comply with the provisions of their
B-5
<PAGE>
respective agreements. Stone & Webster also conducted a site visit on October
21, 1998 and made general field observations, specifically the existing above
ground condition of the site.
1.1 Project Description
The Project is being developed and will be owned, operated, and maintained by
AES Ironwood. AES Ironwood is a limited liability company, organized and
existing under the laws of Delaware. AES Ironwood was formed to develop,
construct, own, and operate the Project. AES Ironwood is a special purpose
project company and a wholly owned subsidiary of AES Ironwood Inc. AES Ironwood
Inc. is a wholly owned subsidiary of The AES Corporation ("AES"). AES, which was
founded in 1981, is one of the world's largest global power companies and owns
or has an interest in 97 electric generating plants totaling over 26,000 MW in
18 countries. AES also distributes power in Brazil, El Salvador and Argentina,
and heat in Kazakhstan. AES operates gas-fired, oil-fired, hydropower and solid
fuel plants and employs approximately 40,000 people around the world. As of
December 31, 1998, AES had assets worth $10.8 billion. AES Prescott, L.L.C,
("AES Prescott"), a Delaware limited liability company and a wholly owned
subsidiary of AES Ironwood, Inc., will manage the development and construction
of the Project pursuant to a development and construction management agreement
between AES Prescott and AES Ironwood.
The Facility will have a nominal 705 MW designed electric generating capacity
and will be comprised of the following major equipment: two SWPC model 501G
combustion turbines (the "501G") with hydrogen cooled generators, two unfired,
three pressure level reheat heat recovery steam generators ("HRSGs"), one
multicylinder reheat condensing steam turbine with hydrogen cooled generator,
one water cooled condenser using a forced draft cooling tower, one integrated
control system, and a 230 kV switchyard. The combustion turbines, the steam
turbine, and their associated generators will be located indoors. The two HRSGs
and associated auxiliary equipment will be located outdoors.
The Facility will be designed for base load and/or cyclic operation capable of
startup and shutdown on a dispatchable basis. The combustion turbines will
primarily burn natural gas supplied by way of a pipeline with provisions to burn
Jet A ("fuel oil") as a backup fuel. Each combustion turbine will be coupled
with a three pressure level reheat HRSG that will generate steam to operate the
steam turbine. Electrical generators connected to the two combustion turbines
and the steam turbine will be connected to the switchyard through individual
generator step up transformers. These transformers will raise the generated
voltage to 230 kV for connection into the PJM interconnected electrical system.
The Facility will be designed as a zero liquid discharge facility with its raw
water supply requirements coming from two sources: the adjacent Pennsy Supply,
Inc. quarry and the City of Lebanon Wastewater Treatment Plant ("WWTP") by way
of an approximately 6.5 mile effluent ("makeup water") pipeline. Potable water
will also be supplied by the City of Lebanon Authority (the "Authority").
B-6
<PAGE>
Stone & Webster reviewed the TRC Environmental Corporation ("TRC") Phase 1
Environmental Site Assessment Reports performed for the site consisting of the
Martin property and the RESCO Products property. The assessment for the Martin
property revealed no evidence of recognized concerns to the subject property.
The only environmental condition identified for the RESCO Products property is
the presence of asbestos in two roofing materials: the tar coating of the Butler
Building/add-on roof and the roof tar paper of a small attached shed at the rear
of the Butler Building. Stone & Webster agrees with TRC's opinion that removal
of these structures and the asbestos is not considered a major environmental
issue.
Electrical power produced by the Project will be sold to Williams Energy
Marketing & Trading Company ("Williams") under the terms of a 20 year PPA. The
PPA calls for Williams to purchase Facility capacity, ancillary services, and
fuel conversion services pursuant to the terms of the PPA. In addition, the PPA
provides for the supply and transport of the natural gas and fuel oil to the
Facility by Williams. The natural gas will be supplied by way of a pipeline to
the site boundary. The fuel oil will be supplied by truck. A two-day fuel oil
supply will be stored in the Facility's fuel oil storage tank.
Following expiration of the 20-year term of the PPA, the Facility will be
operated as a merchant power plant. AES Ironwood will be responsible for the
procurement of fuel and will sell its output directly into the PJM power pool
(or pursuant to bilateral contracts).
Under the terms of the EPC Contract, SWPC, a wholly owned subsidiary of Siemens
Corporation, will act as the primary Contractor and will be responsible for the
engineering, procurement, and construction of the Project on a turnkey, lump-sum
basis. All of SWPC's obligations under the EPC Contract are unconditionally
guaranteed by Siemens Corporation. Siemens Corporation is a wholly owned
subsidiary of Siemens AG and is the entity through which Siemens AG conducts all
of its U.S. business.
The Provisional Notice to Proceed ("PNTP") was provided to SWPC on September 23,
1998 and several milestones have been achieved to date by SWPC. The full Notice
to Proceed ("NTP") will occur at or before financial closing of AES Ironwood.
The Project Guaranteed Provisional Acceptance date is 23 months and two weeks
following NTP.
AES personnel will operate the Facility pursuant to a Management and Operations
Services Agreement ("Operations Agreement") between AES Prescott and AES
Ironwood. The Project will purchase combustion turbine parts, shop repairs, and
scheduled outage services from SWPC.
1.2 Conclusions
Set forth below are the principal findings and conclusions which Stone & Webster
has reached regarding the Project. For a complete understanding of the
estimates, assumptions, and
B-7
<PAGE>
calculations upon which these findings and conclusions are based, this Report
should be read in its entirety.
1. The Facility design, as specified in the EPC Contract, is in accordance
with standard industry practice. SWPC possesses the organization and
personnel to execute its obligations under the EPC Contract and the
Maintenance Services Agreement, and is familiar with the construction and
maintenance of large electrical generation facilities. The Project
construction schedule proposed by SWPC is achievable and is consistent
with the terms of the PPA.
2. Stone & Webster views the SWPC 501G combustion turbine as an
advancement in high-temperature advanced technology combustion turbines
for SWPC and is typical of the normal design evolution for manufacturers.
Many of the design concepts incorporated in the 501G are rooted firmly in
the 501 series and are complemented by improvements which have been
tested in the 501F series or predicted by extensive modeling or full
scale testing. The first 501G unit is expected to begin commercial
operation later in 1999. The various 501G components and designs have
been individually shop tested and computer analyzed. SWPC's 501G is
gaining commercial acceptance as demonstrated by the fact that 17 of
SWPC's 501Gs have been sold to date in the United States.
3. The combustion turbines for the Project are scheduled to become the
third and fourth 501Gs in operation. As a result the Project will benefit
from approximately 25 months of facility startup, extensive testing, and
operating experience of the first installation of 501Gs (McIntosh
Project) and approximately nine months of such experience from the second
installation of 501Gs (Millenium Project). Because the 501G has no
commercial operating experience, the initial unit availability of the
501G may be lower in the early years of operation than is the case with
combustion turbine units currently in operation that use mature
technology. Lower initial unit availability has been reflected as in the
Base Case and a sensitivity case has been included in the Projected
Operating Results utilizing lower availability than that set forth in the
Base Case.
4. A sustained period of commercial operation at full load conditions
followed by an inspection of the combustion turbine is necessary to
predict with any certainty the types of startup and operational problems,
if any, that the 501G may encounter. However, the Project will benefit
from the startup testing and inspection programs implemented by SWPC at
the McIntosh and Millenium units. SWPC has also invested in and has
stated that it will make available to the Project a complete set of risk
parts for the entire combustion turbine gas path. In addition, under the
Maintenance Services Agreement SWPC will provide combustion turbine spare
parts to the Project. This full set of gas path risk parts to be made
available by SWPC and the Maintenance Services Agreement long term spare
parts program will minimize the duration of any unscheduled combustion
turbine-related outages that require the replacement of parts by having
the most commonly replaced parts
B-8
<PAGE>
readily available. In addition, SWPC has the resources and capabilities
to resolve any problem that may arise with the 501Gs.
5. The steam turbine and electrical generator designs are acceptable and in
accordance with standard industry practice.
6. If designed and constructed in accordance with the EPC Contract and
operated and maintained in accordance with the Maintenance Services
Agreement and the Operations Agreement, the Facility should be capable of
meeting the net output contract requirements specified in the Projected
Operating Results.
7. The liquidated damages provisions of the EPC Contract are reasonable.
The one year warranty period is acceptable based on the commercial terms
of the EPC Contract in conjunction with the one year warranty in the
Maintenance Services Agreement. These two agreements, although
independent, are complementary and afford the Project a greater degree of
protection than is available from the EPC Contract alone. Under both
agreements, SWPC is obligated to notify AES Ironwood of any engineering
or design defects that may be manifested in any of SWPC's fleet of 501Gs.
In addition, the risk of a component failure occurring after the one year
EPC Contract warranty is mitigated because the Projected Operating
Results indicate the Project will have adequate revenues to insure the
purchase of components that can be reasonably assumed to require
replacement. Component failures associated with casualty events are
generally covered by insurance policies. The Performance Testing Plan, as
specified in the EPC Contract, is acceptable, customary, and should
adequately demonstrate the Project's performance.
8. Williams possesses the organization and personnel to execute its
obligations under the PPA, and is familiar with the provision of fuel to,
and purchase of electricity from, large electrical generation facilities.
9. Williams has executed certain agreements with Texas Eastern Transmission
Corporation ("TETCO") to provide natural gas delivery services to AES
Ironwood. These agreements require TETCO to construct own and operate an
approximate three-mile pipeline from the TETCO mainline to the Facility.
Stone & Webster, however, has not independently verified the design of
the natural gas pipeline which will interconnect the Facility to the
interstate gas pipeline that will serve the Facility nor its proposed
construction schedule.
10. The Facility can feasibly be electrically integrated into the PJM system,
and no known transmission limitations will inhibit the feasible
evacuation of the Facility's full net capacity both under summer and
winter conditions.
11. Stone & Webster will independently verify the design of the make-up water
supply pipeline when it becomes available. The proposed pipeline
construction schedule appears reasonable and achievable. Stone & Webster
does not know of any reason why the City of Lebanon Authority should be
unable to perform its obligations under the ESA.
B-9
<PAGE>
12. AES Prescott, as an affiliate of AES and with the assistance of SWPC
under the terms of the Maintenance Services Agreement, should be capable
of operating and maintaining the Facility in accordance with standard
industry practices.
13. The technical requirements described in the Project Agreements are
comprehensive, reasonable, and achievable as well as consistent within
and between the various documents.
14. The Phase I environmental site assessments conducted by TRC which
indicated no significant environmental issues were performed in
accordance with standard industry practice and their results appear
reasonable.
15. A majority of the Project's required permits have been acquired and the
Project's permit acquisition plan for those permits not yet required is
reasonable.
16. AES Ironwood has received a determination that the Facility is an Exempt
Wholesale Generator ("EWG") under the applicable rules of Federal Energy
Regulatory Commission ("FERC").
17. Assuming the Facility is constructed, operated, and maintained in
accordance with the terms of the EPC Contract, PPA, the Operations
Agreement, and the Maintenance Services Agreement then it is reasonable
to assume that the Facility will be able to operate in a manner
consistent with applicable permit limits for a period at least equal to
the term of the Bonds.
18. The Project's EPC Contract price is competitive relative to similar
facilities and the Project's proposed operating and maintenance expenses
are consistent with other comparable projects.
19. The technical assumptions utilized in the Hagler Bailly PJM Market Study
Analysis are reasonable.
20. Stone & Webster reviewed the technical and commercial assumptions and the
calculation methodology of the Project financial pro forma model. The
technical assumptions assumed in the Projected Operating Results are
reasonable and are consistent with the Project Agreements. The financial
pro forma model fairly presents, in our judgment, projected revenues and
projected expenses under the Base Case Assumptions. Therefore, the
Projected Operating Results are a reasonable forecast of the Company's
financial results under the Base Case Assumptions.
21. The principal amount of the Bonds, when combined with the equity
contributions and interest earned during the construction period, should
be sufficient to pay the costs of constructing the project and interest
on the Bonds through the end of the construction period.
B-10
<PAGE>
22. The projected revenues from the sale of capacity are more than adequate
to pay the annual operating and maintenance expenses (including
provisions for major maintenance), other operating expenses, and debt
service based on Stone & Webster's studies and analyses of the Project
and the assumptions set forth in this Report. The average and minimum
debt service coverage ratios ("DSCR's") for the full term of the Bonds
are 2.30x and 1.45x, respectively. The average and minimum DSCRs during
the PPA period are 1.46x and 1.45x, respectively. The average and minimum
DSCRs during the merchant period for the debt are 5.81x and 5.77x,
respectively.
23. Assuming deficiencies of up to 6% for heat rate and 5% for capacity, the
average DSCRs over the term of the Bonds, after payment of the liquidated
damages due to a failure to achieve heat rate and capacity guarantees,
are projected to remain approximately the same as the DSCRs in the Base
Case.
B-11
<PAGE>
2. Scope of Work
Stone & Webster was retained to perform a review of the Project in accordance
with a September 30, 1998 agreement with AES Ironwood, Inc. The review was
conducted by Stone & Webster for the purpose of producing this Report on behalf
of Lehman Brothers as Initial Purchaser of certain Rule 144A bonds to be offered
in the United States by AES Ironwood pursuant to rule 144A under the Securities
Act of 1933 as amended to finance the construction and initial start-up and
testing of the Facility, which bonds are to be issued to qualified institutional
buyers and institutional accredited investors and in offshore transactions
complying with Regulation S under the Securities Act of 1933. The scope of the
Review included the following:
o SWPC 501G combustion turbine proposed as the technology basis of the
Project
o Projected performance of the Project
o Projected Operating & Maintenance ("O&M") expenses
o Conceptual design and interfaces of the Project
o Project Phase I site assessments
o Issued permits for the Project
o Technical assumptions utilized in the PJM market study of June 1,
1999, prepared by Hagler Bailly
o Projected operating results in the Project financial pro forma model
Stone & Webster also reviewed the PPA, the Interconnection Agreement, the EPC
Contract, the ESA, the Maintenance Services Agreement, and the Agreement
Relating to Real Estate from a technical and economic standpoint to assess the
adequacy and reasonableness of their terms and conditions. Stone & Webster has
made no determination as to the validity and enforceability of the Project
Agreements. However, for the purposes of this Report, we have assumed the
Project Agreements will be fully enforceable in accordance with their respective
terms and that all parties will comply with the provisions of their respective
agreements.
Stone & Webster conducted a site visit on October 21, 1998 and made general
field observations, specifically the existing above ground condition of the
site. During the review, Stone & Webster reviewed Project information and
interviewed representatives of both AES and SWPC to verify the adequacy of the
Facility design and reasonableness of the technical assumptions.
B-12
<PAGE>
3. Facility Design
Stone & Webster reviewed the design of the Facility and its major components and
interface designs, as specified in Appendix A of the EPC Contract. In general,
Stone & Webster is of the opinion that the Facility design, as specified in the
EPC Contract, is in accordance with standard industry practice and that, if
designed and constructed in accordance with the EPC Contract and operated and
maintained within standard industry practices, the Facility should be capable of
meeting the net output contract requirements specified in the Projected
Operating Results.
3.1 Facility Description
The Facility is designed to have a nominal 705 MW (net) electric generating
capacity and will consist of the following major equipment: two SWPC model 501G
combustion turbines with hydrogen cooled generators, two unfired, three pressure
level reheat HRSGs, one SWPC multi-cylinder reheat condensing steam turbine with
hydrogen-cooled generator, one water cooled condenser using a forced draft
cooling tower, one integrated control system, and a 230 kV switchyard. The
combustion turbines, the steam turbine, and their associated generators will be
located indoors. The two HRSGs and associated auxiliary equipment will be
located outdoors.
The Facility will be configured as a 2 x 1 combined cycle facility designed for
base load and/or cyclic operation capable of startup and shutdown on a
dispatchable basis. The Facility can be operated at various part load conditions
and with one combustion turbine out of service.
3.2 Site Location and Description
The Project site is located in South Lebanon Township approximately one mile
east of the City of Lebanon, adjacent to the Pennsy Supply, Inc. quarry, south
of Route 422 and west of Prescott Road. The site is actively farmed and there
are no wetland resource areas on the site. The site is approximately 35 acres of
industrially zoned land and is landlocked and relatively flat. It is surrounded
by Pennsy Supply quarry tailing piles to the east and north, active quarry pits
to the west and the Conrail mainline to the south. Access to the site will be by
way of a driveway to be constructed by SWPC on Prescott Road, which is a State
Highway that runs north to south. A 50-foot easement has been obtained by AES
Ironwood from Prescott Road across the former Resco Products property that is
parallel to the Conrail tracks. A railspur for the transportation of heavy
equipment to the site will be constructed by the Project to facilitate the
delivery of heavy equipment to the site in this easement.
The October 21, 1998 site visit noted above, which also included a visit to the
WWTP, combined with a review of Project documents provided by AES formed the
basis for our opinion regarding the site. In particular, Stone & Webster relied
on the geotechnical reports prepared by Schnabel in September and October of
1998.
B-13
<PAGE>
3.3 Combustion Turbine Generator
The 501G is the latest product offering from SWPC in the design evolution of the
(formerly Westinghouse) 501 series combustion turbine generator. The 501G
combines the latest advancements in SWPC's low NOx combustion technology,
compressor design, blade designs and cooling schemes, with proven fundamental
design concepts of the SWPC 501 series such as two-bearing single-shaft
construction, cold end drive, horizontally split casings, and axial exhaust. The
resulting combustion turbine is an advanced design, more powerful,
high-temperature, highly efficient, low emission producing derivative of the 501
series that is based on design concepts that have evolved with the development
of the 501 series combustion turbines. The result is a derivative that is based
on demonstrated concepts of the 501 series and improvements in design, high
temperature metallurgy, efficiency and lower emissions.
While many of the fundamental design concepts of the 501F combustion turbine
remain unchanged in the 501G, some new component designs are utilized in the
501G combustion turbine. The most significant changes are the introduction of a
steam cooled transition piece and a redesign of the first row turbine blades.
SWPC reports that the design concepts and design criteria as well as some of the
design codes used in the 501G design are the same as in the 501F and that to
produce state-of-the-art compressor and turbine designs, additional aero
industry engine-derived computer codes were used in the 501G design. These codes
were verified against test rig and combustion turbine test results, including
501F shop test results.
Stone & Webster views the 501G combustion turbine as an advancement in
high-temperature advanced technology combustion turbines for SWPC and is typical
of the normal design evolution for manufacturers. Many of the design concepts
are rooted firmly in the 501 series and are complemented by improvements which
have been tested in the 501F series with further refinements predicted from
extensive modeling or full scale testing. Although we note that the combustion
turbine does not have any commercial operating experience as an assembled unit,
the Project will benefit from the testing and monitoring of other 501G units
scheduled to begin commercial operation well before the Project's scheduled
commercial operation date.
B-14
<PAGE>
SWPC provided Stone & Webster with a listing of seventeen customers that have
committed to purchasing the 501G. This listing is provided in the following
table:
<TABLE>
<CAPTION>
=======================================================================================================================
501G Customer Listing
=======================================================================================================================
Anticipated Commercial
Number of Units Name of Plant Owner Operation Date
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 McIntosh #5 City of Lakeland, Florida 7/10/99
- -----------------------------------------------------------------------------------------------------------------------
1 Millenium Millenium Power Partners 8/20/00
(U.S. Generating Company)
- -----------------------------------------------------------------------------------------------------------------------
2 AES Ironwood AES Ironwood 5/15/01
- -----------------------------------------------------------------------------------------------------------------------
2 Magic Valley Calpine Corporation 4/01/01
- -----------------------------------------------------------------------------------------------------------------------
11 Letters of Intent Confidential Clients Various
=======================================================================================================================
</TABLE>
The combustion turbines for the Project are currently scheduled to become the
third and fourth 501G combustion turbines in operation. An extensive testing
program for the McIntosh #5 unit began operation in April of 1999. This testing
program will include testing of the engine performance, emissions, thermal and
mechanical performance of components, and other key performance parameters with
over 2000 engine instruments. The engine will then be inspected and engine
instrumentation will be removed prior to commercial operation which will begin
in July of 1999 to satisfy summer peak power needs. This will provide
approximately 25 months of facility start up, extensive testing, and operating
experience prior to AES Ironwood's anticipated COD.
SWPC provided Stone & Webster with an overview of the test instrumentation that
will be utilized at the McIntosh Project. The operations monitoring will employ
1200 temperature, 500 pressure, and 200 strain gauges, which will monitor key
areas of the turbine. The test plan is focused on thermal and performance data
including emissions data, combustion mapping, and thermal paint testing. The
McIntosh #5 program will also include scheduled inspections after the first 200
and 400 equivalent starts to observe the durability of the unit in simple cycle
in cyclic operation. SWPC indicates that it has developed detailed risk
mitigation plans to implement the results of the McIntosh testing program,
including how to best utilize the lessons learned during this testing into the
AES Ironwood and other 501G units. The extensive testing program at the McIntosh
unit should reduce technical risks for the Project because it will provide an
opportunity to validate the 501G design through both testing and actual
operating experience prior to operating the Project's 501G units.
In addition, U. S. Generating Company's Millenium plant, a 1x1 501G combined
cycle unit is scheduled to go into base load operation in mid-2000. As a result,
there will also be approximately nine months of start-up testing amid base load
operation at that unit prior to Ironwood's scheduled COD.
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Because the 501G combustion turbine has no commercial operating experience,
initial unit availability of the 501G may be lower in the early years of
operation than the availability of units, which use more mature technologies.
While SWPC's 501F combustion turbine has reportedly experienced availability
factors greater than 90%, Stone & Webster believes that conservative
availability assumptions should be used for early operation of the 501G. Thus,
we have assumed a conservative availability factor (85%) in the Project
financial pro forma model sensitivity case for the first two years of commercial
operation.
3.3.1 Compressor Section
The purpose of the compressor section of the combustion turbine is to produce
sufficient volumes of pressurized air to support combustion at the combustors,
provide cooling air to various components, and to generate rotational energy by
increasing mass-flow through the turbine section.
The compressor section for the 501G is composed of a 16-stage axial flow design
with a pressure ratio of approximately 19.5:1. The compressor includes
inter-stage bleeds for starting and component cooling in various down-stream
locations. While the compressor design is new, it has conventional variable
inlet guide vanes for improved low-speed surge characteristics and part load
performance. The new design also maintains the use of the inner shroud sealing
system and abradable seals currently in use on the model 501F combustion
turbines.
SWPC developed the new compressor for the 501G using three-dimensional flow
field computer codes through a licensing agreement with Rolls Royce. The new
compressor was designed with the same number of stages as in the 501F
predecessor combustion turbine, but has increased the final pressure ratio and
flow by approximately 25%. To accommodate the increase in flow, SWPC has
increased the mean diameter of the compressor stages. All rotor blades have the
same root design that were used on the 501F, which allows the blades to be
removed with the rotor in place (with the covers off) and should aid in the
maintenance of the machine.
Additionally, the rear stages of the new 501G compressor have larger diameters
than the 501F, which SWPC represents helps balance spindle thrust. The sixteen
stages of compressor blades are fabricated in two 180 degree diaphragms, same as
for the 501F, to facilitate field removal. While the new compressor design does
not have any commercial operating experience, SWPC has undertaken extensive
full-scale testing of the new compressor and the results have met SWPC's
performance expectations and demonstrated the mechanical integrity of the
compressor in a full scale testing environment.
The full scale W501ATS compressor, which is the 501G compressor with four stages
added at the rear, was extensively tested to verify its operational
characteristics, aerodynamic performance and mechanical integrity. The
compressor was instrumented with more than 500 individual sensors. The test
program included starting characteristics optimization, variable stator
optimization,
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design point performance optimization, compressor map definition, blade
vibration and diaphragm strain gauge measurements. The test results confirmed
aerodynamic performance and mechanical predictions. Test results on selected
blades and diaphragms showed excellent correlation of vibration characteristics
between prediction and measurement.
3.3.2 Combustor Section
The combustor section of the combustion turbine mixes and burns the supplied
fuel and compressed air (from the compressor discharge) and produces hot gases
used to rotate the downstream turbine. The combustion system consists of 16
individual combustor "cans" that are mounted circumferentially around the
combustion turbine. The combustors are of the dry low NOx ("DLN") type, have
dual fuel capability, and incorporate recent design changes to eliminate the
coking problems of the 501F when firing oil. This is accomplished through the
use of dual direction water purging and a design change that incorporates an oil
piping configuration that eliminates any trapped oil in the combustor.
Additional design modifications to the dual fuel nozzles or "rockets" improve
flame temperature consistency, thereby eliminating local hot spots within the
flame region.
The latest DLN combustor is a modified version of previous DLN combustors. SWPC
reports that the new combustor has reportedly undergone successful lab tests at
the high pressure facilities located in the Arnold Engineering Development
Center of the U.S. Air Force, in Tullahoma, Tennessee, and SWPC has similar
(though not identical) DLN combustors installed at several locations.
The DLN combustion system and the selective catalytic reduction ("SCR") system
in the HRSG both act to reduce NOx emissions, which are a byproduct of the
combustion process. The system is designed to achieve 4 ppmvd on natural gas and
10 ppmvd on fuel oil, both at 15% O2 at the exhaust stack of the HRSG under base
load conditions.
Another design improvement is the addition of supplementary gas injectors in the
"top hat" section for use while firing in the gaseous fueled mode. According to
SWPC, the "top hat" section promotes better fuel-air mixing and more homogeneous
fuel-air ratios, leading to lower NOx and CO emissions with improved combustor
stability.
The length of the 501G combustor is reduced from its predecessor, the 501F. The
air-cooled aft section of the 501F combustor has been eliminated and
incorporated into a new steam cooled transition piece. This provides two
advantages: steam-cooled transition walls operate cooler than air-cooled walls;
and the air formerly used for cooling is now routed to the head end of the
combustor to make it run leaner while increasing mass flow, output and
efficiency. The new steam cooled transition piece of the 501G is made of Inconel
617 material, and is a significant change from the 501F combustion turbine. The
transition piece is also provided with cooling passages around the
circumference, and in passages on each side of weld seams. The steam
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cooled transition piece receives steam from the intermediate pressure ("IP")
section of the three-pressure HRSG. The transition piece is over-cooled by
approximately 25% at part loads to accommodate an increase in cooling
requirements during a large load increase. The IP boiler is designed for a
capacity 30% greater than the maximum expected transition-cooling requirements.
This conservative design capacity should provide adequate margin to ensure the
security of the steam flow to the transition piece during transient load
conditions. During normal operation at base load (non-transient conditions), the
excess capacity is dumped by way of a control valve to the cold reheat system.
In order to provide even cooling over the length of the transition piece, SWPC
supplies both ends of the transition with steam and collects the heated (hotter)
steam near the center of the transition piece in a collection ring.
The burner outlet temperature of the 501G is approximately the same as the 501F
combustion turbine, but the rotor inlet temperature ("RIT") is approximately
140(degrees)F higher. This increase in rotor inlet temperature is accomplished
through the use of the aforementioned steam cooled transition piece and
improvements in turbine material and cooling improvements, which will be
discussed later in this section.
3.3.3 Turbine Section
The turbine section of the combustion turbine produces the rotational energy
required to drive the compressor and generate electrical power. This is
accomplished in the 501G combustion turbine with approximately 15% fewer turbine
parts than in the 501F.
The 501G combustion turbine has a four-stage turbine section, which incorporates
improved cooling throughout and uses its directional solidified ("DS") blades in
rotating rows one and two. The aerodynamic airfoil shapes were optimized using a
three-dimensional flow analysis.
SWPC has incorporated a series of improvements for the cooling of blades and
vanes in the turbine section which include: use of turbulators; serpentine
cooling passages; shaped film cooling holes; and a more extensive use of an
improved thermal barrier coating application.
The Row 1 vane cooling design is an enhancement of the 501F design, using three
impingement inserts in combination with an array of film-cooling holes and
trailing edge pin-fin system. All three cavities take direct compressor
discharge air to maximize the available pressure head. "Shower Head" cooling is
used at the leading edge of the row one vane, while film cooling is used at
selected pressure and suction side locations which limits vane wall thermal
gradients and external surface temperatures. SWPC represents that the low cycle
fatigue design criteria is satisfied by the control of wall gradients. The Row 2
vane cooling uses twin impingement inserts with film-cooling holes and trailing
edge pin-fin system. Row 3 vanes are convection-cooled by the admission of
cooling air into the airfoil's three-cavity multipass center. Row 4 vanes are
not internally cooled. The metal temperatures of the 501G airfoils are greater
than those of the 501F
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combustion turbine. However, according to SWPC improvements in cooling designs
help maintain metal temperatures safely below metal temperature limits.
The first and second stage blades are manufactured from DS material, and are
cooled by a combination of convection techniques by way of multipass serpentine
passages and trailing edge cooling air ejection. While the DS blades used in
Rows 1 and 2 represent SWPC's first commercial use of this material, this
technology is not new. Rolls Royce, the manufacturer of the SWPC DS blades, has
successfully manufactured DS blades for use in several other manufacturer's
combustion turbines.
Similar to the analysis of the compressor blades and vanes, the design of the
turbine blades and vanes uses three-dimensional flow analysis developed by Rolls
Royce for the development and verification of the aerodynamic airfoil shapes.
3.3.4 Risk Mitigation
SWPC has followed a conservative design process for the 501G combustion turbine,
executed a risk analysis as part of a plan designed to ensure mechanical
integrity, and has invested in a complete set of "risk parts" for the combustion
turbine's entire gas path. This set of "risk parts" alone amounts to an
investment by SWPC of over $10,000,000. This set of risk parts is in addition to
the long-term spare parts program that is included pursuant to the Maintenance
Services Agreement. The risk parts include the compressor blades and diaphragms,
the turbine blades and vane segments, and the combustor system (nozzles,
baskets, and transitions). This investment is significant not only in monetary
terms, but also in terms of unit availability and manufacturer commitment. The
full set of gas path risk parts made available by SWPC and the Maintenance
Services Agreement long term spare parts program will minimize the duration of
any unscheduled combustion turbine-related outages that require the replacement
of parts by having the most commonly replaced parts readily available.
SWPC's risk mitigation program for the 501G Program goes beyond what is
typically utilized during the introduction of a manufacturer's latest model
design. It is strongly supported by a dedicated manufacturing team with stated
component procurement plans, an established parts supply chain, and a proactive
monitoring program designed to quickly incorporate design changes into the parts
inventory program.
3.3.5 CTG Conclusions
A sustained period of operation at full load conditions followed by an
inspection of the combustion turbines is necessary to predict with any certainty
the types of startup and operational problems, if any, that may be encountered
with the 501Gs. However, SWPC has made significant financial and organizational
investments in the 501G technology. Stone & Webster
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believes that SWPC has the resources and capabilities to resolve any problems
that may arise with the 501G.
Because the 501G combustion turbine has no commercial operating experience
initial unit availability of the 501G may be lower in the early years of
operation than the availability of units using mature technologies. While SWPC's
501F combustion turbine has reportedly experienced availability factors greater
than 90%, Stone & Webster believes that conservative availability assumptions
should be used for early operation of the 501G. It is not uncommon in the
industry for new combustion turbines to experience availability factors during
the first years of operation in the mid-eighty percent range. Thus, we have
assumed a conservative availability factor (85%) in the Project financial pro
forma model sensitivity case for the first two years of commercial operation.
3.4 Heat Recovery Steam Generator
Stone & Webster reviewed the functional specification and scope of supply
provided in the EPC Contract and understands that Hangjung has been selected as
the HRSG vendor and that the detailed design specifications will be reviewed by
Stone & Webster. The scope of supply for the HRSG includes the HRSG internals,
ducting, and insulation, the stack, the SCR, the ammonia storage system, the
continuous emissions monitoring system ("CEMS"), and the associated piping,
valves and instrumentation. The CEMS scope includes oxygen, CO, and NOx
analyzers.
The functional specification describes the two HRSG's as being of the horizontal
gas path (vertical tubes), natural water circulation, three pressure level,
reheat type. Each HRSG will have high pressure ("HP"), IP, and low pressure
("LP") superheaters, reheaters, economizers, and evaporator sections. Each HRSG
will be equipped with an SCR system to reduce the stack NOx emission levels and
a spool piece for the possible future addition of a CO catalyst. The HRSGs will
have no duct firing capability. The HRSGs will be designed in accordance with
the ASME Code Section I for pressure parts and ANSI/ASME B31.1 for power piping.
Stone & Webster is of the opinion that HRSG scope description is suitable for
the Project and in accordance with standard industry practice.
3.5 Steam Turbine
The steam turbine will be a model 2F32 two case tandem compound design with a
side exhaust double flow low pressure element. The steam turbine will be
directly connected by rigid coupling to a hydrogen inner-cooled generator, which
produces electrical power.
The steam turbine will consist of a primary turbine inlet, combined HP/IP
turbine, and the double flow LP turbine. The two primary steam supply sources to
the turbine are main and reheat steam. The steam flow to the turbine is
controlled by the main steam and reheat steam inlet valves. The
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HP/IP turbine receives steam from the main steam and reheat steam supply and
converts it to rotational power to drive the generator. The LP turbine receives
steam from the IP exhaust by way of the crossover piping and converts it to
rotational power to drive the generator. The last stage blade design is a model
72R. This design has a 32.1 inch vane section and a 63.4 square foot exhaust
annulus area.
With respect to operational experience, SWPC provided a sample list showing four
existing units of similar configuration but with different loadings or ratings.
SWPC reports an exhaust flow rate of 1,398,070 lb/hr, which leads Stone &
Webster to believe that the exhaust velocity would approach 786 ft/sec. This
rate is within SWPC's experience and is considered by Stone & Webster to be
acceptable. Stone & Webster is of the opinion that the steam turbine design is
acceptable and in accordance with standard industry practice.
3.6 Electric Generator
The three electric generators are designated by SWPC as model 2-97x134. The
generators will be hydrogen inner-cooled synchronous 3600 rpm, 60 Hz machines
rated at 288,000 kVA at 16 kV. The generators will be designed for a leading
power factor of 0.95 and a 0.90 lagging power factor at the generator terminals
at 60 psig hydrogen gas pressure. The generators will have Class F insulation
with Class B temperature rise for both the stator and the rotor. The generators
will have a short circuit ratio of 0.53 at nominal capacity and are to be
fabricated in accordance with ANSI standards C50.10, C50.13, and C50.14, as
appropriate.
Despite the fact that the generator, as described in the EPC Contract, utilizes
a design with little operating experience, it appears to be sized properly. The
proposed generator was first utilized on the Hines Energy Project for Florida
Power Corp. (2 x 2 x 1 - combined cycle) and is expected to begin commissioning
in early 1999. According to SWPC, thirteen generators of this design have been
sold. The generator design (2-97x135) from which the proposed generator was
developed was first introduced in 1958 and was offered until 1975. A total of 26
units were sold ranging from 200 MVA to 270 MVA. Stone & Webster is of the
opinion that the generator design is acceptable and in accordance with standard
industry practice.
3.7 Balance of Plant Systems
Stone & Webster reviewed the general configuration of the Facility balance of
plant ("BOP") systems identified in this section. These systems although
important do not generally take on as high a degree of risk significance as the
main power island, which consists of the combustion turbines, HRSGs, and the
steam turbine. Stone & Webster's BOP system review focused on ensuring that the
specific system designs were consistent with standard industry practice.
As is typical of a project at this phase in design, the detailed system and
component technical information that is developed during the detailed design
phase and is required to independently verify a system's capabilities was not
available for Stone & Webster's review. The conceptual
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description of the BOP systems and Stone & Webster's opinions are described in
the following sections.
In general, Stone & Webster is of the opinion that the BOP systems described
below are consistent with standard industry practice and any individual issues
identified during our review are presented in their respective sections. AES
Ironwood has informed us that after the individual system and component vendors
have been selected and the individual system designs and component
specifications are available, the Project will conduct a detailed BOP design
review to ensure compliance.
3.7.1 Condensate and Feedwater System
The condensate and feedwater systems are auxiliary systems supporting the HRSG.
Condensate is collected in the hotwell of the condenser and pumped by two of
three 50% capacity pumps to the suction side of the feedwater pumps. Each HRSG
is equipped with one 100% capacity feedwater pump that delivers feedwater to the
HRSG. The feedwater pumps will be either split-case or segmented ring section
design. The pump is electric motor driven and is located adjacent to the HRSG. A
demineralized condensate water storage tank is provided to allow for 12 hours of
base load operation.
The condenser will have titanium tubes and will consist of two segregate shells
with the hotwells connected by an equilibrium line. The condenser will be
designed to accommodate the exhaust from the steam turbine plus the
miscellaneous drains from the steam system and to allow for 100% steam bypass of
the steam turbine.
The single feedwater pumping system configuration proposed for the Project is
becoming widely used in combined cycle plants, as the cost of the
reconfiguration generally outweighs the assumed benefit. Stone & Webster has
been informed that the single pump configuration is part of the SWPC reference
plant design. The current configuration is such that the failure of either of
the feedwater pumps will result in shutting down the corresponding combustion
turbine, its associated HRSG, and the power loss associated with losing
approximately half of the steam input to the steam turbine. Stone & Webster has
recommended increased feedwater pump redundancy. As a result, the Project has
committed to carrying one complete spare pump, including casing in store plus
normal spares. This will reduce the equipment outage and downtime associated
with a feedpump failure.
3.7.2 Cycle Makeup System
The cycle makeup system supplies and stores demineralized water for makeup to
the HRSG and also supplies water for the combustion turbine water injection and
water washing. The system consists of one condensate storage tank, two 100%
capacity cycle makeup pumps designed for normal makeup to the cycle when water
is not being injected into the combustion turbine, and one
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100% capacity pump designed to handle makeup to the unit including water
injection to the combustion turbine.
The water supply to the system is provided from the cycle makeup treatment
system. The demineralized water from the mixed bed exchangers discharges to the
condensate storage tank. Two 100% capacity cycle makeup pumps are provided for
normal system operations without water injection to the combustion turbine. The
cycle makeup pumps take suction from the condensate storage tank. An automatic
recirculation control valve is provided for each cycle makeup pump for minimum
flow recirculation to prevent overheating and cavitating the pumps during
startup and low flow operation.
The system is designed to provide makeup water under all normal operating
conditions. The two 100% cycle makeup pumps are sized to provide adequate flow
and pressure for normal system operations. The single 100% capacity cycle makeup
pump is designed to provide adequate water flow and pressure. The intention is
to use the pump during combustion turbine water injection operation.
3.7.3 Condenser Air Removal System
The condenser air removal system evacuates the condenser steam space of
noncondensable gases during steam turbine generator operation and rapidly
reduces the condenser pressure from atmospheric pressure during plant startup.
The vacuum breaker valve allows air to enter the condenser to reduce the coast
down time of the steam turbine generator after shutdown. The system will consist
of two stage, twin element steam jet air ejectors with inter and after
condensers for holding operation, a hogging steam jet air ejector for startup,
and one vacuum breaker valve.
3.7.4 Raw Water System
The Facility raw water requirements will be supplied from the Pennsy Supply
quarry pits located adjacent to the site and the WWTP located approximately 6.5
miles west of the site. A waterline and pumping equipment will be constructed as
part of the EPC Contract will transport the raw water from the Pennsy Supply
quarry pits. The WWTP supply will be transported by way of a pumping station and
an 18-inch diameter pipeline.
The raw water system provides water for cooling tower makeup, cycle makeup,
evaporative cooler supply, fire water and miscellaneous plant services such as
washdown. The raw water system consists of the following major components:
quarry water supply, WWTP water supply, two 100% (1500 gpm each) raw water
forwarding pumps, raw water/fire water storage tank, and the associated piping,
valves, and instrumentation.
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3.7.5 Circulating Water System
The circulating water system will consist of two 50% capacity circulating water
pumps, a double shell water-cooled condenser, and a direct contact, mechanical
draft cooling tower. Water from the cooling tower basin will be pumped by the
circulating water pumps to the condenser and then to the cooling tower in a
single pressurized piping circuit. The heated cooling water will be cooled in a
mechanical draft, direct contact cooling tower. The underground circulating
water piping will be welded steel pipe with an internal epoxy coating and an
external asphalt blanket and the above ground piping will be uncoated carbon
steel.
The circulating water pumps will be designed in accordance with requirements of
the Hydraulic Institute Standards, and the condenser will be designed in
accordance with the requirements of the Heat Exchange Institute Standards for
Steam Surface Condensers. The design capacity of each circulating water pump
will be based on 50% of the circulating water flow at the contract plant
performance guarantee points, rounded to the next higher 1000 gpm.
The cooling tower will be a wood frame, counterflow mechanical draft cooling
tower constructed on top of the concrete cooling tower basin or at SWPC's option
a concrete tower structure may be used. Each of the two pumps takes suction from
the cooling tower basin and discharges into a common circulating water header.
This main header is divided into smaller headers, which feed the condenser and
auxiliary cooling water system. The heated discharge from each header is
recombined and the heated water is returned to the cooling tower. At the cooling
tower, the return line is divided into equally sized lines, each of which
services one cooling tower cell. The circulating water pump pit will be located
at the end of the basin. A trash rack, removable for cleaning, will be located
upstream of the circulating water pump pit to protect the circulating water
pumps from debris in the cooling tower basin. The tower also includes a fire
protection system and a lightning protection system.
3.7.6 Auxiliary Cooling Water System
The auxiliary closed loop cooling water system will supply cooling water for
various equipment heat exchangers. The system will consist of two 100% capacity
auxiliary cooling pumps, two plate and frame type closed cooling water heat
exchangers, and the associated piping, valves, piping and instrumentation.
The auxiliary cooling water pumps supply water to the Facility's various cooling
loads. The heated cooling water flows to the closed cooling water heat
exchanger, which is cooled by circulating water from the open loop. The loop is
completed as the cooled water flows to the suction of the auxiliary cooling
pumps.
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3.7.7 Fire Protection Systems
Fire protection is provided by a ring header, hydrants and hose stations
supplied from the raw/fire water tank. The fire protection system gives a visual
indication of actuation at the local control panel. There are two independent
systems. An automatically actuated dry chemical type system is provided for the
exhaust bearing area of the turbine. The system consists of temperature sensing
devices, spray nozzles, dry chemical tank, and interconnecting piping and
wiring. In accordance with the U.S. National Fire Protection Agency ("NFPA")
standards there is an FM-200 based fire protection system for total flooding
protection of the turbine enclosure and the electrical and control units. .
3.7.8 Wastewater System
The Facility wastewater system will be designed as a zero discharge system
("ZDS") to eliminate liquid waste streams. All treated wastewater to the
Facility will be discharged as cooling tower evaporation or vapor through
Facility vents. The solids, in the waste water or introduced as chemical
additives, will be removed by the system which will first concentrate the waste
and then produce a chemical precipitate which is filtered to dryness for
ultimate disposal in a landfill. AES Ironwood represents that the sludge, which
has a high proportion of calcium carbonate, has commercial use as feed stock for
FGD systems. AES Ironwood is currently negotiating a commercial agreement to
sell the sludge and avoid landfilling.
Stone & Webster understands that the Project is still evaluating options for the
design of the ZDS and that SWPC has offered the Project alternative ZDS systems.
The maximum requirements for the ZDS system will be experienced when the
Facility is operating at full load on fuel oil during the winter months. The
alternatives being evaluated depend on whether the proposed design is based on
normal gas operations or on oil operation. If the Project accepts the gas
option, then it will be responsible for obtaining portable demineralizer
trailers to meet the oil fired case requirements. The Project is examining
proposals for portable demineralizers with second pass RO units. These proposals
would ensure at least 100 hours operation per demineralizer trailer between
regenerations. The Project expects to resolve this issue in early 1999. The
Project has been advised by SWPC that the net power guarantee includes the net
parasitic load for the ZDS. AES Ironwood represents that once a system design
has been selected, it will be reviewed to ensure operational conformance.
Stone & Webster also understands that SWPC has proposed the use of one 100%
brine concentrator and one 100% crystalizer. The vendor selection of these two
key components should emphasize equipment reliability due to the lack of
redundancy in this key system.
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3.7.9 Compressed Air System
The compressed air system will supply compressed air at the required capacity
and pressure for service air and instrument air requirements. The instrument air
system supplies dry instrument quality air at the required pressure and capacity
to all pneumatic controls, transmitters, instruments, and valve operators. The
system will consist of two 100% capacity, air cooled, motor driven air
compressors, one service air receiver, one instrument air receiver, and two 100%
skid mounted refrigeration type air dryers, with electric motor driver and two
coalescing filters for each dryer. The instrument air will be designed to
conform to the Instrument Society of America ("ISA") Quality Standards for
Instrument Air. During normal operation, either air compressor can provide
compressed air to the system.
3.7.10 Compressed Gas Storage System
The compressed gas storage system will consist of the hydrogen gas system, the
carbon dioxide system, and the nitrogen system. The hydrogen system supplies
hydrogen gas to the hydrogen cooled generators. The carbon dioxide system stores
and transfers carbon dioxide gas to the generator cooling and purge systems for
generator purging. The nitrogen system supplies nitrogen for inerting the HRSGs
and main cycle piping during an extended outage. The compressed gas system will
consist of a hydrogen tube trailer, hydrogen valve manifold, carbon dioxide
valve manifold, a nitrogen valve manifold, and the associated piping and
instrumentation.
3.7.11 Ammonia Storage and Forwarding System
The ammonia storage and forwarding system will store and supply ammonia for the
SCR. The system will consist of two 10,000 gallon aqueous ammonia storage tanks,
one for each HRSG, that provide approximately a seven day supply of ammonia, two
ammonia forwarding pumps, an ammonia injection skid, and associated piping and
instrumentation.
3.8 Fuel Systems
The Facility will be designed with natural gas fuel as the primary fuel for the
combustion turbines with fuel oil as the backup fuel supply. It is projected
that the Facility will operate a majority of the time on natural gas but may
operate up to 31 days per year on fuel oil pursuant to the terms of the PPA. The
Project pro forma financial model assumes 12 days operation on fuel oil during
the PPA period based on estimates by CC Pace, the Project's independent fuel
consultant. The PPA incorporates the natural gas and fuel oil specifications
consistent with EPC Contract specifications.
With respect to natural gas pressure, the EPC Contract assumes that the natural
gas line is able to supply a minimum of 450 psig at the Facility boundary. The
PPA defines natural gas as being at
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a pressure equal to the pressure on the Texas Eastern pipeline, data from the
pipeline demonstrates that the pressure is generally in excess of 700 psig.
3.8.1 Fuel Gas System
The fuel gas system receives natural gas supplied from the natural gas supply
pipeline at the Facility boundary and transports it to the combustion turbines.
The system will consist of the fuel gas filter separators provided locally at
each combustion turbine, fuel gas heater, knock out drums, and associated piping
and instrumentation.
Natural gas will be supplied to the system by a natural gas pipeline to a single
connection located at the Facility boundary. A shutoff valve and duplex strainer
will be provided in the gas supply piping. Individual fuel gas heaters will be
provided for heating the fuel gas supply to the respective combustion turbines.
Natural gas fuel will be heated using IP feedwater to approximately
440(degrees)F. A liquid separator/leak detector will be installed downstream of
the fuel gas heater to detect any water in the gas supply resulting from a
leaking fuel gas preheater. On detection of fuel gas heater leakage, the
isolation valves will close and a bypass valve will open automatically to
isolate and bypass the fuel gas heater. Control valves provided with the
combustion turbine packages will regulate gas pressure to the combustion turbine
fuel nozzles. A valving arrangement will provide positive isolation of the fuel
supply system at the combustion turbine. The fuel gas supply pressure required
for the combustion turbines will be at least 650 psig at the combustion turbine
connection. If required, the combustion turbines can be switched over from
natural gas to fuel oil online without shutting down the Facility.
3.8.2 Fuel Oil System
The fuel oil system receives, stores, and transports fuel oil for operating the
combustion turbines. The fuel oil system consists of one 2,300,000 gallon fixed
roof fuel oil storage tank on a ring wall foundation, a fuel oil tank truck
unloading area, a fuel oil truck unloading skid, air eliminators, and
accessories including flame arrestor with conservation vent, fuel oil metering
skid, and a lined berm containment.
Fuel oil will be delivered to the site by truck and unloaded at the unloading
station to the fuel oil storage tank. Duplex fuel oil strainers will be provided
at the inlet to the unloading station. An air eliminator and flow totalizing
meter will be provided at the discharge of the unloading station to verify fuel
oil deliveries. The fuel oil storage tank will be a cone roof, double wall with
double bottom carbon steel tank on a ring wall foundation. The fuel oil storage
tank will be constructed in accordance with American Petroleum Institute ("API")
Standard 650.
Fuel oil will be supplied to the fuel oil forwarding pumps from the fuel oil
storage tank. The fuel oil forwarding system will be equipped with two 100%
capacity forwarding pumps. Fuel oil pressure and flow to the combustion turbines
will be controlled by a recirculation valve in the
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combustion turbine fuel oil skid which will control the fuel oil supply pressure
by recirculating fuel back to the fuel oil storage tank.
3.9 Electrical Systems
Stone & Webster reviewed the general configuration of the Facility electrical
systems identified in this section. Stone & Webster's electrical system review
focused on ensuring that the individual system designs were consistent with
standard industry practice. As is typical of a project at this phase of design,
the detailed system and component technical information that is developed during
the detailed design phase and is required to independently verify a systems
capabilities was not available for Stone & Webster's review. The conceptual
description of the electrical systems as well as Stone & Webster findings are
provided in the following sections.
In general, Stone & Webster is of the opinion that the electrical systems
described below are consistent with standard industry practice. AES Ironwood has
stated that when the individual system and component vendors have been selected
and the individual system designs and component specifications are available, a
design review will be conducted by the Project to ensure compliance.
3.9.1 Normal Station Service Power
Two station auxiliary transformers will provide power from the switchyard to the
Facility auxiliary loads. Station auxiliary transformers step down the voltage
from 230 kV to 6.9 kV to 480 V and lower voltage levels suitable for equipment
needs. A medium voltage switchgear bus will supply power to medium voltage
motors, and medium to low voltage transformers. These transformers feed low
voltage switchgear, motor control centers, and other loads.
3.9.2 Emergency Power
Emergency power systems also exist to assist Facility operations. The emergency
systems include uninterruptible power supplies and direct current ("DC") power.
Uninterruptible power and DC/battery power are provided for equipment that must
operate under all conditions, such as lube oil pumps and turning gear to ensure
a proper cool down process of the turbines during an emergency trip. The
Facility does not have black start capability. Startup of the Facility is by way
of electrical backfeed through the station auxiliary transformer off the 230 kV
utility grid system.
3.10 Switchyard
Electrical power generated through the combustion turbine and steam turbine
generators at 16 kV is transformed to 230 kV for delivery to the switchyard. The
Facility will electrically interconnect with the PJM electrical system through
an existing MET-ED 230 kV transmission line located
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<PAGE>
approximately 0.25 mile to the west of the Facility which will tie into the
Facility's switchyard.
Three main transformers will be provided for this service. The combustion
turbine generators and the steam turbine generator will be connected to its own
two winding, oil filled step up transformer which increases the voltage from the
generator terminals to the interconnecting voltage at the high side terminals.
Synchronization and protection of the combustion turbine generator and the steam
turbine generator are achieved by power circuit breakers in the switchyard.
These circuit breakers isolate the power generating station from the
interconnecting system. The combustion turbine generators and steam turbine
generator will be connected to their step-up transformers by an isolated phase
bus duct.
The switchyard will have a 230 kV conventional, outdoor, open air, radial design
featuring a provision for two outgoing transmission lines. The switchyard will
extend from the high voltage terminals of the generator step-up transformers and
station auxiliary transformers to the interface with MET-ED's two outgoing
transmission circuits. The transmission line protective relays and the remote
terminal units ("RTUs") that will interface with the Transmission/Distribution
Control Center and the Energy Control Center will be provided by MET-ED. This
equipment will be installed in the switchyard control building.
The EPC Contract states that optional switchyard arrangements, metering, and
protective relaying schemes can be provided and that SWPC will work with the
Project and MET-ED to establish the specific requirements for the switchyard and
Facility interfaces with MET-ED. The switchyard requirements will also be
further defined as part of the Project Interconnection Agreement, which is
currently under negotiation between AES Ironwood and GPU Energy, Inc. ("GPU").
3.11 Instrument and Control Systems
Stone & Webster understands that the original Project instrument and control
system design was based on the Westinghouse Distributed Processing Family
("WDPF") Control System. Since the Westinghouse Power Generation acquisition by
Siemens, SWPC now utilizes and would prefer to provide to the Facility a Siemens
Control System. Stone & Webster believes that either of these two systems would
be acceptable and in accordance with standard industry practice.
3.12 Civil and Structural Design
The Project's civil and structural design parameters have been appropriately
specified in accordance with the geotechnical investigations conducted on-site
to date, as well as applicable engineering codes and standards relating to the
type of construction proposed at the site. It is noted that SWPC has accepted
the risk of any additional foundation requirements as necessary based on a
detailed geotechnical investigation to be performed during the detailed design
phase of the Project. The structural design criteria outlined in the EPC
Contract appear adequate to comply with the Project requirements. The materials
of construction specified in the building
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finish schedule are appropriate for the intended application. The minimum
required strength of materials, stipulated in the design criteria, are
consistent with industry standards. The established loadings and maximum design
conditions comply with the referenced codes, site development requirements and
foundation design criteria. Stone & Webster are of the opinion that the
structural design is reasonable and adequate for operation of the Facility as
contemplated in the Project Agreements.
3.12.1 Geotechnical Evaluation
The bedrock units beneath the site are dolomite and limestone. Sinkhole
development has been identified near the site area. Laboratory testing was
performed to classify the soils. The geotechnical investigation indicated that
the subsurface soils are very soft to very stiff residual soils, which are
overly poor to moderate quality dolomite bedrock. The residual soils are
classified as high plasticity sandy clays and silts. The thickness of the
residual soil varies; however, the soil deposit is generally about 20 feet deep
in the site area. The exploration borings and resistivity surveys indicate that
the underlying bedrock is highly variable in quality and depth. The bedrock
surface is expected to be quite variable and have high points, due to the
weathering characteristics of the carbonate bedrock units. Exploration borings
and probe holes were drilled in suspect solution areas that were identified by
the resistivity survey. No large underground solution cavities or clay filled
features were identified to the depths explored at the location of critical
structures.
Blasting operations at the Pennsy Supply quarry adjacent to the site can be
performed within 25 feet of the property line. Pennsylvania law limits the
blasting. In addition under the EPC Contract, SWPC acknowledges that prior to
the execution of the EPC Contract SWPC has made a complete and careful
examination of the nature and character of the soils and terrain of the site
that might affect SWPC's ability to construct the Facility.
Stone & Webster believes that the exploration and testing programs were
conducted in accordance with good engineering practice and were appropriate for
the planned Facility and anticipated site conditions. Stone & Webster is of the
opinion that the Project site is suitable for the Facility provided that the
site construction is performed incorporating the recommendations of the Schnabel
Report of September 1998. These recommendations are discussed in Section 3.12.5
of this report.
3.12.2 Groundwater
Groundwater was not encountered during the drilling at the test boring
locations. Based on these observations, the groundwater level is believed to be
below the depth of the excavations proposed for this Project. Groundwater is
present at a depth below the site and dewatering operations at the adjacent
Penney Supply quarry presently controls the level.
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<PAGE>
3.12.3 Water Supply
Stone & Webster reviewed a number of documents in its evaluation of the
availability of raw water to the Project including: the approvals from the
Susquehanna and Delaware River Basin Commission, the Final Hydrologic Analysis,
Availability of Groundwater from the Pennsy Supply Quarry, Proposed Ironwood
Power Plant, Lebanon, Pennsylvania by Schnabel Engineering Associates, February
26, 1998, and the Application for Water Withdrawal for AES Ironwood Power Plant,
Submitted to the Delaware River Basin Commission and the Susquehanna River
Basin, by TRC Environmental Corporation, April, 1998.
The make-up water supply for the Project will be obtained from the WWTP and from
the current dewatering operations at the adjacent Pennsy Supply quarry. Under
normal operating conditions, 1.44 MGD of water from the WWTP will be pumped to
the Facility through a pipeline. The remaining 2.16 MGD of water required by the
Facility will be obtained from the quarry dewatering operations. When the
Facility is operating on fuel oil, 2.16 MGD of water may be diverted from the
WWTP and the remainder 2.16 MGD will be obtained from the quarry dewatering
operations.
A review of documents provided to Stone & Webster indicates that an adequate
make-up water supply is available to meet the Facility generation demands. The
split for providing make-up water from both the WWTP and the Pennsy quarry
satisfies the river basin commissions environmental requirements. Approval has
been obtained from the Delaware River Basin Commission on April 24, 1998 and the
Susquehanna River Basin Commission on June 9, 1998 for this proposed make-up
water supply approach.
Should quarry operations cease in the future or supply from the WWTP need
adjustment, an adequate make-up water supply could be obtained from groundwater
sources at or near the site or pumped from a flooded quarry. New agreements with
the commissions would have to be worked out at that time and are considered by
Stone & Webster to be attainable, if they are required.
3.12.4 Site Grading and Drainage System
The site grading and drainage system will be designed to comply with all
applicable federal, regional, and local regulations. Topographic modifications
to the site area may be required to provide positive overall drainage. Surface
drainage onsite will consist of overland and open channel flow. Channels and
ditches will generally be trapezoidal in cross section, of sufficient width to
facilitate easy cleaning, and mildly sloping so that erosion is prevented. The
storm drainage system will be designed for a rainfall intensity of five inches
per hour. Site specific drainage facilities will be designed for the flow
resulting from a 25 year rainfall or regional and local code requirements,
whichever is greater. The Facility main complex area will be moderately graded
for effective drainage.
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3.12.5 Foundations
The site is considered suitable for development of the Project. The proposed
structures can be placed on mat or spread foundations. Recommendations are
provided in the Schnabel Report for deep and shallow foundation systems. The
Schnabel Report recommends that foundations for the larger, heavier structures
be supported on compacted dense graded crushed stone structural fill. All
residual soil and boulders should be removed beneath the foundation area.
Placement of the structural fill will start at the contact with the weathered
bedrock or very hard residual soil. An allowable bearing pressure of 10,000 psf
is expected for structures supported in this manner. Adequate quantities of
quality structural fill materials are available from the rock quarries in the
vicinity of the site.
The support buildings and other lightly loaded structures can be supported on
spread foundations on suitable stiff to hard natural soils or compacted fill,
using an allowable bearing pressure of at least 2,000 psf. The above ground
storage tanks can be supported on the stiff to hard residual soils, weathered
rock, or structural fill.
The exploration program indicates that some rock excavation may be required for
installation of the circulating water lines. The Schnabel Report also includes
recommendations for site preparation and inspections that should be performed
beneath critical structures to preclude development over an area of potential
solution activity. Subsequent to the date of the Schnabel Report, SWPC obtained
additional data on quarry blasting operations and has indicated that it is
revising its foundation design criteria to reflect that additional data.
3.12.6 Stack
The common stack height will be 175 feet and is to be constructed in accordance
with ASME/ANSI standards and will be made from carbon steel. The location of
test ports and sampling platform will meet USEPA siting criteria of 40 CFR 60.
3.13 Interconnections
3.13.1 Fuel Interconnection
The natural gas fuel supply to the Facility will be transported by way of a
pipeline that will be designed to supply a minimum of 700 psig at the Facility
boundary as discussed in Section 3.8 of this Report. Fuel will be supplied to
the Facility by Williams in accordance with the PPA as discussed in Section 5 of
this Report. Williams is responsible for the construction of all gas
interconnection and delivery facilities necessary for delivery of natural gas.
Pipeline permitting, design, and construction is also the responsibility of
Williams. The fuel oil will be supplied by truck, and a two-day supply will be
stored in the Facility's fuel oil storage tank.
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<PAGE>
Williams has executed certain agreements with TETCO to provide natural gas
delivery services to the Facility. These agreements require TETCO to construct
own and operate an approximate three-mile pipeline from the TETCO mainline to
the Facility. Under these agreements, TETCO is required to have the lateral
completed by September 1, 2000. Stone & Webster has not independently verified
the design of the pipeline, however we know of no reason why Williams should be
unable to perform its obligations under the PPA.
3.13.2 Electrical Interconnection
The Project electrical interconnection design was previously discussed in the
Switchyard Section of this Report. In addition, Stone & Webster reviewed
available information to assess the general feasibility (from an electrical
standpoint) of integrating the Project into the PJM power transmission system.
The review focused on assessing whether there were additional steady-state
transmission constraints, which could be attributed to the Project. The review
relied primarily on information in the public domain provided by the
Mid-Atlantic Area Council ("MAAC") reliability council of the North American
Electric Reliability Council ("NERC") in filings before the FERC. The MAAC
region consists of 15 full time members and 31 associate members serving over 22
million people in a 48,700 square-mile area. The region includes all of Delaware
and the District of Columbia, major portions of Pennsylvania, New Jersey, and
Maryland, and a small part of Virginia. All utilities in the PJM system are a
part of MAAC. In particular, the following information, submitted to the FERC as
part of the 1998 Form 715 filing, was reviewed:
o Transmission planning reliability criteria of the MAAC region
(Part 4 of Form 715)
o Transmission planning assessment practices of MAAC (Part 5 of Form
715)
o Evaluation of transmission system performance of the MAAC system
(Part 6 of Form 715)
o Transmission planning reliability criteria of the GPU utilities
(Part 4 of Form 715)
o Transmission planning assessment practices of the GPU utilities
(Part 5 of Form 715)
o Evaluation of transmission system performance of the GPU utility
system (Part 6 of Form 715)
o Load flow simulations of the MAAC system for the following
conditions: (1) 1998 summer, (2) 1998/99 winter, (3) 1999 summer,
(4) 1999/2000 winter, (5) 2002 summer, (6) 2002/03 winter, (7)
2007 summer
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<PAGE>
Stone & Webster also reviewed a report titled "Reliability Assessment
1998-2007", prepared by NERC and dated September, 1998, and a letter report from
GPU to AES Ironwood dated February 4, 1999, regarding the results of system
studies (the "System Study Report").
The Project was modeled by GPU in the planning of its transmission system for
the period 1998-2007 and simulated in all load flow cases for years 2002 and
beyond, but not before, since: (1) FERC Form 715 instructions explicitly
indicate that load flow cases that are submitted as part of the filing should be
those "regularly used by the utility in its own planning", and (2) the Project
is scheduled to come on-line in 2001. Thus, 2002 is the first year in which the
Project appears in the simulations.
The Project is modeled in the load flow cases as three separate generators (at
buses 1736 "AES-GEN1", 1737 "AES-GEN2", and 1738 "AES-GEN3", all at 230 kV).
These buses are in turn connected to the Prescott 230 kV bus, and from there to
the South Lebanon and Jonestown 230 kV buses (1163 and 1175, respectively). In
all cases (i.e., summer and winter), each unit is modeled as generating 212 MW,
for a combined production of 636 MW. The generators are in area 27 of the load
flow (area "MET-ED"), which in year 2002 exports about 246 MW.
GPU has represented that it has confirmed that the transmission system will
accept the Facility output of up to 662 MW (summer) and 797 MW (winter).
Based on this representation, Stone & Webster is of the opinion that the Project
can be feasibly integrated into the PJM system and that no known transmission
limitations will inhibit the feasible evacuation of the Project's full net
capacity both under summer and winter conditions.
3.13.3 Water Interconnection
The Project has agreements in place to draw water for cooling the Facility from
two independent sources. The Pennsy Supply quarry, located directly adjacent to
the Project site on Prescott Road, and an agreement with the City of Lebanon
Authority to use treated effluent water from their facility, located on Ridge
View Road. Access to both water sources will be designed and constructed to
serve the full Facility needs from either or both sources. An approximately 6.5
mile pipeline will be designed and constructed to transport the water from the
WWTP to the Facility.
In order to construct the pipeline, which will be owned and operated by the
Authority, Rights-of-Way ("ROW") must be acquired from eleven landowners. The
ROWs provide the Project with the permission to utilize the various landowners'
property to construct the pipeline beneath the surface of the property. Most of
the ROWs are represented to be within an already-existing utility easement.
Gannett Fleming, Inc. has surveyed all the properties and the Project has
secured ten of the eleven ROWs. The last ROW is expected to be secured in June
1999.
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<PAGE>
Applications for the road crossings, county occupancy permits, and railroad
crossings have been submitted and are currently awaiting approval.
Stone & Webster will independently verify the design of the pipeline when it
becomes available. The proposed construction schedule appears to be reasonable
and achievable. We do not know of any reason why the Authority should be unable
to perform its obligations under the ESA.
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<PAGE>
4. Environmental and Permitting
4.1 Environmental Site Assessment
Stone & Webster reviewed the Environmental Site Assessment of Martin/Ziegler
Property and the Environmental Site Assessment and Preliminary Asbestos Survey
of RESCO Products Property by TRC Environmental Corporation, of March 1998 and
April 1998. The assessment for the Martin property revealed no evidence of
recognized concerns to the subject property. The only environmental condition
identified for the RESCO Products property is the presence of asbestos in two
roofing materials; the tar coating of the Butler Building/add-on roof and the
roof tar paper of a small attached shed at the rear of the Butler Building.
Removal of these structures and the asbestos is not considered to be a major
environmental issue. Both property locations may have radon presence in
groundwater that might be obtained from wells. Radon is characteristic of the
geologic units in the area for groundwater wells.
The past and present land use of these properties and the adjacent properties
are not anticipated to create any conditions that would result in a major
environmental concern. Groundwater beneath the Project site area drains into the
adjacent quarry and is presently pumped to surface drains. No contamination has
been identified within this groundwater regime.
Stone & Webster is of the opinion that the assessments reviewed were performed
in accordance with standard industry practice and their results appear
reasonable.
4.2 Permitting
The EPC Contract (Appendix F) sets forth a list of applicable permits and
approvals that are required by federal, state, and local agencies. This list
also identifies who is responsible for obtaining the permit or approval. The
Project has represented that this list is comprehensive and that no other
permits other than possibly some ministerial permits are required for the
construction and operation of the Project.
SWPC and AES Ironwood are individually or jointly responsible for obtaining the
permits and authorizations described in the following table. Stone & Webster has
relied upon the Project to confirm that all necessary permits or authorizations
have been identified and that the permits have either been obtained or will be
granted in a timely manner without adversely affecting the Project's schedule.
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<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================
Applicable Permits and Approvals
====================================================================================================================
Agency Applicable Permits Status
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Federal Energy Regulatory Exempt Wholesale Generator Issued March 29, 1999
Commission Certification
- --------------------------------------------------------------------------------------------------------------------
PaDEP PSD/State Air Permit Final March 29, 1999
- --------------------------------------------------------------------------------------------------------------------
U.S. Dept. of Energy, Office Fuel Use Act Certification Approved
of Fossil Energy
- --------------------------------------------------------------------------------------------------------------------
PaDOT Roadway Access Permits from Approved
Prescott Road to site
- --------------------------------------------------------------------------------------------------------------------
PaDEP NPDES, PAG-2 Approved
- --------------------------------------------------------------------------------------------------------------------
PaDEP NPDES General Permits #4, # 4 #5 Approved
#7
- --------------------------------------------------------------------------------------------------------------------
PaDEP NPDES Part 1 Construction Approved
- --------------------------------------------------------------------------------------------------------------------
Pa Dept of Labor and Industry Onsite Oil Storage Tank Part of
(1) Permission to construct SWPC Construction Permit
(2) Permit for construction
- --------------------------------------------------------------------------------------------------------------------
Delaware River Basin Water Use Approval as per Section Approved
3.8 of DRDC regulations
- --------------------------------------------------------------------------------------------------------------------
Susquehanna River Basin Water Use Approval Approved
Commission
- --------------------------------------------------------------------------------------------------------------------
Lebanon County Soil Erosion and Sediment Control Approved
Conservation District Approval
- --------------------------------------------------------------------------------------------------------------------
Conrail/Norfolk Southern Railroad Crossing Approval and Approval Agreements Pending
Railspur Construction
- --------------------------------------------------------------------------------------------------------------------
Lebanon Zoning Hearing Stack Height Variance Approval for Approved
Board Power Plant
- --------------------------------------------------------------------------------------------------------------------
South Lebanon Board of Land Development Approval for Approved
Supervisors Power Plant
- --------------------------------------------------------------------------------------------------------------------
South Lebanon Board of Subdivision Approval for Access Approved
Supervisors Road
- --------------------------------------------------------------------------------------------------------------------
South Lebanon Onsite septic approval for sanitary Conceptually Approved
Township/Lebanon County discharge
- --------------------------------------------------------------------------------------------------------------------
City of Lebanon Authority Agreement for Supply of treated Approved
effluent and construction, operation
and maintenance of pipeline
- --------------------------------------------------------------------------------------------------------------------
Lebanon County Building Permit To be acquired prior to construction
Planning Department
- --------------------------------------------------------------------------------------------------------------------
Federal Aviation Notice of Alteration or Proposed Approved
Administration Construction for AES Ironwood
Facility Stack
====================================================================================================================
</TABLE>
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<PAGE>
Stone & Webster is of the opinion that the permits and authorizations that have
been granted are consistent with the Project's present phase of development.
Stone & Webster has reviewed the permits and approvals identified in this
section. Stone & Webster is of the opinion that if this facility is constructed,
operated and maintained in accordance with the terms of the EPC Contract, PPA,
and the Maintenance Services Agreement, and if the natural gas and fuel oil
provided by Williams are within the quality limits specified in the EPC
Contract, then it is reasonable to assume that the Project should satisfy the
permit limitations of the issued permits and have a useful life beyond the final
maturity date of the Bonds.
Stone & Webster notes that the quantity of ammonia to be stored on site (two
10,000 gallon tanks of aqueous ammonia) is sufficient to subject this Facility
to the risk management and reporting programs administered by the EPA and OSHA.
However, compliance with these programs should not have any effect on either
project cost or schedule.
4.2.1 Prevention of Significant Deterioration Permit
The Project submitted the Prevention of Significant Deterioration Permit ("PSD")
air permit application forms to the Pennsylvania Department of Environmental
Protection ("PaDEP") in May 1998 as part of the Plan Approval Application for
the AES Ironwood Facility (the "Plan Approval Application"). The application was
deemed complete in August 1998, a draft PSD Air Permit was issued on December
23, 1998 and a public hearing was held on February 18, 1999. The final PSD Air
Permit was issued to AES Ironwood on March 29, 1999.
The application form sets forth atmospheric emissions limits for NOx, CO, and
volatile organic compounds ("VOC") which are consistent with or above the EPC
Contract emissions warranties. With respect to VOC and particulate matter
("PM"), the permitted emissions will be based upon stack test results and/or
vendor guarantees. Emissions of SO2 will be determined by fuel sulfur sampling
and mass balance calculations.
The Plan Approval Application includes a summary of proposed permit limits.
Stone & Webster reviewed the Pennsylvania modified Chapter 139 PM sampling
protocol report of 1998 which reports only the "front-end" portion of the
sampling train emissions. AES Ironwood's environmental consultant also advised
Stone & Webster that the calculated permit limits for ammonia salts (from the
SCR) are to be included in the total emissions of PM. These amounts are
reflected in the emission tables provided to TRC by SWPC for the 501G emissions.
We believe that this is a conservative approach to estimating the emissions as
measured under the current Pennsylvania PM sampling protocol as represented by
AES Ironwood's environmental consultant.
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<PAGE>
Although the manufacturer for the SCR system has yet to be selected, Stone &
Webster has reviewed the design criteria for the SCR system, discussed the
emissions testing performed on the 501G combustor nozzles with SWPC, and
analyzed the similarities in the turbine firing temperatures of the 501F and
501G gas turbines. Based on these actions coupled with our knowledge of the 501F
gas turbine, Stone & Webster believes that the 501G will be able to achieve and
maintain compliance with the Project's Air Permit during full load operation.
The PSD Permit expires on June 30, 2002, by which time AES needs to have
completed construction, start-up, commissioning, environmental testing and
performance testing, and begun commercial operation. During this period of time,
AES is required to compile its initial emissions testing report and submit an
application to the PaDEP for an "operating" permit. In addition, Condition 3.c
of the PSD Permit authorizes "temporary" operation for a period of 180 days from
the date of "commencement of operation". This 180-day period should be
sufficient for start-up, commissioning, environmental testing, performance
testing and operating permit application compilation and submittal.
4.2.2 Exempt Wholesale Generator Status
AES Ironwood filed for certification of the Facility as an EWG under the
applicable rules of the FERC on February 24, 1999. AES Ironwood has received a
determination that the Facility is an EWG under the applicable rules of FERC.
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<PAGE>
5. Project Agreements
Stone & Webster reviewed the primary contracts and agreements associated with
the Project. These included the PPA, the EPC Contract, the ESA, and the
Maintenance Services Agreement. Stone & Webster reviewed the agreements from a
technical and economic standpoint to assess the adequacy and reasonableness of
their terms and conditions. Legal, financial, and other important aspects of the
agreements associated with the project were not considered under this review.
This Report describes only portions of the Project Agreements as needed for the
discussion of the Facility's related issues. A complete description or legal
evaluation of the contracts and documents related to the Facility is beyond the
scope of this report, and Stone & Webster is not providing legal counsel
opinions regarding the legal interpretation of any contract language. Adherence
to industry standards and good engineering practice was assessed where
appropriate. Provided below is a summary of our findings for each of the
reviewed agreements.
5.1 Power Purchase Agreement
Stone & Webster reviewed the PPA. Certain of the provisions of the PPA are
discussed below. For a summary of the material terms of the PPA, reference is
made to "Description of Project Contracts - Power Purchase Agreement" in the
Offering Memorandum of AES Ironwood with respect to the Bonds to which the
Report is appended (the "Offering Circular").
5.1.1 Term
The term of the PPA is for a period of 20 years after the Contract Anniversary
Date that is the last day of the month in which the Commercial Operation Date
("COD") occurs. If the COD has not occurred prior to June 30, 2001, subject to
the extension as described below except for a Force Majeure or a delay caused by
Williams, Williams has the right to terminate the PPA without liability or
responsibility unless AES Ironwood has either:
o Demonstrated to Williams that the COD will occur no later than
December 31, 2001, or
o Was unable to execute an Interconnection Agreement with GPU. to
maintain the Facility construction schedule ("Interconnect Delay")
In these cases AES Ironwood has the right to extend the COD to December 31, 2001
("Free Extension Option"). In the event the above described conditions are not
met then AES Ironwood has the right to extend the COD to and including December
31, 2001, by giving Williams a written notice of extension no later than April
30, 2001 and paying Williams a specified amount no later than June 30, 2001.
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<PAGE>
In the event AES Ironwood qualifies and elects the Free Extension Option but the
COD does not occur by December 31, 2001 then AES Ironwood can elect to:
o extend the COD up to and including December 31, 2002 by making
certain daily payments, and
o pay Williams an amount equal to the lesser of:
>>actual damages Williams suffers or incurs after December 31,
2001, or up to a specified cap
In the event AES Ironwood qualifies for the Free Extension Option or elects the
First Paid Extension Option and the COD has not occurred prior to December 31,
2001, except for a delay caused by Williams, a Force Majeure delay, or an
Interconnect Delay then Williams has the right to terminate the PPA without
liability or responsibility, provided that AES Ironwood has the right to extend
the final COD to December 31, 2002, by giving Williams written notice of the
extension no later than October 31, 2001, and making Williams certain daily
payments.
In the event AES Ironwood elects the Second Paid Extension Option and the COD
does not occur by December 31, 2002 for any reason except as a result of an
Interconnect Delay, Force Majeure, or a delay caused by Williams, then Williams
has the absolute right to terminate the PPA without liability or responsibility.
The Provisional NTP was provided to SWPC on September 23, 1998 and several
milestones have been achieved to date by SWPC. The Full NTP will occur on or
about June 1, 1999. Pursuant to the terms of the PPA, AES Ironwood has the
option to extend the COD to December 31, 2001 by paying Williams a specified
amount if there is a delay in the June 30, 2001 COD. The Delay in Financial
Closing/SWPC Continued Performance Agreement between SWPC and AES Ironwood
extends the date by which the Commencement Date must occur to June 1, 1999. Not
withstanding the above stated provisions SWPC agreed in a letter to AES Ironwood
dated May 12, 1999 to not exercise its right to suspend its performance of
services between June 1, 1999 and June 21, 1999. The Guaranteed Provisional
Acceptance Date is 23 months and two weeks following full NTP.
Based on the EPC Contract, if SWPC fails to achieve the Provisional, Interim, or
Final a specified amount per day. If Provisional, Interim, or Final Acceptance
occurs six months after the Guaranteed Provisional Acceptance Date, AES Ironwood
would receive liquidated damages, which amount, together with contingencies and
prefunded IDC, is sufficient to cover the amounts AES Ironwood would be required
to pay Williams to extend the COD to December 31, 2001, plus approximately 190
days in debt service after the Guaranteed Provisional Acceptance Date beyond
December 31, 1999. Based on the EPC Contract, the total liquidated damages
associated with a delay in the Guaranteed Provisional Acceptance Date is a
maximum of 20% of the contract price. If the COD is delayed to December 31,
2002, AES Ironwood would receive liquidated damages,
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<PAGE>
which amount, together with contingencies and prefunded IDC, is sufficient to
cover the additional payments to Williams plus approximately one year in debt
service after the Guaranteed Provisional Acceptance Date.
5.1.2 Fuel Conversion and Associated Services
Williams is obligated to supply and transport the fuel (natural gas and fuel
oil) to generate net electric energy, perform start-ups and shutdowns, and
operate the Facility during any period other that during a dispatch period.
Williams is responsible for all costs and expenses related to the supply and
transportation of the natural gas and fuel oil to the fuel delivery point(s).
AES Ironwood is responsible for all costs and expenses related to the supply and
transportation of the natural gas and fuel oil from the fuel delivery point(s)
to the Facility. AES Ironwood is required to provide fuel oil storage capacity
sufficient to operate the plant at full output for at least 2 days. If AES
Ironwood elects to use offsite fuel oil storage, then AES Ironwood is
responsible for arranging transportation to the Facility from that remote
location. AES Ironwood is not obligated to operate the Facility on fuel oil for
more than 31 days or 744 hours per year.
Williams is responsible for the construction of the Gas Interconnection
Facilities. In the event that the Gas Interconnection Facilities have not been
constructed or Williams is unable to deliver gas to the Facility to support the
initial start-up testing, Williams will pay AES Ironwood certain specified
amounts for each day of the delay from the date on which the Facility would
otherwise (but for the absence of gas) be ready for start-up testing until the
gas is delivered to the site.
5.1.3 PPA Payments
Williams will pay AES Ironwood for facility capacity, fuel conversion services,
and ancillary services. Each monthly billing payment is the sum of the total
fixed payment, fuel conversion payment, and the start-up payment. For each month
of the PPA term Williams is responsible to pay AES Ironwood for the fixed
payments for facility capacity, fuel conversion services and ancillary services
at the rates specified in Appendix 1 of the PPA. The PPA also includes certain
heat rate bonus and penalty payments, startup cost payments and penalties
payable by AES Ironwood for failure to be available for dispatch under certain
conditions.
5.1.4 Interconnection and Metering Equipment
AES Ironwood at its cost and expense will design, construct, install, own, and
maintain the Interconnection Facilities and Protective Gas Apparatus needed to
deliver the net electric energy to the electricity delivery point. AES Ironwood
is also responsible for the negotiation and execution of an Interconnection
Agreement with the host utility. The host utility will own and be responsible
for the design, installation, construction, and maintenance of the electric
metering equipment and any transmission equipment and related facilities
necessary to interconnect with
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the host utility at the electric delivery point. Williams is required to
reimburse AES Ironwood up to a specified amount for reasonable costs incurred by
the host utility under the Interconnection Agreement. Williams is responsible
for installing, maintaining, calibrating, and testing the gas and oil metering
equipment. Net electric energy will be metered on an hour-by hour basis at the
metering point. Williams will pay to AES Ironwood the net amount shown on the
monthly statement within 30 days following the end of the applicable billing
month.
5.2 Interconnection Agreement
Stone & Webster reviewed the Interconnection Agreement by and between MET-ED
d/b/a GPU and AES Ironwood. Certain provisions of the Interconnection Agreement
are discussed below. For a summary of the material terms of the agreement,
reference is made to "Description of Project Contracts - Interconnection
Agreement" in the Offering Circular.
In general, Stone & Webster found that the Interconnection Agreement is
comparable to other similar agreements with which Stone & Webster is familiar.
In addition, the technical requirements for operating the transmission
interconnection (Appendix C of the Agreement) and system protection and control
(Appendix D), and for the installation of the interconnection (Appendix E)
appears to be reasonable.
5.3 Engineering, Procurement, and Construction Services
Stone & Webster reviewed the executed EPC Contract between AES Ironwood and
SWPC. Certain provisions of the EPC Contract are discussed below. For a summary
of the material terms of the agreement, reference is made to "Description of
Project Contracts - EPC Agreement" in the Offering Circular.
The EPC Contract is for a 705 MW combined cycle facility to be located in South
Lebanon Township near Lebanon, Pennsylvania. SWPC will provide a Facility which
is intended to have at least a 25-year useful life (when operated and maintained
in accordance with the Instruction Manual, the PPA, and the manufacturers'
recommendations. We believe the EPC Contract scope adequately describes the
services to be performed and is technically complete. SWPC's scope of services
is presented in detail in Appendix A of the EPC Contract. Our assessment of
SWPC's scope of services and the technical descriptions are presented in Chapter
3 of this report. This price includes agreed to and estimated price changes for
scope changes agreed to by AES Ironwood through the date of this Report, but
does not include certain scope changes currently under discussion, the price of
which are included in "Other Hard Costs" as described in Section 7.3. The total
current contract price is $238.0 million.
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5.3.1 SWPC Responsibilities
SWPC's responsibilities under the EPC Contract include the design, engineering,
procurement, and construction of the facility; startup, training, and testing;
and the supply of all machinery, equipment (excluding operational spare parts),
tools, construction fuels, chemicals, etc. to complete the Project. SWPC will be
responsible for all tasks necessary to complete the Project other than those
specifically assigned to AES Ironwood in Appendix A. SWPC will also prepare a
Quality Assurance Plan (Appendix K). SWPC will use this plan to ensure that the
construction and engineering methods and standards required are adhered to or
achieved. SWPC will develop a list of recommended operational spare parts and a
price list. This will be delivered to AES Ironwood at least 12 months prior to
the scheduled date for PA.
SWPC also has certain obligations with respect to labor and personnel,
permitting and permitting support, inspection and expediting, personnel
training, cleanup and waste disposal, security, coordination with other
contractors, and management and supervision of its subcontractors. Stone &
Webster believes that these areas of contractor responsibility have been
addressed adequately in the EPC Contract. SWPC is required to coordinate its
functions with other contractors involved with the Project. SWPC is also
required to arrange for construction-period water supply facilities, but the EPC
Contract does not address the disposal of construction-period sanitary waste
disposal.
SWPC will provide training to AES Prescott's operation staff. Beginning six
months prior to the Project Guaranteed Provisional Acceptance Date, SWPC will
provide on-site classroom training for AES Prescott's O&M staff. The training
curriculum is more completely described in Appendix A of the EPC Contract. In
addition to SWPC's own training it will also coordinate any Subcontractor
training sessions in a manner sufficient to provide the personnel with an
adequate understanding of the O&M aspects of each dimension of the Project as an
integrated whole. Stone & Webster agrees with this overall approach to preparing
and training the O&M staff.
Within 60 days of the Guaranteed Provisional Acceptance Date, SWPC will submit
to AES Ironwood a detailed electronic construction schedule consistent with the
schedule outlined in Appendix C of the EPC Contract. As soon as practical but no
later than 120 days after the Guaranteed Provisional Acceptance Date, SWPC will
provide AES Ironwood with a critical path method ("CPM") schedule for the
Project including activity duration for each major component of the Services
provided by SWPC.
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5.3.2 AES Ironwood Responsibilities
AES Ironwood is responsible for certain services associated with the EPC
Contract. These activities relate to: the appointment of an Owner's
representative; acquisition of the Facility site and access for SWPC;
acquisition of all applicable permits and real estate rights for the facility;
providing startup personnel; arranging for certain construction utilities (waste
disposal after the risk transfer date), fuel, and electrical interconnection
facilities on the utility side. These responsibilities are reasonable and
customary for this type of transaction.
5.3.3 Construction Schedule
AES Ironwood issued a Provisional Notice to Proceed as of September 23, 1998,
which required SWPC to begin the Services, including a full release of the
engineering, manufacturing, and procurement of the equipment on the date
specified. AES Ironwood is obligated to pay SWPC for all pre-Commencement Date
Services actually performed.
Stone & Webster reviewed the sequencing of events necessary to achieve Final
Acceptance of the Project and the criteria of each milestone. We believe that
the milestone criteria are technically reasonable. The significant milestones
are Mechanical Completion, Provisional Acceptance, Interim Acceptance, Final
Acceptance, and Project Completion. The Performance Tests and the PPA Output
Tests are conducted after Mechanical Completion in order to meet Provisional
Acceptance. The Reliability Run is required in order to meet Final Acceptance.
Project Completion occurs after Final Acceptance.
Interim Acceptance ("IA") is a milestone more specific to this agreement. IA
occurs when the gas-based electrical output and heat rate guarantee is not less
than those levels demonstrated during the completed performance test at
Provisional Acceptance.
5.3.4 Contract Price and Payment Schedule
The contract price (as adjusted for scope changes) will be paid out to SWPC in
installments over the construction schedule. The payments began with Provisional
Notice to Proceed and continue through construction according to the Payment and
Milestone Schedule (Appendix B). Retainage in the amount of 5% is withheld from
each scheduled payment except for the project completion payment. Stone &
Webster generally experiences retainage in the order of 5-10% of the contract
price. Upon achieving Final Acceptance of the Facility and the receipt of
documentation that all requirements have been satisfied, all the retainage may
be paid to the Contractor, except that AES Ironwood can hold back an amount
equal to $1 million and 150% of the punch list. Within 30 days after the Project
Completion all remaining retainage will be paid to SWPC.
AES Ironwood may deduct and set-off against any part of the balance due or to
become due from SWPC to AES Ironwood in connection with this agreement. If this
set-off amount is later
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determined not to have been due from SWPC, then SWPC will be entitled to
interest on the set-off amount. The EPC Contract allows for change orders that
may be initiated by AES Ironwood or SWPC. The change order protocol allows for
adjustments to both pricing and schedule. The protocol utilized in this EPC
Contract is similar to other contracts with which we are familiar and is
technically acceptable.
5.3.5 Performance Testing Plans
To demonstrate Final Acceptance, SWPC must demonstrate 100% of the gas-based and
fuel oil-based electrical output and heat rate guarantees during the performance
test, or demonstrate in a completed PPA output test the achievement of 100% of
the gas-based electrical output guarantee and satisfy AES Ironwood that the
capabilities outlined in Part B of Appendix B are achieved. In addition,
Mechanical Completion must be satisfied and the Reliability Guarantee achieved.
Also, the reliability run must be completed no later than the occurrence of
Final Acceptance of the Facility.
Stone & Webster reviewed the performance testing plan. The performance tests
will be performed in accordance with PTC-46, the test code for overall plant
performance testing. A plant specific performance test procedure will be written
by SWPC and submitted to AES Ironwood 90 days prior to the test. Stone & Webster
believes that the performance testing plan as specified in the EPC Contract
Appendix D is acceptable, customary, and should adequately demonstrate the
Project's performance.
AES Ironwood can elect Final Acceptance. In this scenario, SWPC has no liability
to AES Ironwood for any performance guarantee payments arising thereafter for
failure of the Facility to achieve any or all of the performance guarantees
applicable. SWPC can elect Final Acceptance. In this case SWPC must have
completed a performance test which demonstrates at least a level of 95% of the
gas-based and fuel oil-based electrical output and 108% of the gas-based and
fuel oil-based heat rate. SWPC is then obligated to pay all of the performance
guarantee payments as determined by the final or most recent completed
performance test. SWPC also must pay any Provisional Acceptance late completion
payments required.
5.3.6 Performance Guarantees
SWPC is required to design and construct the Facility to achieve certain
guaranteed performance levels in regards to capacity, heat rate, and
reliability.
The Performance Guarantees are designed to ensure that the Project's performance
meets or exceeds the minimum operating parameters of the PPA.
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5.3.7 Warranty Period
The EPC Contract provides a warranty for all machinery, engineering and design,
and for situations involving corrections, additions, repairs or replacements.
With respect to all machinery, equipment, materials, systems, supplies and other
items comprising the Project, the warranty period is the earlier to occur of (i)
12 months following the first to occur of Provisional Acceptance, Interim
Acceptance and Final Acceptance and (ii) with respect to the machinery,
equipment, materials, systems, supplies and other items comprising each unit,
the date on which such unit has operated for 8,000 equivalent operating hours
following the first to occur of Provisional Acceptance, Interim Acceptance, and
Final Acceptance.
With respect to the engineering and design of the Project and its components, 12
months following the first to occur of Provisional Acceptance, Interim
Acceptance and Final Acceptance; and in the case of any correction, addition,
repair or replacement to any machinery, equipment, materials, systems, supplies
or other items, including without limitation the engineering or design thereof,
during any existing warranty period, with respect to such machinery, equipment,
materials, systems, supplies or other items, twelve months after the date of
such correction, addition, repair or replacement, but in no event later than 24
months after the originally scheduled expiration date of the applicable initial
warranty period.
In addition, the EPC Contract states that SWPC warrants and guarantees that the
design of the Facility is based on a useful life design objective for a period
not less than 25 years from the COD.
Stone & Webster is of the opinion that the warranty period is acceptable based
on the commercial terms of the EPC Contract in conjunction with the Maintenance
Services Agreement. These two agreements, although independent, are
complementary and afford the Project a greater degree of protection that is
available from the EPC Contract alone. The risk posed by the possibility of a
component failure that occurs after the expiration of the one year EPC Contract
warranty has been mitigated because the revenues presented in the Projected
Operating Results are sufficient to allow the purchase of replacement
components. Component failures associated with catastrophic failures are
generally covered by insurance policies.
5.3.8 Liquidated Damages
If there is a shortfall in either electrical output or heat rate SWPC will pay
AES Ironwood rebates for failure to meet both interim and final performance
requirements. SWPC guarantees to AES Ironwood to demonstrate a performance level
equivalent to the performance guarantees at least by Final Acceptance. SWPC
agrees to pay a specified amount per kilowatt for each kilowatt less than the
gas-based electrical output guarantee and a specified amount per kilowatt for
each kilowatt less than the fuel oil-based output guarantee, as of Final
Acceptance. The output rebate
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for the gas-based operation is sufficient to motivate SWPC to meet their
gas-based electrical output guarantee.
SWPC will pay to AES Ironwood specified rebate amounts for each Btu/kWh that the
heat rate exceeds the heat rate guarantees for gas and Jet A fuel, including
interim rebates for heat rate while firing gas during the period from interim
acceptance until Final Acceptance. The heat rate rebates are sufficient to
motivate SWPC to meet their heat rate guarantees.
SWPC guarantees that at least one of the Provisional Acceptance, Interim
Acceptance, or Final Acceptance will occur on or before the Guaranteed
Provisional Acceptance Date, and that Final Acceptance will occur on or before
the Guaranteed Final Acceptance Date. If SWPC fails to achieve the Provisional,
Interim or Final Acceptance by the Guaranteed Provisional Acceptance Date, then
SWPC will pay AES Ironwood a specified dollar amount per day. If SWPC does not
achieve Provisional, Interim, or Final Acceptance within 40 days of the
Guaranteed Provisional Acceptance Date, then SWPC must provide an acceptable
plan to achieve acceptance within 12 months after the Guaranteed Provisional
Acceptance Date and the Final Acceptance of the Facility by the Guaranteed Final
Acceptance Date. The Provisional Acceptance Late Completion Payments cannot
exceed 20% of the contract price. If Final Acceptance does not occur on or
before the Guaranteed Final Acceptance Date, the Provisional Acceptance Late
Completion Payments, together with contingencies and prefunded IDC, will be
sufficient to cover the Williams payment plus debt service commitment for
approximately one year after the Guaranteed Provisional Acceptance Date.
The total aggregate Performance Guarantee Payment is equal to the lesser of the
aggregate total of the Performance Guarantee Payments or the total liquidated
damages subcap less all Provisional Acceptance Late Completion Payments. The
total liquidated damages subcap, including the Performance Guarantee Payment and
all Provisional Acceptance Late Completion Payments, cannot exceed 45% of the
contract price.
Stone & Webster believes, based on its review, that the liquidated damages
provisions are sufficient to motivate SWPC to meet their contractual
obligations.
5.4 Management and Operations Agreement
Stone & Webster reviewed the Operations Agreement and Services Agreement between
AES Ironwood and AES Prescott. Certain provisions of the agreement are discussed
below. For a summary of the material terms of the agreement, reference is made
to "Description of the Project Contracts - Operations Agreement" in the Offering
Circular.
Under the Operations Agreement AES Prescott is obligated to supply personnel and
support services required by AES Ironwood to supervise the development and
construction of the Project until the COD and to maintain and operate the
Facility following the COD through the remaining
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term of the agreement. The agreement commences on the execution date and
terminates the last day of the month in the 27th anniversary of the execution
date.
Stone & Webster is of the opinion that the Operations Agreement is reasonable
and believes that each Party is capable of fulfilling all of its obligations
therein.
5.5 Services Agreement
Stone & Webster reviewed the Services Agreement between AES and AES Prescott.
Certain provisions of the agreement are discussed below. For a summary of the
material terms of the agreement, reference is made to "Description of the
Project Contracts - Services Agreement" in the Offering Circular.
AES will provide certain personnel and support services to AES Prescott in order
for AES Prescott to perform its obligations under the Services Agreement. The
Services Agreement commences on the execution date and terminates the last day
of the month in the 27th anniversary of the execution date.
Stone & Webster is of the opinion that the Services Agreement is reasonable and
believes that each Party is capable of fulfilling all of its obligations
therein.
5.6 Effluent Supply Agreement
Stone & Webster reviewed the ESA between AES Ironwood and the City of Lebanon
Authority. Certain provisions of the agreement are discussed below. For a
summary of the material terms of the agreement, reference is made to
"Description of the Project Contracts - Effluent Supply Agreement" in the
Offering Circular.
The agreement was executed on March 3, 1998. The City of Lebanon Authority
operates a publicly owned wastewater treatment facility for the handling,
treatment, and disposal of wastewater, which meets applicable governmental
requirements. The City of Lebanon Authority is willing to provide this treated
effluent to the Project for use at the Facility. The term of this Agreement is
25 years with no more than four successive five-year extensions. The makeup
water will be delivered to the Project by way of a nominal 6.5 mile pipeline
with pumphouse and ancillary facilities. The pipeline is about 18 inches in
diameter and is designed for a capacity of 3,000 gallons per minute. The point
of delivery is located at or inside the Project property. In addition to the
treated effluent the City of Lebanon Authority will also supply potable water to
the Project.
Stone & Webster is of the opinion that the ESA is technically reasonable and
believes that each Party is capable of fulfilling all of its obligations
therein.
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5.7 Agreement Relating to Real Estate
Stone & Webster reviewed the Agreement Related to Real Estate between AES
Ironwood and Pennsy Supply, Inc. ("Pennsy"), dated October 22, 1998. Certain
provisions of the agreement are discussed below. For a summary of the material
terms of the agreement, reference is made to "Description of Project Contracts
Agreement Relating to Real Estate" in the Offering Circular.
AES is the equitable owner of the 35-acre property on which it intends to build
the Project. Pennsy currently owns tracts of land that border the AES property.
The agreement addresses certain real estate transfer, access and easement
agreements, and water pumping arrangements.
Additionally, the agreement confers preferred vendor status upon Pennsy for the
supply of certain construction materials to AES Ironwood. Responsibilities of
the parties regarding applications and permits including associated fees and
costs of construction and maintenance are delineated in the agreement and appear
reasonable. Based on other real estate agreements evaluated by Stone & Webster,
the terms of this agreement appear reasonable.
5.8 Maintenance Program Parts, Shop Repairs and Scheduled Outage
TFA Services Contract
Stone & Webster reviewed the executed Maintenance Services Agreement between AES
Ironwood and SWPC for the Project. Certain provisions of the agreement are
discussed below. For a summary of the material terms of the agreement, reference
is made to "Description of Project Contracts - Maintenance Program Parts, Shop
Repairs and Scheduled Outage TFA Services Contract" in the Offering Circular.
SWPC agrees to provide the parts and technical advice required to conduct the
major maintenance for the combustion turbines. SWPC provides a warranty for its
parts and the advice it provides in exchange for a fee paid by AES Ironwood.
Under the terms of the Maintenance Services Agreement, all major maintenance and
parts are to be provided by SWPC, even if the particular item is not covered by
the original equipment warranty or some provision of this services agreement.
The Maintenance Services Agreement obligates SWPC to notify AES Ironwood of any
engineering or design defects that develop in the 501G fleet and provide
remedial action.
The Maintenance Services Agreement provides combustion turbine major maintenance
(including all scheduled outages) and spare parts for this Project in a
reasonable manner for approximately the initial eight years of operation. This
service provided by an a affiliate of the combustion turbine supplier reduces
the risk of using improper parts or maintenance being conducted improperly on
the combustion turbines due to the close involvement of the original equipment
manufacturer's trained personnel. The Maintenance Services Agreement provides
risk mitigation by providing a warranty on parts provided as part of the
Agreement. The warranty period ends
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with the earlier of one year from date of installation of the part, 8000
equivalent base hours of operation, or 100 starts of the combustion turbine. The
Maintenance Services Agreement levelizes the major maintenance parts costs and
indexes costs to the type of combustion turbine operation in a reasonable and
consistent fashion. Under the agreement, AES Ironwood is responsible for labor
and supervision of labor for the major maintenance activities and the normal and
routine maintenance for the combustion turbines. These costs are included in the
operation and maintenance budget and accounted for in the Project's Projected
Operating Results. The Maintenance Services Agreement also obligates SWPC to
notify AES Ironwood of any engineering or design defects that develop in the
501G fleet and to provide remedial action. SWPC's scope of supply requirements
under the Maintenance Services Agreement are reasonable and consistent with
standard industry practice.
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6. Principal Project Participants
Stone & Webster reviewed the major Project participants and believe each should
be capable of fulfilling their obligations to one another as specified in the
various contracts and agreements of the Project.
6.1 AES Ironwood, LLC
AES Ironwood is a limited liability company, organized and existing under the
laws of Delaware. AES Ironwood was formed to develop, own, and operate the
Project. AES Ironwood is a special purpose project company and a subsidiary of
AES Ironwood, Inc.. AES Ironwood Inc. is a wholly owned subsidiary of The AES
Corporation ("AES"). AES is one of the world's largest global power companies
owning or having an interest in 97 plants totaling over 26,000 MW in 16
countries.
AES was founded in 1981 and has 18 years of experience developing and operating
large, complex power generating facilities. AES also distributes power in
Brazil, El Salvador and Argentina and heat in Kazakhstan. AES operates
gas-fired, oil-fired, hydropower, and solid-fuel plants, and employs
approximately 40,000 people around the world. AES currently owns assets worth in
excess of $10 billion. AES end-of-year 1998 revenue was $2.5 billion with a net
income of $308 million.
Stone & Webster believes that AES Ironwood, as an affiliate of AES and with the
assistance of SWPC under the terms of the Maintenance Services Agreement, should
be capable of operating and maintaining the Facility in accordance with standard
industry practices.
6.2 AES Prescott, LLC
AES Prescott is a Delaware limited liability company and a wholly owned
subsidiary of AES Ironwood, Inc. AES Prescott will manage the development and
construction of the Project pursuant to a development and construction
management agreement between AES Prescott and AES Ironwood. Stone & Webster
believes that AES Prescott, as an affiliate of AES, should be capable of
managing the development and construction of the Project.
6.3 Williams Energy Marketing & Trading Company
Williams is the Project's power purchaser and fuel supplier. Williams is a
corporation organized and existing under the laws of the State of Delaware and
is a wholly owned subsidiary of the Williams Companies. The Williams Companies,
through its subsidiaries, is engaged in the transportation and sale of natural
gas and petroleum products, and is engaged in energy commodity trading and
marketing. For the nine months ended September 1998, revenues were $5.64 billion
with a net income of $160 million.
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Stone & Webster believes that Williams possesses the organization and personnel
to execute its obligations under the PPA, and is familiar with the provision of
fuel and purchase of electricity from large electrical generation facilities.
6.4 Siemens Westinghouse Power Corporation
SWPC is the Project's EPC contractor. SWPC is a newly formed Delaware
corporation that was formed in 1998 when Siemens Corporation acquired the
Westinghouse Power Generation business from the CBS Corporation in August 1998.
SWPC, headquartered in Orlando, Florida, is the regional business division for
the Americas and operates engineering and manufacturing centers in North
America.
Siemens Corporation owns all of the SWPC stock and is an industry leader in
telecommunications; energy and power; transportation; information systems and
other products. For the first nine months of fiscal year 1997/1998 Siemens' U.S.
businesses, with more than 55,000 employees, recorded sales of $7.0 billion.
Siemens AG, based in Berlin and Munich, owns all of the Siemens Corporation
stock and is one of the world's largest electrical engineering and electronics
companies and employs over 400,000 people worldwide in more than 190 countries.
Stone & Webster believes that SWPC possesses the organization and personnel to
execute its obligations under the EPC Contract, and is familiar with the
construction of large electrical generation facilities. Stone & Webster also
believes SWPC considers the 501G technology advancement as being extremely
important to its continued participation in the advanced combustion turbine
market and therefore will ensure that the initial project installations are
closely supported.
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7. Assessment of Projected Operating Results
7.1 Overview
The Projected Operating Results consist of a pro forma financial model for AES
Ironwood (the "Base Case"). Stone & Webster has reviewed the assumptions, data,
and the calculations necessary to support the cash flow projections of cash flow
available for debt service. Stone & Webster has verified that the underlying
model assumptions are consistent with the expected performance and the
commercial terms of the Project Agreements. Stone & Webster has validated key
calculations to ensure that the resulting revenues, expenses, cash flow, and
DSCRs were correctly calculated. Stone & Webster has reviewed the Projected
Operating Results and compared them to data provided in the Project Agreements,
data provided to Stone & Webster and power industry public information. Stone &
Webster has not reviewed the tax and depreciation assumptions, which were
provided by AES Ironwood, and financing assumptions, including the amortization
schedule and interest rates, which were provided by Lehman Brothers.
Lastly, Stone & Webster performed several sensitivities to determine the impact
of certain variables on the DSCRs. The Projected Operating Results for the Base
Case and the sensitivity cases are included in Exhibit I of this Report. The
Projected Operating Results are calculated in nominal dollars based on an
assumed inflation rate of 3% per annum.
7.2 Principal Considerations and Assumptions
In preparing this Report and the conclusions contained herein, Stone & Webster
has made certain assumptions with respect to the conditions, which may exist, or
events, which may occur in the future. While Stone & Webster believes these
assumptions to be reasonable for the purpose of this Report, they are dependent
on future events, and actual conditions may differ from those assumed. In
addition, Stone & Webster has used and relied on information provided to us by
sources that we believe to be reliable. Stone & Webster believes that the use of
this information and assumptions is reasonable for the purposes of our Report.
However, some assumptions may vary significantly due to unanticipated events and
circumstances. To the extent that actual future conditions may differ from those
assumed in this Report, or provided to us by others, the actual results will
vary from those forecast. This Report summarizes our work up to the date of the
Report and changes in conditions occurring or that became known after such date
could affect the Projected Operating Results.
The principal considerations and assumptions related to the Projected Operating
Results are listed below:
1. Stone & Webster has assumed that the Project will be designed and
built in accordance with the design specifications and the construction
schedule dictated in the EPC contract.
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2. The electricity market energy and capacity price projections, which
are relevant during the post PPA period were prepared by Hagler Bailly
for Lehman Brothers, in its capacity as Initial Purchaser, using a market
simulation model. Stone & Webster reviewed the technical inputs to the
Hagler Bailly model and found them to be reasonable. Stone & Webster did
not independently verify the methodology used by Hagler Bailly to develop
the energy or capacity price forecasts nor verify the accuracy of the
forecasts.
3. Stone & Webster has made no determination as to the validity and
enforceability of any contract, agreement, rule, or regulation as
applicable to the Facility and its operations. For the purposes of this
Report, Stone & Webster has assumed that all contracts, agreements,
rules, or regulations will be valid and fully enforceable in accordance
with the terms and that all parties will comply with the provisions of
their respective agreements.
4. Williams will arrange for the procurement and delivery of the fuel to
the Facility and will purchase all available capacity, ancillary
services, and energy from AES Ironwood in accordance with the PPA.
5. Stone & Webster has reviewed the capital and O&M budgets for AES
Ironwood. We have assumed that the Facility will operate and be
maintained in accordance with the Operations Agreement, O&M and capital
budgets, standard industry practice, and in a safe and environmentally
responsible manner.
6. Stone & Webster has assumed for purposes of the Projected Operating
Results that AES Ironwood will operate the Facility pursuant to the PPA
through the end of the first quarter of 2021 and as a merchant plant for
the term of the Bonds.
7. Stone & Webster has assumed that the maintenance will be performed by
AES Prescott in accordance with the Operations Agreement and by SWPC in
accordance with the Maintenance Services Agreement.
8. The natural gas and fuel oil prices are inputs to the Hagler Bailly
model. Stone & Webster reviewed the fuel price forecasts provided by the
independent fuel consultant, CC Pace. It is assumed that the fuel will be
available in sufficient quantities and at the prices forecasted for the
period covered in the Projected Operating Results.
9. Stone & Webster has assumed that all licenses, permits, and approvals
required to construct and operate the Project which have not been
obtained will be obtained in a timely basis and any changes that may be
required to any permits will not materially affect the design, operation,
cost, or maintenance of the Project.
10. Stone & Webster has assumed that AES Ironwood will be able to
purchase emission allowances, to the extent any are required, on an as
needed basis to comply with the emission limits. We have assumed that
emission offsets will be available for purchase at the prices forecasted
in the Projected Operating Results. Stone & Webster has not evaluated the
feasibility or cost of AES Ironwood implementing alternate strategies for
complying with its emission limits.
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11. Stone & Webster has not evaluated the non-operating expenses
projected by AES Ironwood including property and capital franchise taxes,
insurance, and general and administrative expenses.
7.3 Project Cost
Stone & Webster evaluated AES Ironwood's estimate for the total Project costs
included in the pro forma financial model. The Projected Operating Results Base
Case total Project construction costs are estimated to be $342 million
(excluding contingency) or approximately $485/kW (net) in the pro forma
financial model. The breakdown of the total Project costs is provided in the
following table:
<TABLE>
<CAPTION>
========================================================================
Total Project Costs
($ million)
========================================================================
<S> <C>
EPC Contract $238.00
Other Hard (Construction-Related) Costs 13.94
Other Development and Construction Costs 21.35
Initial Working Capital 1.80
Net Interest During Construction 51.14
Start-up and Other Soft Costs 15.42
Company's Contingency 17.00
------------------------------------------------------------------------
Total Project Costs $358.65
========================================================================
</TABLE>
Stone & Webster evaluated the Project's lump sum fixed price for the EPC
Contract of $238.0 million (including adjustments), which is equivalent to
approximately $338/kW (net). The EPC Contract price is very competitive relative
to similar facilities.
The non-EPC portion of the total Project cost includes construction management
costs, start-up costs, insurance, financing costs including IDC as well as
lenders, legal, and consultants fees, and working capital. The subtotal of the
non-EPC portion of the total Project cost, excluding contingency, equals $104
million, or 29% of the total Project costs, which is within the range of other
similar projects.
The Project development costs represent slightly less than 5% of the total
Project cost, which is reasonable for a project of this type. The Base Case
assumes $1.8 million for the initial working capital, which is equivalent to 45
days of non-fuel O&M expenses. The financial model assumes
B-56
<PAGE>
a 4.7% contingency in the total Project cost, which based on our experience, is
typical of similar projects.
The financial model currently has $1.85 million in its capital budget for the
initial spare parts. AES Ironwood intends to designate those operational spare
parts approximately one year before commercial operations. In addition, there
are $5.4 million worth of combustion turbine maintenance spares imbedded in the
Maintenance Service Agreement, which will be available during the first 8000
EBH. SWPC has committed to stock one complete set of hot gas path parts for
every four combustion turbines sold.
7.4 Power Production
Stone & Webster evaluated the technical assumptions associated with the
performance of the Project for electricity production. The Base Case assumes a
705 MW net Facility capacity at site conditions, a 92.5% average availability
factor ("AF"), and 88.1% average capacity factor over the 26-year term of the
Bond issue. AF is defined as the total hours in a year (i.e., 8760) minus
planned maintenance hours and forced outage hours. Capacity factor is defined as
the actual hours of operation (i.e., dispatched) over the year.
The Base Case assumes that the Facility will continue to operate as a merchant
facility after the expiration of the 20-year PPA. Under the merchant operation
the Facility capacity is assumed to operate at a degraded net full load Facility
capacity at site conditions ranging from 698 MW while operating on natural gas
to 621 MW while operating on fuel oil.
7.4.1 Power Plant Availability
Power plant availability is a function of many variables, including design and
construction quality, operation and maintenance practices, and fuel quality. In
order to be conservative, the Base Case assumes a lower AF in years one and two
than in subsequent years. AES Ironwood projects the AF to be 90.4% in the first
two years and an average of 92.7% in subsequent years.
7.4.2 Capacity Factor
The Facility capacity factor is based on Hagler Bailley's economic dispatch of
AES Ironwood within the context of its PJM market study. Stone & Webster did not
independently verify the methodology that Hagler Bailly used to develop the
capacity factor nor verify the accuracy of the forecast. Hagler Bailly projected
for the Base Case that the AES Ironwood will have an average capacity factor of
88.1% during the term of the PPA and the post PPA period.
B-57
<PAGE>
7.4.3 Capacity
The Base Case Projected Operating Results are based on the net Facility capacity
operating on natural gas at site conditions adjusted to 92(degrees)F and
including degradation. The Base Case model assumes a 4% degradation factor for
output over the six-year maintenance cycle, which is standard for similar
facilities. Stone & Webster considers the assumed degradation to be within the
range of expected degradation for such power generation facilities.
7.5 Revenues
Williams is obligated for a period of 20 years from the COD to purchase the
Facility capacity, approximately 655 MW +/-10% (summer capacity) at 92(degrees)F
when firing on natural gas pursuant to the PPA. Williams will pay AES Ironwood
for the Facility capacity, fuel conversion services, and ancillary services
provided under the PPA. The Project revenues are calculated based on the pricing
and payment structure defined in Appendix 1 of the PPA. The revenues for the
first full calendar year (Year 2002) are $60.2 million.
The Total Fixed Payment is based on a Fixed Capacity Rate, which has a set
schedule for the 20-year term of the PPA. If the Project Equivalent Availability
Factor ("EAF") as defined in Appendix 1 to the PPA is greater than 85%, there is
an Annual Availability Energy Adjustment ("AAEA") payable to AES Ironwood. The
Annual Availability Capacity Adjustment ("AACA") will be calculated as a credit
to Williams each year based on the EAF if the EAF is lower than 85%. For the
Base Case there is no AACA projected for the 20-year term of the PPA. The AAEA
and AACA are paid in the first quarter of the operating year following the end
of the previous year.
Williams provides fuel to the Project for conversion into energy. Consequently,
the Project is not responsible for the cost of fuel. Rather Williams pays a fee
to AES Ironwood to convert the fuel into energy. The Fuel Conversion Rates are
escalated annually at the Gross Domestic Product Implicit Price Deflator
("GDPIPD"). The Base Case assumes a GDPIPD of 3%.
In addition to the fuel conversion revenue, Williams is required to pay AES
Ironwood an energy efficiency bonus or penalty ("HRB/HRP"). The energy
efficiency bonus or penalty is based on the difference between the Heat Rate
Target ("HRT") while operating on natural gas and the actual Facility Heat Rate
("FHR"), net electric energy delivered, and the natural gas price index.
The Base Case assumes a 2% degradation factor for heat rate over the six-year
maintenance cycle, which is standard for similar facilities. Stone & Webster
considers the assumed degradation to be within the range of expected degradation
for such power generation facilities. After 20 years from COD at the end of the
PPA term, the Base Case assumes that the Project net capacity and energy will be
sold into the PJM system for a period through and beyond the maturity of the
Bonds. Hagler Bailly estimated the Base Case first merchant operating year
B-58
<PAGE>
(2021) AES Ironwood plant-specific energy and capacity market price projections
in 1996 dollars at $27.16/MWh and $5.38/MWh, respectively. The total operating
revenue for the first full merchant calendar year (Year 2022) is $379 million,
which includes AAEA revenues earned in the final operating year of the PPA term.
7.6 Operating Expenses
The estimated Project expenses during the PPA period consist of non-fuel fixed
and variable expenses. The natural gas and fuel oil will be supplied and
transported to the Project under the terms established in the PPA. During the
PPA period, Williams will arrange for the procurement and delivery of the
natural gas and fuel oil to the applicable Facility fuel delivery point. After
the PPA period, AES Ironwood will be responsible for the procurement and
delivery of all the fuel to the Facility.
In the pro forma, the estimated O&M expenses are in nominal dollars reflecting
an assumed 3% inflation per year. The first full calendar year (Year 2002) fixed
and variable non-fuel O&M expenses, which total $17.2 million, and are detailed
in the following table.
<TABLE>
<CAPTION>
===========================================================================
Estimated Non-Fuel O&M Expenses
(2002 $ ,000)
===========================================================================
<S> <C>
Fixed O&M $13.2
Variable O&M 2.1
Administration 0.3
Operating Insurance 0.6
Property Taxes 0.9
---------------------------------------------------------------------------
Total Non-Fuel O&M Expenses $17.2
===========================================================================
</TABLE>
Stone & Webster reviewed the O&M assumptions utilized in the Projected Operating
Results. The information reviewed included assumptions and forecasts for unit
performance; staffing functions and levels; annual O&M budget summary; and unit
overhaul plans and schedules. Stone & Webster compared the information with its
experience with plants of similar configuration and Utility Data Institute cost
and staffing information for similar plants. Stone & Webster considers these
Project assumptions to be reasonable and comparable to other facilities of
similar design.
B-59
<PAGE>
7.6.1 Maintenance Schedule
All maintenance work and spare parts replacement for the combustion turbine
during the first eight years of the Facility operations will be provided by SWPC
through the Maintenance Services Agreement and thereafter will be the
responsibility of AES Ironwood. The O&M schedule and budget assumes that each
combustion turbine accumulates 8000 EBH each year. SWPC's recommended frequency
for annual inspections, hot gas path inspections, and major overhauls are being
used. In addition, AES Ironwood has included in the schedule and budget a "cover
lift" for every hot gas path inspection in order to restore any performance
degradation experienced since the previous major overhaul. Stone & Webster
believes that AES Ironwood's planned overhaul and maintenance schedule is
reasonable and adequate to support its operational and business objectives.
7.6.2 Operations and Maintenance Budget
Stone & Webster reviewed the non-fuel fixed, variable, and major maintenance
expenses in the Projected Operating Results. Stone & Webster believes that the
O&M budget is sufficient to support the planned staffing level, the maintenance
and overhaul schedule, and the project's performance and business objectives.
7.6.3 O&M Staffing Levels
AES Ironwood's planned functional positions and staffing levels were reviewed
and are considered satisfactory to operate and maintain the Facility safely in
accordance with the operational and regulatory requirements. The staffing levels
compare favorably with and are typical of those found in similarly configured
plants that Stone & Webster has reviewed. Our review also included the resume of
the proposed Project Plant Manager, who appears to have relevant experience in
similar plants and has previously demonstrated the requisite skills to perform
satisfactorily for AES Ironwood. Stone & Webster believes that the staffing
levels are adequate to support AES Ironwood's operational and business
objectives.
7.6.4 Emission Compliance Costs
The Projected Operating Results include an emission compliance limit cost. AES
Ironwood will be required to purchase allowances equal to one ton per year for
all SO2 emitted from the Facility and for all NOx emitted from the Facility
during the summer ozone season (defined as May through September). The Base Case
assumes that the Project will need approximately 150 tons of NOx allowances per
year at the current market value of $2,200 per ton for a vintage 2001 allowance.
The Project has already secured NOx allowances for the first two years of
operation and has capitalized these costs. NOx allowance costs in the year 2003
are projected to be $0.4 million. The Base Case assumes that the Project will
need approximately 198 tons of SO2 allowances per year, commencing at COD in
year 2001, at the current market value of $200 per
B-60
<PAGE>
ton. The SO2 allowance cost for 2001 is $0.02 million. Both the NOx and SO2
allowance costs are projected to increase at 3% per annum.
7.6.5 Fuel Expense
In operating year 21, the term of the PPA will end and AES Ironwood will be
responsible for providing the fuel for the Facility to operate as a merchant
plant. The Base Case assumes that the fuel will be purchased at the price
stipulated in the CC Pace Fuel Forecast. The delivered natural gas price will
start at $2.44/mmBtu in real 1996$'s in year 2001 and increases to $2.64/mmBtu
in real 1996$'s in the first merchant operating year, 2021. Per the terms of the
PPA, Williams will supply Jet A fuel oil to the Facility throughout the 20-year
PPA. Following the PPA period, the Facility will purchase No. 2 fuel oil. The
No. 2 fuel oil price is projected by CC Pace to be $3.69/mmBtu in 1996$ in 2021.
The fuel expense assumed during the post PPA period is based on the Facility
heat rate at ISO conditions, the Facility capacity factor, and the unit cost of
fuel. The fuel expense for the first full calendar year of merchant operation is
$219.2 million. When AES Ironwood becomes a merchant plant, the fuel expense
will be the single largest expense.
The CC Pace Fuel Forecast is given in 1998$'s. The Hagler Bailly report assumes
that the fuel expenses are in 1996$'s and are escalated at 2.5%. The unit fuel
costs used in the CC Pace Fuel Forecast are shown in the following table.
<TABLE>
<CAPTION>
==========================================================================================
Fuel Price Forecast
==========================================================================================
Delivered Natural Gas Delivered No. 2 Fuel Oil
Year ($1996/mmBtu) ($1996/mmBtu)
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2021 2.64 3.69
2022 2.65 3.69
2023 2.67 3.69
2024 2.68 3.69
2025 2.69 3.69
==========================================================================================
</TABLE>
The CC Pace Fuel Forecast for the PJM area is consistent with Stone & Webster's
forecasts for fuels.
7.7 Financing Assumptions
Lehman Brothers provided the financing assumptions for the $358.65 million
Project cost. The source of funds will consist of $50.15 million in equity and
$308.5 million. The capital cost items are allocated monthly during the
construction period to calculate releases of Bond proceeds and interest during
construction ("IDC"). The combined annual debt service (principal plus
B-61
<PAGE>
interest, annual administrative and LOC fees) during the post construction
period ranges from a low of $16.3 million in 2001 to a high of $35.4 million in
2008.
7.8 Projected Operating Results
The Projected Operating Results are shown in Exhibit I of this Report. On the
basis of our studies and analyses of the Project, the Project Agreements and the
assumptions set forth in this Report, the projected revenues from the sale of
fuel conversion services, capacity, and ancillary services are more than
adequate to pay the annual O&M expenses (including provisions for major
maintenance), other operating expenses, and debt service.
The Base Case indicate the following DSCRs:
<TABLE>
<CAPTION>
==================================================================================
Base Case
Debt Service Coverage
==================================================================================
Minimum Average
----------------------------------------------------------------------------------
<S> <C> <C>
PPA Period
----------------------------------------------------------------------------------
1.45x 1.46x
----------------------------------------------------------------------------------
Post PPA Term
----------------------------------------------------------------------------------
5.77x 5.81x
----------------------------------------------------------------------------------
Full Term of the Bonds
----------------------------------------------------------------------------------
1.45x 2.30x
==================================================================================
</TABLE>
7.9 Sensitivity Analyses
Due to uncertainties necessarily inherent in relying on assumptions and
projections, it should be anticipated that actual operating results would
differ, perhaps, materially, from those assumed and described herein. In order
to demonstrate the impact of certain circumstances on the Projected Operating
Results, certain sensitivity analyses have been developed by Stone & Webster. It
should be noted that other examples could have been considered, and those
presented are not intended to reflect the full extent of possible impacts on the
Project.
Stone & Webster performed several sensitivity analyses using the pro forma
financial model by varying the following Project specific key input parameters
including power plant availability, heat rate degradation factors, and O&M
costs.
7.9.1 Project Sensitivities
The three Project sensitivities include increasing the Base Case O&M costs,
increasing the Base Case heat rate, and decreasing the Base Case AF.
B-62
<PAGE>
Operation and Maintenance Cost Sensitivity - The Base Case O&M costs were
increased by 15%. The resulting average and minimum DSCRs for the PPA term, the
post PPA term, and the full term of the Bonds are summarized in the following
table.
<TABLE>
<CAPTION>
==================================================================================
Sensitivity Case 1
Operation and Maintenance
Debt Service Coverage Ratios
==================================================================================
Minimum Average
----------------------------------------------------------------------------------
<S> <C> <C>
PPA Term
----------------------------------------------------------------------------------
1.29x 1.38x
----------------------------------------------------------------------------------
Post PPA Term
----------------------------------------------------------------------------------
5.58x 5.64x
----------------------------------------------------------------------------------
Full Term of the Bonds
----------------------------------------------------------------------------------
1.29x 2.20x
==================================================================================
</TABLE>
Heat Rate Degradation Factors - To test the sensitivity of the Projected
Operating Results to heat rate, Stone & Webster increased the Base Case heat
rate by 5% (ignoring liquidated damages "by-downs'). The resulting average and
minimum DSCRs for the PPA term, the full term, and the post PPA term are
summarized in the following table.
<TABLE>
<CAPTION>
==================================================================================
Sensitivity Case 2
Heat Rate Degradation
Debt Service Coverage Ratios
==================================================================================
Minimum Average
----------------------------------------------------------------------------------
<S> <C> <C>
PPA Term
----------------------------------------------------------------------------------
1.11x 1.24x
----------------------------------------------------------------------------------
Post PPA Term
----------------------------------------------------------------------------------
5.26x 5.29x
----------------------------------------------------------------------------------
Full Term of the Bonds
----------------------------------------------------------------------------------
1.11x 2.02x
==================================================================================
</TABLE>
Availability Factor Sensitivity - To test the pro forma sensitivity the Base
Case AF assumption was changed. The Base Case AF is 90.4% for the first two
years and ranges from 89.2% to 93.7% for the remaining life of the Facility. Due
to the evolutionary nature of the 501G gas turbine design Stone & Webster took a
more conservative approach and estimated the Facility AF to be approximately 85%
in the first two years and to increase to 90% in the remaining years of the term
of the Bonds. The resulting average and minimum DSCRs for the PPA term, the full
term, and the post PPA term are summarized in the following table.
B-63
<PAGE>
<TABLE>
<CAPTION>
==================================================================================
Sensitivity Case 3
Availability Factor
Debt Service Coverage Ratios
==================================================================================
Minimum Average
-----------------------------------------------------------------------------------
<S> <C> <C>
PPA Term
-----------------------------------------------------------------------------------
1.41x 1.43x
-----------------------------------------------------------------------------------
Post PPA Term
-----------------------------------------------------------------------------------
5.70x 5.73x
-----------------------------------------------------------------------------------
Full Term of the Bond
-----------------------------------------------------------------------------------
1.41x 2.26x
==================================================================================
</TABLE>
7.9.2 Hagler Bailly Sensitivities
In addition, sensitivity of the Project results was assessed for the two
downside alternatives, Low Demand Growth Case and a High Gas Price Case. The
High Gas Price and Low Demand Growth scenarios were taken from the Hagler Bailly
forecasts. Stone & Webster applied the two Hagler Bailly "macroeconomic"
downside sensitivities to the Base Case.
High Gas Price - The natural gas prices were uniformly increased by $0.50 per
mmBtu (in 1996$) above the CC Pace forecast levels. The resulting average and
minimum DSCRs for the post PPA term are summarized in the following table.
<TABLE>
<CAPTION>
=====================================================================================
Sensitivity Case 4 - High Gas Price
Debt Service Coverage Ratios
=====================================================================================
Minimum Average
-------------------------------------------------------------------------------------
<S> <C> <C>
Post PPA Term
-------------------------------------------------------------------------------------
4.98x 5.13x
=====================================================================================
</TABLE>
B-64
<PAGE>
Low Demand Growth - The demand growth rates were reduced by a third, compared to
the Base Case, for the period 2017 through 2025. In this case the peak and total
demand grew at only 0.50% and 1.00% per annum, respectively beginning in 2017,
while new capacity building remained per the Hagler Bailly base case. The
resulting average and minimum DSCRs for the post PPA term are summarized in the
following table.
<TABLE>
<CAPTION>
=====================================================================================
Sensitivity Case 5 - Low Demand Growth
Debt Service Coverage Ratios
=====================================================================================
Minimum Average
-------------------------------------------------------------------------------------
<S> <C> <C>
Post PPA Term
-------------------------------------------------------------------------------------
4.70x 4.93x
=====================================================================================
</TABLE>
7.10 Liquidated Damages Analyses
Stone & Webster reviewed the impact on the average DSCRs if SWPC fails to pass
certain performance tests and there is a long-term performance deficiency over
the term of the Bonds. It was assumed that the performance liquidated damages
paid to AES Ironwood by SWPC would be used to buy down the Bonds on a pro rata
basis. The analysis was performed to demonstrate that the liquidated damages for
the guaranteed net electrical output and guaranteed net heat rate are sufficient
to maintain the DSCRs at the same level as projected in the Base Case.
It is projected that the average DSCRs over the term of the Bonds, after payment
of the liquidated damages due to a failure to achieve the guaranteed net
electrical output and the guaranteed net heat rate, will generally remain at the
same level as the average DSCRs in the Base Case for deficiencies up to
approximately 5% in net electrical output and 6% in net heat rate.
SWPC is required to pay liquidated damages for a delay in the Facility
completion. SWPC will pay AES Ironwood $110,000 for each day after the required
Facility completion date that the Facility completion is not achieved. The
liquidated damages for a delay in the Facility completion cannot exceed 20% of
the contract price. Such payment, together with contingencies and prefunded IDC,
will be sufficient to cover the Williams payment plus debt service commitment
for approximately one year after the Guaranteed Provisional Acceptance Date.
B-65
<PAGE>
Exhibit I
Base Case
Increased O&M Sensitivity (Case #1)
Increased Heat Rate Sensitivity (Case #2)
Decreased Availability Sensitivity (Case #3)
Hagler Bailey High Gas Price Sensitivity (Case #4)
Hagler Bailly Low Demand Growth Sensitivity (Case #5)
B-66
<PAGE>
Confidential
Exhibit I
AES Ironwood Projected Operating Results
Base Case
<TABLE>
<CAPTION>
PPA Period
------------------------------------------------------------------------------------
Year Ending December 31, 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Operating Revenues ($million)
PPA Revenues 35.1 60.2 60.4 63.4 65.4 65.0 68.0 70.1 64.1 63.1 65.5
Merchant Revenues - - - - - - - - - - -
------------------------------------------------------------------------------------
Total Operating Revenues 35.1 60.2 60.4 63.4 65.4 65.0 68.0 70.1 64.1 63.1 65.5
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Interest Earned on Accounts ($million) 0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.3 0.2 0.3 0.5
------------------------------------------------------------------------------------
Operating Expenses ($million)
Fuel - - - - - - - - - - -
Fixed O&M 7.0 13.2 9.5 10.6 12.3 9.8 11.5 13.4 11.2 10.6 10.6
Variable O&M 1.3 2.1 2.2 2.3 2.4 5.2 4.5 2.7 2.7 2.8 3.0
Administration 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.4 0.4
Insurance - 0.6 1.1 1.1 1.2 1.2 1.2 1.3 1.3 1.3 1.4
Property Taxes 0.5 0.9 0.9 1.0 1.0 1.0 1.1 1.1 1.1 1.2 1.2
Local Taxes 0.0 0.0 0.1 0.1 0.1 0.1 0.2 0.2 0.3 0.3 0.3
------------------------------------------------------------------------------------
Total Operating Expenses 8.9 17.2 14.1 15.4 17.3 17.7 18.9 19.0 16.9 16.6 16.8
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Cash Flow Available for Debt Service ($million) 26.3 43.2 46.6 48.2 48.3 47.5 49.4 51.4 47.4 46.8 49.2
------------------------------------------------------------------------------------
Annual Debt Service ($million)
Facility Bonds
B-O-Y Balance Outstanding 308.5 306.5 301.8 295.4 288.4 281.2 272.1 260.7 251.1 241.1 228.4
Principal and Interest 15.9 29.2 31.7 32.9 33.0 32.5 33.7 35.1 32.4 32.0 33.6
LOC & Administrative Fees 0.4 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
------------------------------------------------------------------------------------
Total Debt Service 16.3 29.6 32.0 33.2 33.3 32.8 34.0 35.4 32.7 32.3 33.9
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Annual Debt Service Coverage 1.61x 1.46x 1.45x 1.45x 1.45x 1.45x 1.45x 1.45x 1.45x 1.45x 1.45x
------------------------------------------------------------------------------------
<CAPTION>
PPA Period
---------------------------------------------------------------------------
Year Ending December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021*
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Operating Revenues ($million)
PPA Revenues 65.6 67.3 67.1 64.8 66.2 65.8 63.0 64.4 64.6 27.5
Merchant Revenues - - - - - - - - - 215.3
---------------------------------------------------------------------------
Total Operating Revenues 65.6 67.3 67.1 64.8 66.2 65.8 63.0 64.4 64.6 242.8
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Interest Earned on Accounts ($million) 0.3 0.3 0.4 0.2 0.3 0.5 0.3 0.3 0.4 0.2
---------------------------------------------------------------------------
Operating Expenses ($million)
Fuel - - - - - - - - - 123.4
Fixed O&M 13.3 13.5 11.5 11.7 12.8 12.6 15.7 16.1 13.7 13.6
Variable O&M 6.3 5.5 3.3 3.3 3.5 3.6 7.6 6.6 4.0 4.1
Administration 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.5 0.5 0.5
Insurance 1.4 1.5 1.5 1.6 1.6 1.7 1.7 1.8 1.8 1.9
Property Taxes 1.2 1.3 1.3 1.3 1.4 1.4 1.5 1.5 1.5 1.6
Local Taxes 0.2 0.2 0.3 0.3 0.4 0.4 0.4 0.4 0.4 0.9
---------------------------------------------------------------------------
Total Operating Expenses 22.9 22.3 18.2 18.7 20.1 20.1 27.3 26.9 22.0 146.0
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Cash Flow Available for Debt Service ($million) 43.0 45.3 49.3 46.4 46.4 46.2 36.0 37.8 43.0 97.1
---------------------------------------------------------------------------
Annual Debt Service ($million)
Facility Bonds
B-O-Y Balance Outstanding 219.0 207.1 191.2 175.9 159.2 141.1 128.6 113.8 93.7 76.1
Principal and Interest 29.3 30.8 33.7 31.7 31.7 31.6 24.5 25.8 29.5 25.2
LOC & Administrative Fees 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.3 0.3 0.2
---------------------------------------------------------------------------
Total Debt Service 29.6 31.1 34.0 32.0 32.0 31.9 24.8 26.0 29.7 25.5
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Annual Debt Service Coverage 1.45x 1.45x 1.45x 1.45x 1.45x 1.45x 1.45x 1.45x 1.45x 3.81x
---------------------------------------------------------------------------
<CAPTION>
=============================
Post PPA Period
-----------------------------
Year Ending December 31, 2022 2023 2024 2025
-----------------------------
<S> <C> <C> <C> <C>
Net Operating Revenues ($million)
PPA Revenues - - - -
Merchant Revenues 378.9 389.7 391.5 416.2
-----------------------------
Total Operating Revenues 378.9 389.7 391.5 416.2
-----------------------------
-----------------------------
Interest Earned on Accounts ($million) 0.3 0.6 0.3 0.2
-----------------------------
Operating Expenses ($million)
Fuel 219.2 228.8 226.8 238.4
Fixed O&M 13.3 14.9 19.3 18.7
Variable O&M 4.2 4.4 9.1 7.9
Administration 0.5 0.5 0.5 0.6
Insurance 1.9 2.0 2.0 2.1
Property Taxes 1.6 1.7 1.7 1.8
Local Taxes 1.6 2.3 3.0 3.8
-----------------------------
Total Operating Expenses 242.4 254.6 262.4 273.2
-----------------------------
-----------------------------
Cash Flow Available for Debt Service ($million) 136.8 135.7 129.4 143.3
-----------------------------
Annual Debt Service ($million)
Facility Bonds
B-O-Y Balance Outstanding 59.0 40.5 21.3 0.0
Principal and Interest 23.3 23.1 22.1 22.5
LOC & Administrative Fees 0.2 0.2 0.2 0.2
-----------------------------
Total Debt Service 23.6 23.3 22.3 22.7
-----------------------------
-----------------------------
Annual Debt Service Coverage 5.81x 5.81x 5.80x 5.77x
=============================
</TABLE>
* The first five months of 2021 include PPA cash flow and the last seven months
of 2021 include Post PPA cash flow. The resulting blended DSCR is 3.81.
Average Debt Coverage During PPA 1.46x
Minimum Debt Coverage During PPA 1.45x
Average Debt Coverage Post PPA 5.81x
Minimum Debt Coverage Post PPA 5.77x
Average Debt Coverage During 2.30x
Bond Term
B - 67
<PAGE>
Confidential
Exhibit I
AES Ironwood Projected Operating Results
Increased O&M Sensitivity (Case #1)
<TABLE>
<CAPTION>
PPA Period
------------------------------------------------------------------------------------
Year Ending December 31, 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Operating Revenues ($million)
PPA Revenues 35.1 60.2 60.4 63.4 65.4 65.0 68.0 70.1 64.1 63.1 65.5
Merchant Revenues - - - - - - - - - - -
------------------------------------------------------------------------------------
Total Operating Revenues 35.1 60.2 60.4 63.4 65.4 65.0 68.0 70.1 64.1 63.1 65.5
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Interest Earned on Accounts ($million) 0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.3 0.2 0.3 0.5
------------------------------------------------------------------------------------
Operating Expenses ($million)
Fuel - - - - - - - - - - -
Fixed O&M 7.4 13.9 9.7 11.0 13.1 10.3 12.1 14.2 12.5 12.2 12.2
Variable O&M 1.4 2.5 2.5 2.7 2.8 6.0 5.2 3.1 3.1 3.2 3.4
Administration 0.2 0.3 0.3 0.3 0.4 0.4 0.4 0.4 0.4 0.4 0.4
Insurance - 0.7 1.3 1.3 1.3 1.4 1.4 1.5 1.5 1.5 1.6
Property Taxes 0.6 1.0 1.1 1.1 1.1 1.2 1.2 1.2 1.3 1.3 1.4
Local Taxes 0.0 0.0 0.1 0.1 0.1 0.1 0.2 0.2 0.3 0.3 0.3
------------------------------------------------------------------------------------
Total Operating Expenses 9.6 18.5 14.9 16.5 18.8 19.3 20.5 20.6 19.0 19.0 19.2
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Cash Flow Available for Debt Service ($million) 25.7 41.9 45.7 47.1 46.8 45.9 47.7 49.8 45.3 44.5 46.8
------------------------------------------------------------------------------------
Annual Debt Service ($million)
Facility Bonds
B-O-Y Balance Outstanding 308.5 306.5 301.8 295.4 288.4 281.2 272.1 260.7 251.1 241.1 228.4
Principal and Interest 15.9 29.2 31.7 32.9 33.0 32.5 33.7 35.1 32.4 32.0 33.6
LOC & Administrative Fees 0.4 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
------------------------------------------------------------------------------------
Total Debt Service 16.3 29.6 32.0 33.2 33.3 32.8 34.0 35.4 32.7 32.3 33.9
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Annual Debt Service Coverage 1.57x 1.42x 1.43x 1.42x 1.41x 1.40x 1.40x 1.41x 1.39x 1.38x 1.38x
------------------------------------------------------------------------------------
<CAPTION>
PPA Period
----------------------------------------------------------------------------
Year Ending December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021*
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Operating Revenues ($million)
PPA Revenues 65.6 67.3 67.1 64.8 66.2 65.8 63.0 64.4 64.6 27.5
Merchant Revenues - - - - - - - - - 215.3
----------------------------------------------------------------------------
Total Operating Revenues 65.6 67.3 67.1 64.8 66.2 65.8 63.0 64.4 64.6 242.8
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Interest Earned on Accounts ($million) 0.3 0.3 0.4 0.3 0.3 0.6 0.3 0.3 0.5 0.3
----------------------------------------------------------------------------
Operating Expenses ($million)
Fuel - - - - - - - - - 123.4
Fixed O&M 15.3 15.4 13.2 13.5 14.7 14.5 18.1 18.5 15.8 15.8
Variable O&M 7.3 6.3 3.7 3.8 4.0 4.2 8.7 7.6 4.6 4.7
Administration 0.4 0.4 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.6
Insurance 1.6 1.7 1.7 1.8 1.8 1.9 2.0 2.0 2.1 2.1
Property Taxes 1.4 1.4 1.5 1.5 1.6 1.6 1.7 1.7 1.8 1.8
Local Taxes 0.2 0.2 0.3 0.3 0.4 0.4 0.4 0.4 0.4 0.9
----------------------------------------------------------------------------
Total Operating Expenses 26.3 25.5 20.9 21.5 23.0 23.1 31.4 30.7 25.2 149.3
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash Flow Available for Debt Service ($million) 39.6 42.0 46.6 43.6 43.5 43.4 32.0 33.9 39.8 93.7
----------------------------------------------------------------------------
Annual Debt Service ($million)
Facility Bonds
B-O-Y Balance Outstanding 219.0 207.1 191.2 175.9 159.2 141.1 128.6 113.8 93.7 76.1
Principal and Interest 29.3 30.8 33.7 31.7 31.7 31.6 24.5 25.8 29.5 25.2
LOC & Administrative Fees 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.3 0.3 0.2
----------------------------------------------------------------------------
Total Debt Service 29.6 31.1 34.0 32.0 32.0 31.9 24.8 26.0 29.7 25.5
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Annual Debt Service Coverage 1.34x 1.35x 1.37x 1.36x 1.36x 1.36x 1.29x 1.30x 1.34x 3.68x
----------------------------------------------------------------------------
<CAPTION>
=============================
Post PPA Period
-----------------------------
Year Ending December 31, 2022 2023 2024 2025
-----------------------------
<S> <C> <C> <C> <C>
Net Operating Revenues ($million)
PPA Revenues - - - -
Merchant Revenues 378.9 389.7 391.5 416.2
-----------------------------
Total Operating Revenues 378.9 389.7 391.5 416.2
-----------------------------
-----------------------------
Interest Earned on Accounts ($million) 0.3 0.6 0.4 0.2
-----------------------------
Operating Expenses ($million)
Fuel 219.2 228.8 226.8 238.4
Fixed O&M 15.5 17.1 22.2 21.4
Variable O&M 4.9 5.0 10.5 9.1
Administration 0.6 0.6 0.6 0.6
Insurance 2.2 2.3 2.3 2.4
Property Taxes 1.9 1.9 2.0 2.1
Local Taxes 1.6 2.3 3.0 3.8
-----------------------------
Total Operating Expenses 245.9 258.1 267.3 277.8
-----------------------------
-----------------------------
Cash Flow Available for Debt Service ($million) 133.4 132.2 124.5 138.6
-----------------------------
Annual Debt Service ($million)
Facility Bonds
B-O-Y Balance Outstanding 59.0 40.5 21.3 0.0
Principal and Interest 23.3 23.1 22.1 22.5
LOC & Administrative Fees 0.2 0.2 0.2 0.2
-----------------------------
Total Debt Service 23.6 23.3 22.3 22.7
-----------------------------
-----------------------------
Annual Debt Service Coverage 5.66x 5.67x 5.58x 5.59x
=============================
</TABLE>
* The first five months of 2021 include PPA cash flow and the last seven months
of 2021 include Post PPA cash flow. The resulting blended DSCR is 3.68.
Average Debt Coverage During PPA 1.38x
Minimum Debt Coverage During PPA 1.29x
Average Debt Coverage Post PPA 5.64x
Minimum Debt Coverage Post PPA 5.58x
Average Debt Coverage During 2.20x
Bond Term
B - 68
<PAGE>
Confidential
Exhibit I
AES Ironwood Projected Operating Results
Increased Heat Rate Sensitivity (Case #2)
<TABLE>
<CAPTION>
PPA Period
------------------------------------------------------------------------------------
Year Ending December 31, 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Operating Revenues ($million)
PPA Revenues 32.3 55.4 55.5 58.2 59.9 59.6 62.2 64.0 58.0 56.6 58.6
Merchant Revenues - - - - - - - - - - -
------------------------------------------------------------------------------------
Total Operating Revenues 32.3 55.4 55.5 58.2 59.9 59.6 62.2 64.0 58.0 56.6 58.6
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Interest Earned on Accounts ($million) 0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.3 0.2 0.3 0.5
------------------------------------------------------------------------------------
Operating Expenses ($million)
Fuel - - - - - - - - - - -
Fixed O&M 5.6 12.3 9.4 10.5 12.2 9.8 11.4 13.2 11.2 10.5 10.4
Variable O&M 1.3 2.1 2.2 2.3 2.4 5.2 4.5 2.7 2.7 2.8 3.0
Administration 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.4 0.4
Insurance - 0.6 1.1 1.1 1.2 1.2 1.2 1.3 1.3 1.3 1.4
Property Taxes 0.5 0.9 0.9 1.0 1.0 1.0 1.1 1.1 1.1 1.2 1.2
Local Taxes 0.0 0.0 0.1 0.1 0.1 0.1 0.2 0.2 0.3 0.3 0.3
------------------------------------------------------------------------------------
Total Operating Expenses 7.6 16.3 14.0 15.3 17.2 17.7 18.7 18.8 16.9 16.4 16.6
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Cash Flow Available for Debt Service ($million) 24.9 39.3 41.7 43.1 42.9 42.0 43.7 45.4 41.3 40.5 42.5
------------------------------------------------------------------------------------
Annual Debt Service ($million)
Facility Bonds
B-O-Y Balance Outstanding 308.5 306.5 301.8 295.4 288.4 281.2 272.1 260.7 251.1 241.1 228.4
Principal and Interest 15.9 29.2 31.7 32.9 33.0 32.5 33.7 35.1 32.4 32.0 33.6
LOC & Administrative Fees 0.4 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
------------------------------------------------------------------------------------
Total Debt Service 16.3 29.6 32.0 33.2 33.3 32.8 34.0 35.4 32.7 32.3 33.9
------------------------------------------------------------------------------------
Annual Debt Service Coverage 1.53x 1.33x 1.30x 1.30x 1.29x 1.28x 1.28x 1.28x 1.26x 1.26x 1.25x
------------------------------------------------------------------------------------
<CAPTION>
PPA Period
----------------------------------------------------------------------------
Year Ending December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021*
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Operating Revenues ($million)
PPA Revenues 58.6 60.0 59.4 57.0 57.8 57.2 54.4 55.3 54.9 23.5
Merchant Revenues - - - - - - - - - 215.3
----------------------------------------------------------------------------
Total Operating Revenues 58.6 60.0 59.4 57.0 57.8 57.2 54.4 55.3 54.9 238.7
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Interest Earned on Accounts ($million) 0.3 0.3 0.4 0.2 0.3 0.5 0.3 0.3 0.4 0.2
----------------------------------------------------------------------------
Operating Expenses ($million)
Fuel - - - - - - - - - 129.6
Fixed O&M 13.3 13.3 11.3 11.6 12.6 12.5 15.7 15.9 13.5 16.3
Variable O&M 6.3 5.5 3.3 3.3 3.5 3.6 7.6 6.6 4.0 4.1
Administration 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.5 0.5 0.5
Insurance 1.4 1.5 1.5 1.6 1.6 1.7 1.7 1.8 1.8 1.9
Property Taxes 1.2 1.3 1.3 1.3 1.4 1.4 1.5 1.5 1.5 1.6
Local Taxes 0.2 0.2 0.3 0.3 0.4 0.4 0.4 0.4 0.4 0.9
----------------------------------------------------------------------------
Total Operating Expenses 22.9 22.1 18.0 18.6 19.9 20.0 27.3 26.6 21.7 154.8
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash Flow Available for Debt Service ($million) 36.1 38.2 41.8 38.6 38.3 37.7 27.4 29.0 33.6 84.1
----------------------------------------------------------------------------
Annual Debt Service ($million)
Facility Bonds
B-O-Y Balance Outstanding 219.0 207.1 191.2 175.9 159.2 141.1 128.6 113.8 93.7 76.1
Principal and Interest 29.3 30.8 33.7 31.7 31.7 31.6 24.5 25.8 29.5 25.2
LOC & Administrative Fees 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.3 0.3 0.2
----------------------------------------------------------------------------
Total Debt Service 29.6 31.1 34.0 32.0 32.0 31.9 24.8 26.0 29.7 25.5
----------------------------------------------------------------------------
Annual Debt Service Coverage 1.22x 1.23x 1.23x 1.21x 1.20x 1.18x 1.11x 1.11x 1.13x 3.30x
----------------------------------------------------------------------------
<CAPTION>
=============================
Post PPA Period
-----------------------------
Year Ending December 31, 2022 2023 2024 2025
-----------------------------
<S> <C> <C> <C> <C>
Net Operating Revenues ($million)
PPA Revenues - - - -
Merchant Revenues 378.9 389.7 391.5 416.2
-----------------------------
Total Operating Revenues 378.9 389.7 391.5 416.2
-----------------------------
-----------------------------
Interest Earned on Accounts ($million) 0.3 0.6 0.3 0.2
-----------------------------
Operating Expenses ($million)
Fuel 230.2 240.2 238.1 250.3
Fixed O&M 15.3 14.9 19.3 18.7
Variable O&M 4.2 4.4 9.1 7.9
Administration 0.5 0.5 0.5 0.6
Insurance 1.9 2.0 2.0 2.1
Property Taxes 1.6 1.7 1.7 1.8
Local Taxes 1.6 2.3 3.0 3.8
-----------------------------
Total Operating Expenses 255.3 266.0 273.8 285.1
-----------------------------
-----------------------------
Cash Flow Available for Debt Service ($million) 123.8 124.2 118.1 131.3
-----------------------------
Annual Debt Service ($million)
Facility Bonds
B-O-Y Balance Outstanding 59.0 40.5 21.3 0.0
Principal and Interest 23.3 23.1 22.1 22.5
LOC & Administrative Fees 0.2 0.2 0.2 0.2
-----------------------------
Total Debt Service 23.6 23.3 22.3 22.7
-----------------------------
Annual Debt Service Coverage 5.26x 5.32x 5.29x 5.29x
=============================
</TABLE>
* The first five months of 2021 include PPA cash flow and the last seven months
of 2021 include Post PPA cash flow. The resulting blended DSCR is 3.30.
Average Debt Coverage During PPA 1.24x
Minimum Debt Coverage During PPA 1.11x
Average Debt Coverage Post PPA 5.29x
Minimum Debt Coverage Post PPA 5.26x
Average Debt Coverage During 2.02x
Bond Term
B - 69
<PAGE>
Confidential
Exhibit I
AES Ironwood Projected Operating Results
Decreased Availability Sensitivity (Case #3)
<TABLE>
<CAPTION>
PPA Period
------------------------------------------------------------------------------------
Year Ending December 31, 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Operating Revenues ($million)
PPA Revenues 35.1 59.9 59.9 62.8 64.6 64.2 67.3 69.3 63.2 62.3 64.7
Merchant Revenues - - - - - - - - - - -
------------------------------------------------------------------------------------
Total Operating Revenues 35.1 59.9 59.9 62.8 64.6 64.2 67.3 69.3 63.2 62.3 64.7
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Interest Earned on Accounts ($million) 0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.3 0.2 0.3 0.5
------------------------------------------------------------------------------------
Operating Expenses ($million)
Fuel - - - - - - - - - - -
Fixed O&M 7.0 13.1 9.4 10.7 12.3 9.8 11.6 13.4 11.2 10.6 10.6
Variable O&M 1.3 2.1 2.2 2.3 2.4 5.2 4.5 2.7 2.7 2.8 3.0
Administration 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.4 0.4
Insurance - 0.6 1.1 1.1 1.2 1.2 1.2 1.3 1.3 1.3 1.4
Property Taxes 0.5 0.9 0.9 1.0 1.0 1.0 1.1 1.1 1.1 1.2 1.2
Local Taxes 0.0 0.0 0.1 0.1 0.1 0.1 0.2 0.2 0.3 0.3 0.3
------------------------------------------------------------------------------------
Total Operating Expenses 8.9 17.1 13.9 15.5 17.3 17.7 18.9 19.0 16.9 16.6 16.8
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Cash Flow Available for Debt Service ($million) 26.3 43.0 46.1 47.5 47.5 46.7 48.6 50.6 46.6 46.0 48.3
------------------------------------------------------------------------------------
Annual Debt Service ($million)
Facility Bonds
B-O-Y Balance Outstanding 308.5 306.5 301.8 295.4 288.4 281.2 272.1 260.7 251.1 241.1 228.4
Principal and Interest 15.9 29.2 31.7 32.9 33.0 32.5 33.7 35.1 32.4 32.0 33.6
LOC & Administrative Fees 0.4 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
------------------------------------------------------------------------------------
Total Debt Service 16.3 29.6 32.0 33.2 33.3 32.8 34.0 35.4 32.7 32.3 33.9
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Annual Debt Service Coverage 1.61x 1.45x 1.44x 1.43x 1.43x 1.43x 1.43x 1.43x 1.42x 1.43x 1.42x
------------------------------------------------------------------------------------
<CAPTION>
PPA Period
----------------------------------------------------------------------------
Year Ending December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021*
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Operating Revenues ($million)
PPA Revenues 64.6 66.4 66.2 63.8 65.2 64.8 61.8 63.3 63.4 26.4
Merchant Revenues - - - - - - - - - 213.7
----------------------------------------------------------------------------
Total Operating Revenues 64.6 66.4 66.2 63.8 65.2 64.8 61.8 63.3 63.4 240.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Interest Earned on Accounts ($million) 0.3 0.3 0.4 0.2 0.3 0.5 0.3 0.3 0.4 0.2
----------------------------------------------------------------------------
Operating Expenses ($million)
Fuel - - - - - - - - - 122.4
Fixed O&M 13.2 13.5 11.5 11.6 12.9 12.5 15.6 16.2 13.7 13.6
Variable O&M 6.3 5.5 3.3 3.3 3.5 3.6 7.6 6.6 4.0 4.1
Administration 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.5 0.5 0.5
Insurance 1.4 1.5 1.5 1.6 1.6 1.7 1.7 1.8 1.8 1.9
Property Taxes 1.2 1.3 1.3 1.3 1.4 1.4 1.5 1.5 1.5 1.6
Local Taxes 0.2 0.2 0.3 0.3 0.4 0.4 0.4 0.4 0.4 0.9
----------------------------------------------------------------------------
Total Operating Expenses 22.8 22.3 18.2 18.6 20.2 20.1 27.2 26.9 22.0 144.9
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash Flow Available for Debt Service ($million) 42.1 44.3 48.4 45.4 45.4 45.2 34.9 36.7 41.9 95.4
----------------------------------------------------------------------------
Annual Debt Service ($million)
Facility Bonds
B-O-Y Balance Outstanding 219.0 207.1 191.2 175.9 159.2 141.1 128.6 113.8 93.7 76.1
Principal and Interest 29.3 30.8 33.7 31.7 31.7 31.6 24.5 25.8 29.5 25.2
LOC & Administrative Fees 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.3 0.3 0.2
----------------------------------------------------------------------------
Total Debt Service 29.6 31.1 34.0 32.0 32.0 31.9 24.8 26.0 29.7 25.5
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Annual Debt Service Coverage 1.42x 1.42x 1.42x 1.42x 1.42x 1.42x 1.41x 1.41x 1.41x 3.74x
----------------------------------------------------------------------------
<CAPTION>
=============================
Post PPA Period
-----------------------------
Year Ending December 31, 2022 2023 2024 2025
-----------------------------
<S> <C> <C> <C> <C>
Net Operating Revenues ($million)
PPA Revenues (0.1) - - -
Merchant Revenues 373.5 381.8 387.8 411.3
-----------------------------
Total Operating Revenues 373.4 381.8 387.8 411.3
-----------------------------
-----------------------------
Interest Earned on Accounts ($million) 0.3 0.6 0.3 0.2
-----------------------------
Operating Expenses ($million)
Fuel 215.8 223.4 224.2 235.1
Fixed O&M 13.7 14.9 19.3 18.7
Variable O&M 4.2 4.3 9.0 7.8
Administration 0.5 0.5 0.5 0.6
Insurance 1.9 2.0 2.0 2.1
Property Taxes 1.6 1.7 1.7 1.8
Local Taxes 1.6 2.3 3.0 3.8
-----------------------------
Total Operating Expenses 239.4 249.0 259.8 269.8
-----------------------------
-----------------------------
Cash Flow Available for Debt Service ($million) 134.3 133.3 128.3 141.7
-----------------------------
Annual Debt Service ($million)
Facility Bonds
B-O-Y Balance Outstanding 59.0 40.5 21.3 0.0
Principal and Interest 23.3 23.1 22.1 22.5
LOC & Administrative Fees 0.2 0.2 0.2 0.2
-----------------------------
Total Debt Service 23.6 23.3 22.3 22.7
-----------------------------
-----------------------------
Annual Debt Service Coverage 5.70x 5.71x 5.75x 5.71x
=============================
</TABLE>
* The first five months of 2021 include PPA cash flow and the last seven months
of 2021 include Post PPA cash flow. The resulting blended DSCR is 3.74.
Average Debt Coverage During PPA 1.43x
Minimum Debt Coverage During PPA 1.41x
Average Debt Coverage Post PPA 5.73x
Minimum Debt Coverage Post PPA 5.70x
Average Debt Coverage During 2.26x
Bond Term
B - 70
<PAGE>
Confidential
Exhibit I
AES Ironwood Projected Operating Results
Hagler Bailly High Gas Price Sensitivity (Case #4)
<TABLE>
<CAPTION>
PPA Period
------------------------------------------------------------------------------------
Year Ending December 31, 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Operating Revenues ($million)
PPA Revenues 34.8 59.4 59.6 62.5 64.3 63.9 67.0 68.8 62.6 61.8 64.3
Merchant Revenues - - - - - - - - - - -
------------------------------------------------------------------------------------
Total Operating Revenues 34.8 59.4 59.6 62.5 64.3 63.9 67.0 68.8 62.6 61.8 64.3
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Interest Earned on Accounts ($million) 0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.3 0.2 0.3 0.5
------------------------------------------------------------------------------------
Operating Expenses ($million)
Fuel - - - - - - - - - - -
Fixed O&M 7.0 13.1 9.4 10.6 12.2 9.8 11.6 13.3 11.1 10.7 10.6
Variable O&M 1.2 2.0 2.1 2.2 2.3 5.1 4.4 2.5 2.5 2.7 2.8
Administration 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.4 0.4
Insurance - 0.6 1.1 1.1 1.2 1.2 1.2 1.3 1.3 1.3 1.4
Property Taxes 0.5 0.9 0.9 1.0 1.0 1.0 1.1 1.1 1.1 1.2 1.2
Local Taxes 0.0 0.0 0.1 0.1 0.1 0.1 0.2 0.2 0.3 0.3 0.3
------------------------------------------------------------------------------------
Total Operating Expenses 8.9 17.0 13.8 15.3 17.1 17.5 18.8 18.8 16.6 16.4 16.6
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Cash Flow Available for Debt Service ($million) 26.0 42.6 45.9 47.4 47.4 46.6 48.4 50.4 46.2 45.7 48.1
------------------------------------------------------------------------------------
Annual Debt Service ($million)
Facility Bonds
B-O-Y Balance Outstanding 308.5 306.5 301.8 295.4 288.4 281.2 272.1 260.7 251.1 241.1 228.4
Principal and Interest 15.9 29.2 31.7 32.9 33.0 32.5 33.7 35.1 32.4 32.0 33.6
LOC & Administrative Fees 0.4 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
------------------------------------------------------------------------------------
Total Debt Service 16.3 29.6 32.0 33.2 33.3 32.8 34.0 35.4 32.7 32.3 33.9
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Annual Debt Service Coverage 1.60x 1.44x 1.43x 1.43x 1.43x 1.42x 1.42x 1.42x 1.41x 1.42x 1.42x
------------------------------------------------------------------------------------
<CAPTION>
PPA Period
----------------------------------------------------------------------------
Year Ending December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021*
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Operating Revenues ($million)
PPA Revenues 64.2 66.2 66.0 63.6 65.3 65.1 61.9 63.4 63.7 26.7
Merchant Revenues - - - - - - - - - 225.7
----------------------------------------------------------------------------
Total Operating Revenues 64.2 66.2 66.0 63.6 65.3 65.1 61.9 63.4 63.7 252.3
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Interest Earned on Accounts ($million) 0.3 0.3 0.4 0.2 0.3 0.5 0.3 0.3 0.4 0.2
----------------------------------------------------------------------------
Operating Expenses ($million)
Fuel - - - - - - - - - 141.6
Fixed O&M 13.2 13.5 11.4 11.6 12.9 12.6 15.6 16.2 13.8 13.5
Variable O&M 6.2 5.3 3.1 3.2 3.4 3.5 7.5 6.5 3.9 4.0
Administration 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.5 0.5 0.5
Insurance 1.4 1.5 1.5 1.6 1.6 1.7 1.7 1.8 1.8 1.9
Property Taxes 1.2 1.3 1.3 1.3 1.4 1.4 1.5 1.5 1.5 1.6
Local Taxes 0.2 0.2 0.3 0.3 0.4 0.4 0.4 0.4 0.4 0.9
----------------------------------------------------------------------------
Total Operating Expenses 22.6 22.3 18.1 18.4 20.1 20.0 27.1 26.8 22.0 163.9
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash Flow Available for Debt Service ($million) 41.9 44.2 48.4 45.4 45.5 45.6 35.2 36.8 42.2 88.6
----------------------------------------------------------------------------
Annual Debt Service ($million)
Facility Bonds
B-O-Y Balance Outstanding 219.0 207.1 191.2 175.9 159.2 141.1 128.6 113.8 93.7 76.1
Principal and Interest 29.3 30.8 33.7 31.7 31.7 31.6 24.5 25.8 29.5 25.2
LOC & Administrative Fees 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.3 0.3 0.2
----------------------------------------------------------------------------
Total Debt Service 29.6 31.1 34.0 32.0 32.0 31.9 24.8 26.0 29.7 25.5
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Annual Debt Service Coverage 1.42x 1.42x 1.42x 1.42x 1.42x 1.43x 1.42x 1.41x 1.42x 3.48x
----------------------------------------------------------------------------
<CAPTION>
=============================
Post PPA Period
-----------------------------
Year Ending December 31, 2022 2023 2024 2025
-----------------------------
<S> <C> <C> <C> <C>
Net Operating Revenues ($million)
PPA Revenues - - - -
Merchant Revenues 398.8 407.0 405.7 432.2
-----------------------------
Total Operating Revenues 398.8 407.0 405.7 432.2
-----------------------------
-----------------------------
Interest Earned on Accounts ($million) 0.3 0.6 0.3 0.2
-----------------------------
Operating Expenses ($million)
Fuel 251.5 261.6 259.5 273.5
Fixed O&M 13.7 14.9 19.3 18.7
Variable O&M 4.2 4.3 9.0 7.9
Administration 0.5 0.5 0.5 0.6
Insurance 1.9 2.0 2.0 2.1
Property Taxes 1.6 1.7 1.7 1.8
Local Taxes 1.6 2.3 3.0 3.8
-----------------------------
Total Operating Expenses 275.0 287.3 295.1 308.2
-----------------------------
-----------------------------
Cash Flow Available for Debt Service ($million) 124.2 120.3 110.9 124.2
-----------------------------
Annual Debt Service ($million)
Facility Bonds
B-O-Y Balance Outstanding 59.0 40.5 21.3 0.0
Principal and Interest 23.3 23.1 22.1 22.5
LOC & Administrative Fees 0.2 0.2 0.2 0.2
-----------------------------
Total Debt Service 23.6 23.3 22.3 22.7
-----------------------------
-----------------------------
Annual Debt Service Coverage 5.27x 5.15x 4.98x 5.00x
=============================
</TABLE>
* The first five months of 2021 include PPA cash flow and the last seven months
of 2021 include Post PPA cash flow. The resulting blended DSCR is 3.48.
Average Debt Coverage During PPA 1.43x
Minimum Debt Coverage During PPA 1.41x
Average Debt Coverage Post PPA 5.13x
Minimum Debt Coverage Post PPA 4.98x
Average Debt Coverage During 2.14x
Bond Term
B - 71
<PAGE>
Confidential
Exhibit I
AES Ironwood Projected Operating Results
Hagler Bailly Low Demand Growth Sensitivity (Case #5)
<TABLE>
<CAPTION>
PPA Period
------------------------------------------------------------------------------------
Year Ending December 31, 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Operating Revenues ($million)
PPA Revenues 35.1 60.2 60.4 63.4 65.4 65.0 68.0 70.1 64.1 63.1 65.5
Merchant Revenues - - - - - - - - - - -
------------------------------------------------------------------------------------
Total Operating Revenues 35.1 60.2 60.4 63.4 65.4 65.0 68.0 70.1 64.1 63.1 65.5
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Interest Earned on Accounts ($million) 0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.3 0.2 0.3 0.5
------------------------------------------------------------------------------------
Operating Expenses ($million)
Fuel - - - - - - - - - - -
Fixed O&M 7.0 13.2 9.5 10.6 12.3 9.8 11.5 13.4 11.2 10.6 10.6
Variable O&M 1.3 2.1 2.2 2.3 2.4 5.2 4.5 2.7 2.7 2.8 3.0
Administration 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.4 0.4
Insurance - 0.6 1.1 1.1 1.2 1.2 1.2 1.3 1.3 1.3 1.4
Property Taxes 0.5 0.9 0.9 1.0 1.0 1.0 1.1 1.1 1.1 1.2 1.2
Local Taxes 0.0 0.0 0.1 0.1 0.1 0.1 0.2 0.2 0.3 0.3 0.3
------------------------------------------------------------------------------------
Total Operating Expenses 8.9 17.2 14.1 15.4 17.3 17.7 18.9 19.0 16.9 16.6 16.8
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Cash Flow Available for Debt Service ($million) 26.3 43.2 46.6 48.2 48.3 47.5 49.4 51.4 47.4 46.8 49.2
------------------------------------------------------------------------------------
Annual Debt Service ($million)
Facility Bonds
B-O-Y Balance Outstanding 308.5 306.5 301.8 295.4 288.4 281.2 272.1 260.7 251.1 241.1 228.4
Principal and Interest 15.9 29.2 31.7 32.9 33.0 32.5 33.7 35.1 32.4 32.0 33.6
LOC & Administrative Fees 0.4 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
------------------------------------------------------------------------------------
Total Debt Service 16.3 29.6 32.0 33.2 33.3 32.8 34.0 35.4 32.7 32.3 33.9
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Annual Debt Service Coverage 1.61x 1.46x 1.45x 1.45x 1.45x 1.45x 1.45x 1.45x 1.45x 1.45x 1.45x
------------------------------------------------------------------------------------
<CAPTION>
PPA Period
----------------------------------------------------------------------------
Year Ending December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021*
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Operating Revenues ($million)
PPA Revenues 65.6 67.3 67.1 64.8 66.2 65.8 62.8 64.2 64.3 27.3
Merchant Revenues - - - - - - - - - 203.5
----------------------------------------------------------------------------
Total Operating Revenues 65.6 67.3 67.1 64.8 66.2 65.8 62.8 64.2 64.3 230.7
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Interest Earned on Accounts ($million) 0.3 0.3 0.4 0.2 0.3 0.5 0.3 0.3 0.4 0.2
----------------------------------------------------------------------------
Operating Expenses ($million)
Fuel - - - - - - - - - 122.8
Fixed O&M 13.3 13.5 11.5 11.7 12.8 12.6 15.6 16.1 13.7 13.6
Variable O&M 6.3 5.5 3.3 3.3 3.5 3.6 7.6 6.6 4.0 4.1
Administration 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.5 0.5 0.5
Insurance 1.4 1.5 1.5 1.6 1.6 1.7 1.7 1.8 1.8 1.9
Property Taxes 1.2 1.3 1.3 1.3 1.4 1.4 1.5 1.5 1.5 1.6
Local Taxes 0.2 0.2 0.3 0.3 0.4 0.4 0.4 0.4 0.4 0.9
----------------------------------------------------------------------------
Total Operating Expenses 22.9 22.3 18.2 18.7 20.1 20.1 27.2 26.8 22.0 145.3
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash Flow Available for Debt Service ($million) 43.0 45.3 49.3 46.4 46.4 46.2 35.9 37.6 42.8 85.7
----------------------------------------------------------------------------
Annual Debt Service ($million)
Facility Bonds
B-O-Y Balance Outstanding 219.0 207.1 191.2 175.9 159.2 141.1 128.6 113.8 93.7 76.1
Principal and Interest 29.3 30.8 33.7 31.7 31.7 31.6 24.5 25.8 29.5 25.2
LOC & Administrative Fees 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.3 0.3 0.2
----------------------------------------------------------------------------
Total Debt Service 29.6 31.1 34.0 32.0 32.0 31.9 24.8 26.0 29.7 25.5
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Annual Debt Service Coverage 1.45x 1.45x 1.45x 1.45x 1.45x 1.45x 1.45x 1.44x 1.44x 3.36x
----------------------------------------------------------------------------
<CAPTION>
=============================
Post PPA Period
-----------------------------
Year Ending December 31, 2022 2023 2024 2025
-----------------------------
<S> <C> <C> <C> <C>
Net Operating Revenues ($million)
PPA Revenues - - - -
Merchant Revenues 359.0 370.1 367.6 385.8
-----------------------------
Total Operating Revenues 359.0 370.1 367.6 385.8
-----------------------------
-----------------------------
Interest Earned on Accounts ($million) 0.3 0.6 0.3 0.2
-----------------------------
Operating Expenses ($million)
Fuel 217.6 226.3 224.1 234.7
Fixed O&M 13.5 14.9 19.3 18.7
Variable O&M 4.2 4.3 9.0 7.8
Administration 0.5 0.5 0.5 0.6
Insurance 1.9 2.0 2.0 2.1
Property Taxes 1.6 1.7 1.7 1.8
Local Taxes 1.6 2.3 3.0 3.8
-----------------------------
Total Operating Expenses 240.9 252.0 259.7 269.4
-----------------------------
-----------------------------
Cash Flow Available for Debt Service ($million) 118.4 118.6 108.3 116.6
-----------------------------
Annual Debt Service ($million)
Facility Bonds
B-O-Y Balance Outstanding 59.0 40.5 21.3 0.0
Principal and Interest 23.3 23.1 22.1 22.5
LOC & Administrative Fees 0.2 0.2 0.2 0.2
-----------------------------
Total Debt Service 23.6 23.3 22.3 22.7
-----------------------------
-----------------------------
Annual Debt Service Coverage 5.03x 5.08x 4.86x 4.70x
=============================
</TABLE>
* The first five months of 2021 include PPA cash flow and the last seven months
of 2021 include Post PPA cash flow. The resulting blended DSCR is 3.36.
Average Debt Coverage During PPA 1.46x
Minimum Debt Coverage During PPA 1.44x
Average Debt Coverage Post PPA 4.93x
Minimum Debt Coverage Post PPA 4.70x
Average Debt Coverage During 2.13x
Bond Term
B - 72
<PAGE>
[GRAPHIC OMITTED]
Stone & Webster AES Ironwood Project
Management Consultants, Inc. Independent Technical Review
- --------------------------------------------------------------------------------
Exhibit II
Document Log
B - 73
<PAGE>
[GRAPHIC OMITTED]
Stone & Webster AES Ironwood Project
Management Consultants, Inc. Independent Technical Review
- --------------------------------------------------------------------------------
Exhibit II
Document Log
- --------------------------------------------------------------------------------
No. Reference
- --------------------------------------------------------------------------------
1. Draft property lease between Consolidated Rail Corporation and AES
Ironwood
- --------------------------------------------------------------------------------
2. Draft Sidetrack Agreement between Consolidated Rail Corporation and AES
Ironwood
- --------------------------------------------------------------------------------
3. Draft Rail Corporation License Agreement for Undergrade Watermain
Occupation
- --------------------------------------------------------------------------------
4. Agreement relating to real estate dated October 22, 1998
- --------------------------------------------------------------------------------
5. EWG Application
- --------------------------------------------------------------------------------
6. Effluent Supply Agreement
- --------------------------------------------------------------------------------
7. Amended and Restated Operating Agreement of PJM Interconnection, LLC
dated June 2, 1997
- --------------------------------------------------------------------------------
8. Maintenance Program Parts, Shop Repairs and Scheduled Outage TFA
Services Contract last revised November 19, 1998
- --------------------------------------------------------------------------------
9. Draft Generation Facility Transmission Interconnection Agreement
between Metropolitan Edison Company d/b/a AES Ironwood LLC
- --------------------------------------------------------------------------------
10. Amended and Restated Power Purchase Agreement by and between AES
Ironwood LLC and Williams Energy Marketing & Trading Company
- --------------------------------------------------------------------------------
11. Agreement for Engineering, Procurement and Construction Services
between AES Ironwood, Inc. ("Owner") and Siemens Westinghouse Power
Corporation dated September 23, 1998
- --------------------------------------------------------------------------------
12. Report on MHI 501G for KEPCO Ilijan Power Project
- --------------------------------------------------------------------------------
13. Draft report on MHI 501G Combustion Turbine Generator dated December
14, 1998
- --------------------------------------------------------------------------------
14. Hagler Bailly Report prepared for Lehman Brothers on the Projected
Competitiveness of the Ironwood Power Project in the PJM Market dated
February 1999 and draft report dated October 1998
- --------------------------------------------------------------------------------
15. Agreement for Engineering, Procurement and Construction Services
- --------------------------------------------------------------------------------
16. EPC Appendix A
- --------------------------------------------------------------------------------
17. Effluent Supply Agreement with City of Lebanon Authority
- --------------------------------------------------------------------------------
18. Maintenance Program Parts, Shop Repairs and Scheduled Outage TFA
Services Contract
- --------------------------------------------------------------------------------
19. SWPC Engineering Flow Schematics Drawings F8210010-F8210480-10/01/98
- --------------------------------------------------------------------------------
20. NPDES Permit # PAR-10-P082
- --------------------------------------------------------------------------------
21. Letter dated November 18, 1998 from K. Friederich Updergrafe to Ian
Miller re POTW Water Supply Pipeline and Pumping Station
- --------------------------------------------------------------------------------
22. Fax to Debra Richert dated April 22, 1999 from Alicia Sinn re the final
plan approval for the Ironwood facility issued by PaDEP on 3/29/99
- --------------------------------------------------------------------------------
23. Copy of letter to Patricia Rollin dated February 3, 1999 concerning the
Delay in Financial Closing
- --------------------------------------------------------------------------------
24. Letter to John Garvey from Jeffrey Jacobsohn dated November 16, 1998 re
the Facility Emission Rates for PSD Application
- --------------------------------------------------------------------------------
25. Memo to John Garvey from Bart Rossi dated November 25, 1998 regarding
the AES Ironwood Emissions Data
- --------------------------------------------------------------------------------
26. Specification For A Heat Recovery Steam Generator for the AES Ironwood
Project received by SWMCI in Boston on February 24, 1999
- --------------------------------------------------------------------------------
27. Williams Fuel Plan for AES Ironwood fax dated February 5, 1999
- --------------------------------------------------------------------------------
28. Fax to John Garvey from Ian Miller dated March 12, 1999 regarding the
Gas Pressure and Compressors
- --------------------------------------------------------------------------------
29. Fax copy of the PJM Regional Fuel Forecast 1998 - 2031 for AES Ironwood
dated January 19, 1999
- --------------------------------------------------------------------------------
B - 74
<PAGE>
[GRAPHIC OMITTED]
Stone & Webster AES Ironwood Project
Management Consultants, Inc. Independent Technical Review
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
30. Draft Evaluation Report of Oil Combustion profile for AES Ironwood
Prepared for AES Corporation by CC Pace Resources dated February 25,
1999
- --------------------------------------------------------------------------------
31. Letter to Bart Rossi from Jeffrey Jacobsohn regarding Stone & Webster's
questions dated March 2, 1999 received by fax
- --------------------------------------------------------------------------------
32. Letter to Bart Rossi from Jeffrey Jacobsohn regarding Combustion
Turbine degradation dated March 1, 1999 received by fax
- --------------------------------------------------------------------------------
33. Fax from Gary Dzikowski to Ian Miller regarding DLN Combustors dated
February 16, 1999
- --------------------------------------------------------------------------------
34. Fax from Jeffrey Jacobsohn to Bart Rossi regarding the Revised Warranty
Data sheet dated February 12, 1999 received by Fax
- --------------------------------------------------------------------------------
35. Letter to Steve Dahm from Jeffrey M. Jacobsohn dated January 29, 1999
regarding Information for Financial Closing received by Fax
- --------------------------------------------------------------------------------
36. Faxed memo dated January 19, 1999 from Siemens Westinghouse concerning
Stone & Webster Issues
- --------------------------------------------------------------------------------
37. Faxed memo dated January 21, 1999 from Gary Dzikowski at Siemens
Westinghouse to Ian Miller concerning Fleet Risk Management Spares
received by Fax
- --------------------------------------------------------------------------------
38. Letter dated December 11, 1998 to John Garvey from Jeffrey M. Jacobsohn
regarding Degradation of the Combustion Turbine
- --------------------------------------------------------------------------------
39. Fax memo to John Garvey from Jeff Jacobsohn dated December 2, 1998
regarding the revised Heat Balance information
- --------------------------------------------------------------------------------
40. Letter dated November 16, 1998 to John Garvey from Jeffrey Jacobsohn
regarding the Facility Emission Rates for PSD Application
- --------------------------------------------------------------------------------
41. Letter dated November 12, 1998 to John Garvey from Jeffrey Jacobsohn
regarding Additional Responses to Various S&W information requests
- --------------------------------------------------------------------------------
42. Letter dated November 4, 1998 to John Garvey from Jeffrey Jacobsohn
regarding Responses to S&W AES Ironwood Additional Information Requests
from S&W dated November 3, 1998
- --------------------------------------------------------------------------------
43. Letter received from Jeffrey M. Jacobsohn in response to a S&W fax
dated October 29, 1998 regarding water balances
- --------------------------------------------------------------------------------
44. Letter to John Garvey dated November 3, 1998 from Jeffrey Jacobsohn
regarding Responses to S&W Request for Additional Information on a
letter and fax dated October 29, 1998
- --------------------------------------------------------------------------------
45. Letter to John Garvey dated November 5, 1998 in response to our letter
for IE Information in our letter dated October 28, 1998
- --------------------------------------------------------------------------------
46. Letter to John Garvey in response to our Letter Dated October 26, 1998
for additional information regarding Technical Questions
- --------------------------------------------------------------------------------
47. Letter to Robert Golden dated December 7, 1998 with a copy to John
Garvey enclosing one set each of the approved Land Development Plan for
Prescott Road
- --------------------------------------------------------------------------------
48. Fax to John Garvey from Eileen Cates transmitting the Outstanding
Issues dated January 29, 1999
- --------------------------------------------------------------------------------
49. Memo from Gary Dzikowski to Ian Miller dated January 14, 1999 providing
responses to questions concerning the HRSG Spec
- --------------------------------------------------------------------------------
50. Memo from Ian Miller to Gary Dzikowski dated December 14, 1998
regarding ZDS and demin water.
- --------------------------------------------------------------------------------
51. Letter from Patricia Rollin to GPU Energy dated January 11, 1999
concerning the AES Ironwood Interconnection
- --------------------------------------------------------------------------------
52. Letter to Patricia Rollin from GPU Energy referring to the letter of
January 11, 1999 concerning the AES Ironwood Interconnection
- --------------------------------------------------------------------------------
53. Letter to Steve Dahm from Jeffrey Jacobsohn regarding the minutes of
January 21, 1999 meeting
- --------------------------------------------------------------------------------
54. Letter dated January 26, 1999 to Ian Miller from GPU regarding the
Preliminary Interconnection facilities Cost
- --------------------------------------------------------------------------------
B - 75
<PAGE>
[GRAPHIC OMITTED]
Stone & Webster AES Ironwood Project
Management Consultants, Inc. Independent Technical Review
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
55. Letter dated March 3, 1999 to John Garvey from Anthony P. Letizia at
TRC regarding the confirmation of Revised Pennsylvania Title 25 Chapter
139
- --------------------------------------------------------------------------------
56. Letter to Ian Miller dated October 7, 1998 from the Lebanon County
Conservation District concerning the General Permit Issuance, NPDES
Permit #: PAR-10-PO82
- --------------------------------------------------------------------------------
57. Fax copy of the Petition for an interpretation and variance dated
February 11, 1998
- --------------------------------------------------------------------------------
58. Letter to Buck Applewhite & John Garvey dated September 30, 1998 from
Eileen Cates dated September 30, 1998 concerning the technical
information that will be used for this report
- --------------------------------------------------------------------------------
59. Copy of a fax listing the required permits and approvals for AES
Ironwood dated November 6, 1998
- -------------------------------------------------------------------------------
60. Letter from Paula B. Ballaron to Patricia L. Rollin from the
Susquehanna River Basin Commission approving the project
- --------------------------------------------------------------------------------
61. Notice of Commission Action Docket NoD-97-45 for the Surface Water
Withdrawal/Importation
- --------------------------------------------------------------------------------
62. Letter received by fax dated April 22, 1999 from the United States
Environmental Protection Agency regarding the review of the draft plan
approval for AES Ironwood
- --------------------------------------------------------------------------------
63. Letter received dated April 7, 1999 between Jeffrey Jacobsohn and
Patrician Rollin regarding AES Ironwood Payment Schedule Revision I
Letter Agreement
- --------------------------------------------------------------------------------
64. Letter received dated March 31, 1999 between Jeffrey Jacobsohn and
Patricia Rollin regarding AES Ironwood Financial Closing Later than
March 31, 1999 Continued Performance Letter Agreement
- --------------------------------------------------------------------------------
65. Letter dated March 24, 1999 to Bart Rossi from Jeffrey M. Jacobsohn re
CO Catalyst Emissions Warrantly
- --------------------------------------------------------------------------------
66. Letter dated April 22, 1999 to Patricia Rollin from Jeffrey M.
Jacobsohn re Gas Specifications Clarification Letter
- --------------------------------------------------------------------------------
67. Letter dated May 12, 1999 to Patricia Rollin from Jeffrey Jacobsohn re
Delay in Commencement Date after June 1, 1999
- --------------------------------------------------------------------------------
68. Letter dated May 19, 1999 to Patricia Rollin from Philip Scalzo re
Williams executed certain agreements with Texas Eastern Transmission
Corporation
- --------------------------------------------------------------------------------
69. Memo from Jeffrey Jacobsohn of SWPC to Patty Rollin of AES concerning
the estimated performance impact of the gas compressor deletion
- --------------------------------------------------------------------------------
B - 76
<PAGE>
------------------------------------------------------------
ANNEX C
INDEPENDENT POWER
CONSULTANT'S REPORT
------------------------------------------------------------
<PAGE>
PROJECTED COMPETITIVENESS
OF THE IRONWOOD POWER PLANT
IN THE PJM MARKET
Privileged and Confidential
Prepared for:
Lehman Brothers
3 World Financial Center
New York, NY 10285-1600
Prepared by:
Hagler Bailly Consulting, Inc.
1776 Eye Street, NW
Suite 500
Washington, DC 20006
(202) 223-6665
Contact:
Alan L. Madian
June 1, 1999
C-1
- ---------------------------------Hagler Bailly---------------------------------
Privileged and Confidential
<PAGE>
- --------------------------------------------------------------------------------
CONTENTS
<TABLE>
<S> <C>
Foreword ................................................................................................6
Executive Summary
S.1 The Project.....................................................................................7
S.2 PJM Market Structure............................................................................7
S.2.1 Procedure..............................................................................8
S.3 Key Base Case Assumptions and Sensitivity Cases.................................................9
S.4 Forecasted Results.............................................................................11
S.5 Conclusions....................................................................................17
Chapter 1 Introduction
1.1 Background.....................................................................................18
1.2 Organization of the Report.....................................................................18
Chapter 2 Ironwood Project
2.1 The Ironwood Project...........................................................................20
Chapter 3 Proposed Market Structure In PJM
3.1 Background.....................................................................................22
3.2 The PJM Market.................................................................................23
3.2.1 The Spot Energy Market................................................................23
3.2.2 Installed Capacity Market.............................................................25
Chapter 4 Approach To Market Price Forecasting
4.1 Introduction...................................................................................27
4.2 Issues in Predicting Market Prices.............................................................27
4.2.1 Issues in the Capacity Markets........................................................27
4.2.2 Ancillary Services....................................................................29
4.3 Approach to Market Price Forecasting...........................................................30
4.3.1 Market Characteristics................................................................31
4.3.2 Predicting Energy Prices and Dispatch.................................................31
4.3.3 Predicting Capacity Prices: The Capacity Market Simulation Model......................32
4.3.4 Market Entry and Exit.................................................................33
</TABLE>
C-2
- ---------------------------------Hagler Bailly---------------------------------
Privileged and Confidential
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Chapter 5 Market Price Forecasting: Assumptions and Assumption Development
5.1 Introduction...................................................................................35
5.2 Production Cost Model Input Assumptions........................................................35
5.2.1 Existing Generation Units.............................................................37
5.2.2 Load Growth...........................................................................40
5.2.3 Fuel Prices...........................................................................42
5.2.4 Energy Import/Export Forecast.........................................................44
5.2.5 Transmission Constraints..............................................................45
5.3 Capacity Market Simulation: Model Input Assumptions...........................................46
5.3.1 Existing Units Going-Forward Costs....................................................46
5.3.2 New Generating Capacity...............................................................47
Chapter 6 Market Price Forecasts
6.1 Introduction...................................................................................49
6.2 PJM Capacity and Energy Price Forecasts........................................................49
6.2.1 Base Case.............................................................................49
6.3 Implications for AES Ironwood..................................................................56
Chapter 7 Conclusions....................................................................................62
</TABLE>
C-3
- ---------------------------------Hagler Bailly---------------------------------
Privileged and Confidential
<PAGE>
- --------------------------------------------------------------------------------
TABLES
<TABLE>
<S> <C>
Executive Summary
S.1 Delivered Fuel Prices (1996 $/MMBtu)...........................................................10
S.2 PJM All-In Average (Energy + Capacity) Prices (1996 $).........................................12
Chapter 5 Market Price Forecasting: Assumptions and Assumption Development
5.1 Variable Operating Costs (1996 $ per MWh)......................................................38
5.2 Nuclear Unit Retirement Dates..................................................................40
5.3 Delivered Fuel Prices (1996 $/MMBtu)...........................................................42
5.4 Imports and Exports (1996 $ per MWh)...........................................................45
5.5 Emergency Imports..............................................................................45
5.6 New Generating Unit Characteristics (1996 $)...................................................48
Chapter 6 Market Price Forecasts
6.1 PJM Capacity Additions and Retirements.........................................................51
6.2 PJM Unweighted Average Energy Prices (1996 $/MWh)..............................................53
6.3 PJM Capacity Prices (1996 $/kW-yr).............................................................54
6.4 PJM All-In Average (Energy + Capacity) Prices (1996 $).........................................55
</TABLE>
C-4
- ---------------------------------Hagler Bailly---------------------------------
Privileged and Confidential
<PAGE>
- --------------------------------------------------------------------------------
FIGURES
<TABLE>
<S> <C>
Executive Summary
S.1 PJM Unweighted Average Energy Prices 1996 $....................................................13
S.2 AES Ironwood Capacity Factors..................................................................14
S.3 PJM Supply Curves (1996 $/MWh).................................................................15
Chapter 4 Approach to Market Price Forecasting
4.1 Approach to Developing Capacity and Energy Prices..............................................30
4.2 Example Supply and Demand Curve................................................................33
Chapter 5 Market Price Forecasting: Assumptions and Assumption Development
5.1 Forecast of Allowance Prices (1996 $ per Ton)..................................................39
5.2 Cumulative Demand Growth in PJM................................................................41
5.3 Delivered Natural Gas Prices 1996 $............................................................43
5.4 PJM Generation Weighted Average Delivered Coal Prices 1996 $...................................44
Chapter 6 Market Price Forecasts
6.1 PJM Unweighted Average Energy Prices 1996 $....................................................52
6.2 AES Ironwood Capacity Factors..................................................................56
6.3 Ironwood's Energy Revenue vs. PJM's Time-Weighted Average
Energy Price 1996 $ ...........................................................................58
6.4 PJM Supply Curves (1996 $/MWh)..............................................................59-61
</TABLE>
C-5
- ---------------------------------Hagler Bailly---------------------------------
Privileged and Confidential
<PAGE>
- --------------------------------------------------------------------------------
FOREWORD
This report presents Hagler Bailly's analysis of the market for power in the
Pennsylvania, New Jersey, Maryland (PJM) power pool.
i. Some information in the report is necessarily based on predications and
estimates of future events and behaviors.
ii. Such predictions or estimates may differ from that which other experts
specializing in the electricity industry might present.
iii. The provision of a report by Hagler Bailly does not obviate the need
for potential investors to make further appropriate inquiries as to the
accuracy of the information included therein, or to undertake an
analysis of its own.
iv. This report is not intended to be a complete and exhaustive analysis of
the subject issues and therefore will not consider some factors that
are important to a potential investor's decision-making.
v. Hagler Bailly and its employees cannot accept liability for loss
suffered in consequence of reliance on the report. Nothing in our
report should be taken as a promise or guarantee as to the occurrence
of any future events.
FOREWORD o C-6
- ---------------------------------Hagler Bailly---------------------------------
Privileged and Confidential
<PAGE>
- --------------------------------------------------------------------------------
EXECUTIVE SUMMARY
Hagler Bailly Consulting, Inc. (Hagler Bailly) was retained by AES Ironwood,
Inc., on behalf of, and to prepare this report solely for, Lehman Brothers, as
Initial Purchaser of certain Rule 144A bonds to be offered by AES Ironwood, LLC
to finance the construction, initial start-up and testing of the Ironwood
facility. We have been retained to independently forecast future market prices
for electric capacity and energy in the Pennsylvania, New Jersey, Maryland (PJM)
power pool and to assess the competitive position of the AES Ironwood Facility
in PJM during the term of the bonds. This document presents the results of our
analysis.
S.1 THE PROJECT
AES Ironwood, LLC ("AES Ironwood"), a wholly owned subsidiary of the AES
Corporation ("AES"), proposes to build and operate a 705 MW (net) gas
combined-cycle power station ("the Project"). The AES Ironwood power station
will employ Siemens Westinghouse 5O1G technology and will be fueled primarily by
natural gas. The facility will sell its entire output to the Williams Energy
Marketing and Trading Company under a fixed price 20 year power purchase
agreement ("PPA") and will operate as a merchant plant (or under bilateral
contracts) from the expiration of the PPA. The facility will be located in South
Lebanon Township, Pennsylvania in the Central region of the Pennsylvania, New
Jersey, Maryland (PJM) power pool.
S.2 PJM MARKET STRUCTURE
The PJM market may be characterized on the supply side as competitive except for
the limited hours when transmission is constrained. New capacity is expected to
be composed predominantly of gas-fueled combined cycle units, though simple
cycle combustion turbines ("peakers") will be added, especially in areas with
substantial base load capacity.
We have modeled the future PJM market with both an energy market and a capacity
market. This is not to say that a separate capacity market will necessarily
continue well into the future. However, in the absence of a separate installed
capacity market, an at least equivalent revenue increase would be required in
the energy or ancillary services market to maintain reserve margins at levels
prospectively thought to be essential by system operators and regulators.
FOREWORD o C-7
- ---------------------------------Hagler Bailly---------------------------------
Privileged and Confidential
<PAGE>
We have assumed that energy market participants will base dispatch and payment
in the PJM market upon competitive energy bidding and that the bidding will
shortly cease to be cost-based for investor owned utilities (IOUs), as is
currently required by regulation.
The PJM Independent System Operator (ISO), which became operational at the
beginning of 1998, has set reserve generation capacity requirements on all
load-serving entities (LSEs). These reserve requirements require that
load-serving entities that are short of capacity acquire it from others. The PJM
ISO has established a capacity market to facilitate capacity provision but
bilateral arrangements are also accommodated.
Transmission constraints within PJM play a modest role in the operation of the
PJM market. There are three defined regions within PJM, West, Central, and East
(see Maps 5-1 and 5-2). Each of the historic utilities functions as a control
area. Nodal pricing (i.e., pricing that reflects location-specific factors, such
as transmission constraints) has been implemented recently. The direction of
power flow within PJM is generally from the west, which has a preponderance of
the pool's lower-cost coal units, to the east. Transmission capacity is not
expected to expand significantly within PJM, but no additional important
constraints are forecast.
S.2.1 Procedure
In our analysis, we have used the RealTime(TM) model to simulate future market
conditions and operation. RealTime(TM), a chronological production cost model,
was used to estimate energy prices and revenues through the year 2025. In each
hour the model schedules the units in a least-cost manner based upon fuel cost,
start-up cost, emission cost, and variable O&M cost. The hourly marginal cost is
determined by the cost of the least-expensive unit available to follow
increasing load, which becomes the market price for that hour. Given that
production cost modeling is inherently cost-based, conservative adjustments were
made to the model to account for expected upward pressure on price resulting
from the evolving bid-based system and market power phenomena./1
PowerWorld(TM), a load flow model, was used to determine if Ironwood would
impose additional burdens on the PJM transmission system and if the plant's
location would lead to its being dispatched less than anticipated due to
transmission constraints. The model was also used to assess whether Ironwood
could expect to receive higher revenues due to contributions to voltage support
or for transmission constraint-reducing flows.
To address capacity revenue requirements, Hagler Bailly utilized a model that
calculates the additional revenue, above that earned from energy sales, needed
to meet the revenue requirement
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1 Market power occurs when strategic behavior is possible. This can
occur, for example, when a single plant bids just under the price of
the next highest cost plant in the stack, or when operators of multiple
plants withdraw one or more in order to increase the total revenue they
will receive from those that remain on. Market power can be the result
of collusion, but collusion is not necessary for market power to be
present.
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of the marginal plant entering the market. Plants at the end of their useful
lives, and those that do not recover their going-forward costs are retired.
Based on that model, we have estimated capacity payments necessary to maintain
an installed capacity margin of approximately 18 percent including the PJM
authorized curtailable load margin. The revenue requirement of a new plant
equals the net revenue needed to cover operating costs, taxes, interest and
payment of a target return on equity.
The results from these models provide the basis for the evaluation of the
competitiveness of the Ironwood plant during and after the PPA period, including
the determination of the PJM market revenues to AES Ironwood under merchant
operation.
S.3 KEY BASE CASE ASSUMPTIONS AND SENSITIVITY CASES
The key assumptions that drive the results in this analysis include demand
growth, fuel prices, capacity additions and reserve margin requirements, and the
retirement of nuclear stations. Assumptions were developed for a Base Case and
two downside sensitivities, a Low Demand Growth Case and a High Gas Price Case.
The Base Case represents the most probable market scenario and consequently what
Hagler Bailly believes to be the most likely performance forecast and
competitive position for Ironwood. The sensitivity cases are intended to test
the Project under significantly more adverse circumstances.
Demand
Our load forecast is based upon the actual 1995 PJM hourly load profile. Hagler
Bailly has forecast that PJM peak demand (load) will grow at 1.00% annually
through 2009 and at 0.75% thereafter. Annual energy growth has been forecast at
1.50% through 2002, at 2.00% from 2003 to 2009, and at 1.50% thereafter.
Fuel prices
CC Pace Consulting, LLC ("CC Pace") provided our fossil fuel price forecasts.
Coal price projections were assessed on a plant by plant basis, while gas and
oil were based upon regional zones. Table S-1 summarizes the fuel price
forecasts used in the Base Case.
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Table S-1
Delivered Fuel Prices (1996$/MMBtu)/1
<TABLE>
<CAPTION>
Average
Annual %
Fuel 1998 2005 2010 2020 2025 Change/4
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Natural Gas - PJM East/2 $2.57 $2.48 $2.52 $2.63 $2.69 0.17%
- -------------------------------------------------------------------------------------------
Natural Gas - PJM West $2.47 $2.38 $2.43 $2.53 $2.60 0.18%
- -------------------------------------------------------------------------------------------
Residual #6 $2.10 $2.41 $2.41 $2.41 $2.41 0.51%
- -------------------------------------------------------------------------------------------
Distillate #2 $3.20 $3.69 $3.69 $3.69 $3.69 0.53%
- -------------------------------------------------------------------------------------------
Jet A $3.40 $3.89 $3.89 $3.89 $3.89 0.50%
- -------------------------------------------------------------------------------------------
Coal/3 $1.36 $1.15 $1.09 $1.03 $1.04 -1.00%
- -------------------------------------------------------------------------------------------
</TABLE>
1 Fuel price estimates are left in real 1996$s to maintain consistency with a
proprietary Hagler Bailly RealTime(TM) database.
2 Ironwood is forecast to use PJM East natural gas. The Henry Hub to PJM East
basis (transportation) differential is approximately $0.52 per MMBtu.
3 Coal prices were provided on a plant specific basis. Average prices represent
the average for all the coal consumed in a given year. The 1998 price is for
the period Oct. 1997 - Sept. 1998.
4 Calculated from 1998 to 2025.
Capacity Additions
It is our belief that PJM will continue to impose a required reserve margin with
a target of 18%. Actual reserve levels will not remain constant but instead will
fluctuate around this value. We anticipate net capacity additions of 13,221 MW
between 1999 and 2025. All of the new capacity is gas-fired combustion turbines
(CT) or combined cycle (CC) units.
Nuclear Retirements
The retirement dates for PJM nuclear units are based on the expiration dates of
current operating licenses, with the exceptions of Oyster Creek 1, which GPU
Energy ("GPU") intends to retire toward the end of 2000, and Salem-2, which we
retire at the end of 2002.
Sensitivity Assumptions
As noted above, we considered two sensitivity cases:
o In the Low Demand Growth Case, the growth rates are reduced by a third,
compared to the Base Case, for the period 2017 through 2025. In this
case peak and total demand grow at only 0.50% and 1.00% per annum,
respectively, beginning in 2017.
o In the High Natural Gas Price Case, natural gas prices are uniformly
$0.50 per MMBtu (in 1996 $) above the CC Pace forecast levels.
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Except as noted above, the assumptions underlying all three cases are identical.
S.4 FORECASTED RESULTS
Hagler Bailly used the RealTime(TM) production cost model and other analytical
tools to forecast energy and capacity prices for PJM. The resulting PJM "all-in"
price (i.e., capacity price plus energy price) forecast for the Base Case is
$27.70/MWh in 2002, $27.96/MWh in 2012, and $29.98/MWh in 2022 (all in constant
1996 dollars/2). Table S-2 (on the next page) summarizes the price forecasts.
Forecasted energy prices for PJM are shown in Figure S-1. In the Base Case,
energy market prices show a steady, slow price growth throughout the study
period. Prices (time-weighted) begin at $22.05 per MWh in 2001 and gradually
increase to $25.86 by 2025. In the High Gas Price Case, energy prices are
approximately $.60 to $1.20 per MWh above the Base Case throughout the forecast
period. In the Low Demand Growth Case, the impact of the reduction in demand
growth in 2017 can be clearly seen as a break in the price trend. By the end of
the forecast period the Low Demand Growth Case prices are about $2.00 per MWh
below the Base Case./3
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2 Fuel price estimates are left in real 1996$s to maintain consistency
with a proprietary Hagler Bailly RealTime(TM) database.
3 Note that while energy prices in the Low Demand Growth Case are below
the Base Case, this is due to prices remaining essentially flat in real
terms rather than significantly declining. This flat trend in real
prices is maintained although the Low Demand Growth Case assumes no
adjustment to the schedule of capacity additions and retirements in
reaction to the decline in demand growth.
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Table S-2
PJM West/Central Average
All-In Prices
(1996 $)/1
Low Demand
Base Case High Gas Case Growth Case
2001 $27.28 $28.25 $27.28
2002 $27.70 $28.59 $27.70
2003 $26.66 $27.28 $26.66
2004 $27.65 $28.32 $27.65
2005 $26.90 $27.84 $26.90
2006 $27.21 $28.24 $27.21
2007 $27.36 $28.24 $27.36
2008 $27.96 $28.67 $27.96
2009 $27.77 $28.43 $27.77
2010 $28.02 $28.89 $28.02
2011 $28.33 $29.18 $28.33
2012 $27.96 $29.18 $27.96
2013 $28.51 $29.38 $28.51
2014 $28.81 $29.81 $28.81
2015 $28.89 $30.08 $28.89
2016 $29.54 $30.40 $29.54
2017 $29.55 $30.39 $29.11
2018 $29.70 $30.36 $29.27
2019 $29.67 $30.98 $29.05
2020 $29.41 $30.56 $28.87
2021 $30.70 $31.79 $29.08
2022 $29.98 $31.17 $28.91
2023 $30.50 $30.94 $29.29
2024 $30.68 $31.40 $28.76
2025 $31.09 $31.70 $29.05
1 All-In prices include energy and capacity payments. Assumes a 100% capacity
factor in calculating the capacity price per MWh. This assumption has the
effect of understating the capacity price; for capacity factors below 100%
the capacity payment per MWh increases. Fuel price estimates are left in real
1996$s to maintain consistency with a proprietary Hagler Bailly RealTime(TM)
database.
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Figure S-1
PJM West/Central Average Energy Prices
1996$
[GRAPHIC OMITTED]
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The expected operating regime of the Ironwood plant over the 25-year time frame
is indicated by the trend in capacity factor (see Figure S-2)./4 The figure
illustrates the consistent growth in utilization experienced by the Project in
the Base Case.
Figures S-2
AES Ironwood Capacity Factors
[GRAPHIC OMITTED]
The average annual capacity factor is also shown in Figure S-2 for the
sensitivity cases. In both downside cases the model forecasts that Ironwood's
capacity utilization decreases somewhat from the Base Case. Nevertheless,
Ironwood's position in the stack, in terms of costs, is expected to allow it to
effectively compete with other PJM power generators. In the High Gas Price Case,
by the end of the forecast period the utilization of the plant is virtually the
same as in the Base Case. In the Low Demand Growth Case, utilization during the
merchant tail (i.e., the period beginning in the second quarter of 2021 when the
Williams PPA will expire and the plant will find new buyers for its output) is
also very similar to the Base Case. What the analysis
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4 Capacity factor is a measure of plant utilization. It is the ratio of
actual plant output in MWh to the theoretical maximum output that would
result from running the plant at full load every hour of the year
(i.e., 8760 hours). The sawtooth pattern in the graph reflects major
(every sixth year) and minor (every third year) planned maintenance
outages.
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indicates is that the growth in demand, combined with unit retirements, creates
a "floor" that provides stabile economics for the Project during the merchant
period.
Figure S-3 illustrates the position of Ironwood in the PJM supply curve in 2002,
2012, 2022 for the Base Case. The figure illustrates that Ironwood is
positioned, in all years, well below the highest cost coal unit. These results
are consistent with the high utilization of the plant shown in Figure S-2./5
Figure S-3
PJM Supply Curves (1996 $/MWh)
2002
[GRAPHIC OMITTED]
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5 Units positioned below the lowest cost coal unit include nuclear and
hydro. Units positioned above the highest cost coal unit include oil
and gas-fired steam units and combustion turbines and other peakers.
Note that the supply curves exclude emergency power. Emergency power is
incorporated within the RealTime(TM) model in the estimation of energy
prices.
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Figure S-3 (cont'd)
PJM Supply Curves (1996 $/MWh)
2012
[GRAPHIC OMITTED]
2022
[GRAPHIC OMITTED]
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S.5 CONCLUSIONS
Based on our analysis, we believe that the facility's dispatch position on the
supply curve will be highly competitive and well below the highest priced
baseload coal plant during the post-PPA period (and during the term of the power
purchase agreement) due to the facility's high efficiency, low production costs,
and the influence of demand growth in conjunction with unit retirements.
The facility is expected to have an average capacity factor of 90.7% during the
post-PPA period. The addition of new, more efficient gas-fired power generation
facilities in PJM over time will not adversely affect the facility's dispatch.
Even in the two macroeconomic "downside sensitivity" cases of low demand growth
and high gas prices, the Facility's average capacity factor remains
significantly high at 89.6% during the post-PPA period.
During the term of the power purchase agreement, the economics of the Project
are not sensitive to fuel prices because the costs of fuel are the
responsibility of the power purchaser under the power purchase agreement's fuel
tolling provisions.
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CHAPTER 1
INTRODUCTION
1.1 BACKGROUND
Hagler Bailly Consulting, Inc. (Hagler Bailly) was retained by AES Ironwood on
behalf of, and to prepare this report solely for Lehman Brothers as Initial
Purchaser of certain Rule 144A bonds to be offered by AES Ironwood, LLC to
finance the construction, start-up and initial testing of the Ironwood Facility.
We have been retained to independently assess the competitiveness of the planned
AES Ironwood power plant given forecast market prices for electric energy and
capacity in the Pennsylvania, New Jersey, Maryland (PJM) power pool. This
document presents the results of our analysis.
The Northeast power markets are undergoing profound change. Many of the
vertically integrated utilities are divesting their generation assets, and tight
pools (such as the New England Power Pool (NEPOOL), New York Power Pool ( NYPP)
and PJM) are changing as well. Historically, these pools were formed to obtain
the benefits of economic dispatch and coordinated planning. The tight pools are
being replaced by independent system operators (ISOs) with responsibility for
both system operations and market operations. Through the creation of the new
market institutions, the market participants intend to create a liquid and
vibrant market where buyers and sellers of generation services will be able to
transact business efficiently.
It is in this evolving environment that the competitive assessment presented in
this report is made. There is little doubt that forward-price forecasting is
more challenging in a changing market. Our approach is to examine the
fundamental economic prospects of AES Ironwood in the context of the planned and
forecast market.
1.2 ORGANIZATION OF THE REPORT
The remainder of this report is organized as follows:
o Chapter 2 describes the Ironwood project.
o Chapter 3 describes the proposed structure of the markets in PJM.
o Chapter 4 presents our approach to developing forward-price forecasts
for generation services.
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o Chapter 5 discusses the development of assumptions and data to describe
the PJM marketplace.
o Chapter 6 presents market price forecasts for a base case and two
downside sensitivity cases.
o Chapter 7 presents our conclusions.
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CHAPTER 2
THE IRONWOOD PROJECT
2.1 THE IRONWOOD PROJECT
AES Ironwood, LLC proposes to build and operate a 705 MW (net) power plant
("Ironwood") in south Lebanon Township, Pennsylvania. South Lebanon is in the
central region of PJM. The PJM ISO will operate this region's energy market and
transmission system. Ironwood will be a combined cycle power plant using Siemens
Westinghouse 501G technology.
The entire output of Ironwood will be sold to the Williams Energy Marketing and
Trading Company under a 20 year, fixed price power purchase agreement ("PPA").
It is assumed that the Ironwood facility will operate as a merchant power plant
and sell directly into the PJM market upon expiration of the PPA.
AES Ironwood expects seasonal maximum generating capacities of at least 788 MW
in winter, 705 MW in spring and fall, and 655 MW in summer. The power purchase
agreement envisages that in ordinary circumstances Ironwood will be dispatched
at 100% of available. The economics of AES Ironwood assure a high frequency of
commitment and operation at high capacity factors.
Ironwood has a ramp rate of 10 MW/minute. It is considered to have a minimum
uptime of eight hours and no minimum downtime.
A fuel conversion payment of $1.86/MWh (1996 $) is payable to the Ironwood plant
under the PPA. Ironwood's projected actual variable O&M cost is $1.71/MWh (1996
$).
Ironwood is modeled as a dual-fuel plant, generally burning natural gas but
consuming fuel oil during 25 of the highest load days of the winter./6 Since the
RealTime(TM) production cost model employed for this study must be given
specific time periods for each fuel type, we have chosen the high-load winter
days as those most likely to have tight gas supply, necessitating the use of
fuel oil to optimize economics. The plant's forced outage rate is conservatively
assumed to be 10.0% during the first year, 8.0% during the second year, and 5.0%
per year thereafter.
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6 The PPA requires Ironwood to use Jet A during fuel oil operation. Once
the plant enters merchant operation in 2021, the model assumes the
alternative fuel will be distillate fuel oil. Also note that the PPA
permits up to 31 days of annual operation on fuel oil.
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The PPA target heat rate (contractual heat) while operating on natural gas is
higher than Ironwood's heat rate under its EPC contract.
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CHAPTER 3
THE PROPOSED MARKET STRUCTURE IN PJM
One of the key factors that affect prices is the structure and institutions of
the market. This chapter describes the expected structure of generator services
for PJM.
There are a variety of power market models that are currently being considered,
and the PJM market may evolve over time to a structure that differs from that
described here. In addition, revenue and cost streams can be significantly
affected by arrangements made between the owners of generation assets and the
buyer of the plant's generation and capacity. Hagler Bailly's assessment of the
PJM market over the near to mid-term is intended to establish the context for
considering the range of variables relevant to the modeled performance of
Ironwood. In all cases, the description of the PJM market represents the most
recent intelligence, research and expert judgment of Hagler Bailly.
3.1 BACKGROUND
The PJM power pool was one of the first centrally dispatched power pools in the
United States and is one of the largest in the world. Along with other "tight
pools," the PJM power pool demonstrated that centralized dispatch and reserve
sharing among a large number of utilities could result in increased reliability
and provide cost savings for all of the participants.
As policy has shifted toward introducing greater competition in the electric
industry, tight pools such as the PJM power pool have been encouraged by the
Federal Energy Regulatory Commission (FERC) to transform themselves into
Independent System Operators. In its Open Access Rule,/7 FERC ordered public
utilities that are members of tight pools to file an open access transmission
tariff and to open membership in the pool on a nondiscriminatory basis.
In response to the FERC order, the members of the PJM power pool developed a
restructuring proposal and a pool-wide open access tariff. This restructuring
proposal created an ISO to operate the regional bulk power system, maintain
system reliability, administer specified electricity markets, and facilitate
open access to the regional transmission system under the PJM tariff. The PJM
electricity market uses market pricing for generation services, thereby
facilitating the development of a more efficient and more competitive wholesale
electricity market.
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7 Order No. 888, FERC Stats. & Regs. Paragraph 31,036 at 31,726-27.
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PJM was the first power pool to have its open access transmission tariff
approved by FERC. The PJM bid-based energy market was initiated on April 1,
1997. PJM Interconnection, LLC was certified as an ISO by FERC on November 25,
1997. Locational marginal pricing took effect on April 1, 1998. An installed
capacity (daily capacity) market was launched on October 15, 1998.
As PJM shifts to a more competitive environment, many additional changes are
expected. In order to assess Ironwood's competitive position, a number of
critical factors were addressed. Chief among these are the market structure and
rules which define the way in which plant owners will bid and be compensated for
the energy and generation capacity that they provide to the market. Assumptions
about these market conditions were used to determine unit utilization, energy
prices and capacity prices.
3.2 THE PJM MARKET
The wholesale market structure includes the following markets for the services
of generators:
o Spot energy market
o Installed capacity market
Note that ancillary services do not currently have separate bid-based markets,
although such markets are under consideration, as recommended by FERC. Payments
for providing regulation are grounded in cost-based formulas. Payments for
providing operating reserves are included in an energy market daily
reconciliation.
3.2.1 The Spot Energy Market
The ISO runs the spot energy market. The closing time for submitting bids to the
ISO is noon for the energy markets the following day (for example, noon on
Tuesday for bids on energy to be generated on Wednesday). A bid to supply
generation consists of an incremental energy bid curve. For each generation
level, the curve represents the minimum price a bidder is willing to accept to
be dispatched at that generation level. The bid curve is specified by up to 10
price-quantity pairs. The same curve is used for all 24 hours of dispatch.
Bidders also specify operating constraints on their units (minimum up time,
minimum down time, ramp rates) as well as start-up costs and no-load costs.
The ISO determines location-specific market-clearing energy prices for each
hour. Prices are in dollars per megawatt-hour (MWh). Prices are based on bids
for generation, actual loads, and scheduled bilateral transactions. The ISO
constructs a commitment based upon day-ahead bids. Real-time dispatch is
conducted by the ISO by sending price signals to those generators on the margin.
These marginal generators then respond by ramping up or ramping down. The ISO
can also command units to change their output.
Settlement prices are currently calculated after the fact using dispatch data.
PJM has acquired a new energy management system that is to include a security
constrained unit commitment and
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dispatch module. At the time that this system is implemented, the current
procedures for calculating energy prices will be replaced with calculations from
the security constrained dispatch model.
The location-specific market-clearing prices include any charges for
transmission congestion. (The ISO intends in the future to also include charges
for transmission losses.) Congestion occurs when the transmission system becomes
constrained, and some generating capacity is dispatched while other generating
capacity with lower bids is not dispatched. The result is that the
market-clearing prices may differ from location to location. The locational
market-clearing prices ("locational marginal prices" in the jargon of the PJM
ISO) capture any costs associated with the out-of-order dispatch.
Important features of the spot energy market include the following:
o Only the incremental energy bid curve is used in determining the
market-clearing prices.
o Generators that do not recover their start-up and minimum load costs
over the course of a day's operations are compensated for the shortfall
in net revenue ("negative cycle costs") with payments which ensure that
a plant does not lose money by being required to operate by the PJM
ISO./8
o Aside from some interruptible load and exports, bidding is only allowed
by generation resources.
o Bilateral transactions are not subject to the market-clearing prices.
However, they are subject to the same charges for transmission
congestion included in the market-clearing prices.
o Fixed transmission rights (FTRs) allow generators, load-serving
entities, and others to hedge the costs associated with transmission
congestion. An FTR has a financial analogue (transmission congestion
credit or TCC) which is a financial right entitling holders of FTRs to
the congestion charges associated with the difference in prices from a
point of power injection to a point of delivery. When one obtains an
FTR, one also acquires a TCC. TCCs thus may be used to offset the costs
of transmission congestion. FTR's are obtained through two means:
subscription to network service, where FTR's are assigned to the load
based upon the location of the capacity resource and the load, or
through purchase of firm point-to-point transmission service. In
addition, PJM has petitioned the FERC for authority to conduct a
periodic auction of uncommitted FTRs, and a secondary market for these
rights is expected to develop.
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8 In any 24-hour period beginning at midnight, a generator may not lose
money as a result of being dispatched by the ISO. If a generator does
not recover its costs through market payments, then the amount of the
operating loss is paid to the generator by the ISO. This means that a
generator can not lose money from operating on any given day.
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o Investor-owned utilities do not currently have FERC authorization for
market-based pricing. Unless utility participants have authority for
market-based pricing, their bids are capped at cost.
3.2.2 Installed Capacity Market
PJM has imposed generation capacity reserve requirements on all LSEs. These
requirements are expected to lead to an active capacity market. LSEs are defined
as entities providing electricity services to end-use customers under state law.
The PJM conducts an annual reliability study to determine the PJM Reserve
Requirement, defined as the level of installed reserves needed for PJM to meet
the installed generating capability requirements established within the control
area. Historically, the required reserve margin has been decreasing due mainly
to reductions in forced outage hours, and has averaged 18% to 20% over the past
five years./9
To ensure that sufficient capacity is available in the market to meet
reliability standards, PJM requires load-serving entities to own or contract
with physical generation capacity to cover their peak demand. Important features
of the installed capacity market include the following:
o There are two capacity obligations. A load-serving entity's installed
capacity obligation is determined two years in advance by PJM, based on
forecast conditions. This obligation remains in place, and is known as
the "planned-for" obligation. The planned-for obligation is then
adjusted for actual conditions; this adjusted obligation is known as
the "accounted-for" obligation. Capacity acquired in the installed
capacity market satisfies the "accounted-for" obligation.
o The amount of capacity each generator can supply is determined by a
12-month rolling average of availability, calculated two months in
advance of the period for which the capacity is supplied.
o There is a day-ahead installed capacity market, and monthly markets
extending 12 months into the future.
o Each installed capacity market has a single market-clearing price for
each day the market is in operation.
o Capacity may be acquired by a load-serving entity through bilateral
transactions with generators or other load-serving entities. PJM
operates a bulletin board to facilitate bilateral transactions.
If a load-serving entity fails to meet its capacity requirement, a penalty is
assessed.
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9 "1997 MAAC Reliability Assessment," June 1998, Final Report, Prepared
by PJM Interconnection, L.L.C., System Coordination Division.
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Current projections of committed new generating capacity within PJM are
insufficient to meet a reserve requirement of nearly 20% after the year 2000.
The focus of capacity planning has shifted from large, base load coal-fired
generation projects to combustion turbines and combined-cycle plants, which can
be planned and constructed in relatively short periods. However, based on
forecast reserve margins, PJM will require new capacity on line by the 2000
planning period./10
Additional elements of the evolving market for capacity in PJM are described in
the next chapter of this report.
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10 It should be noted that most LSE's in PJM have discontinued reporting
planned capacity additions so as to avoid divulging information related
to strategic business plans to competitors within the system. In spite
of this understanding, it is apparent that maintenance of historical
levels of reserve capacity may not be economically viable. The apparent
shortage of reserve capacity supports our projection that even with an
active capacity market reduced reserve margins are likely.
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CHAPTER 4
APPROACH TO MARKET PRICE FORECASTING
4.1 INTRODUCTION
This chapter discusses our approach to forecasting forward prices for the
services of generation units. The first section discusses general issues related
to the capacity and ancillary services markets. The second section describes the
specific approach employed in this analysis to develop the energy and capacity
price forecasts.
4.2 ISSUES IN PREDICTING MARKET PRICES
By far the most important element of the power market is the energy market,
which will account for the vast majority of revenue. Although there is the
possibility that generators can capture margins in all markets within the PJM
pool, some of these other markets are much more difficult to assess. The
following section of the report discusses issues involved in evaluating the
value of capacity and ancillary services.
4.2.1 Issues in the Capacity Markets
What Is the Purpose of a Capacity Market?
The Northeast markets, i.e., PJM, NYPP and NEPOOL, have all incorporated a
market for capacity as one of the key elements of the new wholesale market
design. In all three of these pools, load-serving entities have an
administrative obligation to purchase, own or control capacity. The capacity
market provides a mechanism for covering any shortfalls in the positions of load
serving entities with respect to their administrative obligations to the pool.
These three pools represent a departure from how other restructured markets have
dealt with the issue of capacity. In other markets that include some
compensation for capacity, notably the England and Wales pool, capacity payments
are determined administratively and are collected through an "uplift" charge
(basically a surcharge) that is added by the pool administrator to the
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price of power from the pool. The PJM, NYPP and NEPOOL markets, to our
knowledge, are the first markets to attempt to institute a bid market for
capacity./11
What is the purpose of capacity compensation? Capacity payments have been
included in the market designs for several purposes:
o Capacity payments can serve as a mechanism to encourage investment in
new generation capacity. This was the predominant rationale for
including capacity payments in the England and Wales pool. The premise
is that a competitive energy market (one that tends to force energy
prices to marginal cost) provides inadequate margins to assure the
construction of sufficient new capacity.
o Some regulators and market designers believe that a capacity payment
will reduce price volatility in the energy market. The premise is that
a fixed capacity payment provides base compensation, the result of
which is to reduce the volatility in energy prices. If revenue
expectations are constant, reduced volatility will reduce risk and
financing costs.
o In the case of PJM, NYPP and NEPOOL the rationale for a bid market in
capacity is due, in part, to gaming that occurred in the England and
Wales pool. There, generators strategically declared their capacity
unavailable in order to raise capacity payments. The designers of the
U.S. capacity markets thought, in part, that a bid market for capacity
might reduce the opportunities for gaming./12
However, many restructured electricity markets have not included a capacity
market or a capacity payment. In fact, California, Norway, New South Wales, and
Victoria all have foregone the option of including a capacity component in the
exchange.
Capacity Revenues Must Be Included in Market Projections
Market institutions evolve and change over time. Given that many debate whether
or not a capacity payment should be a part of the market institutions, is the
revenue we include from capacity prices at risk?
We believe not. Experience in existing energy markets shows that the energy
prices arising from the production cost model (discussed below) understate the
revenue that generators will earn
- ----------
11 Regulated electricity markets, including PJM, have provided capacity
compensation. With deregulation, many continue to do so. What is unique
is not the compensation but the effort to establish a bid market.
12 To be specific, capacity payments in the England and Wales pool are
determined on a day-ahead basis by calculating the loss of load
probability (LOLP, which depends on projected load and capacity). The
LOLP is then multiplied by a value of lost load, which was
administratively determined and escalates over time. Significant gaming
occurred in the pool where generators would declare their capacity not
to be available for the next day, thus increasing the LOLP and the
resulting capacity payment, then declare their capacity available the
next day to capture the inflated capacity payment.
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from the energy market. Using a production cost model presumes that energy
prices are driven to short-run marginal cost. The result of this assumption is
that a significant number of generators (most particularly the peaking and
cycling facilities) earn insufficient margins from the energy market to cover
all of their going-forward costs. If no other payments were provided, rather
then incur these losses or retire, these generators would increase their
start-up bids in all hours in which they expected to be dispatched to at least
recover their going-forward costs. The results of this bidding behavior would be
expected to have results very similar to the method we used in projecting
capacity prices from a bid market.
There are a number of ways that these capacity revenues might be recovered.
o First, the installed capacity markets, although unproven, may function
well into the future.
o Second, the installed capacity market could be replaced by an operating
capacity market, which would have different pricing to cover going
forward costs.
o Third, the capacity markets could be replaced with an administrative
market institution such as those found in the U.K. or Argentina.
o Fourth, even if the capacity market were to disappear, generators would
recover any shortfall in their going-forward costs by increasing their
bid prices in the energy market above marginal cost when market
conditions allow. If they could not do so they would exit the market
and prices would need to increase to attract sufficient new entry to
maintain any required capacity margin.
o Fifth, there is a robust bilateral market that currently exists for
capacity that is likely to persist in any new market structure.
How Do We Model Capacity Payments?
Regardless of the ultimate form of capacity markets, we assess prices by
determining the economic worth of capacity. In our analysis, we model what the
market is willing to pay to retain plant (that might otherwise leave the market)
for reliability services. Specifically, our approach is based on a partial
equilibrium analysis that assessed returns from the energy and capacity markets
and dynamically simulated entry and exit decisions. For these reasons, we
believe that the capacity prices reflect returns that will be sustained by the
market.
Our approach to constructing capacity payments is described in more detail later
in this chapter.
4.2.2 Ancillary Services
The PJM ISO provides for revenues for ancillary services. There are,
potentially, material revenues and margins that could be attributed to these
markets. However, it is extremely difficult to predict what the forward price
curve might be in these markets, since they do not yet
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exist in PJM and there is so little experience with bid-based systems for
ancillary services elsewhere. Hence, our price, revenue, and margin projections
have assumed that the going forward costs of the marginal unit would be covered
and that there would be no contribution from ancillary services markets that
would increase the margins of the marginal unit.
4.3 APPROACH TO MARKET PRICE FORECASTING
Figure 4-1 provides a graphical view of Hagler Bailly's process for producing
forward-price forecasts. The process begins with a definition of the
characteristics of the market, including the electric generating units currently
in operation, their production efficiencies (including heat rate curves), a
projection of plant additions (based in part on announcements and in part on an
equilibrium evaluation of market price signals), consumer demand and load, and
fuel prices.
Figure 4-1
Approach to Developing Capacity and Energy Prices
[GRAPHIC OMITTED]
Using these data, energy prices are projected through a comprehensive simulation
which sets energy price to the short run marginal cost, which also yields
estimates of how much each generating unit produces in the market. Capacity
prices are then projected based on our simulation of the capacity market. Next,
total returns to each generating unit are calculated and used to assess whether
market entry and exit occurs. Iteration between these three phases takes place
until stability is achieved in the energy and capacity price forecast.
Thus, this process develops prices based on a dynamic examination of market
entry and exit (including retirement) decisions made by the supply-side actors
in the market.
The following sections briefly discuss Hagler Bailly's approach to each of these
steps.
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4.3.1 Market Characteristics
The first step is to ensure that we understand sufficiently the nature and
parameters of the market and the generation assets that participate in that
market. Hagler Bailly uses a variety of data sources to characterize the market.
These include:
o Data identifying the generating units, consumer demand and load, and
production capacities of existing plants. This included data from
public sources and data extracted from Hagler Bailly's proprietary Ramp
Up(TM) database.
o Fuel price forecasts.
o Planned additions, which are developed based on announced plans of
developers (tracked in the Hagler Bailly IPP Database) and utilities
(contained in planning council reports), weighted by our assessment of
how much capacity will actually be built in the early stages of the
analysis time horizon. Capacity additions subsequent to 2001 are tested
in the entry and exit logic.
o Retirements of nuclear plants. We review the experience of nuclear
power plant operators (tracked in the Hagler Bailly Operating Plant
Experience Code database) to identify the plants most likely to be
retired before the end of their operating license and to estimate early
retirement dates.
4.3.2 Predicting Energy Prices and Dispatch
Hagler Bailly used the RealTime(TM) production cost model to develop the PJM
wholesale market price of energy, plant operating costs, and projected dispatch
on an hourly basis for the years 2001-2025./13 RealTime(TM) incorporates unit
characteristics (e.g., heat rates, minimum and maximum capacities, ramp rate,
and fuel type), fuel costs, emissions, hourly load, imports from (exports to)
adjoining power pools and many other factors in its calculations.
Since RealTime(TM) is an hourly chronological production cost model, it
addresses each hour before moving on to the next hour. Thus, in every hour each
unit has a generation level (MW) and a cost associated with that generation. A
chronological model such as RealTime(TM) more closely simulates reality and its
uncertainties than do non-chronological models.
RealTime(TM) output includes revenue, fuel costs, emission costs, other variable
costs, profit, generation level (and capacity factor), hours connected to the
grid, forced outages, number of hot
- ----------
13 Hagler Bailly has used RealTime(TM) to project market clearing prices
and unit operations in PJM for asset valuations, regulatory
proceedings, and the evaluation of potential merchant plant projects
for a number of clients. Hagler Bailly has also used RealTime(TM)
elsewhere in the country to model prospective production costs.
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and cold starts, and average and load-weighted marginal costs. In addition,
other reports are provided for every fossil, nuclear, and hydroelectric unit in
PJM.
An additional element of the dispatch analysis considered the impact of
transmission system characteristics and constraints. PowerWorld(TM), a load flow
model, was used to determine if Ironwood would impose additional burdens on the
PJM transmission system and if the plant's location would lead to its being
dispatched less than anticipated due to transmission constraints. We also used
the model to assess whether Ironwood could expect to receive higher revenues due
to contributions to voltage support or for transmission constraint-reducing
flows. The analysis showed that the plant's location would ease transmission
constraints from west to east, the predominant direction of flow, within PJM
Central. However, the value of this contribution is too small to measure at
present. In the future, if a nodal pricing regime is retained (i.e.,
location-specific pricing that reflects such factors as transmission
congestion), some revenue may be available for transmission congestion relief;
none is included in our results.
From the energy price analysis, Hagler Bailly determines the energy margin
(price minus variable cost) attributable to each generating unit in the market.
These margins, along with estimates of "going-forward costs," (fixed costs, such
as fixed O&M, property taxes, administrative and general expenses, employee
benefits, and incremental capital expenditures) are used in the Capacity Market
Simulation model to predict capacity prices.
4.3.3 Predicting Capacity Prices: The Capacity Market Simulation Model
Capacity payments are a mechanism for supporting an appropriate amount and mix
of capacity in the system. There are two reasons for including a capacity
payment in a forward-price analysis. First, if generators bid their short-run
marginal costs into an energy market, only inframarginal plants (those not on
the margin) earn a contribution toward their going-forward fixed costs. Plants
at the top of the supply curve receive little, if any, contribution toward their
going-forward costs. In addition, some of the baseload and cycling plants that
are not at the top of the supply curve but have high going-forward costs may not
earn a sufficient operating margin from the energy market alone to cover all of
those costs.
We predict capacity prices using our proprietary Capacity Market Simulation
Model. This model presumes that the market will retain a sufficient amount of
capacity to meet economic reliability targets. In other words, we simulate the
capacity market as consisting of a supply curve and a demand curve for
reliability (or capacity) services. We assume that the organized capacity market
is a competitive market, and that the market-clearing price for capacity is
determined by the intersection of the supply and demand curves. We construct
supply and demand curves for each year of the simulation time horizon.
The supply curve is calculated from the going-forward costs of each generating
unit. The net of going-forward costs and energy market margins, expressed on a
per-kilowatt basis, represents the minimum amount a generating unit needs to go
forward. Ranking these net costs in ascending order produces a supply curve for
capacity.
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Next, the demand curve is estimated. The demand curve is estimated by
representing the capacity associated with a target reliability level. The demand
curve is a vertical line derived using a target reserve margin or target level
of installed capacity.
Finally, the intersection of the demand curve and the supply curve represents
the capacity payment that the market would support in that year. The capacity
price forecast is the capacity payment derived for each year of the study
period. An example supply and demand curve is shown in Figure 4-2.
For the purposes of the AES Ironwood study, Hagler Bailly applied the results of
its most recent capacity valuation studies of the PJM market. The estimated
annual capacity values average $45.19/kW-year (1996 $) for the forecast
period./14 (The annual values are shown in Chapter 6 of the report.)
Figure 4-2
Example Supply and Demand Curve
[GRAPHIC OMITTED]
4.3.4 Market Entry and Exit
It is necessary to assess the feasibility and timing of new capacity additions
as well as the exit of uneconomic existing capacity. Hagler Bailly's proprietary
modeling approach serves two purposes:
- ----------
14 Additional revenues may be available in the future to generators that
provide operating capacity services and other ancillary services, such
as black-start capability. Such revenues are not considered in this
analysis.
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o First, it identifies generating units that are not able to cover their
going-forward costs in the energy market and are therefore at risk of
abandoning the market.
o Second, it provides a rational method for ascertaining the amount,
timing, and type of capacity additions.
Hagler Bailly's approach uses a financial model to assess the decision to add
new capacity and to retire existing capacity. The approach to plant additions is
based on a set of generic plant characteristics, financing assumptions, and
economic parameters, and is an iterative process performed simultaneously with
the development of the energy price forecast and the capacity price forecast.
The methodology assesses the validity of annual capacity additions based on a
Discounted Cash Flow (DCF) model using net energy revenues determined in the
production cost model simulations, and capacity revenues determined from our
Capacity Market Simulation approach. For each increment of new capacity, a "Go"
or "No Go" decision is made based on the resulting financials. In addition,
economic retirement decisions are made at each step in the iterative process
based on the specific financial and operating characteristics of each existing
plant.
The iterative process begins with the addition of new capacity. A production
cost run is executed to determine energy prices, dispatch, and operating costs.
The Capacity Market Simulation is then performed. Financial results for the
energy and capacity markets are combined in the financial model to determine
whether the new unit is a "Go" or "No Go." If the new unit is a "Go," another
new unit is added, and the process repeated. This occurs until the next new unit
returns a "No Go."
Retirements are determined after new units are added. A financial analysis of
each unit is performed, combining the results of the energy and capacity
markets. If the cumulative operating profit (loss) for an existing unit were
negative for any five-year period, it was retired at the end of the third year
of consecutive operating loss. Although the decision criterion was somewhat
subjective, it was interpreted conservatively. Thus, if a unit lost money for
two years, was in the black over the third year, and then lost money for two
more years, the unit was maintained online.
If units were retired, the iterative process would begin again with the addition
of new capacity. In this way, the introduction of new units influences the
retirement of existing units, and the retirement of existing units enables the
introduction of new units. Since the addition of new units is "lumpy," the
iteration generally stops with new generators earning a small increment above
their cost of debt and equity. The addition of one more new unit would then push
many of the previous additions into losses. This approach reflects a game
theoretic concept of a market equilibrium.
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CHAPTER 5
MARKET PRICE FORECASTING:
ASSUMPTIONS AND ASSUMPTION DEVELOPMENT
5.1 INTRODUCTION
This section of the report describes the key assumptions used in the development
of the PJM capacity and energy market price forecasts and the related models.
The assumptions are presented in two sections. The first section describes the
inputs to the RealTime(TM) production cost model, including: (1) the
characteristics of the existing generating units (thermal, hydro, nuclear), (2)
the demand and energy forecasts, (3) fuel prices, (4) the modeling of
electricity imports/exports in the regions, and (5) intra-PJM transmission
constraints. The second section describes the inputs to the Capacity Market
Simulation Model.
5.2 PRODUCTION COST MODEL INPUT ASSUMPTIONS
As discussed above, to simulate the hourly market-clearing price of energy we
use the RealTime(TM) production-costing model. RealTime(TM) allows the
characterization of multiple transmission areas within a power pool.
Transmission areas for PJM are defined as "PJM-East" and "PJM-Central/West"
(see Map 5-1, below).
Map 5-1
PJM Regions
[GRAPHIC OMITTED]
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Imports and exports are modeled as contracts involving the East Central Area
Reliability Council (ECAR) and the New York Power Pool (NYPP). Map 5-2
illustrates the location of PJM, NYPP, ECAR and other adjacent power pools.
Map 5-2
Eastern Power Pools
[GRAPHIC OMITTED]
Each of the PJM region's major generating units is represented individually in
the production-costing model using unit-specific cost and operating
characteristics. The RealTime(TM) model is used to perform an hour-by-hour
chronological simulation of the commitment and dispatch of generation resources.
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5.2.1 Existing Generating Units
Fossil Units
Each fossil generating unit is characterized using the following parameters:
o Summer and winter net capability
o Heat-rate curve
o Operating characteristics
|_| Minimum capacity
|_| Ramp rate
|_| Minimum uptime
|_| Minimum downtime
o Forced outage rate
o Scheduled maintenance outage rate
o Variable operation and maintenance cost
o Emission costs
o Start fuel.
Units that operate on more than one fuel have characteristics specified for each
fuel. The development of these parameters is discussed below.
Summer and Winter Capabilities. Summer and winter capability values were
obtained from the 1997 Mid-Atlantic Area Council (MAAC) Regional Reliability
Council, EIA-411 Report. (MAAC is contiguous with PJM.)
Heat-Rate Curves for Fossil Units. Heat rate estimates were derived primarily
from Hagler Bailly's Ramp Up(TM) generation database and analysis system. Ramp
Up(TM) contains estimates of unit heat rates based on actual hourly unit
performance, as reported to the U.S. Environmental Protection Agency as part of
the Continuous Emission Monitoring (CEM) program. Where the CEM data was not
available, heat rate curves were estimated, using a proprietary Hagler Bailly
methodology, from the full load heat rates reported to the federal Energy
Information Administration (EIA) on EIA Form 860.
Operating Characteristics. The operating characteristics (minimum capacity, ramp
rate, minimum uptime, minimum downtime, forced and scheduled outage rates) are
derived from Hagler Bailly proprietary databases.
Variable Operation and Maintenance Costs. In RealTime(TM), nonfuel variable O&M
cost, hereafter referred to simply as variable O&M, is treated as if it is
directly proportional to the generation level of each unit. Variable O&M is a
problematic category because, in the short run, the truly variable portion
represents only a small part of total variable O&M costs, as traditionally
reported.
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The variable O&M costs in RealTime are derived from FERC Form 1 data. The model
assumptions are shown below in Table 5-1.
- -------------------------------------------------------------------------------
Table 5-1
Variable Operating Costs (1996 $ per MWh)/15
- -------------------------------------------------------------------------------
Existing Oil, Gas, and Refuse $2.00/MWh
- -------------------------------------------------------------------------------
Coal - Not Scrubbed $3.00/MWh
- -------------------------------------------------------------------------------
Coal - Scrubbed $4.00/MWh
- -------------------------------------------------------------------------------
New CC $1.71
- -------------------------------------------------------------------------------
New CT $3.02
- -------------------------------------------------------------------------------
Sulfur Dioxide Emission Costs. The Clean Air Act Amendments of 1990 (CAAA)
provided for tightened restrictions on the emission of sulfur dioxide (SO2) by
fossil-fired generating stations, with the primary impact falling on coal
plants. In a departure from traditional command-type regulation, the CAAA
established a mechanism by which utilities could buy and sell rights to emit
SO2. This SO2 "allowance" system accordingly establishes a value or cost to a
utility, depending on whether it needs to purchase allowances or, if it emitting
less SO2 than it is authorized per the CAAA, it has excess allowances that it
can sell or bank for future use. Each allowance represents the right to emit one
ton of SO2.
The assumptions related to SO2 costs were based upon forward price forecasts
developed by Putnam, Hayes & Bartlett, Inc. (PHB). For the purposes of our
modeling, we assumed that SO2 emission costs were equal to the number of tons of
SO2 emitted multiplied by the price of allowances in a given year. The resulting
cost was added to the variable cost of each generating unit and included in the
development of the energy price forecast.
SO2 allowances are currently priced at about $190 per ton (1996 $). PHB
forecasts allowance prices escalating to $200 by 2001, and then gradually
ramping up to $400 by 2010, after which prices are flat in real terms (see
Figure 5-1).
Development of NOx Control Costs and Emission Rates
Because of the persistence of a widespread ozone nonattainment problem and the
recognition of NOx emissions as the primary precursor pollutant, EPA has
recently proposed the State Implementation Plan (SIP) Call. The SIP Call seeks a
70% percent reduction in NOx emissions from large NOx point sources (i.e., power
plants and industrial boilers) in 22 states starting in 2003. Despite these
large proposed reductions in NOx emissions, modeling of ozone
- ---------
15 Note: for modeling purposes all operating costs for nuclear, hydro and
pumped storage units are assumed to be fixed.
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concentrations suggests that many areas east of the Mississippi will be in
non-attainment of the 8-hour ozone standard. In order to avoid strict federal
penalties for ozone nonattainment, states will need to obtain further reductions
in NOx emissions. This will result in a continuous reduction in the number of
NOx allowances that are available, which will maintain NOx allowance prices
beyond 2020. The forecast SO2 and NOx price curves are shown below in Figure
5-1.
Figure 5-1
Forecast Of Allowance Prices
(1996$ per Ton)
[GRAPHIC OMITTED]
The forward price curve for NOx emissions begins in 2001 at a price for
summer/16 NOx allowances of $2,150/ton (1996 $). The price of NOx allowances
jumps to $2,500/ton for the first summer of SIP Call regulations in 2003,
reaches $2,900 by 2005, and remains at this level through 2025./17
Hydroelectric Units
The hydroelectric plants in the region are modeled individually, with the
exception of small plants, which are consolidated by utility and categorized as
peaking or baseload. Similar to the
- ----------
16 The summer NOx period is May 1 through September 30.
17 Source of NOx Allowance Prices: PHB Hagler Bailly estimate
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thermal units, the maximum capacity for each unit was taken from sources cited
above for summer and winter capabilities.
Nuclear Units
Table 5-2 lists the shutdown dates for all PJM nuclear units that retire during
the forecast period. The retirement dates are based on the expiration dates of
current operating licenses, with the exceptions of Oyster Creek 1, which GPU
intends to retire at the end of 2000, and Salem-2, which we retire at the end of
2002.
- --------------------------------------------------------------------------------
Table 5-2
Nuclear Unit Retirement Dates
- --------------------------------------------------------------------------------
Unit Retirement Summer Capacity Cumulative Retired
Date (MW) Capacity (MW)
- --------------------------------------------------------------------------------
Oyster Creek-1 10/01/00 619 619
- --------------------------------------------------------------------------------
Salem-2 12/31/02 1,106 1725
- --------------------------------------------------------------------------------
Peach Bottom-2 12/31/14 1,093 2818
- --------------------------------------------------------------------------------
Calvert Cliff-1 12/31/15 840 3658
- --------------------------------------------------------------------------------
Peach Bottom-3 12/31/15 1,093 4751
- --------------------------------------------------------------------------------
T.M. Island-1 12/31/15 786 5537
- --------------------------------------------------------------------------------
Calvert Cliff-2 12/31/17 840 6377
- --------------------------------------------------------------------------------
Salem-1 12/31/17 1,106 7483
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Hope Creek-1 12/31/21 1,031 8514
- --------------------------------------------------------------------------------
Susquehanna 1 12/31/23 1,090 9604
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5.2.2 Load Growth
Our load growth assumptions have an important effect upon the analysis of the
market. With the output of generating plants and imports and exports held
constant, higher load means higher energy prices since units higher in the stack
will be dispatched to cover demand. Load, or demand, growth assessments focus on
aggregate, or total, demand and on load shape, which directly affect forecasts
of peak demand. Changes in the load shape (e.g., peak shaving) may reduce the
energy revenues despite higher aggregate demand. PJM load growth on average is
generally expected to increase at between 1.5% and 2% per annum, with peak loads
growing more slowly to reflect primarily industrial load shifting toward the
less expensive hours of the day.
In the present study, we utilized the actual hourly load variation pattern of
1995. We escalated the total load and peak load at different rates to reflect
our expectation that industrial and commercial peak loads will be shifted in the
future as time-of-day pricing and metering are extended.
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The estimation of load growth through the next two decades is an important input
to the analysis. Hagler Bailly has done extensive work on the subject of demand
forecasting, and has selected load growth rates that are most probable given
this research and analysis. The years 2002-2009 are assigned a higher load
growth rate to reflect increased energy use as utilities finish collecting
stranded costs, making power less expensive. In the present study, the Base Case
assumptions forecast annual demand escalation at the following rates:
o to 2002: 1.5% per annum
o 2003 to 2009: 2.0% per annum
o 2010 to 2025: 1.5% per annum
Our peak load escalation rates are as follows:
o to 2009: 1.00% per annum
o 2010 to 2025: 0.75% per annum
We also tested the economics of Ironwood for a Low Demand Growth Case. In this
scenario both annual average and peak load growth rates for each year after 2016
are reduced by one-third, with no concomitant adjustment to the schedule of
capacity additions or retirements. This encompasses the last four years of the
PPA period and the merchant tail. Figure 5-2 illustrates the growth in average
and peak load under the Base and Low Demand Growth Cases.
Figure 5-2
Cumulative Demand Growth in PJM
[GRAPHIC OMITTED]
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5.2.3 Fuel Prices
Fossil fuel prices for this study were provided and documented by CC Pace. The
forecast for all fossil fuels is shown in Table 5-3, and summary graphs
illustrating the natural gas and coal price forecasts are presented in Figures
5-3 and 5-4.
Note that Figure 5-3 illustrates the natural gas Base Case values and the High
Gas Price Case constructed by Hagler Bailly (a uniform $0.50 per MMBtu increase
in the gas price for each year). Because the plant is gas-fired, the High Gas
Price Case represents the "downside" fuel price sensitivity.
The coal prices shown are the PJM-average delivered price for each year. The
model runs are based on individually determined coal prices for each plant, and
reflect such factors as the specific transportation costs and sulfur content
requirements of each station.
Table 5-3
Delivered Fuel Prices (1996$/MMBtu)/1
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Average
Annual %
Fuel 1998 2005 2010 2020 2025 Change/4
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Natural Gas - PJM East/2 $2.57 $2.48 $2.52 $2.63 $2.69 0.17%
- -----------------------------------------------------------------------------------------------
Natural Gas - PJM West $2.47 $2.38 $2.43 $2.53 $2.60 0.18%
- -----------------------------------------------------------------------------------------------
Residual #6 $2.10 $2.41 $2.41 $2.41 $2.41 0.51%
- -----------------------------------------------------------------------------------------------
Distillate #2 $3.20 $3.69 $3.69 $3.69 $3.69 0.53%
- -----------------------------------------------------------------------------------------------
Jet A $3.40 $3.89 $3.89 $3.89 $3.89 0.50%
- -----------------------------------------------------------------------------------------------
Coal/3 $1.36 $1.15 $1.09 $1.03 $1.04 -1.00%
- -----------------------------------------------------------------------------------------------
1 Fuel price estimates are left in real 1996$s to maintain consistency with a
proprietary Hagler Bailly RealTime(TM) database.
2 Ironwood is forecast to use PJM East natural gas. The Henry Hub to PJM East basis
(transportation) differential is approximately $0.52 per MMBtu.
3 Coal prices were provided on a plant specific basis. Average prices represent the
average for all the coal consumed in a given year. The 1998 price is for the period
Oct. 1997 - Sept. 1998.
4 Calculated from 1998 to 2025.
</TABLE>
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Figure 5-3
Delivered Natural Gas Prices 1996$
[GRAPHIC OMITTED]
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Figure 5-4
PJM Generation Weighted Average Coal Prices 1996$
[GRAPHIC OMITTED]
5.2.4 Energy Import/Export Forecast
In RealTime(TM), we have modeled two electric energy imports into PJM and one
export. The imports are from ECAR and Ohio Edison-Potomac Electric Power Company
(OE-PEPCo), with maximum hourly capacities of, respectively, 4300 and 450 MW.
The export is into NYPP (maximum hourly capacity of 1000 MW). These imports and
exports are utilized when they are economical; electrical energy is imported
when the import price is less than the cost of generating that unit of energy
within PJM, and energy is exported when the price is greater than the cost of
PJM generation. All imports and exports remain in place throughout the model run
with the exception of the OE-PEPCo import, which expires at the end of 2005.
Table 5-4 displays the properties of the two imports and the export.
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<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Table 5-4
Imports and Exports (1996 $ per MWh)
- ------------------------------------------------------------------------------------------------------------------
On-Peak
Location Price in Off-Peak Annual Price Maximum Hourly Minimum
Import/Export within PJM 2001 Price in 2001 Escalation Capacity (MW) Take (MW)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ECAR Import/18 West & Central 20.75 15.25 See Note 4,300 10
- ------------------------------------------------------------------------------------------------------------------
OE-PEPCO Import West & Central 11.94 11.94 3.0% 450 10
- ------------------------------------------------------------------------------------------------------------------
NYPP Export East 22.04 15.79 1.0% 1,000 10
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Emergency power purchase contracts were modeled on an economy basis using
experience Hagler Bailly has gained in the course of several market studies and
the pricing observed during the past year. Given recent market pricing during
high demand periods, the assumed pricing of the emergency power purchase
contracts is conservative. In all years of the study, the PJM market is assumed
to be able to purchase the following amounts of power for each of the two PJM
regions at the prices shown in Table 5-5. Emergency power is imported from
neighboring control areas using transmission capacity reserved for such purposes
(as provided by the capacity benefit margin).
- --------------------------------------------------------------------------------
Table 5-5
Emergency Imports
- --------------------------------------------------------------------------------
Quantity Available Price (Real 1996 $)
- --------------------------------------------------------------------------------
500 MW $100.00
- --------------------------------------------------------------------------------
500 MW $150.00
- --------------------------------------------------------------------------------
200 MW $250.00
- --------------------------------------------------------------------------------
Additional MW $300.00
- --------------------------------------------------------------------------------
5.2.5 Transmission Constraints
The PJM Central-East interface has transfer capability estimated variously at
between 4,700 and 5,300 MW located near the New Jersey-Pennsylvania border.
Historically, as a consequence of this constraint a price differential exists
between the two sides of the interface about 10% of the time. RealTime(TM)
models transmission flows based on forecast price differentials resulting from
local demand and prices. This PJM East constraint generally becomes binding in
times of moderate to high demand, but not at times of peak demand. The reason
for this is that
- ----------
18 Note: ECAR import price trajectory approximates PJM trends.
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significantly greater base-load and intermediate capacity is located in the West
and Central regions relative to the East. The East, in contrast, contains a
significant quantity of peaking capacity. Thus, as load increases more energy is
transmitted from Central to East until the constraint is reached. However, as
load levels continue to increase to peak levels, many peaking units in the East
are dispatched, lowering transmission demand. This means that plants located in
the West and Central regions receive slightly lower market prices than would be
the case if PJM were simply a single unconstrained pool.
PJM does not expect major new transmission lines to be constructed during the
study period. We have adopted this expectation.
5.3 CAPACITY MARKET SIMULATION MODEL INPUT ASSUMPTIONS
5.3.1 Existing Units Going-Forward Costs
For fossil units, annual fixed O&M costs are determined using FERC data from
1994-1996. For each year, total annual nonfuel production costs are identified.
The fossil fuel experts within Hagler Bailly assume that a reasonable proxy for
attributing nonfuel production costs to fixed and variable components is to
attribute 30% of total nonfuel costs to fixed costs, and the remainder to
variable costs. These fixed costs, in dollars, are then divided by net
capability to arrive at a cost in units of $/kW. These costs are then averaged
across years to determine an annual fixed production cost in $/kW. No
discounting is done to account for inflation, because inflation is a very small
component of the year-to-year variability for the three-year time period.
For steam units, the following adjustments are made. An increment of $4/kW for
annual G&A is added./19 Costs for employee benefits are assumed to be 50% of
total salaries reported in FERC Form 402, lines 18 and 28. Incremental capital
expenditures are assumed to be 20% of total fixed costs. These costs, which are
an important component of going-forward costs, are not reported in the FERC
production accounts.
While some FERC cost data is available at the generating unit level, most of
these data are available only at the power plant or station level. For
generating units lacking FERC data at the generating unit level, total station
annual nonfuel costs are attributed to generating units in proportion to
generating unit capacity. Since fixed production costs are calculated in units
of $/kW, this means that all generating units at a station have the same fixed
production costs per kW, unless production costs for a generating unit are
individually reported in the FERC data.
- ----------
19 An increment for annual G&A is only included for the steam units and
not the remaining units since the steam units are the units that are
more likely to have G&A costs that are not reflected in the FERC fixed
O&M accounts.
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For units not reported in the FERC data, an average value by unit type was
calculated from those units that do report FERC data. Combustion turbines and
gas turbines that were not listed in the FERC data were attributed annual fixed
production costs of $14.50/kW. Combined cycles were assigned a value of
$13.50/kW and steam units a value of $30.50/kW.
Property tax data for each unit was derived by applying a mill rate to an
assumed market value. We assumed a value for generating capacity of $400/kW.
Mill rates were assumed to vary by state and yield values averaging $9.50/kW.
5.3.2 New Generating Capacity
Projected unit characteristics for future combined cycle units (CCs) are based
upon Hagler Bailly estimates. These estimates were confirmed in conversations
with industry sources. These units were assigned seasonal maximum capacities of
788 MW, 705 MW, and 655 MW during the winter, spring/fall, and summer,
respectively. These units ramp up at 10 MW/minute, burn pipeline gas, and have a
variable O&M cost of $1.71/ MWh (1996 $). Their minimum uptime is eight hours
and they have no minimum downtime.
Unlike existing stock (those currently operating) in the model, future CCs are
assigned hot and cold start-up costs expressed in MMBtu. A cold start is defined
as a start after eight or more hours not in operation and has an average cost of
6,172 MMBtu per unit. A hot start is a start after less than eight hours of
inactivity, and its average cost is 2,482 MMBtu per unit.
Heat rates for CCs improve with time (i.e., newer units have superior technology
and performance to earlier units). Table 5-6 shows the heat rates and other key
characteristics of the generic combustion turbines (CTs) and CCs used in the
model.
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- --------------------------------------------------------------------------------
Table 5-6
New Generating Unit Characteristics (1996 $)
- --------------------------------------------------------------------------------
CC CT
- --------------------------------------------------------------------------------
Summer Net Capacity (MW) 655 MW/1 345 MW
- --------------------------------------------------------------------------------
Total Capital Cost $464 $279
($/kW)
- --------------------------------------------------------------------------------
Heat Rate (Btu/kWh, for Units installed 2001-06: 6768
full load summer Units installed 2007-13: 6339 10,400
operation) Units installed 2014-25: 6235
- --------------------------------------------------------------------------------
Variable O&M ($/MWh) $1.71 $3.02
- --------------------------------------------------------------------------------
Fixed O&M ($/kW Year) $9.75 $5.11
- --------------------------------------------------------------------------------
1 The 655 MW (summer capacity) is equivalent to 705 MW average capacity.
Information on fixed costs, depreciation, and taxes is also developed and
incorporated within the DCF analysis to determine the economic viability of the
new unit additions. Environmental costs and overhaul expenses are not included
due to expectations that such expenses would be minimal in early years of
operation. Key economic and financial assumptions include the following:
o Property taxes are assumed to be 1% of the initial capital costs.
Property taxes are escalated over time at the Projected inflation rate.
o Depreciation of the initial all-in cost of the new additions are based
on a standard 20-year MACRS (150% DB) with mid-year convention.
o General inflation is assumed at 2.5%.
o Minimum after-tax return of 13.5%.
o Income tax rate is assumed to be 35% federal and 7% state.
o Financing assumptions of 60% debt, 40% equity.
o Debt interest rate of 8%.
o Debt terms are 20 years for combined cycle units with mortgage-style
amortization.
o Debt terms are 15 years for combustion turbine units.
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- --------------------------------------------------------------------------------
CHAPTER 6
MARKET PRICE FORECASTS
6.1 INTRODUCTION
This chapter presents the market price forecasts resulting from our analysis,
and our assessment of Ironwood's dispatch given these forecasts. Three cases
were developed:
o "Base Case," which reflects our best assessment of future market
conditions.
o "High Gas Price Case," a downside sensitivity that tests the effect of
higher prices for gas through a uniform increase of $.50/MMBtu relative
to the Base Case in all years, while leaving all other fuel prices
unchanged.
o "Low Demand Growth Case," a downside sensitivity that tests the effect
of a one-third reduction in PJM average and peak demand growth rates
for each year beginning in 2017. This encompasses the last four years
of the PPA term and each year in the post-PPA period. While demand
growth is reduced, this case includes no corresponding adjustment to
the schedule of capacity retirements and additions.
All three cases use the same schedule of unit additions and retirements. In the
Low Demand Growth Case this conservative assumption has the effect of
overstating the likely reserve margins and exaggerating the downward impact on
energy prices.
The remainder of this chapter of the report is organized as follows:
o Section 6.2 presents our forecasts of power prices in PJM.
o Section 6.3 presents our forecasts of capacity factors and of
Ironwood's competitive position.
6.2 PJM CAPACITY AND ENERGY PRICE FORECASTS
6.2.1 Base Case
The pressing need for capacity in the PJM market is reflected in Table 6-1,
which summarizes PJM market entry and exit. During the study period, 14,744 MW
of capacity is retired and 27,965 MW of new combined cycle (CC) and combustion
turbine (CT) capacity is added, for a
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net increase of 13,221 MW (a 25% increase, compared to current installed
capacity of 52,521 MW). These additions provide for an average reserve margin of
18.1% for the study period./20
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Table 6-1
PJM Capacity Additions and Retirements
(MW)
- -----------------------------------------------------------------------------------------------------------------------
Net
Total Capacity Cumulative Reserve
Year CC CT Additions Retirements Cumulative Net Capacity Margin
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2001 655 - 655 (198) 457 457 17.8%
- -----------------------------------------------------------------------------------------------------------------------
2002 - 240 240 - 240 697 17.1%
- -----------------------------------------------------------------------------------------------------------------------
2003 1,310 1,380 2,690 (2,264) 426 1,123 16.7%
- -----------------------------------------------------------------------------------------------------------------------
2004 1,310 1,035 2,345 (1,791) 554 1,677 16.6%
- -----------------------------------------------------------------------------------------------------------------------
2005 1,310 690 2,000 (1,131) 869 2,546 17.1%
- -----------------------------------------------------------------------------------------------------------------------
2006 - 690 690 - 690 3,236 17.2%
- -----------------------------------------------------------------------------------------------------------------------
2007 1,310 - 1,310 - 1,310 4,546 18.4%
- -----------------------------------------------------------------------------------------------------------------------
2008 655 - 655 - 655 5,201 18.8%
- -----------------------------------------------------------------------------------------------------------------------
2009 - 690 690 - 690 5,891 18.9%
- -----------------------------------------------------------------------------------------------------------------------
2010 655 690 1,345 (835) 510 6,401 19.0%
- -----------------------------------------------------------------------------------------------------------------------
2011 - 345 345 - 345 6,746 18.7%
- -----------------------------------------------------------------------------------------------------------------------
2012 - 345 345 - 345 7,091 18.5%
- -----------------------------------------------------------------------------------------------------------------------
2013 655 - 655 - 655 7,746 18.7%
- -----------------------------------------------------------------------------------------------------------------------
2014 - 345 345 - 345 8,091 18.5%
- -----------------------------------------------------------------------------------------------------------------------
2015 1,310 345 1,655 (1,093) 562 8,653 18.6%
- -----------------------------------------------------------------------------------------------------------------------
2016 1,310 1,725 3,035 (2,719) 316 8,969 18.3%
- -----------------------------------------------------------------------------------------------------------------------
2017 - 690 690 - 690 9,659 18.6%
- -----------------------------------------------------------------------------------------------------------------------
2018 1,310 1,035 2,345 (1,946) 399 10,058 18.4%
- -----------------------------------------------------------------------------------------------------------------------
2019 655 - 655 - 655 10,713 18.6%
- -----------------------------------------------------------------------------------------------------------------------
2020 655 - 655 - 655 11,368 18.8%
- -----------------------------------------------------------------------------------------------------------------------
2021 - 345 345 (571) (226) 11,142 17.6%
- -----------------------------------------------------------------------------------------------------------------------
2022 1,310 - 1,310 (1,106) 204 11,346 17.8%
- -----------------------------------------------------------------------------------------------------------------------
2023 655 - 655 - 655 12,001 18.0%
- -----------------------------------------------------------------------------------------------------------------------
2024 1,310 345 1,655 (1,090) 565 12,566 17.9%
- -----------------------------------------------------------------------------------------------------------------------
2025 655 - 655 - 655 13,221 18.1%
- -----------------------------------------------------------------------------------------------------------------------
TOTAL 17,030 10,935 27,965 (14,744) 13,221 Avg. reserve 18.1%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
20 Due to the abundance of inexpensive coal fired generation capacity in
PJM-West, there are no economic additions or retirements in this
region. All the additions in PJM are in the East and Central regions.
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The introduction of this substantial new capacity helps to explain why the PJM
market is characterized by relatively low energy prices and relatively high
capacity prices. When many of the nuclear units are retired, they are
immediately replaced in the model by new CC and CT units to meet system
reliability requirements. These units, like the nuclear plants, have relatively
low variable costs, which perpetuates low prices in the energy market. The going
forward costs of these units, coupled with the relatively low energy market
prices, require additional revenues from the capacity market. This keeps
capacity prices high throughout the study period. By the end of 2005, 5384 MW of
uneconomic generation is retired in PJM. At the same time the system adds 7930
MW of new capacity. This new capacity, composed of both CC and CT units,
replaces the retired nuclear units. New generating capacity is added in every
year of the study period, in order to meet the growing demand for power in the
region.
At the outset of the forecast period coal generation is at the margin for over
half the hours in a year. Over time, as gas-fired units are constructed to meet
load growth and nuclear units are retired (which has the effect of increasing
the base load utilization of coal), gas-fired units become the marginal source
of power for almost a third of the hours. Since Ironwood's costs are lower than
many coal units, Ironwood is "inframarginal" in the vast majority of hours; that
is, its costs are below the costs of the marginal unit.
In the Base Case, energy market prices show a steady, slow price growth
throughout the study period. Energy prices begin at $22.05 (1996 $s/21) per MWh
in 2001 and gradually increase to $25.86 by 2025 (See Figure 6-1 and Table 6-2).
In the High Gas Price Case, energy prices are approximately $.60 to $1.20 per
MWh above the Base Case throughout the forecast period. This sensitivity
represents the "downside" fuel case because of the increase in Ironwood's fuel
costs. In the Low Demand Growth Case, the impact of the reduction in demand
growth in 2017 can be clearly seen as a break in the price trend. By the end of
the forecast period the Low Demand Growth Case prices are about $2.00 per MWh
below the Base Case./22
- -----------
21 Fuel price estimates are left in real 1996$s to maintain consistency
with a proprietary Hagler Bailly RealTime(TM) database.
22 Note that while energy prices in the Low Demand Growth Case are below
the Base Case, this is due to prices remaining essentially flat in real
terms rather than significantly declining. This flat trend in real
prices is maintained although the Low Demand Growth Case assumes no
adjustment to the schedule of capacity additions or retirements in
reaction to the decline in demand growth.
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Figure 6-1
PJM West/Central Average Energy Prices
1996$
[GRAPHIC OMITTED]
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Table 6-2
PJM Average Energy Prices
(1996 $/MWh)
High Gas Low Demand
Base Case Price Case Growth Case
- --------------------------------------------------------------------------------
2001 $22.05 $23.02 $22.05
2002 $22.47 $23.36 $22.47
2003 $21.43 $22.05 $21.43
2004 $22.42 $23.09 $22.42
2005 $21.88 $22.82 $21.88
2006 $22.15 $23.18 $22.15
2007 $22.32 $23.20 $22.32
2008 $22.85 $23.56 $22.85
2009 $23.02 $23.68 $23.02
2010 $22.98 $23.85 $22.98
2011 $23.44 $24.29 $23.44
2012 $22.77 $23.99 $22.77
2013 $23.28 $24.15 $23.28
2014 $23.58 $24.58 $23.58
2015 $23.66 $24.85 $23.66
2016 $24.31 $25.17 $24.31
2017 $24.32 $25.16 $23.88
2018 $24.51 $25.17 $24.08
2019 $24.44 $25.75 $23.82
2020 $24.18 $25.33 $23.64
2021 $25.47 $26.56 $23.85
2022 $24.75 $25.94 $23.68
2023 $25.27 $25.71 $24.06
2024 $25.45 $26.17 $23.53
2025 $25.86 $26.47 $23.82
Table 6-3 presents the annual forecast of capacity values used in the study,
expressed in 1996 dollars per kW-year. Since it can be difficult to separately
assess the effects of capacity and energy prices, we also present in Table 6-4
an "all-in" price forecast that combines energy and capacity prices (calculated
using a 100% load factor). The forecasted all-in price for the Base Case is
$27.70/MWh in 2002, $27.96/MWh in 2012, and $29.98/MWh in 2022 (all in constant
1996 dollars).
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Table 6-3
PJM Capacity Prices
(1996 $/kW-yr)
All Cases
---------------------------------
2001 $45.84
2002 $45.84
2003 $45.84
2004 $45.84
2005 $44.01
2006 $44.34
2007 $44.17
2008 $44.74
2009 $41.65
2010 $44.13
2011 $42.80
2012 $45.49
2013 $45.84
2014 $45.84
2015 $45.84
2016 $45.84
2017 $45.84
2018 $45.46
2019 $45.84
2020 $45.84
2021 $45.78
2022 $45.78
2023 $45.78
2024 $45.78
2025 $45.78
We have used the Base Case capacity values throughout. We do so since the High
Gas Case does not affect capacity requirements and the reduced energy margins
would, all else equal, increase the revenue required for new capacity. With the
Low Demand Growth Case we do not believe that the posited capacity would
actually enter the market. As capacity became overbuilt, new entrants would
delay or cancel their projects. Over some period, the supply and demand for
capacity would return to equilibrium and might go beyond equilibrium to
shortage. The posited continual overbuild is not plausible for more than a brief
period. Thus we consider this
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sensitivity analysis to be a useful stress test for energy prices, but not a
credible capacity scenario.
Table 6-4
PJM West/Central Average
All-In Prices
(1996 $)/1
Low Demand
Base Case High Gas Case Growth Case
- --------------------------------------------------------------------------------
2001 $27.28 $28.25 $27.28
2002 $27.70 $28.59 $27.70
2003 $26.66 $27.28 $26.66
2004 $27.65 $28.32 $27.65
2005 $26.90 $27.84 $26.90
2006 $27.21 $28.24 $27.21
2007 $27.36 $28.24 $27.36
2008 $27.96 $28.67 $27.96
2009 $27.77 $28.43 $27.77
2010 $28.02 $28.89 $28.02
2011 $28.33 $29.18 $28.33
2012 $27.96 $29.18 $27.96
2013 $28.51 $29.38 $28.51
2014 $28.81 $29.81 $28.81
2015 $28.89 $30.08 $28.89
2016 $29.54 $30.40 $29.54
2017 $29.55 $30.39 $29.11
2018 $29.70 $30.36 $29.27
2019 $29.67 $30.98 $29.05
2020 $29.41 $30.56 $28.87
2021 $30.70 $31.79 $29.08
2022 $29.98 $31.17 $28.91
2023 $30.50 $30.94 $29.29
2024 $30.68 $31.40 $28.76
2025 $31.09 $31.70 $29.05
1 Assumes a 100% capacity factor in calculating the capacity price per
MWh. This assumption has the effect of understating the capacity price;
for capacity factors below 100% the capacity payment per MWh increases.
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6.3 IMPLICATIONS FOR AES IRONWOOD
In this section, we discuss capacity factors (CF)/23, energy prices, and
dispatch for Ironwood under the three cases. As shown in Figure 6-2, in the Base
Case the CF gradually rises from the 85% range to over 90% by 2019. This
improvement in utilization reflects an assumed decreased forced outage rate over
time (this is a typical pattern as units move past the "break-in" period), and
increasing demand for power in PJM in conjunction with unit retirements. During
the early years of operation we would expect Ironwood to be backed-down during
low load periods, such as some Spring and Fall weekends and some evening
periods. As load increases the number of backdown periods declines and operation
of the plant is more continuous.
Figure 6-2
AES Ironwood Capacity Factors
[GRAPHIC OMITTED]
- ----------
23 The capacity factor represents how fully used the plant is in a
specific year. It is the ratio of total MWh produced to the total MWh
the plant could have produced if fully utilized every hour of the year
(i.e., 8760 hours).
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The sawtooth pattern in the figure reflects the impact of maintenance outages.
Major maintenance outages take place every six years with less significant
outages at three-year intervals.
Even in the Low Demand Growth Case the capacity factors remain above 90% during
three of the first four years of the merchant tail. In the High Gas Price Case
dispatch is degraded and the capacity factors are under 85% for the early years
of operation. However, as PJM load grows the dispatch of the plant steadily
improves and by the merchant tail is closely tracking the Base Case. In short,
demand growth combined with unit retirements creates a "floor" that stabilizes
the utilization of the Project during the merchant tail.
Simultaneous with its high utilization, the Ironwood plant achieves an average
energy price for its power that is higher than the time weighted PJM market
price for energy (a result shown in Figure 6-3 for the Base Case). AES Ironwood
will receive this higher energy price during the merchant period. (The
discussion that follows deals only with energy prices and does not cover
capacity revenues, which are discussed above.) The reasons the Ironwood plant
receives higher than average energy prices are (i) the plant is not dispatched
in the lowest price hours; (ii) the plant's planned outages are scheduled during
low price periods; iii) ramping from and to shutdown occurs predominantly in low
priced hours; and (iv) compensation is received for negative cycle costs./24
Excluding the lowest priced hours and including reimbursement for the negative
cycle costs raises the average price received by the plant above the PJM
average.
- ----------
24 Negative cycle costs are costs incurred in excess of revenues at times
when a unit is dispatched by the ISO to provide spinning reserve,
transmission system support, or some other service, or is kept on due
to minimum up-time or other constraints or ISO decisions. PJM rules
currently provide for make-whole payments to compensate generators for
negative cycle costs, and this procedure is expected to continue.
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Figure 6-3
Ironwood's Energy Revenue vs PJM's
Average Energy Price 1996$
Base Case
[GRAPHIC OMITTED]
The plant's economics are such that it is inframarginal to (less expensive than)
much coal generation and most other capacity in PJM. Figure 6-4 shows Ironwood's
position on the PJM supply curve for 2002, 2012, and 2022. As new, more
efficient capacity is added over time, Ironwood moves up the supply curve;
however, at the same time the curve is elongated as demand increases. The
overall effect is that Ironwood remains at a favorable point on the supply curve
throughout the study period. The figure illustrates that Ironwood is positioned,
in all years, well below the highest cost coal unit./25 These results are
consistent with the high utilization of the plant shown in Figure 6-2.
- ----------
25 Units positioned below the lowest cost coal unit include nuclear and
hydro. Units positioned above the highest cost coal unit include oil
and gas-fired steam units and combustion turbines and other peakers.
Note that the supply curves exclude emergency power. Emergency power is
incorporated within the RealTime(TM) model in the estimation of energy
prices.
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Figure 6-4
PJM Supply Curves (1996 $/MWh)
2002
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Figure 6-4 (cont.)
PJM Supply Curves (1996 $/MWh)
2012
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2022
[OBJECT OMITTED]
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CHAPTER 7
Conclusions
Based on our analysis, we believe that the facility's dispatch position on the
supply curve will be highly competitive and well below the highest priced
baseload coal plant during the post-PPA period (and during the term of the power
purchase agreement) due to the facility's high efficiency, low production costs,
and the influence of demand growth in conjunction with unit retirements.
The facility is expected to have an average capacity factor of 90.7% during the
post-PPA period. The addition of new, more efficient gas-fired power generation
facilities in PJM over time will not adversely affect the facility's dispatch.
Even in the two macroeconomic "downside sensitivity" cases of low demand growth
and high gas prices, the Facility's average capacity factor remains
significantly high at 89.6% during the post-PPA period.
During the term of the power purchase agreement, the economics of the Project
are not sensitive to fuel prices because the costs of fuel are the
responsibility of the power purchaser under the power purchase agreement's fuel
tolling provisions.
In summary, the economics of Ironwood appear to be robust. We cannot, of course,
account for all possible circumstances in the energy and fuel markets. What this
study does indicate is that given the operating parameters, costs, and other
modeling assumptions, and for a range of scenarios which provide a significant
test to the economics of the Project, the AES Ironwood project is financially
viable.
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 18-108 of the Delaware Limited Liability Company Act provides:
Subject to such standards and restrictions, if any, as are set forth in its
limited liability company agreement, a limited liability company may, and shall
have the power to, indemnify and hold harmless any member or manager or other
person from and against any and all claims and demands whatsoever.
Section 4.2 of our Company's Limited Liability Company Agreement
provides that our Company shall indemnify to the fullest extant permitted by the
laws of the State of Delaware, as from time to time in effect, the Directors and
Officers of our Company.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibit
Number Description
- ------ -----------
3 Amended and Restated Limited Liability Company Agreement, dated
as of October 4, 1999, by our Company.
4.1 Indenture and the First Supplemental Indenture, dated as of June
1, 1999, by and among our Company, the Trustee and the Depositary
Bank.
4.2 Collateral Agency and Intercreditor Agreement, dated as of June
1, 1999, by and among our Company, the Trustee, the Collateral
Agent, the DSR LOC Provider, the CP LOC Provider and the
Depositary Bank.
4.3 Debt Service Reserve Letter of Credit and Reimbursement
Agreement, dated as of June 1, 1999, by and among our Company,
the DSR LOC Provider and the Banks named therein.
4.4 Construction Period Letter of Credit and the Reimbursement
Agreement, dated as of June 1, 1999, by and among our Company,
the CP LOC Provider and the Banks named therein.
4.5 Global Bonds, dated June 25, 1999, evidencing 8.857% Senior
Secured Bonds of our Company due 2025 in the principal amount of
$308,500,000.
4.6 Equity Subscription Agreement, dated as of June 1, 1999, by and
among our Company, AES Ironwood and the Collateral Agent.
4.7 Security Agreement, dated as of June 1, 1999, by and between our
Company and the Collateral Agent.
4.8 Pledge and Security Agreement, dated as of June 1, 1999, by and
between AES Ironwood and the Collateral Agent.
4.9 Consent to Assignment, dated as of June 1, 1999, by and between
the Power Purchaser and the Collateral Agent, and consented to by
our Company.
4.10 Consent to Assignment, dated as of June 1, 1999, by and between
the PPA Guarantor and our Company, and consented to by our
Company.
4.11 Consent to Assignment, dated as of June 1, 1999, by and between
the Contractor and the Collateral Agent, and consented to by our
Company (with respect to the EPC Contract).
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Exhibit
Number Description
- ------ -----------
4.12 Consent to Assignment, dated as of June 1, 1999, by and between
the Contractor and the Collateral Agent and consented to by our
Company (with respect to the Maintenance Services Agreement).
4.13 Consent to Assignment, dated as of June 1, 1999, by and between
Siemens Corporation and the Collateral Agent, and consented to by
our Company.
4.14 Consent to Assignment, dated as of June 1, 1999, by and between
Prescott and the Collateral Agent, and consented to by our
Company.
4.15 Consent to Assignment, dated as of June 1, 1999, by and between
Metropolitan Edison Company d/b/a GPU Energy and the Collateral
Agent, and consented to by our Company.
4.16 Consent to Assignment, dated as of June 1, 1999, by and between
City of Lebanon Authority and the Collateral Agent, and consented
to by our Company.
4.17 Consent to Assignment, dated as of June 1, 1999, by and between
Pennsy Supply, Inc. and the Collateral Agent, and consented to by
our Company.
4.18 Assignment and Assumption Agreement, dated June 25, 1999, by and
between AES Ironwood, Inc. and AES Ironwood, L.L.C. (with respect
to the EPC Contract).
4.19 Assignment and Assumption Agreement, dated June 25, 1999, by and
between AES Ironwood, Inc. and AES Ironwood, L.L.C. (with respect
to the Maintenance Services Agreement).
5* Opinion of Hunton & Williams regarding Legality.
10.1 Guaranty, dated as of February 5, 1999, by and between the PPA
Guarantor and our Company.
10.2* Amended and Restated Power Purchase Agreement, dated as of
February 5, 1999, and Amendment No. 1 to Amended and Restated
Power Purchase Agreement, dated as of June 18, 1999, between our
Company and the Power Purchaser. (Portions of this exhibit have
been omitted pursuant to a request for confidential treatment.)
10.3* Engineering, Procurement and Construction Services Agreement,
dated as of September 23, 1998 (the "EPC Contract"), as amended,
by and between our Company and the Contractor. (Portions of this
exhibit have been omitted pursuant to a request for confidential
treatment.)
10.4 Guaranty, dated as of September 23, 1998, by and between Siemens
Corporation and our Company.
10.5* Maintenance Program Parts, Shop Repairs and Scheduled Outage TFA
Services Contract, dated as of September 23, 1998, and Amendment
No. 1 to Maintenance Program Parts, Shop Repairs and Scheduled
Outage TFA Services Contract, dated as of January 13, 1999 (the
"Maintenance Services Agreement"), by and between our Company and
the Contractor. (Portions of this exhibit have been omitted
pursuant to a request for confidential treatment.)
10.6 Development and Operations Services Agreement, dated as of June
1, 1999, by and between our Company and Prescott.
10.7 Effluent Supply Agreement, dated as of March 3, 1998, by and
between our Company and City of Lebanon Authority.
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Exhibit
Number Description
- ------ -----------
10.8 Generation Facility Transmission Interconnection Agreement, dated
as of March 23, 1999, by and between our Company and Metropolitan
Edison Company d/b/a GPU Energy.
10.9* Agreement Relating to Real Estate, dated as of October 23, 1998,
by and between our Company and Pennsy Supply, Inc.
10.10* Easements and Right of Access Agreement, dated as of April 15,
1999, by and between our Company and Pennsy Supply, Inc.
23.1 Consent of Stone & Webster Management Consultants, Inc.
23.2 Consent of Hagler Bailly Consulting, Inc.
23.3* Consent of Hunton & Williams (contained in Exhibit 5).
23.4 Consent of Deloitte & Touche LLP.
24 Power-of-Attorney (contained on the signature page of this
Registration Statement).
25 Statement of Eligibility and Qualification on Form T-1 of The
Bank of New York, as successor Trustee under the Indenture.
27 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Letter to Clients.
99.3 Form of Letter to Registered Holders and DTC Participants.
99.4 Form of Notice of Guaranteed Delivery.
- ----------
* To be filed by amendment.
ITEM 22. UNDERTAKINGS
A. The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total
dollar value of the securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement; and
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(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this
Registration Statement or any material change to such
information in this Registration Statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
B. The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
C. The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in the documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
D. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints John Ruggirello and Barry Sharp, and each of them
(with full power to act alone) as true and lawful attorneys-in-fact, and stead,
in any and all capacities, to sign any amendments, including post-effective
amendments, to this registration statement and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may lawfully do or
cause to be done by virtue thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Lebanon,
and State of Pennsylvania, on November 19, 1999.
AES IRONWOOD, L.L.C.
By: /s/ John Ruggirello
-------------------------------
John Ruggirello
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ John Ruggirello President November 19, 1999
- ------------------------
John Ruggirello
/s/ Barry Sharp Vice President and
- ------------------------ Chief Financial Officer November 19, 1999
Barry Sharp (and principal accounting,
officer) and Director
/s/ Dennis Bakke Director November 19, 1999
- ------------------------
Dennis Bakke
/s/ Roger Naill Director November 19, 1999
- ------------------------
Roger Naill
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Exhibit 3
AES Ironwood, L.L.C.
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
(this "Agreement") is made and entered into as of October 4, 1999 by AES
Ironwood, Inc. ("AES") pursuant to and in accordance with the Limited Liability
Company Act of 1992 of the State of Delaware and any successor statute (the
"Act").
WHEREAS, AES Ironwood, L.L.C. (the "Company") was formed by
AES as its sole Initial Shareholder by the filing of a Certificate of Formation
on October 30, 1998, and the execution of the AES Ironwood, L.L.C. Limited
Liability Company Agreement on November 1, 1998, (the "Original Agreement"); and
WHEREAS, AES, the sole Shareholder of the Company, desires to
amend the Original Agreement;
NOW, THEREFORE, AES does hereby certify and agree as follows:
ARTICLE I
ORGANIZATION
Section 1.1 Formation. The Company has been formed as a
Delaware limited liability company by the filing of a certificate of formation
(the "Certificate") under and pursuant to Section 18-201 of the Act and the
filing of a copy of the Certificate in the Office of the Secretary of State of
the State of Delaware.
Section 1.2 Name. The name of the Company is AES Ironwood,
L.L.C., or such other name as the Members (as defined herein) may determine from
time to time and all Company business shall be conducted in such name or such
other names that comply with applicable law and as the Members may designate
from time to time.
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Section 1.3 Registered Office; Registered Agent; Principal
Office. The registered office of the Company in the State of Delaware shall be
1013 Centre Road, Wilmington, New Castle, Delaware 19805, or at such other
location as the Officers may from time to time agree. The registered agent at
such address for service of process on the Company in the State of Delaware
shall be The Corporation Service Company, or such other person or persons as the
Officers may designate from time to time in the manner provided by law.
Section 1.4 Purpose. The purpose of the Company is to engage
in any business or activity that now or hereafter is not forbidden by Section
18-106 of the Act and which it may lawfully undertake under the law of any
jurisdiction in which the Company engages in its business.
Section 1.5 Term. The term of the Company shall commence on
the date of filing of the Certificate in the Office of the Secretary of State of
the State of Delaware and shall continue until terminated in accordance with the
terms hereof.
ARTICLE II
MEMBERS; OWNERSHIP; DISPOSITION OF INTERESTS
Section 2.1 Members. The Members of the Company shall be those
persons or entities listed on Schedule 1 hereto (each, a "Member" and, jointly,
the "Members"), all of which are hereby admitted to the Company.
Section 2.2 Title to Company Property. All property owned by
the Company, whether real or personal, tangible or intangible, and wherever
located, shall be deemed to be owned by the Company as an entity, and no Member,
individually, shall have any ownership of such property. The Company may hold
its property in its own name or in the name of a nominee, which may be one of
the Members or an affiliate thereof, or any trustee or agent designated by the
Members.
Section 2.3 Disposition of Interests.
(a) No interest in the Company of any Member (a "Membership
Interest") may be disposed of, in whole or in
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part, without the prior written consent of all the Members, which consent may be
granted or withheld by each such member in its sole and absolute discretion.
(b) The person to which a Member's Membership Interest is
sold, assigned, transferred or exchanged shall have no right to be admitted as a
Member of the Company unless (i) the Membership Interest is sold, assigned,
transferred or exchanged by a Member who was properly admitted as such pursuant
to the terms hereof, (ii) each Member effecting the sale, assignment, transfer
or exchange and the person to whom the Membership Interest is sold, assigned,
transferred or exchanged executes and delivers a document to the other Members
containing a representation and warranty by each Member effecting such sale,
assignment, transfer or exchange and the person to which such Membership
Interest is sold, assigned, transferred or exchanged to the effect that such
sale, assignment, transfer or exchange was made in accordance with all laws and
regulations, including securities laws, applicable to such Member or person, as
appropriate and (iii) all of the requirements of Section 2.3(c) are satisfied
with respect to such admission.
(c) A person to whom a Membership Interest is sold, assigned,
transferred or exchanged shall be admitted as a Member of the Company if (i) the
existing Members consent (which consent may be granted or withheld by each such
member in its sole and absolute discretion) to such admission, and (ii) the
Company receives a document setting forth (A) the notice and payment address and
facsimile number of the person to be admitted to the Company as a Member, (B)
the written acceptance by such person of all the terms and provisions of this
Agreement, (C) an agreement by such person to perform and discharge timely all
of the obligations and liabilities in respect of the Membership Interest being
obtained, (D) a power of attorney in the form of Section 8.1 hereof executed by
such person and (E) the effective date of the sale, assignment, transfer or
exchange.
Section 2.4 Additional Members. Additional persons may be
admitted as Members in the Company, without the sale, assignment, transfer or
exchange by an existing Member of all or any part of its Membership Interest,
only with the consent
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of all of the existing Members and upon the making of such capital contribution,
if any, as the existing Members shall require from such person. In such event,
the percentages of the existing and additional Members shall be adjusted pro
rata or assigned, as the case may be, to reflect the capital contribution, if
any, of such additional Member. If the additional Member makes no capital
contribution, the existing Members shall assign a percentage to the additional
Member and the percentages of the existing Members shall be adjusted
accordingly.
Section 2.5 Form of Certificates. Each Member shall receive a
certificate in such form as prescribed by the Directors ("Director" defined as a
member of the Board elected as provided in Section 4.2.) and by any applicable
law, which certificate shall certify the interest of such Member in the Company.
Section 2.6 Membership Interests as Securities. All Membership
Interests in the Company shall be "securities" governed by Article 8 of the
Uniform Commercial Code in any jurisdiction (a) that has adopted revisions to
Article 8 of the Uniform Commercial Code substantially consistent with the 1994
revisions to Article 8 adopted by the American Law Institute and the National
Conference of Commissioners on Uniform State Laws and (b) whose laws may be
applicable, from time to time, to the issues of perfection, the effect of
perfection or non-perfection, and the priority of a security interest in
Membership Interests in the Company
Section 2.7 Liability to Third Parties. The debts, obligations
and liabilities of the Company, whether arising in contract, tort or otherwise,
shall always and hereafter be solely the debts, obligations, and liabilities of
the Company and no Member shall have any personal liability for any obligation
of the Company, whether such obligations arise in contract, tort or otherwise,
except to the extent that any such obligations are expressly assumed in writing
by such Member.
Section 2.8 Resignation. A Member does not have the right or
power to resign or withdraw from the Company as a Member unless an additional
member or members have been
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properly admitted in accordance with Section 2.3(c) or Section 2.4.
ARTICLE III
CAPITALIZATION, ALLOCATIONS AND DISTRIBUTIONS
Section 3.1 Percentage Interests. For all purposes of this
Agreement, the term Percentage Interest with respect to a particular Member
shall mean that percentage interest set forth on Schedule 1 opposite such
Member's name.
Section 3.2 Capital Contributions.
(a) Each Member has made an initial capital contribution to
the Company in the aggregate amount set forth opposite such Member's name on
Schedule 1 hereto. Except as required by law, no Member shall have an obligation
to make additional capital contributions to the Company.
(b) Except as may be required by law, at no time during the
term of the Company shall a Member with a negative balance in its Capital
Account (as defined herein) have any obligation to the Company or to the other
Members to restore such negative balance.
Section 3.3 Capital Accounts. Each Member's capital account
("Capital Account") shall be maintained on the books of the Company for each
Member and the balance of each Member's Capital Account shall be equal to such
Member's initial capital contribution pursuant to Section 3.2 above, and shall
be (i) increased by (A) the aggregate amount of such Member's additional capital
contributions to the Company, (B) the book value of property contributed by such
Member to the Company, net of liabilities secured by such property that the
Company is considered to assume or take subject to under Section 752 of the
Code, and (C) profits and items of income and gain allocated to such Member, and
(ii) shall be decreased by (A) cash distributions to such Member from the
Company, (B) the book value of property distributed in kind to such Member, net
of liabilities secured by such property that such Member is deemed to assume or
take subject to under Code Section 752, and (C) losses and items of loss or
deduction allocated to such Member. The provisions of this Agreement relating to
the
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maintenance of Capital Accounts are intended to comply with Section 1.704-1(b)
of Treasury Regulations pursuant to the Code and shall be interpreted and
applied in a manner consistent with such regulation. To the extent such
provisions are inconsistent with such regulations or are incomplete with respect
thereto, the Capital Accounts of the Member shall be maintained in accordance
with such regulations.
Section 3.4 Allocations and Distributions.
(a) Profits and losses of the Company for each fiscal year
shall be allocated pro rata to the Members according to the Percentage
Interests.
(b) Every item of income, gain, loss, deduction, credit or tax
preference entering into the computation of profits and losses, or applicable to
the period during which such profits or losses were recognized, shall be
considered allocated to each Member in the same proportion as profits or losses
are allocated to such Members.
(c) Distributions to the Members shall be shared pro rata
according to the Percentage Interests. Distributions may be made from time to
time in such amounts as the Directors in their discretion shall determine.
Immediately prior to a distribution of property other than cash, the Capital
Accounts shall be adjusted as provided in Treasury Regulation ss.
1.704-1(b)(2)(iv)(f).
(d) To the extent an adjustment to the adjusted tax basis of
any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is
required, pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m), to be
taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis) and such gain or loss shall be specially allocated to the
Members in a manner consistent with the manner in which their Capital Accounts
are required to be adjusted pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(m).
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(e) The allocation of profits and losses, pursuant to Section
3.4 hereof shall not result in any Member having an Adjusted Capital Account
Deficit at the end of any fiscal year. In the event any Member unexpectedly
receives any adjustments, allocations, or distributions described in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of Company gross income and gain shall be
specially allocated to such Member in an amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations, the Adjusted
Capital Account Deficit of such Member as quickly as possible, provided that an
allocation pursuant to this Section 3.4(e) shall be made only if and to the
extent that such Member would have an Adjusted Capital Account Deficit after
making all other allocations provided for hereunder on the basis that the
allocation provisions of this Section 3.4(e) are of no force or effect and such
allocation does not create or increase an Adjusted Capital Account Deficit of
any other Member.
(f) If a Membership Interest has been transferred during a
fiscal year, distributions shall be made, as among the transferor and the
transferee, to the person owning the Member's Membership Interest on the date of
the distribution. Profits, losses and items allocated under this Section 3.4
(other than income or loss from a capital event) shall be allocated by the
number of days each person held the Membership Interest (except if the
transferor and the transferee agree to the contrary and so advise the other
Members in writing within 10 days after the end of the Fiscal Year in which the
assignment occurs) and profits or losses from any capital event shall be
allocated to the holder of the Membership Interest on the day the capital event
occurred during such fiscal year.
(g) In connection with any distribution, whether upon winding
up of the Company or otherwise and whether or not it shall constitute a return
of capital, no Member shall have the right to demand or receive property other
than cash, although the liquidator may distribute property other than cash. No
Member shall have priority over any other Member either as to the return of its
capital contribution or as to allocation of profits or losses of the Company.
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(h) If any Company property has a book value different from
its adjusted tax basis to the Company for U.S. federal income tax purposes
(whether by reason of the contribution of such property to the Company, the
revaluation of such property hereunder, or otherwise), allocations of taxable
income, gain, loss and deductions under this Section 3.4(h) with respect to such
asset shall take account of any variation between the adjusted tax basis of such
asset for federal income tax purposes and its book value in the same manner as
under Code Section 704(c) or the principle set forth in Treasury Regulation
Section 1.704-1(b)(2)(iv)(g), as the case may be. Each item of income, gain,
loss, deduction and credit and all other items governed by Code Section 702(a)
shall be allocated among the Members in proportion to the allocation of profits,
losses and other items to such Members hereunder, provided that any gain
recognized from any disposition of a Company asset which is treated as ordinary
income because it is attributable to the recapture of any depreciation or
amortization shall be allocated among the Members in the same ratio as the prior
allocations of profits, losses or other items which include such depreciation or
amortization, but not in excess of the gain otherwise allocable to each such
Member. Except as set forth in this Section 3.4(h), allocations for tax purpose
of items of income, gain, loss and deduction, and credits and basis therefor,
shall be made in the same manner as allocations for book purposes as set forth
in Section 3.4(a). Allocations pursuant to this Section 3.4(h) are solely for
purposes of federal, state and local income taxes and shall not affect, or in
any way be taken into account in computing, any Member's Capital Account or
share of profits, losses, other items or distributions pursuant to any provision
of this Agreement, or Membership Interest.
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ARTICLE IV
MANAGEMENT AND OPERATION
ARTICLE IV
MANAGEMENT
4.1. Management of Company. As provided in this Agreement, all
management powers over the business and affairs of the Company shall be vested
in a Board of Directors (the "Board") and, subject to the direction of the
Board, the Officers, who shall collectively constitute "managers" of the Company
within the meaning of the Act. No Member, by virtue of having the status of a
Member, shall solely have any management power over the business and affairs of
the Company or actual or apparent authority to enter into contracts on behalf
of, or to otherwise bind, the Company. Except as specifically provided in this
Agreement, the authority and functions of the Board on the one hand and of the
Officers on the other shall be identical to the authority and functions of the
board of directors and officers, respectively, of a corporation organized under
the Delaware General Corporation Law. Thus, except as otherwise specifically
provided in this Agreement, the business and affairs of the Company shall be
managed under the direction of the Board, and the day-to-day activities of the
Company shall be conducted on the Company's behalf by the Officers, who shall be
agents of the Company. In addition to the powers that now or hereafter can be
granted to managers under the Act and to all other powers granted under any
other provision of this Agreement, the Board (subject to Section 4.2) and the
Officers (subject to Section 4.4 and the direction of the Board) shall have full
power and authority to do all legal things on such terms as they, in their sole
discretion, may deem necessary or appropriate to conduct, or cause to be
conducted, the business and affairs of the Company
4.2 The Board of Directors.
(a) Number; Term of Office; Qualifications; Vacancies. The
number of Directors that shall constitute the whole Board shall be three (3).
Vacancies and newly created directorships resulting from any increase in the
authorized
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number of directors may be filled by a majority of the Directors then in office,
although less than a quorum, or by the sole remaining Director, and the
Directors so chosen shall hold office, subject to Sections 4.2(c) and 4.2(d),
until the next meeting of Members and until their respective successors are
elected and qualified.
(b) Directors. The initial Board shall be those persons listed
on Schedule 2 hereto, who shall serve until successor Directors are elected
pursuant to Section 4.2(a).
(c) Resignation. Any Director may resign at any time by giving
written notice of such resignation to the Board or the President or the
Secretary of the Company. Any such resignation shall take effect at the time
specified therein or, if no time is specified, upon receipt thereof by the Board
or one of the above-named Officers; and, unless specified therein, the
acceptance of such resignation shall not be necessary to make it effective. When
one or more Directors shall resign from the Board, effective at a future date, a
majority of the Directors then in office, including those who have so resigned,
shall have power to fill such vacancy or vacancies, the vote thereof to take
effect when such resignation or resignations shall become effective and each
Director so chosen shall hold office as provided in this Agreement in the
filling of other vacancies.
(d) Removal. Any Director may be removed, with or without
cause, by the vote or by the written consent of the holders of a majority of the
issued and outstanding Membership Interests.
(e) Regular Meetings; Notice. Regular meetings of the Board
shall be held at such time and at such place as the Board may from time to time
prescribe. No notice need be given of any regular meeting and a notice, if
given, need not specify the purposes thereof.
(f) Special Meetings; Notice. A special meeting of the Board
may be called at any time by the President or any person acting in the place of
the President and shall be called by the President or by the Secretary upon
receipt of a written request to do so specifying the matter or matters
10
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appropriate for action at such a meeting that are proposed to be presented at
the meeting and signed by at least two Directors. Any such meeting shall be held
at such time and at such place, within or without the State of Delaware, as
shall be determined by the body or person calling such meeting. Notice of such
meeting stating the date, time and place thereof shall be given by mail,
telephone or personally.
(g) Quorum. A majority of the whole Board shall constitute a
quorum for the transaction of business, but in the absence of a quorum, a
majority of those present (or if only one be present, then that one) may adjourn
the meeting, without notice other than announcing the meeting, until such time
as a quorum is present. Except as otherwise required by this Agreement, the vote
of the majority of the Directors present at a meeting at which a quorum is
present shall be the act of the Board.
(h) Informal Action By Directors. Any action required or
permitted to be taken at a meeting of the Board or of any committee thereof may
be taken without a meeting if a consent in writing setting forth the action so
taken shall be signed by all of the members of the Board or of such committee,
as the case may be, entitled to vote with respect to the subject matter thereof,
and such consent shall have the same force and effect as a unanimous vote.
(i) Indemnification of Directors and Officers. The Company
shall indemnify to the full extent permitted by the laws of the State of
Delaware, as from time to time in effect, the Directors and Officers of the
Company.
(j) Limitation of Liability. The debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company, and no
Officer or Director shall be obligated personally for any such debt, obligation
or liability of the Company solely by reason of being an Officer or Director of
the Company.
4.3 Meetings of Members.
(a) Special Meetings. A special meeting of Members may be
called by the Board or the President or holders of not
11
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less than one-tenth (1/10) of the Membership Interests entitled to vote at the
meeting. Any such meeting shall be held on such date and at such time and place
as shall be determined by the body or person calling such meeting and as shall
be stated in the notice of such meeting.
(b) Quorum. A majority of the holders of Membership Interests
present in person or represented by proxy at a meeting shall constitute a quorum
at a meeting of Members.
(c) Vote. The affirmative vote of the majority of the
Membership Interests represented at a meeting at which a quorum is present and
entitled to vote on the subject matter shall be the act of the Members.
(d) Informal Action by Members. Any action which may be taken
at a meeting of Members may be taken without a meeting if a consent in writing
setting forth the action so taken shall be signed by the Members having not less
than the minimum number of votes that would be necessary to take such action at
a meeting at which Members entitled to vote thereon were present and voted. Such
consent shall have the same force and effect as if such action had been taken at
a meeting of Members.
4.4 Officers.
(a) In General. Unless otherwise provided by resolution of the
Board, the Officers shall have the titles, powers, authority and duties
described below in this Section 4.4. Initial Officers shall be those persons
listed on Schedule 2 hereto, who shall serve until successor Officers are
elected Section 4.4(b).
(b) Election; Qualification. The Officers of the Company shall
be a President, a Vice President, a Secretary and a Treasurer, each of whom
shall be elected by the Board. The Board may elect one or more other Officers as
it may from time to time determine. Any one or more offices may be held by the
same person.
(c) Term of Office. Each Officer shall hold office from the
time of such Officer's election and qualification to
12
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the time at which such Officer's successor is elected and qualified, unless such
Officer shall die or resign or shall be removed pursuant to Section 4.4(d).
(d) Resignation. Any Officer may resign at any time by giving
written notice of such resignation to the Board or the President or the
Secretary of the Company. Any such resignation shall take effect at the time
specified therein or, if no time is specified, upon receipt thereof by the Board
or one of the above-named Officers; and, unless specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
(e) Removal. Any Officer may be removed at any time, with or
without cause, by the vote of a majority of the whole Board.
(f) Vacancies. A vacancy however caused in any office of the
Company may be filled for the unexpired portion of the term in the manner
provided in this Agreement for election or appointment of such office.
(g) President. The President shall be the chief executive
officer of the Company and shall have general charge of the business and affairs
of the Company subject however to the right of the Board to confer specified
powers on Officers and subject generally to the direction of the Board. The
President shall preside at all meetings of Members and of the Board.
(h) Vice President. The Vice President shall have such powers
and duties as generally pertain to the office of Vice President and as the Board
or the President may from time to time prescribe. During the absence of the
President or his inability to act, the Vice President shall exercise the powers
and shall perform the duties of the President, subject to the direction of the
Board.
(i) Secretary. The Secretary shall keep the minutes of all
meetings of Members and of the Board. The Secretary shall exercise the powers
and shall perform the duties incident to the office of Secretary, and those that
may otherwise from time to time be assigned to the Secretary, subject to the
direction of the Board.
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(j) Treasurer. The Treasurer shall have care of all funds and
securities of the Company and shall exercise the powers and shall perform the
duties incident to the office of Treasurer, subject to the direction of the
Board. The Board may delegate to the Treasurer the power to designate a bank or
banks as depositories for the funds of the Company and to designate signatories
for the Company's bank accounts, including authorization of the use of facsimile
signatures, and to change such signatories from time to time, and the Board may
authorize the Treasurer to delegate any of the Treasurer's powers to any other
Officer or agent of the Company.
(k) Powers of Attorney. The Company may grant powers of
attorney or other authority as appropriate to establish and evidence the
authority of the Officers and other persons.
4.5. Duties of Officers and Directors. Except as otherwise
specifically provided in this Agreement, the duties and obligations owed to the
Company and to the Members by the Officers of the Company and by members of the
Board, and any such duties that may be owed by any Member or by any affiliate of
any Member, shall be the same as the respective duties and obligations owed to a
corporation organized under the Delaware General Corporation Law by its officers
and directors and any such duties that may be owed to such corporation by any
similarly situated stockholder or affiliate thereof, respectively.
ARTICLE V
TAXES
Section 5.1 Tax Returns.
(a) The Company shall file a partnership tax return in the
United States at the end of each fiscal year and for tax purposes it is the
intent of the Members that the Company be taxed as a partnership in the United
States for U.S. federal, state, and local tax purposes. The Company is hereby
designated to be the "Tax Matters Partner" for U.S. federal income tax purposes
pursuant to Section 6231 of the Code with
14
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respect to all taxable years of the Company. The Tax Matters Partner shall
prepare or cause to be prepared all tax returns required of the Company.
(b) The Tax Matters Partner shall, to the extent permitted by
applicable law and regulations, and upon obtaining any necessary approval of the
United States Commissioner of Internal Revenue, elect to use such methods of
depreciation, and make all other U.S. federal income tax elections in such
manner, as it determines to be most favorable to the Members. The Tax Matters
Partner shall at the Company's expense defend all tax audits and litigation with
respect to the Company's tax returns, and shall not undertake any act which
would cause the books, records, or tax returns of the Company or the Members to
be inconsistent with such acts, elections and steps taken by the Company.
(c) The Tax Matters Partner shall, upon the written request of
any Member, cause the Company to file an election under Code Section 754 and the
Treasury Regulations thereunder to adjust the basis of the Company's assets
under Code Section 734(b) or 743(b) and a corresponding election under the
applicable sections of U.S. state and local law.
ARTICLE VI
BOOKS AND REPORTS
Section 6.1 Books of Account. The Company shall maintain its
books and records and shall determine all items of profits and losses and
distributions on a cash basis in accordance with principles applicable in
determining taxable income or loss for federal income tax purposes for
partnerships and consistent with accounting methods used by the Company in
determining taxable income or loss for U.S. federal income tax purposes. The
Company shall also keep all other records necessary or convenient to record the
Company's business and affairs and sufficient to record the determination and
allocation of all profits, losses, distributions and other amounts as may be
provided for herein.
Section 6.2 Reports. As soon as practicable after the end of
each fiscal year, there shall be prepared and delivered to each Member a
financial statement for the Company
15
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consisting of the following: (i) income statements and balance sheets for such
fiscal year showing separately the computation of profits or losses and (ii) the
amount of the distributions to the Members and the effect of such distributions
on the balance sheet of the Company and the Capital Accounts of each Member, and
(iii) a report reviewed setting forth in sufficient detail all such information
and data with respect to the business transactions effected by or involving the
Company during such fiscal year as shall enable each Member to prepare all its
tax returns in accordance with all relevant laws, rules and regulations then
prevailing.
Section 6.3 Access to Books. The books and records of the
Company shall be available to each Member or its representatives for inspection
and audit upon reasonable notice during normal business hours at the principal
office of the Company. The Company shall cause the auditors to cooperate in such
inspection and audit and to provide any of their work papers requested in
connection therewith.
Section 6.4 Fiscal Year. The fiscal year of the Company shall
end on the 31st day of December of each year.
ARTICLE VII
DISSOLUTION, LIQUIDATION, AND TERMINATION
Section 7.1 Dissolution. The Company shall be dissolved and
its affairs shall be wound up upon the first to occur of any of the following:
(a) the written consent of all the Members; or
(b) the entry of a decree of judicial dissolution under
Section 18-802 of the Act.
Section 7.2 Liquidation and Termination. On dissolution of the
Company, the Members shall appoint one or more persons as liquidators of the
Company. The liquidators shall forthwith commence the winding up of the
Company's business and the liquidation of its property. All proceeds from the
sale or disposition of the property of the Company
16
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shall, to the maximum extent permitted by law, be applied as follows:
(a) All of the Company's debts and liabilities shall be paid
and discharged in the order of priority provided by law; and
(b) The balance shall be distributed to the Members in
accordance with their relative respective positive Capital Account balances
until such balances, if any, are reduced to zero and then the balance shall be
distributed to each Member in accordance with their Percentage Interests.
The liquidator(s) may make distributions of the Company's
assets in kind. The choice of which, if any, Company assets are to be
distributed in kind shall be within the sole discretion of the liquidator(s) and
shall be binding upon all Members. Unless otherwise agreed by the Members,
distributions of property in kind shall be shared by all the Members in
accordance with their Percentage Interests. The costs of liquidation shall be
borne as a Company expense. Until final distribution, the liquidator(s) shall
continue to operate the Company properties with all the power and authority of
the Officers hereunder.
Section 7.3 No Restoration of Negative Capital Accounts.
Except as required under applicable laws of the State of Delaware, or in respect
of any negative balance resulting from a distribution in contravention of this
Agreement, at no time shall a Member with a negative balance in its Capital
Account have an obligation to restore such negative balance.
Section 7.4 Cancellation of Filings. Upon completion of the
distribution of Company assets as provided in Section 8.2 hereof, the Company is
terminated, and the Officers shall file a certificate of cancellation with the
Secretary of State of the State of Delaware and shall take such other actions as
may be necessary to terminate the Company.
17
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ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Power of Attorney. Each Member, by execution of
this Agreement or a counterpart hereof, irrevocably constitutes and appoints the
Officers, with full power of substitution, its agent and attorney-in-fact in its
name, place and stead to make, execute, swear to, verify, acknowledge, amend,
file, record, deliver and publish (a) any certificate of limited liability
company or amendments to any certificate of limited liability company required
to be filed on behalf of the Company pursuant to the Act, (b) a counterpart of
any amendment to this Agreement for the purpose of substituting as a Member an
assignee or assignees of a Member or for the purpose of admitting an additional
Member, (c) a counterpart of this Agreement for the purpose of filing or
recording such counterpart in any jurisdiction in which the Company may own
property or transact business, (d) all certificates and other instruments
necessary to qualify or continue the Company as a limited liability company in
the jurisdictions where the Company may own property or transact business, (e)
any other instrument which is now or which may hereafter be required by law to
be filed on behalf of the Company which does not increase the obligations of any
Member, and (f) any other certificates or instruments necessary, advisable or
appropriate to conduct the business and affairs of the Company which do not
increase the obligations of any Member. The power of attorney granted by this
Section 8.1 is irrevocable and shall survive the assignment or transfer by any
Member of all or any part of his interest in the Company and, being coupled with
an interest, shall survive the incapacity or other legal disability of each such
Member. Any person dealing with the Company may, without further inquiry,
conclusively presume and rely upon the fact that any certificate or instrument
described in this Section 8.1 and executed by such agent and attorney-in-fact is
authorized, valid and binding.
Section 8.2 Notices. Except as otherwise expressly provided in
this Agreement, all notices, demands, requests, or other communications required
or permitted to be given pursuant to this Agreement shall be in writing and
shall be
18
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given either (a) in person, (b) by United States mail, certified or registered,
return receipt requested, postage prepaid, (c) by prepaid telegram, telex,
cable, telecopy, or similar means (with signed confirmed copy to follow by mail
in the same manner as prescribed by clause (b) above) or (d) by expedited
delivery service (charges prepaid) with proof of delivery to the following:
AES Ironwood, L.L.C.
1001 North 19th Street, Suite 2000
Arlington, VA 22209
Attn.: William R. Luraschi
Section 8.3 Amendment. This Agreement may be changed, modified
or amended only by an instrument in writing duly executed by all the Members.
Section 8.4 Partition. Each of the Members hereby irrevocably
waives, to the extent it may lawfully do so, any right that such Member may have
to maintain any action for partition with respect to the Company property.
Section 8.5 Entire Agreement; Waivers and Modifications.
(a) This Agreement constitutes the entire agreement of the
parties hereto with respect to the subject matter hereof and supersedes any and
all prior and contemporaneous contracts, understandings, negotiations and
agreements with respect to the Company and the subject matter hereof, whether
oral or written.
(b) Any waiver or consent, express, implied or deemed, to or
of any breach or default by any person in the performance by that person of its
obligations with respect to the Company or any action inconsistent with this
Agreement is not a consent or waiver to or of any other breach or default in the
performance by that person of the same or any other obligations of that person
with respect to the Company or any other such action. Failure on the part of a
person to complain of any act of any person or to declare any person in default
with respect to the Company, irrespective of how long
19
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that failure continues, does not constitute a waiver by that person of its
rights with respect to that person or its rights with respect to that default
until the applicable statute of limitations period has lapsed. All waivers and
consents hereunder shall be in writing and shall be delivered to the other
Member in the manner set forth in Section 8.2 A Member may grant or withhold any
waiver or consent in its absolute sole discretion.
Section 8.6 Severability. Every provision in this Agreement is
intended to be severable. If any term or provision hereof is illegal or invalid
for any reason whatsoever, such illegality or invalidity shall not affect the
validity of the remainder of this Agreement.
Section 8.7 Binding Effect; No Third-Party Beneficiaries.
Subject to the restrictions set forth in Section 2.3 herein, this Agreement is
binding on and inures to the benefit of the Members and their respective heirs,
legal representatives, successors and assigns. Nothing in this Agreement shall
provide any benefit to any third party or entitle any third party to any claim,
cause of action, remedy or right of any kind, it being the intent of the parties
that this Agreement shall not be construed as a third-party beneficiary
contract.
Section 8.8 Governing Law. THIS AGREEMENT IS GOVERNED BY AND
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE
OR CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. If any
provision of this Agreement or the application thereof to any person or
circumstance is held invalid or unenforceable to any extent, the remainder of
this Agreement and the application of that provision to other persons or
circumstances is not affected thereby, and that provision shall be enforced to
the greatest extent permitted by law.
Section 8.9 Recourse Only to Member. The sole recourse of the
Company or any Member for performance of the obligations of a particular Member
hereunder shall be against such Member and its assets and not against any assets
or property of any present or future Member, officer, employee,
20
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servant, executive, director, agent, authorized representative or affiliate of
such Member.
8.10 Multiple Counterparts. This Agreement may be executed in
multiple counterparts with the same effect as if all signing parties had signed
the same document. All
21
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counterparts shall be construed together and constitute the same instrument.
IN WITNESS WHEREOF, the Member, intending to be legally bound,
has executed this Agreement as of the date first set forth above.
AES Ironwood, Inc.
By: /s/ William R. Luraschi
--------------------------------
Name: William R. Luraschi
Title: Vice President
22
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Schedule 1
Initial capital Percentage
Members contribution Interest
- --------------------------------------------------------------------------------
AES Ironwood, Inc. $10.00 100%
23
<PAGE>
Schedule 2
Name Title
- --------------------------------------------------------------------------------
Barry J. Sharp Director
Vice President and Chief
Financial Officer
John R. Ruggirello Director
President
Roger F. Naill Director
Patricia L. Rollin Vice President
Bart Rossi Vice President
Stephen C. Dahm Vice President
Michael Cranna Vice President
Ian Miller Vice President
Kevin L. Polchow Vice President
William R. Luraschi Vice President
Willard C. Hoagland III Treasurer
Maureen B. Shearer Secretary
24
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Exhibit 4.1
EXECUTION COPY
- --------------------------------------------------------------------------------
TRUST INDENTURE
dated as of June 1, 1999
among
AES Ironwood, L.L.C.,
IBJ Whitehall Bank & Trust Company,
as Trustee
and
IBJ Whitehall Bank & Trust Company,
as Depositary Bank
Providing for the Issuance from Time to Time of
Bonds in One or More Series
- --------------------------------------------------------------------------------
705 MW (Net) Gas-Fired Combined Cycle Electric Generating Facility
South Lebanon Township, Lebanon County, Pennsylvania
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION.................................................2
SECTION 1.1 DEFINITIONS, CONSTRUCTION...................................................................2
SECTION 1.2 COMPLIANCE CERTIFICATES AND OPINIONS.......................................................22
SECTION 1.3 FORM OF DOCUMENTS DELIVERED TO TRUSTEE.....................................................23
SECTION 1.4 ACTS OF BONDHOLDERS........................................................................23
SECTION 1.5 NOTICES, ETC. TO TRUSTEE AND COMPANY.......................................................24
SECTION 1.6 NOTICES TO BONDHOLDERS; WAIVER.............................................................25
SECTION 1.7 EFFECT OF HEADING AND TABLE OF CONTENTS....................................................25
SECTION 1.8 SUCCESSORS AND ASSIGNS.....................................................................25
SECTION 1.9 SEVERABILITY...............................................................................25
SECTION 1.10 BENEFITS OF INDENTURE......................................................................26
SECTION 1.11 GOVERNING LAW..............................................................................26
SECTION 1.12 LEGAL HOLIDAYS.............................................................................26
SECTION 1.13 EXECUTION IN COUNTERPARTS..................................................................27
ARTICLE II THE BONDS.............................................................................................27
SECTION 2.1 FORM OF BOND TO BE ESTABLISHED BY SERIES SUPPLEMENTAL INDENTURE............................27
SECTION 2.2 FORM OF TRUSTEE'S AUTHENTICATION...........................................................27
SECTION 2.3 AMOUNT UNLIMITED; ISSUABLE IN SERIES; LIMITATIONS ON ISSUANCE..............................27
SECTION 2.4 AUTHENTICATION AND DELIVERY OF BONDS.......................................................28
SECTION 2.5 FORM AND DENOMINATIONS.....................................................................29
SECTION 2.6 EXECUTION OF BONDS.........................................................................30
SECTION 2.7 TEMPORARY BONDS............................................................................30
SECTION 2.8 REGISTRATION, TRANSFER AND EXCHANGE........................................................31
SECTION 2.9 MUTILATED, DESTROYED, LOST AND STOLEN BONDS................................................32
SECTION 2.10 PAYMENT OF PRINCIPAL AND INTEREST, PRINCIPAL AND INTEREST RIGHTS PRESERVED.................32
SECTION 2.11 PERSONS DEEMED OWNERS......................................................................34
SECTION 2.12 CANCELLATION...............................................................................34
SECTION 2.13 DATING OF BONDS, COMPUTATION OF INTEREST...................................................34
SECTION 2.14 SOURCE OF PAYMENTS LIMITED; RIGHTS AND LIABILITIES OF THE COMPANY..........................34
SECTION 2.15 PARITY OF BONDS............................................................................35
SECTION 2.16 ALLOCATION OF PRINCIPAL AND INTEREST.......................................................35
SECTION 2.17 MONIES UNCLAIMED...........................................................................35
ARTICLE III REPRESENTATIONS AND WARRANTIES.......................................................................35
SECTION 3.1 ORGANIZATION, POWER AND STATUS OF THE COMPANY..............................................35
SECTION 3.2 AUTHORIZATION, ENFORCEABILITY, EXECUTION AND DELIVERY......................................36
SECTION 3.3 NO CONFLICTS; APPLICABLE LAWS AND CONTRACTS; NO DEFAULT....................................36
SECTION 3.4 GOVERNMENTAL APPROVALS.....................................................................37
SECTION 3.5 LITIGATION.................................................................................37
SECTION 3.6 COLLATERAL.................................................................................37
SECTION 3.7 TAXES......................................................................................37
SECTION 3.8 ENVIRONMENTAL MATTERS......................................................................38
SECTION 3.9 COMPLIANCE WITH APPLICABLE LAW.............................................................38
SECTION 3.10 SECURITY DOCUMENTS.........................................................................38
SECTION 3.11 UTILITY REGULATION; EWG STATUS.............................................................38
SECTION 3.12 INVESTMENT COMPANY ACT.....................................................................38
SECTION 3.13 ERISA AND EMPLOYEES........................................................................39
SECTION 3.14 SUBSIDIARIES...............................................................................39
SECTION 3.15 CERTIFICATES...............................................................................39
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ARTICLE IV ACCOUNTS..............................................................................................39
SECTION 4.1 ESTABLISHMENT OF ACCOUNTS..................................................................39
SECTION 4.2 INVESTMENT OF FUNDS IN THE INDENTURE ACCOUNTS..............................................40
SECTION 4.3 VALUATION AND SALE OF INVESTMENTS..........................................................40
SECTION 4.4 POSSESSION OF ACCOUNTS; LIQUIDATION........................................................41
SECTION 4.5 THE DEPOSITARY BANK; LIMITED COMPANY RIGHTS................................................41
ARTICLE V COLLECTION AND APPLICATION OF FUNDS IN THE INDENTURE ACCOUNTS..........................................43
SECTION 5.1 BOND PROCEEDS ACCOUNT......................................................................43
SECTION 5.2 BOND PAYMENT ACCOUNT.......................................................................43
SECTION 5.3 INTEREST PAYMENT SUBACCOUNT, PRINCIPAL PAYMENT SUBACCOUNT AND REDEMPTION SUBACCOUNT........43
SECTION 5.4 CONSTRUCTION INTEREST ACCOUNT..............................................................44
ARTICLE VI COVENANTS.............................................................................................44
SECTION 6.1 PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST........................................44
SECTION 6.2 INSURANCE..................................................................................45
SECTION 6.3 REPORTING REQUIREMENTS.....................................................................45
SECTION 6.4 MAINTENANCE OF EXISTENCE, LIENS AND GOVERNMENTAL APPROVALS.................................48
SECTION 6.5 NATURE OF BUSINESS.........................................................................48
SECTION 6.6 OPERATING AND MAINTENANCE..................................................................48
SECTION 6.7 COMPLIANCE WITH APPLICABLE LAWS............................................................48
SECTION 6.8 PROHIBITION ON CHANGE IN CONTROL...........................................................48
SECTION 6.9 PROJECT CONTRACTS; WILLIAMS GUARANTY; OPERATION OF THE FACILITY............................49
SECTION 6.10 TRANSACTIONS WITH AFFILIATES...............................................................49
SECTION 6.11 AMENDMENTS TO PROJECT CONTRACTS............................................................49
SECTION 6.12 PROHIBITION ON FUNDAMENTAL CHANGES AND DISPOSITION OF ASSETS...............................50
SECTION 6.13 ANNUAL BUDGET..............................................................................51
SECTION 6.14 INSURANCE REPORT...........................................................................51
SECTION 6.15 LIENS......................................................................................51
SECTION 6.16 INSPECTION.................................................................................51
SECTION 6.17 LIMITATIONS ON ADDITIONAL INDEBTEDNESS.....................................................52
SECTION 6.18 RESTRICTED PAYMENTS........................................................................52
SECTION 6.19 CONSTRUCTION OF THE FACILITY...............................................................52
SECTION 6.20 CONTRACTOR PERFORMANCE TESTS; FINAL ACCEPTANCE.............................................52
SECTION 6.21 CHANGE ORDERS..............................................................................52
SECTION 6.22 CASUALTY PROCEEDS; EMINENT DOMAIN PROCEEDS.................................................53
SECTION 6.23 PAYMENT OF TAXES AND IMPOSITIONS...........................................................53
SECTION 6.24 PRESERVATION OF LIEN OF MORTGAGE...........................................................53
SECTION 6.25 YEAR 2000..................................................................................54
ARTICLE VII REDEMPTION AND PREPAYMENT OF BONDS...................................................................54
SECTION 7.1 APPLICABILITY OF ARTICLE...................................................................54
SECTION 7.2 ELECTION TO REDEEM OR PREPAY; NOTICE TO TRUSTEE............................................54
SECTION 7.3 OPTIONAL REDEMPTION; MANDATORY REDEMPTION; PREPAYMENT; SELECTION OF BONDS TO BE REDEEMED OR
PREPAID....................................................................................54
SECTION 7.4 NOTICE OF REDEMPTION OR PREPAYMENT.........................................................57
SECTION 7.5 BONDS PAYABLE ON REDEMPTION DATE OR PREPAYMENT DATE........................................58
SECTION 7.6 BONDS REDEEMED OR PREPAID IN PART..........................................................58
ARTICLE VIII SINKING FUNDS.......................................................................................58
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SECTION 8.1 APPLICABILITY OF ARTICLE...................................................................58
SECTION 8.2 SINKING FUNDS FOR BONDS....................................................................59
ARTICLE IX EVENTS OF DEFAULT; REMEDIES...........................................................................59
SECTION 9.1 EVENTS OF DEFAULT..........................................................................59
SECTION 9.2 ENFORCEMENT OF REMEDIES....................................................................62
SECTION 9.3 SPECIFIC REMEDIES..........................................................................63
SECTION 9.4 JUDICIAL PROCEEDINGS INSTITUTED BY TRUSTEE.................................................63
SECTION 9.5 HOLDERS MAY DEMAND ENFORCEMENT OF RIGHTS BY TRUSTEE........................................65
SECTION 9.6 CONTROL BY BONDHOLDERS.....................................................................66
SECTION 9.7 WAIVER OF PAST DEFAULTS....................................................................66
SECTION 9.8 HOLDER MAY NOT BRING SUIT EXCEPT UNDER CERTAIN CONDITIONS..................................66
SECTION 9.9 UNDERTAKING TO PAY COURT COSTS.............................................................67
SECTION 9.10 RIGHT OF BONDHOLDERS TO RECEIVE PAYMENT NOT TO BE IMPAIRED.................................67
SECTION 9.11 APPLICATION OF FUNDS COLLECTED BY TRUSTEE..................................................67
SECTION 9.12 BONDS HELD BY CERTAIN PERSONS NOT TO SHARE IN DISTRIBUTION.................................69
SECTION 9.13 WAIVER OF APPRAISEMENT, VALUATION, STAY, RIGHT TO MARSHALLING..............................69
SECTION 9.14 REMEDIES CUMULATIVE, DELAY OR OMISSION NOT A WAIVER........................................69
SECTION 9.15 THE COLLATERAL AGENCY AGREEMENT............................................................69
SECTION 9.16 AFFILIATE CURE RIGHTS......................................................................70
ARTICLE X THE TRUSTEE............................................................................................70
SECTION 10.1 CERTAIN DUTIES AND RESPONSIBILITIES........................................................70
SECTION 10.2 NOTICE OF DEFAULTS.........................................................................71
SECTION 10.3 CERTAIN RIGHTS OF TRUSTEE..................................................................71
SECTION 10.4 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF BONDS..........................................72
SECTION 10.5 MAY HOLD BONDS.............................................................................73
SECTION 10.6 FUNDS MAY BE HELD BY TRUSTEE OR PAYING AGENT; INVESTMENTS..................................73
SECTION 10.7 COMPENSATION, REIMBURSEMENT AND INDEMNIFICATION............................................73
SECTION 10.8 DISQUALIFICATION; CONFLICTING INTERESTS....................................................74
SECTION 10.9 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY....................................................79
SECTION 10.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR..........................................79
SECTION 10.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.....................................................80
SECTION 10.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS................................81
SECTION 10.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST ANY OBLIGOR......................................81
SECTION 10.14 MAINTENANCE OF OFFICES AND AGENCIES........................................................84
SECTION 10.15 CO-TRUSTEE OR SEPARATE TRUSTEE.............................................................87
SECTION 10.16 TAXES......................................................................................88
ARTICLE XI HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY.....................................................88
SECTION 11.1 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF BONDHOLDERS..............................88
SECTION 11.2 PRESERVATION OF INFORMATION; COMMUNICATIONS TO BONDHOLDERS.................................88
ARTICLE XII SUPPLEMENTAL INDENTURES..............................................................................89
SECTION 12.1 SUPPLEMENTAL INDENTURES AND AMENDMENTS TO FINANCING DOCUMENTS WITHOUT CONSENT OF
BONDHOLDERS................................................................................89
SECTION 12.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF BONDHOLDERS........................................90
SECTION 12.3 DOCUMENTS AFFECTING IMMUNITY OR INDEMNITY..................................................92
SECTION 12.4 EXECUTION OF SUPPLEMENTAL INDENTURES.......................................................92
SECTION 12.5 EFFECT OF SUPPLEMENTAL INDENTURES..........................................................92
SECTION 12.6 REFERENCE IN BONDS TO SUPPLEMENTAL INDENTURES..............................................92
</TABLE>
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TABLE OF CONTENTS
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Page
<S> <C>
ARTICLE XIII SATISFACTION AND DISCHARGE..........................................................................92
SECTION 13.1 SATISFACTION AND DISCHARGE OF BONDS........................................................92
SECTION 13.2 SATISFACTION AND DISCHARGE OF INDENTURE....................................................93
SECTION 13.3 APPLICATION OF TRUST MONEY.................................................................94
ARTICLE XIV MEETINGS OF BONDHOLDERS; ACTION WITHOUT MEETING......................................................95
SECTION 14.1 PURPOSES FOR WHICH MEETINGS MAY BE CALLED..................................................95
SECTION 14.2 CALL, NOTICE AND PLACE OF MEETINGS.........................................................95
SECTION 14.3 PERSONS ENTITLED TO VOTE AT MEETINGS.......................................................95
SECTION 14.4 QUORUM; ACTION.............................................................................96
SECTION 14.5 ATTENDANCE AT MEETINGS; DETERMINATION OF VOTING RIGHTS; CONDUCT OF
ADJOURNMENT OF MEETINGS....................................................................97
SECTION 14.6 COUNTING VOTES AND RECORDING ACTION OF MEETINGS............................................97
SECTION 14.7 ACTION WITHOUT MEETING.....................................................................98
ARTICLE XV NONRECOURSE LIABILITY.................................................................................98
SECTION 15.1 NONRECOURSE LIABILITY......................................................................98
ARTICLE XVI DEPOSITARY BANK......................................................................................99
SECTION 16.1 DEPOSITARY BANK............................................................................99
SCHEDULES
SCHEDULE 3.4 GOVERNMENTAL APPROVALS
SCHEDULE 6.2 INSURANCE REQUIREMENTS
EXHIBITS
EXHIBIT 5.1 FORM OF WIRE INSTRUCTIONS
</TABLE>
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TRUST INDENTURE
TRUST INDENTURE, dated as of June 1, 1999 (this "Indenture"), by and
among AES Ironwood, L.L.C., a Delaware limited liability company, (the
"Company"), its principal office and mailing address being 829 Cumberland
Street, Lebanon, Pennsylvania 17042, IBJ WHITEHALL BANK & TRUST COMPANY, as
trustee (the "Trustee"), its corporate trust office and mailing address being at
One State Street, New York, New York 10004, and IBJ WHITEHALL BANK & TRUST
COMPANY, as depositary bank (the "Depositary Bank"), its office and mailing
address being at One State Street, New York, New York 10004.
W I T N E S S E T H:
WHEREAS, the Company has duly authorized the creation of bonds,
debentures, promissory notes or other evidences of indebtedness to be issued in
one or more series (the "Bonds") up to such principal amount or amounts as may
from time to time be authorized in accordance with the terms of this Indenture;
and the Company has duly authorized the execution and delivery of this Indenture
to secure the Bonds and to provide for the authentication and delivery thereof
by the Trustee;
WHEREAS, the Company wishes to secure the payment of the principal of,
premium, if any, and interest on all the Bonds authenticated and delivered under
this Indenture and issued by the Company and the performance of the covenants
therein and herein contained and to mortgage, pledge and assign substantially
all of its assets, including the proceeds of the sale of the Bonds to the
Trustee pursuant to this Indenture;
WHEREAS, all obligations of the Company under this Indenture shall be
secured as set forth in this Indenture and the other Security Documents; and
WHEREAS, all acts necessary to make this Indenture and the other
Security Documents valid instruments, in accordance with its and their terms,
have been done.
NOW, THEREFORE, in consideration of the premises and of the purchase of
the Bonds by the Bondholders thereof, and in order to secure the payment of the
principal of and premium, if any, and interest on all the Bonds from time to
time Outstanding and the performance of the covenants therein and herein
contained and to declare the terms and conditions on which such Bonds are
secured, the Company has granted certain security interests as provided in the
other Security Documents and hereby grants, bargains, mortgages, sells,
releases, conveys, assigns, transfers, pledges, sets over and confirms to the
Trustee, and grants to the Trustee a security interest in, all right, title and
interest of the Company in and to the Indenture Accounts (including any and all
funds contained therein or hereafter delivered to the Trustee for deposit
therein), including, in each case, all funds received and the right to receive
funds thereunder;
TO HAVE AND TO HOLD all the same with all privileges and appurtenances
hereby given, granted, pledged and assigned or agreed or intended so to be, unto
the Trustee, and its successors in such trust and to it and its assigns forever;
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IN TRUST, NEVERTHELESS, for the equal and proportionate benefit and
security of the Bondholders from time to time of all Outstanding Bonds;
PROVIDED, HOWEVER, that if the right, title and interest of the Trustee
in and to the Indenture Accounts shall have ceased, terminated and become void
in accordance with Article XIII hereof, then and in that case, subject to the
provisions of Article XII, this Indenture and the estate and rights hereby
granted shall cease, terminate and be void, and the Trustee shall cancel and
discharge this Indenture and execute and deliver to the Company such instruments
as the Company shall require to evidence the discharge hereof; otherwise this
Indenture shall be and remain in full force and effect; and
THE PARTIES HEREBY COVENANT AND AGREE AS FOLLOWS:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1 Definitions, Construction.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(i) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular;
(ii) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted
accounting principles of the United States;
(iii) all references in this Indenture to designated
"Schedules," "Exhibits," "Articles," "Sections" and other subdivisions
are to the designated Schedules, Exhibits, Articles, Sections and other
subdivisions of this Indenture;
(iv) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision;
(v) unless otherwise specified herein, any agreement or
instrument defined or referred to herein shall include any amendments,
modifications and supplements thereto and waivers thereof made in
accordance with the terms of such agreement or instrument;
(vi) unless otherwise specified herein, each reference to a
Person shall include the successors and permitted assigns of such
Person; and
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(vii) unless otherwise specified herein, each reference to an
act, law, rule, regulation or ordinance shall include such act, law,
rule, regulation or ordinance as amended, modified or supplemented and
any successor or replacement for any such act, law, rule, regulation or
ordinance.
"Acceptable Credit Provider" has the meaning specified in the
Collateral Agency Agreement.
"Acceptable Credit Support" has the meaning specified in the Collateral
Agency Agreement.
"Act" when used with respect to any Bondholder, has the meaning
specified in Section 1.4.
"Advances" has the meaning specified in the Collateral Agency
Agreement.
"AES" means The AES Corporation, a Delaware corporation.
"AES Ironwood" means AES Ironwood, Inc., a Delaware corporation.
"Affiliate" with respect to any Person, means any other Person directly
or indirectly controlling or controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, the term "control"
(including the correlative meanings of the terms "controlling", "controlled by"
and "under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting stock or other equity interests or by contract or otherwise.
"Affiliate Subordinated Debt" means an unsecured, subordinated loan or
loans from any Affiliate of the Company pursuant to an Affiliate Subordinated
Loan Agreement.
"Affiliate Subordinated Debt Provider" means any Affiliate of the
Company providing Affiliate Subordinated Debt pursuant to an Affiliate
Subordinated Loan Agreement.
"Affiliate Subordinated Loan Agreement" means a binding agreement
providing nonrecourse, unsecured debt financing from an Affiliate Subordinated
Debt Provider to the Company on terms and conditions which meet the requirements
set forth in this Indenture and the Collateral Agency Agreement.
"Affiliate Transaction" has the meaning specified in Section 6.10.
"Annual Budget" means the annual budget prepared by the Company for
each Fiscal Year in accordance with the requirements of this Indenture.
"Applicable Law" means any constitution, statute, law, rule,
regulation, ordinance, judgment, order, decree, Governmental Approval, or any
published directive, guideline, requirement or other governmental restriction
which has the force of law, or any determination by, or interpretation of any of
the foregoing by, any judicial authority, binding on a given Person
3
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whether in effect as of the date of any Financing Documents or thereafter and in
each case as amended (including, without limitation, all Environmental Laws and
any of the foregoing pertaining to land use or zoning restrictions).
"Assignment of Leases and Income" means the Assignment of Leases and
Income, by and between the Company and the Collateral Agent.
"Authenticating Agent" means any Person acting as Authenticating Agent
hereunder pursuant to Section 10.14(b).
"Authorized Agent" means any Paying Agent, Authenticating Agent or
Security Registrar or other agent appointed by the Trustee in accordance with
this Indenture to perform any function that this Indenture authorizes the
Trustee or such agent to perform.
"Authorized Officer" means any officer of the Trustee or any other
individual who shall be duly authorized by appropriate corporate action on the
part of the Trustee to authenticate Bonds.
"Authorized Representative" of any Person means the individual or
individuals authorized to act on behalf of such Person by the board of
directors, managing member, management committee, board of control or any other
governing body of such Person as designated from time to time in a certificate
of such Person with specimen signatures.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, Title II of
the United States Code, as amended, and any other Applicable Law with respect to
bankruptcy, insolvency or reorganization that is successor thereto.
"Bankruptcy Event" has the meaning specified in Section 9.1(h).
"Board Resolution" when used with respect to the Company, means a copy
of a resolution certified by the Corporate Secretary or an Assistant Corporate
Secretary of the Company as having been adopted by the board of directors of the
Company and to be in full force and effect on the date of such certification.
"Bond Payment Account" means the Bond Payment Account established
pursuant to Section 4.1.
"Bond Proceeds Account" means the Bond Proceeds Account established
pursuant to Section 4.1.
"Bondholder" means a holder of record of any of the Bonds from time to
time.
"Bonds" has the meaning specified in the introductory recitals to this
Indenture.
"Business Day" means any day other than a Saturday or Sunday or other
day on which banks in New York, New York, are authorized or required by law or
executive order to remain closed.
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"Buy-Down Amounts" means amounts received by the Company from the
Contractor in respect of performance liquidated damages under the EPC Contract.
"Cash Available for Debt Service" means, in respect of a specified
period, all funds (i) deposited in the Revenue Account (other than amounts
transferred to such account from the Major Maintenance Reserve Account, the
Distribution Account or the Construction Account), if such specified date
occurred prior to the date of determination or (ii) projected by the Company on
a reasonable basis to be deposited, if such specified period is to occur
subsequent to the date of determination, in the Revenue Account during such
period minus all funds transferred to (a) the Company for payment of Operating
and Maintenance Costs, (b) the Trustee, Collateral Agent, DSR LOC Provider and
the CP LOC Provider in respect of Trustee Claims, Collateral Agent Claims, DSR
LOC Provider Claims and CP LOC Provider Claims, respectively, and (c) a working
capital provider in respect of payments on working capital loans during such
period.
"Casualty Proceeds" means all insurance proceeds (including title
insurance proceeds) or other amounts actually received on account of an Event of
Loss, except proceeds of business interruption insurance.
"Change in Control" means any failure by AES, at any time while Bonds
are Outstanding, to maintain directly or indirectly at least a 51% voting and
economic interest in the Company, unless prior to giving effect to the reduction
in AES's voting or economic interest either (i) each of the Rating Agencies
provides a Ratings Reaffirmation to the Trustee or (ii) the reduction in AES's
voting or economic interest has been approved by Bondholders holding at least
66-2/3% in aggregate principal amount of the Bonds.
"Closing Date" means the date of original issuance of the Bonds.
"Code" means the Internal Revenue Code of 1986, as amended, or any
comparable successor federal statute.
"Collateral" has the meaning specified in the Mortgage and the Security
Agreement and the other Security Documents.
"Collateral Agency Agreement" means the Collateral Agency and
Intercreditor Agreement, by and among the Company, the DSR LOC Provider, the CP
LOC Provider, the Trustee, the Collateral Agent and the Depositary Bank.
"Collateral Agent" means IBJ Whitehall Bank & Trust Company and any
successor or assign as Collateral Agent under the Collateral Agency Agreement.
"Commercial Operation Date" has the meaning set forth in the Power
Purchase Agreement.
"Company" has the meaning specified in the preamble to this Indenture.
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<PAGE>
"Company Request" and "Company Order" means, respectively, a written
request or order signed in the name of the Company by an Authorized
Representative of the Company, and delivered to the Trustee.
"Consents to Assignment" means the consents to assignment with respect
to the Project Contracts.
"Construction Account" has the meaning specified in the Collateral
Agency Agreement.
"Construction Interest Account" means the Construction Interest Account
established pursuant to Section 4.1.
"Contractor" means Siemens Westinghouse Power Corporation, a Delaware
corporation.
"Corporate Trust Office" means the designated corporate trust office of
the Trustee at which at any particular time corporate trust business of the
Trustee shall be administered, which at the date of this Indenture is [One State
Street, New York, New York 10004], or such other office as may be designated by
the Trustee to the Company.
"CP Letter of Credit" means the letter of credit issued pursuant to the
CP LOC Reimbursement Agreement as provided by the Company to the Power Purchaser
in satisfaction of the requirements of Section 19.2 of the Power Purchase
Agreement.
"CP LOC Issuing Bank" means Dresdner Bank AG, New York Branch or any
other financial institution providing the CP Letter of Credit pursuant to the CP
LOC Reimbursement Agreement.
"CP LOC Provider" means the Agent under the CP LOC Reimbursement
Agreement acting for and on behalf of the Banks party thereto and the CP LOC
Issuing Bank; provided, however, that references to the long-term debt rating of
the CP LOC Provider shall be deemed to refer to the debt rating of the CP LOC
Issuing Bank.
"CP LOC Provider Claims" means all obligations of the Company, now or
hereafter existing, to pay administrative fees, costs, expenses, liabilities or
indemnities to the CP LOC Provider under the CP LOC Reimbursement Agreement.
"CP LOC Reimbursement Agreement" means the Construction Period Letter
of Credit and Reimbursement Agreement, by and among the CP LOC Provider, the
Company and the banks named therein, pursuant to which the CP LOC Issuing Bank
may issue the CP Letter of Credit.
"Date Certain" means the final date by which the Facility must commence
commercial operation pursuant to Section 2.1 of the Power Purchase Agreement.
"Debt" means, in respect of any Person, Indebtedness.
"Debt Service Reserve Account" has the meaning specified in the
Collateral Agency Agreement.
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"Default" means an event or condition that, with the giving of notice
or lapse of time, or both, would become an Event of Default.
"Depositary Bank" has the meaning specified in the preamble to this
Indenture.
"DSR Letter of Credit" means a letter of credit provided by the Company
in respect of all or a portion of the DSRA Required Balance.
"DSR LOC Issuing Bank" means Dresdner Bank AG, New York Branch or any
other financial institution providing the DSR Letter of Credit pursuant to the
DSR LOC Reimbursement Agreement.
"DSR LOC Provider" means the Agent under the DSR LOC Reimbursement
Agreement acting for and on behalf of the Banks party thereto and the DSR LOC
Issuing Bank; provided, however, that references to the long-term debt rating of
the DSR LOC Provider shall be deemed to refer to the debt rating of the DSR LOC
Issuing Bank.
"DSR LOC Provider Claims" means all obligations of the Company, now or
hereafter existing, to pay administrative fees, costs, expenses, liabilities or
indemnities under the DSR LOC Reimbursement Agreement.
"DSR LOC Reimbursement Agreement" means the Debt Service Reserve Letter
of Credit and Reimbursement Agreement, by and among the DSR LOC Provider, the
Company and the banks named therein, pursuant to which the DSR LOC Issuing Bank
will issue the DSR Letter of Credit.
"DSRA Required Balance" means an amount equal to the next succeeding
two quarterly scheduled payments of principal and interest due on the
Outstanding Bonds, plus if a DSR Letter of Credit is to be provided, six months
of interest which would be payable to the DSR LOC Provider assuming there were
DSR Loans outstanding in an amount equal to the maximum amount of such DSR
Letter of Credit.
"Effluent Supply Agreement" means the Effluent Supply Agreement, dated
as of March 3, 1998, by and between the Company (as assignee of AES Ironwood)
and City of Lebanon Authority.
"Emergency Capital Expenditures" means capital expenditures required to
be made to prevent or mitigate an emergency situation in respect of the
Facility.
"Eminent Domain Proceeds" means all amounts and proceeds actually
received in respect of any Event of Eminent Domain.
"Environmental Law" means any Governmental Requirement in effect from
time to time governing or relating to (i) the environment, (ii) releases or
threatened releases of Hazardous Materials including, without limitation,
investigation, monitoring and abatement of such releases
7
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and (iii) the manufacture, handling, transport, use, treatment, storage or
disposal of Hazardous Materials or materials containing Hazardous Materials.
"EPC Contract" means the Agreement for Engineering, Procurement and
Construction Services, dated as of September 23, 1998, as amended, by and
between the Company (as assignee of AES Ironwood) and the Contractor.
"Equity Subscription Agreement" means the Equity Subscription
Agreement, by and among AES Ironwood, the Company and the Collateral Agent,
pursuant to which AES Ironwood shall agree to make certain equity contributions
to the Company.
"ERISA" means the United States Employee Retirement Income Security Act
of 1974, as amended.
"Event of Default" has the meaning specified in Section 9.1.
"Event of Eminent Domain" means any compulsory transfer or taking or
transfer under threat of compulsory transfer or taking of all or a material
portion of the Facility by any Governmental Authority for more than one year
unless such transfer or taking is the subject of a Good Faith Contest.
"Event of Loss" means an event which causes all or a material portion
of the Facility to be damaged, destroyed or rendered unfit for normal use for
any reason whatsoever including through a failure of title.
"Facility" means the 705 megawatt (net) gas-fired combined cycle
electric generating facility located in South Lebanon Township, Lebanon County,
Pennsylvania, together with all machinery, equipment, improvements and other
personal property and fixtures constituting such facility.
"Facility Capacity" has the meaning specified in the Power Purchase
Agreement.
"Final Maturity Date" means the latest Stated Maturity of any of the
Bonds.
"Financing Documents" means the Indenture, the Bonds, the DSR LOC
Reimbursement Agreement and any evidence of indebtedness thereunder entered
into, the CP LOC Reimbursement Agreement and any evidence of indebtedness
thereunder entered into, the Equity Subscription Agreement, the Collateral
Agency Agreement and the Security Documents.
"Financing Liabilities" has the meaning specified in the Collateral
Agency Agreement.
"Fiscal Year" means the period of time beginning on January 1 of each
year and ending on December 31 of such year; provided, that the initial Fiscal
Year shall commence on the Closing Date and shall end on December 31, 1999.
"GAAP" means generally accepted accounting principles in the United
States as in effect from time to time.
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"GDPIPD" means the Gross Domestic Product Implicit Price Deflator for a
calendar year as published in the United States Department of Commerce, Bureau
of Analysis publication entitled "Survey of Current Business". If the Gross
Domestic Product Implicit Price Deflator ceases to exist or is no longer
available, the Company, with the approval of the Independent Engineer (such
approval not to be unreasonably withheld or delayed), shall designate a
substitute index that is reasonably similar to the Gross Domestic Product
Implicit Price Deflator.
"Good Faith Contest" means the contest of an item if: (i) the item is
diligently contested in good faith by appropriate proceedings timely instituted,
(ii) adequate reserves or bonding are established in accordance with GAAP with
respect to the contested item and (iii) during the period of such contest, the
enforcement of any contested item is effectively stayed.
"Governmental Approval" means any authorization, consent, approval,
concession privilege, waiver, exemption, variance, registration, filing,
certification, permission, permit and license with or notice to any Governmental
Authority.
"Governmental Authority" means the federal government of the United
States, any state of the United States or political subdivision thereof, and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any other governmental entity,
instrumentality, agency, authority or commission.
"Governmental Obligations" means any of the following which are
noncallable and which at the time of investment are legal investments under the
laws of the state for the funds proposed to be invested therein: (i) direct
obligations of, or obligations the payment of principal of and interest on which
are unconditionally guaranteed as to full and timely payment by, the United
States; (ii) direct obligations of, or participation certificates guaranteed by,
Federal National Mortgage Association, Government National Mortgage Association,
or Federal Home Loan Mortgage Corporation so long as such entities shall be
federally chartered or any other comparable federal agency hereafter created to
the extent that such obligations or certificates are unconditionally guaranteed
by the United States; or (iii) obligations of any state of the United States,
any political subdivision thereof or any agency or instrumentality thereof, if
such obligations are secured by direct obligations of, or obligations the
principal and interest on which are fully or unconditionally guaranteed by, the
United States, and the principal of and interest on which shall be sufficient to
pay as due the principal of and interest on such obligations.
"Governmental Requirement" means any Applicable Law or Governmental
Approval applicable to the Company or the Facility.
"Guaranteed Investment Contract" means an agreement with a Guaranteed
Investment Contract Provider and providing for the investment of funds.
"Guaranteed Investment Contract Provider" means a bank, insurance
company or other financial institution whose senior unsecured debt obligations
are rated at least "A" or the equivalent by Moody's or S&P.
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"Hazardous Materials" means (i) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, and transformers or other equipment that
contain dielectric fluid containing polychlorinated biphenyls ("PCBs") and any
other chemicals, materials or substances which are now or hereafter become
defined as or included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely hazardous wastes", "restricted
hazardous wastes", "toxic substances" or "toxic pollutants", or words of similar
import, under Environmental Laws, including but not limited to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. ss. 9601 et seq.); the Hazardous Material Transportation Act, as amended
(42 U.S.C. ss. 1801 et seq.); the Resource Conservation and Recovery Act, as
amended (42 U.S.C. ss. 6901 et seq.); the Toxic Substances Control Act, as
amended (15 U.S.C. ss. 2601); the Clean Air Act, as amended (42 U.S.C. ss. 7401
et seq.); the Federal Water Pollution Control Act, as amended (33 U.S.C. ss.
1251 et seq.); or (ii) any other chemical, material, substance or waste declared
to be hazardous or toxic by any Governmental Authority, exposure to which is now
or hereafter prohibited, limited or regulated by any Governmental Authority.
"Holder" means a Person whose name is registered in the Security
Register.
"Impositions" means all duties, taxes, assessments, dues, charges,
fees, excises, levies, license and permit fees, impositions, water rates, sewer
rents and other charges, ordinary or extraordinary, whether foreseen or
unforeseen, of any kind whatsoever, (i) now or hereafter levied or assessed or
imposed against or upon or in respect of the Mortgaged Property or (ii) which
now is or may be levied or assessed against the Income (as defined in the
Mortgage) by virtue of any present or future law, as well as all income taxes,
assessments and other governmental charges levied and imposed by any
Governmental Authority upon or against the Company in respect of the Mortgaged
Property or any part thereof, to the extent the same is in lieu of or in
substitution of the items described in clause (i). Impositions shall not include
any taxes imposed on the net income, gross receipts or any franchise taxes of
the Trustee or Collateral Agent, except as provided in this Indenture.
"Indebtedness" of any Person means, at any date, without duplication,
(i) all obligations of such Person for borrowed money (including obligations
with respect to letters of credit issued for the account of such Person), (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 (excluding accounts payable and
similar obligations arising in the ordinary course of business which are not
more than 90 days past due), (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 the debt portion of any leveraged lease not
required to be capitalized, (v) all obligations of other Persons of the type
referred to in clauses (i) through (iv) of this definition guaranteed by such
Person, whether or not secured by a Lien or other security interest on any asset
of such Person and (vi) all Indebtedness of another Person secured by a Lien on
any property owned by the first Person (whether or not such indebtedness has
been assumed or guaranteed by such first Person).
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"Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into in accordance with the provisions hereof.
"Indenture Accounts" has the meaning specified in Section 4.1.
"Indenture Collateral" has the meaning specified in Section 9.3.
"Independent Engineer" means, initially, Stone & Webster Management
Consultants, Inc., and thereafter any other engineering or consulting entity
acting as independent engineer under the Financing Documents.
"Independent Forecast" has the meaning specified in Section 6.3.
"Independent Insurance Advisor" means, initially, AON Risk Services,
Inc., or another nationally recognized insurance advisory firm appointed as
insurance advisor by the Company.
"Initial Purchasers" means Lehman Brothers Inc. (as Lead Manager),
Morgan Stanley & Co. Incorporated (as Co-Manager) and Dresdner Kleinwort Benson
North America LLC, the initial purchasers of the Bonds.
"Institutional Accredited Investors" means "accredited investors" as
such term is defined under the Securities Act, Rule 501(a)(1), (2), (3) or (7).
"Interconnection Agreement" means the Generation Facility Transmission
Interconnection Agreement, dated as of March 23, 1999, by and between the
Company and Metropolitan Edison Company d/b/a GPU Energy.
"Interest Payment Date" means each February 28, May 31, August 31 and
November 30, commencing August 31, 1999.
"Interest Payment Subaccount" means the Interest Payment Subaccount of
the Bond Payment Account established pursuant to Section 4.1.
"Investment Grade" means a rating in one of the four highest categories
(without regard to subcategories within such rating categories) by S&P and
Moody's (or an equivalent rating by another nationally recognized credit rating
agency if none of such corporations is rating the subject debt instrument).
"Lien" means any mortgage, pledge, security interest, hypothecation,
collateral assignment, encumbrance, lien (statutory or other), or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction).
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"Maintenance Services Agreement" means the Maintenance Program Parts,
Shop Repairs and Scheduled Outage TFA Services Contract, dated as of September
23, 1998, by and between the Company (as assignee of AES Ironwood) and the
Contractor.
"Major Maintenance Reserve Account" has the meaning specified in the
Collateral Agency Agreement.
"Make-Whole Premium" means an amount calculated as of the date (the
"Determination Date") set for the redemption or repurchase of the Bonds of any
series as follows:
(i) the average life of the remaining scheduled payments of
principal in respect of Outstanding Bonds of such series (the
"Remaining Average Life") shall be calculated as of the Determination
Date;
(ii) the yield to maturity shall be calculated for the United
States Treasury security having an average life equal to the Remaining
Average Life of such series and trading in the secondary market at the
price closest to the principal amount thereof (the "Primary Issue");
provided, however, that if no United States Treasury security has an
average life equal to the Remaining Average Life of such series, the
yields (the "Other Yields") for the two maturities of United States
Treasury securities having average lives most closely corresponding to
such Remaining Average Life and trading in the secondary market at the
price closest to the principal amount thereof shall be calculated, and
the yield to maturity for the Primary Issue shall be the yield
interpolated or extrapolated from such Other Yields on a straightline
basis, rounding in each of such relevant periods to the nearest month;
(iii) the discounted present value of the then remaining
scheduled payments of principal and interest (but excluding that
portion of any scheduled payment of interest that is actually due and
paid on the Determination Date) in respect of Outstanding Bonds of such
series shall be calculated as of the Determination Date using a
discount factor equal to the sum of (x) the yield to maturity for the
Primary Issue, plus (y) 50 basis points;
(iv) the amount of Make-Whole Premium in respect of Bonds of
such series to be redeemed or repurchased shall be an amount equal to
(x) the discounted present value of such Bonds to be redeemed
determined in accordance with clause (iii) above, minus (y) the unpaid
principal amount of such Bonds; provided, however, that the Make-Whole
Premium shall not be less than zero; and
(v) such calculation shall be made by an independent
investment banking institution of national standing appointed by the
Trustee.
"Material Adverse Effect" means (i) a material adverse change, or an
event or occurrence which would reasonably be expected to result in a material
adverse change, in the financial condition, or results of operation, of the
Company or operation of the Facility or (ii) any event or occurrence of whatever
nature which would materially and adversely change (a) the Company's
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ability to perform its obligations under the Financing Documents or (b) the
Senior Parties' security interests in the Collateral under the Security
Documents.
"Member" means a Person who holds an ownership interest in the Company,
which for federal income tax purposes is treated as a partner.
"Moody's" means Moody's Investors Service, Inc., a Delaware
corporation.
"Mortgage" means the Mortgage, by and between the Company and the
Collateral Agent.
"Mortgaged Property" has the meaning specified in the Mortgage.
"Officer's Certificate" means a certificate delivered to the Trustee
that has been signed by an Authorized Representative of the Company or an
Authorized Representative of the board of directors of the Company.
"Operating and Maintenance Costs" means all actual cash maintenance and
operation costs to be incurred and paid for with respect to the Facility in any
particular period to which such term is applicable, including franchise, sales,
property and other similar taxes (but not taxes on or measured by net income),
payments for the supply and transportation of fuels, insurance, consumables,
payments under any lease, payments pursuant to the Project Contracts (including
payments under the Operations Agreement, but excluding payments made under the
EPC Contract and any payments under the Project Contracts that are expressly
subordinated), repair and replacement costs for equipment included in the
Facility, reasonable legal fees and expenses paid by the Company in connection
with the management, maintenance or operation of the Facility, fees paid in
connection with obtaining, transferring, maintaining or amending any
Governmental Approvals, employee salaries, wages and other employment-related
costs and reasonable general and administrative expenses, all fees, expenses and
other payments due to and all indemnities and other arrangements providing for
the payment of amounts to the lenders, arrangers, underwriters, Initial
Purchasers, independent consultants, their agents, counsel and employees in
connection with the Indebtedness of the Company (but excluding transaction costs
associated with the offering and issuance of the Bonds), but exclusive in all
cases of (i) non-cash charges, including depreciation or obsolescence charges or
reserves therefor, amortization of intangibles or other bookkeeping entries of a
similar nature, (ii) all interest charges, (iii) all commitment fees,
underwriting fees and other similar fees due and payable in connection with
Indebtedness of the Company, (iv) maintenance costs funded from amounts on
deposit in the Major Maintenance Reserve Account and (v) solely for purposes of
priority of payment, fees (but not costs) payable to the Operator, except to the
extent that there are funds available in the Revenue Account to make all
required payments and deposits specified in clauses first through sixth of
Section 3.10 of the Collateral Agency Agreement.
"Operations Agreement" means the Development and Operations Services
Agreement, by and between the Company and the Operator.
"Operator" means AES Prescott, L.L.C., a Delaware limited liability
company.
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"Opinion of Counsel" means a written opinion of counsel for any Person
either expressly referred to herein or otherwise satisfactory to the Trustee
which may include, without limitation, counsel for the Company, whether or not
such counsel is an employee of any of such Person.
"Optional Modifications" means all material modifications to the
Facility that are not Required Modifications to the extent that the Company
certifies and the Independent Engineer confirms, which confirmation may not be
unreasonably withheld or delayed, that such modifications: (i) are not
reasonably likely to result in a Material Adverse Effect, (ii) are technically
feasible and (iii) are reasonably expected to improve the operation or
reliability of the Facility.
"Outstanding," when used with respect to Bonds, means, as of the date
of determination, all Bonds theretofore authenticated and delivered under this
Indenture, except: (i) Bonds theretofore canceled by the Trustee or delivered to
the Trustee for cancellation; (ii) Bonds or portions thereof deemed to have been
paid within the meaning of Section 13.1; and (iii) Bonds that have been
exchanged for other Bonds or Bonds in lieu of which other Bonds have been
authenticated and delivered pursuant to this Indenture; provided, however, that
in determining whether the Bondholders of the requisite principal amount of
Outstanding Bonds have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or whether or not a quorum is present at a
meeting of Bondholders, Bonds owned by the Company or any Affiliate of the
Company shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver or upon any
such determination as to presence of a quorum, only Bonds that a Responsible
Officer of the Trustee actually knows to be so owned shall be so disregarded.
"Paying Agent" means any Person acting as Paying Agent hereunder
pursuant to Section 10.14(b).
"Pennsy Agreements" means (i) the Agreement Relating to Real Estate,
dated as of October 22, 1998, by and between the Company (as assignee of AES
Ironwood) and Pennsy Supply, Inc. and (ii) the Easement and Right of Access
Agreement, dated as of April 15, 1999, by and between the Company and Pennsy
Supply, Inc.
"Permitted Indebtedness" means, collectively: (i) the Bonds, (ii)
indebtedness incurred under the DSR LOC Reimbursement Agreement or any CP LOC
Reimbursement Agreement; (iii) letters of credit and other financial obligations
arising under the Project Contracts; (iv) Affiliate Subordinated Debt; (v)
purchase money obligations incurred to finance discrete items of equipment not
comprising an integral part of the Project that extend only to the equipment
being financed and that do not in the aggregate have annual debt service or
lease obligations exceeding $5 million (escalated at GDPIPD); (vi) trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business so long as such trade accounts
payable are payable within ninety (90) days of the date the respective goods are
delivered or the respective services are rendered; (vii) obligations in respect
of surety bonds or similar instruments in an aggregate amount not exceeding $5
million at any one time outstanding; (viii) any lines of credit for working
capital purposes in the maximum amount of $5 million; (ix) Senior Debt used
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for an expansion of the Facility; provided, however, that such Senior Debt may
not be issued unless (a) (1) the projected average Senior Debt Service Coverage
Ratio (after giving effect to such Senior Debt) is at least 1.50 to 1.0 through
the end of the PPA Term (taken as one period) and at least 2.50 to 1.0 during
the Post-PPA Period (taken as one period) and (2) the projected minimum Senior
Debt Service Coverage Ratio (after giving effect to such Senior Debt) is at
least 1.30 to 1.0 through the end of the PPA Term and at least 2.15 to 1.0
during the Post-PPA Period; (b) the Company provides a Ratings Reaffirmation
from each of the Rating Agencies; and (c) the Trustee does not, within sixty
(60) days of notice to holders of the Bonds setting forth a summary of the terms
of such Senior Debt and a description of the facilities to be constructed with
the proceeds of such Senior Debt, receive an instruction from Persons holding a
majority in principal amount of the Bonds not to permit the issuance of such
Senior Debt; and (x) Senior Debt or Subordinated Debt (from Persons who are not
Affiliates of the Company) for Required Modifications and Optional
Modifications; provided, however, that the Company may issue (a) Senior Debt on
a parity basis with the Bonds only for Required Modifications and only if (1)
the projected average Senior Debt Service Coverage Ratio (after giving effect to
such Senior Debt) is at least 1.30 to 1.0 through the end of the PPA Term (taken
as one period) and at least 2.0 to 1.0 in each year during the Post-PPA Period
(taken as one period) or (2) the Company provides a Ratings Reaffirmation from
each of the Ratings Agencies; (b) Subordinated Debt for Required Modifications
only if (1)(A) the projected average Total Debt Service Coverage Ratio (after
taking into account such Subordinated Debt) is at least 1.20 to 1.0 through the
end of the PPA Term (taken as one period) and at least 1.65 to 1.0 during the
Post-PPA Period (taken as one period) and (B) the projected minimum Total Debt
Service Coverage Ratio (after giving effect to such Subordinated Debt) is at
least 1.1 to 1.0 through the PPA Term and at least 1.35 to 1.0 during the
Post-PPA Period, or (2) the Company provides a Ratings Reaffirmation from each
of the Ratings Agencies; or (c) Subordinated Debt for Optional Modifications
only if the Company provides a Ratings Reaffirmation from each of the Ratings
Agencies. In the case of clauses (b) and (c) of the preceding proviso, the final
maturity date of such Subordinated Debt shall not be earlier than the Final
Maturity Date and the average life of such Subordinated Debt must be no shorter
than the average remaining life of the Bonds.
"Permitted Investments" means investments that are any of the
following, which investments shall be made so as to mature or be subject to
potential redemption not later than the date on which the proceeds of the same
are expected to be required to pay Project Costs or Operating and Maintenance
Costs: (i) Governmental Obligations; (ii) interest-bearing deposit accounts
(which may be represented by certificates of deposit) in national, state or
foreign commercial banks whose outstanding long-term debt is rated at least A or
the equivalent by S&P or Moody's; (iii) bankers' acceptances drawn on and
accepted by any domestic or foreign commercial banks whose outstanding long-term
debt is rated at least A or the equivalent by S&P or Moody's; (iv) direct
obligations of, obligations guaranteed by, and any other obligations the
interest on which is excluded from income for federal income tax purposes issued
by, any state of the United States, the District of Columbia or the Commonwealth
of Puerto Rico or any political subdivision, agency, authority or
instrumentality of any of the foregoing, which are rated at least A or the
equivalent by S&P or Moody's; (v) commercial paper issued by any corporation
which is rated at least A1 or the equivalent by S&P or at least P1 or the
equivalent by Moody's; (vi) instruments issued by an investment company rated at
least A or the equivalent by S&P or Moody's having a portfolio consisting of at
least 95% or more of the securities described in paragraphs (i) through (v)
above;
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(vii) repurchase agreements with banking institutions and securities dealers
recognized as primary dealers by the Federal Reserve Bank of New York whose
outstanding long-term and short-term debt is rated at least A or the equivalent
by S&P or Moody's; (viii) Guaranteed Investment Contracts; (ix) funding
agreements with primary dealers reasonably acceptable to the Trustee; and (x)
other Investment Grade instruments or instruments issued or guaranteed by
Investment Grade entities (including unsecured promissory notes) or permitted
investments mutually agreed to by the Trustee and the Company. Each of the
investments described in clauses (vii), (viii), (ix) and (x) above shall contain
a provision for the unwinding of such investment within three (3) Business Days
if the long-term or short-term debt rating of the bank, primary dealer or other
financial institution, as the case may be, providing such investment falls below
A or the equivalent by S&P or Moody's or such entity defaults on the payment of
any of its obligations to or on behalf of the Company, unless such investment is
collateralized with government obligations in an amount equal to at least one
hundred two percent (102%) of the face amount of such investments or such rating
is reinstated on or prior to such unwind date.
"Permitted Liens" means, collectively, (i) Liens specifically created,
required or permitted by the Financing Documents; (ii) Liens for taxes which are
either not yet due, are due but payable without penalty or are the subject of a
Good Faith Contest by the Company; (iii) any exceptions to title which are
contained in the title insurance policy for the Site; (iv) such minor defects,
easements, rights of way, restrictions, irregularities, encumbrances and clouds
on title and statutory liens that do not materially impair the property affected
thereby and that do not individually or in the aggregate materially impair the
value of the security interests granted under the Security Documents; (v)
deposits or pledges to secure statutory obligations or appeals; release of
attachments, stay of execution or injunction; performance of bids, tenders,
contracts (other than for the repayment of borrowed money) or leases, or for
purposes of like general nature in the ordinary course of business; (vi) Liens
in connection with workmen's compensation, unemployment insurance or other
social security or pension obligations; (vii) legal or equitable encumbrances
deemed to exist by reason of the existence of any litigation or other legal
proceeding if the same is the subject of a Good Faith Contest (excluding any
attachment prior to judgment, judgment lien or attachment in aid of execution on
a judgment); and (viii) mechanic's, workmen's, materialmen's, construction or
other like Liens arising in the ordinary course of business or incident to the
construction or improvement of any property in respect of obligations which are
not yet due or which are the subject of a Good Faith Contest.
"Person" means any individual, sole proprietorship, corporation,
partnership, joint venture, trust, unincorporated association, institution,
Governmental Authority, limited liability company or any other entity, except
under certain provisions of this Indenture, the Trustee is not a "Person".
"PJM Market" means the control area recognized by the North American
Electric Reliability Council as the "PJM Control Area".
"Place of Payment," when used with respect to the Bonds of any series,
means the office or agency maintained pursuant to Section 10.14(a) and such
other place or places, if any, where the principal of, and premium, if any, and
interest on the Bonds of such series are payable as specified in the Series
Supplemental Indenture setting forth the terms of the Bonds of such series.
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"Pledge Agreement" means the Pledge and Security Agreement, by and
among AES Ironwood, the Company and the Collateral Agent.
"Post-PPA Period" means that period commencing six (6) months prior to
the end of the PPA Term and ending on the Final Maturity Date.
"Power Marketing Plan" means a marketing and procurement plan prepared
by or on behalf of the Company which describes in reasonable detail the
Company's plan to (i) procure gas to be burned at the Facility and (ii) sell
electric power from the Facility without a Replacement Power Purchase Agreement.
"Power Purchase Agreement" means the Amended and Restated Power
Purchase Agreement, dated as of February 5, 1999, as amended, by and between the
Company and the Power Purchaser.
"Power Purchaser" means Williams Energy Marketing & Trading Company, a
Delaware corporation.
"PPA Guarantor" means The Williams Companies, Inc., a Delaware
corporation.
"PPA Term" means that period during which the Power Purchaser is
obligated to purchase the Facility Capacity pursuant to the terms of the Power
Purchase Agreement.
"Predecessor Bonds" with respect to any particular Bond, means every
previous Bond evidencing all or a portion of the same debt as that evidenced by
such particular Bond, for the purposes of this definition, any Bond
authenticated and delivered under Section 2.9 in lieu of a lost, destroyed or
stolen Bond shall be deemed to evidence the same debt as the lost, destroyed or
stolen Bond.
"Prepayment Date" has the meaning specified in Section 7.2.
"Principal Payment Date" means each February 28, May 31, August 31 and
November 30, commencing February 28, 2002, on which principal payments are due
to the Bondholders.
"Principal Payment Subaccount" means the Principal Payment Subaccount
of the Bond Payment Account established pursuant to Section 4.1.
"Project Accounts" has the meaning specified in Section 3.1 of the
Collateral Agency Agreement.
"Project Contracts" means the Power Purchase Agreement, the Williams
Guaranty, the EPC Contract, the Siemens Guaranty, the Operations Agreement, the
Maintenance Services Agreement, the Interconnection Agreement, the Services
Agreement the Effluent Supply Agreement, the Pennsy Agreements and each other
material contract or agreement related to the development, construction,
ownership, operation or maintenance of the Facility, including any
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agreement referred to in Section 6.12 with respect to spare parts, but excluding
any Financing Document or Security Document not expressly referred to in this
definition.
"Project Costs" means all costs of developing, financing, constructing,
testing and initial operation of the Facility, including but not limited to: (i)
all amounts payable under the EPC Contract including any contractor bonuses,
site acquisition and preparation costs, costs of acquisition and construction of
fuel handling and processing equipment, any electric interconnection and
transmission upgrade costs payable by the Company pursuant to the Power Purchase
Agreement, all water interconnection costs payable by the Company and all gas
interconnection costs payable by the Company; (ii) all development costs and
fees, which shall be paid to, or as designated by, the Company on the Closing
Date; (iii) all other Facility-related costs, including but not limited to
fuel-related costs, fees and expenses payable pursuant to the Operations
Agreement and expenses to complete the construction and financing of the
Facility; (iv) startup and testing costs and initial working capital costs; (v)
initial reserve fund requirements; (vi) fees and costs payable during
construction with respect to any DSR Letter of Credit, CP Letter of Credit and
any other letters of credit or security provided under any Project Contract;
(vii) legal and other transaction costs and financing-related fees; (viii) any
other out-of-pocket expenses related to the financing; and (ix) interest on the
Bonds.
"Project Revenues" means, for any period, the Company's revenues or
income received, including, without limitation: (i) except as otherwise
specified in the Collateral Agency Agreement, interest and other income earned
and credited on funds deposited in the Project Accounts; (ii) amounts paid by
the Power Purchaser pursuant to the Power Purchase Agreement; (iii) the proceeds
of the sale of any part of the Facility which is not prohibited under this
Indenture; (iv) the proceeds of any insurance claims in respect of an event or
occurrence concerning the Facility that is not an Event of Loss or an Event of
Eminent Domain; and (v) all amounts received by the Company under the Williams
Guaranty.
"Projected Operating Results" means financial projections relating to
revenues, expenses, and debt service coverage during the period the Bonds are
scheduled to remain Outstanding and included in the final offering circular with
respect to the Bonds.
"Prudent Operating and Maintenance Practices" has the meaning specified
in the Operations Agreement.
"PUHCA" means the Public Utility Holding Company Act of 1935.
"Qualified Institutional Buyer" or "QIB" means a "qualified
institutional buyer" as such term is defined in Rule 144A.
"Rating Agency" means each of Moody's and S&P; provided, that such
rating agency maintains a rating on any Outstanding Bonds.
"Ratings Reaffirmation" means a reaffirmation by each of the Rating
Agencies of their then current credit ratings of any Outstanding Bonds, giving
effect to any transactions giving rise to a request for such reaffirmation.
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"Redemption Date" has the meaning specified in Section 7.2.
"Redemption Subaccount" means the Redemption Subaccount of the Bond
Payment Account established pursuant to Section 4.1.
"Regular Record Date" means, for the Stated Maturity of any Bond of a
series, or for the Stated Maturity of any installment of principal thereof or
payment of interest thereon, the first day of the month (whether or not a
Business Day) in which such Stated Maturity occurs, or any other date specified
for such purpose in the form of Bond of such series attached to the Series
Supplemental Indenture relating to the Bonds of such series.
"Replacement Power Purchase Agreement" means one or more power purchase
agreements between the Company and one or more Persons, pursuant to which the
Company sells, in aggregate, all or substantially all of the capacity and/or
associated electric energy from the Facility to such Person or Persons at a
commercially reasonable price for a term of not less than the remaining term of
the Power Purchase Agreement.
"Required Bondholders" means, at any time, the persons that at such
time own a majority in aggregate principal amount of the Outstanding Bonds.
"Required Capital Expenditures" means capital expenditures that are
identified as required capital expenditures in the Annual Budget then in effect.
"Required Modifications" means, collectively, those modifications
reasonably necessary for the Facility to (i) remain in compliance with all
material Applicable Laws and Governmental Approvals and (ii) maintain, at a
minimum, the capacity production levels contemplated by the Projected Operating
Results, in either case, as confirmed by the Independent Engineer.
"Required Rating" means a rating of at least "A" by S&P and "A2" by
Moody's.
"Responsible Officer" when used with respect to the Trustee, means any
officer in the Corporate Trust Office of the Trustee.
"Restricted Payments" means, collectively, (i) distributions including
payments of dividends to holders of ownership interests in the Company, (ii)
payments of principal, interest or premium, if any, on, and any repurchase of,
any Affiliate Subordinated Debt, (iii) prepayments or repurchases of any
Subordinated Debt and (iv) the repurchase by the Company of any ownership
interests in the Company.
"Revenue Account" has the meaning specified in the Collateral Agency
Agreement.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"S&P" means Standard & Poor's Ratings Group, a division of the
McGraw-Hill Companies, Inc.
"Secured Obligations" has the meaning specified in the Collateral
Agency Agreement.
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"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Agreement" means the Security Agreement, by and between the
Company and the Collateral Agent.
"Security Documents" means, collectively, (i) the Mortgage, (ii) the
Collateral Agency Agreement, (iii) the Security Agreement, (iv) this Indenture,
(v) the Consents to Assignment, (vi) the Pledge Agreement and (vii) the
Assignment of Leases and Income.
"Security Register" has the meaning specified in Section 2.8.
"Security Registrar" means any Person acting as Security Registrar
hereunder pursuant to Section 10.14.
"Senior Debt" means, collectively, the Outstanding Bonds and any other
Debt outstanding which ranks pari passu with the Bonds upon liquidation or
foreclosure, including any amounts owed to a working capital provider, the DSR
LOC Provider and the CP LOC Provider; provided, however, that no Debt of the
Company shall rank senior to the Bonds.
"Senior Debt Service" means, for any period, an amount calculated by
the Company as equal to the aggregate of (i) all amounts payable by the Company
during such period in respect of principal of, and interest and premium, if any,
on, the Bonds, (ii) all amounts payable by the Company during such period to the
provider of any other Senior Debt, including all fees, interest and other
amounts payable under the DSR LOC Reimbursement Agreement or the CP LOC
Reimbursement Agreement, and (iii) all amounts payable by the Company during
such period as fees and other expenses (including any interest thereon) to any
fiduciary acting in such capacity under any of the Security Documents.
"Senior Debt Service Coverage Ratio" means for any period, the ratio of
(i) Cash Available for Debt Service for such period to (ii) the amount of Senior
Debt Service due and payable for such period.
"Senior Parties" has the meaning specified in the Collateral Agency
Agreement.
"Series Supplemental Indenture" means an indenture supplemental to this
Indenture entered into by the Company and the Trustee for the purpose of
establishing, in accordance with this Indenture, the title, form and terms of
the Bonds of any series; "Series Supplemental Indentures" means each and every
Series Supplemental Indenture.
"Services Agreement" means the Services Agreement, by and between AES
and the Operator.
"Siemens Guaranty" means the Guaranty, dated as of September 23, 1998,
by Siemens Corporation and in favor of the Company.
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"Sinking Fund" has the meaning specified in Section 8.2.
"Sinking Fund Redemption Dates" has the meaning specified in Section
8.2.
"Sinking Fund Requirements" has the meaning specified in Section 8.2.
"Site" means the Facility site in South Lebanon Township, Lebanon
County, Pennsylvania, as further described in the Mortgage.
"Special Record Date" for the payment of any defaulted principal or
interest means a date fixed by the Trustee pursuant to Section 2.10.
"Stated Maturity," when used with respect to any Bond or any
installment of principal thereof or payment of interest thereon, means the date
specified in such Bond as the fixed date on which such Bond or such installment
of principal or payment of interest is due and payable.
"Subordinated Debt" means all Debt of the Company issued by a
Subordinated Debt Provider pursuant to a Subordinated Loan Agreement and
subordinated in right of payment to the Bonds in accordance with the terms of
the Collateral Agency Agreement.
"Subordinated Debt Provider" means any Person (other than an Affiliate
of the Company) providing Subordinated Debt pursuant to a Subordinated Loan
Agreement.
"Subordinated Loan Agreement" means a binding agreement with a
Subordinated Debt Provider providing nonrecourse debt financing to the Company
for application toward the payment of Project Costs or Operating and Maintenance
Costs on terms and conditions which meet the requirements of the Collateral
Agency Agreement.
"Term Expiration Date" has the meaning specified in Section 6.3(e).
"Third-Party Engineer" has the meaning specified in the Collateral
Agency Agreement.
"Total Debt" means, collectively, (i) Senior Debt, (ii) Subordinated
Debt and (iii) any other Debt permitted under this Indenture and incurred by the
Company.
"Total Debt Service" means, for any period, an amount calculated by the
Company as equal to the aggregate of (i) all amounts payable by the Company
during such period in respect of Senior Debt Service, (ii) all amounts payable
by the Company during such period in respect of principal of, and interest on,
and premium, if any, on Subordinated Debt and any other Debt permitted under
this Indenture and incurred by the Company and (iii) all amounts payable by the
Company during such period as fees and other expenses (including any interest
thereon) to any fiduciary acting in such capacity with respect to any Debt
referred to in clause (ii) of this definition.
"Total Debt Service Coverage Ratio" means for any period, the ratio of
(i) Cash Available for Debt Service for such period to (ii) the amount of Total
Debt Service due and payable for such period.
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"Transaction Documents" means the Project Contracts and the Financing
Documents.
"Trustee" has the meaning specified in the preamble of this Indenture
until a successor Trustee shall have become Trustee pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" means such successor
Trustee.
"Trustee Claims" means all obligations of the Company, now or hereafter
existing, to pay fees, costs, expenses (including fees and expenses of counsel),
liabilities or indemnities to the Trustee under this Indenture.
"UCC" means the Uniform Commercial Code as in effect from time to time
in the State of New York and any other jurisdiction the laws of which control
the creation or perfection of security interests under the Security Documents.
"United States" or "U.S." means the United States of America.
"Williams Guaranty" means the Guaranty, dated as of February 5, 1999,
by the PPA Guarantor in favor of the Company.
"Year 2000 Problem" means any significant risk that computer hardware,
software or equipment containing embedded microchips essential to the Company's
business or operations will not, in the case of dates or periods occurring after
December 31, 1999, function at least as effectively and reliably as in the case
of dates or time periods occurring before January 1, 2000, including the making
of accurate leap year calculations.
SECTION 1.2 Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officer's Certificate (upon which the Trustee may conclusively
rely to take such requested action) stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel (upon which the Trustee may conclusively
rely to take such requested action) stating that in the opinion of such counsel
all such conditions precedent, if any, have been complied with, except that in
the case of any such application or request as to which the furnishing of
documents is specifically required by any provision of this Indenture relating
to such particular application or request, no additional certificate or opinion
need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
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(c) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 1.3 Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such Person, or
that they be so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and one or more
other such Persons as to other matters, and any such Person may certify or give
an opinion as to such matters in one or several documents. The Trustee may
conclusively presume that all matters required to take action have been covered
by such certificates and opinions delivered at one time.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows or has reason to believe
that the certificate or opinion or representations with respect to the matters
upon which his certificate or opinion is based are erroneous. Any such
certificate or Opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer or
officers of the Company, stating that the information with respect to such
factual matters is in the possession of the Company, unless such counsel knows
that the certificate or opinion or representations with respect to such matters
are erroneous.
Any Opinion of Counsel stated to be based on the opinion of other
counsel shall be accompanied by a copy of such other opinion.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4 Acts of Bondholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by any
Bondholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Bondholders in person or by an agent
duly appointed in writing or, alternatively, may be embodied in and evidenced by
the record of such Bondholders voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of such Bondholders duly
called and held in accordance with the provisions of Article XIV, or a
combination of such instruments and any such record. Except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments or record, or both are delivered to the Trustee.
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Such instrument or instruments and any such record (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Bondholders signing such instrument or instruments and so voting at any such
meeting. Proof of execution of any such instrument or of a writing appointing
any such agent shall be sufficient for any purpose of this Indenture and
(subject to Section 10.1) conclusive in favor of the Trustee and the Company, if
made in the manner provided in this Section 1.4. The record of any meeting of
any Bondholders shall be proved in the manner provided in Section 14.6.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument acknowledged to him
the execution thereof, or by an affidavit of a witness to such execution sworn
to before any such notary or other such officer, and where such execution is by
an officer of a corporation or association or a member of a partnership, on
behalf of such corporation, association or partnership, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other manner which the
Trustee deems sufficient.
(c) The principal amount and serial numbers of Bonds held by any
Person, and the date or dates of holding the same, shall be proved by the
Security Register, and the Trustee shall not be affected by notice to the
contrary.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by any Bondholder shall bind such Bondholder of every
Bond issued upon the transfer thereof or in exchange therefor or in lieu
thereof, whether or not notation of such action is made upon such Bond.
(e) Until such time as written instruments shall have been delivered
with respect to the requisite percentage of principal amount of Bonds for the
action contemplated by such instruments, any such instrument executed and
delivered by or on behalf of any Bondholder may be revoked with respect to any
or all of such Bonds by written notice by such Bondholder or any subsequent
Bondholder, proven in the manner in which such instrument was proven.
(f) Bonds of any series authenticated and delivered after any Act of
any Bondholder may, and shall if required by the Trustee, bear a notation in
form approved by the Trustee as to any action taken by such Act of such
Bondholder. If the Company shall so determine, new Bonds of any series so
modified as to conform, in the opinion of the Company, to such action may be
prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Bonds of such series.
SECTION 1.5 Notices, etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of any Bondholder or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
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(a) the Trustee by any Bondholder, by the Company or by an Authorized
Agent shall be sufficient for every purpose hereunder if made, given, furnished
or filed in writing to or with a Responsible Officer of the Trustee at its
Corporate Trust Office, or
(b) the Company by the Trustee, by any Bondholder or by an Authorized
Agent shall be sufficient for every purpose hereunder if in writing and mailed,
first-class postage prepaid, to the Company addressed to it at the address of
its principal office specified in the first paragraph of this instrument or at
any other address previously furnished in writing to the Trustee by the Company
for such purpose.
SECTION 1.6 Notices to Bondholders; Waiver.
Where this Indenture provides for notice to the Bondholders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Bondholder, at its address as it appears in the Security Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by any Bondholder shall be filed
with the Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver. In any case where
notice to the Bondholders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Bondholder
shall affect the sufficiency of such notice with respect to other Bondholders,
and any notice that is mailed in the manner herein provided shall be
conclusively presumed to have been duly given.
SECTION 1.7 Effect of Heading and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 1.8 Successors and Assigns.
All covenants, agreements, representations and warranties in this
Indenture by the Trustee and the Company shall bind and, to the extent permitted
hereby, shall inure to the benefit of and be enforceable by their respective
successors and assigns, whether so expressed or not.
SECTION 1.9 Severability.
In case any provision in this Indenture or in the Bonds shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
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SECTION 1.10 Benefits of Indenture.
Nothing in this Indenture or in the Bonds, expressed or implied, shall
give to any Person, other than the parties hereto and their successors hereunder
and the Bondholders, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
SECTION 1.11 Governing Law.
THIS INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK EXCEPT THAT SUCH LAWS SHALL NOT
APPLY WITH RESPECT TO (I) ANY COLLATERAL WHERE IT IS NECESSARY TO APPLY THE LAWS
OF ANOTHER JURISDICTION TO PERFECT LIENS RELATING TO DEBT ISSUED HEREUNDER OR
(II) ENFORCEMENT OF REMEDIES UPON COLLATERAL LOCATED IN ANOTHER JURISDICTION OR
(III) ENVIRONMENTAL MATTERS GOVERNED BY THE LAWS OF ANOTHER JURISDICTION.
SECTION 1.12 Legal Holidays.
In any case where the Redemption Date, Prepayment Date or the Stated
Maturity of any Bond or of any installment of principal thereof or payment of
interest thereon, or any date on which any defaulted interest is proposed to be
paid, shall not be a Business Day, then (notwithstanding any other provision of
this Indenture or such Bond) payment of interest and/or principal, and premium,
if any, need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Redemption Date,
Prepayment Date or at the Stated Maturity, or on the date on which the defaulted
interest is proposed to be paid, and, except as provided in the Series
Supplemental Indenture setting forth the terms of such Bond, if such payment is
timely made, no interest shall accrue for the period from and after such
Redemption Date, Prepayment Date or Stated Maturity, or date for the payment of
defaulted interest, as the case may be, to the date of such payment.
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SECTION 1.13 Execution in Counterparts.
This instrument may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
ARTICLE II
THE BONDS
SECTION 2.1 Form of Bond to Be Established by Series Supplemental
Indenture.
The Bonds of each series shall be substantially in the form (not
inconsistent with this Indenture, including Section 2.5 hereof) established in
the Series Supplemental Indenture relating to the Bonds of such series.
SECTION 2.2 Form of Trustee's Authentication.
The Trustee's certificate of authentication on all Bonds shall be in
substantially the following form:
This Bond is one of the Bonds referred to in the within-mentioned
Indenture.
[____________________________________________________________],
as Trustee
By ____________________________________________________________
Authorized Officer
SECTION 2.3 Amount Unlimited; Issuable in Series; Limitations on
Issuance.
The aggregate principal amount of Bonds that may be authenticated and
delivered under this Indenture is unlimited.
The Bonds may be issued in one or more series. There shall be
established in one or more Series Supplemental Indentures, prior to the issuance
of Bonds of any series:
(a) the title of the Bonds of such series (which shall distinguish the
Bonds of such series from all other Bonds) and the form or forms of Bonds of
such series;
(b) any limit upon the aggregate principal amount of the Bonds of such
series that may be authenticated and delivered under this Indenture (except for
Bonds authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Bonds of such series pursuant to Section 2.7,
2.8, 2.9 or 7.6 and except for Bonds that, pursuant to Section 2.4 hereof, are
deemed never to have been authenticated and delivered hereunder);
(c) the date or dates on which the principal of the Bonds of such
series is payable, the amounts of principal payable on such date or dates and
the Regular Record Date for the
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determination of Bondholders to whom principal is payable; and the date or dates
on or as of which the Bonds of such series shall be dated, if other than as
provided in Section 2.13;
(d) the rate or rates at which the Bonds of such series shall bear
interest, or the method by which such rate or rates shall be determined, the
date or dates from which such interest shall accrue, the interest payment dates
on which such interest shall be payable (which such interest payment dates shall
be the Interest Payment Dates specified herein if such securities are to enjoy
the benefits of the Debt Service Reserve Account) and the Regular Record Date
for the determination of Bondholders to whom interest is payable, and the basis
of computation of interest, if other than as provided in Section 2.13(b);
(e) if other than as provided in Section 10.14(a), the place or places
where (i) the principal of, premium, if any, and interest on Bonds of such
series shall be payable, (ii) Bonds of such series may be surrendered for
registration of transfer or exchange and (iii) notices and demands to or upon
the Company in respect of the Bonds of such series and this Indenture may be
served;
(f) the price or prices at which, the period or periods within which
and the terms and conditions upon which Bonds of such series may be redeemed, in
whole or in part, at the option of the Company;
(g) the obligation, if any, of the Company to redeem, purchase or
prepay Bonds of such series pursuant to any sinking fund or analogous provisions
or at the option of a Bondholder thereof and the price or prices at which, the
period or periods within which and the terms and conditions upon which Bonds of
such series shall be redeemed, purchased or prepaid, in whole or in part,
pursuant to such obligations;
(h) if other than denominations of $100,000 and integral multiples of
$1,000 in excess thereof, the denominations in which Bonds of such series shall
be issuable;
(i) any other terms of such series (which terms shall not be
inconsistent with the provisions of this Indenture); and
(j) any trustees, authenticating or paying agents, warrant agents,
transfer agents or registrars with respect to the Bonds of such series.
SECTION 2.4 Authentication and Delivery of Bonds.
Subject to Section 2.3 and Section 6.17, at any time and from time to
time after the execution and delivery of this Indenture, the Company may deliver
Bonds of any series executed by the Company to the Trustee for authentication,
together with a Company Order for the authentication and delivery of such Bonds,
and the Trustee shall thereupon authenticate and make available for delivery
such Bonds in accordance with such Company Order, without any further action by
the Company. No Bond shall be secured by or entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Bond a certificate of authentication, in the form provided for herein, executed
by the Trustee by the
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manual signature of an Authorized Officer, and such certificate upon any Bond
shall be conclusive evidence, and the only evidence, that such Bond has been
duly authenticated and delivered hereunder. In authenticating such Bonds and
accepting the additional responsibilities under this Indenture in relation to
such Bonds, the Trustee shall be entitled to receive, and (subject to Section
10.l(a)(ii)) shall be fully protected in relying upon:
(a) an executed Series Supplemental Indenture with respect to the Bonds
of such series;
(b) an Officer's Certificate of the Company certifying (i) as to
resolutions of the Company by or pursuant to which the terms of the Bonds of
such series were established, (ii) that all conditions precedent under this
Indenture to the Trustee's authentication and delivery of such Bonds have been
complied with and (iii) as to the incumbency of the persons named in such
certificate;
(c) an Opinion of Counsel to the effect that (i) the form or forms and
the terms of such Bonds have been established by a Series Supplemental Indenture
as permitted by Sections 2.1 and 2.3 of this Indenture, and (ii) the Bonds of
such series, when authenticated and made available for delivery by the Trustee
and issued by the Company in the manner and subject to any conditions specified
in such Opinion of Counsel, shall constitute legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as such enforceability (A) may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and
other similar laws affecting the enforcement of creditors' rights and remedies
generally and (B) is subject to general principles of equity (regardless of
whether considered in a proceeding in equity or at law); and
(d) such other documents and evidence with respect to the Company as
the Trustee may reasonably request.
Notwithstanding the foregoing, if any Bond shall have been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Bond to the Trustee for cancellation as
provided in Section 2.12 together with a written statement (which need not
comply with Section 1.2 and need not be accompanied by an Opinion of Counsel)
stating that such Bond has never been issued and sold by the Company, for all
purposes of this Indenture such Bond shall be deemed never to have been
authenticated and delivered hereunder and shall never have been or be entitled
to the benefits hereof.
SECTION 2.5 Form and Denominations.
Except to the extent they are in book-entry form, the Bonds of each
series shall be in registered form and may have such letters, numbers or other
marks of identification and such legends or endorsements printed, lithographed,
engraved, typewritten or photocopied thereon, as may be required to comply with
the rules of any securities exchange (if any) upon which the Bonds are to be
listed or to conform to any usage in respect thereof, or as may, consistently
herewith, be prescribed by the officers executing such Bonds, such determination
by such officers to be evidenced by their signing the Bonds.
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The definitive Bonds shall be printed, lithographed, engraved,
typewritten, photocopied or produced by any combination of these methods or may
be produced in any other manner permitted by the rules of any securities
exchange, all as determined by the officers executing such Bonds, as evidenced
by their execution of such Bonds.
All Bonds of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided herein or in the Series
Supplemental Indenture setting forth the terms of the Bonds of such series.
All Bonds in book-entry form shall comply with the requirements of the
clearing corporation or clearing agency with whom the registered form of such
Bond will be deposited and the Series Supplemental Indenture relating to such
Bonds shall set forth such requirements.
SECTION 2.6 Execution of Bonds.
The Bonds shall be executed on behalf of the Company by the Chief
Executive Officer, President, Chief Financial Officer, one of the Vice
Presidents or the Corporate Secretaries of the managing Member of the Company,
with or without its corporate seal reproduced thereon. The signature of any such
officers on the Bonds may be manual or facsimile.
Bonds bearing the manual or facsimile signatures of individuals who
were at the time such signatures were affixed the proper officers of the Company
shall bind the Company notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of such
Bonds or did not hold such offices at the date of such Bonds.
SECTION 2.7 Temporary Bonds.
Pending the preparation of definitive Bonds of any series, the Company
may execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Bonds of such series that are printed,
lithographed, typewritten, photocopied or otherwise produced, in any
denomination, substantially of the tenor of the definitive Bonds in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Bonds may
determine, as evidenced by their execution of such Bonds.
If temporary Bonds of any series are issued, the Company shall cause
definitive Bonds of such series to be prepared without unreasonable delay. After
the preparation of definitive Bonds of such series, the temporary Bonds of such
series shall be exchangeable for definitive Bonds of such series upon surrender
of the temporary Bonds of such series at the Corporate Trust Office of the
Trustee or at the Place of Payment, without charge to the Bondholder. Upon
surrender for cancellation of any one or more temporary Bonds of any series, the
Company shall execute and the Trustee shall authenticate and make available for
delivery, in exchange therefor, definitive Bonds of such series of authorized
denominations and of like tenor and aggregate principal amount. Until so
exchanged, such temporary Bonds of any series shall in all respects be entitled
to the same benefits under this Indenture as definitive Bonds of such series.
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SECTION 2.8 Registration, Transfer and Exchange.
The Trustee shall cause to be kept at the Corporate Trust Office a
register in which, subject to such reasonable regulations as the Company may
prescribe, the Company shall provide for the registration of Bonds and for the
registration of transfers and exchanges of Bonds. This register and, if there
shall be more than one Security Registrar, the combined registers maintained by
all such Security Registrars, are herein sometimes referred to as the "Security
Register."
Upon surrender for registration of transfer of any Bond of any series
at the Corporate Trust Office, or at any office or agency maintained for such
purpose pursuant to Section 10.14(a), the Company shall execute, and the Trustee
shall authenticate and make available for delivery, in the name of the
designated transferee or transferees, one or more new Bonds of the same series,
of authorized denominations and of like tenor and aggregate principal amount.
At the option of the Bondholders, Bonds of any series may be exchanged
for other Bonds of the same series, of authorized denominations and of like
tenor and aggregate principal amount, upon surrender of the Bonds to be
exchanged at any office or agency maintained for such purpose pursuant to
Section 10.14(a). Whenever any Bonds are so surrendered for exchange, the
Company shall execute, and the Trustee or a duly authorized authenticating agent
shall authenticate and make available for delivery, the Bonds which the
Bondholder making the exchange is entitled to receive.
All Bonds issued upon any registration of transfer or exchange of Bonds
shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same security and benefits under this Indenture, as the Bonds
surrendered upon such registration of transfer or exchange.
Every Bond presented or surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar or any
transfer agent, duly executed by the Bondholder or his attorney duly authorized
in writing.
No service charge shall be required of any Bondholders participating in
any transfer or exchange of Bonds in respect of such transfer or exchange, but
the Security Registrar may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any transfer
or exchange of Bonds, other than exchanges pursuant to Section 2.7, 7.6 or 12.6
not involving any transfer.
The Security Registrar shall not be required (i) to issue, register the
transfer of or exchange any Bond of any series during a period (a) beginning at
the opening of business 15 days before the day of the mailing of a notice of
redemption of Bonds of such series selected for redemption under Section 7.2 or
8.2 and ending at the close of business on the day of such mailing and (b)
beginning on the Regular Record Date for the Stated Maturity of any installment
of principal of or payment of interest on the Bonds of such series and ending on
the Stated Maturity of such installment of principal or payment of interest, or
(ii) to issue, register the
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transfer of or exchange any Bond so selected for redemption in whole or in part,
except the unredeemed portion of any Bond selected for redemption in part.
SECTION 2.9 Mutilated, Destroyed, Lost and Stolen Bonds.
If (i) any mutilated Bond is surrendered to the Trustee or the Company,
and the Security Registrar or the Trustee receives evidence to its satisfaction
of the destruction, loss or theft of any Bond, and (ii) there is delivered to
the Company, the Security Registrar and the Trustee evidence to their
satisfaction of the ownership and authenticity thereof, and such security or
indemnity as may be required by them to save each of them harmless, the Company
shall execute and upon its request the Trustee shall authenticate and make
available for delivery, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Bond, a new Bond of the same series and of like tenor
and principal amount, bearing a number not then Outstanding.
Notwithstanding the foregoing, in case any such mutilated, destroyed,
lost or stolen Bond has become or is about to become due and payable, the
Company, upon satisfaction of the conditions set forth in clauses (i) and (ii)
of the immediately preceding paragraph may, instead of issuing a new Bond, pay
such Bond.
Upon the issuance of any new Bond under this Section 2.9, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith.
Every new Bond issued pursuant to this Section 2.9 in lieu of any
destroyed, lost or stolen Bond shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Bond shall be at any time enforceable by anyone, and shall be entitled to
all the security and benefits of this Indenture equally and proportionately with
any and all other Bonds duly issued hereunder.
The provisions of this Section 2.9 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Bonds.
SECTION 2.10 Payment of Principal and Interest, Principal and Interest
Rights Preserved.
Principal or interest on any Bond that is payable, and is punctually
paid or duly provided for, at any Stated Maturity shall be paid to the Person in
whose name that Bond (or one or more Predecessor Bonds) is registered at the
close of business on the Regular Record Date for such principal or interest.
Payment of principal of and interest on the Bonds of any series shall be made at
the Corporate Trust Office of the Trustee or by check or in another manner or
manners if so provided in the Series Supplemental Indenture creating the Bonds
of such series.
Any principal of or interest on any Bond of any series that is payable,
but is not punctually paid or duly provided for, at any Stated Maturity of an
installment of principal or payment of interest shall forthwith cease to be
payable to the Bondholder on the relevant Regular
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Record Date by virtue of having been such Bondholder to the extent that such
defaulted principal or interest may be paid by the Company, at its election in
each case, as provided in paragraph (a) or paragraph (b) below:
(a) The Company may elect to make payment of all or any portion of such
defaulted principal or interest to the Persons in whose names the Bonds of such
series (or their respective Predecessor Bonds) in respect of which principal or
interest is in default are registered at the close of business on a Special
Record Date for the payment of such defaulted principal or interest, which shall
be fixed in the following manner. The Company shall notify the Trustee and the
Paying Agent in writing of the amount of defaulted principal or interest
proposed to be paid on each Bond of such series and the date of the proposed
payment, and concurrently there shall be deposited with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
defaulted principal or interest or there shall be made arrangements satisfactory
to the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled
to such defaulted principal or interest as provided in this paragraph. Thereupon
the Trustee shall fix a Special Record Date for the payment of such defaulted
principal or interest (together with other amounts payable with respect to such
defaulted principal or interest) which shall not be more than 15 nor less than
10 days prior to the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company and the Security Registrar of such
Special Record Date and shall direct the Security Registrar to immediately
provide notice of the proposed payment of such defaulted principal or interest
and the Special Record Date therefor to be mailed, first-class postage prepaid,
to each Bondholder of a Bond of such series at his address as it appears in the
Security Register, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such defaulted principal or interest and the
Special Record Date therefor having been mailed as aforesaid, such defaulted
principal or interest shall be paid to the Persons in whose names the Bonds of
such series (or their respective Predecessor Bonds) are registered on such
Special Record Date and shall no longer be payable pursuant to the following
paragraph (b).
(b) The Company may make, or cause to be made, payment of any defaulted
principal or interest (together with other amounts payable with respect to such
defaulted interest) in any other lawful manner not inconsistent with the
requirements of any securities exchange (if any) on which the Bonds in respect
of which principal or interest is in default may be listed, and upon such notice
as may be required by such exchange, if, after notice given by the Company to
the Trustee of the proposed payment pursuant to this paragraph, such payment
shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.10, each Bond
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Bond shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Bond, and each such Bond
shall bear interest from whatever date shall be necessary so that neither gain
nor loss in interest shall result from such registration of transfer, exchange
or replacement.
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SECTION 2.11 Persons Deemed Owners.
Subject to Section 2.10, the Person in whose name any Bond is
registered shall be deemed to be the owner of such Bond for the purpose of
receiving payment of principal of, and premium, if any, and interest on, such
Bond and for all other purposes whatsoever, whether or not such Bond be overdue,
regardless of any notice to anyone to the contrary.
SECTION 2.12 Cancellation.
All Bonds surrendered for payment, redemption or registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee for cancellation. The Company may at any time
deliver to the Trustee for cancellation any Bonds previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Bonds so delivered shall be promptly canceled by the
Trustee. No Bonds shall be authenticated in lieu of or in exchange for any Bonds
canceled as provided in this Section, except as expressly permitted by this
Indenture. All canceled Bonds held by the Trustee shall be destroyed and
certification of their destruction delivered to the Company unless, by Company
Request, the Company otherwise directs.
SECTION 2.13 Dating of Bonds, Computation of Interest.
(a) Except as otherwise provided in the Series Supplemental Indenture
relating to the Bonds of a series, each Bond of such series shall be dated the
date of its authentication.
(b) Except as otherwise provided in the Series Supplemental Indenture
relating to the Bonds of a series, interest on the Bonds of such series shall be
computed on the basis of a 360-day year consisting of twelve 30-day months and,
for any period shorter than a full month, on the basis of the actual number of
days elapsed.
SECTION 2.14 Source of Payments Limited; Rights and Liabilities of the
Company.
Except as otherwise specifically provided in this Indenture, all
payments of principal and premium, if any, and interest to be made in respect of
the Bonds and this Indenture shall be made only from the payments from the
Project Accounts and the Collateral and the income and proceeds thereof received
by the Trustee. Each Bondholder, by its acceptance of a Bond, agrees that
recourse shall be limited in accordance with Section 15.1.
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SECTION 2.15 Parity of Bonds.
All Bonds of a series issued and Outstanding hereunder rank on a parity
with each other Bond of the same series and with all Bonds of each other series
and each Bond of a series shall be secured equally and ratably by this Indenture
and the Security Documents with each other Bond of the same series and with all
Bonds of each other series, without preference, priority or distinction of any
one thereof over any other by reason of difference in time of issuance or
otherwise, and each Bond of a series shall be entitled to the same benefits and
security in this Indenture and the Security Documents as each other Bond of the
same series and with all Bonds of each other series.
SECTION 2.16 Allocation of Principal and Interest.
Each payment of principal of and premium, if any, and interest on each
Bond shall be applied, first, to the payment of accrued but unpaid interest on
such Bond (as well as any interest on overdue principal or, to the extent
permitted by applicable Applicable Law, overdue interest) to the date of such
payment, second, to the payment of the principal amount of and premium, if any,
on such Bond then due (including any overdue installment of principal)
thereunder, and third, the balance, if any, to the payment of the principal
amount of such Bond remaining unpaid.
SECTION 2.17 Monies Unclaimed.
Any monies paid by the Company to the Trustee for any payments with
respect to the Bonds that remain unclaimed for two years will be repaid to the
Company, and thereafter the Bondholder will look only to the Company for
payments thereof as an unsecured creditor, and the Company shall not be liable
to pay any taxes or other duties in connection with such payment; provided,
however, that unless otherwise provided by Applicable Law, the right to receive
payment of principal and interest on any Bond (whether at maturity, redemption
or otherwise) will become void at the end of five (5) years from the date on
which the right to receive payment arose (or such shorter period as may be
prescribed by Applicable Law).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Trustee as follows:
SECTION 3.1 Organization, Power and Status of the Company.
The Company is (i) a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware and (ii)
duly authorized to do business in each jurisdiction where the nature of its
activities makes such qualification necessary. The Company has not engaged in
any business or activity other than in connection with the development,
acquisition, construction, ownership, operation and financing of the Facility as
contemplated by the Transaction Documents to which the Company is a party. The
Company has all requisite
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corporate power and authority to own and operate the property it purports to own
and to carry on its business as now being conducted and as proposed to be
conducted in respect of the Facility.
SECTION 3.2 Authorization, Enforceability, Execution and Delivery.
(a) The Company has all necessary power and authority to execute,
deliver and perform its obligations under the Transaction Documents executed on
or prior to the date of original issuance of the Bonds hereunder and to which it
is a party.
(b) All action on the part of the Company that is required for the
authorization, execution, delivery and performance of the Transaction Documents
to which the Company is a party, in each case has been duly and effectively
taken; and the execution, delivery and performance of the Transaction Documents
does not require the approval or consent of any holder or trustee of any Debt or
other obligations of the Company or of any contractual counterparty, which has
not been obtained.
(c) Each Transaction Document to which the Company is a party has been
duly executed and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company enforceable against it in accordance with the
terms thereof, except as such enforceability (i) may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and
similar laws affecting the enforcement of creditors' rights and remedies
generally and (ii) is subject to general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at law).
SECTION 3.3 No Conflicts; Applicable Laws and Contracts; No Default.
(a) Neither the execution, delivery and performance of this Indenture
and each other Transaction Document to which the Company is a party nor the
consummation of any of the transactions contemplated hereby or thereby nor
performance of or compliance with the terms and conditions hereof or thereof (i)
contravenes any Applicable Law or Governmental Approval or order, writ or
injunction of any court or other Governmental Authority applicable to the
Company or any of the Collateral, (ii) constitutes a default under or results in
the violation of the Company's certificate of formation or operating agreement
or any other material contract to which the Company is a party or by which it or
any of its assets is bound, or (iii) results in the creation or imposition of
any Liens (other than Permitted Liens) on any of the Collateral, or results in
the acceleration of any obligation, hereunder or under the Transaction
Documents.
(b) The Company and the Facility are in compliance with and not in
default under any and all Governmental Approvals applicable to the Company or
the Facility and all terms and provisions of all Transaction Documents to which
the Company is a party, unless such noncompliance or such default could not
reasonably be expected to result in a Material Adverse Effect.
(c) The Company has not given or received any notice of default under
any executed Transaction Document, and each executed Transaction Document, to
the best of the Company's
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knowledge, is in full force and effect. The Company is not in default under any
executed Transaction Document where such Default could reasonably be expected to
have a Material Adverse Effect.
SECTION 3.4 Governmental Approvals.
All Governmental Approvals which are required to be obtained as of the
Closing Date in the name of the Company in connection with (i) the construction,
operation and maintenance of the Facility and (ii) the execution of the Bonds
and the execution, delivery and performance by the Company of the Transaction
Documents have been duly obtained or made, were validly issued and are in full
force and effect. All such Governmental Approvals are set forth in Part I of
Schedule 3.4. The Company is in compliance with all Government Approvals
required to be obtained as of the Closing Date unless such noncompliance could
not reasonably be expected to result in a Material Adverse Effect. The Company
does not have any reason to believe that it will be unable to obtain the
required Governmental Approvals that are not required to be obtained prior to
the Closing Date, which Governmental Approvals are set forth in Part II of
Schedule 3.4, in the ordinary course of business and at such time or times and
containing such terms as may be necessary to avoid any substantial delay in, or
material impairment to, the consummation and performance of the transactions as
contemplated by the Transaction Documents.
SECTION 3.5 Litigation.
There are no actions, suits or proceedings at law or in equity by or
before any Governmental Authority now pending or to the best of the Company's
knowledge, threatened against the Company, any property or other assets or
rights of the Company with respect to this Indenture, any other Transactions
Documents or the Facility that, if determined adversely to the Company, could
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.6 Collateral.
The Company has, or has valid and enforceable rights to acquire, (i)
good title to the interests in the Site, any other real property or fixtures and
(ii) good title or a valid leasehold rights to the tangible personal property,
in each case, forming a part of the Collateral purported to be covered by the
Security Documents subject only to Permitted Liens.
SECTION 3.7 Taxes.
The Company has filed, or caused to be filed, all tax and information
returns that are required to have been filed by it in any jurisdiction, and has
paid all taxes shown to be due and payable on such returns and all other taxes
and assessments payable thereunder, to the extent the same have become due and
payable, except to the extent there is a Good Faith Contest thereof by the
Company.
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SECTION 3.8 Environmental Matters.
The Company and the Site are in compliance with all applicable
Environmental Laws affecting the Site or the Facility, the noncompliance with
which could reasonably be expected to result in a Material Adverse Effect, and,
to the Company's knowledge, there are no environmental conditions which could
reasonably be expected to materially interfere with the construction or
commercial operation of the Facility or adversely affect the Lien of the
Collateral Agent thereon.
SECTION 3.9 Compliance with Applicable Law.
The Company and its officers, directors, employees, agents and all
Affiliates acting on their behalf, are in compliance in all material respects
with all Applicable Law, in respect of the conduct of the Company's business and
the ownership of its property.
SECTION 3.10 Security Documents.
The provisions of the Security Documents are effective to create, in
favor of the Trustee and the Collateral Agent, a legal, valid and enforceable
Lien on all of the property, assets and revenues described therein to the extent
a security interest may be created therein under Applicable Law and all
necessary and appropriate recordings, registrations and filings have been made
in all appropriate public offices, and all other necessary and appropriate
action has been taken so that each such Security Document creates an effective
Lien with respect to the property, assets and revenues covered thereby to the
extent a security interest may be created therein under Applicable Law, prior
and superior to all other Liens except for Permitted Liens, and all necessary
and appropriate Governmental Approvals and consents to the creation,
effectiveness, priority and enforcement of such Liens have been obtained from
each of the parties to the Transaction Documents and the relevant Governmental
Authorities.
SECTION 3.11 Utility Regulation; EWG Status.
(a) Neither the Company nor the Trustee shall, solely by reason of (i)
the ownership, construction, operation and maintenance of the Facility by the
Company, (ii) the issuance of the Bonds, or (iii) any other transaction
contemplated by the Transaction Documents, be deemed by any Governmental
Authority having jurisdiction to be subject to financial, organizational or rate
regulation as an "electric utility", "electric corporation", "electrical
company", "public utility", "public utility holding company" or any similar
entity under any existing Applicable Law.
(b) The Company is an "exempt wholesale generator" under Section 32(a)
of PUHCA.
SECTION 3.12 Investment Company Act.
Upon issuance of the Bonds, the Company will not be subject to
regulation as an "investment company" under the Investment Company Act of 1940.
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SECTION 3.13 ERISA and Employees.
The Company does not sponsor, maintain, administer, contribute to,
participate in, or have any obligation to contribute to or any liability under,
any employee benefit plan within the meaning of Section 3(3) of ERISA nor since
the date which is six (6) years immediately preceding the Closing Date has the
Company established, sponsored, maintained, administered, contributed to,
participated in, or had any obligation to contribute to or liability under, any
such plan.
SECTION 3.14 Subsidiaries.
The Company has no subsidiaries.
SECTION 3.15 Certificates.
Any statements made by the Company in any certificates delivered by the
Company under any of the Financing Documents shall constitute a representation
and warranty by the Company made as of the date such certificate is delivered.
ARTICLE IV
ACCOUNTS
SECTION 4.1 Establishment of Accounts.
(a) The Trustee hereby confirms that it has established with the
Depositary Bank at its office at the address listed in the preamble to this
Indenture the following special, segregated accounts (the "Indenture Accounts"):
(i) Bond Proceeds Account;
(ii) Bond Payment Account; and
(iii) Construction Interest Account.
(b) The Trustee hereby confirms that it has established with the
Depositary Bank at its office at the address set forth in the preamble to this
Indenture the following subaccounts to the Bond Payment Account:
(i) Interest Payment Subaccount;
(ii) Principal Payment Subaccount; and
(iii) Redemption Subaccount.
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All amounts from time to time held in each Indenture Account shall be
held (x) in the name of the Trustee subject to the lien and security interest
granted under this Indenture or certain of them as set forth herein and (y) in
the custody of the Depositary Bank for and on behalf of the Trustee for the
purposes and on the terms set forth in this Indenture.
SECTION 4.2 Investment of Funds in the Indenture Accounts.
(a) Amounts deposited in the Indenture Accounts (and each subaccount
thereof) and each other account or fund created hereunder (unless expressly
stated otherwise), at the written request and direction of the Company, shall be
invested by the Trustee in Permitted Investments upon written instructions from
the Company. Such investments shall mature in such amounts and not later than
such times as may be necessary to provide funds when needed to make payments
from such funds as provided in this Indenture. Net interest or gain received
from such investments shall be applied as provided in this Indenture.
(b) So long as an outstanding balance shall remain in the Indenture
Accounts or any other account or fund created hereunder, the Trustee shall
provide the Company with statements by the tenth (10th) Business Day of each
month showing the amount of all receipts, the net investment income or gain
received and collected, all disbursements and the amount then available as of
the last Business Day of the prior calendar month in the Indenture Accounts (and
each subaccount thereof) and each other account or fund created hereunder. The
Depositary Bank agrees to provide the Trustee with such information as it may
reasonably have available to it in order to permit the Trustee to provide such
statements in accordance with the requirements of this Indenture.
SECTION 4.3 Valuation and Sale of Investments.
(a) Obligations purchased as an investment of funds in any Indenture
Account or any other separate account or fund created under the provisions of
this Indenture shall be deemed at all times to be a part of such account or fund
and, unless otherwise specified herein, any profit realized from the liquidation
of such investment shall be credited to such Indenture Account or such other
separate account or fund created hereunder, and any loss resulting from the
liquidation of such investment shall be charged to the respective Indenture
Account or such other separate account or fund.
(b) The Trustee shall determine the value of all investments in any of
the Indenture Accounts as of the last Business Day of each month, with any
deficit in any account balance to be funded from Project Revenues in accordance
with this Section 4.3, and any investments valued in excess of the amounts
required to be on deposit in an account shall be liquidated and the amount of
such excess shall be deposited in the Bond Payment Account for application in
accordance with Section 5.2.
(c) In computing the amount of any funds in any Indenture Account, or
other separate account or fund created under the provisions of this Indenture
for any purpose provided in this Indenture, obligations purchased as an
investment of funds therein shall be valued at the market value of such
obligations, exclusive of accrued interest; provided, however, if there is no
readily
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determinable market value for such obligations, the value of such obligations
shall be determined with reference to the acquisition price of such obligations,
plus accrued but unpaid interest.
(d) The Depositary Bank agrees to provide the Trustee with such
information as it may reasonably have available to it in order to permit the
Trustee to make such determinations and transfers as may be required by this
Section 4.3.
SECTION 4.4 Possession of Accounts; Liquidation.
(a) Each of the Indenture Accounts shall at all times be in the
exclusive possession of the Depositary Bank acting for and on behalf of the
Trustee.
(b) If an Event of Default shall have occurred and be continuing, the
Trustee shall to the extent permitted by law promptly liquidate all amounts in
the Indenture Accounts and all related investments and distribute all such
monies so received in accordance with Section 9.11.
SECTION 4.5 The Depositary Bank; Limited Company Rights.
(a) The Depositary Bank.
(i) Establishment of Securities Accounts. The Depositary Bank
hereby agrees and confirms that (A) the Depositary Bank has established
the Indenture Accounts as set forth in Section 4.1, (B) each Indenture
Account is and will be maintained as a "securities account" (within the
meaning of Section 8-501 of the UCC), (C) the Trustee is the
"entitlement holder" (within the meaning of Section 8-102(a)(7) of the
UCC) in respect of the "financial assets" (within the meaning of
Section 8-102(a)(9) of the UCC) credited to the Indenture Accounts, (D)
all property delivered to the Depositary Bank pursuant to the
Transaction Documents or this Agreement will be held by the Depositary
Bank and promptly credited to an Indenture Account by an appropriate
entry in its records in accordance with this Agreement, (E) all
"financial assets" (within the meaning of Section 8-102(a)(9) of the
UCC) in registered form or payable to or to the order of and credited
to any Indenture Account shall be registered in the name of, payable to
or to the order of, or endorsed to, the Trustee or in blank, or
credited to another securities account maintained in the name of the
Trustee, and in no case will any financial asset credited to any
Indenture Account be registered in the name of, payable to or to the
order of, or endorsed to, the Company except to the extent the
foregoing have been subsequently endorsed by the Company to the
Depositary Bank or in blank and (F) the Depositary Bank shall not
change the name or account number of any Indenture Account without the
prior written consent of the Trustee.
(ii) Financial Assets Election. The Depositary Bank agrees
that each item of property (excluding cash, but including any security,
instrument or obligation, share, participation, interest or other
property whatsoever) credited to any Indenture Account shall be treated
as a "financial asset" within the meaning of Section 8-102(a)(9) of the
UCC.
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(iii) Entitlement Orders. If at any time the Depositary Bank
shall receive any "entitlement order" (within the meaning of Section
8-102(a)(8) of the UCC) or any other order from the Trustee acting in
accordance with this Agreement directing the transfer or redemption of
any financial asset relating to the Indenture Accounts, the Depositary
Bank shall comply with such entitlement order or other order without
further consent by the Company or any other Person. The parties hereto
hereby agree that the Trustee shall have "control" (within the meaning
of Section 8-106(d) of the UCC) of the Trustee's "security entitlement"
(within the meaning of Section 8-102(a)(17) of the UCC) with respect to
the financial assets credited to the Indenture Accounts and the
Depositary Bank hereby disclaims any entitlement to claim "control" of
such "security entitlement".
(iv) Subordination of Lien; Waiver of Set-off. If the
Depositary Bank has or subsequently obtains by agreement, operation of
law or otherwise a lien or security interest in any Indenture Account
or any security entitlement credited thereto, the Depositary Bank
agrees that such lien or security interest shall be subordinate to the
lien and security interest of the Trustee. The financial assets
standing to the credit of the Indenture Accounts will not be subject to
deduction, set-off, banker's lien, or any other right in favor of any
Person other than the Trustee in its capacity as such (except that the
face amount of any checks which have been credited to any Indenture
Account but are subsequently returned unpaid because of uncollected or
insufficient funds).
(v) No Other Agreements. The Depositary Bank and the Company
have not entered into any agreement with respect to the Indenture
Accounts or any financial assets credited to any Indenture Account
other than this Agreement and the other Security Documents. The
Depositary Bank has not entered into any agreement with the Company or
any other Person purporting to limit or condition the obligation of the
Depositary Bank to comply with entitlement orders originated by the
Trustee in accordance with this Section 4.5. In the event of any
conflict between this Section 4.5 or any other Security Document or any
other agreement now existing or hereafter entered into, the terms of
this Section 4.5 shall prevail.
(vi) Notice of Adverse Claims. Except for the claims and
interest of the Trustee and the Company in each of the Indenture
Accounts, the Depositary Bank does not know of any claim to, or
interest in, any Indenture Account or in any financial asset credited
thereto. If any Person asserts any lien, encumbrance or adverse claim
(including any writ, garnishment, judgment, warrant of attachment,
execution or similar process) against any Indenture Account or in any
financial asset credited thereto, the Depositary Bank will promptly
notify the Trustee and the Company thereof.
(vii) Rights and Powers of the Depositary Bank. The rights and
powers granted by the Trustee to the Depositary Bank have been granted
in order to perfect its lien and security interests in the Indenture
Accounts, are powers coupled with an interest and will neither be
affected by the bankruptcy of the Trustee nor the lapse of time.
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(viii) Choice of Applicable Law. Both this Agreement and each
Indenture Account (including all security entitlements relating
thereto) shall be governed by the law of the State of New York.
Regardless of any provision in any other agreement, for purposes of the
UCC, the "securities intermediary's jurisdiction" of the Depositary
Bank with respect to the Indenture Accounts is the State of New York.
(b) Limited Company Rights. The Company shall not have any rights
against or to monies held in the Indenture Accounts, as third-party beneficiary
or otherwise or any right to direct the Depositary Bank or the Trustee to apply
or transfer monies in any Indenture Account, except the right to direct the
investment of monies held in the Indenture Accounts as permitted by Section 4.2
of this Agreement. Except as expressly provided in this Agreement, in no event
shall any amounts or Permitted Investments deposited in or credited to any
Indenture Account be registered in the name of the Company, payable to the order
of the Company or specially endorsed to the Company, except to the extent that
the foregoing have been specially endorsed to the Trustee or in blank.
ARTICLE V
COLLECTION AND APPLICATION OF FUNDS IN THE INDENTURE ACCOUNTS
SECTION 5.1 Bond Proceeds Account.
The Trustee shall deposit the net proceeds of the issuance of the Bonds
into the Bond Proceeds Account prior to transferring such proceeds to the
Construction Interest Account in amounts specified by the Company on the Closing
Date. Such transfer shall be accomplished pursuant to written instruction
substantially in the form of Exhibit 5.1. After giving effect to such transfer,
on the Closing Date the Trustee shall transfer all amounts remaining in the Bond
Proceeds Account to the Collateral Agent for deposit in the Construction
Account.
SECTION 5.2 Bond Payment Account.
The Trustee shall deposit (i) all funds held in the Bond Payment
Account and all funds received by it for the payment of interest on the Bonds
into the Interest Payment Subaccount for disbursement in accordance with Section
5.3(a) and (ii) all funds received by it for the payment of principal on the
Bonds (including any funds transferred from the Redemption Subaccount pursuant
to Section 5.3(c)) into the Principal Payment Subaccount for disbursement in
accordance with Section 5.3(b).
SECTION 5.3 Interest Payment Subaccount, Principal Payment Subaccount
and Redemption Subaccount.
(a) The Trustee is hereby authorized and directed to disburse from the
Interest Payment Subaccount, the amount required to pay interest on the Bonds
when due (whether on an Interest Payment Date or upon call for redemption or by
acceleration or otherwise).
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(b) The Trustee is hereby authorized and directed to disburse from the
Principal Payment Subaccount, the amount required to pay principal on the Bonds
when due (whether on a Principal Payment Date or upon call for redemption or by
acceleration or otherwise).
(c) The Trustee is hereby authorized and directed to disburse funds
from the Redemption Subaccount (when amounts on deposit therein equal or exceed
$5,000,000) for the redemption of Bonds in accordance with Section 7.3. The
foregoing notwithstanding, the Trustee shall transfer funds remaining in the
Redemption Subaccount for more than one (1) year and not applied to the
redemption of Bonds pursuant to this Section and Section 7.3 to the Principal
Payment Subaccount for application by the Trustee in accordance with Section
5.3(b).
SECTION 5.4 Construction Interest Account.
(a) The Trustee shall deposit all funds received by it for the payment
of interest on the Bonds from and including the Closing Date to and through the
Commercial Operation Date into the Construction Interest Account.
(b) The Trustee is hereby authorized and directed to disburse from the
Construction Interest Account the amount required to pay interest on the Bonds
when due (whether on an Interest Payment Date or upon call for redemption or by
acceleration or otherwise).
(c) On the Commercial Operation Date and upon the Company's delivery to
the Collateral Agent and the Trustee of the Commercial Operation Certificate
specified in Section 3.9 of the Collateral Agency Agreement, the Trustee shall
transfer all monies remaining in the Construction Interest Account to the Bond
Payment Account for deposit in the Interest Payment Subaccount.
(d) If on any date prior to an Interest Payment Date there are
insufficient funds to pay interest due on such Interest Payment Date, the
Trustee shall give written notice to the Collateral Agent to such effect and
requesting the transfer of funds in an amount sufficient to pay such interest
coming due.
ARTICLE VI
COVENANTS
SECTION 6.1 Payment of Principal, Premium, if any, and Interest.
The Company shall duly and punctually pay, or cause to be paid, the
principal of, premium, if any, and interest on, and all other amounts payable in
respect of, the Bonds of each series in accordance with their terms and the
terms of this Indenture and of the related Series Supplemental Indenture.
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SECTION 6.2 Insurance.
(a) The Company shall maintain or cause to be maintained insurance
coverages meeting the requirements of Schedule 6.2. If at any time any of the
required insurance shall no longer be available on commercially reasonable terms
(as confirmed by the Independent Insurance Advisor), the Company shall procure
substitute insurance coverage reasonably satisfactory to the Independent
Insurance Advisor that is the most equivalent to the required coverage and that
is available on commercially reasonable terms.
(b) The Company shall obtain title insurance in an amount equal to the
principal amount of the Senior Debt.
(c) Within 30 days after any officer of the Company obtains knowledge
of any occurrence which has or might reasonably be expected to result in any:
(i) premium increase in excess of 10% over the applicable cost for any such
insurance coverages; or (ii) any cancellation, reduction, non-renewal or
material alteration of any such required insurance a report describing such
occurrences and the potential insurance-related impact thereof.
SECTION 6.3 Reporting Requirements.
The Company shall furnish to the Senior Parties:
(a) as soon as practicable and in any event within 60 days after the
end of the first, second and third quarterly accounting periods of each fiscal
year of the Company (commencing with the quarter ending September 30, 1999), an
unaudited balance sheet of the Company as of the last day of such quarterly
period and the related statements of income and cash flows, and reports of all
dividends and other distributions paid to owners during such quarterly period
prepared in accordance with GAAP and (in the case of second and third quarterly
periods) for the portion of the fiscal year ending with the last day of such
quarterly period, setting forth in each case in comparative form corresponding
unaudited figures from the preceding fiscal year and accompanied by a written
statement of an Authorized Representative of the Company to the effect that such
financial statements fairly represent the Company's financial condition and
results of operations at and as of their respective dates;
(b) as soon as practicable and in any event within one hundred-twenty
(120) days after the end of each fiscal year of the Company (commencing with the
fiscal year ended December 31, 1999), a balance sheet of the Company as of the
end of such year and the related statements of income and cash flow during such
year setting forth in each case in comparative form corresponding figures from
the preceding fiscal year, accompanied by an audit report thereon of a firm of
independent public accountants of recognized national standing;
(c) at the time of the delivery of the financial statements provided
for in clause (a) and (b) above, an Officer's Certificate to the effect that, to
the best of such officer's knowledge, (i) the Company is in compliance with all
of its material obligations under the terms of the Transaction Documents the
non-performance of which has resulted or could reasonably be expected to result
in a Material Adverse Effect and (ii) to the best of such officer's knowledge,
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no Default or Event of Default has occurred and is continuing or, if any Default
or Event of Default has occurred and is continuing, specifying the nature and
extent thereof and what action the Company is taking or proposes to take in
response thereto; and
(d) each of the following items:
(i) promptly after the Company obtains actual knowledge of the
occurrence thereof, written notice of the occurrence of any event or
condition which constitutes an Event of Default and an Officer's
Certificate of the Company setting forth the details thereof and the
action which the Company is taking or proposes to take with respect
thereto;
(ii) promptly after the Company obtains actual knowledge of
any proceeding, legislation or proposal by any Governmental Authority
to acquire compulsorily the Company, all or any portion of the
Collateral or a material part of the Company's business or assets or
the occurrence thereof, written notice of the occurrence of any Event
of Eminent Domain or any event that has caused or could cause the
Company to incur a casualty or loss exceeding $100,000 or any Event of
Loss and an Officer's Certificate of the Company setting forth the
details thereof and the action which the Company is taking or proposes
to take with respect thereto;
(iii) until the occurrence of the Commercial Operation Date,
within forty-five (45) days after the end of each fiscal quarter of the
Company (commencing with its quarter ending September 30, 1999), a
quarterly construction report describing the progress of the Facility's
construction and expenditure of funds, including any material problems
encountered during the engineering, procurement and construction;
provided, that, if any events, conditions or circumstances occur or
exist which affect the matters covered in the construction report,
which has had or would reasonably be expected to have a Material
Adverse Effect, and until the effects of any such events, conditions or
circumstances are cured, the Company shall, if requested to do so by
any Senior Party, deliver prompt information with respect to such
events, conditions or circumstances on a monthly basis;
(iv) any litigation, arbitration or governmental proceeding
pending or threatened against the Company or any substantial dispute
with any Governmental Authority or any party to any Transaction
Document (x) involving a claim or claims in excess of $250,000
individually or $1,000,000 in the aggregate or (y) which could
reasonably be expected to have a Material Adverse Effect;
(v) any material notice or correspondence received or
initiated by the Company, other than notices or correspondence received
or initiated in the ordinary course of business, relating to a
Transaction Document, Governmental Approval or other license or
authorization necessary for the performance by the Company of its
obligations under the Transaction Documents;
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(vi) promptly after the Company obtains actual knowledge of
any one or more events, conditions or circumstances which has had or
could reasonably be expected to have (i) a Material Adverse Effect or
(ii) that permits, or, with the passage of time would, excuse
performance by the Company or Contractor on account of (x) a Force
Majeure condition as defined in and under the PPA or (y) a Force
Majeure Event as defined in and under the EPC Contract; and
(vii) promptly after the Company's receipt thereof, a copy of
any management letter or other similar communication received by the
Company from its Auditors in relation to the Company's financial,
accounting and other systems, management or accounts.
(e) The Company shall furnish or cause to be furnished to the Senior
Parties no later than six (6) months prior to the expiration of the term of the
Power Purchase Agreement (the "Term Expiration Date"), a report (an "Independent
Forecast") prepared by an independent consultant which sets forth projections of
(A) electricity prices for the PJM market (or if such market no longer exists at
such time, any successor market or substitute market as determined in good faith
by the Company which approximates, to the extent practicable, such region) and
(B) gas prices on a delivered basis to the Facility, in each case on at least an
annual basis through the Final Maturity Date; provided, that in the event (i)
the Company enters into a Replacement Power Purchase Agreement that is effective
as of the Term Expiration Date and extends to at least the Final Maturity Date,
(ii) the projected Senior Debt Service Coverage Ratio through the Final Maturity
Date, based on the provisions of such Replacement Power Purchase Agreement,
shall be greater than 2.0 to 1 and (iii) the senior unsecured long-term debt of
such power purchaser(s) under such agreement(s) is rated at least Investment
Grade, then the Company shall not be required to provide the forecast referenced
in this Section 6.3(e).
(f) Upon the request of any Bondholder (or the Trustee on behalf of a
holder of a beneficial interest in the Bonds), the Company shall furnish such
information as is specified in paragraph (d)(4) of Rule 144A to such Bondholder
(and holders of beneficial interests in the Bonds), to a prospective purchaser
of the Bonds (and prospective purchasers of beneficial interests in the Bonds)
who is a Qualified Institutional Buyer or Institutional Accredited Investor or
to the Trustee for delivery to such Bondholder or prospective purchaser of the
Bonds, as the case may be, unless, at the time of such request, the Company is
subject to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act.
(g) The information to be provided to the Senior Parties pursuant to
Sections 6.3(a), (b), (c) and (d) above shall also be provided by the Trustee to
(i) the Bondholders and (ii) the holders of beneficial interests in the Bonds or
prospective purchasers of the Bonds or beneficial interests in the Bonds upon
written request to the Trustee (which may be a single continuing request). The
Company shall furnish the Trustee, upon its request, with sufficient copies of
all such information to accommodate the requests of the holders of beneficial
interests in the Bonds and shall pay all reasonable costs and expenses of the
Trustee incurred with respect to such request.
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(h) The information specified in Sections 6.3(a), (b), (c), (d) and (e)
above shall be provided by the Company to each Rating Agency concurrently with
its delivery to the Senior Parties.
SECTION 6.4 Maintenance of Existence, Liens and Governmental Approvals.
The Company shall at all times:
(a) preserve and maintain in full force and effect (i) its existence as
a limited liability company and its good standing under the laws of the State of
Delaware and (ii) 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;
(b) obtain and maintain in full force and effect all Governmental
Approvals (including, without limitation, maintaining compliance with
Environmental Laws) and other consents and approvals required at any time in
connection with the construction, maintenance, ownership or operation of the
Facility;
(c) preserve and maintain good and marketable title to its properties
and assets (subject to no Liens other than Permitted Liens); and
(d) preserve and maintain the Liens of the Senior Parties on the
Collateral.
SECTION 6.5 Nature of Business.
The Company shall not engage in any business other than the
development, financing, construction, operation and maintenance of the Facility
as contemplated by the Project Contracts.
SECTION 6.6 Operating and Maintenance.
The Company shall, or shall cause the Operator to, use, maintain and
operate the Facility and the Site in compliance with generally accepted Prudent
Operating and Maintenance Practices and the material provisions of all relevant
Project Contracts.
SECTION 6.7 Compliance with Applicable Laws.
The Company shall comply with, and shall ensure that the Facility is
constructed and operated in compliance with, and shall make such alterations to
the Facility and the Site as may be required for compliance with, all Applicable
Laws, Environmental Laws and Governmental Approvals, except where noncompliance
would not reasonably be expected to result in a Material Adverse Effect.
SECTION 6.8 Prohibition on Change in Control.
The Company shall not engage in, or suffer to occur, any Change in
Control.
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SECTION 6.9 Project Contracts; Williams Guaranty; Operation of the
Facility.
(a) The Company shall (i) perform and observe in all material respects
its covenants and agreements contained in any of the Project Contracts, (ii)
enforce, defend and protect all of its rights contained in any of the Project
Contracts and (iii) take all reasonable and necessary actions to prevent the
termination or cancellation of any of the Project Contracts, except in case of
(i) and (ii) above, where such non-performance could not reasonably be expected
to have a Material Adverse Effect.
(b) The Company (i) shall fully enforce its rights under the Williams
Guaranty and the Power Purchase Agreement with respect to substitute security
under the circumstances provided for therein and (ii) shall not, without the
consent of Bondholders holding a majority in outstanding principal amount of the
Bonds, make a demand for or take any legal action under the Williams Guaranty
if, as a result of payments made pursuant to such demand or legal action by the
Company, the aggregate amount available under the Williams Guaranty would be
less than or equal to the principal amount of the then outstanding Senior Debt,
including without limitation, the undrawn portions of the maximum amounts of any
DSR Letter of Credit or CP Letter of Credit. The Company shall (i) upon any
payment event of default or other event of default under the Power Purchase
Agreement, exercise its rights to terminate the Power Purchase Agreement in
accordance with its terms, (ii) in the event of any termination of the Power
Purchase Agreement, fully enforce its rights under the Williams Guaranty and
(iii) use any amounts obtained under the Williams Guaranty to redeem the Bonds
in accordance with the Indenture and to pay principal and interest on the
Company's other Senior Debt in accordance with the Financing Documents and in
each case in accordance with the terms of the Collateral Agency Agreement.
(c) The Company shall (i) exercise all of its rights under the
Operations Agreement to terminate such agreement if (a) a bankruptcy event in
respect of the Operator has occurred and is continuing and (b) the Operator has
failed to perform any material obligation under the Operations Agreement, and
(ii) exercise its rights under the Operations Agreement to cause the Operator to
terminate the Services Agreement pursuant to the terms of such agreement if (a)
a bankruptcy event in respect of AES has occurred and is continuing and (b) AES
has failed to perform any material obligation under the Services Agreement.
SECTION 6.10 Transactions with Affiliates.
The Company shall not enter into any transaction or agreement, with any
Affiliate of the Company (each, an "Affiliate Transaction") other than (i) the
Operations Agreement and the Equity Subscription Agreement (and any Affiliate
Subordinated Loan Agreement referenced therein) and (ii) transactions in the
ordinary course of business on fair and reasonable terms no less favorable to
the Company than the Company would obtain in an arm's length transaction with a
Person that is not an Affiliate of the Company.
SECTION 6.11 Amendments to Project Contracts.
The Company shall not terminate, amend or modify (other than pursuant
to Sections 6.9(b) and 6.9(c) and other than immaterial amendments or
modifications as certified by the
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Company) any of the Project Contracts to which it is a party, or consent to any
assignment by another party thereto, unless the Company certifies to the Senior
Parties that (i) such termination, amendment, modification or assignment is not
reasonably expected to result in a Material Adverse Effect and such termination,
amendment, modification or assignment is not reasonably expected to materially
increase the likelihood of the occurrence of a future Material Adverse Effect
and (ii) the Independent Engineer does not within ten (10) Business Days of
receipt of such certificate disagree in writing to the certification provided
pursuant to clause (i); provided, however, that the Company shall not (a) amend
or modify the Power Purchase Agreement, unless in addition to the requirements
of clauses (i) and (ii) above, the Company certifies that such amendment or
modification would not cause the Company's net operating revenues to decrease by
more than five (5) percent and such certification is confirmed by the
Independent Engineer, (b) subject to Section 6.9(b), terminate the Power
Purchase Agreement or consent to any release of, assignment by or change in the
identity of the Power Purchaser, unless (1) within ninety (90) days of such
termination or consent resulting from an event of default by the Power Purchaser
under the Power Purchase Agreement, or prior to any such termination or consent
or for any other reason, the Company (A) enters into a Replacement Power
Purchase Agreement or (B) provides the Senior Parties and each of the Ratings
Agencies with a Power Marketing Plan and (2) the Company provides to the Trustee
and the Collateral Agent a Ratings Reaffirmation from each Rating Agency within
such ninety (90)-day period or prior to such termination or consent, as the case
may be, or (c) release or modify in any way the Williams Guaranty unless the
Company obtains substitute security therefor pursuant to Section 19.3 of the
Power Purchase Agreement.
SECTION 6.12 Prohibition on Fundamental Changes and Disposition of
Assets.
The Company shall not enter into any transaction of merger or
consolidation, change its form of organization or its business, liquidate or
dissolve itself (or suffer any liquidation or dissolution), except as permitted
herein. The Company shall not amend its governing instruments except where such
amendment could not reasonably be expected to result in a Material Adverse
Effect. The Company shall not purchase or otherwise acquire all or substantially
all of the assets of any other Person; provided, that the Company may maintain
ownership interests in subsidiaries if such subsidiaries are involved in
operation, maintenance or fuel supply for the Facility. In addition, except as
contemplated by the Project Contracts or permitted pursuant to this Indenture,
or as authorized by the first and second provisos below, the Company shall not
sell, lease (as lessor) or transfer (as transferor) any property or assets
material to the operation of the Facility except in the ordinary course of
business to the extent that such property is worn out or is no longer useful or
necessary in connection with the operation of the Facility; provided, however,
that the Company shall not sell, lease or transfer any of such property or
assets without the written approval of the Collateral Agent if the aggregate
fair market value of all sales, leases and transfers in the current Fiscal Year
exceeds $5 million escalated at the GDPIPD; provided, further, that the Company
may loan useful spare parts to other electric power generating facilities owned
by an Affiliate of the Company without prior approval of the Trustee or the
Collateral Agent on the conditions that, with respect to any spare part whose
value is in excess of $50,000 (i) at the time of the loan the recipient of the
spare part enters into an enforceable obligation to replace the spare part in
kind, or to pay an amount equal
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to the replacement value of the spare part to the Company, within thirty (30)
days of the Company's demand for the same, and (ii) the Company certifies to the
Collateral Agent that the spare part is not reasonably expected to be required
for a planned outage or for scheduled maintenance of the Facility prior to being
replaced, and such certificate is confirmed by the Independent Engineer.
SECTION 6.13 Annual Budget.
Not less than thirty (30) days prior to (i) the anticipated Commercial
Operation Date, and thereafter (ii) the commencement of each Fiscal Year, the
Company shall provide to the Senior Parties and the Rating Agencies an Annual
Budget. The first Annual Budget shall cover the period from the Commercial
Operation Date through the end of the Fiscal Year in which the Commercial
Operation Date occurs, and if such period consists of less than six months, for
the immediately succeeding Fiscal Year. Each Annual Budget shall specify the
estimated sales of capacity and energy pursuant to the Power Purchase Agreement
and any Replacement Power Purchase Agreement and all other sales of capacity and
energy, the estimated rates and revenues for each category of such sales, all
Operating and Maintenance Costs, a manpower forecast, a periodic inspection,
maintenance and repair schedule, a description of all Required Capital
Expenditures and the underlying operating assumption and implementation plans
for the Fiscal Year covered by such Annual Budget. The Company shall operate and
maintain the Facility, or cause the Facility to be operated and maintained, in
accordance with the Annual Budget other than deviations resulting from operating
requirements under the Project Contracts or Prudent Operating and Maintenance
Practices.
SECTION 6.14 Insurance Report.
Within thirty (30) days after the end of each Fiscal Year, the Company
shall submit to the Senior Parties and each Rating Agency that currently is
rating any of the Outstanding Bonds a certificate (i) listing all insurance
being carried by, or on behalf of, the Company pursuant to this Indenture and
(ii) certifying that all insurance policies required to be maintained pursuant
to the Project Contracts and this Indenture are in full force and effect and all
premiums therefor have been fully paid.
SECTION 6.15 Liens.
The Company shall not create or suffer to exist or permit any Lien upon
or with respect to any of its properties, other than Permitted Liens.
SECTION 6.16 Inspection.
The Senior Parties shall have the right, upon reasonable advance
written notice to the Company, to inspect the Facility and the Site from time to
time; provided that the Company shall have the right to specify reasonable dates
and times for any such inspection in order to avoid any material interference
with operation of the Facility.
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SECTION 6.17 Limitations on Additional Indebtedness.
The Company shall not create or incur or suffer to exist any Debt or
lease obligations except for Permitted Indebtedness.
SECTION 6.18 Restricted Payments.
The Company shall not make any Restricted Payments unless the
Distribution Conditions set forth in Section 3.14 of the Collateral Agency
Agreement have been satisfied.
SECTION 6.19 Construction of the Facility.
The Company shall cause the construction of the Facility to be
prosecuted and completed with diligence and continuity (except for interruptions
provided for in the EPC Contract or due to events of force majeure, which events
of force majeure the Company shall use its best efforts to mitigate), in a good
and workmanlike manner and in accordance with sound, generally accepted building
and engineering practices, all material applicable Governmental Requirements and
the EPC Contract. The Company shall at all times cause a complete set of the
current and (when available) as-built plans (and all supplements thereto)
relating to the Facility to be maintained on the Site or the Contractor's
offices and available for inspection by the Independent Engineer.
SECTION 6.20 Contractor Performance Tests; Final Acceptance.
(a) The Independent Engineer shall have the right to witness and verify
the performance tests required by the EPC Contract.
(b) The Company shall not, without the prior written consent of the
Independent Engineer, either (i) grant the Final Acceptance Certificate to the
Contractor pursuant to Section 6.5.1.2 of the EPC Contract or (ii) elect to
effect Final Acceptance pursuant to Section 6.5.2 of the EPC Contract.
SECTION 6.21 Change Orders.
The Company shall not initiate or approve any change order under the
EPC Contract unless (i) such change order is technically feasible, (ii) such
change order is not reasonably expected to materially and adversely affect the
operation or reliability of the Facility, (iii) the implementation of such
change order is not reasonably expected to cause the Commercial Operation Date
to occur after the Date Certain and (iv) adequate funds are available to the
Company to fund such change orders and all other Project Costs through the
Commercial Operation Date, and in the event that such change order individually
exceeds $5,000,000 or when aggregated with all other change orders exceeds
$10,000,000, unless the Company certifies in writing to the Collateral Agent as
to clauses (i) - (iv) above and such certification is confirmed by the
Independent Engineer.
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SECTION 6.22 Casualty Proceeds; Eminent Domain Proceeds.
The Company shall cause all Casualty Proceeds and Eminent Domain
Proceeds to be deposited in the Restoration Account under the Collateral Agency
Agreement.
SECTION 6.23 Payment of Taxes and Impositions.
(a) Subject to the terms of Section 6.23(c), the Company will pay or
cause to be paid, before any fine, interest or penalty is imposed thereon, all
Impositions and, upon the request of the Collateral Agent, will deliver to the
Collateral Agent photocopies of receipts, cancelled checks and other evidence
reasonably satisfactory to the Collateral Agent evidencing such payment.
Notwithstanding the foregoing, if pursuant to any Applicable Law, any
Impositions may at the option of the Company be paid in installments (whether or
not interest shall accrue on the unpaid balance thereof), the Company shall have
the right, provided that no Event of Default shall then exist, to exercise such
option and to pay or cause to be paid such Impositions and any accrued interest
thereon in installments as they fall due and before any fine, penalty, further
interest or cost may be added thereto.
(b) The Company will pay all taxes and other governmental charges
(including without limitation, stamp taxes) assessed by any Governmental
Authorities and imposed on the Collateral Agent, its successors or assignees, by
reason of the Collateral Agent's ownership of the Mortgage or the other Security
Documents or payable by either the Company or the Collateral Agent upon any
modification, amendment, extension and/or consolidation thereof. The Company
will also pay any tax imposed directly or indirectly on the Mortgage in lieu of
a tax on the Mortgaged Property or any part thereof, whether by reason of (i)
the passage after the date of the Mortgage of any law of the Commonwealth of
Pennsylvania deducting from the value of real property for the purposes of
taxation any lien thereon, (ii) any change in the laws for the taxation of
mortgages or debts secured by mortgages for state or local purposes, (iii) a
change in the means of collection of any such tax, or (iv) any tax, now or
hereafter assessed against the Mortgage or assessed against, or withheld from,
any payments made by the Company hereunder. Within a reasonable time after
payment of any such tax or governmental charge, the Company will deliver to the
Trustee and the Collateral Agent satisfactory proof of payment thereof.
(c) The Company will not claim or demand or be entitled to any credit
or credits for the payment of any Impositions, and no deduction shall otherwise
be made or claimed from the taxable value of the Mortgaged Property, or any part
thereof, by reason of the Mortgage.
SECTION 6.24 Preservation of Lien of Mortgage.
The Company will (i) preserve its right, title and interest in and to
the Mortgaged Property and will warrant and defend the same against and all
claims and demands whatsoever, (ii) continue to have full power and lawful
authority to encumber and convey the Mortgaged Property as provided in the
Mortgage, and (iii) maintain and preserve the priority of the lien of the
Mortgage until all of the obligations under the Financing Documents are paid and
performed in full.
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SECTION 6.25 Year 2000.
The Company shall take all actions reasonably necessary to assure that
its computer-based and other systems are to process effectively data without
experiencing any Year 2000 Problem that could cause a Material Adverse Effect,
and shall at the request of any Senior Party provide information reasonably
satisfactory to such Senior Party as to its capability to process data without
experiencing a Year 2000 Problem that could cause such a Material Adverse
Effect.
ARTICLE VII
REDEMPTION AND PREPAYMENT OF BONDS
SECTION 7.1 Applicability of Article.
Bonds of any series that are subject to redemption or prepayment before
their Stated Maturity (or, if the principal of the Bonds of any series is
payable in installments, the Stated Maturity of the final installment of the
principal thereof) shall be redeemed or prepaid in accordance with their terms
and (except as otherwise specified in the Series Supplemental Indenture creating
such series) in accordance with this Article VII.
SECTION 7.2 Election to Redeem or Prepay; Notice to Trustee.
The election of the Company to redeem or prepay any Bonds otherwise
than through a sinking fund shall be evidenced by a Company Order. If the
Company determines or is required to redeem or prepay any Bonds, the Company
shall, at least fifteen days prior to the date upon which notice of redemption
or prepayment is required to be given to the Bondholders pursuant to Section 7.4
(unless a shorter notice period shall be satisfactory to the Trustee), deliver
to the Trustee a Company Order specifying the date on which such redemption or
prepayment shall occur (the "Redemption Date" or "Prepayment Date," as the case
may be) and the series and principal amount of Bonds to be redeemed or prepaid.
Upon receipt of any such Company Order, the Trustee shall establish a Redemption
Subaccount into which shall be deposited amounts to be held by the Trustee and
applied to the redemption or prepayment of such Bonds. In the case of any
redemption or prepayment of Bonds (i) prior to the expiration of any restriction
on such redemption or prepayment provided in the terms of such Bonds, the Series
Supplemental Indenture relating thereto or elsewhere in this Indenture or (ii)
pursuant to an election of the Company that is subject to a condition specified
in the terms of such Bonds or in the Series Supplemental Indenture relating
thereto, the Company shall furnish the Trustee with an Officer's Certificate and
Opinion of Counsel evidencing compliance with such restriction or condition.
SECTION 7.3 Optional Redemption; Mandatory Redemption; Prepayment;
Selection of Bonds to Be Redeemed or Prepaid.
(a) The Bonds of any series shall be subject to redemption from time to
time at the option of the Company only as provided in the Series Supplemental
Indenture relating thereto.
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(b) All Outstanding Bonds shall be redeemed prior to maturity, as a
whole, at a redemption price equal to the principal amount thereof, together
with interest on the principal amount of the Bonds accrued through the
Redemption Date, in the event the Company or the Collateral Agent receives
Casualty Proceeds or Eminent Domain Proceeds upon the occurrence of either an
Event of Loss or an Event of Eminent Domain that has been determined in
accordance with Section 3.15(d) of the Collateral Agency Agreement to render the
Facility substantially destroyed or taken and incapable of being rebuilt,
repaired or restored, as the case may be, to permit operation on a commercially
feasible basis. All Casualty Proceeds or Eminent Domain Proceeds, as the case
may be, received by the Trustee pursuant to Section 4.2 of the Collateral Agency
Agreement with respect to such Event of Loss or Event of Eminent Domain, as the
case may be, shall be applied by the Trustee to the redemption of the Bonds
pursuant to this Section 7.3(b). The foregoing provisions of this Section 7.3(b)
may be altered in a Series Supplemental Indenture, but such altered provisions
shall not be effective while any Outstanding Bonds on the date of such Series
Supplemental Indenture remain Outstanding.
Any redemption pursuant to this Section 7.3(b) shall be made within 90
days after the receipt by the Trustee of the Casualty Proceeds or Eminent Domain
Proceeds, as the case may be.
(c) The Outstanding Bonds shall be redeemed prior to maturity, as a
whole or in part, ratably among all outstanding series, at a redemption price
equal to the principal amount thereof, together with interest on the principal
amount of the Bonds accrued through the Redemption Date, if the Company or the
Collateral Agent receives amounts identified by the Company in an Officer's
Certificate as proceeds under the Williams Guaranty upon termination of the
Power Purchase Agreement by the Company as a result of an event of default by
the Power Purchaser under the Power Purchase Agreement. All such proceeds
received by the Trustee pursuant to Section 4.1 of the Collateral Agency
Agreement with respect to such termination of the Power Purchase Agreement shall
be applied by the Trustee to the redemption of the Bonds pursuant to this
Section 7.3(c). The foregoing provisions of this Section 7.3(c) may be altered
in a Series Supplemental Indenture, but such altered provisions shall not be
effective while any Outstanding Bonds on the date of such Series Supplemental
Indenture remain outstanding.
After payment of certain administrative fees pursuant to clause first
of Section 4.1(a) of the Collateral Agency Agreement, the aggregate amount of
the Bonds to be redeemed pursuant to this Section 7.3(c) (including accrued and
unpaid interest thereon) will equal an amount which is equal to (x) the amount
paid under the Williams Guaranty multiplied by (y) a fraction the numerator of
which is the then outstanding principal amount of the Bonds and accrued and
unpaid interest thereon and the denominator of which is the principal and
accrued interest on all Senior Debt including the Bonds, such amount to be
calculated by the Company and specified in an Officer's Certificate delivered to
the Senior Parties.
Any redemption pursuant to this Section 7.3(c) shall be made within 90
days after the receipt by the Trustee of the proceeds under the Williams
Guaranty.
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(d) Outstanding Bonds shall be partially redeemed, ratably among all
outstanding series, prior to maturity at a redemption price equal to the
principal amount thereof, together with interest on the principal amount of the
Bonds accrued through the Redemption Date, if the Company or the Collateral
Agent receives Casualty Proceeds or Eminent Domain Proceeds upon the occurrence
of either an Event of Loss or an Event of Eminent Domain that has been
determined in accordance with Section 3.15(d) of the Collateral Agency Agreement
to render a portion of the Facility substantially destroyed or taken and
incapable of being rebuilt, repaired, or restored, as the case may be, to permit
operation on a commercially feasible basis, but permits the remaining portion of
the Facility to be rebuilt, repaired or restored, as the case may be, to permit
operation of such remaining portion of the Facility on a commercially feasible
basis (except when the proceeds not used for rebuilding, repair or restoration
do not exceed $5 million and the Company certifies to the Trustee and the
Collateral Agent, which certification is confirmed by the Independent Engineer,
that (i) such proceeds are not needed for rebuilding, repair or restoration of
the facility and (ii) not using such proceeds for the rebuilding, repair or
restoration of the Facility would not reasonably be expected to result in a
Material Adverse Effect). The foregoing provisions of this Section 7.3(d) may be
altered in a Series Supplemental Indenture, but such altered provisions shall
not be effective while any Outstanding Bonds on the date of such Series
Supplemental Indenture remain outstanding.
The amount (rounded down to the nearest $1,000) by which all of the
Casualty Proceeds or the Eminent Domain Proceeds, as the case may be, received
by the Trustee pursuant to Section 4.2 of the Collateral Agency Agreement
exceeds the estimate of the total cost of rebuilding, repairing and restoring
the Facility made in accordance with Section 3.15(d) of the Collateral Agency
Agreement shall be applied by the Trustee to the redemption of the Bonds
pursuant to this Section 7.3(d); provided, that the amount so received is not
less than $5,000,000. Any funds received by the Trustee pursuant to this Section
7.3(d) in an amount less than $5,000,000 shall be transferred to the Redemption
Subaccount.
Any redemption pursuant to this Section 7.3(d) shall be made within 90
days after the receipt by the Trustee of such Casualty Proceeds or Eminent
Domain Proceeds (other than such proceeds transferred to the Redemption
Subaccount), as the case may be.
(e) [Reserved].
(f) Outstanding Bonds shall be partially redeemed, ratably among all
outstanding series, prior to maturity at a redemption price equal to the
outstanding principal amount thereof, together with interest on the principal
amount of the Bonds accrued through the Redemption Date, if the Company or the
Collateral Agent receives Buy-Down Amounts. The foregoing provisions of this
Section 7.3(f) may be altered in a Series Supplemental Indenture, but such
altered provisions shall not be effective while any Securities Outstanding on
the date of such Series Supplemental Indenture remain outstanding.
The amount (rounded down to the nearest $1,000) of Buy-Down Amounts
received by the Trustee from the Collateral Agent pursuant to Section 4.3 of the
Collateral Agency Agreement shall be applied by the Trustee to the redemption of
Securities pursuant to this
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Section 7.3(f); provided, that the amount so received is not less than
$5,000,000. Any funds received by the Trustee pursuant to this Section 7.3(f) in
an amount less than $5,000,000 shall be transferred to the Redemption
Subaccount.
Any redemption pursuant to this Section 7.3(f) shall be made within 90
days after receipt by the Trustee of such proceeds (other than such proceeds
transferred from the Redemption Subaccount).
(g) Except as otherwise specified herein or in the Series Supplemental
Indenture relating to the Bonds of a series, if less than all the Bonds of such
series are to be redeemed or prepaid pursuant to Section 7.3(a), the particular
Bonds of such series to be redeemed or prepaid shall be selected by the Trustee
from the Outstanding Bonds of such series not previously called for redemption
or prepayment in whole, by such method (including by lot) as the Trustee shall
deem fair and appropriate.
(h) The Trustee shall promptly notify the Company in writing of the
Bonds selected for redemption or prepayment and, in the case of any Bonds to be
redeemed or prepaid in part, the principal amount thereof to be redeemed or
prepaid.
(i) For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption or prepayment of Bonds shall
relate, in the case of any Bonds redeemed or prepaid or to be redeemed or
prepaid only in part, to the portion of the principal amount of such Bonds that
has been or is to be redeemed or prepaid.
SECTION 7.4 Notice of Redemption or Prepayment.
Except as otherwise specified in the Series Supplemental Indenture
relating to the Bonds of a series to be redeemed or prepaid, notice of
redemption or prepayment shall be given in the manner provided in Section 1.6 to
the Bondholders of such series to be redeemed or prepaid at least 30 days but
not more than 60 days prior to the Redemption Date or Prepayment Date, as the
case may be. All notices of redemption or prepayment shall state:
(i) the Redemption Date or Prepayment Date, as the case may
be;
(ii) the premium payable on redemption or prepayment, if any;
(iii) if less than all the Outstanding Bonds of any series are
to be redeemed or prepaid in whole, (i) the identification of the
particular Bonds of such series to be redeemed or prepaid in whole, or
(ii) the portion of the principal amount of each Bond of such series to
be redeemed or prepaid in part, and a statement that, on and after the
Redemption Date or Prepayment Date, as the case may be, upon surrender
of such Bond, a new Bond or Bonds of such series in principal amount
equal to the remaining unpaid principal amount thereof shall be issued;
(iv) that on the Redemption Date or Prepayment Date, as the
case may be, interest thereon shall cease to accrue on and after such
date; and
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(v) the Place or Places of Payment where such Bonds are to be
surrendered for payment of the amount in respect of such redemption or
prepayment.
Notice of redemption of Bonds to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 7.5 Bonds Payable on Redemption Date or Prepayment Date.
Notice of redemption or prepayment, as the case may be, having been
given as aforesaid, and the conditions, if any, set forth in such notice having
been satisfied, the Bonds or portions thereof so to be redeemed or prepaid
shall, on the Redemption Date or Prepayment Date, as the case may be, become due
and payable, and from and after such date such Bonds or portions thereof shall
cease to bear interest. Upon surrender of any such Bond for redemption or
prepayment in accordance with such notice, an amount in respect of such Bond or
portion thereof shall be paid as provided therein; provided, however, that any
payment of interest on any Bond the Stated Maturity of which payment is on or
prior to the Redemption Date or Prepayment Date, as the case may be, shall be
payable to the Bondholder of such Bond, or one or more Predecessor Bonds,
registered as such at the close of business on the related Regular Record Date
according to the terms of such Bond and subject to the provisions of Section
2.10.
SECTION 7.6 Bonds Redeemed or Prepaid in Part.
Any Bond that is to be redeemed or prepaid only in part shall be
surrendered at a Place of Payment therefor (with, if the Company or the Trustee
so requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Bondholder
thereof or his attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and make available for delivery to
such Bondholder without service charge, a new Bond or Bonds of the same series,
of any authorized denomination requested by such Bondholder and of like tenor
and in aggregate principal amount equal to and in exchange for the remaining
unpaid principal amount of the Bond so surrendered.
ARTICLE VIII
SINKING FUNDS
SECTION 8.1 Applicability of Article.
The provisions of this Article VIII shall be applicable to any sinking
fund for the retirement of the Bonds of any series except as otherwise specified
in the Series Supplemental Indenture creating the Bonds of such series.
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SECTION 8.2 Sinking Funds for Bonds.
Any Series Supplemental Indenture may provide for a sinking fund for
the retirement of the Bonds of the series created thereby (a "Sinking Fund") in
accordance with which the Company will be required to redeem on the dates set
forth therein ("Sinking Fund Redemption Dates") Bonds of principal amounts set
forth therein ("Sinking Fund Requirements").
Except as otherwise specified in the Series Supplemental Indenture
relating to the Bonds of a series, the particular Bonds of such series, if any,
to be redeemed through a Sinking Fund shall be selected in the manner provided
in Section 7.3(g), and notice of such redemption shall be given in the manner
provided in Section 7.4.
ARTICLE IX
EVENTS OF DEFAULT; REMEDIES
SECTION 9.1 Events of Default.
The term "Event of Default," whenever used herein, means any of the
following events (whatever the reason for such event and whether voluntary or
involuntary, affected by question of law, or pursuant to or in compliance with
any Applicable Law) and such event shall continue to be an Event of Default if
and for so long as it shall not have been remedied:
(a) The Company shall fail to pay any principal, interest or premium,
if any, including any Make-Whole Premium, on a Bond when the same becomes due
and payable, whether at scheduled maturity or required prepayment or by
acceleration or otherwise and such failure shall continue for ten (10) or more
days; or
(b) Any representation or warranty made by the Company herein or in any
certificate delivered pursuant to any Financing Documents shall prove to have
been false or misleading in any respect as of the time made, confirmed or
furnished and the inaccuracy has resulted or is reasonably expected to result in
a Material Adverse Effect and the circumstances surrounding such
misrepresentation shall continue uncured for thirty (30) or more days from the
discovery thereof; provided, that if the Company commences efforts to cure the
factual situation resulting in such misrepresentation within such 30-day period,
the Company may continue to effect such cure of the misrepresentation, and such
misrepresentation shall not be deemed an Event of Default, for an additional
sixty (60) days so long as an Authorized Representative of the Company certifies
that no other Event of Default has occurred and is continuing and the Company is
diligently pursuing the cure; or
(c) The Company shall fail to maintain insurance in accordance with
Section 6.2; or
(d) The Company shall fail to perform or observe any covenant or
agreement contained in Sections 6.4 (Maintenance of Existence and Governmental
Approvals), 6.5 (Nature of Business), 6.7 (Compliance with Applicable Laws),
6.11 (Amendments to Project Contracts),
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6.12 (Prohibition on Fundamental Changes and Disposition of Assets), 6.15
(Liens), 6.17 (Indebtedness) or 6.18 (Restricted Payments) herein and such
failure shall continue uncured for more than thirty (30) days after the Company
has actual knowledge of such failure; or
(e) A Change in Control shall have occurred; or
(f) The Company shall fail to perform or observe any of its covenants
or agreements contained in any other provision of this Indenture not referred to
above and such failure shall continue uncured for more than thirty (30) days
after the Company has actual knowledge of such failure; provided, that if the
Company commences efforts to cure such default within such thirty (30)-day
period and is diligently attempting to cure such default (and certifies to the
Trustee the steps it is taking), the Company may continue to effect such cure of
the default (and such default shall not be deemed an "Event of Default"
hereunder) for an additional sixty (60) days so long as the Company certifies
that no other Event of Default has occurred and is continuing and the Company is
diligently pursuing such cure; or
(g) The Company or, so long as AES has any outstanding obligations
under any Acceptable Credit Support, AES or, so long as AES Ironwood has any
outstanding obligations under the Equity Subscription Agreement, AES Ironwood
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 of all
or substantially all 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 of the benefit of its creditors, (iv) commence a voluntary
case under the Bankruptcy Code, (v) file a petition seeking to take advantage of
any law relating to bankruptcy, insolvency, reorganization, winding-up or the
composition or readjustment of debts, (vi) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against such
Person in an involuntary case under the Bankruptcy Code or (vii) take any
corporate or other action for the purpose of effecting any of the foregoing; or
(h) A proceeding or case shall be commenced without the application or
consent of the Company or, so long as AES has any obligations under any
Acceptable Credit Support, AES or, so long as AES Ironwood has any outstanding
obligations under the Equity Subscription Agreement, AES Ironwood in any court
of competent jurisdiction, seeking (i) its liquidation, reorganization,
dissolution, winding-up, or the composition or readjustment of debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of such
Person under any law relating to bankruptcy, insolvency, reorganization,
winding-up or the composition or adjustment of debts, and such proceeding or
case shall continue undismissed, or any order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of ninety (90) or more consecutive days, or any order for
relief against such Person shall be entered in an involuntary case under the
Bankruptcy Code (each event described in subsection (g) and (h) of this Section
9.1 is hereinafter referred to as a "Bankruptcy Event"); or
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(i) A final and non-appealable judgment or judgments for the payment of
money in excess of $15,000,000 shall be rendered against the Company, and the
same remain unpaid or unstayed for a period of sixty (60) or more consecutive
days from the date of entry thereof; or
(j) An "Event of Default" has occurred and is continuing in respect of
any Indebtedness of the Company under the DSR LOC Reimbursement Agreement, the
CP LOC Reimbursement Agreement or any other Indebtedness of the Company the
holder of which (or an agent or trustee therefor) is a party to the Collateral
Agency Agreement (other than Indebtedness incurred pursuant to this Indenture),
or an "Event of Default" has occurred and is continuing in respect of any other
Indebtedness of the Company in excess of $15,000,000; or
(k) With respect to any Project Contract: (i) such Project Contract is
declared unenforceable by a Governmental Authority, (ii) any other party thereto
denies it has a material obligation under such Project Contract or (iii) any
other party thereto defaults in respect of its obligations under such Project
Contract, and in the case of each event described in clause (i), (ii) or (iii),
such event would be likely to result in a Material Adverse Effect; provided,
however, that none of such events shall be an Event of Default hereunder if
within one hundred eighty (180) days (ninety (90) days in respect of the Power
Purchase Agreement or the EPC Contract) from the occurrence of such event (A)
the other party resumes performance or enters into an alternative agreement with
the Company or (B) the Company enters into a replacement contract or contracts
with another party or parties which (1) contains, as certified by the Company,
substantially equivalent terms and conditions or, if such terms and conditions
are no longer available on a commercially reasonable basis, the terms and
conditions then available on a commercially reasonable basis and (2) either (I)
the Company provides to the Trustee and the Collateral Agent a Ratings
Reaffirmation from each Rating Agency or (II) the Company certifies that it
would, after giving effect to the alternative agreement, maintain a projected
minimum Senior Debt Service Coverage Ratio for each year during the remaining
term of the Bonds equal to or greater than the lesser of (x) the projected
minimum annual Senior Debt Service Coverage Ratio which would have been in
effect had performance under the original Project Contract continued and (y)
1.25 to 1.0 or (C) in the case of the Power Purchase Agreement, the Company
delivers to the Trustee and Collateral Agent a Power Marketing Plan and obtains
a Ratings Reaffirmation from each Ratings Agency; or
(l) Any grant of a Lien contained in the Security Documents shall cease
to be effective to grant a perfected Lien to the Trustee or the Collateral Agent
on a material portion of the Collateral described therein with the priority
purported to be created thereby; provided, however, that the Company shall have
ten (10) days from actual knowledge thereof to cure any such cessation; or
(m) The construction of the Facility is permanently abandoned; or
(n) AES Ironwood fails to perform or breaches any of its payment
obligations under the Equity Subscription Agreement and such failure or breach
continues for ten (10) Business Days or more; or
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(o) Any Acceptable Credit Provider fails to perform or breaches any of
its payment obligations under any Acceptable Credit Support and such failure or
breach continues for ten (10) Business Days or more.
SECTION 9.2 Enforcement of Remedies.
(a) If one or more Events of Default shall have occurred and be
continuing, then:
(i) in the case of a Bankruptcy Event, the entire principal
amount of the Outstanding Bonds, all interest accrued and unpaid
thereon, and all premium payable under the Bonds and this Indenture, if
any, shall automatically become due and payable without presentment,
demand, protest or notice of any kind, all of which are hereby waived;
or
(ii) in the case of any other Event of Default the Trustee may
and, upon written direction of the Bondholders of not less than 33 1/3%
of the aggregate principal amount of the Outstanding Bonds, the Trustee
shall, by notice to the Company, declare the entire principal amounts
of the Outstanding Bonds, all interest accrued and unpaid thereon, and
all premium payable under the Bonds and this Indenture, if any, to be
due and payable, whereupon the same shall become due and payable
without presentment, demand, protest or further notice of any kind, all
of which are hereby waived; or
(iii) the Trustee shall (if the Required Bondholders request
in writing to the Trustee) direct the Collateral Agent (to the extent
permitted under the Collateral Agency Agreement) to take possession of
all the Collateral and, pursuant to the Collateral Agency Agreement, to
sell the Collateral, as and to the extent permitted under the
Collateral Agency Agreement.
(b) If an Event of Default occurs and is continuing and is known to the
Trustee (as described in Section 10.3(h)), the Trustee shall mail to each
Bondholder a notice of the Event of Default within thirty (30) days after the
occurrence thereof. Except in the case of an Event of Default in payment of
principal of or interest on any Bond, the Trustee may withhold the notice to the
Bondholders if a committee of its trust officers in good faith determines that
withholding the notice is in the interest of Bondholders.
(c) At any time after the principal of the Bonds shall have become due
and payable upon a declared (but not an automatic) acceleration as provided
herein, and before any judgment or decree for the payment of the money so due,
or any portion thereof, shall be entered, the Bondholders of not less than a
majority in aggregate principal amount of the Outstanding Bonds, by written
notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if:
(i) there shall have been paid to or deposited with the
Trustee a sum sufficient to pay
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(A) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements, and advances of the Trustee, its agents and
counsel,
(B) all overdue installments of interest on the
Bonds,
(C) the principal of and premium, if any, on any
Bonds that have become due otherwise than by such declaration
of acceleration and interest thereon at the respective rates
provided in the Bonds for late payments of principal or
premium, and
(D) to the extent that payment of such interest is
lawful, interest upon overdue installments of interest at the
respective rates provided in the Bonds for late payments of
interest.
(ii) all Events of Default, other than the non-payment of the
principal of the Bonds that has become due solely by such acceleration,
have been cured or waived as provided in Section 9.7.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 9.3 Specific Remedies.
If any Event of Default shall have occurred and be continuing and an
acceleration shall have occurred pursuant to Section 9.2, subject to the
provisions of Sections 9.2, 9.5, 9.6, 9.15, 10.3 and 10.7, the Trustee may sell,
without recourse, for cash, or credit or for other property, for immediate or
future delivery, and for such price or prices and on such terms as the Trustee
in its discretion may determine, the collateral securing the Bonds referred to
in the Granting Clause (for the purposes of Article IX, Article X and Article
XII, the "Indenture Collateral") as an entirety, or in such portions as the
Bondholders of a majority in aggregate principal amount of the Bonds then
Outstanding shall request by an Act of Bondholders, or, in the absence of such
request, as the Trustee in its discretion shall deem expedient in the interest
of the Bondholders, at public or private sale.
SECTION 9.4 Judicial Proceedings Instituted by Trustee.
(a) Trustee May Bring Suit. If there shall exist an Event of Default,
then the Trustee, after receiving any indemnification or assurance of
indemnification for its costs pursuant to Sections 10.3(e) and 10.7, in its own
name, and as trustee of an express trust, subject to the provisions of Sections
2.14 and 9.2, shall be entitled and empowered to institute any suits, actions or
proceedings at law, in equity or otherwise, for the collection of the sums so
due and unpaid on the Bonds, and may prosecute any such claim or proceeding to
judgment or final decree, and may enforce any such judgment or final decree and
collect the funds adjudged or decreed to be payable in any manner provided by
law, whether before or after or during the pendency of any proceedings for the
enforcement of the Lien of this Indenture, or of any of the
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Trustee's rights or the rights of the Bondholders under this Indenture, and such
power of the Trustee shall not be affected by any sale hereunder or by the
exercise of any other right, power or remedy for the enforcement of the
provisions of this Indenture or for the foreclosure of the Lien hereof.
(b) Trustee Shall Recover Unpaid Indebtedness after Sale of Indenture
Collateral. Subject to Section 2.14, in the case of a sale of the Indenture
Collateral and of the application of the proceeds of such sale to the payment of
the indebtedness secured by this Indenture, the Trustee, after receiving any
indemnification or assurance of indemnification for its costs pursuant to
Sections 10.3(e) and 10.7, in its own name, and as trustee of an express trust,
shall be entitled and empowered, by any appropriate means, legal, equitable or
otherwise, to enforce payment of, and to receive all amounts then remaining due
and unpaid upon, all or any of the Bonds, for the benefit of the Bondholders
thereof, and upon any other portion of the indebtedness remaining unpaid, with
interest at the rates specified in the respective Bonds on the overdue principal
of and premium, if any, and (to the extent that payment of such interest is
legally enforceable) on the overdue installments of interest.
(c) Recovery of Judgment Does Not Affect Lien of this Indenture or
Other Rights. No recovery of any such judgment or final decree by the Trustee
and no levy of any execution under any such judgment upon any of the Indenture
Collateral, or upon any other property, shall in any manner or to any extent
affect the Lien of this Indenture upon any of the Indenture Collateral, or any
rights, powers or remedies of the Trustee, or any liens, rights, powers or
remedies of the Bondholders, but all such liens, rights, powers or remedies
shall continue unimpaired as before.
(d) Trustee Shall File Proofs of Claim, Appointment of Trustee as
Attorney-in-Fact in Judicial Proceedings. The Trustee in its own name, or as
trustee of an express trust, or as attorney-in-fact for the Bondholders, or in
any one or more of such capacities (irrespective of whether the principal of the
Bonds shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand for
the payment of overdue principal, premium, if any, or interest), shall be
entitled and empowered to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee and of the Bondholders (whether such claims be based upon the provisions
of the Bonds or of this Indenture) allowed in any equity, receivership,
insolvency, bankruptcy, liquidation, readjustment, reorganization or any other
judicial proceedings relating to the Company or any obligor on the Bonds, the
creditors of the Company or any such obligor, the Indenture Collateral or any
other property of the Company or any such obligor and any receiver, assignee,
trustee, liquidator, sequestrator (or other similar official) in any such
judicial proceeding is hereby authorized by each Bondholder to make such
payments to the Trustee and, if the Trustee shall consent to the making of such
payments directly to the Bondholders, to pay to the Trustee any amount due to it
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel. The Trustee is hereby irrevocably appointed
(and the successive respective Bondholders, by taking and holding the same,
shall be conclusively deemed to have so appointed the Trustee) the true and
lawful attorney-in-fact of the respective Bondholders, with authority to (i)
make and file in the
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respective names of the Bondholders (subject to deduction from any such claims
of the amounts of any claims filed by any of the Bondholders themselves), any
claim, proof of claim or amendment thereof, debt, proof of debt or amendment
thereof, petition or other document in any such proceedings and to receive
payment of any amounts distributable on account thereof, (ii) execute any such
other papers and documents and to do and perform any and all such acts and
things for and on behalf of such Bondholders, as may be necessary or advisable
in order to have the respective claims of the Trustee and of the Bondholders
against the Company or any such obligor, the Indenture Collateral or any other
property of the Company or any such obligor allowed in any such proceeding and
(iii) receive payment of or on account of such claims and debt; provided,
however, that nothing contained in this Indenture shall be deemed to give to the
Trustee any right to accept or consent to any plan or reorganization or
otherwise by action of any character in any such proceeding to waive or change
in any way any right of any Bondholder. Any funds collected by the Trustee under
this Section shall be applied as provided in Section 9.11.
(e) Trustee Need Not Have Possession of Bonds. All proofs of claim,
rights of action and rights to assert claims under this Indenture or under any
of the Bonds may be enforced by the Trustee without the possession of the Bonds
or the production thereof at any trial or other proceedings instituted by the
Trustee. In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the
Bondholders and it shall not be necessary to make any such Bondholders parties
to such proceedings.
(f) Suit to Be Brought for Ratable Benefit of Bondholders. Any suit,
action or other proceeding at law, in equity or otherwise which shall be
instituted by the Trustee under any of the provisions of this Indenture shall be
for the equal, ratable and common benefit of all the Bondholders, subject to the
provisions of this Indenture.
(g) Trustee May Be Restored to Former Position and Rights in Certain
Circumstances. In case the Trustee shall have instituted any proceeding to
enforce any right, power or remedy under this Indenture by foreclosure, entry or
otherwise, and such proceedings shall have been discontinued or abandoned for
any reason or shall have been determined adversely to the Trustee, then and in
every such case the Company and the Trustee shall be restored to their former
positions and rights hereunder, and all rights, powers and remedies of the
Trustee shall continue as if no such proceedings had been taken.
SECTION 9.5 Holders May Demand Enforcement of Rights by Trustee.
If an Event of Default shall have occurred and shall be continuing, the
Trustee shall, upon the written request of the Bondholders of a majority in
aggregate principal amount of the Bonds then Outstanding and upon the offering
of indemnity as provided in Section 10.3(e), but subject in all cases to the
provisions of Section 9.3, proceed to institute one or more suits, actions or
proceedings at law, in equity or otherwise, or take any other appropriate
remedy, to enforce payment of the principal of, or premium, if any, or interest
on, the Bonds or to foreclose the lien of this Indenture or to sell the
Indenture Collateral under a judgment or decree of a court or
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courts of competent jurisdiction or under the power of sale herein granted, or
take such other appropriate legal, equitable or other remedy, as the Trustee,
being advised by counsel, shall deem most effectual to protect and enforce any
of the rights or powers of the Trustee or the Bondholders, or, in case such
Bondholders shall have requested a specific method of enforcement permitted
hereunder, in the manner requested; provided, that such action shall not be
otherwise than in accordance with law and the provisions of this Indenture, and
the Trustee, subject to such indemnity provisions, shall have the right to
decline to follow any such request if the Trustee in good faith shall determine
that the suit, proceeding or exercise of the remedy so requested would involve
the Trustee in personal liability or expense.
SECTION 9.6 Control by Bondholders.
Subject to Sections 10.3(e) and 10.7, the Bondholders of not less than
a majority in aggregate principal amount of the Outstanding Bonds shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee; provided, that (i) such direction shall not be in conflict with any
Applicable Law or with this Indenture and (ii) the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent with such
direction.
SECTION 9.7 Waiver of Past Defaults.
The Bondholders of not less than a majority in aggregate principal
amount of the Outstanding Bonds may on behalf of the Bondholders of all Bonds
waive any past Default and its consequences except that only the Bondholders of
all Bonds affected thereby may waive a Default (i) in the payment of the
principal of or premium, if any, or interest on, or other amounts due under, any
Bond then Outstanding or (ii) in respect of a covenant or provision hereof that
under Article XII cannot be modified or amended without the consent of the
Bondholder of each Bond Outstanding affected. Upon any such waiver such Default
shall cease to exist and any Event of Default arising therefrom shall be deemed
to have been cured for every purpose of this Indenture, but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereon.
SECTION 9.8 Holder May Not Bring Suit Except Under Certain Conditions.
A Bondholder shall not have the right to institute any suit, action or
proceeding at law or in equity or otherwise for the foreclosure of the Lien of
this Indenture, for the appointment of a receiver or for the enforcement of any
other remedy under or upon this Indenture, unless:
(a) such Bondholder previously shall have given written notice to the
Trustee of a continuing Event of
Default;
(b) the Bondholders of at least 25% in aggregate principal amount of
the Outstanding Bonds shall have requested the Trustee in writing to institute
such action, suit or proceeding and shall have offered to the Trustee indemnity
as provided in Section 10.3(e);
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(c) the Trustee shall have refused or neglected to institute any such
action, suit or proceeding for 60 days after receipt of such notice, request and
offer of indemnity; and
(d) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Bondholders of a majority in
principal amount of Outstanding Bonds.
It is understood and intended that no one or more of the Bondholders
shall have any right in any manner whatever hereunder or under the Bonds to (i)
surrender, impair, waive, affect, disturb or prejudice the Lien of this
Indenture on any property subject thereto or the rights of the Bondholders of
any other Bonds, (ii) obtain or seek to obtain priority or preference over any
other such Bondholder or (iii) enforce any right under this Indenture, except in
the manner herein provided and for the equal, ratable and common benefit of all
the Bondholders subject to the provisions of this Indenture.
SECTION 9.9 Undertaking to Pay Court Costs.
All parties to this Indenture, and each Bondholder by his acceptance of
a Bond, shall be deemed to have agreed that any court may in its discretion
require, in any suit, action or proceeding for the enforcement of any right or
remedy under this Indenture, or in any suit, action or proceeding against the
Trustee for any action taken or omitted by it as Trustee hereunder, the filing
by any party litigant in such suit, action or proceeding of an undertaking to
pay the costs of such suit, action or proceeding, and that such court may, in
its discretion, assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, action or proceeding, having due regard
to the merits and good faith of the claims or defenses made by such party
litigant; provided, however, that the provisions of this Section 9.9 regarding
such agreement by the parties to this Indenture and each Bondholder shall not
apply to (a) any suit, action or proceeding instituted by the Trustee, (b) any
suit, action or proceeding instituted by any Bondholder or group of Bondholders
holding in the aggregate more than 10% in aggregate principal amount of the
Outstanding Bonds or (c) any suit, action or proceeding instituted by any
Bondholder for the enforcement of the payment of the principal of, or premium,
if any, or interest on, any of the Bonds, on or after the respective due dates
expressed therein.
SECTION 9.10 Right of Bondholders to Receive Payment Not to Be
Impaired.
Anything in this Indenture to the contrary notwithstanding, the right
of any Bondholder to receive payment of the principal of, and premium, if any,
and interest on, such Bond, on or after the respective due dates expressed in
such Bond (or, in case of redemption, on the Redemption Date fixed for such
Bond), or to institute suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Bondholder.
SECTION 9.11 Application of Funds Collected by Trustee.
Any money collected or to be applied by the Trustee pursuant to this
Article IX in respect of the Bonds of a series, together with any other funds
which may then be held by the Trustee
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under any of the provisions of this Indenture as security for the Bonds of such
series (other than funds at the time required to be held for the payment of
specific Bonds of such series at their Stated Maturities or at a time fixed for
the redemption thereof) shall be applied in the following order from time to
time, on the date or dates fixed by the Trustee and, in the case of a
distribution of such funds on account of principal, premium, if any, or
interest, upon presentation of the Outstanding Bonds of such series, and
stamping thereon of payment, if only partially paid, and upon surrender thereof,
if fully paid:
first, to the payment of all taxes, assessments or liens prior
to the Lien of the Security Documents, except those subject to which
any sale shall have been made, all reasonable costs and expenses of
collection, including the reasonable costs and expenses of handling the
Collateral and of any sale thereof pursuant to the provisions of the
Security Documents, and to the payment of all Trustee Claims;
second, in case the unpaid principal amount of the
indebtedness of the Company under any of the Outstanding Bonds shall
not have become due, to the payment of any interest in default, in the
order of the maturity of the payments thereof, with interest at the
rates specified in the respective Bonds of each series in respect of
overdue payments (to the extent that payment of such interest shall be
legally enforceable) on the payments of interest then overdue;
third, in case the unpaid principal amount of a portion of the
indebtedness of the Company under any of but not all the Outstanding
Bonds shall have become due, first to the payment of accrued interest
on such indebtedness under such Outstanding Bonds in the order of the
maturity of the payments thereof, with interest at the respective rates
specified in the Bonds of each series for overdue payments of
principal, premium, if any, and (to the extent that payment of such
interest shall be legally enforceable) interest then overdue, and next
to the payment of the unpaid principal amount of all Bonds then due;
and
fourth, in case the unpaid principal amount of all the
indebtedness of the Company under all the Outstanding Bonds shall have
become due, to the payment of the whole amount then due and unpaid upon
such indebtedness under the Outstanding Bonds for principal, premium,
if any, and interest, together with interest at the respective rates
specified in each series of the Bonds for overdue payments on
principal, premium, if any, and (to the extent that payment of such
interest shall be legally enforceable) interest then overdue;
provided, however, that all payments in respect of the Bonds of a series to be
made pursuant to clauses "second" through "fourth" of this Section 9.11 shall be
made ratably to the Bondholders of such series entitled thereto, without
discrimination or preference, based upon the ratio of the unpaid principal
amount of the Bonds of such series in respect of which such payments are to be
made held by each such Bondholder to the unpaid principal amount of all Bonds of
such series.
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SECTION 9.12 Bonds Held by Certain Persons Not to Share in
Distribution.
Any Bonds known to a Responsible Officer of the Trustee to be owned or
held by, or for the account or benefit of, the Company or an Affiliate thereof,
shall not be entitled to share in any payment or distribution provided for in
this Article IX until all Bonds held by other Persons have been indefeasibly
paid in full.
SECTION 9.13 Waiver of Appraisement, Valuation, Stay, Right to
Marshalling.
To the full extent it may lawfully do so, the Company, for itself and
for any other Person who may claim through or under it, hereby:
(a) agrees that neither it nor any such Person shall set up, plead,
claim or in any manner whatsoever take advantage of, any appraisal, valuation,
stay, extension or redemption laws, now or hereafter in force in any
jurisdiction which may delay, prevent or otherwise hinder (i) the performance or
enforcement or foreclosure of this Indenture, (ii) the sale of any of the
Indenture Collateral or (iii) the putting of the purchaser or purchasers thereof
into possession of such Indenture Collateral immediately after the sale thereof;
(b) waives all benefit or advantage of any such laws;
(c) consents and agrees that the Indenture Collateral may be sold by
the Trustee as an entirety or in parts; and
(d) waives and releases all rights to have the Indenture Collateral
marshaled upon any foreclosure, sale or other enforcement of this Indenture.
SECTION 9.14 Remedies Cumulative, Delay or Omission Not a Waiver.
Each and every right, power and remedy herein specifically given to the
Trustee shall be cumulative and shall be in addition to every other right, power
and remedy herein specifically given or now or hereafter existing at law, in
equity or by statute, and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by the Trustee
and the exercise or the beginning of the exercise of any right, power or remedy
shall not be construed to be a waiver of the right to exercise at the same time
or thereafter any other right, power or remedy, and no delay or omission by the
Trustee in the exercise of any right, power or remedy or in the pursuance of any
remedy shall impair any such right, power or remedy or be construed to be a
waiver of any default on the part of the Company or to be an acquiescence
therein.
SECTION 9.15 The Collateral Agency Agreement.
Simultaneously with the execution and delivery of this Indenture, the
Trustee shall enter into the Collateral Agency Agreement. Notwithstanding any
other provision of this Indenture (other than the provisions of Sections 9.10
and 12.2) to the contrary, all rights and remedies available to the Bondholders,
and all future holders of any of the Bonds, or the Trustee with
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respect to the Collateral, or otherwise pursuant to the Security Documents,
shall be subject to the Collateral Agency Agreement including, in all cases, the
ability to enforce any remedy and the limitations on the Trustee's ability to
vote the interests represented by the Outstanding Bonds. In respect of matters
voted on by the Senior Parties collectively, the Trustee shall vote all Bonds
according to the votes of a majority of Bondholders voting.
SECTION 9.16 Affiliate Cure Rights.
Any Affiliate of the Company, at its option, shall have the right (but
not the obligation) to cure any Events of Default for which cures are available.
ARTICLE X
THE TRUSTEE
SECTION 10.1 Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions
which by any provisions hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements
of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own grossly negligent action, its own grossly
negligent failure to act, or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect
of subsection (a) of this Section 10.1;
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(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer of the Trustee, unless it
shall be proved that the Trustee was grossly negligent in ascertaining
the pertinent facts;
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Bondholders of not less than a majority in
aggregate principal amount of the Outstanding Bonds relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture; and
(iv) no provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if in its sole discretion it
shall determine that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
(d) Whether or not herein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 10.1.
SECTION 10.2 Notice of Defaults.
In addition to its obligation to give notice to Bondholders as provided
in Section 1.6, as promptly as practicable after, and in any event within 90
days after, the occurrence of any Default hereunder, the Trustee shall transmit
by mail to all Bondholders, as their names and addresses appear in the Security
Register, notice of such Default hereunder known to the Trustee, unless such
Default shall have been cured or waived; provided, however, that, except in the
case of a Default in the payment of the principal of, or premium, if any, or
interest on any Bond, the Trustee shall be protected in withholding such notice
if and so long as the board of directors the executive committee or a trust
committee of directors and/or Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interests of the
Bondholders.
SECTION 10.3 Certain Rights of Trustee.
Except as otherwise provided in Section 10.1:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting in reliance upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or document believed by it to be genuine and to have been signed or
presented by the purported proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Company may be sufficiently evidenced by a Board Resolution of the
Company;
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(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate of the Company and/or, where required herein,
an opinion of counsel;
(d) the Trustee may consult with counsel and the advice of such counsel
or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Bondholders pursuant to this Indenture, unless such Bondholders shall
have offered to the Trustee adequate security or indemnity (as determined by the
Trustee in its reasonable discretion) against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company personally or by agent or attorney;
(g) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(h) The Trustee shall not be charged with knowledge of any Event of
Default unless either (i) a Responsible Officer of the Trustee shall have actual
knowledge of such Event of Default or (ii) written notice of such Event of
Default shall have been given to the Trustee by the Company or by any
Bondholder.
SECTION 10.4 Not Responsible for Recitals or Issuance of Bonds.
The recitals contained herein and in the Bonds, except the certificates
of authentication, shall not be taken as the statements of the Trustee, and the
Trustee assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture, the
Indenture Collateral or the Bonds, except that the Trustee hereby represents and
warrants that this Indenture has been executed and delivered by one of its
officers who is duly authorized to execute and deliver such document on its
behalf. The Trustee shall not be accountable for the use or application by the
Company of the Bonds or the proceeds thereof.
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SECTION 10.5 May Hold Bonds.
The Trustee, any Paying Agent, Security Registrar, any Authenticating
Agent or any Affiliate thereof, in its individual or any other capacity, may
become the owner or pledgee of Bonds and, subject to Sections 10.8 and 10.13,
may otherwise deal with the Company with the same rights it would have if it
were not Trustee, Paying Agent, Security Registrar, Authenticating Agent or such
other agent.
SECTION 10.6 Funds May Be Held by Trustee or Paying Agent; Investments.
(a) Subject to subsection (b) of this Section 10.6, any funds held by
the Trustee or the Paying Agent hereunder as part of the Indenture Collateral
may, until paid out by the Trustee or the Paying Agent as herein provided, be
carried by the Trustee or the Paying Agent on deposit with itself, and neither
the Trustee nor the Paying Agent shall have any liability for interest upon any
such funds.
(b) At any time and from time to time prior to the application by the
Trustee of any funds to the redemption of Bonds pursuant to Article VII, if at
the time no Event of Default has occurred and is continuing, the Trustee (i)
shall, on Company Request, invest and reinvest funds at the time on deposit with
the Trustee as part of the Indenture Collateral, together with any income and
gains from the investment and reinvestment thereof, in Permitted Investments as
specified in such Company Request and (ii) may, in the absence of a Company
Request, invest and reinvest any such funds in Permitted Investments of the sort
described in clause (i) of the definition thereof. Such Permitted Investments
shall be held by the Trustee until so sold in trust as part of the Indenture
Collateral. In the case of clause (i) above, the Trustee shall sell any
Permitted Investment at such prices, including accrued interest, as are set
forth in such Company Request and, in the case of clause (ii) above, the Trustee
may sell any Permitted Investments at such prices, including accrued interest,
as the Trustee shall in its sole discretion determine. The Trustee shall, on
Company Request, sell such Permitted Investments as may be specified therein,
and the Trustee shall, without Company Request, in the event funds are required
for payment of any amounts to be paid by the Trustee pursuant to Article VII in
respect of any series of Bonds and for any payment of the principal of, premium,
if any, or interest on any series of Bonds, sell such Permitted Investments as
are required to restore to cash as part of the Indenture Collateral such amounts
as are needed for any such payments. The Trustee shall not be responsible for
any losses on any investments or sales of Permitted Investments made pursuant to
the procedure specified in this subsection 10.6(b).
SECTION 10.7 Compensation, Reimbursement and Indemnification.
The Company agrees:
(a) to pay, or cause to be paid, to each of the Trustee and any
Authorized Agent from time to time reasonable compensation for all services
rendered by it hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
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(b) to reimburse, or cause to be reimbursed, each of the Trustee and
any Authorized Agent upon its request for all expenses, disbursements and
advances incurred or made by it in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable of its own gross negligence, willful
misconduct or bad faith; and
(c) to indemnify, or cause to be indemnified, each of the Trustee, any
predecessor Trustee and any Authorized Agent for, and to hold it harmless
against, any loss, liability or expense incurred without gross negligence,
willful misconduct or bad faith on its part, arising out of or in connection
with the acceptance or administration of this trust or the performance of its
duties hereunder, including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder.
As security for the performance of the obligations of the Company under
this Section 10.7, the Trustee shall have a lien prior to the Bonds upon all
property and funds held or collected by the Trustee as such, except funds held
in trust under Section 13.3.
SECTION 10.8 Disqualification; Conflicting Interests.
(a) If the Trustee has or shall acquire any conflicting interest, as
defined in this Section 10.8, then, within 90 days after ascertaining that it
has such conflicting interest, and if the default (for purposes of this Section
10.8, a default means a default in payment of principal which shall have
continued for thirty days or more and shall not have been cured) to which such
conflicting interest relates has not been cured or duly waived or otherwise
eliminated before the end of such 90 day period, it shall resign in the manner
and with the effect hereinafter specified in this Article X;
(b) If the Trustee shall fail to comply with the provisions of
subsection (a) of this Section 10.8, the Trustee shall, within 10 days after the
expiration of such 90-day period, transmit by mail to all Bondholders, as their
names and addresses appear in the Security Register, notice of such failure.
(c) For the purposes of this Section 10.8, the Trustee shall be deemed
to have a conflicting interest if the Bonds are in default and:
(i) the Trustee is trustee under another indenture under which
any other securities, or certificates of interest or participation in
any other securities, of any obligor on the Bonds are outstanding
unless (A) the Bonds are collateral trust notes under which the only
collateral consists of securities issued under such other indenture,
(B) such other indenture is a collateral trust indenture under which
the only collateral consists of Bonds issued under this Indenture or
(C) such obligor has no substantial unmortgaged assets and is engaged
primarily in the business of owning, or of owning and developing and/or
operating, real estate, and this Indenture and such other indenture are
secured by wholly separate and distinct parcels of real estate;
provided, that there shall be excluded from the operation of this
paragraph other series under this Indenture;
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(ii) the Trustee or any of its directors or executive officers
is an underwriter for an obligor on the Bonds;
(iii) the Trustee directly or indirectly controls, is directly
or indirectly controlled by or is under direct or indirect common
control with an underwriter for an obligor on the Bonds;
(iv) the Trustee or any of its directors or executive officers
is a director, officer, partner, employee, appointee or representative
of any obligor on the Bonds or of an underwriter (other than the
Trustee itself) for such obligor who is currently engaged in the
business of underwriting, except that (A) one individual may be a
director or an executive officer, or both, of the Trustee and a
director or an executive officer, or both, of an obligor on the Bonds
but may not be at the same time an executive officer of both the
Trustee and such obligor; (B) if and so long as the number of directors
of the Trustee in office is more than nine, one additional individual
may be director or an executive officer, or both, of the Trustee and a
director of an obligor on the Bonds; and (C) the Trustee may be
designated by an obligor on the Bonds or by any underwriter for such
obligor to act in the capacity of transfer agent, registrar, custodian,
paying agent, fiscal agent, escrow agent, or depositary, or in any
other similar capacity, or subject to the provisions of paragraph (i)
of this subsection, to act as trustee, whether under an indenture or
otherwise;
(v) 10% or more of the voting securities of the Trustee is
beneficially owned either by any obligor on the Bonds or by any
director, partner, or executive officer thereof, or 20% or more of such
voting securities is beneficially owned, collectively, by any two or
more of such persons; or 10% or more of the voting securities of the
Trustee is beneficially owned either by an underwriter for any obligor
on the Bonds or by any director, partner or executive officer thereof,
or is beneficially owned collectively by any two or more such persons;
(vi) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default, (A) 5% or
more of the voting securities, or 10% or more of any other class of
security, of any obligor on the Bonds not including the Bonds issued
under this Indenture and securities issued under any other indenture
under which the Trustee is also trustee, or (B) 10% or more of any
class of security of an underwriter for any obligor on the Bonds;
(vii) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default, 5% or more
of the voting securities of any person who, to the knowledge of the
Trustee, owns 10% or more of the voting securities of, or controls
directly or indirectly or is under direct or indirect common control
with, any obligor on the Bonds;
(viii) the Trustee is the beneficial owner of, or holds
collateral security for an obligation which is in default, 10% or more
of any class of security of any person who, to
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the knowledge of the Trustee, owns 50% or more of the voting securities
of any obligor on the Bonds;
(ix) the Trustee owns, on the date of default upon the Bonds
or any anniversary of such default while such default upon the Bonds
remains outstanding, in the capacity of executor, administrator,
testamentary or inter vivos trustee, guardian, committee or
conservator, or in any other similar capacity, an aggregate of 25% or
more of the voting securities, or of any class of security, of any
person, the beneficial ownership of a specified percentage of which
would have constituted a conflicting interest under paragraphs (vi),
(vii) or (viii) of this subsection. As to any such securities of which
the Trustee acquired ownership through becoming executor,
administrator, or testamentary trustee of an estate which included such
securities, the provisions of the immediately preceding sentence shall
not apply for a period of not more than two years from the date of such
acquisition to the extent that such securities included in such estate
do not exceed 25% of such voting securities or 25% of any such class of
security. Promptly after the dates of any such default upon the Bonds
and annually in each succeeding year that the Bonds remain in default,
the Trustee shall make a check of its holdings of such securities in
any of the above-mentioned capacities as of such dates. If any obligor
on the Bonds fails to make payment in full of the principal of, or the
premium, if any, or interest on, any of the Bonds when and as the same
becomes due and payable and such failure continues for 30 days
thereafter, the Trustee shall make a prompt check of its holdings of
such securities in any of the above-mentioned capacities as of the date
of the expiration of such 30-day period, and after such date,
notwithstanding the foregoing provisions of this paragraph, all such
securities so held by the Trustee, with sole or joint control over such
securities vested in it, shall be considered as though beneficially
owned by the Trustee for the purposes of paragraphs (vi), (vii) and
(viii) of this subsection; or
(x) except under the circumstances described in Section
10.13(b) (i), (iii), (iv), (v) or (vi), the Trustee shall be or shall
become a creditor of the obligor.
For the purposes of paragraph (i) of this subsection, the term "series
of securities" or "securities" means a series, class or group of Bonds issuable
under this Indenture pursuant to whose terms Bondholders of one such series may
vote to direct the Trustee, or otherwise take action pursuant to a vote of such
Bondholders, separately from Bondholders of another such series; provided, that
"series of securities" or "series" shall not include any series of Bonds
issuable under this Indenture if all such series rank equally and are wholly
unsecured.
The specification of percentages in paragraphs (v) to (ix) inclusive,
of this subsection, shall not be construed as indicating that the ownership of
such percentages of the securities of a person is or is not necessary or
sufficient to constitute direct or indirect control for the purposes of
paragraph (iii) or (vii) of this subsection.
For the purposes of paragraphs (vi), (vii), (viii) and (ix) of this
subsection only, (A) the terms "security" and "securities" shall include only
such securities as are generally known as corporate securities, but shall not
include any note or other evidence of indebtedness issued to
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evidence an obligation to repay funds loaned to a person by one or more banks,
trust companies or banking firms, or any certificate of interest or
participation in any such note or evidence of indebtedness, and (B) the Trustee
shall not be deemed to be the owner or Bondholder of (1) any security that it
holds as collateral security, as trustee or otherwise, for an obligation which
is not in default, or (2) any security which it holds as collateral security
under this Indenture, irrespective of any default hereunder, or (3) any security
that it holds as agent for collection, or as custodian, escrow agent, or
depositary, or in any similar representative capacity.
Except as provided in the next preceding paragraph, the word "security"
or "securities" as used in this Indenture means any note, stock, treasury stock,
bond, debenture, evidence of indebtedness, certificate of interest or
participation in any profit-sharing agreement, collateral trust certificate,
preorganization certificate or subscription, transferable share, investment
contract, voting trust certificate, certificate of deposit for security,
fractional undivided interest in oil, gas, or other mineral rights, any put,
call, straddle, option or privilege on any security, certificate of deposit, or
group or index of securities (including, any interest therein or based on the
value thereon) or any put, call, straddle, option or privilege entered into on a
national securities exchange relating to foreign currency, or, in general, any
interest or instrument commonly known as a "security," or any certificate or
interest or participation in, temporary or interim certificate for, receipt for,
guarantee of, or warrant or right to subscribe to purchase, any of the
foregoing.
(d) For the purposes of this Section only:
(i) The term "underwriter" when used with reference to any
obligor on the Bonds, means every person who, within one year prior to
the time as of which the determination is made, has purchased from such
obligor with a view to, or has offered or sold for such obligor in
connection with, the distribution of any security of such obligor
outstanding at such time, or has participated or has had a direct or
indirect participation in any such undertaking, or has participated or
has had a participation in the direct or indirect underwriting of any
such undertaking; but such term shall not include a person whose
interest was limited to a commission from an underwriter or dealer not
in excess of the usual and customary distributors' or sellers'
commission.
(ii) The term "director" means any director of a corporation,
or any individual performing similar functions with respect to any
organization whether incorporated or unincorporated.
(iii) The term "person" means an individual, a corporation, a
partnership, an association, a joint-stock company, a trust, an
unincorporated organization, or a government or political subdivision
thereof. As used in this paragraph, the term "trust" shall include only
a trust where the interest or interests of the beneficiary or
beneficiaries are evidenced by a security.
(iv) The term "voting security" means any security presently
entitling the owner or holder thereof to vote in the direction or
management of the affairs of a person, or any security issued under or
pursuant to any trust, agreement or arrangement whereby
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a trustee or trustees or agent or agents for the owner or holder of
such security are presently entitled to vote in the direction or
management of the affairs of a person.
(v) The term "obligor" means the Company and any other person
(including any guarantor) who is liable on the Bonds .
(vi) The term "executive officer" means the president, every
vice president, every trust officer, the cashier, the secretary, and
the treasurer of a corporation, and any individual customarily
performing similar functions with respect to any organization whether
incorporated or unincorporated, but shall not include the chairman of
the board of directors.
(e) The percentage of the voting securities and other securities
specified in this Section shall be calculated in accordance with the following
provisions:
(i) A specified percentage of the voting securities of the
Trustee, any obligor or any other person referred to in this Section
10.8 (each of whom is referred to as a "person" in this paragraph)
means such amount of the outstanding voting securities of such person
as entitles the holder or holders thereof to cast such specified
percentage of the aggregate votes which the holders of all the
outstanding voting securities of such person are entitled to cast in
the direction or management of the affairs of such person.
(ii) A specified percentage of a class of securities of a
person means such percentage of the aggregate amount of securities of
the class outstanding.
(iii) The term "amount," when used in regard to securities,
means the principal amount if relating to evidences of indebtedness,
the number of shares if relating to capital shares and the number of
units if relating to any other kind of security.
(iv) The term "outstanding" as used in this Section 10.8 means
issued and not held by or for the account of the issuer. The following
securities shall not be deemed outstanding within the meaning of this
definition:
(A) securities of an issuer held in a sinking fund
relating to securities of the issuer of the same class;
(B) securities of an issuer held in a sinking fund
relating to another class of securities of the issuer, if the
obligation evidenced by such other class of securities is not
in default as to principal or interest or otherwise;
(C) securities pledged by the issuer thereof as
security for an obligation of the issuer not in default as to
principal or interest or otherwise; and
(D) securities held in escrow if placed in escrow by
the issuer thereof;
provided, however, that any voting securities of an issuer shall be deemed
outstanding if any person other than the issuer is entitled to exercise the
voting rights thereof.
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(v) A security shall be deemed to be of the same class as
another security if both securities confer upon the holder or holders
substantially the same rights and privileges; provided, however, that
in the case of secured evidences of indebtedness, all of which are
issued under a single indenture, differences in the interest rates or
maturity dates of various series thereof shall not be deemed sufficient
to constitute such series different classes; and provided, further,
that, in the case of unsecured evidences of indebtedness, differences
in the interest rates or maturity dates thereof shall not be deemed
sufficient to constitute them securities of different classes, whether
or not they are issued under a single indenture.
SECTION 10.9 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder that shall be a
corporation or bank organized and doing business under the laws of the United
States or of any State thereof, authorized under such laws to exercise corporate
trust powers, having (or whose obligations are unconditionally guaranteed by a
corporation or bank having) a combined capital and surplus of at least
$250,000,000, and subject to supervision or examination by Federal or state
authority. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 10.9, the combined capital and
surplus of such corporation or bank shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. If
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 10.9, it shall resign immediately in the manner and
with the effect hereinafter specified in this Article X.
SECTION 10.10 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor Trustee under Section 10.11.
(b) The Trustee may resign at any time by giving written notice thereof
to the Company. If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Company and the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee, or
any Bondholder who has been a bona fide Bondholder for at least 6 months may,
subject to Section 10.9, on behalf of himself and all others similarly situated,
petition any such court for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Bondholders of
not less than a majority in principal amount of the Outstanding Bonds, delivered
to the Trustee and the Company.
(d) If at any time:
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(i) the Trustee shall fail to comply with Section 10.8(a)
after written request therefor by any Bondholder who has been a bona
fide Bondholder for at least six months, or
(ii) the Trustee shall cease to be eligible under Section 10.9
and shall fail to resign after written request therefor by any such
Bondholder or the Company, or
(iii) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, or
(iv) the Trustee shall fail to carry out its obligations under
this Indenture in a timely manner and the Company shall have petitioned
a court of competent jurisdiction to order the Trustee to carry out
such obligations.
then, in any such case, (i) the Company may remove the Trustee by Board
Resolution or (ii) subject to Section 9.9, any Bondholder who has been a bona
fide Bondholder for at least six (6) months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company shall promptly appoint by Board Resolution a successor Trustee. If no
successor Trustee shall have been so appointed by the Company or by the
Bondholders, and accepted appointment in the manner hereinafter provided, any
Bondholder who has been a bona fide Bondholder for at least six (6) months may,
subject to Section 9.9, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee by mailing written
notice of such event by first-class mail, postage prepaid, to the Bondholders as
their names and addresses appear in the Security Register. Each notice shall
include the name of the successor Trustee and the address of its Corporate Trust
Office.
SECTION 10.11 Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee but, on request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument prepared by the Company transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee, and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder, subject
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nevertheless to its lien, if any, provided for in Section 10.7. Such transfer
shall not effect or impair any indemnification rights of the retiring Trustee.
Upon request of any such successor Trustee, the Company shall execute any and
all instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article X.
SECTION 10.12 Merger, Conversion, Consolidation or Succession to
Business.
Any corporation or bank into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or bank
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation or bank succeeding to all or substantially
all of the corporate trust business of the Trustee, shall be the successor of
the Trustee hereunder, provided such corporation or bank shall be otherwise
qualified and eligible under this Article X, without the execution or filing of
any paper or any further act on the part of any of the parties hereto. In case
any Bonds shall have been authenticated, but not delivered, by the Trustee then
in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Bonds so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Bonds.
SECTION 10.13 Preferential Collection of Claims Against any Obligor.
(a) Subject to subsection (b) of this Section 10.13, if the Trustee
shall be or shall become a creditor, directly or indirectly, secured or
unsecured, of any obligor (as defined in subsection (c) of this Section) on the
Bonds within three months prior to a default (as defined in subsection (c) of
this Section) or subsequent to such a default, then, unless and until such
default shall be cured, the Trustee shall set apart and hold in a special
account for the benefit of the Trustee individually and the Bondholders:
(i) an amount equal to any and all reductions in the amount
due and owing upon any claim as such creditor in respect of principal
or interest, effected after the beginning of such three month period
and valid as against any obligor on the Bonds and its other creditors,
except any such reduction resulting from the receipt or disposition of
any property described in paragraph (ii) of this subsection, or from
the exercise of any right of set-off that the Trustee could have
exercised if a petition in bankruptcy had been filed by or against any
such obligor upon the date of such default; and
(ii) all property received by the Trustee in respect of any
claim as such creditor, either as security therefor, or in satisfaction
or composition thereof, or otherwise, after the beginning of such three
month period, or an amount equal to the proceeds of any such property,
if disposed of, subject, however, to the rights, if any, of any obligor
on the Bonds and its other creditors in such property or such proceeds.
Nothing herein contained, however, shall affect the right of the Trustee:
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(A) to retain for its own account (1) payments made on account
of any such claim by any Person (other than an obligor on the Bonds)
who is liable thereon, and (2) the proceeds of the bona fide sale of
any such claim by the Trustee to a third person, and (3) distributions
made in cash, securities or other property in respect of claims filed
against such obligor in bankruptcy or receivership or in proceedings
for reorganization pursuant to the Bankruptcy Code or applicable state
law;
(B) to realize, for its own account, upon any property held by
it as security for any such claim, if such property was so held prior
to the beginning of such three month period;
(C) to realize, for its own account, but only to the extent of
the claim hereinafter mentioned, upon any property held by it as
security for any such claim, if such claim was created after the
beginning of such three month period and such property was received as
security therefor simultaneously with the creation thereof, and if the
Trustee shall sustain the burden of proving that at the time such
property was so received the Trustee had no reasonable cause to believe
that a default (as defined in subsection (c) of this Section 10.13)
would occur within three months; or
(D) to receive payment on any claim referred to in clause (B)
or (C) above, against the release of any property held as security for
such claim as provided in clause (B) or (C), as the case may be, to the
extent of the fair value of such property.
For the purposes of clauses (B), (C) and (D) of the immediately
preceding paragraph, property substituted after the beginning of such three
month period for property held as security at the time of such substitution
shall, to the extent of the fair value of the property released, have the same
status as the property released, and, to the extent that any claim referred to
in any of such clauses is created in renewal of or in substitution for or for
the purpose of repaying or refunding any pre-existing claim of the Trustee as
such creditor, such claim shall have the same status as such pre-existing claim.
If the Trustee shall be required to account, the funds and property
held in such special account and the proceeds thereof shall be apportioned
between the Trustee and the Bondholders in such manner that the Trustee and the
Bondholders realize, as a result of payments from such special account and
payments of dividends on claims filed against the obligor on the Bonds in
bankruptcy or receivership or in proceedings for reorganization pursuant to the
Bankruptcy Code or applicable state law, the same percentage of their respective
claims, figured before crediting to the claim of the Trustee anything on account
of the receipt by it from such obligor of the funds and property in such special
account and before crediting to the respective claims of the Trustee and the
Bondholders dividends on claims filed against such obligor in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Bankruptcy
Code or applicable state law, but after crediting thereon receipts on account of
the indebtedness represented by their respective
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claims from all sources other than from such dividends and from the funds and
property so held in such special account. As used in this paragraph, with
respect to any claim, the term "dividends" shall include any distribution with
respect to such claim, in bankruptcy or receivership or proceedings for
reorganization pursuant to the Bankruptcy Code or applicable state law, whether
such distribution is made in cash, securities, or other property, but shall not
include any such distribution with respect to the secured portion, if any, of
such claim. The court in which such bankruptcy, receivership or proceedings for
reorganization is pending shall have jurisdiction (i) to apportion between the
Trustee and the Bondholders in accordance with the provisions of this paragraph,
the funds and property held in such special account and proceeds thereof, or
(ii) in lieu of such apportionment, in whole or in part, to give to the
provisions of this paragraph due consideration in determining the fairness of
the distributions to be made to the Trustee and the Bondholders with respect to
their respective claims, in which event it shall not be necessary to liquidate
or to appraise the value of any securities or other property held in such
special account or as security for any such claim, or to make a specific
allocation of such distributions as between the secured and unsecured portions
of such claims, or otherwise to apply the provisions of this paragraph as a
mathematical formula.
Any Trustee that has resigned or been removed after the beginning of
such three month period shall be subject to the provisions of this subsection as
though such resignation or removal had not occurred. If any Trustee has resigned
or been removed prior to the beginning of such three month period, it shall be
subject to the provisions of this subsection if and only if the following
conditions exist: (i) the receipt of property or reduction of claim, which would
have given rise to the obligation to account if such Trustee had continued as
Trustee, occurred after the beginning of such three month period; and (ii) such
receipt of property or reduction of claim occurred within three months after
such resignation or removal.
(b) There shall be excluded from the operation of subsection (a) of
this Section 10.13 a creditor relationship arising from:
(i) the ownership or acquisition of securities issued under
any indenture, or any security or securities having a maturity of one
year or more at the time of acquisition by the Trustee;
(ii) advances authorized by a receivership or bankruptcy court
of competent jurisdiction, or by this Indenture, for the purpose of
preserving the property that shall at any time be subject to the Lien
of this Indenture or of discharging tax liens or other prior liens or
encumbrances thereon, if notice of such advances and of the
circumstances surrounding the making thereof is given to the
Bondholders at the time and in the manner provided in this Indenture;
(iii) disbursements made in the ordinary course of business in
the capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depositary, or other similar
capacity;
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(iv) an indebtedness created as a result of services rendered
or premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction (as defined in subsection (c) of
this Section 10.13);
(v) the ownership of stock or of other securities of a
corporation organized under the provisions of Section 25(a) of the
Federal Reserve Act, as amended, that is directly or indirectly a
creditor of an obligor upon the securities; or
(vi) the acquisition, ownership, acceptance or negotiation of
any drafts, bills of exchange, acceptances or obligations which fall
within the classification of self-liquidating paper (as defined in
subsection (c) of this Section 10.13).
(c) For the purposes of this Section 10.13 only:
(i) The term "default" means any failure to make payment in
full of the principal of or interest on any of the Bonds when and as
such principal or interest becomes due and payable;
(ii) The term "cash transaction" means any transaction in
which full payment for goods or securities sold is made within seven
days after delivery of the goods or securities in currency or in checks
or other orders drawn upon banks or bankers and payable upon demand;
(iii) The term "self-liquidating paper" means any draft, bill
of exchange, acceptance or obligation which is made, drawn, negotiated
or incurred by any obligor on the Bonds for the purpose of financing
the purchase, processing, manufacturing, shipment, storage or sale of
goods, wares or merchandise and which is secured by documents
evidencing title to, possession of or a lien upon, the goods, wares or
merchandise or the receivables or proceeds arising from the sale of the
goods, wares or merchandise previously constituting the security,
provided the security is received by the Trustee simultaneously with
the creation of the creditor relationship with such obligor arising
from the making, drawing, negotiating or incurring of the draft, bill
of exchange, acceptance or obligation; and
(iv) The term "obligor" means the Company and any other person
(including any guarantor) who is liable on the Bonds.
SECTION 10.14 Maintenance of Offices and Agencies.
(a) There shall at all times be maintained, as shall be specified for
the Bonds of any series in the related Series Supplemental Indenture, an office
or agency where Bonds may be presented or surrendered for registration of
transfer or exchange and for payment of principal, premium, if any, and
interest, and where notices and demands to or upon the Trustee in respect of the
Bonds or this Indenture may be served. Such office or agency shall be initially
at the Corporate Trust Office. Written notice of the location of each of such
other office or agency and of any change of location thereof shall be given by
the Company to the Trustee and by the
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Trustee to the Bondholders in the manner specified in Section 1.6. If no such
office or agency shall be maintained or no such notice of location or of change
of location shall be given, presentations, surrenders and demands may be made
and notices may be served at the Corporate Trust Office.
(b) There shall at all times be a Security Registrar and a Paying Agent
("Paying Agent") hereunder. In addition, at any time when any Bonds remain
Outstanding, the Trustee may appoint an Authenticating Agent or Agents with
respect to the Bonds of one or more series which shall be authorized to act on
behalf of the Trustee to authenticate Bonds of such series issued upon original
issuance, exchange, registration of transfer or partial redemption thereof or
pursuant to Section 2.9, and Bonds so authenticated shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all purposes as
if authenticated by the Trustee hereunder (it being understood that wherever
reference is made in this Indenture to the authentication and delivery of Bonds
by the Trustee or the Trustee's certificate of authentication, such reference
shall be deemed to include authentication and delivery on behalf of the Trustee
by an Authenticating Agent and a certificate of authentication executed on
behalf of the Trustee by an Authenticating Agent). If an appointment of an
Authenticating Agent with respect to the Bonds of one or more series shall be
made pursuant to this Subsection 10.14(b), the Bonds of such series may have
endorsed thereon, in addition to the Trustee's certificate of authentication, an
alternate certificate of authentication in the following form:
This Bond is one of the Bonds referred to in the within-mentioned
Indenture.
[________________________________________]
as Trustee
By:______________________________________
Authenticating Agent
By:______________________________________
Authorized Signatory
Any Authorized Agent shall be a bank or trust company, shall be a
corporation or bank organized and doing business under the laws of the United
States or any State thereof, having a combined capital and surplus of at least
$50,000,000, and shall be authorized under such laws to exercise corporate trust
powers, subject to supervision by Federal or State authorities. If such
Authorized Agent publishes reports of its condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 10.14, the combined capital and
surplus of such Authorized Agent shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time an Authorized Agent shall cease to be eligible in accordance with the
provisions of this Section 10.14, such Authorized Agent shall resign immediately
in the manner and with the effect specified in this Section 10.14. The Trustee
at its office specified in the first paragraph of this Indenture, is hereby
appointed as Paying Agent and Security Registrar hereunder.
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(c) Any Paying Agent (other than the Trustee) from time to time
appointed hereunder shall execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section 10.14, that such Paying Agent will:
(i) hold all sums held by it for the payment of principal of,
and premium, if any, and interest on the Bonds in trust for the benefit
of the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(ii) give the Trustee within five days thereafter notice of
any default by any obligor upon the Bonds in the making of any such
payment of principal, premium, if any, or interest; and
(iii) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
Notwithstanding any other provision of this Indenture, any payment required to
be made to or received or held by the Trustee may, to the extent authorized by
written instructions of the Trustee, be made to or received or held by a Paying
Agent in the City of New York, County of New York, for the account of the
Trustee.
(d) Any corporation or bank into which any Authorized Agent may be
merged or converted or with which it may be consolidated, or any corporation or
bank resulting from any merger, consolidation or conversion to which any
Authorized Agent shall be a party, or any corporation or bank succeeding to the
corporate trust business of any Authorized Agent, shall be the successor of such
Authorized Agent hereunder, if such successor corporation or bank is otherwise
eligible under this Section 10.14, without the execution or filing of any paper
or any further act on the part of the parties hereto or such Authorized Agent or
such successor corporation or bank.
(e) Any Authorized Agent may at any time resign by giving written
notice of resignation to the Trustee and the Company. The Company may, and at
the request of the Trustee shall, at any time, terminate the agency of any
Authorized Agent by giving written notice of termination to such Authorized
Agent and to the Trustee. Upon the resignation or termination of an Authorized
Agent or in case at any time any such Authorized Agent shall cease to be
eligible under this Section 10.14 (when, in either case, no other Authorized
Agent performing the functions of such Authorized Agent shall have been
appointed), the Company shall promptly appoint one or more qualified successor
Authorized Agents approved by the Trustee to perform the functions of the
Authorized Agent which has resigned or whose agency has been terminated or who
shall have ceased to be eligible under this Section 10.14. The Company shall
give written notice of any such appointment to all Bondholders as their names
and addresses appear on the Security Register.
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SECTION 10.15 Co-Trustee or Separate Trustee.
(a) If at any time or times it shall be necessary or prudent in order
to conform to any law of any jurisdiction in which property shall be held
subject to the Lien of this Indenture, or the Trustee determines or shall be
advised by counsel satisfactory to it that it is so necessary or prudent in the
interest of the Bondholders or the Trustee, or the Bondholders of a majority in
principal amount of Outstanding Bonds shall in writing so request, the Trustee
and the Company shall execute and deliver all instruments and agreements
necessary or proper to constitute another bank or trust company or one or more
Persons approved by the Trustee either to act as co-trustee or co-trustees of
all or any part of the Indenture Collateral jointly with the Trustee originally
named herein or any successor or successors, or to act as separate trustee or
trustees of all or any such property. Any co-trustee or separate trustee so
appointed shall be entitled to all rights and benefits granted to the Trustee
under this Indenture, including without limitation, Sections 10.3 and 10.7. In
the event the Company shall have not joined in the execution of such instruments
and agreements within 10 days after the receipt of a written request from the
Trustee so to do, or in case an Event of Default with respect to the Bonds of a
series shall have occurred and be continuing, the Trustee may act under the
foregoing provisions of this Section 10.15 without the concurrence of the
Company; and the Company hereby appoints the Trustee as agent and attorney to
act under the foregoing provisions of this Section 10.15 in either of such
contingencies.
(b) Every additional trustee hereunder shall, to the extent permitted
by law, be appointed and act, and such additional trustee and its successors
shall act, subject to the following provisions and conditions, namely:
(i) the Bonds shall be authenticated and delivered, and all
powers, duties, obligations and rights conferred upon the Trustee in
respect of the custody, control and management of funds, papers or
securities, shall be exercised, solely by the Trustee (or, in the case
of authentication and delivery of Bonds, by any Authenticating Agent);
(ii) all rights, powers, duties and obligations conferred or
imposed upon the Trustee or the additional trustee or trustees shall be
conferred or imposed upon and exercised or performed by the Trustee or
the Trustee and such additional trustee or trustees jointly, except to
the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed, the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations shall be exercised and
performed by such additional trustee or trustees;
(iii) no power given hereby to, or which it is provided hereby
may be exercised by, any such additional trustee or trustees, shall be
exercised hereunder by such additional trustee or trustees, except
jointly with, or with the consent in writing of, the Trustee, anything
herein contained to the contrary notwithstanding;
(iv) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder; and
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(v) the Company and the Trustee, at any time, by an instrument
in writing, executed by them jointly, may remove any such additional
trustee, and in that case, by an instrument in writing executed by them
jointly, may appoint a successor or successors to such additional
trustee or trustees, as the case may be, anything herein contained to
the contrary notwithstanding. If the Company shall not have joined in
the execution of any such instrument within 10 days after the receipt
of a written request from the Trustee to do so, the Trustee shall have
the power to remove any such additional trustee and to appoint a
successor additional trustee without the concurrence of the Company,
the Company hereby appointing the Trustee its agent and attorney to act
for it in such connection in such contingency. If the Trustee alone
shall have appointed an additional trustee or trustees or co-trustee or
co-trustees as above provided, it may at any time, by an instrument in
writing, remove any such additional trustee or co-trustee, the
successor to any such trustee or co-trustee so removed to be appointed
by the Company and the Trustee, or by the Trustee alone, as
hereinbefore in this Section 10.15 provided.
SECTION 10.16 Taxes.
Any United States withholding taxes imposed with respect to payments
made to a Bondholder shall be the sole responsibility of such Bondholder and
therefore no Bondholder shall have the right to have any payment to it
"grossed-up" for, or paid free of, any such withholding taxes.
ARTICLE XI
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 11.1 Company to Furnish Trustee Names and Addresses of
Bondholders.
The Company shall furnish or cause to be furnished to the Trustee
quarterly, between March 15 and March 31, between April 15 and April 30, between
July 15 and July 31 and between October 15 and October 31, in each year, and at
such other times as the Trustee may request in writing, within 30 days after
receipt by the Company of any such request, a list, in such form as the Trustee
may reasonably require, of the names and addresses of the Bondholders, in each
case as of a date not more than 15 days prior to the time such list is
furnished; provided, however, that so long as the Trustee is the sole Security
Registrar or is otherwise furnished a copy of the Security Register, no such
list need be furnished.
SECTION 11.2 Preservation of Information; Communications to
Bondholders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Bondholders contained in the most recent
list furnished to the Trustee as provided in Section 11.1 and received by the
Trustee in its capacity as Security Registrar, if so acting. The Trustee may
destroy any list furnished to it upon receipt of a new list so furnished.
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(b) If three or more Bondholders (for the purposes of this Section
11.2, hereinafter referred to as the "applicants") apply in writing to the
Trustee, and furnish to the Trustee reasonable proof that each such applicant
has owned a Bond for a period of at least six months preceding the date of such
application, and such application states that the applicants desire to
communicate with other Bondholders with respect to their rights under this
Indenture or under the Bonds and is accompanied by a copy of the form of proxy
or other communication which such applicants propose to transmit, then the
Trustee shall, within five Business Days after the receipt of such application,
at its election, either:
(i) afford such applicants access to the information preserved
at the time by the Trustee in accordance with Section 11.2(a), or
(ii) inform such applicants as to the approximate number of
Bondholders whose names and addresses appear in the information
preserved at the time by the Trustee in accordance with Section
11.2(a), and as to the approximate cost of mailing to such Bondholders
the form of proxy or other communication, if any, specified in such
application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Bondholder whose name and address appears in the information
preserved at the time by the Trustee in accordance with Section 11.2(a), a copy
of the form of proxy or other communication that is specified in such request,
with reasonable promptness after a tender to the Trustee of the material to be
mailed and of payment, or provision for the payment, of the reasonable expenses
of mailing.
(c) Every Bondholder, by receiving and holding the same, agrees with
the Company and the Trustee that neither the Company nor the Trustee shall be
held accountable by reason of the disclosure of any such information as to the
names and addresses of the Bondholders in accordance with Section 11.2(b),
regardless of the source from which such information was derived.
ARTICLE XII
SUPPLEMENTAL INDENTURES
SECTION 12.1 Supplemental Indentures and Amendments to Financing
Documents Without Consent of Bondholders.
Without the consent of the Bondholders, the Company, and the Trustee,
at any time and from time to time, may enter into one or more indentures
supplemental hereto in form reasonably satisfactory to the Trustee and may amend
any of the other Financing Documents, for any of the following purposes:
(a) to establish the form and terms of Bonds of any series permitted by
Sections 2.1 and 2.3; or
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(b) to evidence the succession of another entity to the Company, and
the assumption by any such successor of the covenants of the Company herein and
in the Bonds contained; or
(c) to evidence the succession of a new Trustee hereunder or a
co-trustee or separate trustee pursuant to Section 10.15; or
(d) to add to the covenants of the Company, for the benefit of the
Bondholders, or to surrender any right or power herein conferred upon the
Company; or
(e) to convey, transfer and assign to the Trustee, and to subject to
the Lien of this Indenture, additional properties or assets, and to correct or
amplify the description of any property at any time subject to the Lien of this
Indenture or to assure, convey and confirm unto the Trustee any property subject
or required to be subject to the Lien of this Indenture; or
(f) to permit or facilitate the issuance of Bonds in uncertificated
form; or
(g) to change or eliminate any provision of this Indenture; provided,
however, that if such change or elimination would adversely affect the interests
of the holders of any Bonds of any series, such change or elimination shall
become effective with respect to such series only when no Bond of such series
remains Outstanding; or
(h) to comply with changes in Applicable Law; provided, however, that
no such amendment or supplement shall result in a Material Adverse Effect or
otherwise adversely affect the interests of the Holders of any Bonds of any
series in any material respect; or
(i) to make any changes required by S&P or Moody's or any other
nationally recognized securities rating agency as a condition to the issuance or
maintenance of the then current rating on the Bonds or any series thereof,
provided that any such change shall not result in a Material Adverse Effect or
otherwise adversely affect the interests of the Holders of any Bonds of any
series in any material respect; or
(j) to cure any ambiguity, to correct or supplement any provision
herein that may be defective or inconsistent with any other provision herein, or
to make any other provisions with respect to matters or questions arising under
this Indenture, provided such action shall not adversely affect the interest of
the Bondholders of any series in any material respect.
SECTION 12.2 Supplemental Indentures with Consent of Bondholders.
With the consent of the Bondholders of not less than a majority in
aggregate principal amount of the Bonds of all series then Outstanding,
considered as one class, by Act of such Bondholders delivered to the Company and
the Trustee and the Company may, and the Trustee, subject to Section 12.3 and
12.4, shall, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of, this Indenture; provided, however, that if there shall be
Bonds of more than one series Outstanding hereunder and if a proposed
supplemental indenture shall directly affect the rights of the Bondholders of
one or more, but less than all, of such series, then the consent only
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of the Bondholders of not less than a majority in aggregate principal amount of
the Outstanding Bonds of all series so directly affected, considered as one
class, shall be required; provided, further, that no such supplemental indenture
shall, without the consent of the Bondholder of each Outstanding Bond directly
affected thereby,
(a) change the Stated Maturity of any Bond (or, if the principal
thereof is payable in installments, the Stated Maturity of any such
installment), or of any payment of interest thereon, or the dates or
circumstances of payment of premium, if any, on, any Bond, or change the
principal amount thereof or the interest thereon or any premium payable upon the
redemption thereof, or change the place of payment where, or the coin or
currency in which, any Bond or the premium, if any, or the interest thereon is
payable, or impair the right to institute suit for the enforcement of any such
payment of principal or interest on or after the Stated Maturity thereof (or, in
the case of redemption, on or after the Redemption Date) or such payment of
premium, if any, on or after the date such premium becomes due and payable; or
(b) except for Permitted Liens, permit the creation of any lien prior
to or, pari passu with the Lien of any of the Security Documents with respect to
any of the Collateral, or terminate the Lien on any Collateral or deprive any
Bondholder of the security afforded by the Lien of this Indenture; or
(c) reduce the percentage in principal amount of the Outstanding Bonds,
the consent of whose Bondholders is required for any such supplemental
indenture, or the consent of whose Bondholders is required for any waiver (of
compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this Indenture, or reduce the
requirements of Section 14.4 for quorum or voting; or
(d) modify any of the provisions of Section 9.2 or Section 9.7 (except
to increase the percentage of the principal amount of the Outstanding Bonds
required to waive past defaults) or of this Section 12.2 (except to provide that
certain other provisions of this Indenture cannot be modified or waived without
the consent of the Bondholder of each Bond affected thereby).
A supplemental indenture that changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely for
the benefit of one or more particular series of Bonds, or which modifies the
rights of the Bondholders of such series with respect to such covenant or other
provision, shall be deemed not to affect the rights under this Indenture of the
Bondholders of any other series.
Upon receipt by the Trustee of Board Resolutions of the Company and
such other documentation as the Trustee may reasonably require and upon the
filing with the Trustee of evidence of the Act of such Bondholders, the Trustee
shall join in the execution of such supplemental indenture or other instrument,
as the case may be, subject to the provisions of Sections 12.3 and 12.4.
It shall not be necessary for any Act of Bondholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
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SECTION 12.3 Documents Affecting Immunity or Indemnity.
If in the opinion of the Company or the Trustee any document required
to be executed by it pursuant to the terms of Section 12.2 affects any interest,
right, duty, immunity or indemnity in favor of the Company or the Trustee under
this Indenture, the Company or the Trustee, as the case may be, may in its
discretion decline to execute such document.
SECTION 12.4 Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any Series
Supplemental Indenture or other supplemental indenture permitted by this Article
XII or the modifications thereby of the trusts created by this Indenture, the
Trustee shall be entitled to receive, and (subject to Section 10.1) shall be
fully protected in relying upon, an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture.
SECTION 12.5 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article
XII, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Bondholder theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 12.6 Reference in Bonds to Supplemental Indentures.
Bonds authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article XII may, and shall if required
by the Company, bear a notation in form approved by the Company and the Trustee
as to any matter provided for in such supplemental indenture; and, in such case,
suitable notation may be made upon Outstanding Bonds after proper presentation
and demand. If the Company shall so determine, new Bonds so modified as to
conform, in the opinion of the Company and the Trustee, to any such supplemental
indenture may be prepared and executed by the Company and authenticated and
delivered by the trustee in exchange for Outstanding Bonds.
ARTICLE XIII
SATISFACTION AND DISCHARGE
SECTION 13.1 Satisfaction and Discharge of Bonds.
Except as otherwise provided with respect to the Bonds of any series in
the Series Supplemental Indenture relating thereto, the Bonds of such series
shall, prior to the Stated Maturity thereof (or, if principal is payable in
installments, the Stated Maturity of the final installment of principal
thereof), be deemed to have been paid for all purposes of this Indenture, and
the entire indebtedness of the Company in respect thereof shall be deemed to
have been satisfied and discharged, upon satisfaction of the following
conditions:
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(a) the Company shall have irrevocably deposited with the Trustee, in
trust, money or Permitted Investments in an amount which shall be sufficient to
pay, without requiring reinvestment by the Trustee, when due the principal of
and premium, if any, and interest due and to become due on the Bonds of such
series on and prior to the Stated Maturity of principal thereof (or, if
principal is payable in installments, the Stated Maturity of the final
installment of principal thereof) or upon redemption or prepayment;
(b) if any such deposit of money or Permitted Investments shall have
been made prior to the Stated Maturity (or, if principal is payable in
installments, the Stated Maturity of the final installment of principal) or
Redemption Date or Prepayment Date of such Bonds, the Company shall have
delivered to the Trustee a Company Order each stating that such money shall be
held by the Trustee, in trust, as provided in Section 13.3;
(c) in the case of redemption or prepayment of Bonds, the notice
requisite to the validity of such redemption or prepayment shall have been
given, or irrevocable authority shall have been given by the Company to the
Trustee to give such notice, under arrangements satisfactory to the Trustee; and
(d) there shall have been delivered to the Trustee an Opinion of
Counsel to the effect that as a result of a change in Applicable Law after the
date of this Indenture such satisfaction and discharge of the indebtedness of
the Company with respect to the Bonds of such series shall not be deemed to be,
or result in, a taxable event with respect to Bondholders of such series for
purposes of United States Federal income taxation unless the Trustee shall have
received documentary evidence that each Bondholder of such series either is not
subject to, or is exempt from, United States Federal income taxation.
Upon satisfaction of the aforesaid conditions with respect to the Bonds
of any series, the Trustee shall, upon receipt of a Company Request, acknowledge
in writing that the Bonds of such series are deemed to have been paid for all
purposes of this Indenture and that the entire indebtedness of the Company in
respect thereof is deemed to have been satisfied and discharged.
If Bonds which shall be deemed to have been paid as provided in this
Section 13.1 do not mature and are not to be redeemed within the 60 day period
commencing on the date of the deposit with the Trustee of funds, the Company
shall, as promptly as practicable, give a notice, in the same manner as a notice
of redemption with respect to such Bonds, to the Bondholders to the effect that
such Bonds are deemed to have been paid and the circumstances thereof.
Notwithstanding the satisfaction and discharge of any Bonds as
aforesaid, the rights and obligations of the Company and the Trustee in respect
of such Bonds under Sections 2.7, 2.8, 2.9, 6.3, 10.3(e) and 10.7 and this
Article XIII shall survive.
SECTION 13.2 Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as hereinafter expressly provided), and the Trustee, at the expense of
the Company, shall execute
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proper instruments prepared by the Company acknowledging satisfaction and
discharge of this Indenture, when:
(a) either
(i) all Bonds theretofore authenticated and delivered (other
than (A) Bonds which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 2.9 and (B) Bonds deemed
to have been paid in accordance with Section 13.1) have been delivered
to the Trustee for cancellation; or
(ii) all Bonds not theretofore delivered to the Trustee for
cancellation shall be deemed to have been paid in accordance with
Section 13.1;
(b) all other sums due and payable hereunder have been paid; and
(c) the Company has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
Upon satisfaction of the aforesaid conditions, the Trustee shall, upon
receipt of a Company Request, acknowledge in writing the satisfaction and
discharge of this Indenture.
Notwithstanding the satisfaction and discharge of this Indenture as
aforesaid, the rights and obligations of the Company and the Trustee under
Sections 2.7, 2.8, 2.9, 6.3, 10.3(e), 10.7, 15.1 and this Article XIII shall
survive.
Upon satisfaction and discharge of this Indenture as provided in this
Section 13.2, the Trustee shall assign, transfer and turn over to or upon the
order of the Company any and all money, securities and other property then held
by the Trustee for the benefit of the Bondholders other than money deposited
with the Trustee pursuant to Section 13.1(a) and interest and other amounts
earned or received thereon.
SECTION 13.3 Application of Trust Money.
The money deposited with the Trustee pursuant to Section 13.1 shall not
be withdrawn or used for any purpose other than, and shall be held in trust for,
the payment of the principal of and premium, if any, and interest on the Bonds
or portions of principal amount thereof in respect of which such deposit was
made, all subject, however, to the provisions of Section 6.1.
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ARTICLE XIV
MEETINGS OF BONDHOLDERS; ACTION WITHOUT MEETING
SECTION 14.1 Purposes for Which Meetings May Be Called.
A meeting of Bondholders of one or more, or all, series, may be called
at any time and from time to time pursuant to this Article XIV to make, give or
take any request, demand, authorization, direction, notice, consent, waiver or
other action provided by this Indenture to be made, given or taken by
Bondholders of such series.
SECTION 14.2 Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Bondholders of one or
more, or all, series of Bonds for any purposes specified in Section 14.1, to be
held at such time and at such place in the City of New York, County of New York,
or at such other place, as the Trustee shall determine. Notice of every such
meeting, setting forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting, shall be given, in the
manner provided in Section 1.6, not less than 14 nor more than 60 days prior to
the date fixed for the meeting.
(b) If the Trustee shall have been requested to call a meeting of the
Bondholders of one or more, or all, series, by the Company or by the Bondholders
of 10% in aggregate principal amount of the Outstanding Bonds of such series
(or, in the case of a meeting of the Bondholders of the Bonds of all series, 10%
in aggregate principal amount of the Outstanding Bonds of all series, considered
as one class), by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have made the
first mailing of the notice of such meeting within 21 days after receipt of such
request or shall not thereafter proceed to cause the meeting to be held as
provided herein, then the Company or such Bondholders, as the case may be, may
determine the time and the place in the City of New York, County of New York, or
in such other place as the Company or such Bondholders, as the case may be,
shall determine, for such meeting and may call such meeting for such purposes by
giving notice thereof as provided in subsection (a) of this Section 14.2.
(c) Any meeting of Bondholders or one or more, or all, series shall be
valid without notice if the Bondholders of all Outstanding Bonds of such series
are present in person or by proxy and the Trustee are present, or if notice is
waived in writing before or after the meeting by the Bondholders of all
Outstanding Bonds of such series, or by such of them as are not present at the
meeting in person or by proxy.
SECTION 14.3 Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Bondholders of one or more, or
all, series, a Person shall be (a) a Bondholder of one or more Outstanding Bonds
of such series or (b) a Person appointed by an instrument in writing as proxy
for a Bondholder or Bondholders of one or more
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Outstanding Bonds of such series by such Bondholder or Bondholders. The only
Persons who shall be entitled to attend any meeting shall be the Bondholders
described above and any proxies of such Bondholders and their respective
counsel, any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
SECTION 14.4 Quorum; Action.
The Persons entitled to vote a majority in aggregate principal amount
of the Outstanding Bonds of the series with respect to which a meeting shall
have been called as hereinbefore provided, considered as one class, shall
constitute a quorum for a meeting of Bondholders of such series; provided,
however, that if any action is to be taken at such meeting which this Indenture
expressly provides may be taken by the Bondholders of a specified percentage
that is less than a majority in principal amount of the Outstanding Bonds of
such series, considered as one class, the Persons entitled to vote such
specified percentage in principal amount of the Outstanding Bonds of such
series, considered as one class, shall constitute a quorum. In the absence of a
quorum, the meeting may be adjourned for a period of not less than ten days as
determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than ten
days as determined by the chairman of the meeting prior to the adjournment of
such adjourned meeting. Except as provided in Section 14.5(e), notice of the
reconvening of any adjourned meeting shall be given as provided in Section
14.2(a), except that such notice need be given only once not less than five days
prior to the date on which the meeting is scheduled to be reconvened. Notice of
the reconvening of an adjourned meeting shall state expressly the percentage, as
provided above, of the principal amount of the Outstanding Bonds of such series
which shall constitute a quorum.
Except as limited by Section 12.2, any resolution presented to a
meeting or adjourned meeting duly reconvened at which a quorum is present as
aforesaid may be adopted by the affirmative vote of the Bondholders of a
majority in aggregate principal amount of the Outstanding Bonds of the series
with respect to which such meeting shall have been called, considered as one
class; provided, however, that, except as so limited, any resolution with
respect to any action that this Indenture expressly provides may be taken by the
Bondholders of a specified percentage that is less than a majority in principal
amount of the Outstanding Bonds of such series, considered as one class, may be
adopted at a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid by the affirmative vote of the Bondholders of
such specified percentage in principal amount of the Outstanding Bonds of such
series, considered as one class.
Any resolution passed or decision taken at any meeting of Bondholders
duly held in accordance with this Section 14.4 shall be binding on all the
Bondholders of the series with respect to which such meeting shall have been
held, whether or not present or represented at the meeting.
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SECTION 14.5 Attendance at Meetings; Determination of Voting Rights;
Conduct of Adjournment of Meetings.
(a) Attendance at meetings of Bondholders may be in person or by proxy,
and, to the extent permitted by law, any such proxy shall remain in effect and
be binding upon any future Bondholder with respect to which it was given, unless
and until specifically revoked by the Bondholder or future Bondholder of such
Bonds before being voted.
(b) Notwithstanding any other provision of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting of
Bondholders in regard to proof of the holding of such Bonds and of the
appointment of proxies and in regard to the appointment and duties of inspectors
of votes, the submission and examination of proxies, certificates and other
evidence of the right to vote, and such other matters concerning the conduct of
the meeting as it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the holding of Bonds shall be proved in the
manner specified in Section 1.4 and the appointment of any proxy shall be proved
in the manner specified in Section 1.4. Such regulations may provide that
written instruments appointing proxies, regular on their face, may be presumed
valid and genuine without the proof specified in Section 1.4 or other proof.
(c) The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Bondholders as provided in Section 14.2(b), in which case the
Company or the Bondholders of the series calling the meeting, as the case may
be, shall in like manner appoint a temporary chairman. A permanent chairman and
a permanent secretary of the meeting shall be elected by vote of the Persons
entitled to vote a majority in aggregate principal amount of the Outstanding
Bonds of all series represented at the meeting, considered as one class.
(d) At any meeting each Bondholder of an Outstanding Bond of any series
or his proxy shall be entitled to one vote for each $1,000 original principal
amount of Bonds of such series held or represented by him, and each Bondholder
of any such Bond or his proxy shall be entitled to divide the votes carried by
such Bond, casting some for and some against a particular action, as he sees
fit; provided, however, that no vote shall be cast or counted at any meeting in
respect of any Bond challenged as not Outstanding and ruled by the chairman of
the meeting to be not Outstanding. The chairman of the meeting shall have no
right to vote, except as a Bondholder of a Bond or proxy.
(e) Any meeting duly called pursuant to Section 14.2 at which a quorum
is present may be adjourned from time to time by Persons entitled to vote a
majority in aggregate principal amount of the Outstanding Bonds of all series
represented at the meeting, considered as one class; and the meeting may be held
as so adjourned without further notice.
SECTION 14.6 Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Bondholders
shall be by written ballots on which shall be subscribed the signatures of the
Bondholders of Outstanding Bonds or of their representatives by proxy and the
principal amounts and serial numbers of the
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Outstanding Bonds, of the series with respect to which the meeting shall have
been called, held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in quadruplicate of all
votes cast at the meeting. A record, at least in quadruplicate, of the
proceedings of each meeting of Bondholders shall be prepared by the secretary of
the meeting and there shall be attached to such record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that such notice was given as provided in
Section 14.2 and, if applicable, Section 14.4. Each copy shall be signed and
verified by the affidavits of the permanent chairman and secretary of the
meeting and one such copy shall be delivered to the Company and another to the
Trustee to be preserved by the Trustee, the latter to have attached thereto the
ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
SECTION 14.7 Action Without Meeting.
In lieu of the vote of Bondholders at a meeting as hereinbefore
contemplated in this Article XIV, any request, demand, authorization, direction,
notice, consent, waiver or other action may be made, given or taken by
Bondholders by written instruments as provided in Section 1.4.
ARTICLE XV
NONRECOURSE LIABILITY
SECTION 15.1 Nonrecourse Liability.
Satisfaction of the obligations of the Company under this Indenture,
for the payment of the principal of or premium, if any, or interest on any
Bonds, or any part thereof, or for any claim based thereon or otherwise in
respect thereof or related thereto, shall be had solely from the Collateral and
the assets of the Company and no recourse shall be had in the event of any
non-performance by the Company of any such obligations to (i) any assets or
properties of the Members (or any Person that controls any Member within the
meaning of Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act) or (ii) any Affiliate of the Company or any incorporators,
officers, directors or employees thereof, and no judgment for any deficiency
upon the obligations of the Company under this Indenture, for the payment of the
principal of or premium, if any, or interest on any Bonds, or any part thereof,
or for any claim based thereon or otherwise in respect thereof or related
thereto, shall be obtainable by the Bondholders or the Trustee against any
Member or Affiliate of the Company or any other incorporator, stockholder,
officer, employee or director, past, present or future of the Company or any
Affiliate of the Company; provided, however, that nothing contained herein shall
prevent the taking of any action permitted by law against the Company or any of
its Affiliates, or in any way affect or impair the rights of the Trustee or
Bondholders to take any action permitted by law,
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in either case to realize upon the Collateral and; provided, further, that
nothing herein shall be deemed to affect the obligations of any Affiliate of the
Company under any Transaction Document to which such Affiliate is a party.
ARTICLE XVI
DEPOSITARY BANK
SECTION 16.1 Depositary Bank.
The Trustee hereby designates and appoints IBJ Whitehall Bank & Trust
Company to act as the Depositary Bank under this Agreement, and the Depositary
Bank hereby agrees to act, as "securities intermediary" (within the meaning of
Section 8-102(a)(14) of the UCC) with respect to the Indenture Accounts. The
Company hereby acknowledges that the Depositary Bank shall act as securities
intermediary with respect to the Indenture Accounts and pursuant to this
Agreement. The Depositary Bank shall not have any duties or responsibilities
except those expressly set forth in this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Parties have executed this Indenture by their
duly authorized signatories as of the date first above written.
AES IRONWOOD, L.L.C.
By: /s/ Patricia L. Rollin
---------------------------------
Name: PATRICIA L. ROLLIN
Title: VICE PRESIDENT
IBJ WHITEHALL BANK & TRUST COMPANY,
as Trustee
By: /s/ Thomas McCutcheon
---------------------------------
Name: THOMAS MCCUTCHEON
Title: ASSISTANT VICE PRESIDENT
IBJ WHITEHALL BANK & TRUST COMPANY,
as Depository Bank
By: /s/ Thomas McCutcheon
--------------------------------
Name: THOMAS MCCUTCHEON
Title: ASSISTANT VICE PRESIDENT
<PAGE>
SCHEDULE 3.4
GOVERNMENTAL APPROVALS
Part 1:
<TABLE>
<CAPTION>
====================================================================================================================
Applicable Permits and Approvals
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Agency Applicable Permits Status
- ----------------------------------- -------------------------------------- -----------------------------------------
Federal Energy Regulatory Exempt Wholesale Generator Issued March 29, 1999
Commission Certification
- ----------------------------------- -------------------------------------- -----------------------------------------
PaDEP PSD/State Air Permit
Final- March 29, 1999
- ----------------------------------- -------------------------------------- -----------------------------------------
U.S. Dept. of Energy, Office of Fuel Use Act Certification Approved
Fossil Energy
- ----------------------------------- -------------------------------------- -----------------------------------------
PaDOT Roadway Access Permits from Prescott Approved
Road to site
- ----------------------------------- -------------------------------------- -----------------------------------------
PaDEP NPDES, PAG-2 Approved
- ----------------------------------- -------------------------------------- -----------------------------------------
PaDEP NPDES General Permits #4, #4 #5 #7 Approved
- ----------------------------------- -------------------------------------- -----------------------------------------
PaDEP NPDES Part 1 Construction Approved
- ----------------------------------- -------------------------------------- -----------------------------------------
Delaware River Basin Commission Water Use Approval as per Section Approved
3.8 of DRDC regulations
- ----------------------------------- -------------------------------------- -----------------------------------------
Susquehanna River Basin Commission Water Use Approval Approved
- ----------------------------------- -------------------------------------- -----------------------------------------
Lebanon County Conservation Soil Erosion and Sediment Control Approved
District Approval
- ----------------------------------- -------------------------------------- -----------------------------------------
Lebanon Zoning Hearing Board Stack Height Variance Approval for Approved
Power Plant
- ----------------------------------- -------------------------------------- -----------------------------------------
South Lebanon Board of Land Development Approval for Power Approved
Supervisors Plant
- ----------------------------------- -------------------------------------- -----------------------------------------
South Lebanon Board of Subdivision Approval for Access Road Approved
Supervisors
- ----------------------------------- -------------------------------------- -----------------------------------------
City of Lebanon Authority Agreement for Supply of treated Approved
effluent and construction, operation
and maintenance of pipeline
- ----------------------------------- -------------------------------------- -----------------------------------------
Federal Aviation Administration Notice of Alteration or Proposed Approved
Construction for AES Ironwood
Facility Stack
====================================================================================================================
</TABLE>
Schedule 3.4 - 1
<PAGE>
Part 2:
<TABLE>
<CAPTION>
====================================================================================================================
Applicable Permits and Approvals
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Agency Applicable Permits Status
- ----------------------------------- -------------------------------------- -----------------------------------------
Pa Dept of Labor and Industry Onsite Oil Storage Tank Part of
(1) Permission to construct SWPC Construction Permit
(2) Permit for construction
- ----------------------------------- -------------------------------------- -----------------------------------------
Conrail/Norfolk Southern Railroad Crossing Approval and Approval Agreements Pending
Railspur Construction
- ----------------------------------- -------------------------------------- -----------------------------------------
South Lebanon Township/Lebanon Onsite septic approval for sanitary Conceptually Approved
County discharge
- ----------------------------------- -------------------------------------- -----------------------------------------
Lebanon County Building Permit To be acquired prior to construction
Planning Department
- ----------------------------------- -------------------------------------- -----------------------------------------
</TABLE>
Schedule 3.4 - 2
<PAGE>
SCHEDULE 6.2
INSURANCE POLICIES
I. GENERAL CONDITIONS:
(a) If at any time any of the required insurance shall no longer be
available on commercially reasonable terms (as confirmed by the Independent
Insurance Advisor), the Company shall procure substitute insurance coverage
reasonably satisfactory to the Independent Insurance Advisor that is the most
equivalent to the required coverage and that is available on commercially
reasonable terms.
(b) All policies shall waive the rights of subrogation against the
Collateral Agent.
(c) All policies, except workers' compensation policies and automobile
liability policies, shall name the Collateral Agent and the Power Purchaser as
additional insureds. All policies protecting real and personal property or loss
of income shall include a Lenders' Loss Payable provision, pursuant to a form
agreed to by the Company and the Independent Insurance Advisor, for the benefit
of the Collateral Agent.
(d) All policies covering real and personal property and business
interruption shall be endorsed to provide a minimum of 45 days' notice of
cancellation, nonrenewal, or material change (restricting coverage) to the
Collateral Agent.
(e) All policies shall stipulate by endorsement or equivalent policy
language that the additional insured status of the Collateral Agent or the Power
Purchaser places no responsibility on the Collateral Agent or the Power
Purchaser for the payment of policy premiums, nor does the action or failure to
take action by any other insured or additional insured invalidate coverages
under Sections II(a) or (b) or Sections III(a) or (b) for the Collateral Agent
or the Power Purchaser under said policies.
(f) A severability of interest clause or equivalent cross liability
endorsement shall be included in each policy.
(g) All policies shall be primary as respects coverage provided for the
Project.
(h) All policies shall be provided through insurance carriers rated
"A-," "IX" or better by the Best's Insurance Guide and Key Rating Guides or
other insurance companies reasonably acceptable to the Collateral Agent, in each
case, which are authorized to do business in the Commonwealth of Pennsylvania.
(i) Any policy under Section II(a) or (b) or Section III(a) or (b)
shall stipulate by endorsement or equivalent policy language that following a
Trigger Event (as defined in the Collateral Agency Agreement) and the exercise
of remedies under the Security Documents, the Collateral Agent shall have the
right to participate in the adjustment of all claims made under said policies.
6.2-1
<PAGE>
(j) Any policy under Section II(a) or (b) or Section III(a) or (b)
shall stipulate by endorsement or equivalent policy language that following a
Trigger Event (as defined in the Collateral Agency Agreement) and the exercise
of remedies under the Security Documents, said policies can be assigned to the
Collateral Agent.
II. CONSTRUCTION PERIOD INSURANCE: the following coverages shall be in effect
on the date of this Indenture:
(a) Builder's Risk. The Company shall maintain or cause to be
maintained all-risk builder's risk insurance, covering physical loss or damage
to the Facility for perils including but not limited to fire, lightning, hail,
explosion, riot and civil commotion, vandalism and malicious mischief, theft,
damage from aircraft (and other falling objects), inland transportation,
vehicles, smoke, fire, flood, earthquake, landslide, Tsunami, windstorm,
collapse, start-up and testing of the Facility and to any and all materials,
supplies or equipment comprising the Facility or intended for installation into
the Facility and covering all such materials, supplies or equipment during
temporary storage and transit to or from the Site during erection and otherwise.
Insurance maintained shall be written on a full replacement cost basis; provided
such insurance may have a sub-limit of $100,000,000 in case of flood or
earthquake. This insurance shall also include Maintenance Coverage for two (2)
years following the first to occur of Provisional Acceptance, Interim Acceptance
and Final Acceptance of the Facility. Policy Deductible amounts shall be based
on a "per occurrence" basis not to exceed $500,000 for Equipment Start-up
Testing, $250,000 for earthquake, $250,000 for windstorm, $250,000 for flood,
and $250,000 for all other property damage losses, except that with respect to
damage to the Row 1 and Row 2 blades and vanes or the steam cooled transition
pieces of the 501G turbine generator, the maximum permitted deductible shall be
$1,000,000.
(b) Delayed Opening. As an extension of Section II(a) hereof or as a
separate policy, the Company shall maintain or cause to be maintained cost of
delayed opening insurance in an amount equal to 18 months projected continuing
expenses and Senior Debt Service of the Company. This extension or policy shall
include coverage for delays resulting from (i) damage to the Facility, (ii)
damage to equipment while in transit and (iii) damage to any equipment while in
storage away from the Site. The "Delay in Start-up" Deductible shall also be
based on a "per occurrence" basis with Waiting Period Deductibles not to exceed
thirty (30) days, except that such period may be up to (i) forty-five (45) days
with respect to the 501G turbine generator and (ii) sixty (60) days with respect
to the 501G turbine generator in the event its Row 1 and Row 2 blades and vanes
or its steam cooled transition pieces have sustained damage. Earthquake and
flood coverage are to be provided at the maximum limits commercially available.
Coverage shall remain in effect until replaced by business interruption
insurance as specified in Section III(b) hereof.
(c) Comprehensive General Liability. The Company shall maintain or
cause to be maintained comprehensive (or commercial) general liability insurance
written on an occurrence basis and with a combined single limit of not less than
$1,000,000 and a $2,000,000 general annual aggregate limit. Such coverage shall
include premises/operations, explosion, collapse and underground hazards, broad
form contractual, independent contractors, products/completed operations, broad
form property damage and personal injury. Such policy shall be written on a
6.2-2
<PAGE>
location specific basis and shall apply solely to the construction, use,
operation and maintenance of the Facility and the Site. Coverage shall remain in
effect until replaced by permanent insurance as specified in Section III(c)
hereof.
(d) Workers' Compensation and Employer's Liability. The Company shall
maintain (i) workers' compensation insurance with statutory limits and (ii)
employer's liability with limits of not less than $1,000,000 including
occupational disease coverage. Coverage shall remain in effect until replaced by
permanent insurance as specified in Section III(d) hereof.
(e) Automobile Liability. The Company shall maintain comprehensive (or
business) automobile liability insurance for owned (if any), nonowned and hired
vehicles with combined single limits of not less than $1,000,000 and containing
appropriate no-fault insurance provisions wherever applicable. Coverage shall
remain in effect until replaced by permanent insurance as specified in Section
III(e) hereof.
(f) Umbrella Liability. The Company shall maintain or cause to be
maintained excess (or umbrella) liability insurance written on an occurrence
basis and providing coverage limits in excess of the coverage under the
insurance specified in Sections II(c), (d)(ii) and (e) above. The limits of the
insurance so specified and this excess (or umbrella) coverage, when combined,
shall be not less than $19,000,000 per occurrence and aggregate annually. Such
policy shall be written on a project specific basis naming the Company as the
insured and shall apply solely to the construction, use, operation and
maintenance of the Facility and the Property. Coverage shall remain in effect
until replaced by permanent insurance as specified in Section III(f) hereof.
(g) Contractor's Insurance. The Company shall cause the Contractor to
obtain and maintain in full force and effect the additional insurance coverage
required in the EPC Contract.
III. OPERATING PERIOD INSURANCE: the following coverages shall be placed into
effect upon transfer of care, custody and control of the Facility to the
Company, and shall be maintained in effect at all times until all obligations of
the Company pursuant to this Indenture, the Securities, the Collateral Agency
Agreement and the other Security Documents have been fully discharged:
(a) Property and Boiler and Machinery. The Company shall maintain or
cause to be maintained all-risk property and boiler and machinery insurance,
covering physical loss or damage to the Facility and transmission lines
including but not limited to fire and extended coverage, lightning, hail,
explosion, riot and civil commotion, vandalism and malicious mischief, theft,
damage from aircraft (and other falling objects), vehicles, smoke, landslide,
windstorm, collapse, earthquake, flood and comprehensive boiler and machinery
(including electrical malfunction and mechanical breakdown). Such insurance
shall cover any and all materials, supplies and equipment comprising the
Facility. The all-risk property and boiler and machinery coverage shall not
contain an exclusion for resultant damage caused by faulty workmanship, design
or materials. Coverage shall be written on a full replacement cost basis;
provided such insurance may have a sub-limit of $100,000,000 in case of flood or
earthquake. Such policy shall contain a valid agreed amount endorsement waiving
any coinsurance penalty. The policy may be subject to deductibles not to exceed
$250,000 per occurrence, except that with respect to
6.2-3
<PAGE>
the steam turbine generator where the maximum permitted deductible shall be
$350,000 and the 501G turbine generator, where the maximum permitted deductible
shall be $1,000,000; provided, that the maximum permitted deductible for the
501G turbine generator shall be $500,000 if such coverage is available on
commercially reasonable terms.
(b) Business Interruption. As an extension of Section III(a) above or
as a separate policy, the Company shall maintain or cause to be maintained
business interruption insurance in an amount equal to 18 months of debt service
and fixed operation and maintenance expenses of the Company. This extension or
separate policy shall include coverage for (i) business interruption arising
from loss or damage to the Facility and (ii) contingent business interruption
arising from damage to the property and equipment of customers and suppliers of
the Facility, which is not covered by the insurance specified in Section III(a)
above. This extension or separate policy shall also include coverage for
expediting expenses and extra expense with a sublimit of $2,000,000. This
extension or separate policy shall have a deductible not to exceed 60 days'
business interruption.
(c) Comprehensive General Liability. The Company shall maintain or
cause to be maintained comprehensive (or commercial) general liability insurance
written on an occurrence basis and with a combined single limit of not less than
$1,000,000 (and $2,000,000 annual aggregate). Such coverage shall include
premises/operations, explosion, collapse and underground hazards, broad form
contractual, independent contractors, products/completed operations, broad form
property damage and personal injury. Such policy shall be written on a
project-specific basis. The Company and the Operator shall be named insureds on
such policy.
(d) Workers' Compensation and Employer's Liability. The Company shall
maintain (i) workers' compensation insurance with statutory limits and (ii)
employer's liability with limits of not less than $1,000,000 including
occupational disease coverage.
(e) Automobile Liability. The Company shall maintain comprehensive (or
business) automobile liability insurance for owned (if any), nonowned and hired
vehicles with combined single limits of not less than $1,000,000 and containing
appropriate no-fault insurance provisions wherever applicable.
(f) Umbrella Liability. The Company shall maintain or cause to be
maintained project specific excess (or umbrella) liability insurance written on
an occurrence basis and providing coverage limits in excess of the coverage
under the insurance specified in Sections III(c), (d)(ii) and (e) above. The
limits of the insurance so specified and this excess (or umbrella) coverage,
when combined, shall not be less than $19,000,000 per occurrence and aggregate
annually. The Company and Operator shall be named insureds on such policy.
(g) Additional Insurance. The Company shall maintain in full force and
effect any additional insurance coverage required by the Project Contracts.
6.2-4
<PAGE>
Exhibit 5.1
EXHIBIT 5.1
FORM OF WIRE INSTRUCTIONS
Payments from Construction Account to be paid on Closing, June 25, 1999.
Disbursement Due Disbursement
Amount Date Instructions
- ------------ ---- ------------
<PAGE>
EXECUTION COPY
================================================================================
FIRST SUPPLEMENTAL INDENTURE
dated as of June 1, 1999
to
TRUST INDENTURE
dated as of June 1, 1999
among
AES IRONWOOD, L.L.C.,
IBJ WHITEHALL BANK & TRUST COMPANY, as Trustee
and
IBJ WHITEHALL BANK & TRUST COMPANY, as Depositary Bank
================================================================================
<PAGE>
FIRST SUPPLEMENTAL INDENTURE (the "First Supplemental Indenture"),
dated as of June 1, 1999, to the Trust Indenture, dated as of June 1, 1999 (the
"Original Indenture"), among AES IRONWOOD, L.L.C., a Delaware limited liability
company (together with its successors and assigns, the "Company"), its principal
office and mailing address being at 829 Cumberland Street, Lebanon, Pennsylvania
17042, IBJ WHITEHALL BANK & TRUST COMPANY (the "Trustee"), its corporate trust
office and mailing address being at One State Street, New York, New York 10004,
and IBJ WHITEHALL BANK & TRUST COMPANY, as depositary bank (the "Depositary
Bank"), its office and mailing address being at One State Street, New York, New
York 10004.
W I T N E S S E T H:
WHEREAS, the Company and the Trustee have heretofore executed and
delivered the Original Indenture to provide for the issuance from time to time
of the Company's Bonds (as defined in the Original Indenture) to be issued in
one or more series;
WHEREAS, Sections 2.1, 2.3 and 12.1 of the Original Indenture provide,
among other things, that the Company and the Trustee may enter into indentures
supplemental to the Original Indenture for, among other things, the purpose of
establishing the designation, form, terms and provisions of Bonds of any series
as permitted by Sections 2.1, 2.3 and 12.1 of the Original Indenture;
WHEREAS, the Company (i) desires the issuance of one (1) series of
Bonds to be designated as hereinafter provided and (ii) has requested the
Trustee to enter into this First Supplemental Indenture for the purpose of
establishing the designation, form, terms and provisions of the Bonds of such
series;
WHEREAS, all action on the part of the Company necessary to authorize
the issuance of said Bonds under the Original Indenture and this First
Supplemental Indenture (the Original Indenture, as supplemented by this First
Supplemental Indenture, being hereinafter called the "Indenture") has been duly
taken; and
WHEREAS, all acts and things necessary to make said Bonds, when
executed by the Company and authenticated and delivered by the Trustee as
provided in the Original Indenture, the legal, valid and binding obligations of
the Company, and to constitute these presents a valid and binding supplemental
indenture according to its terms, have been done and performed, and the
execution of this First Supplemental Indenture and the creation and issuance
under the Indenture of said Bonds have in all respects been duly authorized, and
the Company, in the exercise of the legal right and power vested in it, executes
this First Supplemental Indenture and proposes to create, execute, issue and
deliver said Bonds;
NOW, THEREFORE, in order to establish the designation, form, terms and
provisions of, and to authorize the authentication and delivery of, said Bonds,
and in consideration of the acceptance of said Bonds by the holders thereof and
of other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
Capitalized terms not otherwise defined herein shall have the meanings
set forth in the Original Indenture.
ARTICLE II
THE TERMS OF THE BONDS
SECTION 2.1 Terms of 8.857% Senior Secured Bonds due 2025.
(a) There is hereby created one (1) series of Bonds designated: 8.857%
Senior Secured Bonds due 2025, in the aggregate principal amount of $308,500,000
(the "Senior Secured Bonds"). Upon delivery of a Company Order to the Trustee in
accordance with the provisions of Section 2.4 of the Original Indenture, the
Trustee shall authenticate and deliver the Senior Secured Bonds. Such Company
Order shall specify the amount of the Senior Secured Bonds to be authenticated
and the date on which such Bonds are to be authenticated.
(b) The Senior Secured Bonds, if issued in certificated definitive
form, shall be substantially in the form of Schedule A-1 hereto and, if issued
in the form of one or more global Bonds, shall comply with the provisions of
Section 2.2 and shall be substantially in the form of Schedule A-2.
SECTION 2.2 Terms of Bonds Issued Hereunder in Global Form.
(a) The Senior Secured Bonds offered and sold within the United States
in reliance on Rule 144A ("Rule 144A") under the Securities Act of 1933, as
amended (the "Securities Act") will be initially issued in the form of one or
more permanent global Bonds (each, a "Global Bond") in fully registered form,
without coupons, substantially in the form of Schedule A-2, which Global Bonds
will be deposited on behalf of the purchasers of such Senior Secured Bonds
represented thereby with the Trustee as custodian for, and registered in the
name of, The Depository Trust Company ("DTC") or its nominee.
(b) Beneficial interests in a Global Bond (and any Bonds issued in
exchange therefor) will be subject to certain restrictions on transfer set forth
therein and in the Original Indenture and as set forth on the form of the Global
Bond.
(c) Except in the limited circumstances described under Section 2.2(h)
below, beneficial interest in a Global Bond will only be recorded by book-entry
and owners of beneficial interest in a Global Bond will not be entitled to
receive physical delivery of certificates representing the Bonds.
(d) Upon the issuance of a Global Bond, DTC or its nominee will credit,
on its internal system, the respective principal amount of the individual
beneficial interests represented
2
<PAGE>
by such Global Bond to the accounts of persons who have accounts with DTC.
Ownership of beneficial interests in a Global Bond will be limited to persons
who have accounts with DTC ("Agent Members") or persons who hold interests
through Agent Members. Ownership of beneficial interests in a Global Bond will
be shown on, and the transfer of that ownership will be effected only through,
records maintained by DTC or its nominee (with respect to interests of Agent
Members) and the records of Agent Members (with respect to interests of persons
other than Agent Members).
(e) So long as DTC or its nominee is the registered owner or Holder of
a Global Bond, DTC or its nominee, as the case may be, will be considered the
sole owner or Holder of the Bonds represented by such Global Bond for all
purposes under the Original Indenture and under the Bonds. No beneficial owner
of an interest in a Global Bond will be able to transfer that interest except in
accordance with DTC's applicable procedures unless the Company shall issue
certificates for the Bonds in definitive registered form as under Section 2.2(h)
below.
(f) All payments of the principal of, and interest and additional
amounts and premium, if any, on, a Global Bond will be made to DTC or its
nominees, as the registered owners thereof.
(g) Transfers between participants in DTC will be effected in the
ordinary way in accordance with DTC rules and will be settled in same-day funds.
(h) If (i) the Company notifies the Trustee in writing that DTC or any
successor depository is unwilling or unable to continue as a depository for a
Global Bond or ceases to be a "clearing agency" registered under the Exchange
Act and a successor depository is not appointed by the Company within 90 days of
such notice, (ii) the Company, at its option, notifies the Trustee in writing
that it elects to cause the issuance of the Bonds issued hereunder to be in
certificated form or (iii) during an Event of Default, a holder of a beneficial
interest in a Global Bond requests the issuance of certificated Bonds
representing such holder's interest then, the Company shall issue certificates
for the Bonds in definitive registered form substantially in the form of
Schedule A-1 in exchange for the Global Bond outstanding.
(i) The holder of a certificated definitive registered Bond may
transfer such Bond in whole or part by surrendering it at the Corporate Trust
Office of the Trustee in accordance with the terms of the Indenture and such
Bond. Upon the transfer, exchange or replacement of definitive Bonds the Company
will deliver only definitive Bonds that bear a restrictive legend unless there
is delivered to the Company such satisfactory evidence, which may include an
opinion of counsel, as may reasonably be required by the Company, that neither
the legend nor the restrictions on transfer set forth therein are required to
ensure compliance with the provisions of the Bonds Act.
(j) In case any certificated definitive Bond shall become mutilated,
destroyed, lost or stolen, the provisions of Section 2.9 of the Original
Indenture shall apply.
(k) Certificated definitive Bonds may be in denominations of less than
$100,000 to the extent any redemption has reduced such Holder aggregate holding
of Bonds of the same series to less than $100,000.
3
<PAGE>
(l) If any redemption affecting a series of Bonds would result in the
amount to be paid to a Holder of such affected Bond in respect of such
redemption not to equal $1,000 or an integral multiple thereof, the Company
shall instruct the Trustee to round) the amount to be paid to such Holder to the
nearest $1,000 so that the amount to be paid to such Holder equals $1,000 or an
integral multiple thereof.
SECTION 2.3 Interest, Principal, Maturity Date and Regular
Record Date.
Each Bond of a series created hereby shall bear interest on the unpaid
principal amount thereof from time to time outstanding from the date of
authentication thereof until such amount is paid in full at the rate of interest
set forth in the forms of such series attached hereto. The principal amount of
each Bond of a series shall be due and payable in installments as set forth in
the form of Bond of such series attached hereto.
Payment of principal of, premium, if any, and interest on each Bond
shall be made, unless the Company otherwise so elects, as provided in Section
2.10 of the Original Indenture at the Corporate Trust Office of the Trustee
except that the final payment of principal of any series of the Bonds shall be
made on the due date therefor to the account of the Holder as such account shall
appear in the Security Register, which amount shall be payable upon presentation
and surrender of such Bond at the Corporate Trust Office of the Trustee.
Each Bond of a series shall mature on the date and in the amounts set
forth thereon.
The Regular Record Date applicable to all Bonds issued hereunder shall
be the Regular Record Date as defined in the Original Indenture.
At the direction of the Company, the Trustee shall round principal
amounts to be redeemed to the nearest $1,000.
All payments of principal and interest with respect to certificated
Bonds will be made by dollar check drawn on a bank in The City of New York or,
for Bondholders of at least U.S.$1,000,000 in aggregate principal amount of
Bonds, by wire transfer to a dollar account maintained by the payee with a bank
in The City of New York; provided, that a written request from such Bondholder
to such effect designating such account is received by the Trustee or the Paying
Agent no later than the Regular Record Date immediately preceding such Bond
Payment Date. Unless such designation is revoked, any such designation made by
such person with respect to such certificated Bonds will remain in effect with
respect to any future payments with respect to such certificated Bond payable to
such person.
SECTION 2.4 Redemption.
(a) Optional Redemption.
All Bonds issued hereunder are subject to optional redemption, in whole
or in part, at any time at the option of the Company at a redemption price equal
to the outstanding principal amount of the Bonds being so redeemed plus accrued
and unpaid interest thereon to the Redemption Date together with the Make-Whole
Premium applicable thereto.
4
<PAGE>
(b) Mandatory Redemption.
In accordance with the provisions of Section 7.3 of the Original
Indenture, the Bonds issued hereunder are subject to mandatory redemption under
certain conditions, on the terms set forth in Section 7.3(b), 7.3(c), 7.3(d) and
7.3(f) of the Original Indenture.
ARTICLE III
MISCELLANEOUS
SECTION 3.1 Execution of Supplemental Indenture.
This First Supplemental Indenture is executed and shall be construed as
an indenture supplemental to the Original Indenture and, as provided in the
Original Indenture, this First Supplemental Indenture forms a part thereof.
SECTION 3.2 Concerning the Trustee.
The Trustee shall not be responsible in any manner for or with respect
to the validity or sufficiency of this First Supplemental Indenture, or the due
execution hereof by the Company, or for or with respect to the recitals and
statements contained herein, all of which recitals and statements are made
solely by the Company.
SECTION 3.3 Counterparts.
This First Supplemental Indenture may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original;
but all such counterparts shall together constitute but one and the same
instrument.
SECTION 3.4 GOVERNING LAW.
THIS FIRST SUPPLEMENTAL INDENTURE AND EACH BOND ISSUED HEREUNDER SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THE STATE
OF NEW YORK.
5
<PAGE>
IN WITNESS WHEREOF, the parties have caused this First Supplemental
Indenture to be duly executed by their respective officers thereunder duly
authorized as of the date and year first above written.
AES IRONWOOD, L.L.C.
By: /s/ Patricia L. Rollin
-------------------------------
Name: Patricia L. Rollin
Title: Vice President
IBJ WHITEHALL BANK & TRUST COMPANY,
as Trustee
By: /s/ Thomas McCutcheon
-------------------------------
Name: Thomas McCutcheon
Title: Assistant Vice President
IBJ WHITEHALL BANK & TRUST COMPANY,
as Depositary Bank
By: /s/ Thomas McCutcheon
-------------------------------
Name: Thomas McCutcheon
Title: Assistant Vice President
[FIRST SUPPLEMENTAL INDENTURE]
<PAGE>
Schedule A-1
Form of Certificated Bond
THIS BOND (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM AND IN ANY EVENT MAY BE SOLD OR OTHERWISE TRANSFERRED ONLY
IN ACCORDANCE WITH THE INDENTURE, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION
AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE IN NEW YORK, NEW YORK.
EACH PURCHASER OF THIS BOND IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER. EACH HOLDER OF THIS BOND REPRESENTS TO AES
IRONWOOD, L.L.C. (THE "COMPANY") THAT (A) SUCH HOLDER WILL NOT SELL, PLEDGE OR
OTHERWISE TRANSFER THIS BOND (WITHOUT THE CONSENT OF THE COMPANY) OTHER THAN (I)
TO A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION COMPLYING WITH RULE 144A
UNDER THE SECURITIES ACT, (II) IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES
ACT, (III) OUTSIDE THE UNITED STATES OF AMERICA IN A TRANSACTION MEETING THE
REQUIREMENTS OF REGULATION S UNDER THE SECURITIES ACT, (IV) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, SUBJECT, IN THE
CASE OF CLAUSES (II), (III) OR (IV), TO THE RECEIPT BY THE COMPANY OF AN OPINION
OF COUNSEL OR SUCH OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH RESALE,
PLEDGE, OR TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND THAT
(B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER OF THIS BOND OF THE RESALE RESTRICTIONS REFERRED TO HEREIN AND DELIVER
TO THE TRANSFEREE (OTHER THAN A QUALIFIED INSTITUTIONAL BUYER) PRIOR TO THE SALE
A COPY OF A NOTICE TO INVESTORS (COPIES OF WHICH MAY BE OBTAINED FROM THE
TRUSTEE).
A1-1
<PAGE>
AES IRONWOOD, L.L.C.
8.857% SENIOR SECURED BOND
DUE 2025
$0 CUSIP No. [_____________]
AES IRONWOOD, L.L.C., a Delaware limited liability company (the
"Company"), for value received, hereby promises to pay to the holder of this
Bond or registered assigns, the principal sum of Zero Dollars ($0) in
consecutive quarterly installments on February 28, May 31, August 31 and
November 30 of each year (each such date being a "Bond Payment Date"), beginning
August 31, 1999, in an amount equal to the amount thereof specified for such
date on Annex 1 hereto until the outstanding principal hereof is repaid in full,
in any coin or currency of the United States of America which at the time of
payment is legal tender for public and private debts, and to pay on each Bond
Payment Date occurring after the date hereof at said offices or agencies to the
registered owner hereof, in like coin or currency, interest on the outstanding
principal hereof from the date of issuance hereof at the rate of 8.857% per
annum. The final maturity hereof shall be November 30, 2025. All payments of
principal of, premium, if any, and interest on this Bond shall be made at the
Corporate Trust Office of the Trustee.
The provisions of this Bond are continued on the reverse hereof and
such continued provisions shall for all purposes have the same effect as though
fully set forth at this place.
This Bond shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Authentication Certificate hereon shall have been signed by or on behalf of the
Trustee.
IN WITNESS WHEREOF, the Company has caused this Bond to be signed in
its name by its Authorized Officer.
Dated: ____________, 1999
AES IRONWOOD, L.L.C.
By:
-------------------------------
Name:
Title:
A1-2
<PAGE>
TRUSTEE'S AUTHENTICATION CERTIFICATE
This bond is one of the Bonds referred to in the within-mentioned
Indenture.
IBJ WHITEHALL BANK & TRUST COMPANY,
as Trustee
By:
-------------------------------
Authorized Officer
A1-3
<PAGE>
Reverse of Certificated Bond
AES IRONWOOD, L.L.C.
8.857% SENIOR SECURED BOND
DUE 2025
This bond is one of an issue of bonds of the Company, issuable in
series, and is one of a series known as its certificated 8.857% Senior Secured
Bonds Due 2025 (collectively, the "Bonds"), all issued and to be issued under
and equally secured (except as to any sinking fund established in accordance
with the provisions of the Indenture hereinafter mentioned for the Bonds of any
particular series) by a Trust Indenture, dated as of June 1, 1999, executed and
delivered between the Company, and IBJ Whitehall Bank & Trust Company, as
Trustee and Depositary Bank (the "Original Indenture"), as amended and
supplemented by the First Supplemental Indenture, dated as of June 1, 1999, to
which the Original Indenture is so amended and supplemented (herein collectively
referred to as the "Indenture"). A description of the rights of the Bondholders
and the terms and conditions upon which the Bonds are issued are set forth in
the Indenture. Capitalized terms used but not otherwise defined herein shall
have the meanings assigned thereto in the Indenture.
THE BONDS ARE SUBJECT TO OPTIONAL AND MANDATORY REDEMPTION AND
PREPAYMENT AS PROVIDED IN THE INDENTURE.
As more fully described in the Indenture, the Company has the right,
without the consent of the Bondholders, to amend the Indenture in certain
respects. As more fully described in the Indenture, with the consent of
Bondholders of not less than a majority in aggregate principal amount of the
Bonds of all series then Outstanding, the Company may amend the Indenture in any
other respect; provided, however, that no amendment shall, without the consent
of the Bondholder of each Outstanding Bond, (1) change the maturity date of any
Bond, or change the amount, of any payment of principal, interest or premium, if
any, on any Bond, (2) permit the creation of any lien on the Collateral not
otherwise permitted, prior to or on a parity with the lien of the Indenture, or
terminate the lien of the Indenture, (3) reduce the percentage of the principal
amount of Bonds the Bondholders of which are required to approve any such
amendment or (4) waive a Default in the payment of principal, interest or
premium, if any, or the remedies available in the case of an Event of Default.
The principal hereof may be declared or may become due on the
conditions, in the manner and at the time set forth in the Indenture, including
an acceleration of payment of the principal upon the occurrence and during the
continuance of an Event of Default as in the Indenture provided.
Recourse under this Bond is limited as set forth under the Indenture.
Satisfaction of the obligations of the Company under this Indenture, for the
payment of the principal of or premium, if any, or interest on any Bonds, or any
part thereof, or for any claim based thereon or otherwise in respect thereof or
related thereto, shall be had solely from the Collateral and the assets of the
Company and no recourse shall be had in the event of any non-performance by the
Company of
A1-4
<PAGE>
any such obligations to (i) any assets or properties of the Members (or any
Person that controls any Member within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) or (ii) any Affiliate of the
Company or any incorporators, officers, directors or employees thereof, and no
judgment for any deficiency upon the obligations of the Company under this
Indenture, for the payment of the principal of or premium, if any, or interest
on any Bonds, or any part thereof, or for any claim based thereon or otherwise
in respect thereof or related thereto, shall be obtainable by the Bondholders or
the Trustee against any Member or Affiliate of the Company or any other
incorporator, stockholder, officer, employee or director, past, present or
future of the Company or any Affiliate of the Company; provided, however, that
nothing contained herein shall prevent the taking of any action permitted by law
against the Company or any of its Affiliates, or in any way affect or impair the
rights of the Trustee or Bondholders to take any action permitted by law, in
either case to realize upon the collateral and, provided further, that nothing
herein shall be deemed to affect the obligations of any Affiliate of the Company
under any Transaction Document to which such Affiliate is a party.
The Bonds are issuable only as registered bonds without coupons in
denominations of $100,000 and integral multiples of $1,000 in excess thereof and
authorized multiples thereof. This Bond is transferable as prescribed in the
Indenture by the registered owner hereof, in person or by attorney duly
authorized, at the Corporate Trust Office of the Trustee upon surrender and
cancellation of this Bond, and thereupon a new registered Bond or Bonds for a
like principal amount in authorized denominations will be issued to the
transferee in exchange therefor, as provided in the Indenture, and upon payment,
if the Company shall require it, of the transfer charges therein prescribed. The
Company and the Trustee shall deem and treat the person in whose name this Bond
is registered as the absolute owner for the purpose of receiving payment of or
on account of the principal and interest due hereon and for all other purposes.
Registered Bonds shall be exchangeable at said office of the Trustee for
registered Bonds of other authorized denominations having the same aggregate
principal amount, in the manner and upon the conditions prescribed in the
Indenture. Notwithstanding any provision of the Indenture, (a) neither the
Company nor the Trustee shall be required to make transfers or exchanges of
Bonds during the period between any interest payment date for such Bonds and the
Regular Record Date next preceding such interest payment date, and (b) no charge
shall be made upon any transfer or exchange of Bonds other than for any tax or
taxes or other government charges required to be paid by the Company.
All payments of principal and interest with respect to certificated
Bonds will be made by dollar check drawn on a bank in The City of New York or,
for Bondholders of at least U.S.$1,000,000 in aggregate principal amount of
Bonds, by wire transfer to a dollar account maintained by the payee with a bank
in The City of New York; provided, that a written request from such Bondholder
to such effect designating such account is received by the Trustee or the Paying
Agent no later than the Regular Record Date immediately preceding such Bond
Payment Date. Unless such designation is revoked, any such designation made by
such person with respect to such certificated Bonds will remain in effect with
respect to any future payments with respect to such certificated Bond payable to
such person.
A1-5
<PAGE>
ANNEX 1
PERCENTAGE OF ORIGINAL PRINCIPAL AMOUNT PAYABLE
<TABLE>
<CAPTION>
YEAR FEBRUARY 28 MAY 31 AUGUST 31 NOVEMBER 30 ANNUAL TOTAL
---- ----------- ------ --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
2001 0.0000% 0.0000% 0.0000% 0.0000% 0.0000%
2002 0.1600% 0.1600% 0.1600% 0.1600% 0.6400%
2003 0.3850% 0.3850% 0.3850% 0.3850% 1.5400%
2004 0.5150% 0.5150% 0.5150% 0.5150% 2.0600%
2005 0.5700% 0.5700% 0.5700% 0.5700% 2.2800%
2006 0.5800% 0.5800% 0.5800% 0.5800% 2.3200%
2007 0.7400% 0.7400% 0.7400% 0.7400% 2.9600%
2008 0.9200% 0.9200% 0.9200% 0.9200% 3.6800%
2009 0.7800% 0.7800% 0.7800% 0.7800% 3.1200%
2010 0.8150% 0.8150% 0.8150% 0.8150% 3.2600%
2011 1.0300% 1.0300% 1.0300% 1.0300% 4.1200%
2012 0.7600% 0.7600% 0.7600% 0.7600% 3.0400%
2013 0.9600% 0.9600% 0.9600% 0.9600% 3.8400%
2014 1.2900% 1.2900% 1.2900% 1.2900% 5.1600%
2015 1.2400% 1.2400% 1.2400% 1.2400% 4.9600%
2016 1.3550% 1.3550% 1.3550% 1.3550% 5.4200%
2017 1.4650% 1.4650% 1.4650% 1.4650% 5.8600%
2018 1.0100% 1.0100% 1.0100% 1.0100% 4.0400%
2019 1.2050% 1.2050% 1.2050% 1.2050% 4.8200%
2020 1.6250% 1.6250% 1.6250% 1.6250% 6.5000%
2021 1.6500% 1.6500% 1.2000% 1.2000% 5.7000%
2022 1.3900% 1.3900% 1.3900% 1.3900% 5.5600%
2023 1.5000% 1.5000% 1.5000% 1.5000% 6.0000%
2024 1.5500% 1.5500% 1.5500% 1.5500% 6.2000%
2025 1.7300% 1.7300% 1.7300% 1.7300% 6.9200%
=======
100%
</TABLE>
At the direction of the Company, the Trustee shall round principal
amounts to be redeemed to the nearest $1,000.
A1-6
<PAGE>
Schedule A-2
Form of Global Bond
Schedule A-2--Form of Global Bond is filed as Exhibit 4.5 to this Registration
Statement.
A2-1
<PAGE>
Exhibit 4.2
EXECUTION COPY
- -------------------------------------------------------------------------------
COLLATERAL AGENCY AND
INTERCREDITOR AGREEMENT
Dated as of June 1, 1999
among
AES IRONWOOD, L.L.C.,
IBJ WHITEHALL BANK & TRUST COMPANY,
as Trustee,
DRESDNER BANK AG, NEW YORK BRANCH,
as DSR LOC Provider,
DRESDNER BANK AG, NEW YORK BRANCH,
as CP LOC Provider,
IBJ WHITEHALL BANK & TRUST COMPANY,
as Collateral Agent,
and
IBJ WHITEHALL BANK & TRUST COMPANY,
as Depositary Bank
- -------------------------------------------------------------------------------
705 MW (Net) Gas-Fired Combined Cycle Electric Generating Facility
South Lebanon Township, Lebanon County, Pennsylvania
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
------
<S> <C>
ARTICLE I DEFINITIONS.............................................................................................2
SECTION 1.1 DEFINITIONS........................................................................................2
ARTICLE II SECURITY INTERESTS AND EXERCISE OF RIGHTS..............................................................8
SECTION 2.1 SHARING; PRIORITY OF SECURITY INTERESTS............................................................8
SECTION 2.2 SUBORDINATED DEBT..................................................................................8
SECTION 2.3 EXERCISE OF RIGHTS UNDER SECURITY DOCUMENTS........................................................9
SECTION 2.4 RIGHTS OF SENIOR PARTIES..........................................................................11
SECTION 2.5 CERTAIN AMENDMENTS................................................................................12
ARTICLE III ACCOUNTS.............................................................................................12
SECTION 3.1 ESTABLISHMENT OF PROJECT ACCOUNTS.................................................................12
SECTION 3.2 INVESTMENT OF FUNDS IN THE PROJECT ACCOUNTS.......................................................13
SECTION 3.3 VALUATION AND SALE OF INVESTMENTS.................................................................13
SECTION 3.4 POSSESSION OF ACCOUNTS; LIQUIDATION...............................................................14
SECTION 3.5 THE DEPOSITARY BANK; LIMITED COMPANY RIGHTS.......................................................14
SECTION 3.6 ADVANCES..........................................................................................16
SECTION 3.7 COLLECTION OF PROJECT REVENUES....................................................................17
SECTION 3.8 CONSTRUCTION ACCOUNT..............................................................................17
SECTION 3.9 PAYMENTS ON COMMERCIAL OPERATION DATE.............................................................19
SECTION 3.10 REVENUE ACCOUNT..................................................................................20
SECTION 3.11 OPERATING AND MAINTENANCE ACCOUNT................................................................22
SECTION 3.12 DEBT SERVICE RESERVE ACCOUNT.....................................................................22
SECTION 3.13 MAJOR MAINTENANCE RESERVE ACCOUNT................................................................25
SECTION 3.14 DISTRIBUTION ACCOUNT.............................................................................25
SECTION 3.15 RESTORATION ACCOUNT..............................................................................27
SECTION 3.16 FUEL CONVERSION VOLUME REBATE ACCOUNT............................................................30
SECTION 3.17 SUBORDINATED DEBT ACCOUNT........................................................................30
ARTICLE IV APPLICATION OF CERTAIN PROCEEDS.......................................................................30
SECTION 4.1 DIVISION OF FORECLOSURE PROCEEDS AND PROCEEDS UNDER THE WILLIAMS GUARANTY.........................30
SECTION 4.2 APPLICATION OF CASUALTY PROCEEDS AND EMINENT DOMAIN PROCEEDS......................................31
SECTION 4.3 APPLICATION OF BUY-DOWN AMOUNTS...................................................................33
ARTICLE V COLLATERAL AGENT; DEPOSITARY BANK......................................................................36
SECTION 5.1 APPOINTMENT AND DUTIES OF COLLATERAL AGENT AND DEPOSITARY BANK....................................36
SECTION 5.2 RIGHTS OF COLLATERAL AGENT........................................................................37
SECTION 5.3 LACK OF RELIANCE ON THE COLLATERAL AGENT..........................................................39
SECTION 5.4 INDEMNIFICATION...................................................................................40
SECTION 5.5 RESIGNATION OF THE COLLATERAL AGENT OR DEPOSITARY BANK............................................41
SECTION 5.6 REMOVAL OF THE COLLATERAL AGENT OR DEPOSITARY BANK................................................42
SECTION 5.7 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.......................................42
SECTION 5.8 POWER OF ATTORNEY.................................................................................42
ARTICLE VI REPRESENTATIONS AND WARRANTIES........................................................................43
SECTION 6.1 REPRESENTATIONS AND WARRANTIES....................................................................43
ARTICLE VII MISCELLANEOUS........................................................................................45
SECTION 7.1 AGREEMENT FOR BENEFIT OF PARTIES HERETO...........................................................45
SECTION 7.2 NO WARRANTIES.....................................................................................45
i
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 7.3 SEVERABILITY......................................................................................46
SECTION 7.4 NOTICES...........................................................................................46
SECTION 7.5 SUCCESSORS AND ASSIGNS............................................................................47
SECTION 7.6 COUNTERPARTS......................................................................................47
SECTION 7.7 GOVERNING LAW.....................................................................................47
SECTION 7.8 IMPAIRMENTS OF OTHER RIGHTS.......................................................................48
SECTION 7.9 AMENDMENT; WAIVER.................................................................................48
SECTION 7.10 HEADINGS.........................................................................................48
SECTION 7.11 TERMINATION......................................................................................48
SECTION 7.12 ENTIRE AGREEMENT.................................................................................48
SECTION 7.13 LIMITATION OF LIABILITY..........................................................................48
SECTION 7.14 REPLACEMENT AND/OR REMOVAL OF INDEPENDENT ENGINEER; PAYMENT OF INDEPENDENT ENGINEER..............49
SECTION 7.15 THIRD-PARTY ENGINEER DISPUTE RESOLUTION..........................................................49
EXHIBITS
Exhibit 2.1 Form of Designation Letter
Exhibit 2.2 Terms of Subordination
Exhibit 2.3 Form of Senior Party Certificate
Exhibit 3.6(a) Form of Guaranty
Exhibit 3.6(b) Form of Letter of Credit
Exhibit 3.8 Form of Requisition
Exhibit 3.15 Form of Restoration Certificate
Exhibit 4.3 Form of Performance Enhancement Certificate
Exhibit 7.14 Third-Party Engineers
</TABLE>
ii
<PAGE>
COLLATERAL AGENCY AND
INTERCREDITOR AGREEMENT
COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT, dated as of June 1, 1999
(this "Agreement"), among AES IRONWOOD L.L.C., a Delaware limited liability
corporation (the "Company"), IBJ WHITEHALL BANK & TRUST COMPANY, as Trustee (the
"Trustee"), DRESDNER BANK AG, NEW YORK BRANCH, in its capacity as Agent for the
banks (including the DSR LOC Issuing Bank) under the DSR LOC Reimbursement
Agreement (the "DSR LOC Provider"), DRESDNER BANK AG, NEW YORK BRANCH, in its
capacity as Agent for the banks (including the CP LOC Issuing Bank) under the CP
LOC Reimbursement Agreement (the "CP LOC Provider"), IBJ WHITEHALL BANK & TRUST
COMPANY, as Collateral Agent (the "Collateral Agent") and IBJ WHITEHALL BANK &
TRUST COMPANY, as Depositary Bank (the "Depositary Bank").
W I T N E S S E T H:
WHEREAS, the Company is constructing and will own a gas-fired combined
cycle electric generating facility in South Lebanon Township, Lebanon County,
Pennsylvania, with a net design capacity of approximately 705 megawatts and
related property and facilities;
WHEREAS, the Company intends to finance the construction and equipping
of the Facility primarily through the issuance of the Bonds, the net proceeds of
which, shall be received by the Company;
WHEREAS, the Company has duly authorized the creation and issuance of
the Bonds pursuant to the Indenture;
WHEREAS, in connection with the authentication and delivery of the
first Bonds to be authenticated and delivered by the Trustee under the
Indenture, the Company will deliver (i) the DSR Letter of Credit, which the DSR
LOC Issuing Bank has agreed to issue subject to the terms and conditions
contained in the DSR LOC Reimbursement Agreement, and (ii) the CP Letter of
Credit, which the CP LOC Issuing Bank has agreed to issue subject to the terms
and conditions contained in the CP LOC Reimbursement Agreement;
WHEREAS, all obligations of the Company under the Indenture, the DSR
LOC Reimbursement Agreement, the CP LOC Reimbursement Agreement and this
Agreement will be secured as set forth in the Security Documents pursuant to
which the Collateral Agent has been granted a Security Interest in the
Collateral; and
WHEREAS, the parties hereto desire to enter into this Agreement to set
forth their mutual understanding with respect to (i) the exercise of certain
rights, remedies and options by the respective parties hereto under the above
described documents, (ii) the priority of their respective security interests
created by the Security Documents, (iii) the appointment of the Collateral Agent
and (iv) the appointment of the Depositary Bank.
1
<PAGE>
NOW, THEREFORE, for and in consideration of the premises and of the
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, covenant and agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
The following terms shall have the meanings specified herein unless the
context otherwise requires. Capitalized terms not otherwise defined herein shall
have the meanings specified in the Indenture in the form of such terms as they
exist on the date hereof; provided, however, that defined terms from the
Indenture that have been added or amended subsequent to the date hereof shall
have such added or amended meanings herein upon compliance with the provisions
of Section 5.1(d). For the purposes of this Agreement, the rules of construction
set forth in the Indenture shall apply as if such rules were set forth herein.
"Acceptable Credit Provider" means (i) in the case of an unconditional
guaranty, AES (if and for so long as its long-term unsecured debt is rated at
least Investment Grade and not lower than the then current lowest rating of the
Bonds by each of S&P and Moody's) and (ii) in the case of an irrevocable letter
of credit, a bank or trust company with a combined capital and surplus of at
least $1,000,000,000 whose long-term unsecured debt is rated at least "A" by S&P
or "A2" by Moody's.
"Acceptable Credit Support" means (i) an unconditional guaranty
substantially in the form of Exhibit 3.6(a) or (ii) an irrevocable letter of
credit substantially in the form of Exhibit 3.6(b) (which is not an obligation
of the Company and is not secured by the Collateral), in each case from an
Acceptable Credit Provider. Each Acceptable Credit Support delivered under this
Agreement shall clearly specify the Advance to which such Acceptable Credit
Support relates.
"Advances" has the meaning specified in Section 3.6.
"Authorized Representative" of any Person means the individual or
individuals authorized to act on behalf of such Person by the board of
directors, management committee, board of control or any other governing body of
such Person as designated from time to time in a certificate of such Person with
specimen signatures and delivered to the Collateral Agent and upon which the
Collateral Agent may conclusively rely.
"Available Accounts" means the Project Accounts other than the
Construction Account and the Debt Service Reserve Account.
"Available Cash Flow" means, with respect to each application of funds
required under this Agreement as of any specified date, all funds remaining in
the Revenue Account as of such
2
<PAGE>
date and available to be applied as set forth in this Agreement after all prior
applications of funds in the Revenue Account required on such date.
"Bond Payment Date" means February 28, May 31, August 31 and November
30 of each year commencing on August 31, 1999, on which interest on and/or
principal of the Bonds shall be payable in accordance with the Indenture.
"Certificate as to Redemption" means the certificate filed by an
Authorized Representative of the Company in the case of an Event of Loss or an
Event of Eminent Domain in order to determine (i) whether the Facility can be
rebuilt, repaired or restored and (ii) the availability of Casualty Proceeds or
Eminent Domain Proceeds for such rebuilding, repairing or restoring.
"Claims" means with respect to any Person, any and all suits,
sanctions, legal proceedings, claims, assessments, judgments, damages,
penalties, fines, liabilities, demands, out-of-pocket costs, reasonable
out-of-pocket expenses of whatever kind (including reasonable attorneys' fees
and expenses) and losses incurred or sustained by or against such Person.
"Collateral Agent" has the meaning specified in the preamble of this
Agreement.
"Collateral Agent Claims" means all obligations of the Company, now or
hereafter existing, to pay fees, costs, expenses, liabilities or indemnities to
the Collateral Agent under the Collateral Agency Agreement.
"Combined Exposure" means, as of any date of calculation, the sum
(calculated without duplication) of the following, to the extent the same is
held by or represented by a Senior Party: (i) the aggregate principal amount of
all Outstanding Bonds; (ii) the aggregate principal amount of all outstanding
Permitted Indebtedness (other than the Bonds, DSR LOC Loans, DSR LOC Term Loans,
DSR Bonds, CP LOC Loans, Subordinated Debt and Affiliate Subordinated Debt);
(iii) the aggregate amount of all available undrawn financing commitments under
the documents governing the Permitted Indebtedness (other than the Bonds,
Subordinated Debt, Affiliate Subordinated Debt, the DSR LOC Reimbursement
Agreement and the CP LOC Reimbursement Agreement) which the creditors party to
such documents have no right to terminate; (iv) the maximum amounts available to
be drawn under the DSR Letter of Credit and the CP Letter of Credit (taking into
account, without duplication, in the case of the DSR Letter of Credit, the
maximum amount which may become available to be drawn in the future by reason of
an increase in the DSRA Required Balance); and (v) the amount, without
duplication, of unreimbursed drawings under the DSR Letter of Credit and the CP
Letter of Credit.
"Commercial Operation Certificate" has the meaning specified in Section
3.9.
"Company" has the meaning specified in the preamble of this Agreement.
"Construction Account" means the Construction Account established
pursuant to Section 3.1.
3
<PAGE>
"Contract" means any agreement, lease, license, evidence of Debt,
indenture or other contract (including any design, construction, equipment, or
other warranty or guarantee under any of the foregoing).
"CP LOC Loan" has the meaning specified in the CP LOC Reimbursement
Agreement.
"CP LOC Provider" has the meaning specified in the preamble of this
Agreement.
"CP LOC Reimbursement Fund" means the CP LOC Reimbursement Fund
established pursuant to Section 3.1.
"Debt Service Coverage Ratio" means for any period, without
duplication, a ratio the numerator of which is Cash Available for Debt Service
for that period and the denominator of which is principal, interest and
commitment fees, underwriting fees and other similar fees due for such period on
the Bonds and other Permitted Indebtedness which ranks pari passu with the
Bonds.
"Debt Service Reserve Account" means the Debt Service Reserve Account
established pursuant to Section 3.1.
"Depositary Bank" has the meaning specified in the preamble to this
Agreement.
"Designation Letter" means a "Designation Letter" in the form of
Exhibit 2.1, pursuant to which a Person agrees to be bound by the terms of this
Agreement.
"Distribution Account" means the Distribution Account established
pursuant to Section 3.1.
"Distribution Conditions" has the meaning specified in Section 3.14.
"DSR Bond" has the meaning specified in the DSR LOC Reimbursement
Agreement.
"DSR LOC Loan" has the meaning specified in the DSR LOC Reimbursement
Agreement.
"DSR LOC Provider" has the meaning specified in the preamble of this
Agreement.
"DSR LOC Reimbursement Fund" means the DSR Reimbursement Fund
established pursuant to Section 3.1.
"DSR LOC Term Loan" has the meaning specified in the DSR LOC
Reimbursement Agreement.
"Equity Contribution" means the equity contribution required to be made
by AES Ironwood under the Equity Subscription Agreement.
"Event of Default" means, so long as there are any Financing
Commitments or any Financing Liabilities outstanding under such documents, an
"Event of Default" as such term is
4
<PAGE>
defined in the Indenture, an "Event of Default" as such term is defined in the
DSR LOC Reimbursement Agreement, an "Event of Default" as such term is defined
in the CP LOC Reimbursement Agreement or an "Event of Default" or equivalent
term under any working capital facility.
"EWG" means "exempt wholesale generator," as defined in Section 32(a)
of PUHCA.
"Excess Amount" has the meaning specified in Section 3.12(j).
"Fair Market Value" has the meaning specified in the Power Purchase
Agreement.
"Financing Commitment" means any commitment pursuant to the Financing
Documents to provide credit to the Company including, but not limited to, (i)
the Stated Amount of the DSR Letter of Credit and the CP Letter of Credit and
(ii) the obligation of the DSR LOC Provider to issue the DSR Letter of Credit,
to reinstate the DSR Letter of Credit upon the reimbursement of drawings
thereunder, and to increase the amount of the DSR Letter of Credit from time to
time by reason of an increase in the DSRA Required Balance.
"Financing Liabilities" means all indebtedness, liabilities and
obligations of the Company (of whatsoever nature and howsoever evidenced
including, but not limited to, principal, interest, fees, reimbursement
obligations, collateralization or deposit obligations, penalties, indemnities
and legal expenses, whether due after acceleration or otherwise) under or
pursuant to the Indenture, the Bonds and any evidence of indebtedness thereunder
entered into, the DSR LOC Reimbursement Agreement and any evidence of
indebtedness thereunder entered into, the CP LOC Reimbursement Agreement and any
evidence of indebtedness thereunder entered into, the Collateral Agency
Agreement and any evidence of indebtedness thereunder entered into, any working
capital facility and any evidence of indebtedness thereunder entered into, and
the Security Documents, to the extent arising on or prior to the Final Maturity
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.
"Fuel Conversion Payment Volume Rebate Account" means the Fuel
Conversion Payment Volume Rebate Account established pursuant to Section 3.1.
"Indenture" means the Trust Indenture, by and among the Company, the
Trustee and the Depositary Bank.
"Liabilities" means, as to any Person, all Debt, obligations and any
other liabilities of such Person (whether absolute, accrued, contingent, fixed
or otherwise, and whether due or to become due).
"Major Maintenance Reserve Account" means the Major Maintenance Reserve
Account established pursuant to Section 3.1.
"Maximum Stated Amount" has the meaning specified in the DSR LOC
Reimbursement Agreement.
5
<PAGE>
"Operating and Maintenance Account" means the Operating and Maintenance
Account established pursuant to Section 3.1.
"Performance Enhancement Certificate" means a certificate of the
Company substantially in the form of Exhibit 4.3.
"Project Accounts" has the meaning specified in Section 3.1.
"PUHCA" means the Public Utility Holding Company Act of 1935.
"Required Senior Parties" means, at any time, Persons that at such time
hold at least a majority of the Combined Exposure.
"Requisition" has the meaning specified in Section 3.8(b).
"Responsible Officer" when used with respect to the Collateral Agent,
means any officer in the corporate trust and agency group (or any successor
group) of the Collateral Agent including without limitation, any vice president,
assistant vice president, assistant treasurer, assistant secretary or any other
officer of the Collateral Agent customarily performing functions similar to
those performed by any of the above designated officers, and with respect to a
particular corporate trust matter, also means any other officer to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
"Restoration Account" means the Restoration Account established
pursuant to Section 3.1.
"Restoration Certificate" means a certificate of the Company
substantially in the form of Exhibit 3.15.
"Revenue Account" means the Revenue Account established pursuant to
Section 3.1.
"Secured Obligations" means, collectively, the Financing Liabilities,
the Trustee Claims, the DSR LOC Provider Claims, the CP LOC Provider Claims and
the Collateral Agent Claims.
"Security Interest" means any perfected and enforceable Lien on
Collateral granted to a Senior Party pursuant to any applicable Security
Document.
"Senior Debt Termination Date" means the date on which all Financing
Liabilities, other than contingent liabilities and obligations which are
unasserted at such date, have been paid and satisfied in full and all Financing
Commitments have been terminated, including, without limitation, the termination
or expiration of the DSR Letter of Credit and the CP Letter of Credit.
"Senior Documents" has the meaning specified in Section 6.1.
"Senior Parties" means, collectively, the Trustee, the Collateral
Agent, the Depositary Bank, the DSR LOC Provider, the CP LOC Provider and any
working capital provider and each successor to any of such Persons.
6
<PAGE>
"Senior Party Certificate" means a certificate of a Senior Party
substantially in the form of Exhibit 2.3, signed by an Authorized Representative
of such Senior Party, (i) setting forth the principal amount of the Financing
Liabilities owed to such Senior Party as of the date of such certificate and the
outstanding unutilized commitments to extend credit to the Company or the
Company by such Senior Party as of the date of such certificate, (ii) setting
forth a contact person for such Senior Party and including phone and facsimile
numbers for such person, (iii) directing the Collateral Agent to take a
specified action and (iv) stating specifically the action the Collateral Agent
is directed to take and the Security Document and the provision thereof pursuant
to which the Collateral Agent is being directed to act.
"Stated Amount" means in respect of the DSR Letter of Credit, the
"Stated Amount" as defined in the DSR LOC Reimbursement Agreement, and in
respect of the CP LOC Letter of Credit, the "Stated Amount" as defined in the CP
LOC Reimbursement Agreement.
"Step-Up Event" means, in respect of any DSR Letter of Credit, (i) such
DSR Letter of Credit has not been extended or replaced within 45 days prior to
the termination date of such DSR Letter of Credit or (ii) the credit rating of
the DSR LOC Issuing Bank is less than the Required Rating and such DSR Letter of
Credit has not been replaced within 45 days of the failure to satisfy the
requirements of the Required Rating with a replacement letter of credit issued
by an issuer that satisfies the requirements of the Required Rating, and, in
each case, the Collateral Agent has drawn on such DSR Letter of Credit in an
amount sufficient to fund the Debt Service Reserve Account up to the DSRA
Required Balance.
"Subordinated Debt Account" means the Subordinated Debt Account
established pursuant to Section 3.1.
"Tax Reimbursements" has the meaning specified in Section 3.14.
"Taxes" or "Tax" means any tax, charge, impost, tariff, duty or fee of
any kind charged, imposed or levied, directly or indirectly, by any Governmental
Authority, including any value-added tax, sales tax, stamp duty, import duty,
withholding tax (whether on income, dividends, interest payments, fees,
equipment rentals or otherwise), tax on foreign currency loans or foreign
exchange transactions, excise tax, property tax, registration fee or license,
water tax or environmental, energy or fuel tax including any interest, penalties
or other additions thereon.
"Terms of Subordination" means the Terms of Subordination attached
hereto as Exhibit 2.2.
"Trigger Event" means (i) an "Event of Default" under the Indenture and
an acceleration of the indebtedness issued thereunder, (ii) an "Event of
Default" under the DSR LOC Reimbursement Agreement and an acceleration of the
indebtedness incurred by the Company thereunder, (iii) an "Event of Default"
under the CP LOC Reimbursement Agreement and an acceleration of the indebtedness
incurred by the Company thereunder, (iv) an "Event of Default" or the equivalent
under any working capital facility and an acceleration of the indebtedness
entered into thereunder or (v) a Bankruptcy Event in respect of the Company and
the expiration of the shortest applicable grace period.
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"Trustee" has the meaning specified in the preamble of this Agreement.
"UCC" means the Uniform Commercial Code as is in effect from time to
time in the State of New York and any other jurisdiction the laws of which
control the creation or perfection of security interests under the Security
Documents.
ARTICLE II
SECURITY INTERESTS AND EXERCISE OF RIGHTS
SECTION 2.1 Sharing; Priority of Security Interests.
(a) Each Senior Party agrees that, (i) as among the Senior Parties, the
Security Interest of each Senior Party in any Collateral ranks and will rank
equally in priority with the Security Interest of the other Senior Parties in
the same Collateral and (ii) in respect of matters voted on by the Senior
Parties collectively, the Trustee shall vote all Bonds according to the votes of
a majority of Bondholders voting.
(b) The priorities specified herein are applicable irrespective of any
statement in any Security Document or in any other agreement to the contrary,
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.
(c) The Company hereby covenants and agrees to cause each person
holding Senior Debt to become a party to this Agreement by executing a
Designation Letter and becoming a Senior Party hereunder.
SECTION 2.2 Subordinated Debt.
Notwithstanding any provision in any Transaction Document to the
contrary, the Senior Parties hereby agree that (i) the Subordinated Debt
Providers shall be entitled to share in the Collateral or any other payment,
security or guarantee from the Company or any of its Affiliates only to the
extent provided in, and only in accordance with, Articles III and IV and the
Terms of Subordination and (ii) the Subordinated Debt Providers shall not be
entitled to vote or take any actions pursuant to this Agreement or any other
Security Document, or take any other actions with respect to the Collateral
until such time as all of the Secured Obligations owing to all of the Senior
Parties have been satisfied in full. Each Subordinated Debt Provider agrees to
be bound by the Terms of Subordination and agrees that such Terms of
Subordination shall be explicitly incorporated into the Subordinated Loan
Agreement to which it is a party. Each party becoming a Subordinated Debt
Provider pursuant to a Designation Letter shall agree, in such Designation
Letter, to be bound by such Terms of Subordination.
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SECTION 2.3 Exercise of Rights Under Security Documents.
So long as any Secured Obligations remain outstanding, the following
provisions shall apply:
(a) Subject to Section 5.2(e), if a Trigger Event shall have occurred
and be continuing, and only in such event, upon the written direction of the
Required Senior Parties contained in Senior Party Certificates, the Collateral
Agent, on behalf of the Trustee, the DSR LOC Provider, the CP LOC Provider and
any other Senior Party that is a party to this Agreement, as applicable, shall
be permitted and is hereby authorized to take any and all actions and to
exercise any and all rights, remedies and options which it may have under the
Security Documents or this Agreement; provided, however, that if the underlying
event which caused the Trigger Event is a Bankruptcy Event in respect of the
Company of which the Collateral Agent shall have received written notice, no
written request of the Required Senior Parties shall be required in order for
the Collateral Agent following such Trigger Event to take any and all actions
and to exercise any and all rights and remedies specified in the Security
Documents or this Agreement to be taken in such circumstances. Nothing contained
herein shall be construed as restricting the right of any Senior Party to cause
the acceleration, in accordance with the applicable Senior Document, of the
Senior Debt held by such Party, or in the case of the DSR LOC Provider and the
CP LOC Provider, to terminate the DSR Letter of Credit or CP Letter of Credit
(after giving any required notice to the beneficiary thereof), as the case may
be, or to terminate the ability of the Company to continue any DSR Loans (as
defined in the DSR LOC Reimbursement Agreement) as, or to convert DSR Loans to
Eurodollar Loans (as defined in the DSR LOC Reimbursement Agreement), or in the
case of the DSR LOC Provider, to terminate the ability of the Company to cause
the reinstatement of the DSR Letter of Credit.
(b) The Senior Parties hereby agree to give each other and the
Collateral Agent written notice of the occurrence of an Event of Default and of
a Trigger Event 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 Senior Parties hereunder or under the Financing Documents.
(c) Each Senior Party hereby acknowledges and agrees that all funds
held by the Trustee in accordance with Article 5 of the Indenture are held for
the benefit of the Bondholders and that the Trustee shall hold such funds solely
for the benefit of such Bondholders.
(d) Each Senior Party hereby acknowledges and agrees that all funds
held in the Debt Service Reserve Account by the Collateral Agent in accordance
with this Agreement are held for the benefit of the Trustee (on behalf of the
Bondholders) and that the Collateral Agent shall hold such funds solely for the
benefit of such Persons.
(e) Each Senior Party hereby acknowledges and agrees that any DSR
Letter of Credit held by the Collateral Agent in accordance with this Agreement
is held for the benefit of the Trustee (on behalf of the Bondholders) and for
the benefit of the DSR LOC Provider to the extent of its interest in such DSR
Letter of Credit and that the Collateral Agent shall hold such letter of credit
(and the proceeds thereof) solely for the benefit of such Persons.
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(f) Each Senior Party hereby acknowledges and agrees that all funds
held in the DSR LOC Reimbursement Fund or the CP LOC Reimbursement Fund by the
Collateral Agent in accordance with this Agreement are held for the benefit of
the DSR LOC Provider or CP LOC Provider, as the case may be, and that the
Collateral Agent shall hold such funds solely for the benefit of such Persons.
(g) Each Senior Party hereby acknowledges and agrees that the
Collateral Agent, subject to Section 5.2(c) and (e), shall administer the
Collateral in the manner contemplated by the Security Documents and this
Agreement and the Collateral Agent shall exercise, as directed by the Required
Senior Parties in Senior Party Certificates in accordance with Section 2.3(a)
such rights and remedies with respect to the Collateral (including the curing of
defaults under the Transaction Documents) as are granted to it under the
Security Documents, this Agreement and Applicable Law. No Senior Party and no
class or classes of Senior Parties shall have any right (i) to direct the
Collateral Agent to take any action in respect of the Collateral other than in
accordance with Section 2.3(a) or (ii) to take any action with respect to the
Collateral (A) independently of the Collateral Agent or (B) other than to direct
the Collateral Agent in writing to take action in accordance with Section
2.3(a); provided, however, that nothing in this Section 2.3(g) shall be deemed
to limit the ability of any Senior Party to take any action in accordance with
Section 2.3(i).
(h) Each of the Company and each Senior Party covenants and agrees
that, upon the occurrence and during the continuation of a Trigger Event, the
Collateral Agent shall be entitled, as instructed by the Required Senior Parties
in Senior Party Certificates in accordance with Section 2.3(a), to give notices
or instructions that the Company would otherwise be entitled to give under this
Agreement.
(i) From time to time during the continuation of a Trigger Event, the
Collateral Agent shall, as instructed by the Required Senior Parties in Senior
Party Certificates in accordance with Section 2.3(a), direct the Depositary Bank
to render an accounting of the current balance of each Project Account or other
amounts or funds administered by the Depositary Bank under this Agreement, and
the Depositary Bank agrees to render the same, subject to the terms, conditions
and protections contained in this Agreement.
(j) The Company covenants and agrees that it shall not take any action
that would prohibit or impair the ability of the Collateral Agent from
participating in any objection to any foreclosure or similar proceeding
instituted by a junior lienor against the Company; provided, however, that
nothing in this Section 2.3(j) shall, or shall be deemed to, affect the
relationship among the Senior Parties or the relationship between the Senior
Parties and the Collateral Agent, nor shall anything in this Section 2.3(j)
affect any representation, warranty, covenant or agreement of any Senior Party
in this Agreement.
(k) The Company covenants and agrees that it shall send to the
Collateral Agent on or before five (5) days prior to each Bond Payment Date an
Officer's Certificate signed by an Authorized Representative of the Company
setting forth (i) the names of each Senior Party as of the date of the
certificate, (ii) the principal amount of the Financing Liabilities owed to each
such
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Senior Party as of the date of the certificate and (iii) the unutilized
outstanding commitments of each Senior Party to extend credit to the Company as
of the date of the certificate, including, but not limited to, (A) the Stated
Amount of the DSR Letter of Credit and the CP Letter of Credit and (B) the
obligation of the DSR LOC Provider to issue the DSR Letter of Credit, to
reinstate the DSR Letter of Credit upon the reimbursement of drawings thereunder
and increase the amount of the DSR Letter of Credit from time to time by reason
of an increase in the DSRA Required Balance. The Collateral Agent shall be
entitled to rely on the information contained in such certificate.
(l) Notwithstanding the foregoing provisions of this Article II, each
Senior Party individually shall be authorized to cure any default of the Company
under any Project Contract in accordance with the consent to assignment executed
in connection with such Project Contract; provided, however, that funds advanced
in connection with such cure shall not constitute Senior Debt unless such funds
would otherwise satisfy the requirements for the issuance of Senior Debt.
(m) Each Senior Party hereby acknowledges and agrees that if (i) there
is an Event of Default under the Indenture and such Event of Default is not
caused directly or indirectly by a default or event of default under the Power
Purchase Agreement, (ii) the Collateral Agent receives the written request of
the Required Senior Parties specified in Section 2.3(a), and (iii) the Trustee
has been directed by the required Bondholders to declare the aggregate principal
amount of the Outstanding Bonds, all interest accrued and unpaid thereon and all
premium payable thereon in accordance with the terms of the Indenture
immediately due and payable, the Collateral Agent at the direction of the
Required Senior Parties shall notify the Power Purchaser in writing at the
address provided in the Power Purchase Agreement of the opportunity to purchase
the Facility for an amount equal to the greater of (x) the Fair Market Value of
the Facility and (y) all Financing Liabilities due and owing to the Senior
Parties and any Subordinated Debt Provider. If the Power Purchaser has not
within 90 days of the date of such notice provided the Collateral Agent with a
binding written notice of its intent to purchase the Facility for such amount,
the Collateral Agent shall no longer have any obligation under this paragraph.
If the Power Purchaser offers within such period to purchase the Facility for
such amount within 120 days after the expiration of such 90 day period, the
Collateral Agent shall take such actions as required to consummate such sale
promptly as directed by the Required Senior Parties in Senior Party
Certificates.
SECTION 2.4 Rights of Senior Parties.
The Senior Parties and the Collateral Agent (upon receipt of Senior
Party Certificates from the Required Senior Parties) may, at any time and from
time to time, without any consent of or notice to any Subordinated Debt
Providers, (i) amend in any manner any Security Document or any agreement under
which any of the Financing Liabilities is outstanding in accordance with the
terms thereof, (ii) sell, exchange, release, not perfect and otherwise deal with
any property at any time pledged, assigned or mortgaged to secure the Financing
Liabilities in accordance with the Security Documents, (iii) release anyone
liable in any manner under or in respect of the Financing Liabilities, (iv)
exercise or refrain from exercising any rights against the Company and
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others and (v) apply any sums from time to time received to payment or
satisfaction of the Financing Liabilities.
SECTION 2.5 Certain Amendments.
Notwithstanding anything to the contrary in this Agreement or any
Security Document, if any consent or direction of the Required Secured Parties
is necessary in order for the Collateral Agent to exercise any rights or
remedies under any of the Security Documents or this Agreement, or to amend,
modify or supplement, give any consent under, or waive any provision of, any of
the Security Documents or this Agreement, and if any such exercise of rights or
remedies, or any such amendment, modification, supplement, consent or waiver
(either alone or together with each then effective amendment, modification,
supplement, consent or waiver not previously approved in accordance with this
paragraph by the CP LOC Provider or the DSR LOC Provider, as the case may be)
could reasonably be expected to have a material adverse effect on the CP LOC
Provider or the DSR LOC Provider (which material adverse effect is materially
different from the effect with respect to other Senior Parties), the Collateral
Agent shall not accept such consent or direction from the Required Senior
Parties unless the CP LOC Provider or the DSR LOC Provider, as the case may be,
shall have received written notice of such proposed consent or direction at
least fifteen days prior to the effectiveness thereof, and the CP LOC Provider
or the DSR LOC Provider, as the case may be, shall have approved such amendment,
modification or supplement, consent or waiver (which approval shall not be
unreasonably withheld).
ARTICLE III
ACCOUNTS
SECTION 3.1 Establishment of Project Accounts.
The Collateral Agent hereby confirms that it has established with the
Depositary Bank at its office at the address listed in Section 7.4, New York,
New York, the following special, segregated accounts (the "Project Accounts"):
(i) Construction Account;
(ii) Revenue Account;
(iii) Operating and Maintenance Account;
(iv) Debt Service Reserve Account;
(v) DSR LOC Reimbursement Fund;
(vi) CP LOC Reimbursement Fund;
(vii) Restoration Account;
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(viii) Major Maintenance Reserve Account;
(ix) Fuel Conversion Payment Volume Rebate Account;
(x) Subordinated Debt Account; and
(xi) Distribution Account.
All amounts from time to time held in each Project Account shall be
held (a) in the name of the Collateral Agent subject to the lien and security
interest of the Collateral Agent for the benefit of the Senior Parties or
certain of them as set forth herein and (b) in the custody of the Depositary
Bank for and on behalf of the Collateral Agent for the purposes and on the terms
set forth in this Agreement. All such amounts shall constitute a part of the
Collateral and shall not constitute payment of any Indebtedness or any other
obligation of the Company until applied as hereinafter provided.
SECTION 3.2 Investment of Funds in the Project Accounts.
(a) Amounts deposited in the Project Accounts (and each subaccount
thereof) and each other account or fund created hereunder (unless expressly
stated otherwise), at the written request and direction of the Company, shall be
invested by the Collateral Agent in Permitted Investments. Such investments
shall mature in such amounts and not later than such times as may be necessary
to provide funds when needed to make payments from such funds as provided in
this Agreement. Net interest or gain received from such investments shall be
applied as provided in this Agreement.
(b) So long as an outstanding balance shall remain in the Project
Accounts or any other account or fund created hereunder, the Collateral Agent
shall provide the Company, the DSR LOC Provider and the CP LOC Provider with
statements by the tenth (10th) Business Day of each month showing the amount of
all receipts, the net investment income or gain received and collected, all
disbursements and the amount then available as of the last Business Day of the
prior calendar month in the Project Accounts (and each subaccount thereof) and
each other account or fund created hereunder. The Depositary Bank agrees to
provide the Collateral Agent with such information as it may reasonably have
available to it in order to permit the Collateral Agent to provide such
statements in accordance with the requirements hereof.
SECTION 3.3 Valuation and Sale of Investments.
(a) Obligations purchased as an investment of funds in any Project
Account or any other separate account or fund created under the provisions
hereof shall be deemed at all times to be a part of such account or fund and,
unless otherwise specified herein, any profit realized from the liquidation of
such investment shall be credited to such Project Account or such other separate
account or fund created hereunder, and any loss resulting from the liquidation
of such investment shall be charged to the respective Project Account or such
other separate account or fund.
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(b) The Collateral Agent shall determine the value of all investments
in any of the Project Accounts or the Bond Payment Account as of the last
Business Day of each month, with any deficit in any account balance to be funded
from Project Revenues in accordance with Section 3.3, and any investments valued
in excess of the amounts required to be on deposit in an account shall be
liquidated and the amount of such excess shall be deposited in the Revenue
Account for application in accordance with Section 3.10.
(c) The Collateral Agent shall determine the value of all investments
in the Debt Service Reserve Account in accordance with Section 3.12.
(d) In computing the amount of any funds in any Project Account, or
other separate account or fund created under the provisions hereof for any
purpose provided in this Agreement, obligations purchased as an investment of
funds therein shall be valued at the market value of such obligations, exclusive
of accrued interest; provided, however, that if there is no readily determinable
market value for such obligations, the value of such obligations shall be
determined with reference to the acquisition price of such obligations, plus
accrued but unpaid interest.
(e) The Depositary Bank agrees to provide the Collateral Agent with
such information as it may reasonably have available to it in order to permit
the Collateral Agent to make such determinations and transfers as may be
required by this Section 3.3.
SECTION 3.4 Possession of Accounts; Liquidation.
(a) Each of the Project Accounts shall at all times be in the exclusive
possession of the Depositary Bank acting for and on behalf of the Collateral
Agent acting for and on behalf of the Senior Parties.
(b) Notwithstanding any provision hereof to the contrary, if a Trigger
Event shall have occurred and be continuing, the Collateral Agent shall promptly
liquidate all amounts in the Project Accounts and all related investments and
distribute all such monies so received in accordance with Section 4.1.
SECTION 3.5 The Depositary Bank; Limited Company Rights.
(a) The Depositary Bank.
(i) Establishment of Securities Accounts. The Depositary Bank
hereby agrees and confirms that (A) the Depositary Bank has established
the Project Accounts as set forth in Section 3.1, (B) each Project
Account is and will be maintained as a "securities account" (within the
meaning of Section 8-501 of the UCC), (C) the Company is the
"entitlement holder" (within the meaning of Section 8-102(a)(7) of the
UCC) in respect of the "financial assets" (within the meaning of
Section 8-102(a)(9) of the UCC) credited to the Project Accounts, (D)
all property delivered to the Depositary Bank pursuant to the
Transaction Documents or this Agreement will be held by the Depositary
Bank and promptly credited to a Project Account by an appropriate entry
in its records in accordance with this Agreement, (E) all "financial
assets" (within the meaning of Section
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8-102(a)(9) of the UCC) in registered form or payable to or to the
order of and credited to any Project Account shall be registered in the
name of, payable to or to the order of, or endorsed to, the Depositary
Bank or in blank, or credited to another securities account maintained
in the name of the Depositary Bank, and in no case will any financial
asset credited to any Project Account be registered in the name of,
payable to or to the order of, or endorsed to, the Company except to
the extent the foregoing have been subsequently endorsed by the Company
to the Depositary Bank or in blank and (F) the Depositary Bank shall
not change the name or account number of any Project Account without
the prior written consent of the Collateral Agent.
(ii) Financial Assets Election. The Depositary Bank agrees
that each item of property (excluding cash, but including any security,
instrument or obligation, share, participation, interest or other
property whatsoever) credited to any Project Account shall be treated
as a "financial asset" within the meaning of Section 8-102(a)(9) of the
UCC.
(iii) Entitlement Orders. If at any time the Depositary Bank
shall receive any "entitlement order" (within the meaning of Section
8-102(a)(8) of the UCC) or any other order from the Collateral Agent
acting in accordance with this Agreement directing the transfer or
redemption of any financial asset relating to the Project Accounts, the
Depositary Bank shall comply with such entitlement order or other order
without further consent by the Company or any other Person. The parties
hereto hereby agree that the Collateral Agent shall have "control"
(within the meaning of Section 8-106(d) of the UCC) of the Company's
"security entitlement" (within the meaning of Section 8-102(a)(17) of
the UCC) with respect to the financial assets credited to the Project
Accounts and the Company hereby disclaims any entitlement to claim
"control" of such "security entitlement".
(iv) Subordination of Lien; Waiver of Set-off. If the
Depositary Bank has or subsequently obtains by agreement, operation of
law or otherwise a lien or security interest in any Project Account or
any security entitlement credited thereto, the Depositary Bank agrees
that such lien or security interest shall be subordinate to the lien
and security interest of the Collateral Agent. The financial assets
standing to the credit of the Project Accounts will not be subject to
deduction, set-off, banker's lien, or any other right in favor of any
Person other than the Collateral Agent in its capacity as such (except
that the face amount of any checks which have been credited to any
Project Account but are subsequently returned unpaid because of
uncollected or insufficient funds).
(v) No Other Agreements. The Depositary Bank and the Company
have not entered into any agreement with respect to the Project
Accounts or any financial assets credited to any Project Account other
than this Agreement and the other Security Documents. The Depositary
Bank has not entered into any agreement with the Company or any other
Person purporting to limit or condition the obligation of the
Depositary Bank to comply with entitlement orders originated by the
Collateral Agent in accordance with this Section 3.5. In the event of
any conflict between this Section 3.5 or any other
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Security Document or any other agreement now existing or hereafter
entered into, the terms of this Section 3.5 shall prevail.
(vi) Notice of Adverse Claims. Except for the claims and
interest of the Collateral Agent and the Company in each of the Project
Accounts, the Depositary Bank does not know of any claim to, or
interest in, any Project Account or in any financial asset credited
thereto. If any Person asserts any lien, encumbrance or adverse claim
(including any writ, garnishment, judgment, warrant of attachment,
execution or similar process) against any Project Account or in any
financial asset credited thereto, the Depositary Bank will promptly
notify the Collateral Agent and the Company thereof.
(vii) Rights and Powers of the Collateral Agent. The rights
and powers granted by the Collateral Agent to the Depositary Bank have
been granted in order to perfect its lien and security interests in the
Project Accounts, are powers coupled with an interest and will neither
be affected by the bankruptcy of the Company nor the lapse of time.
(viii) Choice of Law. Both this Agreement and each Project
Account (including all security entitlements relating thereto) shall be
governed by the law of the State of New York. Regardless of any
provision in any other agreement, for purposes of the UCC, the
"securities intermediary's jurisdiction" of the Depositary Bank with
respect to the Project Accounts is the State of New York.
(b) Limited Company Rights. The Company shall not have any rights
against or to monies held in the Project Accounts, as third-party beneficiary or
otherwise or any right to direct the Depositary Bank or the Collateral Agent to
apply or transfer monies in any Project Account, except the right to receive or
make requisitions of monies held in the Project Accounts, as permitted by this
Agreement and to direct the investment of monies held in the Project Accounts as
permitted by Section 3.2. Except as expressly provided in this Agreement, in no
event shall any amounts or Permitted Investments deposited in or credited to any
Project Account be registered in the name of the Company, payable to the order
of the Company or specially endorsed to the Company except to the extent that
the foregoing have been specially endorsed to the Collateral Agent or in blank.
SECTION 3.6 Advances.
(a) Notwithstanding any other provision hereof to the contrary, the
Company may, by delivering an Officer's Certificate to the Collateral Agent,
withdraw funds on deposit in or credited to any of the Available Accounts
("Advances"); provided, however, that, at the time of the making of such
Advance, (i) no Default or Event of Default shall have occurred and be
continuing and the Officer's Certificate of the Company shall so certify and
(ii) the Company's obligations to repay such Advances shall be supported by
Acceptable Credit Support. The Collateral Agent may conclusively rely on such
Officer's Certificate certifying that all conditions for withdrawals from the
Available Accounts have been met.
(b) The Company shall repay immediately or cause to be repaid any
Advances to the extent that the funds on deposit in such Available Accounts are,
on the Business Day next
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preceding the day on which such funds are to be withdrawn or transferred from
such Available Accounts pursuant to this Article III, insufficient to make the
necessary withdrawals and transfers. In addition, the Company shall cause to be
repaid immediately the aggregate amount of all Advances upon the occurrence of
(i) a default in the payment of principal of, premium, if any, or interest on
the Bonds or pursuant to the DSR LOC Reimbursement Agreement, the CP LOC
Reimbursement Agreement or any working capital facility, (ii) any Event of
Default, (iii) any default by an Acceptable Credit Provider in respect of its
obligations under its Acceptable Credit Support or (iv) the failure of the
Company to provide, within five (5) Business Days, Acceptable Credit Support in
respect of its obligations to repay Advances upon the failure of the Acceptable
Credit Provider to meet the requirements of the definition thereof. Any amounts
so repaid shall be allocated to and deposited in the Available Accounts to which
such repayment is required to be made as directed by the Company in an Officer's
Certificate.
(c) If an Advance is repaid but the Acceptable Credit Support in
respect of such Advance remains outstanding, the Collateral Agent, upon receipt
of a written request of the Company, shall, and hereby is directed to, promptly
execute such documents and agreements as the Company may reasonably request in
order to terminate such Acceptable Credit Support upon expiration of all
obligations thereunder in respect of repayment of such Advance.
SECTION 3.7 Collection of Project Revenues.
The Company shall arrange for the direct payment to the Collateral
Agent of all Project Revenues, and to the extent any such Project Revenues are
at any time received by the Company prior to the Commercial Operation Date, the
Company shall hold all such revenues and other such amounts in trust for the
Collateral Agent and shall transfer to the Collateral Agent for deposit of such
Project Revenues in the Construction Account in each case as soon as reasonably
practical but no later than three (3) Business Days after receipt thereof (duly
endorsed, if necessary, to the Collateral Agent).
SECTION 3.8 Construction Account.
(a) On the Closing Date, the Company shall cause the Trustee to make
the transfer specified in the final sentence of Section 5.1 of the Indenture and
the Collateral Agent shall deposit the amount so received in the Construction
Account.
(b) On the Closing Date, upon receipt by the Collateral Agent of a
complete and properly executed requisition substantially in the form of Exhibit
3.8 (a "Requisition") signed by the Company (the contents of which shall be
confirmed by the Independent Engineer), the Collateral Agent shall apply the
amounts in the Construction Account to the payment, or reimbursement, to the
extent the same have been paid or satisfied by the Company, of Project Costs.
(c) Monthly after the Closing Date, or as frequently as may reasonably
be necessary, the Company may submit a Requisition to disburse monies from the
Construction Account; provided, that each Requisition (except for any
Requisition with respect to the initial drawing on the Closing Date) shall be
submitted to the Collateral Agent no less than three (3) Business Days
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in advance of the drawing date and shall include the following: (i) a
certification that the proceeds thereof shall be used solely to pay Project
Costs in accordance with the Indenture; (ii) a certification that work performed
to date has been satisfactorily performed in a good and workmanlike manner and
according to the EPC Contract; (iii) a statement that undisbursed funds in the
Construction Account, together with funds available under the Equity
Subscription Agreement and other available sources of funds, are reasonably
expected to be sufficient to complete the Facility according to the EPC Contract
by the Date Certain; (iv) a statement that no Default or Event of Default under
the Indenture, the DSR LOC Reimbursement Agreement, the CP LOC Reimbursement
Agreement or any working capital facility has occurred and is continuing; (v) a
statement that all proceeds of prior Requisitions have been expended or applied
pursuant to the provisions of the Financing Documents and that the items for
which amounts are requested in the subject Requisition have not been the basis
for a previous Requisition; (vi) a certification that required insurance,
material Governmental Approvals and necessary Project Contracts are in full
force and effect; and (vii) a certification that the representations set forth
in Sections 3.1, 3.3, 3.4, 3.5, 3.8 and 3.10 of the Indenture are true and
correct in all material respects. Subject to the remaining provisions of this
Section 3.8, upon receipt of a properly delivered Requisition, the Collateral
Agent shall transfer funds from the Construction Account in accordance with such
Requisition.
(d) If the Company cannot satisfy the requirements of clauses (i) or
(v) of Section 3.8(c), the Collateral Agent shall not release funds from the
Construction Account in respect of such Requisition until such clauses are
satisfied. If the Company cannot satisfy clauses (ii), (iii), (iv), (vi) or
(vii) of Section 3.8(c), but the Collateral Agent receives a Requisition signed
by the Company (the contents of which shall be confirmed by the Independent
Engineer) (i) specifying and identifying the failure, and the causes for the
failure, to satisfy the requirements of such clauses (ii), (iii), (iv), (vi) or
(vii) of Section 3.8(c) and (ii) certifying that (A) the requirements of clauses
(i) and (v) of Section 3.8(c) are satisfied, (B) there exists no Bankruptcy
Event in respect of the Company or AES Ironwood, and (C) each of the EPC
Contract, the Power Purchase Agreement, required insurance policies and material
Governmental Approvals needed for construction of the Facility is in full force
and effect, then the Collateral Agent shall disburse funds in accordance with
such Requisition. Within fifteen (15) days of receipt of such Requisition, the
Collateral Agent shall give notice to the Senior Parties describing such failure
and specifying that, unless the Required Senior Parties give notice to the
Collateral Agent of their objection to payment of further Requisitions
containing any such specified failures, the Collateral Agent shall continue to
make payment of such Requisitions from available funds in the Construction
Account, unless the Collateral Agent shall have received, by the second Business
Day prior to the time of payment of such Requisition, notice of objection from
the Required Senior Parties.
(e) Notwithstanding the foregoing, the Collateral Agent will not
release funds from the Construction Account in respect of a requisition if a
Trigger Event shall have occurred and be known to the Collateral Agent and be
continuing until the Collateral Agent determines that such Trigger Event is no
longer continuing or the Required Senior Parties give instructions to the
Collateral Agent as to application of funds.
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(f) If on the date that the Collateral Agent receives a Requisition
pursuant to Section 3.8(c) there are insufficient monies in the Construction
Account to fully satisfy the uses of funds set forth in such Requisition, the
Collateral Agent shall, and is hereby directed to, on the date such Requisition
is so received deliver a written notice in accordance with the Equity
Subscription Agreement requesting an Equity Contribution in accordance with
Section 2 of the Equity Subscription Agreement. The Collateral Agent shall apply
the proceeds of such Equity Contribution in accordance with the provisions of
Section 3.8 and the remaining provisions hereof.
SECTION 3.9 Payments on Commercial Operation Date.
Not later than ten (10) days after receipt by the Collateral Agent of
an Officer's Certificate (the "Commercial Operation Certificate") (the contents
of which shall be confirmed in writing by the Independent Engineer) certifying
that (i) all conditions precedent to the occurrence of the Commercial Operation
Date have been satisfied, (ii) except as stated in such certificate, all labor
and services required to acquire and complete the Facility have been paid for,
(iii) the amount, if any, required for the payment of any remaining portion of
the Project Costs not then due or payable (or which are being contested) to be
retained in the Construction Account, (iv) all permits, licenses, consents and
approvals required on such date by Governmental Authorities for the initial
operation of the Facility have been obtained, (v) the amounts to be transferred
from the Construction Account in accordance with Section 3.8, (vi) no Default or
Event of Default has occurred or is continuing and (vii) the CP Letter of Credit
has been terminated or drawn, the Collateral Agent shall, after retaining in the
Construction Account the amount, if any, specified by the Company pursuant to
clause (iii) above as necessary to pay Project Costs which are not then due and
payable (or which are being contested), transfer all remaining funds in the
Construction Account (plus, to the extent necessary, any amounts available under
and pursuant to the Equity Subscription Agreement to fund first through fifth
below) by wire transfer in accordance with such Officer's Certificate to the
following accounts and recipients in the following order of priority:
first, to the Operating and Maintenance Account, an amount to the
extent available, as specified by the Company but in any event, no less than
one-month's non-fuel Operating and Maintenance Costs;
second, to the Bond Payment Account, an amount, to the extent
available, as specified by the Company for funding of the Interest Payment
Subaccount and Principal Payment Subaccount;
third, to the Debt Service Reserve Account, an amount as specified by
the Company equal to the DSRA Required Balance to the extent not already funded
or provided through a DSR Letter of Credit;
fourth, if applicable, to the CP LOC Provider, an amount equal to the
principal of and interest on any CP LOC Loans outstanding on the Commercial
Operation Date;
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fifth, to the Major Maintenance Reserve Account, an amount as specified
by the Company equal to any initial deposit required therein; and
sixth, to the Revenue Account, any remaining amounts.
SECTION 3.10 Revenue Account.
(a) The Revenue Account shall be funded (i) from transfers made from
the Construction Account in accordance with Sections 3.8 and 3.9, (ii) with all
Project Revenues received subsequent to the transfer to be made pursuant to
Section 3.9 and (iii) as otherwise specified in this Agreement.
(b) After the transfer specified in Section 3.9 and upon receipt by the
Collateral Agent, not less than three (3) Business Days prior to the date of the
proposed transfer, of an Officer's Certificate of the Company detailing the
amounts to be paid, the Collateral Agent shall transfer funds in the Revenue
Account by wire transfer in accordance with such Officer's Certificate and the
following order of priority:
first, as and when required, (i) to any working capital provider, an
amount certified by the Company as the amount, if any, then payable under any
working capital facility and (ii) as and when requested, to the Operating and
Maintenance Account, the amount certified by the Company as necessary for
payment of Operating and Maintenance Costs, including fees then due and owing to
the Operator except in the case of such fees, to the extent that there are
insufficient amounts in the Revenue Account to make the payments specified in
paragraphs first through sixth of this Section 3.10;
second, on a monthly basis, (i) to the Trustee and the Collateral
Agent, any amounts certified by the Company as the amounts then due and payable
in respect of Trustee Claims and Collateral Agent Claims, respectively, (ii) to
any DSR LOC Provider, any amounts certified by the Company as the amounts then
due and payable in respect of DSR LOC Provider Claims and (iii) to any CP LOC
Provider, any amounts certified by the Company as amounts then due and payable
in respect of CP LOC Provider Claims; provided, however, that if funds in the
Revenue Account are insufficient on any date to make the payments specified in
this paragraph second, distribution of funds shall be made ratably to the
specified recipients;
third, on a monthly basis, (i) to the Trustee, for deposit in the
Interest Payment Subaccount, an amount equal to one-third of the interest
becoming due on the Bonds on the next succeeding Bond Payment Date, (ii) to the
DSR LOC Reimbursement Fund, (a) an amount equal to one-third of the interest
becoming due on any DSR LOC Loan on the next succeeding Bond Payment Date, plus
one-third of any fees becoming due under the DSR LOC Reimbursement Agreement on
the next succeeding Bond Payment Date, (b) an amount equal to one-third of the
interest becoming due on any DSR Bond on the next succeeding Bond Payment Date
and (c) an amount equal to one-third of the interest becoming due on any DSR LOC
Term Loan on the next succeeding Bond Payment Date and (iii) to the CP LOC
Reimbursement Fund, an amount equal to one-third of the interest becoming due on
any CP LOC Loan on the next succeeding Bond Payment Date, plus one-third of any
fees becoming due under the CP LOC Reimbursement
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Agreement on the next succeeding Bond Payment Date; provided, however, that if
funds in the Revenue Account are insufficient on any date to make the payments
specified in this paragraph third, distribution of funds shall be made ratably
to the specified recipients;
fourth, on a monthly basis, (i) to the Trustee, for deposit in the
Principal Payment Subaccount, an amount equal to one-third of the principal
becoming due on the Bonds on the next succeeding Bond Payment Date, (ii) to the
DSR LOC Reimbursement Fund, (a) an amount equal to one-third of the principal
becoming due on such DSR Bond on the next succeeding Bond Payment Date and (b)
an amount equal to one-third of the principal becoming due on any DSR LOC Term
Loan on the next succeeding Bond Payment Date and (iii) to the CP LOC
Reimbursement Fund, an amount equal to one-third of the principal becoming due
on any CP LOC Loan on the next succeeding Bond Payment Date; provided, however,
that if funds in the Revenue Account are insufficient on any date to make the
payments specified in this paragraph fourth, distribution of funds shall be made
ratably to the specified recipients;
fifth, on a monthly basis, first, to the DSR LOC Provider, an amount
equal to the outstanding principal amount of any DSR LOC Loans that have not
been converted into DSR LOC Term Loans or DSR Bonds and second, to the
Collateral Agent for deposit in the Debt Service Reserve Account, an amount
necessary to fund the Debt Service Reserve Account up to the DSRA Required
Balance (after taking into account any amounts remaining available to be drawn
under the DSR Letter of Credit); provided, however, that if amounts available
for drawing under the DSR Letter of Credit are not being reinstated to the full
extent of payment made to the DSR LOC Provider and funds in the Revenue Account
are insufficient on any date to make the payments specified in this paragraph
fifth, distribution of funds shall be made ratably to the specified recipients;
sixth, on a monthly basis, to the Major Maintenance Reserve Account,
amounts necessary to cause the balance thereof to be equal to the minimum
balance required at such time under the Annual Budget;
seventh, on a monthly basis, to the Company for payment by the Company
to the Power Purchaser, the amount, if any, certified by the Company as required
to make any Non-Dispatch Payments to the Power Purchaser pursuant to Appendix 1
to the Power Purchase Agreement;
eighth, on a monthly basis, to the Fuel Conversion Payment Volume
Rebate Account, an amount equal to one-twelfth of the amount specified by the
Company that would be owed to the Power Purchaser at the end of the then current
Fiscal Year pursuant to Appendix 1 to the Power Purchase Agreement;
ninth, on a monthly basis, if any Subordinated Debt is outstanding, to
the Subordinated Debt Account, an amount equal to (x) one-third or one-sixth
(depending on the interest payment schedule of such debt) of the interest
becoming due on such Subordinated Debt on the next succeeding interest payment
date for such debt, plus (y) one-third or one-sixth (depending on the
amortization schedule of such debt) of the principal becoming due on such
Subordinated Debt on the next applicable principal payment date;
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tenth, on a monthly basis, to the Contractor, an amount equal to any
subordinated bonuses payable to the Contractor under the EPC Contract; and
eleventh, on a monthly basis, to the Distribution Account, any
remaining amounts for payment of distributions to holders of ownership interests
(including any payment in respect of principal or interest then due on Affiliate
Subordinated Debt); provided, that no such distribution from the Distribution
Account shall be made unless the Distribution Conditions set forth in Section
3.14 have been satisfied.
(c) When making the transfers specified in Section 3.10(b), each
transfer shall be adjusted as necessary, taking into account investment gains or
losses in such Project Account or Indenture Account and further adjusting such
transfers by the amount any prior over-fundings or any prior shortfalls in such
Project Account or Indenture Account, to ensure that the aggregate amounts so
transferred to such Project Accounts or Indenture Accounts are sufficient to pay
the amount due and payable from such Project Accounts and Indenture Accounts on
the applicable payment date.
SECTION 3.11 Operating and Maintenance Account.
(a) The Operating and Maintenance Account shall be funded from funds
transferred by the Collateral Agent from (i) the Construction Account pursuant
to Section 3.9 and (ii) the Revenue Account pursuant to Section 3.10; provided,
that at the beginning of each month, the Operating and Maintenance Account shall
contain an amount at least sufficient to pay one-month's non-fuel Operating and
Maintenance Costs.
(b) Upon receipt by the Collateral Agent of an Officer's Certificate of
the Company detailing the amounts to be paid, the Collateral Agent shall
transfer funds in the Operating and Maintenance Account to the Company or to
whomsoever the Company directs for application to the payment of Operating and
Maintenance Costs.
SECTION 3.12 Debt Service Reserve Account.
(a) The Company shall deliver, or cause to be delivered, to the
Collateral Agent the DSR Letter of Credit upon the earlier to occur of (i) the
Commercial Operation Date, (ii) the Guaranteed Completion Date, or (iii) the
Date Certain. The Collateral Agent shall hold the DSR Letter of Credit as
security agent for the Trustee and the DSR LOC Provider to the extent of its
interest therein. The Collateral Agent is hereby authorized to submit sight
drafts and other required documentation under the DSR Letter of Credit, in each
case, when and to the extent permitted under the DSR Letter of Credit and for
the purposes specified in this Section 3.12.
(b) Upon the occurrence of the Commercial Operation Date, the Debt
Service Reserve Account, shall be funded, if necessary after taking into account
the Outstanding Amount of the DSR Letter of Credit, from monies available in the
Construction Account for such purpose in accordance with Section 3.9 in an
amount up to the DSRA Required Balance.
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(c) Subsequent to the Commercial Operation Date, the Debt Service
Reserve Account shall be funded, if necessary, from monies transferred from the
Revenue Account as and when specified in Section 3.10.
(d) Notwithstanding any other provision hereof to the contrary, when
determining (i) the amount, if any, required to be deposited (or the amount so
required to be deposited) into the Debt Service Reserve Account from time to
time or (ii) whether the Debt Service Reserve Account has deposited therein the
DSRA Required Balance, amounts on deposit in the Debt Service Reserve Account
shall be aggregated with the amount available to be drawn on the DSR Letter of
Credit.
(e) When there are insufficient monies in the Bond Payment Account on
any Bond Payment Date to pay the interest or principal then due on the Bonds,
the Collateral Agent shall, upon receipt prior to such Bond Payment Date of an
Officer's Certificate of the Company and as directed on such certificate, in the
following order of priority: first, withdraw monies on deposit in the Debt
Service Reserve Account; and second, draw on the DSR Letter of Credit in
accordance with the terms and provisions thereof up to the amount available for
such purpose thereunder, in each case, to the extent necessary to make such
interest or principal payment on the Bonds and transfer such monies to the
Trustee for deposit in the Bond Payment Account for application against such
payment.
(f) If the Collateral Agent receives a written notice from the Company
stating that there has been a reduction in the long-term debt rating of the DSR
LOC Provider below the Required Rating, or if a Responsible Officer of the
Collateral Agent otherwise becomes aware of such reduction, and the DSR Letter
of Credit has not been replaced within the time period specified therefor, the
Collateral Agent shall draw on the DSR Letter of Credit in the amount necessary
to fund the Debt Service Reserve Account up to the DSRA Required Balance (as
certified in an Officer's Certificate of the Company delivered to the Collateral
Agent, calculated without aggregating therewith the amount available to be drawn
under the DSR Letter of Credit but taking into account amounts then on deposit
in or credited to the Debt Service Reserve Account), whereupon the Collateral
Agent shall deposit the proceeds of such drawing in the Debt Service Reserve
Account, and the DSR Letter of Credit shall thereupon automatically terminate.
The Company shall give the notice specified in this Section 3.12(f) within three
(3) Business Days of its actual knowledge of the event giving rise to such
notice.
(g) If the Collateral Agent receives a written notice from the DSR LOC
Provider substantially in the form of Annex 2 to the DSR Letter of Credit,
stating that the DSR LOC Provider shall terminate the DSR Letter of Credit on
the date specified in such notice (which termination date shall be no sooner
than 60 days following the giving of such notice), the Collateral Agent shall,
within three (3) Business Days of receipt of such notice, draw on the DSR Letter
of Credit in an amount equal to the amount necessary to fund the Debt Service
Reserve Account up to the DSRA Required Balance (calculated without aggregating
therewith the amount available to be drawn under the DSR Letter of Credit),
whereupon the Collateral Agent shall deposit the proceeds of such drawing in the
Debt Service Reserve Account, and the DSR Letter of Credit shall thereupon
automatically terminate.
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(h) If a Trigger Event shall have occurred and be continuing and the
Collateral Agent has received the written request of the Required Senior Parties
contained in Senior Party Certificates and such notice has not been rescinded,
then the Collateral Agent, upon receipt of an Officer's Certificate of the
Company setting forth the DSRA Required Balance (calculated without aggregating
therewith the amount available to be drawn under the DSR Letter of Credit),
shall draw on the DSR Letter of Credit in an amount equal to the amount
necessary to fund the Debt Service Reserve Account up to the DSRA Required
Balance (calculated as described in the immediately preceding parenthetical),
whereupon the Collateral Agent shall distribute the proceeds of such drawing,
together with other amounts available in the Debt Service Reserve Account, to
the Trustee, and the DSR Letter of Credit shall thereupon automatically
terminate. The failure of the Collateral Agent to receive the written request of
the Required Senior Parties contained in Senior Party Certificates shall not
limit the rights or obligations of the Collateral Agent otherwise provided for
herein.
(i) If, subsequent to the Commercial Operation Date, monies transferred
to the DSR LOC Provider pursuant to Section 3.10(b) third are insufficient to
repay the interest on any DSR LOC Loans due or becoming due on the first day of
such month, the Collateral Agent, upon receipt of a certificate of an Authorized
Officer of the DSR LOC Provider notifying the Collateral Agent of the existence,
and setting forth the amount, of such shortfall, within two (2) Business Days of
receipt of such certificate shall draw on the DSR Letter of Credit in an amount
equal to the amount of such shortfall and transfer such amount to the DSR LOC
Provider in payment (in whole or part) of such interest on such DSR LOC Loans.
Notwithstanding the foregoing, in no event shall any draw on the DSR Letter of
Credit under this Section 3.12(i) individually or in the aggregate with all
other such draws less draws previously reimbursed exceed an amount (the
"Interest Portion") equal to six (6) months of interest on the Maximum Stated
Amount of the DSR Letter of Credit computed at a rate per annum equal to (x) 2%
plus (y) the three-month LIBOR rate as in effect two Business Days prior to the
date of issuance of the DSR Letter of Credit plus (z) 50 basis points; provided,
however, that to the extent amounts available to be drawn under the DSR Letter
of Credit have been reinstated due to reimbursement of prior draws on the DSR
Letter of Credit, draws on the DSR Letter of Credit under this Section 3.12(i)
may equal (in the aggregate with all other such draws) the sum of (x) the
Interest Portion plus (y) an amount equal to the aggregate amount of all
reinstatements of amounts available to be drawn under the DSR Letter of Credit
allocable to prior reimbursements of draws on the DSR Letter of Credit under
this Section 3.12(i) (such allocation shall be determined by multiplying the
aggregate amount of prior reimbursements of draws by a fraction, the numerator
of which is the aggregate amount of drawings under the DSR Letter of Credit
described in this paragraph and the denominator of which is the aggregate amount
of drawings under the DSR Letter of Credit for all purposes).
(j) Unless the DSR Letter of Credit is not extended or replaced or
unless there has been a DSR LOC Event of Default all as described under the DSR
LOC Reimbursement Agreement, amounts available for drawing under the DSR Letter
of Credit shall be reinstated immediately to the extent of any reimbursement of
principal in respect of DSR LOC Loans (but not DSR LOC Term Loans or DSR Bonds).
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(k) If the Company and the DSR LOC Provider shall agree to issue or
reinstate the DSR Letter of Credit in an amount that, when aggregated with cash
on deposit in the Debt Service Reserve Account, would exceed the DSRA Required
Balance (the amount of such excess being referred to hereinafter as the "Excess
Amount"), the Collateral Agent shall, within two (2) Business Days of receipt by
the Collateral Agent of (i) such reissued or reinstated DSR Letter of Credit and
(ii) an Officer's Certificate of the Company, transfer an amount equal to the
Excess Amount to the Revenue Account for application in accordance with clause
eleventh of Section 3.10; provided, that the amount of the DSR Letter of Credit
may not exceed the DSRA Required Balance.
SECTION 3.13 Major Maintenance Reserve Account.
(a) The Major Maintenance Reserve Account shall be funded (i) from
funds transferred by the Collateral Agent from the Construction Account pursuant
to Section 3.9 and (ii) on a monthly basis pursuant to Section 3.10. The Company
shall specify funding of the Major Maintenance Reserve Account in light of the
Annual Budget and taking into account expected costs of major maintenance,
including costs under the Maintenance Services Agreement not included as an
Operating and Maintenance Cost and major maintenance intervals.
(b) Upon receipt by the Collateral Agent of an Officer's Certificate of
the Company detailing the amounts to be paid, the Collateral Agent shall
transfer funds in the Major Maintenance Reserve Account to the Company or to
whomsoever the Company directs for application to the payment of major
maintenance costs and expenses of the Facility that are not otherwise paid as
Operating and Maintenance Costs pursuant to Section 3.11.
(c) If Project Revenues are insufficient to pay Operating and
Maintenance Expenses and debt service, the Company may, through the delivery of
an Officer's Certificate to that effect, direct the Collateral Agent to apply
funds in the Major Maintenance Reserve Account to the payment of Operating and
Maintenance Expenses and debt service.
SECTION 3.14 Distribution Account.
(a) The Distribution Account shall be funded from funds transferred
from the Revenue Account in accordance with Section 3.10.
(b) On any date on which the conditions set forth below (the
"Distribution Conditions") are satisfied, funds on deposit in or credited to the
Distribution Account may be distributed to, or as directed by, the Company for
the payment of Affiliate Subordinated Debt, the making of distributions to the
holders of ownership interests in the Company or any other lawful purpose, upon
receipt by the Collateral Agent of an Officer's Certificate of the Company
requesting such a distribution and certifying that:
(i) all of the Project Accounts described in Section 3.10(b)
and the Bond Payment Account shall be funded to their required levels;
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(ii) no (A) Default or Event of Default under the Indenture,
(B) default or event of default under the DSR LOC Reimbursement
Agreement, (C) default or event of default under any CP LOC
Reimbursement Agreement or (D) default under any working capital
arrangements, if any, shall have occurred and be continuing;
(iii) the Commercial Operation Date has occurred and at least
one complete fiscal quarter thereafter has elapsed;
(iv) if the requested distribution is to be made during the
PPA Term, (A) the Senior Debt Service Coverage Ratio for the preceding
four (4) fiscal quarters (or, with respect to any date prior to the
first anniversary of the Commercial Operation Date, for the number of
complete fiscal quarters since the Commercial Operation Date), measured
as one period, is greater than or equal to 1.2 to 1 and (B) based on
projections prepared by the Company on a reasonable basis, the
projected Senior Debt Service Coverage Ratio for the succeeding four
(4) fiscal quarters (including the quarter in which such distribution
is to be made) (or, with respect to any date within the twelve
(12)-month period prior to the end of the PPA Term, the number of
complete fiscal quarters, if any, until the end of the PPA Term) is
projected to be greater than or equal to 1.2 to 1; and
(v) if the requested distribution is to be made on or after
the date which is six (6) months prior to the end of the PPA Term, (A)
the Senior Debt Service Coverage Ratio for the preceding four (4)
fiscal quarters (or, with respect to any date within the first twelve
(12) months of the Post-PPA Period, the number of complete fiscal
quarters, if any, since the start of the Post-PPA Period), measured as
one period, is greater than or equal to 1.70 to 1.0 (or 1.2 to 1.0 with
respect to such period occurring prior to the end of the PPA Term) and
(B) based on projections prepared by the Company on a reasonable basis,
the projected Senior Debt Service Coverage Ratio for the succeeding
eight (8) fiscal quarters (including the fiscal quarter in which such
distribution is to be made) (or, with respect to any date within the
twenty-four (24)-month period prior to the Final Maturity Date, the
number of complete fiscal quarters, if any, until such Final Maturity
Date), in each case measured as one period, is projected to be greater
than or equal to 1.70 to 1 (or 1.2 to 1 with respect to such period
occurring prior to the end of the PPA Term), each as certified by an
authorized officer of the Company; provided, however, that,
(A) if distributions are blocked because the Company
fails to satisfy the conditions of clause (v)(B) above, then
in lieu of the coverage ratio test set forth in such clause,
the projected Senior Debt Service Coverage Ratio through the
Final Maturity Date, measured as one period, shall be 1.70 to
1 in order to satisfy such clause (v)(B) in respect of amounts
then on deposit in the Distribution Account;
(B) for purposes of calculating the projected Senior
Debt Service Coverage Ratios in clauses (v)(B) above, the
Company shall use (1) for electricity prices, either (x) the
electricity prices forecasted in the most recent Independent
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Forecast furnished to the Trustee, in each case, during the
relevant period of calculation or (y) if and to the extent
that electricity sales during the relevant period of
calculation are made pursuant to one or more power sales
agreements at prices other than prices which are by their
terms market prices, the electricity prices under such power
sales agreements and (2) for gas prices, either (x) the gas
prices forecasted in the most recent Independent Forecast
furnished to the Trustee, in each case, during the relevant
period of calculation or (y) if and to the extent that gas
purchases during the relevant period of calculation are made
pursuant to one or more gas purchase agreements at prices
other than prices which are by their terms market prices, the
gas prices under such gas purchase agreements;
(C) if, and to the extent that, (x) at least 75% of
the Facility Capacity is subject to one or more power sales
agreements on terms (other than pricing) substantially similar
to the Power Purchase Agreement (but excluding the provision
for gas to be supplied for fuel conversion services by the
Power Purchaser) or on commercially reasonable terms (other
than pricing) typical of power sales agreements entered into
at such time for the same term, in each case with a term of
not less than one (1) year during the relevant period of
calculation, and (y) at least 75% of the gas supply for the
Facility is subject to one or more gas supply agreements on
commercially reasonable terms (other than pricing) typical of
gas supply agreements entered into at such time for the same
term, in each case with a term of not less than one (1) year
during the relevant period of calculation (compliance with
such requirements to be certified by the Company), then clause
(v) above shall be deemed satisfied, if the Senior Debt
Service Coverage Ratio and the projected Senior Debt Service
Coverage Ratio referred to in such clause (v) are each equal
to or greater than 1.30 to 1 for the portions of the time
periods referred to in such clause (v) in which such
agreements were or are to be in effect, as certified by the
Company; and
(D) if amounts on deposit in or credited to the
Revenue Account are insufficient to make the transfers
described in priorities first through sixth in Section 3.10,
amounts on deposit in or credited to the Distribution Account
will be transferred to the Revenue Account to the extent
necessary and applied in accordance with Section 3.10.
SECTION 3.15 Restoration Account.
(a) All Casualty Proceeds and Eminent Domain Proceeds shall be
deposited into the Restoration Account. Subject to Sections 3.15(d) and (e), the
Collateral Agent shall apply the amounts in the Restoration Account as directed
in writing by the Company to the payment, or reimbursement to the extent the
same have been paid or satisfied by the Company, of the costs of rebuilding,
repair and restoration of the Facility or any part thereof that has been
affected by an Event of Loss or an Event of Eminent Domain.
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(b) The Collateral Agent is hereby authorized to disburse from the
Restoration Account the amount required to be paid for the repair or replacement
of the Facility or any part thereof as specified in Section 3.15(a). The
Collateral Agent is hereby authorized and directed to issue its checks or
transfer funds electronically for each disbursement from the Restoration
Account, upon receipt of a Restoration Certificate signed by an Authorized
Representative of the Company and approved by the Independent Engineer;
provided, however, that no such approval of the Independent Engineer shall be
required if less than $5,000,000 is requested pursuant to such requisition or
requisitions in any one Fiscal Year. The Collateral Agent shall be entitled to
rely on all certifications and statements in such Restoration Certificate. The
Collateral Agent shall keep and maintain adequate records pertaining to the
Restoration Account and all disbursements therefrom and shall file an accounting
thereof with the Company and the Independent Engineer within three months
following the last business day of each Fiscal Year.
(c) If an Event of Loss or an Event of Eminent Domain shall occur with
respect to any Collateral, the Company shall (i) diligently pursue all its
rights to compensation against any Person with respect to such Event of Loss or
Event of Eminent Domain, (ii) in the reasonable judgment of the Company,
compromise or settle any claim against any Person with respect to such Event of
Loss or Event of Eminent Domain and (iii) hold all amounts of Casualty Proceeds
or Eminent Domain Proceeds (including instruments) received in respect of any
Event of Loss or Event of Eminent Domain (after deducting all reasonable
expenses incurred by it in litigating, arbitrating, compromising or settling any
claims) in trust for the benefit of the Collateral Agent segregated from other
funds of the Company and will promptly transfer to the Collateral Agent for
deposit in the Restoration Account such Casualty Proceeds or Eminent Domain
Proceeds.
(d) If either an Event of Loss or an Event of Eminent Domain shall
occur, as soon as reasonably practicable but no later than the date of receipt
by the Company or the Collateral Agent of Eminent Domain Proceeds or Casualty
Proceeds, as the case may be, the Company shall make a reasonable good faith
determination as to whether (i) the Facility or any portion thereof can be
rebuilt, repaired or restored to permit operation of the Facility or a portion
thereof on a commercially feasible basis and (ii) the Casualty Proceeds or the
Eminent Domain Proceeds, as the case may be, together with any other amounts
that are available to the Company for such rebuilding, repair or restoration,
are sufficient to permit such rebuilding, repair or restoration of the Facility
or a portion thereof, including the making of all required payments of interest
and principal on the Company's Debt during such rebuilding, repair or
restoration. The determination of the Company shall be evidenced by a
Certificate as to Redemption filed with the Collateral Agent which, in the event
the Company determines that the Facility or a portion thereof can be rebuilt,
repaired or restored to permit operation thereof on a commercially feasible
basis and that the Casualty Proceeds or the Eminent Domain Proceeds, as the case
may be, together with any other amounts that are available to the Company for
such rebuilding, repair or restoration, are sufficient, shall also set forth a
reasonable good faith estimate by the Company of the total cost of such
rebuilding, repair or restoration. The Company shall deliver to the Collateral
Agent at the time it delivers the Certificate as to Redemption referred to above
a certificate of the Independent Engineer, dated the date of the Certificate as
to Redemption, stating that, based upon reasonable investigation and review of
the determination made by the
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Company, the Independent Engineer believes the determination and the estimate of
the total cost set forth in the Certificate as to Redemption to be reasonable.
(e) (i) If, following an Event of Loss or an Event of Eminent
Domain, the determination is made pursuant to Section 3.15(d) above
that the Facility cannot be rebuilt, repaired or restored to permit
operation on a commercially feasible basis or that the Casualty
Proceeds or the Eminent Domain Proceeds, together with any other
amounts that are available to the Company for such rebuilding, repair
or restoration, are not sufficient to permit such rebuilding, repair or
restoration, all of the Casualty Proceeds or the Eminent Domain
Proceeds, as the case may be, shall be distributed in accordance with
Section 4.2(a).
(ii) If, following an Event of Loss or an Event of Eminent
Domain, the determination is made pursuant to Section 3.15(d) above
that the entire Facility can be rebuilt, repaired or restored to permit
operation on a commercially feasible basis and that the Casualty
Proceeds or the Eminent Domain Proceeds, together with any other
amounts that are available to the Company for such rebuilding, repair
or restoration, are sufficient to permit such rebuilding, repair or
restoration, all of the Casualty Proceeds or the Eminent Domain
Proceeds, as the case may be, together with such other amounts as are
available to the Company for such rebuilding, repair or restoration,
shall be deposited in the Restoration Account in accordance with
Section 3.15(a) and applied in accordance with Section 3.15(b).
(iii) If, following an Event of Loss or an Event of Eminent
Domain, the determination is made pursuant to Section 3.15(d) above
that a portion of the Facility can be rebuilt, repaired or restored to
permit operation on a commercially feasible basis and that the Casualty
Proceeds or the Eminent Domain Proceeds, together with any other
amounts that are available to the Company for such rebuilding, repair
or restoration, are sufficient to permit such rebuilding, repair or
restoration, (A) an amount equal to the estimate of the total cost of
such rebuilding, repair or restoration set forth in the Certificate as
to Redemption filed with the Collateral Agent pursuant to Section
3.15(d) above shall be deposited in the Restoration Account in
accordance with Section 3.15(a) and applied in accordance with Section
3.15(b) and (B) the amount, if any, by which all of the Casualty
Proceeds or the Eminent Domain Proceeds, as the case may be, exceed the
estimate of the total cost shall be distributed in accordance with
Section 4.2(a).
(f) In the event the Company receives Casualty Proceeds or Eminent
Domain Proceeds, as the case may be, from an Event of Loss or an Event of
Eminent Domain that do not exceed in the aggregate $5,000,000 during any Fiscal
Year of the Company, the Company shall not have to comply with the provisions of
Sections 3.15(d) or (e) and the Casualty Proceeds or the Eminent Domain
Proceeds, as the case may be, shall be deposited in the Restoration Account in
accordance with Section 3.15(a) and applied in accordance with Section 3.15(b).
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SECTION 3.16 Fuel Conversion Volume Rebate Account.
(a) The Fuel Conversion Volume Rebate Account shall be funded from
funds transferred by the Collateral Agent from the Revenue Account as and when
specified in Section 3.10.
(b) Upon receipt of an Officer's Certificate of the Company detailing
the amounts to be paid, funds in the Fuel Conversion Volume Rebate Account shall
be transferred to the Power Purchaser in accordance with Annex 1 to the Power
Purchase Agreement and as set forth in such Officer's Certificate within two (2)
Business Days of receipt of such Officer's Certificate.
SECTION 3.17 Subordinated Debt Account.
(a) The Subordinated Debt Account shall be funded from funds
transferred by the Collateral Agent from the Revenue Account as and when
specified in Section 3.10.
(b) Upon receipt of an Officer's Certificate of the Company detailing
the amounts to be paid, funds in the Subordinated Debt Account shall be
transferred to the appropriate Subordinated Debt Providers as set forth in such
Officer's Certificate within two (2) Business Days of receipt of such Officer's
Certificate.
ARTICLE IV
APPLICATION OF CERTAIN PROCEEDS
SECTION 4.1 Division of Foreclosure Proceeds and Proceeds Under the
Williams Guaranty.
(a) Following (i) the receipt of proceeds under the Williams Guaranty
as a result of a termination of the Power Purchase Agreement or (ii) a
foreclosure or bother exercise of remedies following a Trigger Event, the
proceeds of any sale, disposition or other realization by the Collateral Agent
or by any Senior Party upon the Collateral (or any portion thereof) pursuant to
the Security Documents shall be distributed in the following order of
priorities:
first, to the Collateral Agent, the Trustee, the DSR LOC
Provider and the CP LOC Provider, ratably, all administrative fees,
costs and expenses owed to such Parties under the Financing Documents;
provided, that prior to any such distribution to the Trustee, the DSR
LOC Provider or the CP LOC Provider, the Collateral Agent shall have
received a certificate signed by an Authorized Representative of the
Trustee, the DSR LOC Provider or the CP LOC Provider (as the case may
be), in form and substance satisfactory to the Collateral Agent,
setting forth the amount payable to the Trustee, the DSR LOC Provider
or the CP LOC Provider (as the case may be) as of the date of such
distribution;
second, to the Senior Parties, ratably (based on the amount
owing to specified recipients), an amount equal to the unpaid amount of
all Financing Liabilities owed to the
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Senior Parties by the Company; provided, that prior to any such such
distribution, the Collateral Agent shall have received a certificate
executed by an Authorized Representative of each such Senior Party, in
form and substance reasonably satisfactory to the Collateral Agent,
setting forth the amount payable to such Senior Party pursuant to this
clause as of the date of such distribution;
third, to any Subordinated Debt Providers, ratably, an amount
equal to the unpaid obligations owed to such Subordinated Debt
Providers by the Company under any Subordinated Loan Agreement;
provided, that prior to any such distribution, the Collateral Agent
shall have received a certificate executed by an Authorized
Representative of each such Subordinated Debt Provider, in form and
substance reasonably satisfactory to the Collateral Agent, setting
forth the amount payable to such Subordinated Debt Provider pursuant to
this clause as of the date of such distribution; and
fourth, to the Company (or its successors or assigns) or to
whomever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, any surplus then remaining from such
proceeds.
(b) As used in this Section 4.1, "proceeds" of Collateral shall mean
cash, securities and other property realized in respect of, and distributions in
kind of, Collateral, including any thereof received under any reorganization,
liquidation or adjustment of Debt of the Company or any issuer of or obligor on
any of the Collateral.
(c) The Collateral Agent shall, upon receipt of indemnity satisfactory
to it, use reasonable efforts to join in any foreclosure or similar proceeding
instituted by a junior lienor with respect to the Collateral. The Collateral
Agent shall hold all proceeds of the Collateral received by it in connection
with such proceeding instituted by a junior lienor and not consolidated with any
action by the Collateral Agent on behalf of the Senior Parties pending
application of such proceeds by the Collateral Agent in accordance with the
written instructions of the Required Senior Parties.
SECTION 4.2 Application of Casualty Proceeds and Eminent Domain
Proceeds.
(a) If the determination is made pursuant to Section 3.15(d) above that
all or a portion of the Facility is incapable of being rebuilt, repaired or
restored to permit operation on a commercially feasible basis, all Casualty
Proceeds or Eminent Domain Proceeds received by the Collateral Agent and not
deposited in the Restoration Account pursuant to Section 3.15(e)(iii) shall be
distributed by the Collateral Agent within five (5) Business Days of receipt in
the following order of priorities:
first, to the Collateral Agent, the Trustee, the DSR LOC
Provider and the CP LOC Provider, ratably, in an amount equal to the
amounts owed in respect of the Collateral Agent Claims, the Trustee
Claims, the DSR LOC Provider Claims and the CP LOC Provider Claims,
respectively, due and payable as of the date of such distribution;
provided, that, prior to any such distribution to the Collateral Agent,
the Trustee, the DSR LOC Provider or the CP LOC Provider, the
Collateral Agent shall have received a certificate signed by an
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Authorized Representative of the Trustee, the DSR LOC Provider or the
CP LOC Provider (as the case may be), in form and substance
satisfactory to the Collateral Agent, setting forth the amount payable
to the Trustee, the DSR LOC Provider or the CP LOC Provider (as the
case may be) as of the date of such distribution;
second, to the Senior Parties, ratably (based on the amount
owing to the specified recipients), an amount equal to the unpaid
amount of all Financing Liabilities owed to or required to be deposited
for the account of such Senior Parties, including the amount required
to be applied to a mandatory redemption of the Bonds pursuant to the
Indenture; provided, that prior to any such distribution the Collateral
Agent shall have received a certificate executed by an Authorized
Representative of each such Senior Party, in form and substance
reasonably satisfactory to the Collateral Agent, setting forth the
amount payable to such Senior Party pursuant to this clause as of the
date of such distribution;
third, to the Subordinated Debt Providers, ratably, an amount
equal to the unpaid amounts owed to or required to be deposited for the
account of such Subordinated Debt Providers by the Company under any
Subordinated Loan Agreement; provided, that prior to any such
distribution, the Collateral Agent shall have received a certificate
executed by an Authorized Representative of each such Subordinated Debt
Provider, in form and substance reasonably satisfactory to the
Collateral Agent, setting forth the amount payable to such Subordinated
Debt Provider pursuant to this clause as of the date of such
distribution; and
fourth, to the Company or their successors or assigns or to
whomever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, any surplus then remaining from such
proceeds.
(b) At the time the Collateral Agent is to make a distribution pursuant
to Section 4.2(a) paragraph second, the Collateral Agent shall deposit, with the
same priority as such distribution, ratably, into a separate trust account to be
maintained by the Collateral Agent an amount up to the maximum amount available
to be drawn under the DSR Letter of Credit (taking into account, without
duplication in the case of the DSR Letter of Credit, the maximum amount which
may become available to be drawn in the future by reason of an increase in the
DSRA Required Balance), and not represented by a DSR LOC Loan, DSR LOC Term Loan
or DSR Bond; provided, however, that if funds available are insufficient to make
all payments required under Section 4.2(a) paragraph second and the required
deposits provided for in this sentence, distribution of funds shall be made
ratably to the specified recipients. The Collateral Agent shall hold the funds
in such separate account until receipt of a written notice or notices from the
DSR LOC Provider (which such notice or notices shall be contemporaneously
delivered by the DSR LOC Provider to the other Senior Parties) executed by an
Authorized Representative of the DSR LOC Provider to the effect that either (i)
the Collateral Agent has made a drawing on the DSR Letter of Credit or (ii) the
DSR Letter of Credit has expired or terminated without a drawing being made
thereunder. Upon receipt of a notice specified in clause (i) of the preceding
sentence, the Collateral Agent shall distribute to the DSR LOC Provider that
proportionate share of the amount in the relevant separate account referred to
above, equal to such drawing's proportionate share of the DSR Letter of Credit
collateralized by such account. Upon receipt of a notice
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specified in clause (ii) of the second preceding sentence, the Collateral Agent
shall distribute from the relevant separate account (in accordance with Section
4.2(a) paragraphs second, third and fourth and without regard to this Section
4.2(b)) to the appropriate Persons an amount equal to the amount in such
separate account.
(c) At the time the Collateral Agent is to make a distribution pursuant
to Section 4.2(a) paragraph second, the Collateral Agent shall deposit, with the
same priority as such distribution, ratably, into a separate trust account to be
maintained by the Collateral Agent an amount up to the amount available to be
drawn under the CP Letter of Credit (and not represented by a CP LOC Loan);
provided, however, that if funds available are insufficient to make all payments
required under Section 4.2(a) paragraph second and the required deposits
provided for in this sentence, distribution of funds shall be made ratably to
the specified recipients. The Collateral Agent shall hold the funds in such
separate account until receipt of a written notice or notices from the CP LOC
Provider (which such notice or notices shall be contemporaneously delivered by
the CP LOC Provider to the other Senior Parties) executed by an Authorized
Representative of the CP LOC Provider to the effect that either (i) the
Collateral Agent has made a drawing on the CP Letter of Credit or (ii) the CP
Letter of Credit has expired or terminated without a drawing being made
thereunder. Upon receipt of a notice specified in clause(i) of the preceding
sentence, the Collateral Agent shall distribute to the CP LOC Provider that
proportionate share of the amount in the relevant separate account referred to
above, equal to such drawing's proportionate share of the CP Letter of Credit
collateralized by such account. Upon receipt of a notice specified in clause(ii)
of the second preceding sentence, the Collateral Agent shall distribute from the
relevant separate account (in accordance with Section 4.2(a) paragraphs second,
third and fourth and without regard to this Section 4.2(c)) to the appropriate
Persons an amount equal to the amount in such separate account.
(d) The Company and the Senior Parties hereby authorize the Collateral
Agent to establish the separate account described in Sections 4.2(b) and 4.2(c)
for the purposes specified in such Sections.
(e) The DSR LOC Provider hereby covenants and agrees to use reasonable
efforts to send the written notice specified in clause (ii) of Section 4.2(b)
within three (3) Business Days following the termination or expiration of the
DSR Letter of Credit.
(f) The CP LOC Provider hereby covenants and agrees to use reasonable
efforts to send the written notice specified in clause (ii) of Section 4.2(c)
within three (3) Business Days following the termination or expiration of the CP
Letter of Credit.
SECTION 4.3 Application of Buy-Down Amounts.
(a) All Buy-Down Amounts shall be deposited into a separate account
maintained by the Depositary Bank on behalf of the Collateral Agent pending
application in accordance with the remaining provisions of this Section 4.3.
Subject to the remaining provisions of this Section 4.3, the Collateral Agent
shall apply the amounts in such separate account to the payment, or
reimbursement to the extent the same have been paid or satisfied by the Company,
of the costs of modification, repair and replacement of that portion of the
Facility that requires modification,
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repair or replacement in order to remedy the circumstances giving rise to the
obligation of the Contractor to pay such Buy-Down Amounts.
(b) The Collateral Agent is hereby authorized to disburse from such
separate account the amount required to be paid for the modification, repair or
replacement of that portion of the Facility that requires modification, repair
or replacement in order to remedy the circumstances giving rise to the
obligation of the Contractor to pay such Buy-Down Amounts as specified in
Section 4.3(a). The Collateral Agent is hereby authorized and directed to issue
its checks or transfer funds electronically for each disbursement from such
separate account, upon receipt of a Performance Enhancement Certificate signed
by an Authorized Representative of the Company and approved by the Independent
Engineer. The Collateral Agent shall be entitled to rely on all certifications
and statements in such Performance Enhancement Certificate. The Collateral Agent
shall keep and maintain adequate records pertaining to such separate account and
all disbursements therefrom and shall file an accounting thereof with the
Company and the Independent Engineer within three months following the last
business day of each Fiscal Year. Upon receipt of an Officer's Certificate of
the Company, confirmed by the Independent Engineer, certifying that all
modifications, repairs or replacements of that portion of the Facility that
requires modification, repair or replacement in order to remedy the
circumstances giving rise to the obligation of the Contractor to pay Buy-Down
Amounts have been completed, the Collateral Agent shall transfer all funds
remaining in such separate account to the Revenue Account for application in
accordance with Section 3.10(b); provided, that if such funds or a portion
thereof are deposited in the Distribution Account in accordance with Section
3.10(b) eleventh, the provisions of Section 3.14(b)(iv) and (v) shall not apply
in respect of such funds.
(c) As soon as reasonably practicable following receipt by the Company
or the Collateral Agent of Buy-Down Amounts, the Company shall make a reasonable
good faith determination as to whether (i) it is technically feasible to modify,
repair or replace that portion of the Facility that requires modification,
repair or replacement in order to remedy the circumstances giving rise to the
obligation of the Contractor to pay such Buy-Down Amounts, (ii) the Buy-Down
Amounts, together with any other amounts that are available to the Company for
such modification, repair or replacement, are sufficient to permit such
modification, repair or replacement, including the making of all required
payments of interest and principal on the Company's Debt during such
modification, repair or replacement, (iii) the projected average Senior Debt
Service Coverage Ratio (after giving effect to such modification, repair or
replacement and the application of the Buy-Down Amounts to accomplish the same)
during the PPA Term (taken as one period) and the Post-PPA Period (taken as one
period) is equal to or greater than the projected average Senior Debt Service
Coverage Ratio set forth in the base case projections for each such period set
forth in the final offering circular dated on or before the Closing Date
relating to the Bonds and (iv) the projected minimum Senior Debt Service
Coverage Ratio (after giving effect to such modification, repair or replacement
and the application of the Buy-Down Amounts to accomplish the same) during the
PPA Term and the Post-PPA Period is equal to or greater than the projected
minimum Senior Debt Service Coverage Ratio set forth in the base case
projections for each such period set forth in the final offering circular dated
on or before the Closing Date relating to the Bonds. The determination of the
Company shall be evidenced by an Officer's Certificate (together with such
supporting detail
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as the Collateral Agent or the Independent Engineer may reasonably request)
filed with the Collateral Agent which, in the event the Company determines that
such portion of the Facility can be modified, repaired or replaced and that the
other statements set forth in clauses (ii)-(iv) of this Section 4.3(c) are true,
shall also set forth a reasonable good faith estimate by the Company of the
total cost of such modification, repair or replacement. The Company shall
deliver to the Collateral Agent at the time it delivers the Officer's
Certificate referred to above a certificate of the Independent Engineer, dated
the date of the Officer's Certificate, stating that, based upon reasonable
investigation and review of the determinations, assumptions, conclusions and
estimates of costs made by the Company, the Independent Engineer believes the
determinations, assumptions, conclusions and estimates of costs set forth in the
Officer's Certificate to be reasonable.
(d) If the Company cannot provide the Officer's Certificate referred to
in Section 4.3(c) to permit the application of Buy-Down Amounts toward the
modification, repair or replacement of that portion of the Facility or the
Independent Engineer fails to confirm such Officer's Certificate as required by
Section 4.3(c), all of the Buy-Down Amounts received by the Company or the
Collateral Agent shall be distributed in accordance with Section 4.3(e).
(e) All Buy-Down Amounts to be distributed pursuant to this Section
4.3(e) shall be distributed by the Collateral Agent, ratably (based on the
amount owing to the specified recipient), to (i) the Trustee in respect of the
amount of the Outstanding Bonds for redemption of Bonds in accordance with the
Indenture, (ii) the DSR LOC Provider in respect of the outstanding amount of DSR
LOC Loans, DSR LOC Term Loans or DSR LOC Bonds and (iii) the CP LOC Provider in
respect of the outstanding amount of any CP LOC Loans.
(f) At the time the Collateral Agent is to make a distribution pursuant
to Section 4.3(e), the Collateral Agent shall deposit into a separate trust
account to be maintained by the Collateral Agent an amount up to the amount
available to be drawn under the DSR Letter of Credit (taking into account,
without duplication, in the case of the DSR Letter of Credit, the maximum amount
which may become available to be drawn in the future by reason of an increase in
the DSRA Required Balance), and not represented by a DSR LOC Loan, DSR LOC Term
Loan or DSR Bond; provided, however, that if funds available are insufficient to
make all payments required under Section 4.2(a) paragraph second and the
required deposits provided for in this sentence, distribution of funds shall be
made ratably to the specified recipients. The Collateral Agent shall hold the
funds in such separate account until receipt of a written notice or notices from
the DSR LOC Provider (which such notice or notices shall be contemporaneously
delivered by the DSR LOC Provider to the other Senior Parties) executed by an
Authorized Representative of the DSR LOC Provider to the effect that either (i)
the Collateral Agent has made a drawing on the DSR Letter of Credit or (ii) the
DSR Letter of Credit has expired or terminated without a drawing being made
thereunder. Upon receipt of a notice specified in clause (i) above, the
Collateral Agent shall distribute to the DSR LOC Provider that proportionate
share of the amount in the relevant separate account referred to above, equal to
such drawing's proportionate share of the DSR Letter of Credit collateralized by
such account. Upon receipt of a notice specified in clause (ii) above, the
Collateral Agent shall distribute from
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the relevant separate account to the Trustee an amount equal to the amount in
such separate account.
(g) At the time the Collateral Agent is to make a distribution pursuant
to Section 4.3(e), the Collateral Agent shall deposit into a separate trust
account to be maintained by the Collateral Agent an amount available to be drawn
under the CP Letter of Credit (and not represented by a CP LOC Loan); provided,
however, that if funds available are insufficient to make all payments required
under Section 4.2(a) paragraph second and the required deposits provided for in
this sentence, distribution of funds shall be made ratably to the specified
recipients. The Collateral Agent shall hold the funds in such separate account
until receipt of a written notice or notices from the CP LOC Provider (which
such notice or notices shall be contemporaneously delivered by the CP LOC
Provider to the other Senior Parties) executed by an Authorized Representative
of the CP LOC Provider to the effect that either (i) the Collateral Agent has
made a drawing on the CP Letter of Credit or (ii) the CP Letter of Credit has
expired or terminated without a drawing being made thereunder. Upon receipt of a
notice specified in clause (i) above, the Collateral Agent shall distribute to
the CP LOC Provider that proportionate share of the amount in the relevant
separate account referred to above, equal to such drawing's proportionate share
of the CP Letter of Credit collateralized by such account. Upon receipt of a
notice specified in clause (ii) above, the Collateral Agent shall distribute
from the relevant separate account to the Trustee an amount equal to the amount
in such separate account.
ARTICLE V
COLLATERAL AGENT; DEPOSITARY BANK
SECTION 5.1 Appointment and Duties of Collateral Agent and Depositary
Bank.
(a) The Senior Parties hereby designate and appoint IBJ Whitehall Bank
& Trust Company to act as the Collateral Agent under the Security Documents and
this Agreement, and each of the Senior Parties hereby authorizes IBJ Whitehall
Bank & Trust Company, as the Collateral Agent, to take such actions on its
behalf under the provisions of the Security Documents and this Agreement and to
exercise such powers and perform such duties as are expressly delegated to the
Collateral Agent by the terms of the Security Documents and this Agreement,
together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in the Security
Documents and this Agreement, the Collateral Agent shall not have any duties or
responsibilities, except those expressly set forth in the Security Documents and
this Agreement, or any discretionary or fiduciary duties or responsibilities
with any Senior Party under this Agreement or any other Security Documents, and
no implied covenants, functions or responsibilities shall be read into the
Security Documents, this Agreement or otherwise exist against the Collateral
Agent. The Collateral Agent shall not be liable for any action taken or omitted
to be taken by it hereunder or under any Security Document, or in connection
herewith or therewith, or in connection with the Collateral, unless caused by
its gross negligence or willful misconduct.
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(b) The Collateral Agent and each other Senior Party hereby designate
and appoint IBJ Whitehall Bank & Trust Company to act as the Depositary Bank
under this Agreement, and the Depositary Bank hereby agrees to act as
"securities intermediary" (within the meaning of Section 8-102(a)(14) of the
UCC) with respect to the Project Accounts. The Company hereby acknowledges that
the Depositary Bank shall act as securities intermediary with respect to the
Project Accounts and pursuant to this Agreement. The Depositary Bank shall not
have any duties or responsibilities except those expressly set forth in this
Agreement.
(c) The Collateral Agent will give notice to the Senior Parties of any
action taken, or notices received, hereunder or under any Security Document;
notice of action taken shall be given prior to the taking of such action unless
the Collateral Agent determines that to do so would be detrimental to the
interest of the Senior Parties, in which event such notice shall be given
promptly after the taking of such action.
(d) The Senior Parties agree that all liens and security interests in
the Collateral securing the Secured Obligations shall be held in the name of the
Collateral Agent and administered by and through the Collateral Agent and in
accordance with this Agreement and the other Security Documents. If, as of the
date hereof, or at any time in the future, any Senior Party at any time holds a
lien or security interest on any Collateral in its own name, it agrees to assign
it, without warranty or recourse, to the Collateral Agent (to be held by the
Collateral Agent as the collateral agent for the Senior Parties). The Collateral
Agent shall hold its security interests in and liens on the Collateral for the
benefit of the Senior Parties as provided herein and in the Security Documents.
(e) Notwithstanding anything to the contrary in this Agreement or any
Security Document, the Collateral Agent shall not be required to exercise any
rights or remedies under any of the Security Documents or this Agreement or give
any consent under any of the Security Documents or this Agreement or enter into
any agreement amending, modifying, supplementing or waiving any provision of any
Security Document unless it shall have been directed to do so in Senior Party
Certificates of the Required Senior Parties.
SECTION 5.2 Rights of Collateral Agent.
(a) The Collateral Agent may execute any of its duties under the
Security Documents or this Agreement 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 be (i) liable for any
action lawfully taken or omitted to be taken by it under or in connection with
any Security Document or this Agreement (except for its gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Senior
Parties for any recitals, statements, representations or warranties made in any
Security Document or this Agreement 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, any Security Document or this Agreement or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of the Security Documents or this Agreement or for any failure of
the Company or
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any other Person to perform their obligations thereunder. The Collateral Agent
shall not be under any obligation to any Senior Party or any other Person to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, any Security Document or this
Agreement, or to inspect the properties, books or records of the Company.
(c) The Collateral Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, request, direction,
certificate, notice, consent, 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/or upon advice and/or statements of legal
counsel (including, without limitation, counsel to the Company), independent
accountants and other experts selected by the Collateral Agent. In connection
with any request or direction of the Required Senior Parties, the Collateral
Agent shall be entitled to rely, and shall be fully protected in relying on any
Senior Party Certificate delivered by a Senior Party; provided, however, that in
the event the Collateral Agent receives conflicting directions contained in
Senior Party Certificates representing two or more groups of Required Senior
Parties, the Collateral Agent shall act in accordance with directions contained
in Senior Party Certificates representing the greatest percentage of the
Combined Exposure. The Collateral Agent shall be fully justified in failing or
refusing to take any action under any Security Document or this Agreement (i) if
such action would, in the opinion of the Collateral Agent (which may be based on
the opinion of legal counsel), be contrary to law or the terms of this Agreement
or the other Security Documents, (ii) if such action is not specifically
provided for in such Security Document or this Agreement or it shall not have
received any such advice or concurrence of the Required Senior Parties as it
deems appropriate, (iii) if, in connection with the taking of any such action
hereunder or under any Security Document that would constitute an exercise of
remedies under such Security Document or this Agreement, it shall not first be
indemnified to its satisfaction by the Senior Parties (other than the Trustee in
its individual capacity and the Collateral Agent) against any and all risk of
nonpayment, liability and expense which may be incurred by it by reason of
taking or continuing to take any such action or (iv) if, notwithstanding
anything to the contrary contained in Section 5.2(e), in connection with the
taking of any such action that would constitute a payment due under any
Transaction Document, it shall not first have received from the Senior Parties
funds equal to the amount payable. The Collateral Agent shall in all cases be
fully protected in acting, or in refraining from acting, under any Security
Document or this Agreement in accordance with a request of the Required Senior
Parties contained in Senior Party Certificates, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Senior
Parties.
(d) If, with respect to a proposed action to be taken by it, the
Collateral Agent shall determine in good faith that the provisions of any
Security Document or this Agreement relating to the functions or
responsibilities or discretionary powers of the Collateral Agent are or may be
ambiguous or inconsistent, the Collateral Agent shall notify the Senior Parties,
identifying the proposed action, and may decline either to perform such function
or responsibility or to take the action requested unless it has received the
written confirmation of the Required Senior Parties executed by Authorized
Representatives of such Persons that the Required Senior Parties concur in the
circumstances that the action proposed to be taken by the Collateral Agent is
consistent
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with the terms of this Agreement or such Security Document or is otherwise
appropriate. The Collateral Agent shall be fully protected in acting or
refraining from acting upon the confirmation of the Required Senior Parties in
this respect, and such confirmation shall be binding upon the Collateral Agent
and the other Senior Parties.
(e) The Collateral Agent shall not be deemed to have actual,
constructive, direct or indirect knowledge or notice of the occurrence of any
default or Event of Default or any other event unless and until a Responsible
Officer of the Collateral Agent has received a written notice or a certificate
from an Authorized Representative of a Senior Party or the Company stating that
a default or an Event of Default has occurred. The Collateral Agent shall have
no obligation whatsoever either prior to or after receiving such notice or
certificate to inquire whether a default or an Event of Default has in fact
occurred and shall be entitled to rely conclusively, and shall be fully
protected in so relying, on any notice or certificate so furnished to it. No
provision of this Agreement or any other Security Document shall require the
Collateral Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder or under
any Security Document or the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability including an advance of funds
necessary to take the action requested is not reasonably assured to it, except
that in respect of any potential environmental liability or the taking of title
to any real property, the Collateral Agent may decline to act unless it receives
indemnity satisfactory to it in its sole discretion, including, but not limited
to, an advance of funds necessary to take the action requested. If the
Collateral Agent receives such a notice of the occurrence of any Event of
Default, the Collateral Agent shall give notice thereof to the Senior Parties.
The Senior Parties shall provide evidence of satisfactory indemnity to the
Collateral Agent for any action directed by the Required Senior Parties
including, but not limited to, an advance of funds necessary to take the action
requested. The Collateral Agent shall take such action with respect to such
Event of Default as so requested pursuant to Section 2.3(a) subject, however, to
the third sentence of this Section 5.2(e).
(f) The Company will pay upon demand to the Collateral Agent the amount
of any and all reasonable fees and out-of-pocket expenses, including the
reasonable fees and expenses of its counsel (and any one local counsel) and of
any experts and agents, which the Collateral Agent may incur in connection with
(i) the administration of this Agreement and the other Security Documents, (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 Senior Parties hereunder or under the
other Security Documents or (iv) the failure by the Company to perform or
observe any of the provisions hereof or of any of the other Security Documents.
The provision of this Section 5.2(f) shall survive the expiration or earlier
termination of this Agreement.
SECTION 5.3 Lack of Reliance on the Collateral Agent.
Each of the Senior Parties expressly acknowledges that neither the
Collateral Agent nor any of its officers, directors, employees, agents or
attorneys-in-fact has made any representations
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or warranties to it and that no act by the Collateral Agent hereafter taken,
including, without limitation, any review of the Facility or of the affairs of
the Company, shall be deemed to constitute any representation or warranty by the
Collateral Agent to any Senior Party. Each Senior Party (other than the Trustee)
represents to the Collateral Agent that it has, independently and without
reliance upon the Collateral Agent or any other Senior 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 Facility and the Company. Each
Senior Party (other than the Trustee) also represents that it will,
independently and without reliance upon the Collateral Agent or any other Senior
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
Facility and the Company. Except for notices, reports and other documents
expressly required to be furnished to the Senior Parties by the Collateral Agent
hereunder, the Collateral Agent shall not have any duty or responsibility to
provide any Senior Party with any credit or other information concerning the
business, operations, property, financial and other condition or
creditworthiness of the Facility and the Company which may come into the
possession of the Collateral Agent or any of its officers, directors, employees,
agents or attorneys-in-fact.
SECTION 5.4 Indemnification.
(a) The Senior Parties (other than the Collateral Agent) severally
agree to indemnify the Collateral Agent in its capacity as such and in its
individual capacity (to the extent not reimbursed by the Company and without
limiting the obligation of the Company to do so), ratably according to the
aggregate amounts of their respective Secured Obligations 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 and in its
individual capacity in any way relating to or arising out of the Security
Documents or this Agreement, 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 the Facility and liable as such pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act or any other
Environmental Requirement); provided, that the Senior 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 5.4 shall
survive the payment or satisfaction in full of the Secured Obligations or any
other termination of this Agreement.
(b) The Company agrees to indemnify the Collateral Agent and each
Senior Party from and against any and all claims, losses and liabilities growing
out of or resulting from (i) any
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Security Document or this Agreement (including, without limitation, enforcement
of such Security Document, but excluding any such claims, losses or liabilities
resulting from the Collateral Agent's or such Senior Party's gross negligence or
willful misconduct) or (ii) any refund or adjustment of any amount paid or
payable to the Collateral Agent or any Senior Party under or in respect of any
Transaction Document or any other Collateral, or any interest thereon, which may
be ordered or otherwise required by any Person. The agreements under this
Section 5.4(b) shall survive the payment in full of any secured obligation or
termination of this Agreement or any other Security Document.
SECTION 5.5 Resignation of the Collateral Agent or Depositary Bank.
(a) Either of the Collateral Agent or Depositary Bank may resign its
appointment hereunder at any time without providing any reason therefor by
giving not less than 60 days' prior written notice to that effect to each of the
other parties hereto, provided that no such resignation pursuant to this Section
5.5 or removal pursuant to Section 5.6 shall be effective until:
(i) a successor for the Collateral Agent or Depositary Bank is
appointed in accordance with (and subject to) the succeeding provisions
of this Section 5.5;
(ii) the resigning or removed Collateral Agent or Depositary
Bank has transferred to its successor all of its rights and obligations
in its capacity as Collateral Agent or Depositary Bank under this
Agreement and the other Transaction Documents; and
(iii) the successor Collateral Agent or Depositary Bank has
executed and delivered an agreement to be bound by the terms hereof and
the other Transaction Documents and perform all duties required of the
Collateral Agent or Depositary Bank hereunder and under the other
Transaction Documents.
(b) If the Collateral Agent or Depositary Bank has given notice of its
resignation pursuant to this Section 5.5 or if the Required Senior Parties give
the Collateral Agent, or the Collateral Agent gives the Depositary Bank, notice
of removal pursuant to Section 5.6, then a successor to the Collateral Agent or
Depositary Bank may be appointed by the Required Senior Parties during the
period of such notice but, if no such successor is so appointed within sixty
(60) days after the above notice, the Collateral Agent or Depositary Bank may
appoint such a successor which (i) is authorized under the laws of its
jurisdiction of formation to exercise corporation trust powers, (ii) shall have
a combined capital and surplus of at least U.S.$250,000,000 and (iii) shall be
acceptable to the Required Senior Parties (provided, that if the Required Senior
Parties do not confirm such acceptance or reject such appointee in writing
within thirty (30) days following selection of such successor by the Collateral
Agent or Depositary Bank, then they shall be deemed to have given acceptance
thereof and such successor shall be deemed appointed as the Collateral Agent or
Depositary Bank hereunder by and on behalf of the Senior Parties).
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(c) If a successor to the Collateral Agent or Depositary Bank is
appointed under the provisions of clauses (a) or (b) above, then:
(i) the predecessor Collateral Agent or Depositary Bank shall
be discharged from any further obligation hereunder (but without
prejudice to any accrued liabilities);
(ii) the predecessor Collateral Agent or Depositary Bank's
resignation pursuant to this Section 5.5 or removal pursuant to Section
5.6 notwithstanding, the provisions of this Agreement shall inure to
its benefit as to any actions taken or omitted to be taken by it under
this Agreement and the other Transaction Documents while it was acting
as the Collateral Agent or Depositary Bank; and
(iii) the successor Collateral Agent or Depositary Bank and
each of the other parties hereto shall have the same rights and
obligations amongst themselves as they would have had if such successor
Collateral Agent or Depositary Bank had been an original party hereto.
SECTION 5.6 Removal of the Collateral Agent or Depositary Bank.
The Required Senior Parties may remove the Collateral Agent from its
appointment hereunder, and the Collateral Agent may remove the Depositary Bank
hereunder, in each case with or without cause by giving not less than 60 days'
prior written notice to that effect to the Collateral Agent (or to the
Depositary Bank, as the case may be); provided, that no such removal shall be
effective until a successor for the Collateral Agent (or the Depositary Bank, as
the case may be) is appointed in accordance with Section 5.5.
SECTION 5.7 Merger, Conversion, Consolidation or Succession to
Business.
Any corporation or bank into which the Collateral Agent may be merged
or converted or with which it may be consolidated, or any corporation or bank
resulting from any merger, conversion or consolidation to which the Collateral
Agent shall be a party, or any corporation or bank succeeding to all or
substantially all of the corporate trust business of the Collateral Agent, shall
be the successor of the Collateral Agent hereunder, provided such corporation or
bank shall be otherwise qualified and eligible under this Article V, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.
SECTION 5.8 Power of Attorney.
Each Senior Party (other than the Collateral Agent) 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 5.1, to consent on its behalf under
the Security Documents and the other Transaction Documents to which the
Collateral Agent is a party to the extent that the consent of the Required
Senior Parties (whether or not acting through the Collateral Agent) is required
under any agreement and upon the instructions of the Required Senior Parties
acting pursuant to this Agreement, and to take such actions on its behalf under
the provisions of such agreements as are reasonably incidental thereto,
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to execute and deliver in the name of and on behalf of, or in its own name, as
the case may be, all documents required to be executed by such Senior Party (in
its capacity as such) in connection therewith and to do, take and perform each
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 Senior Party (in its capacity as such) might or
could do, with full power of substitution or revocation, hereby ratifying and
confirming all that such 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, the Security Documents and the other Transaction Documents to which
the Collateral Agent is a party. The enumeration of specific items, rights, acts
or powers herein does not limit or restrict and is not intended to limit or
restrict, and is not to be construed or interpreted as limiting or restricting,
the powers herein granted to such attorney-in-fact. The rights, power and
authority of such attorney-in-fact herein granted shall commence and be in full
force and effect on the date hereof, and such rights, powers and authority shall
remain in full force and effect thereafter until this Agreement is terminated or
until the Collateral Agent's resignation or removal hereunder.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.1 Representations and Warranties.
(a) The Company hereby makes the following representations and
warranties as of the date hereof with respect to itself for the benefit of the
Senior Parties:
(i) The Company (A) is a limited liability corporation duly
formed, validly existing and in good standing under the laws of the
State of Delaware and (B) is duly authorized, to the extent necessary,
to do business in the Commonwealth of Pennsylvania and in each other
jurisdiction where the character of its properties or the nature of its
activities makes such qualification necessary, except to the extent any
failure could not reasonably be expected to have a Material Adverse
Effect. The Company has all requisite power and authority to own and
operate the property it purports to own and to carry on its business as
now being conducted and as proposed to be conducted in respect of the
Facility.
(ii) The Company has all necessary power and authority to
execute, deliver and perform its obligations under this Agreement. All
action on the part of the Company that is required for the
authorization, execution, delivery and performance of this Agreement,
in each case has been duly and effectively taken; and the execution,
delivery and performance of this Agreement does not require the
approval or consent of any holder or trustee of any debt or other
obligations of the Company which has not been obtained.
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(iii) This Agreement has been duly executed and delivered by
the Company. This Agreement constitutes a legal, valid and binding
obligation of the Company enforceable against them in accordance with
the terms thereof, except as such enforceability (A) may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other
laws affecting the enforcement of creditors' rights and remedies
generally and (B) is subject to general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law).
(iv) Neither the execution, delivery and performance of this
Agreement nor the consummation of any of the transactions contemplated
hereby nor performance of or compliance with the terms and conditions
hereof (A) contravenes any material requirement of Applicable Law
applicable to the Company or any of the Collateral which contravention
would reasonably be expected to have a Material Adverse Effect, (B)
constitutes a default under or results in the violation of the
provisions of the certificate of formation or operating agreement, or
of any Transaction Documents that would reasonably be expected to have
a Material Adverse Effect or (C) results in the creation or imposition
of any Liens (other than Permitted Liens) on any of the Collateral
under, or results in the acceleration of, any obligation.
(v) Other than as set forth in the Indenture, there are no
actions, suits or proceedings at law or in equity or by or before any
Governmental Authority now pending against the Company or, to the best
of the Company's knowledge, threatened against the Company or any
property or other assets or rights of the Company or with respect to
this Agreement that would reasonably be expected to have a Material
Adverse Effect.
(b) Each of the Trustee, the DSR LOC Provider and the CP LOC Provider
hereby makes the following representations and warranties as of the date hereof
with respect to itself and for the benefit of the Collateral Agent and the
Depositary Bank:
(i) It is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and is
duly qualified to do business in, and is in good standing in all
jurisdictions where the nature of its business makes such qualification
necessary, except where the failure to effect such qualification would
not have a material adverse effect upon its ability to perform its
obligations pursuant to this Agreement or the Senior Documents (as
hereinafter defined) to which it is a party.
(ii) It has all necessary corporate power to execute, deliver
and perform under this Agreement and the Senior Documents. All action
on its part that is required for the authorization, execution, delivery
and performance of this Agreement and the Senior Documents has been
duly and effectively taken; and the execution, delivery and performance
of this Agreement and the Senior Documents do not require the approval
or consent of any shareholder or the holder or trustee of any debt or
other obligations which has not been obtained.
(iii) This Agreement and the Senior Documents have been duly
executed and delivered by each such Person and constitute the legal,
valid and binding obligation of
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each such Person, enforceable against such Person in accordance with
the terms thereof, except as such enforceability (A) may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting the enforcement of creditors' rights and
remedies generally and (B) is subject to general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law).
(iv) Neither the execution, delivery and performance of this
Agreement and the Senior Documents nor the consummation of any of the
transactions contemplated hereby or thereby nor performance of or
compliance with the terms and conditions hereof or thereof (A)
contravenes any material Applicable Law to such Person or (B)
constitutes a default under or results in the violation of the
provisions in the charter, certificate of incorporation or by-laws of
such Person or of any indenture, loan or credit agreement or any other
agreement, lease, instrument or document to which such Person is a
party or by which it or its properties may be bound.
(v) There are no actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending or, to
the best of such Person's knowledge, threatened which could reasonably
be expected to have a material and adverse effect on the performance by
such Person of its obligations hereunder or under the Senior Documents
or which questions the validity, binding effect or enforceability
hereof or of the Senior Documents, any action to be taken pursuant
hereto or thereto or any transactions contemplated hereby or thereby.
For the purposes of this Section 6.1(b), the term "Senior Documents"
shall mean, with respect to the Trustee, the Indenture, with respect to the DSR
LOC Provider, the DSR LOC Reimbursement Agreement and with respect to the CP LOC
Provider, the CP LOC Reimbursement Agreement.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 Agreement for Benefit of Parties Hereto.
Nothing in this Agreement, express or implied, is intended or shall be
construed to confer upon, or to give to, any Person other than the parties
hereto and their respective successors and assigns, any right, remedy or claim
under or by reason of this Agreement or any covenant, condition or stipulation
hereof; and the covenants, stipulations and agreements contained in this
Agreement are and shall be for the sole and exclusive benefit of the parties
hereto and their respective successors and assigns.
SECTION 7.2 No Warranties.
Except as otherwise expressly provided herein, the Senior Parties have
not made to each other nor do they hereby or otherwise make to each other any
warranties, express or implied, nor
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do they assume any liability to each other with respect to the enforceability,
validity, value or collectability of the Collateral (or any portion thereof). No
Senior Party shall be liable to any other Senior Party for any action or failure
to act or any error of judgment, negligence, or mistake, or oversight whatsoever
on the part of any Senior Party or any Senior Party's agents, officers,
employees or attorneys with respect to any transaction relating to any of the
notes or agreements evidencing or entered into with respect to any of the
Secured Obligations or any security therefor.
SECTION 7.3 Severability.
In case any one or more of the provisions contained in 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 7.4 Notices.
All notices, demands, certificates or other communications hereunder
shall be in writing and shall be deemed sufficiently given or served for all
purposes when delivered personally, when sent by certified or registered mail,
postage prepaid, return receipt requested or by private courier service, or, if
followed and confirmed by mail or courier service notice, when telecopied, in
each case, with the proper address as indicated below. Each party may, by
written notice given to the other parties, designate any other address or
addresses to which notices, certificates or other communications to them shall
be sent as contemplated by this Agreement. Until otherwise so provided by the
respective parties, all notices, certificates and communications to each of them
shall be addressed as follows:
Company: AES Ironwood, L.L.C.
829 Cumberland Street
Lebanon, PA 17042
Attention: Project Manager
Facsimile: 717-228-1271
Trustee: IBJ Whitehall Bank & Trust Company
One State Street
New York, NY 10004
Attention: Capital Markets Trust
Services
Facsimile: 212-858-2952
DSR LOC Provider: Dresdner Bank AG, New York Branch
75 Wall Street, 25th Floor
New York, NY 10005-2889
Attention: Andrew Schroeder
Facsimile: 212-429-2081
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With copy to:
Attention: Michael Higgins
Facsimile: 212-429-2192
CP LOC Provider: Dresdner Bank AG, New York Branch
75 Wall Street, 25th Floor
New York, NY 10005-2889
Attention: Andrew Schroeder
Facsimile: 212-429-2081
With copy to:
Attention: Michael Higgins
Facsimile: 212-429-2192
Collateral Agent: IBJ Whitehall Bank & Trust Company
One State Street
New York, NY 10004
Attention: Capital Markets Trust
Services
Facsimile: 212-858-2952
Depositary Bank: IBJ Whitehall Bank & Trust Company
One State Street
New York, NY 10004
Attention: Capital Markets Trust
Services
Facsimile: 212-858-2952
SECTION 7.5 Successors and Assigns.
Whenever in this Agreement any party hereto is named or referred to,
the successors and assigns of such party shall be deemed to be included and all
covenants, promises and agreements in this Agreement by or on behalf of the
respective parties hereto shall bind and inure to the benefit of the respective
successors and assigns of such parties, whether so expressed or not.
SECTION 7.6 Counterparts.
This Agreement may be executed in any number of counterparts, each
executed counterpart constituting an original but all counterparts together
constituting only one instrument.
SECTION 7.7 Governing Law.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York applicable to contracts made
and to be performed in such state. All terms used herein which are not defined
herein and are defined in the UCC shall have the meanings therein stated, unless
the context otherwise requires.
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SECTION 7.8 Impairments of Other Rights.
Subject to Section 7.13, nothing in this Agreement is intended or shall
be construed to impair, diminish or otherwise adversely affect any other rights
the Senior Parties may have or may obtain against the Company pursuant to the
Financing Documents.
SECTION 7.9 Amendment; Waiver.
No amendment, modification or supplement of this Agreement shall be
effective unless such amendment, modification or supplement was effected in
accordance with this Agreement. Any approval of an amendment to, or any waiver
of any provision of, this Agreement shall be effective only in the specific
instance and for the specific purpose for which such approval or waiver is
given. No delay on the part of any Senior Party in the exercise of any right,
power or remedy shall operate as a waiver thereof, nor shall any single or
partial waiver by such Senior Party of any right, power or remedy preclude any
further exercise thereof, or the exercise of any other right, power or remedy.
SECTION 7.10 Headings.
Headings herein are for convenience only and shall not be relied upon
in interpreting or enforcing this Agreement.
SECTION 7.11 Termination.
This Agreement shall remain in full force and effect until payment in
full of all the Financing Liabilities and termination of the Financing
Commitments. Following the Senior Debt Termination Date, this Agreement shall
continue in full force and effect among the Company, the Subordinated Debt
Providers, and the Collateral Agent, and the Subordinated Debt Providers shall
have all powers, duties and obligations granted hereunder to the Senior Parties
or the Senior Parties as if it were a Senior Party.
SECTION 7.12 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.
SECTION 7.13 Limitation of Liability.
Satisfaction of the obligations of the Company under this Agreement and
each other Financing Documents, for the payment of the principal of or premium,
if any, or interest on any Financing Liability, or any part thereof, or for any
claim based thereon or otherwise in respect thereof or related thereto, shall be
had solely from the Collateral and the assets of the Company and no recourse
shall be had in the event of any non-performance by the Company of any such
obligations to (i) any assets or properties of the Members (or any Person that
controls any Member within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange
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Act) or (ii) any Affiliate of the Company or any incorporators, officers,
directors or employees thereof, and no judgment for any deficiency upon the
obligations of the Company under this Agreement or any other Financing Document,
for the payment of the principal of or premium, if any, or interest on any
Financing Liability, or any part thereof, or for any claim based thereon or
otherwise in respect thereof or related thereto, shall be obtainable by the
Senior Parties or any of them against any Member or Affiliate of the Company or
any other incorporator, stockholder, officer, employee or director, past,
present or future of the Company or any Affiliate of the Company; provided,
however, that nothing contained herein shall prevent the taking of any action
permitted by law against the Company or any of its Affiliates, or in any way
affect or impair the rights of the Trustee or Bondholders to take any action
permitted by law, in either case to realize upon the Collateral and; provided,
further, that nothing herein shall be deemed to affect the obligations of any
Affiliate of the Company under any Transaction Document to which such Affiliate
is a party.
SECTION 7.14 Replacement and/or Removal of Independent Engineer;
Payment of Independent Engineer.
The Company shall in accordance with Section 1 of the Independent
Engineer Agreement, have the right to replace the then current Independent
Engineer at the expiration of the then current term of the Independent Engineer
Agreement and shall appoint a successor Independent Engineer from the engineers
listed on Exhibit 7.14. The Collateral Agent shall, upon receipt of a written
request contained in Senior Party Certificates of the Required Senior Parties,
remove the Independent Engineer if at any time the Independent Engineer becomes
incapable of acting or is, or is reasonably likely to be, adjudged bankrupt or
insolvent or a receiver is appointed for, or any public officer shall take
charge or control of, the Independent Engineer or its property or its affairs
for the purpose of rehabilitation, conservation or liquidation, and shall
appoint a successor Independent Engineer from those engineers then listed on
Exhibit 7.14. Within thirty (30) days of receipt by the Collateral Agent of a
written notification from the Company to the effect that the Independent
Engineer has failed to carry out its obligations in a timely manner, the
Collateral Agent shall, unless directed in Senior Party Certificates of the
Required Senior Parties not to do so, remove the Independent Engineer and
appoint a successor Independent Engineer from those engineers then listed on
Exhibit 7.14. The Company shall pay for all services performed by the
Independent Engineer and its reasonable costs and expenses related thereto.
SECTION 7.15 Third-Party Engineer Dispute Resolution.
(a) If the Company and the Independent Engineer are in dispute in
respect of a notice, plan, report, certificate or budget and they are unable to
resolve the dispute within seven (7) days of the Independent Engineer expressing
its disagreement with such notice, plan, report, certificate or budget, a single
independent engineer (the "Third-Party Engineer") shall be designated to
consider and decide the issues raised by such dispute. The selection of such
Third-Party Engineer shall be made from the list of engineers described below,
the initial version of which is attached as Exhibit 7.14. The Company, as the
case may be, shall designate the Third-Party Engineer from such list not later
than the third (3rd) day following the expiration of the seven (7)
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day period described above and such designation shall become effective in three
(3) days. Within three (3) days of the designation of a Third-Party Engineer,
each of the Company and the Independent Engineer shall submit to the Third-Party
Engineer a notice setting forth in detail such Person's position in respect of
the issues in dispute. Such notice shall include supporting documentation, if
appropriate.
(b) The Third-Party Engineer shall complete all proceedings and issue
his decision with regard to the issues in dispute as promptly as reasonably
possible, but in any event within ten (10) days of the date on which he is
designated as the Third-Party Engineer unless the Third-Party Engineer
reasonably determines that additional time is required in order to give adequate
consideration to the issues raised. In such case the Third-Party Engineer shall
state in writing his reasons for believing that additional time is needed and
shall specify the additional period required, which such period shall not exceed
ten (10) days without the Company's agreement.
(c) If the Third-Party Engineer determines that the position set forth
in the Independent Engineer's notice is correct, it shall so state and shall
state the corrective actions to be taken by the Company. In such case, the
Company shall promptly take such actions. The Company shall thereafter bear all
costs which may arise from actions taken pursuant to the Third-Party Engineer's
decision. If the Third-Party Engineer determines that the position set forth in
the Independent Engineer's notice is not correct, it shall so state and shall
state the appropriate actions to be taken by the Company. In such case, the
Company shall take such actions and for purposes of the Financing Documents, the
Independent Engineer and the Collateral Agent shall be deemed to have approved,
confirmed, concurred in or consented to the notice, plan, report, certificate or
budget in dispute. The decision of the Third-Party Engineer shall be final and
non-appealable. The Company shall bear all reasonable costs incurred by the
Third-Party Engineer in connection with this dispute resolution mechanism.
(d) The Third-Party Engineer shall be chosen from the list of qualified
engineers set forth in Exhibit 7.14. Such list shall be used by the Collateral
Agent (upon written direction of the Required Senior Parties) to choose a
successor Independent Engineer as well. At any time either the Company or the
Collateral Agent (upon written direction of the Required Senior Parties) may
remove a particular engineer from the list by obtaining the other Person's
reasonable consent to such removal. However, neither the Company nor the
Collateral Agent may remove a name or names from the list if such removal would
leave the list without at least two (2) names, unless, concurrently therewith,
the Company and the Collateral Agent (upon direction of the Required Senior
Parties) reasonably agree to the addition of one (1) or more names to such list.
(e) During January of each year, each of the Company and the Collateral
Agent (upon direction of the Required Senior Parties) shall review the current
list of Third-Party Engineers and give notice to the other of any proposed
additions to the list and any intended deletions. Intended deletions shall
automatically become effective forty-five (45) days after notice is received by
the other Person unless written objection is made by such other Person within
thirty (30) days and provided that such deletions do not leave the list without
at least two (2) names. Proposed additions to the list shall automatically
become effective thirty forty-five (45) after
50
<PAGE>
notice is received by the other Person unless written objection is made by such
other Person within thirty (30) days. By mutual agreement between the Company
and the Collateral Agent (upon direction of the Required Senior Parties), a new
name or names may be added to the list of Third-Party Engineers at any time.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
51
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Collateral
Agency and Collateral Agency Agreement to be duly executed by their respective
officers thereunto duly authorized, as of the day and year first above written.
AES IRONWOOD, L.L.C.
By: /s/ Patricia L. Rollin
-------------------------------
Name: Patricia L. Rollin
Title: Vice President
IBJ WHITEHALL BANK & TRUST COMPANY,
as Trustee
By: /s/ Thomas McCutcheon
-------------------------------
Name: Thomas McCutcheon
Title: Assistant Vice President
DRESDNER BANK AG, NEW YORK BRANCH,
as DSR LOC Provider
By: /s/ Kirk Edelman Andrew Schroeder
---------------------------------------
Name: Kirk Edelman Andrew Schroeder
Title: Vice President Vice President
DRESDNER BANK AG, NEW YORK BRANCH,
as CP LOC Provider
By: /s/ Kirk Edelman Andrew Schroeder
---------------------------------------
Name: Kirk Edelman Andrew Schroeder
Title: Vice President Vice President
[COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT]
<PAGE>
IBJ WHITEHALL BANK & TRUST COMPANY,
as Collateral Agent
By: /s/ Thomas McCutcheon
-------------------------------
Name: Thomas McCutcheon
Title: Assistant Vice President
IBJ WHITEHALL BANK & TRUST COMPANY,
as Depositary Bank
By: /s/ Thomas McCutcheon
-------------------------------
Name: Thomas McCutcheon
Title: Assistant Vice President
[COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT]
<PAGE>
EXHIBIT 2.1
FORM OF DESIGNATION LETTER
[Date]
IBJ Whitehall Bank & Trust Company,
as Collateral Agent
One State Street
New York, NY 10004
Re: AES Ironwood Project
Ladies and Gentlemen:
Reference is made to the Collateral Agency and Intercreditor Agreement
(the "Collateral Agency Agreement") dated as of June 1, 1999 among AES Ironwood
L.L.C. (the "Company"), IBJ Whitehall Bank & Trust Company, as Trustee, Dresdner
Bank AG, as DSR LOC Provider, Dresdner Bank AG, as CP LOC Provider, IBJ
Whitehall Bank & Trust Company, as Collateral Agent, and IBJ Whitehall Bank &
Trust Company, as Depositary Bank. Capitalized terms used herein and not defined
herein shall have the meanings set forth in the Collateral Agency Agreement.
The Company and the undersigned have agreed that the undersigned shall
be [an additional Lender] [the Agent for additional Lenders] under the
Collateral Agency Agreement ([each such Lender,] an "Additional Lender") under
the [describe new debt document].
The undersigned is delivering this Designation Letter pursuant to the
Collateral Agency Agreement in order to permit (i) [the undersigned] [each
Additional Lender] to become a [Senior] [Subordinated] Party thereunder and (ii)
the undersigned [and the Additional Lender] to become secured parties under the
Collateral Agency Agreement and the other Financing Documents and to benefit
from the Collateral under the other Security Documents in accordance with the
terms of the Collateral Agency Agreement and the other Security Documents.
Attached hereto is a copy of the Collateral Agency Agreement.
The undersigned [on behalf of itself and the Additional Lenders]
accedes to and agrees to be bound by all of the terms and provisions of the
Collateral Agency Agreement, the Security Documents and the other Financing
Documents. You are hereby instructed to deliver a copy of this Designation
Letter to each Person party to the Collateral Agency Agreement.
2.1 - 1
<PAGE>
Our address for notices is:
[Insert information]
Our wire transfer instructions are:
[Insert Information]
[Insert in the case of Additional Lenders that are to be Subordinated
Debt Providers only: Attached hereto as Annex A are the Terms of Subordination
set forth in the Collateral Agency Agreement, and the undersigned [on behalf of
the Additional Lenders] agrees that such Terms of Subordination shall be
incorporated herein and that [it] [the Additional Lenders] shall be bound by the
terms thereof.] If there is any conflict between such Terms of Subordination and
the lending documents between the Company and the undersigned, such Terms of
Subordination shall govern.
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 AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK EXCLUDING (TO THE GREATEST
EXTENT A NEW YORK COURT WOULD PERMIT) ANY RULE OF LAW THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
[ADDITIONAL LENDER]
By:
-------------------------------
Name:
Title:
ACKNOWLEDGED:
AES IRONWOOD, L.L.C.
By:
-------------------------------
Name:
Title:
2.1 - 2
<PAGE>
ACKNOWLEDGED:
IBJ WHITEHALL BANK & TRUST COMPANY,
as Collateral Agent
By:
-------------------------------
Name:
Title:
2.1 - 3
<PAGE>
EXHIBIT 2.2
TERMS OF SUBORDINATION
Reference is made herein to a certain Collateral Agency and
Intercreditor Agreement, dated as of June 1, 1999 (as amended and in effect from
time to time, the "Collateral Agency Agreement"), entered into among IBJ
Whitehall Bank & Trust Company, as Collateral Agent (in such capacity, together
with its successors and permitted assigns in such capacity, the "Collateral
Agent"), IBJ Whitehall Bank & Trust Company, (in such capacity, together with
its successors and permitted assigns in such capacity, the "Depositary Bank "),
IBJ Whitehall Bank & Trust Company, as Trustee under the Indenture named
therein, on its own behalf and on behalf of the Bondholders described therein
(in such capacity, together with its successors and permitted assigns in such
capacity, the "Trustee"), the other Senior Parties identified therein, the
Subordinated Debt Providers referred to therein, and AES Ironwood, L.L.C. (the
"Company"). Capitalized terms used but not defined herein shall have the
respective meanings ascribed thereto in the Collateral Agency Agreement, the
terms of which are incorporated herein.
(i) Subordination of Subordinated Obligations. The Company, for itself
and its successors and assigns, covenants and agrees, and each Subordinated Debt
Provider that has entered into these Terms of Subordination set forth in this
annex or appendix (the "Terms of Subordination"), who then through the
incorporation of these terms into an executed agreement or otherwise, on its own
behalf and on behalf of each subsequent holder of the Subordinated Obligations
(defined below), likewise covenants and agrees, that, to the extent and in the
manner set forth in these Terms of Subordination, the Subordinated Debt, whether
of principal of and interest and premium (including any Make-Whole Premium) or
prepayment or liquidation penalty (if any) on the Subordinated Debt and fees and
expenses incurred in enforcement of the same (collectively, the "Subordinated
Obligations"), are hereby expressly made subordinate and subject in right of
payment to the prior payment in full in cash of all obligations in respect of
Senior Debt, whether of principal, interest or premium (including any Make-Whole
Premium), if any, and fees and expenses incurred in the enforcement of the same
and the fees, expenses and indemnities to be paid to the Collateral Agent and
the Depositary Bank pursuant to the Collateral Agency Agreement (collectively,
the "Senior Obligations"); provided, however, that nothing in these Terms of
Subordination shall be deemed to prohibit any Subordinated Debt Provider from
receiving payments in accordance with the terms of the Collateral Agency
Agreement, including but not limited to Section 3.10 and Article IV thereof.
(ii) Payment of Proceeds Upon Dissolution. In the event of (i) any
insolvency or bankruptcy case or proceeding, or any receivership, liquidation,
reorganization or other similar case or proceeding in connection therewith,
relative to the Company or to its creditors, as such, or to its assets, or (ii)
any liquidation, dissolution or other winding up of the Company, whether
voluntary or involuntary and whether or not involving insolvency or bankruptcy,
or (iii) any assignment for the benefit of creditors or any other marshalling of
assets and liabilities of the Company, then and in any such event:
2.2 - 1
<PAGE>
(A) the Senior Parties shall be entitled to receive payment in
full in cash of all amounts due or to become due on or in respect of
all Senior Obligations, or provision shall be made for such payment,
before any Subordinated Debt Provider shall be entitled to receive any
payment of the Subordinated Obligations;
(B) any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, by
set-off or otherwise, to which any Subordinated Party would be entitled
but for the provisions of these Terms of Subordination, including any
such payment or distribution that may be payable or deliverable by
reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Subordinated Obligations, shall be
paid by the liquidating trustee or agent or other Person making such
payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, to the Collateral Agent for
distribution in accordance with the terms of the Collateral Agency
Agreement.
(C) if, notwithstanding the foregoing provisions of this
clause (ii) of these Terms of Subordination, any Subordinated Debt
Provider shall have received, before all Senior Obligations are paid in
full in cash or payment thereof provided for, any such payment or
distribution of assets of the Company of any kind or character, whether
in cash, property or securities, including any such payment or
distribution arising out of the exercise by any Subordinated Debt
Provider of a right of set-off or counterclaim and any such payment or
distribution received by reason of any other indebtedness of the
Company being subordinated to the Subordinated Obligations, then, and
in such event, such payment or distribution shall be held in trust for
the benefit of, and shall be immediately paid over or delivered to, the
Collateral Agent for distribution in accordance with the terms of the
Collateral Agency Agreement; and
(D) if any Subordinated Debt Provider shall have failed to
file claims or proofs of claim with respect to the Subordinated
Obligations earlier than [15] days prior to the deadline for any such
filing, the Subordinated Debt Provider shall execute and deliver to the
Senior Parties such powers of attorney, assignments or other
instruments as the Required Senior Parties may reasonably request to
file such claims or proofs of claim.
The consolidation of the Company with, or the merger of the Company
into, another entity or the liquidation or dissolution of the Company following
the conveyance or transfer of its properties and assets substantially as an
entirety to another entity upon the terms and conditions set forth in the
Indenture or the correlative provisions of any other Financing Document shall
not be deemed a dissolution, winding up, liquidation, reorganization, assignment
for the benefit of creditors or marshalling of assets and liabilities of the
Company for purposes of these Terms of Subordination if the entity formed by
such consolidation or into which the Company is merged or the entity that
acquires by conveyance or transfer such properties and assets substantially as
an entirety, as the case may be, shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions set forth in the Indenture or
such correlative provisions of any other Financing Document.
2.2 - 2
<PAGE>
(iii) No Payment. Each Subordinated Debt Provider hereby agrees that,
unless and until the Senior Obligations shall have been paid in full in cash,
(i) no payment on account of the Subordinated Obligations or any judgment with
respect thereto (and no payment on account of the purchase or redemption or
other acquisition of the Subordinated Obligations) shall be made by the Company
or by the Collateral Agent or the Depositary Bank on behalf of the Company and
(ii) no Subordinated Debt Provider shall (A) ask, demand, sue for, take or
receive from the Company, by set-off or in any other manner, or (B) seek any
other remedy allowed at law or in equity against the Company for breach of the
Company's obligations under the instruments representing such Subordinated
Obligations, provided that nothing herein shall be deemed to prohibit payment of
any of the Subordinated Obligations on any day that, under the terms thereof, is
a scheduled payment date to the extent expressly permitted by Section 3.10 of
the Collateral Agency Agreement and the correlative provisions of any other
Financing Document and solely to the extent of available funds.
In the event that, notwithstanding the foregoing provisions of this
clause (iii) of these Terms of Subordination, any Subordinated Debt Provider
shall have received any payment prohibited by the foregoing provisions of this
clause (iii) including, without limitation, any such payment arising out of the
exercise by any Subordinated Debt Provider of a right of set-off or counterclaim
and any such payment received by reason of other indebtedness of the Company
being subordinated to the Subordinated Obligations, then, and in any such event,
such payment shall be held in trust for the benefit of, and shall be immediately
paid over or delivered to, the Collateral Agent for application in accordance
with the Collateral Agency Agreement.
The provisions of this clause (iii) of these Terms of Subordination
shall not alter the rights of the Senior Parties under the provisions of clause
(ii) of these Terms of Subordination.
(iv) Subrogation. Subject to the payment in full in cash of all Senior
Obligations, the Subordinated Debt Providers shall be subrogated (equally and
ratably with the holders of all indebtedness of the Company that by its express
terms is subordinated to Senior Obligations of the Company to the same extent as
the Subordinated Obligations are subordinated and that is entitled to like
rights of subrogation) to the rights of the Senior Parties to receive payments
and distributions of cash, property and securities applicable to the Senior
Obligations until the Subordinated Obligations shall be paid in full in cash.
For purposes of such subrogation, no payments or distributions to the Senior
Parties of any such, property or securities to which any Subordinated Debt
Provider would be entitled except for the provisions of these Terms of
Subordination, and no payments over pursuant to the provisions of these Terms of
Subordination to the Senior Parties by any Subordinated Debt Providers, shall be
deemed to be a payment or distribution by the Company to or on account of the
Senior Obligations.
(v) Provisions Solely to Define Relative Rights. The provisions of
these Terms of Subordination are and are intended solely for the purpose of
defining the relative rights of the Subordinated Debt Providers on the one hand
and the Senior Parties and the Collateral Agent on the other hand. Nothing
contained in these Terms of Subordination or elsewhere in any of the Financing
Documents relating to the Subordinated Obligations is intended to or shall:
2.2 - 3
<PAGE>
(A) affect, as among the Company, its creditors other than the
Senior Parties and the Subordinated Debt Providers, the obligation of
the Company to pay to the Subordinated Debt Providers, the Subordinated
Obligations as and when the same shall become due and payable in
accordance with their terms;
(B) affect the relative rights against the Company of the
Subordinated Debt Providers and creditors of the Company other than the
Senior Parties;
(C) vitiate the occurrence of an "Event of Default" under the
Indenture or the correlative provisions of any other Financing Document
to the extent that any failure to make a payment of principal of, or
interest on, any Subordinated Obligations by reason of the conditions
specified in clause (ii) or (iii) of these Terms of Subordination would
otherwise constitute such an Event of Default; or
(D) prevent any Subordinated Debt Provider from exercising all
remedies otherwise permitted by Applicable Law upon default under any
of the Financing Documents relating to the Subordinated Obligations,
subject to the rights, if any, under these Terms of Subordination of
the Senior Parties, (i) in the event of any proceeding, dissolution,
liquidation or other winding up, assignment for the benefit of
creditors or other marshalling of assets and liabilities of the Company
referred to in clause (ii) of these Terms of Subordination, to receive,
pursuant to and in accordance with such clause (ii), cash, property and
securities otherwise payable or deliverable to the Subordinated Debt
Providers, or (ii) under the conditions specified in clause (iii) of
these Terms of Subordination, to prevent any payment or action
prohibited by such clause (iii).
(vi) No Waiver of Subordination Provisions. No right of any present or
future Senior Party or the Collateral Agent to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by such Senior Party, or by any non-compliance by the Company with
the terms, provisions and covenants of these Terms of Subordination, regardless
of any knowledge thereof such Senior Party may have or be otherwise charged
with.
Without in any way limiting the generality of the foregoing paragraph,
the occurrence of any one or more of the following (without the consent of or
notice to any Subordinated Debt Provider), shall not cause any Senior Party to
incur any responsibility to any Subordinated Debt Provider or the obligations
hereunder of any Subordinated Debt Provider to the Senior Parties:
(A) at any time or from time to time, the time for any
performance of or compliance with any Subordinated Obligation or any
Senior Obligation shall be extended, or such performance or compliance
shall be waived;
(B) any of the acts mentioned in any of the provisions of any
of the Collateral Agency Agreement, the Indenture, any other
Transaction Document, any other Financing Document or any other
agreement or instrument referred to herein or therein shall be done or
omitted;
2.2 - 4
<PAGE>
(C) the maturity of any Subordinated Obligation or Senior
Obligation shall be accelerated, or any Subordinated Obligation or any
Senior Obligation shall be modified, supplemented or amended in any
respect, or any right under any of the Collateral Agency Agreement, the
Indenture, any other Transaction Document, any other Financing Document
or any other agreement or instrument referred to herein or therein
shall be waived or any other guarantee of any Subordinated Obligation
or any Senior Obligation or any security therefor shall be released or
exchanged in whole or in part or otherwise dealt with; or
(D) any lien or security interest granted to, or in favor of,
the Collateral Agent, the Depositary Bank or any Senior Party as
security for any Subordinated Obligation or any Senior Obligation shall
fail to be perfected.
(vii) Notice to Subordinated Debt Providers. The Company shall give
prompt written notice to each Subordinated Debt Provider of any fact known to
the Company that would prohibit the making of any payment to it in respect of
the Subordinated Obligations. Notwithstanding the provisions of these Terms of
Subordination, no Subordinated Debt Provider shall be charged with knowledge of
the existence of any facts that would prohibit the making of any payment to it
in respect of the Subordinated Obligations, unless and until such Subordinated
Debt Provider shall have received written notice thereof from the Company or a
Senior Party or from any trustee, fiduciary or agent therefor; and, prior to the
receipt of any such written notice, each Subordinated Debt Provider shall be
entitled in all respects to assume that no such facts exist.
Each Subordinated Debt Provider shall be entitled to rely on the
delivery to it of a written notice by a Person representing itself to be a
Senior Party (or a trustee, fiduciary or agent therefor) or the Collateral Agent
to establish that such notice has been given by a Senior Party (or a trustee,
fiduciary or agent therefor).
(viii) Reliance on Judicial Order or Certificate of Liquidation Agent.
Upon any payment or distribution of assets of the Company referred to in these
Terms of Subordination, the Subordinated Debt Providers shall be entitled to
rely upon any order or decree entered by any court of competent jurisdiction in
which such insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending, or a
certificate of the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee for the benefit of creditors, agent or other Person making
such payment or distribution, delivered to the Subordinated Debt Providers, for
the purpose of ascertaining the Persons entitled to participate in such payment
or distribution, the Senior Parties and other indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to these Terms of
Subordination.
(ix) Specific Performance. Each of the Senior Parties may demand
specific performance of these terms of subordination, whether or not the Company
shall have complied with any of the provisions hereof applicable to them at any
time when the Subordinated Debt Provider shall have failed to comply with any of
such provisions applicable to it. The
2.2 - 5
<PAGE>
Subordinated Debt Providers hereby irrevocably waive any defense based on the
adequacy of a remedy at law, which might be asserted as a bar to such remedy of
specific performance.
(x) Participation of Subordinated Debt Providers. So long as any of the
Senior Obligations shall remain unpaid or otherwise unsatisfied, no Subordinated
Debt Provider shall commence or join with any creditor other than the Collateral
Agent in commencing any proceeding referred to above for the payment of any
amounts which otherwise would be payable or deliverable upon or with respect to
the Subordinated Obligations.
(xi) Survival. The obligations of the Company under these Terms of
Subordination shall survive the repayment of the Subordinated Obligations.
(xii) Headings. The section headings appearing herein are included
solely for convenience of reference and are not intended to affect the
interpretation of any provision of these Terms of Subordination.
2.2 - 6
<PAGE>
EXHIBIT 2.3
FORM OF SENIOR PARTY CERTIFICATE
IBJ Whitehall Bank & Trust Company AES Ironwood Project
as Collateral Agent Senior Party Certificate
[Date]
Reference is made to that certain Collateral Agency and Intercreditor
Agreement, dated as of June 1, 1999 (as amended, modified or supplemented from
time to time, the "Collateral Agency Agreement"), among AES Ironwood, L.LC.,
(together with its successors and assigns, the "Company") and IBJ Whitehall Bank
& Trust Company, as trustee and depositary bank (together with its successors in
such capacity, the "Collateral Agent") and Dresdner Bank AG, New York Branch, as
DSR LOC Provider and CP LOC Provider. Each capitalized term used herein and not
otherwise defined herein shall have the meaning assigned to it in the Indenture.
The undersigned, [INSERT NAME OF SENIOR PARTY], is a Senior Party under
the Collateral Agency Agreement and hereby certifies the following:
(a) a Trigger Event has occurred and is continuing [insert description
of Trigger Event];
(b) the aggregate principal amount of Senior Debt owed to the Senior
Party by the Company is $[INSERT AMOUNT];
(c) the aggregate amount of all undrawn financing commitments from the
Senior Party to the Company is $[INSERT AMOUNT]1.
The undersigned hereby directs the Collateral Agent to, in accordance
with the terms of the Security Documents, take the following actions:
[INSERT DESCRIPTION OF THE ACTION TO BE TAKEN BY THE COLLATERAL AGENT]
[NAME OF SENIOR PARTY]
By:
-------------------------------
Name:
Title:
__________________
1 Include the principal amount of any undrawn letter of credit here.
2.3 - 1
<PAGE>
EXHIBIT 3.6(a)
FORM OF GUARANTY
GUARANTY (this "Guaranty"), made and delivered as of ___________, ____
by THE AES CORPORATION, a Delaware corporation (the "Guarantor").
RECITALS
A. AES Ironwood, L.L.C. (the "Company"), a Delaware limited liability
company and an indirect subsidiary of Guarantor (the "Guaranteed Party"),
certain parties providing financing to the Company (the "Financing Parties") and
IBJ Whitehall Bank & Trust Company, as Collateral Agent on behalf of the
Financing Parties, have entered into a Collateral Agency and Intercreditor
Agreement, dated as of June 1, 1999 (as the same may be amended, supplemented or
otherwise modified from time to time, the ("Collateral Agency Agreement").
B. Section 3.6 of the Collateral Agency Agreement provides that the
Company may from time to time under certain circumstances and upon certain
conditions, one of which is the provision of this Guaranty to the Guaranteed
Party, withdraw monies on deposit in, or credited to, any of the Available
Accounts.
C. The Guarantor is entering into this Guaranty in order to support the
repayment obligations of the Company under Section 3.6 of the Collateral Agency
Agreement for the Advance made on [INSERT DATE] in the amount of $[INSERT
AMOUNT] (the "Guaranteed Obligations").
AGREEMENT
In consideration of the foregoing and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Guarantor hereby agrees for the benefit of the Guaranteed Party as follows:
SECTION 1. Definitions. Unless otherwise defined herein, all terms used
herein which are defined in the Collateral Agency Agreement shall have their
respective meanings as therein defined.
SECTION 2. Guaranty. The Guarantor hereby unconditionally and
irrevocably guarantees, as the primary obligor and not merely as surety, to and
for the benefit of the Guaranteed Party, punctual and full payment by the
Company of the Guaranteed Obligations as and when the same shall become due and
payable in accordance with the terms of the Collateral Agency Agreement. The
guaranty contained herein is an absolute, unconditional, present and continuing
guaranty of payment, and not of collection, is in no way conditioned or
contingent upon any attempt to collect from or enforce payment by the Company or
upon any other event, contingency or circumstance whatsoever, and shall be
binding upon and against the Guarantor without regard to the validity or
enforceability of the Collateral Agency Agreement. If, for any reason
whatsoever, the Company shall fail or be unable duly, punctually and fully to
pay any
3.6(a)-1
<PAGE>
Guaranteed Obligation as and when the same shall become due and payable, the
Guarantor shall forthwith pay or cause to be paid such Guaranteed Obligation
to the Guaranteed Party. Such amount will not be paid out of funds or other
assets of the Company.
SECTION 3. Obligations Absolute and Unconditional, Continuing, Etc. The
Guarantor agrees that the obligations of the Guarantor set forth in this
Guaranty shall be direct obligations of the Guarantor, and such obligations
shall be absolute and unconditional, shall not be subject to any counterclaim,
set-off, deduction, diminution, abatement, recoupment, suspension, deferment,
reduction or defense (other than full and strict compliance by the Guarantor
with its obligations hereunder) based upon any claim the Guarantor or any other
Person may have against the Guaranteed Party, the Company or any other Person,
and shall remain in full force and effect without regard to, and shall not be
released, discharged or in any way affected or impaired by, any circumstance or
condition whatsoever (other than full and strict compliance by the Guarantor
with its obligations hereunder), whether or not the Guarantor shall have any
knowledge or notice thereof, including, without limitation: (i) any amendment or
modification of or supplement to or other change in the Collateral Agency
Agreement or any other Financing Document; (ii) any failure, omission or delay
on the part of the Company or the Guaranteed Party to conform or comply with any
term of the Collateral Agency Agreement; (iii) any waiver, consent, extension,
indulgence, compromise, release or other action or inaction under or in respect
of the Collateral Agency Agreement or any other Financing Document or any
obligation or liability of the Company or the Guaranteed Party, or any exercise
or non-exercise of any right, remedy, power or privilege under or in respect of
any such instrument or agreement or any such obligation or liability; (iv) any
bankruptcy, insolvency, reorganization, arrangement, readjustment, liquidation
or similar proceeding with respect to the Company or the Guaranteed Party or any
of their respective properties, or any action taken by any Guaranteed Party or
receiver or by any court in any such proceeding; (v) any discharge, termination,
cancellation, frustration, irregularity, invalidity or unenforceability, in
whole or in part, of the Collateral Agency Agreement or any other Financing
Document or any term or provision thereof; (vi) any merger or consolidation of
the Company or the Guarantor into or with any other corporation or any sale,
lease or transfer of all or any of the assets of the Company or the Guarantor to
any other Person; (vii) any change in the ownership of the Company; (viii) to
the extent as may be waived under Applicable Law, the benefit of all principles
or provisions of law, statutory or otherwise, which may be in conflict with the
terms hereof; (ix) the occurrence of any condition affecting (adversely or
otherwise) the value of the Guarantor's or the Company's property; or (x) to the
extent permitted under Applicable Law, any other occurrence or circumstance
whatsoever, whether similar or dissimilar to the foregoing, which might
otherwise constitute a legal or equitable defense or discharge of the
liabilities of a guarantor or surety or which might otherwise limit recourse
under this Guaranty against the Guarantor. The obligations of the Guarantor set
forth herein constitute the full recourse obligations of the Guarantor
enforceable against it to the full extent of all its assets and properties.
Without limiting the generality of the foregoing, the Guarantor agrees that (a)
repeated and successive demands may be made and recoveries may be had hereunder
as and when, from time to time, the Company shall default under or fail to
comply with the terms of Section 3.6 of the Collateral Agency Agreement and that
notwithstanding the recovery hereunder for or in respect of any given default or
failure to so comply by the Company under the Collateral Agency Agreement, this
Guaranty shall remain in force and effect and shall apply to each and
3.6(a)-2
<PAGE>
every subsequent default, and (b) if any Guaranteed Obligation is paid by the
Company, and thereafter all or any part of such payment is recovered from the
Guaranteed Party upon the insolvency, bankruptcy or reorganization of the
Company, the liability of the Guarantor hereunder with respect to such
Guaranteed Obligation so paid and recovered shall, notwithstanding any prior
release or termination hereof, continue and remain in full force and effect, or
shall be reinstated, as the case may be, as if, to the extent of such recovery,
such payment had not been made. If (x) an event permitting the exercise of
remedies under the Collateral Agency Agreement shall at any time have occurred
and be continuing and (y) such exercise, or any consequences thereof provided in
the Collateral Agency Agreement shall at any time be prevented by reason of the
pendency against the Company of a case or proceeding under any bankruptcy or
insolvency law, the Guarantor agrees that, solely for purposes of this Guaranty
and its obligations hereunder, the Collateral Agency Agreement shall be deemed
to have been declared in default and all amounts thereunder shall be deemed to
be due and payable, with all the attendant consequences as provided in the
Collateral Agency Agreement as if declaration of default and the consequence
thereof had been accomplished in accordance with the terms thereof, and the
Guarantor shall forthwith pay any amounts guaranteed hereunder.
SECTION 4. Waiver of Demands, Notices, Etc. The Guarantor hereby
unconditionally waives, to the extent permitted by Applicable Law, (i) notice of
any of the matters referred to in the first sentence of Section 3 hereof; (ii)
all notices which may be required by statute, rule of law or otherwise, now or
hereafter in effect, to preserve any rights against the Guarantor hereunder,
including, without limitation, any demand, proof or notice of non-payment of any
Guaranteed Obligation; (iii) any right to the enforcement, assertion or exercise
of any right, remedy, power or privilege under or in respect of the Collateral
Agency Agreement; (iv) notice of acceptance of this Guaranty, demand, protest,
presentment, notice of default and any requirement of diligence; (v) any
requirement to exhaust any remedies or to mitigate any damages resulting from
default by the Company under the Collateral Agency Agreement; (vi) the benefit
of any and all Applicable Laws which are or might be in conflict with the terms
of this Guaranty; and (vii) any other circumstance whatsoever which might
otherwise constitute a legal or equitable discharge, release or defense of a
guarantor or surety, or which might otherwise limit recourse under this Guaranty
against the Guarantor.
SECTION 5. Subrogation. The Guarantor shall be subrogated to all rights
of the Guaranteed Party in respect of any amounts paid by the Guarantor pursuant
to the provisions of this Guaranty; provided, however, that the Guarantor shall
be entitled to enforce, or to receive any payments arising out of or based upon,
such right of subrogation only after all of the Guaranteed Obligations and any
other payment obligations under the Financing Documents have been paid in full.
Without prejudice to the rights set forth in the preceding sentence, the
Guarantor acknowledges and agrees that no proper payment by the Guarantor under
this Guaranty shall give rise to (i) any claim by the Guarantor against the
Guaranteed Party or (ii) any indebtedness of the Guaranteed Party.
SECTION 6. Certain Rights and Powers of Guaranteed Party. The
Guaranteed Party shall have all of the rights and remedies available under
Applicable Law and may proceed by appropriate court action to enforce the terms
hereof and to recover damages for the breach
3.6(a)-3
<PAGE>
hereof. Each and every remedy of the Guaranteed Party shall, to the extent
permitted by law, be cumulative and shall be in addition to any other remedy now
or hereafter existing at law or in equity. At the option of the Guaranteed Party
and upon notice to the Guarantor, the Guarantor may be joined in any action or
proceeding commenced by such Guaranteed Party against the Company in respect of
any Guaranteed Obligation, and recovery may be had against the Guarantor in such
action or proceeding or in any independent action or proceeding against the
Guarantor, without any requirement that such Guaranteed Party first assert,
prosecute or exhaust any remedy or claim against the Company.
SECTION 7. Representations, Warranties. The Guarantor represents and
warrants to the Guaranteed Party, on and as of the date hereof:
(d) The Guarantor is duly organized and validly existing in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to enter into and perform its obligations under this
Guaranty;
(e) No governmental action is required to be taken, given or obtained,
as the case may be, by or from any Governmental Authority, and no filing,
recording, publication or registration in any public office or any other place
is necessary to authorize the execution, delivery and performance by the
Guarantor of this Guaranty or for the legality, validity, binding effect or
enforceability hereof;
(f) The execution and delivery of this Guaranty by the Guarantor and
the performance of its obligations hereunder will not contravene any Applicable
Law, or any judgment or order applicable to or binding on it, or contravene or
result in any breach of, or constitute any default under its certificate of
incorporation or its bylaws or any mortgage, contract, agreement or instrument
to which the Guarantor is a party or by which any of its properties may be
bound;
(g) The execution, delivery and performance of this Guaranty by the
Guarantor have been duly authorized by all necessary corporate action; this
Guaranty has been duly executed and delivered by the Guarantor and constitutes
the legal, valid and binding obligation of the Guarantor enforceable against the
Guarantor in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
liquidation or similar laws affecting creditors' rights generally and by general
principles of equity; and
(h) There is no action, suit or proceeding pending or, to the knowledge
of the Guarantor, threatened against the Guarantor before or by any Governmental
Authority that questions the validity or enforceability of this Guaranty or if
adversely determined would materially impair the ability (financial or
otherwise) of the Guarantor to perform its obligations hereunder.
SECTION 8. Corporate Existence, Etc. The Guarantor agrees that, so long
as this Guaranty is in effect, the Guarantor shall (i) preserve and maintain its
corporate existence; (ii) preserve and maintain all of its material rights,
privileges and franchises, except where the failure to preserve and maintain any
such right, privilege or franchise would not materially and adversely affect the
ability of the Guarantor to perform its obligations under this Guaranty; and
3.6(a)-4
<PAGE>
(iii) comply with all the requirements of all Applicable Laws, rules,
regulations and orders of governmental or regulatory authorities except where
the failure to comply with any such requirement would not materially and
adversely affect the ability of the Guarantor to perform its obligations under
this Guaranty.
SECTION 9. Payments. The Guarantor shall make all payments of amounts
owing pursuant to this Guaranty in immediately available funds to the Guaranteed
Party by wire or electronic transfer to [ ] at ABA No. [ ], for credit to [ ],
Attention: [ ], or to such other account as the Guaranteed Party may specify
from time to time by notice to the Guarantor, by not later than noon (New York
City time) on the due date for such payment. Any such payment shall, to the
extent so made, discharge the obligations of the Guarantor hereunder.
SECTION 10. Termination. This Guaranty and all obligations of the
Guarantor hereunder shall terminate upon the repayment of the Advance to which
this Guaranty relates.
SECTION 11. Notices. All notices and other communications required or
permitted under the terms and provisions hereof shall be given to the Guarantor
in writing, addressed to the Guarantor at 1001 North 19th Street, Arlington, VA
22209, Attention: General Counsel, Facsimile: 703-528-4510, or at such other
address or addresses as the Guarantor may provide from time to time in writing
to the Guaranteed Party.
SECTION 12. Amendments, Waiver, Assignment, etc. Neither this Guaranty
nor any of the terms hereof may be terminated, amended, supplemented, waived or
modified orally but only by an instrument in writing signed by the Guarantor and
the Guaranteed Party. The obligations of the Guarantor under this Guaranty may
not be assigned or otherwise transferred without the prior written consent of
the Guaranteed Party.
SECTION 13. Section Headings, etc. The headings of the various sections
of this Guaranty are for the convenience of reference only and shall not modify,
define, expand or limit any of the terms or provisions hereof.
SECTION 14. Severability of Provisions. Any provision of this Guaranty
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 15. Successors and Assigns. This Guaranty shall be binding upon
the Guarantor and its successors and assigns and shall inure to the benefit of
the Guaranteed Party and its successors and assigns as Collateral Agent under
the Collateral Agency Agreement. This Guaranty shall not be deemed to create any
right in any Person other than the Guaranteed Party and its successors and
assigns and shall not be construed in any respect to be a contract in whole or
in part for the benefit of any Person other than the Guaranteed Party and its
successors and assigns.
3.6(a)-5
<PAGE>
SECTION 16. GOVERNING LAW. THIS GUARANTY SHALL IN ALL RESPECTS BE
GOVERNED, INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS PROVISIONS OF SUCH LAWS.
SECTION 17. SUBMISSION OF JURISDICTION; VENUE; WAIVER OF JURY TRIAL.
(a) ANY LEGAL ACTION OR PROCEEDING AGAINST THE GUARANTOR WITH RESPEC TO
THIS GUARANTY MAY BE BROUGHT IN THE COURTS OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK AND, BY EXECUTION AND DELIVERY OF THIS GUARANTY, THE
GUARANTOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS. THE GUARANTOR HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT
CORPORATION SYSTEM, WITH OFFICES ON THE DATE HEREOF AT 1633 BROADWAY, NEW YORK,
NY 10019, AS ITS DESIGNEE, APPOINTEE AND AGENT WITH RESPECT TO ANY ACTION OR
PROCEEDING IN NEW YORK 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 AND
AGREES THAT THE FAILURE OF SUCH AGENT TO GIVE ANY ADVICE OF ANY SUCH SERVICE OF
PROCESS TO THE COMPANY SHALL NOT IMPAIR OR AFFECT THE VALIDITY OF SUCH SERVICE
OR OF ANY CLAIM BASED THEREON. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND
AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE GUARANTOR AGREES TO
DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK CITY ON THETERMS AND
FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT. THE 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 THE COMPANY AT ITS
ADDRESS SET FORTH IN SECTION 11, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER
SUCH MAILING.
(b) THE 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 GUARANTY BROUGHT IN THE COURTS REFERRED
TO IN SECTION 17(a) 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.
3.6(a)-6
<PAGE>
(c) THE GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO ANY OF THIS GUARANTY.
SECTION 18. Entire Agreement. This Guaranty constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, between the Guarantor and the Guaranteed Party with respect to the
subject matter hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
3.6(a)-7
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunder duly authorized on the date
first above written.
THE AES CORPORATION
By:
-------------------------------
Name:
Title:
[FORM OF AES GUARANTY]
<PAGE>
EXHIBIT 3.6(b)
FORM OF LETTER OF CREDIT
[INSERT DATE OF ISSUE]
Beneficiary: IBJ Whitehall Bank & Trust Company,
as Collateral Agent
One State Street
New York, NY 10004
________________________________________
Attention: ______________________
________________________
Subject: Irrevocable Standby Letter of Credit No. [L/C______]
Gentlemen:
We hereby issue in your favor our Irrevocable Letter of Credit No. __________
(this "Letter of Credit") for the account of [INSERT NAME OF AFFILIATE OF
IRONWOOD], an affiliate of AES Ironwood, L.L.C. (the "Company") for an amount
(the "Stated Amount") on any date equal to the difference between (x) $[INSERT
AMOUNT TO BE WITHDRAWN FROM ACCOUNTS] (the "Maximum Stated Amount") and (y) the
total amount of prior draws received and honored by us pursuant to this Letter
of Credit. This Letter of Credit relates to the Advance made pursuant to and as
defined in the Collateral Agency Agreement referred to below of [INSERT DATE] in
the amount of $[INSERT AMOUNT].
We understand that this Letter of Credit is being issued to you in connection
with that certain Collateral Agency and Intercreditor Agreement, dated as of
June 1, 1999 (as the same may be amended, modified or supplemented from time to
time, the "Collateral Agency Agreement"), among the Company, certain parties
providing financing to the Company named therein (the "Financing Parties") and
IBJ Whitehall Bank & Trust Company, as Collateral Agent on behalf of the
Financing Parties (the "Collateral Agent").
Prior to the Termination Date (as hereinafter defined) of this Letter of Credit,
you may draw from time to time an amount not exceeding the Stated Amount, on the
conditions set forth herein against presentation of this Letter of Credit in the
manner provided herein and your sight draft on us (marked "Drawn under Letter of
Credit No. L/C ") accompanied by a signed Drawing Certificate in the form
attached hereto as Annex A appropriately completed (such sight draft and Drawing
Certificate being referred to hereinafter collectively as the "Documents").
Presentation of this Letter of Credit and such draft and certificate shall be
made at our office, __________________________________________________ (fax no.
__________) Attn: Letter of Credit Department, either by physical delivery of
such documents or by facsimile transmission of such documents to the office
stated above. Upon such presentation, the payment
3.6(b) - 1
<PAGE>
of a drawing shall be made in accordance with the terms herein. Such documents
shall be sent to our office by overnight courier for receipt by us within one
Business Day of the date of such facsimile transmission. Our only obligation
with regard to a drawing under this Letter of Credit shall be to examine the
Documents and to pay in accordance therewith, and we shall not be obligated to
make any inquiry in connection with the presentation of the Documents.
If this Letter of Credit and the requisite Documents are presented to us at or
prior to 12:00 noon (New York time) on a Business Day (as hereinafter defined),
and provided that such Documents conform to the terms and conditions hereof,
payment of the amount specified shall be made to you in immediately available
funds on or prior to 3:00 p.m. (New York time) on such day. If a drawing is made
hereunder after 12:00 noon (New York time) on a Business Day, and provided that
such Documents conform to the terms and conditions hereof, payment of the amount
specified shall be made to you in immediately available funds, not later than
12:00 noon (New York time), on the following Business Day. If a demand for
payment made hereunder does not, in any instance, conform to the terms and
conditions of this Letter of Credit, we shall give you prompt notice that the
Documents were not in accordance with the terms and conditions of this Letter of
Credit, stating the reasons therefor and that we will hold the Documents at your
disposal or return the same to you. Upon being notified that the Documents were
not in conformity with this Letter of Credit, you may attempt to correct any
such nonconforming Documents if and to the extent that you are entitled and able
to do so.
This Letter of Credit is effective immediately and, unless terminated earlier in
accordance with the provisions hereof, expires at the close of business at our
office in _______________ three hundred sixty four (364) days from today's date
(the "Stated Expiration Date") but such Stated Expiration Date shall be
automatically extended for a period of three hundred sixty four (364) days
effective upon the Stated Expiration Date and each annual anniversary of the
Stated Expiration Date (each such annual anniversary date being referred to
herein as the "New Stated Expiration Date") unless, thirty days prior to the
Stated Expiration Date or any such New Stated Expiration Date, we notify you, by
registered mail or courier service at the above address, that this Letter of
Credit shall not be extended beyond the Stated Expiration Date or the New Stated
Expiration Date, as the case may be; provided that this Letter of Credit shall
not be extended for more than three (3) such additional periods. If you are so
notified that this Letter of Credit will not be extended, you may on or within
fifteen (15) Business Days before the Stated Expiration Date or the New Stated
Expiration Date, as the case may be, draw the full Stated Amount then available
hereunder. Any drawing under this Letter of Credit will be paid with our own
funds and not out of funds or other assets of the Company.
Only you may make a drawing under this Letter of Credit. Multiple drawings may
be made under this Letter of Credit. Upon the payment of a drawing, we shall be
fully discharged of our obligation under this Letter of Credit in respect of any
amount in excess of the Stated Amount, as the case may be, after giving effect
to such drawing, and we shall not thereafter be obligated to make any further
payments under this Letter of Credit in respect of any amount in excess of the
Stated Amount, as the case may be, after giving effect to such drawing.
3.6(b) - 2
<PAGE>
Upon payment of any drawing hereunder, if any amount remains to be drawn
hereunder, the new Stated Amount shall be evidenced by an endorsement on the
reverse of the original Letter of Credit and we shall promptly return such
endorsed Letter of Credit by overnight courier to you at the address specified
herein, provided that we receive the original Letter of Credit for such
endorsement.
Upon the earliest of (i) the close of business at our office in ______________
on the New Stated Expiration Date or, if there is none, the Stated Expiration
Date, (ii) the date we have paid the Maximum Stated Amount under all drawings
made hereunder or (iii) the date of our receipt of a certificate in the form of
Annex B purportedly signed by an Authorized Officer (a "Certificate as to
Defeasance"), (which earliest date of (i), (ii) or (iii) is referred to herein
as the "Termination Date") this Letter of Credit shall automatically terminate
and expire and the original of this Letter of Credit shall be immediately
delivered to us for cancellation.
Communications with respect to this Letter of Credit shall be in writing and
shall be addressed to us at ______________________________________, specifically
referring therein to this Letter of Credit by number.
As used herein (a) "Authorized Officer" shall mean any of your Vice Presidents
and (b) "Business Day" shall mean any day on which commercial banks in New York,
New York are open for the purpose of conducting commercial banking business.
This Letter of Credit sets forth in full our undertaking, and such undertaking
shall not in any way be modified, amended, amplified or limited by reference to
any document, instrument or agreement referred to herein, except only the
certificates referred to herein, and any such reference shall not be deemed to
incorporate herein by reference any documents, instrument or agreement except
for such certificates.
This Letter of Credit shall be subject to the provisions (to the extent that
such provisions are not inconsistent with this Letter of Credit) of the Uniform
Customs and Practice for Documentary Credits, 1993 Revision, International
Chamber of Commerce Publication No. 500. To the extent that the provisions of
this Letter of Credit are not covered by such Uniform Customs and Practice, this
Letter of Credit shall be governed by, and enforced and construed in accordance
with, the laws of the State of New York.
Very truly yours,
[-------------------- ---------------------
Vice President Vice President]
3.6(b) - 3
<PAGE>
ANNEX A
(Form of Drawing Certificate)
Date:
TO: [Letter of Credit Provider] ("Issuing Bank")
Attn: Letter of Credit Department
RE: Irrevocable Letter of Credit No. ____________ (the "Letter of Credit")
The undersigned, duly authorized officers of [INSERT NAME OF COLLATERAL AGENT],
in its capacity as Collateral Agent hereby, certifies to Issuing Bank with
reference to the Letter of Credit that:
(1)
_____ No Certificate as to Defeasance (as defined in the Letter of
Credit) has been delivered and the Company has become
obligated to make or cause to be made a payment in respect of
the Advance to which the Letter of Credit relates pursuant to
Section 3.6 of the Collateral Agency Agreement referred to in
the Letter of Credit in the amount of $[INSERT AMOUNT OF
PAYMENT DUE], which amount does not exceed $___________, such
amount being the current Stated Amount under the Letter of
Credit; and
[or (1)]
_____ No Certificate as to Defeasance has been delivered and the
Letter of Credit will expire within fifteen (15) Business Days
and the Company has not furnished Acceptable Credit Support
(as defined in the Collateral Agency Agreement) in
substitution for the Letter of Credit and as a consequence
thereof the entire Stated Amount of $___________ is due and
payable; and
[or (1)]
_____ No Certificate as to Defeasance has been delivered and the
Acceptable Credit Provider has ceased to have a long-term
unsecured debt rating of at least "A" by S&P or "A2" by
Moody's and the Company has not furnished an Acceptable Credit
Support from a replacement Acceptable Credit Provider.
3.6(b) - 4
<PAGE>
(2) The amount of the sight draft accompanying this certificate equals the
amount due and payable as set forth above and does not exceed the
Stated Amount (as defined in the Letter of Credit).
IBJ WHITEHALL BANK & TRUST COMPANY,
as Collateral Agent
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
3.6(b) - 5
<PAGE>
ANNEX B
(Form of Certificate as to Defeasance)
Date:
TO: [Letter of Credit Provider] ("Issuing Bank")
Attn: Letter of Credit Department
RE: Irrevocable Letter of Credit No. ____________ (the "Letter of Credit")
The undersigned, duly authorized officers of IBJ Whitehall Bank & Trust Company,
in its capacity as Collateral Agent (the "Collateral Agent") hereby certifies to
Issuing Bank with reference to the Letter of Credit that:
_____ the amount of the Advance (as defined in the Collateral Agency
Agreement referred to in the Letter of Credit) to which the
Letter of Credit relates has been repaid as a result of
drawings on the Letter of Credit or payments by others; or
_____ Acceptable Credit Support (as defined in the Collateral Agency
Agreement referred to in the Letter of Credit) in replacement
for the Letter of Credit has been provided to the Collateral
Agent by or on behalf of the Company;
and as a result of the foregoing, the Letter of Credit may be terminated.
IBJ WHITEHALL BANK & TRUST COMPANY,
as Collateral Agent
By:
-------------------------------
Name:
Title:
3.6(b) - 6
<PAGE>
EXHIBIT 3.8
FORM OF REQUISITION
Requisition No.______
Date:________________
IBJ Whitehall Bank & Trust Company,
as Collateral Agent
[address]
Reference is hereby made to the Collateral Agency and Intercreditor
Agreement, dated as of June 1, 1999, among AES Ironwood, L.L.C. (the "Company"),
IBJ Whitehall Bank & Trust Company, as Collateral Agent, Trustee and Depositary
Bank, and Dresdner Bank AG, New York Branch, as DSR LOC Provider and CP LOC
Provider (as the same may be amended, modified or supplemented from time to
time, the "Collateral Agency Agreement"). Each capitalized term used herein and
not otherwise defined herein shall have the meaning assigned to it in the
Collateral Agency Agreement.
The Company hereby requests, pursuant to Section 3.8 of the Collateral
Agency Agreement, that the Collateral Agent make a disbursement from the
Construction Account in the aggregate amount of $_________ (the "Company
Requested Disbursement").
The total funding to date from the Construction Account is equal to
$__________.
The date that the Company Requested Disbursement is to be made is
________.
Proceeds of the Company Requested Disbursement shall be used as
follows:
Cash to be Paid to Contractor $______________
Cash to be Paid to the Senior Parties $______________
Cash to be Paid to Trustee for deposit in the
Construction Interest Account $______________
Cash for Other Project Costs $______________
Total Funds in This Requisition $______________
Total Equity Funding to Date $______________
Total Funding to Date $______________
Cash disbursement instructions (including wire and account
information) for the Company Requested Disbursement are set forth in
Annex 1 hereto.
The date that the Company Requested Disbursement is to be made
is ________.
The Company hereby certifies, in connection with this
Requisition, that:
3.8 - 1
<PAGE>
(a) the proceeds of the requested disbursements will
be used solely to pay Project Costs in accordance with the
Indenture;
(b) all work performed to date has been
satisfactorily performed in a good and workmanlike manner and
according to the EPC Contract;
(c) undisbursed funds in the Construction Account,
together with funds available under the Equity Subscription
Agreement or other available sources of funds, are reasonably
expected to be sufficient to complete the Facility according
to the EPC Contract by the Date Certain;
(d) no Default or Event of Default under the
Indenture has occurred and is continuing;
(e) all proceeds of prior Requisitions have been
expended or applied pursuant to provisions of the Financing
Documents and the items for which amounts are requested in
this Requisition have not been the basis for a previous
Requisition;
(f) the insurance policies required pursuant to
Schedule 6.2 of the Indenture, the material Governmental
Approvals required to have been obtained as of the date of
this Requisition, and all necessary Project Contracts are in
full force and effect; and
(g) the representations set forth in Sections 3.1,
3.3, 3.4, 3.5, 3.8 and 3.10 of the Indenture are true and
correct in all material respects.
This Requisition is accompanied by the following items:
(a) if any amount of the Company Requested
Disbursement is to be applied to any payment under the EPC
Contract, a payment request under the EPC Contract (which
request is attached hereto), approved by the Company;
(b) if any amount of a Company Requested Disbursement
is to be applied to the payment of a Project Cost other than
the payment of interest, fees, expenses or other costs
required to be paid by the obligors under the Financing
Documents or the EPC Contract, a statement detailing such
amounts and describing the services rendered, together with
attached bills for individual Project Costs in excess of
$100,000, except for estimated amounts which represent a
Project Cost which as of the date of this Requisition is not
due and payable but which will become due and payable prior to
the next scheduled requested disbursement ("Estimated Project
Costs") and for which bills for such Estimated Project costs
will be attached to the next Requisition for individual
Project Costs in excess of $100,000; and
3.8 - 2
<PAGE>
(c) bills for any Project Costs which as of the date
of the last Requisition were Estimated Project Costs and are
required pursuant to such last Requisition to be attached
hereto.
3.8 - 3
<PAGE>
[A certificate of the Independent Engineer, substantially in the form
of Exhibit A hereto, will be submitted to the Collateral Agent by the time
required under the Collateral Agency Agreement.]1
AES IRONWOOD, L.L.C.
By:
-------------------------------
Name:
Title:
__________________
1 A certificate of the Independent Engineer is required to be delivered only as
contemplated by Section 3.8(d).
3.8 - 4
<PAGE>
FORM OF INDEPENDENT ENGINEER CONFIRMATION
Requisition No. _____
Date:________________
IBJ Whitehall Bank & Trust Company,
as Collateral Agent
[address]
Reference is hereby made to the Collateral Agency and Intercreditor
Agreement, dated as of June 1, 1999, among AES Ironwood, L.L.C. (the "Company"),
IBJ Whitehall Bank & Trust Company, as Collateral Agent, Trustee and Depositary
Bank, and Dresdner Bank AG, New York Branch, as DSR LOC Provider and CP LOC
Provider (as the same may be amended, modified or supplemented from time to
time, the "Collateral Agency Agreement"). Each capitalized term used herein and
not otherwise defined herein shall have the meaning assigned to it in the
Collateral Agency Agreement.
[ ], as Independent Engineer (the "Independent Engineer") confirms
receipt of Requisition No. _________ (the "Subject Requisition") and confirms
that, to the best of its knowledge and belief, the matters set forth in the
Subject Requisition are [correct] [incorrect in the following respects:]
3.8 - 5
<PAGE>
EXHIBIT 3.15
FORM OF RESTORATION CERTIFICATE
IBJ Whitehall Bank & Trust Company AES Ironwood Project
as Collateral Agent Restoration Certificate
[Date]
Reference is made to that certain Collateral Agency and Intercreditor
Agreement, dated as of June 1, 1999 (as amended, modified or supplemented from
time to time, the "Collateral Agency Agreement"), among AES Ironwood, L.LC.,
(together with its successors and assigns, the "Company") and IBJ Whitehall Bank
& Trust Company, as trustee and depositary bank (together with its successors in
such capacity, the "Collateral Agent") and Dresdner Bank AG, New York Branch, as
DSR LOC Provider and CP LOC Provider. Each capitalized term used herein and not
otherwise defined herein shall have the meaning assigned to it in the Indenture.
The Company hereby requests, pursuant to Section 3.15(b) of the
Collateral Agency Agreement, that the Collateral Agent make a disbursement from
the Restoration Account in the aggregate amount of _________ (the "Requested
Disbursement").
The date that the Requested Disbursement is to be made is ________.
Cash disbursement instructions for the Requested Disbursement are set forth in
Annex 1 hereto.
All monies released from the Restoration Account pursuant to this
Certificate shall be secured by the Security Documents, including, without
limitation, the Mortgage.
The undersigned, an authorized representative of the Company hereby
certifies, in connection with this Certificate, that the proceeds of the
Requested Disbursement will be used solely for the payment (or reimbursement, to
the extent the same have been paid or satisfied by the Company) of the costs of
repair and replacement of the Facility or portion thereof that has been affected
by an Event of Loss or an Event of Eminent Domain
The Requested Disbursement, together with all other such requisitions
in the current Fiscal Year, totals $______ in the aggregate, and the approval of
the Independent Engineer hereto [is/is not] required pursuant to Section 3.15(b)
of the Indenture.
The Company hereby certifies that all conditions precedent to the
Requested Disbursement as set forth in the Collateral Agency Agreement have been
satisfied.
AES IRONWOOD, L.L.C.
By:
-------------------------------
Name:
Title:
3.15 - 1
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Approved this ___ day of ______, ___.1
STONE & WEBSTER MANAGEMENT CONSULTANTS, INC.
By:
-------------------------------
Name:
Title:
__________________
1 Required only if aggregate amount of disbursements requested in any one Fiscal
Year exceeds $5,000,000.
3.15 - 2
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EXHIBIT 4.3
FORM OF PERFORMANCE ENHANCEMENT CERTIFICATE
IBJ Whitehall Bank & Trust Company AES Ironwood Project
as Collateral Agent Performance Enhancement Certificate
[Date]
Reference is made to that certain Collateral Agency and Intercreditor
Agreement, dated as of June 1, 1999 (as amended, modified or supplemented from
time to time, the "Collateral Agency Agreement"), among AES Ironwood, L.LC.,
(together with its successors and assigns, the "Company") and IBJ Whitehall Bank
& Trust Company, as trustee and depositary bank (together with its successors in
such capacity, the "Collateral Agent") and Dresdner Bank AG, New York Branch, as
DSR LOC Provider and CP LOC Provider. Each capitalized term used herein and not
otherwise defined herein shall have the meaning assigned to it in the Indenture.
The Company hereby requests, pursuant to Section 4.3(b) of the
Collateral Agency Agreement, that the Collateral Agent make a disbursement from
a separate account maintained by the Depositary Bank on behalf of the Collateral
Agent in the aggregate amount of _________ (the "Requested Disbursement").
The date that the Requested Disbursement is to be made is ________.
Cash disbursement instructions for the Requested Disbursement are set forth in
Annex 1 hereto.
All monies released from such account pursuant to this Certificate
shall be secured by the Security Documents, including, without limitation, the
Mortgage.
The undersigned, an authorized representative of the Company hereby
certifies, in connection with this Certificate, that the proceeds of the
Requested Disbursement will be used solely for the payment (or reimbursement, to
the extent the same have been paid or satisfied by the Company) of the costs of
modification, repair and replacement of that portion of the Facility that
requires modification, repair or replacement in order to remedy the
circumstances giving rise to the obligation of the Contractor to pay Buy-Down
Amounts.
The Company hereby certifies that all conditions precedent to the
Requested Disbursement as set forth in the Collateral Agency Agreement have been
satisfied.
AES IRONWOOD, L.L.C.
By:
-------------------------------
Name:
Title:
4.3 - 1
<PAGE>
Approved this ___ day of ______, ___.
STONE & WEBSTER MANAGEMENT CONSULTANTS, INC.
By:
---------------------------
Name:
Title:
4.3 - 2
<PAGE>
EXHIBIT 7.14
THIRD-PARTY ENGINEERS
Black & Veatch - Kansas City Office
R.W. Beck - Framingham (Boston) Office
Sergeant & Lundy
Stone & Webster (to the extent not the Independent Engineer)
7.14 - 1
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Exhibit 4.3
EXECUTION COPY
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DEBT SERVICE RESERVE LETTER OF CREDIT
AND REIMBURSEMENT AGREEMENT
Dated as of June 1, 1999
among
AES IRONWOOD, L.L.C.,
as Company,
DRESDNER BANK AG, NEW YORK BRANCH,
as the Issuing Bank, a Bank and Agent
and
THE BANKS PARTY HERETO
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS.............................................................................................1
SECTION 1.1 DEFINITIONS..................................................................................1
SECTION 1.2 CONSTRUCTION.................................................................................7
ARTICLE II DSR LETTER OF CREDIT...................................................................................7
SECTION 2.1 COMMITMENTS..................................................................................7
SECTION 2.2 AMOUNT AND TERM OF DSR LETTER OF CREDIT......................................................7
SECTION 2.3 PARTICIPATION IN DSR LETTER OF CREDIT........................................................9
SECTION 2.4 DRAWING AND REIMBURSEMENT....................................................................9
SECTION 2.5 FEES........................................................................................10
SECTION 2.6 INTEREST....................................................................................11
SECTION 2.7 REPAYMENT...................................................................................14
SECTION 2.8 PREPAYMENTS.................................................................................15
SECTION 2.9 SECURITY....................................................................................15
SECTION 2.10 PAYMENTS....................................................................................15
SECTION 2.11 COMPUTATION OF INTEREST AND FEES............................................................16
SECTION 2.12 PAYMENTS ON NON-BUSINESS DAYS...............................................................16
SECTION 2.13 SHARING OF PAYMENTS, ETC....................................................................16
SECTION 2.14 EVIDENCE OF DEBT............................................................................17
SECTION 2.15 INCREASED COSTS AND REDUCED RETURNS.........................................................17
SECTION 2.16 CAPITAL ADEQUACY............................................................................19
SECTION 2.17 TAXES.......................................................................................20
SECTION 2.18 ILLEGALITY..................................................................................21
SECTION 2.19 EXTENSION OF DSR LETTER OF CREDIT; ASSIGNMENTS BY BANKS.....................................22
SECTION 2.20 REDUCTION IN COMMITMENTS/REIMBURSEMENTS.....................................................23
SECTION 2.21 RIGHT OF SET-OFF............................................................................23
ARTICLE III CONDITIONS PRECEDENT.................................................................................23
SECTION 3.1 CONDITIONS PRECEDENT TO CLOSING DATE........................................................23
SECTION 3.2 CONDITIONS PRECEDENT TO ISSUE DATE..........................................................24
ARTICLE IV REPRESENTATIONS AND WARRANTIES........................................................................25
SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF COMPANY...................................................25
SECTION 4.2 REPRESENTATIONS AND WARRANTIES OF THE ISSUING BANK..........................................25
ARTICLE V COVENANTS..............................................................................................26
SECTION 5.1 COVENANTS...................................................................................26
ARTICLE VI DEFAULTS AND REMEDIES.................................................................................27
SECTION 6.1 EVENTS OF DEFAULT...........................................................................27
SECTION 6.2 REMEDIES....................................................................................27
SECTION 6.3 COLLATERALIZATION UPON ACCELERATION OF THE BONDS............................................27
ARTICLE VII CHARACTER OF OBLIGATIONS.............................................................................28
SECTION 7.1 OBLIGATIONS ABSOLUTE........................................................................28
SECTION 7.2 LIMITED LIABILITY OF AGENT AND BANKS........................................................29
ARTICLE VIII THE AGENT...........................................................................................29
SECTION 8.1 AUTHORIZATION AND ACTION....................................................................29
SECTION 8.2 AGENT'S RELIANCE, ETC.......................................................................30
SECTION 8.3 THE AGENT, THE ISSUING BANK AND AFFILIATES..................................................30
SECTION 8.4 BANK CREDIT DECISION........................................................................31
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SECTION 8.5 INDEMNIFICATION.............................................................................31
SECTION 8.6 SUCCESSOR AGENT.............................................................................31
SECTION 8.7 COLLATERAL..................................................................................32
ARTICLE IX MISCELLANEOUS.........................................................................................32
SECTION 9.1 AMENDMENTS, ETC.............................................................................32
SECTION 9.2 NOTICES, ETC................................................................................32
SECTION 9.3 NO WAIVER, REMEDIES.........................................................................33
SECTION 9.4 COSTS AND EXPENSES..........................................................................33
SECTION 9.5 APPLICATION OF MONEY........................................................................34
SECTION 9.6 SEVERABILITY................................................................................34
SECTION 9.7 NON-RECOURSE LIABILITY......................................................................34
SECTION 9.8 BINDING EFFECT..............................................................................35
SECTION 9.9 ASSIGNMENTS AND PARTICIPATIONS..............................................................35
SECTION 9.10 INDEMNIFICATION.............................................................................36
SECTION 9.11 GOVERNING LAW; SUBMISSION OF JURISDICTION; VENUE; WAIVER OF JURY TRIAL......................37
SECTION 9.12 HEADINGS....................................................................................38
SECTION 9.13 EXECUTION IN COUNTERPARTS...................................................................38
Exhibit A Form of DSR Letter of Credit
Exhibit B Form of DSR LOC Loan Promissory Note
Exhibit C Form of Assignment and Acceptance
Exhibit D Amortization Schedule
Exhibit E Form of DSR LOC Term Loan Promissory Note
Exhibit F Form of DSR Bond Note
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DEBT SERVICE RESERVE LETTER OF CREDIT
AND REIMBURSEMENT AGREEMENT
This DEBT SERVICE RESERVE LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT,
dated as of June 1, 1999 (this "Agreement"), is entered into by and among (1)
AES IRONWOOD, L.L.C., a Delaware limited liability company (the "Company"); (2)
DRESDNER BANK AG, NEW YORK BRANCH, as the Issuing Bank (the "Issuing Bank"); (3)
DRESDNER BANK AG, NEW YORK BRANCH, in its individual capacity, together with
each other bank that becomes a party hereto pursuant to Section 9.9 (each,
including the Issuing Bank, a "Bank" and collectively, the "Banks"); and (4)
DRESDNER BANK AG, NEW YORK BRANCH, as agent for the Banks (in such capacity,
together with its successors in such capacity, the "Agent").
WHEREAS, the Company is constructing and will own a gas-fired combined
cycle electric generating facility in South Lebanon Township, Lebanon County,
Pennsylvania, with a net design capacity of approximately 705 megawatts and
related property and facilities;
WHEREAS, the Company intends to finance the construction and equipping
of the Facility primarily through the issuance of the Bonds, the net proceeds of
which shall be received by the Company and shall be used to pay project costs
related to the Facility;
WHEREAS, the Company has duly authorized the creation and issuance of
the Bonds pursuant to the Indenture; and
WHEREAS, in order to provide assurances in respect of the Company's
satisfaction of its payment obligations under the Bonds and the Indenture, the
Company has requested that the Issuing Bank agree to issue and the Banks
participate in, and the Issuing Bank is willing to agree to issue and the Banks
are willing to participate in, the DSR Letter of Credit upon the terms and
conditions hereinafter set forth.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
(a) Capitalized terms used but not otherwise defined herein shall have
the respective meanings ascribed to them in the Indenture.
(b) The following terms are used in this Agreement with the following
respective meanings:
"Adjusted Base Rate" means the higher of (i) the Federal Funds Rate
plus .50% and (ii) the Reference Rate.
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"Assignment and Acceptance" means an Assignment and Acceptance entered
into by a Bank and another Person, substantially in the form of Exhibit C.
"Bank" has the meaning set forth in the preamble of this Agreement.
"Base Rate Loan" means a DSR Loan, or portion thereof, bearing interest
at a rate determined with reference to the Adjusted Base Rate.
"Bond Conversion Event" means, in respect of a DSR LOC Loan, the
failure by the Company to have repaid (i) at least 50% of the original amount of
such DSR LOC Loan on the date 30 months after the making of such DSR LOC Loan or
(ii) the full amount of such DSR LOC Loan by the DSR LOC Loan Required Payment
Date.
"Business Day" means a day (other than a Saturday or Sunday) on which
banks are open for business in New York, New York, and with respect to all
notices and determinations in connection with, advances of, continuations of,
conversions from and to, and payments of principal and interest on, Eurodollar
Rate Loans, any day that is also a day for trading by and between banks in U.S.
dollar deposits in the London interbank Eurodollar market.
"Closing Date" means the date on which the conditions precedent set
forth in Section 3.1 have been fulfilled.
"Commitment" of a Bank at any time means (i) an amount equal to the
product of (A) the Maximum Stated Amount at such time, as the same may be
reduced from time to time in accordance with the provisions of this Agreement,
and (B) such Bank's Percentage Interest as set forth opposite the name of such
Bank on the signature pages hereof, or if one or more Assignments and
Acceptances shall have been entered into, as set forth in the register of the
Agent set forth for such purpose, or (ii) as the context may require, the
obligation of such Bank to make loans in an aggregate amount of principal at any
time outstanding not exceeding such amount.
"Commitments" means all of the Commitments.
"Company" has the meaning set forth in the preamble of this Agreement.
"Credit Documents" means this Agreement, the Security Documents, the
Collateral Agency Agreement, each DSR Note and the DSR Letter of Credit.
"Default" means an event that with the giving of any required notice
and/or the lapse of any required time would constitute an Event of Default.
"Dollars" and "$" means freely transferable United States dollars.
"Drawing" means a drawing under the DSR Letter of Credit.
"DSR Bond" has the meaning set forth in Section 2.7(h).
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"DSR Bond Note" has the meaning set forth in Section 2.7(j).
"DSR Letter of Credit" means a letter of credit in favor of the
Collateral Agent substantially in the form of Exhibit A, issued or to be issued
by the Issuing Bank.
"DSR Loan" means any DSR LOC Loan, DSR LOC Term Loan or DSR Bond, as
applicable.
"DSR LOC Loan" has the meaning set forth in Section 2.4.
"DSR LOC Loan Note" has the meaning set forth in Section 2.14(a).
"DSR LOC Loan Required Payment Date" means, in respect of each DSR LOC
Loan, the date five years from the date such DSR LOC Loan is made by the Banks
pursuant to the terms of this Agreement.
"DSR LOC Term Loan" means a DSR LOC Term Loan made as a result of the
occurrence of a Step-Up Event either to fund a Drawing made upon such occurrence
or by way of the conversion of then outstanding DSR LOC Loans.
"DSR LOC Term Loan Note" has the meaning set forth in Section 2.7(f).
"DSR LOC Term Loan Required Payment Date" means, in respect of each DSR
LOC Term Loan, the fortieth (40th) Quarterly Date occurring after such DSR LOC
Term Loan is made by the Banks pursuant to the terms of this Agreement.
"DSR Note" means any DSR LOC Note, DSR LOC Term Note or DSR Bond Note,
as applicable.
"Eurocurrency Liabilities" has the meaning set forth in Regulation D.
"Eurocurrency Reserve Period" has the meaning set forth in Section
2.15(b).
"Eurodollar Rate" means, for any Interest Period with respect to a
Eurodollar Rate Loan, the rate per annum equal to the average (rounded upwards,
if necessary, to the nearest 1/100 of 1%) of the offered rates which appear on
the Telerate page 3750, British Bankers Association Interest Settlement Rates
for deposits in Dollars (or such other system for the purpose of displaying
rates of leading reference banks in the London interbank market, as designated
by the Agent) as of 11:00 a.m. (London time) on the day two Business Days prior
to the first day of such Interest Period in an amount approximately equal to the
principal amount of the Eurodollar Rate Loan to which such Interest Period is to
apply and for a period of time comparable to such Interest Period.
"Eurodollar Rate Loan" means a DSR Loan, or portion thereof, bearing
interest at a rate determined with reference to the Eurodollar Rate.
"Event of Default" has the meaning set forth in Section 6.1.
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"Excluded Taxes" has the meaning set forth in Section 2.17(a).
"Expiration Date" means the earlier of (i) five years from the Issue
Date and (ii) the 60th day after written notice of termination of the DSR Letter
of Credit is given by the Agent to the Collateral Agent and the Trustee upon or
after the occurrence of an Event of Default; provided, however, that the
Expiration Date of the DSR Letter of Credit may be extended as set forth in
Section 2.2(b) whereupon the Expiration Date of the DSR Letter of Credit shall
be such extended Expiration Date.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it.
"Guaranteed Completion Date" has the meaning set forth in the EPC
Contract.
"Indemnified Party" has the meaning set forth in Section 9.10.
"Interest Period" means with respect to each Eurodollar Rate Loan, a
period commencing on the date specified in the applicable Notice of Interest
Rate Election and ending one, three or six calendar months thereafter, as the
Company may elect in the applicable Notice of Interest Rate Election; provided,
that:
(a) any Interest Period which would otherwise end on a day which is not
a Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Business Day;
(b) any Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month;
(c) no Interest Period shall be selected to be applicable to a DSR Loan
if such Interest Period ends after the next scheduled principal payment date
therefor pursuant to this Agreement and the relevant DSR Note unless, at the
time of such selection, there are DSR Loans outstanding of the same type (i.e.,
DSR LOC Loans, DSR LOC Term Loans or DSR Bonds) the Interest Period(s)
applicable to which end on or before such scheduled payment date which the
Company reasonably determines are in an aggregate principal amount at least
equal to the amount of such next scheduled principal payment; and
(d) no Interest Period shall end after the latest relevant Required
Payment Date.
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"Issue Date" means the Business Day on which the Issuing Bank shall
issue the DSR Letter of Credit in accordance with Section 2.2(a) and Section
3.2.
"Issuing Bank" has the meaning set forth in the preamble of this
Agreement.
"Loan Obligations" means the Drawings and the principal of all DSR
Loans (including but not limited to the Company's obligations in respect of
amounts not yet disbursed).
"Maximum Stated Amount" means at any time, the highest amount set forth
as a Stated Amount Value shown in Schedule 1 to the DSR Letter of Credit as in
effect at such time.
"Mortgage Basis" means in respect of each DSR LOC Term Loan, an
amortization schedule which, taking into account the interest rate applicable to
such DSR LOC Term Loan determined in accordance with Section 2.7(e) and assuming
payments are made on Interest Payment Dates, results in levelized payment of the
principal of and interest on such DSR LOC Term Loan to and including the DSR LOC
Term Loan Required Payment Date applicable thereto.
"Non-Recourse Party" has the meaning specified in Section 9.7.
"Notice Date" has the meaning set forth in Section 2.2(b).
"Notice of Interest Rate Election" has the meaning set forth in Section
2.6(b).
"Obligations" means all of the Loan Obligations and any and all other
obligations of the Company to the Issuing Bank, the Banks or the Agent under or
in connection with the Credit Documents, whether for interest, fees, expenses,
indemnification or otherwise.
"Participant" has the meaning set forth in Section 9.9(b).
"Percentage Interest" means, for each Bank, the fraction, expressed as
a percentage, where the numerator is the Commitment of such Bank and the
denominator is the aggregate of all the Commitments held by all the Banks, as
set forth on the signature page opposite the name and signature of each
respective Bank or if applicable, in Schedule 1 to any Assignment and
Acceptance.
"Purchasing Bank" has the meaning set forth in Section 9.9(a).
"Quarterly Date" means each Bond Payment Date during the term of this
Agreement.
"Reference Rate" means the variable rate of interest per annum
officially announced or published by the Agent from time to time as its
"reference rate," such rate being set by the Agent as a general reference rate
of interest, taking into account such factors as the Agent may deem appropriate,
it being understood that many of the Agent's commercial or other loans are
priced in relation to such rate, that it is not necessarily the lowest or best
rate actually charged to any customer and that the Agent may make various
commercial or other loans at rates of interest having no relationship to such
rate. For purposes of this Agreement, each change in the
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Reference Rate shall be effective as of the opening of business on the date
announced as the effective date of the change in such "reference rate."
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Regulatory Change" means, subsequent to the date of this Agreement,
any adoption or change in United States Federal, state or municipal or foreign
law or regulations (including Regulation D) or the adoption or change or making
of any application, interpretation, directive, request or guideline of or under
any United States Federal, state or municipal or foreign law or regulations by
any court, central bank or Governmental Authority.
"Required Banks" means, at any time, Banks (one of which shall be the
Agent) owed at least 66-2/3% of the sum of Loan Obligations then outstanding
and/or the Commitments; provided, however, that, if and so long as there are
only two Banks, then "Required Banks" shall mean both of such Banks.
"Required Payment Date" means in the case of any DSR LOC Loan, the DSR
LOC Loan Required Payment Date, in the case of a DSR LOC Term Loan, the
applicable DSR LOC Term Loan Required Payment Date or in the case of any DSR
Bond, the Final Maturity Date.
"Stated Amount" means the amount (not to exceed the Maximum Stated
Amount) available to be drawn under the DSR Letter of Credit as of each
Quarterly Date, which amount shall equal the Stated Amount Value for such date
as in effect from time to time pursuant to the terms of this Agreement.
"Stated Amount Value" means, for any date, the Stated Amount Value for
such date set forth in Schedule 1 to the Letter of Credit and as adjusted from
time to time pursuant to Sections 2.2 and 2.7.
"Step-Up Event" means (i) the failure of the DSR Letter of Credit to
have been extended or replaced at least 45 days prior to the termination date of
such DSR Letter of Credit or (ii) if the credit rating of the Issuing Bank is
less than the Required Rating, the failure of the DSR Letter of Credit to have
been replaced within 45 days after the failure to satisfy the requirements of
the Required Rating with a replacement letter of credit issued by an issuer that
satisfies the requirements of the Required Rating and, in either case, the
Collateral Agent has made a Drawing on such DSR Letter of Credit in an amount
sufficient to fund the Debt Service Reserve Account up to the DSRA Required
Balance.
"Taxes" means any and all present or future income, stamp, transfer,
turnover and other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, and any and all interest, penalties, claims or
other liabilities arising under or relating thereto, including those imposed on
any of the Banks or on payments to be made to or received by any of them from
the Company hereunder.
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"Termination Notice" has the meaning set forth in Section 2.2(f).
SECTION 1.2 Construction.
In this Agreement, unless expressly specified to the contrary: the
singular includes the plural and the plural the singular; words importing any
gender include the other genders; references to statutes or regulations are to
be construed as including all statutory or regulatory provisions consolidating,
amending or replacing the statute or regulation referred to; references to
"writing" include printing, typing, lithography and other means of reproducing
words in a tangible, visible form, but shall not include electronic mail; the
words "including," "includes" and "include" shall be deemed to be followed by
the words "without limitation;" references to articles, sections (or
subdivisions of sections), recitals, appendices, exhibits, annexes or schedules
are to those of this Agreement; references to agreements and other instruments
shall be deemed to include all amendments and other modifications to such
agreements and instruments, but only to the extent such amendments and other
modifications are not prohibited by the terms of this Agreement; references to
Persons include their respective permitted successors and assigns and, in the
case of Governmental Authorities, Persons succeeding to their respective
functions and capacities; and all accounting terms used in this Agreement shall
be interpreted, all accounting determinations under this Agreement shall be made
and all financial statements required to be delivered under this Agreement shall
be prepared in accordance with GAAP as in effect from time to time, on a basis
consistent with the most recent audited financial statements, if any, of the
relevant Person delivered to the Agent, or otherwise reasonably acceptable to
the Agent.
ARTICLE II
DSR LETTER OF CREDIT
SECTION 2.1 Commitments.
Each Bank irrevocably agrees severally, on the terms and conditions
contained in this Agreement, to participate in the DSR Letter of Credit and each
Drawing thereunder in the Percentage Interest of such Bank and in an aggregate
amount not to exceed at any time such Bank's Commitment.
SECTION 2.2 Amount and Term of DSR Letter of Credit.
(a) Subject to the terms and conditions contained in this Agreement:
(i) The Issuing Bank irrevocably agrees to issue the DSR
Letter of Credit on the Issue Date for the account of the Company and
in the Stated Amount equal to the Stated Amount Value set forth for the
Issue Date in Schedule 1 to the form of the DSR Letter of Credit
attached to this Agreement as Exhibit A (Schedule 1 shall be prepared
by the Company and submitted to the Issuing Bank no later than 1
Business Day prior to the Issue Date). Schedule 1 to the DSR Letter of
Credit when issued shall include a schedule of Stated Amount Values in
effect for the entire term of the DSR Letter of Credit. For
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each date during the term of the DSR Letter of Credit, the Stated
Amount Value shall be the sum of (x) the total amount of principal and
interest on the Bonds payable on the first two Quarterly Dates next
succeeding such date, plus (y) an amount equal to six months' interest
on the amount described in the preceding clause (i), computed at a rate
per annum equal to (A) 2% plus (B) the Eurodollar Rate for a three
month Interest Period as in effect two Business Days prior to the Issue
Date (or in the case of an extension of the Expiration Date of the DSR
Letter of Credit, two Business Days prior to the date on which the
Issuing Bank issues its notice of confirmation extending the Expiration
Date of the DSR Letter of Credit) plus (C) 50 basis points.
(ii) If the DSRA Required Balance for any period is reduced by
a prepayment of the principal of the Bonds, the Stated Amount Values
for such period shall be correspondingly reduced.
(iii) Each of the Stated Amount Values set forth in Schedule 1
to the DSR Letter of Credit as in effect from time to time shall be
reduced and/or from time to time in accordance with the provisions of
Section 2.2(c), (e) and (f) and shall be reduced and reinstated from
time to time in accordance with Section 2.7(b) and (c).
(b) On or prior to the date that is 120 days prior to the original
Expiration Date of the DSR Letter of Credit or any extension thereof pursuant to
this Section 2.2(b) (the "Notice Date"), the Agent may on behalf of the Banks in
accordance with Section 2.19(a) extend the original or extended Expiration Date,
as the case may be, of such DSR Letter of Credit for an additional one or more
years beyond the original or extended Expiration Date, as the case may be. The
Agent shall notify the Company, the Collateral Agent and the Trustee of the
Banks' decision regarding such extension on or prior to the applicable Notice
Date. Failure of the Agent to provide the Company, the Collateral Agent and the
Trustee with written notice of renewal on or prior to the applicable Notice Date
in respect of the original Expiration Date or any extended Expiration Date, as
the case may be, or imposition of additional terms and conditions adverse to the
Company (in the Company's reasonable judgment) in respect of such renewal, shall
be deemed to constitute non-renewal of the DSR Letter of Credit beyond the
original or extended Expiration Date, as the case may be. If the Agent agrees to
extend the then current Expiration Date, the Expiration Date of the DSR Letter
of Credit shall, effective upon the giving of such notice to the Company, be
such extended date.
(c) (i) If a Step-Up Event shall have occurred and the Collateral Agent
shall have made a Drawing in accordance with Section 2.4, the DSR Letter of
Credit shall thereupon terminate.
(ii) If a Bond Conversion Event shall have occurred, and the
Agent, subject to the approval of the Required Banks, elects to convert
any DSR LOC Loan into a DSR Bond in accordance with Section 2.7(h),
each of the Stated Amount Values set forth in Schedule 1 to the DSR
Letter of Credit as then in effect shall be reduced by an amount equal
to the amount of the DSR LOC Loan so converted, and the Maximum Stated
Amount correspondingly reduced.
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(d) [Reserved].
(e) To the extent the DSRA Required Balance for any period is reduced
by a prepayment of the principal of the Bonds at a time when there are amounts
on deposit in the Debt Service Reserve Account, then the Stated Amount Value for
each affected date, as set forth in Schedule 1 to the DSR Letter of Credit,
shall be reduced to an amount equal to not less than the excess of (i) the DSRA
Required Balance (with interest calculated as provided for in Section 2.2(a)(i))
applicable to such affected date, over (ii) the amount on deposit in the Debt
Service Reserve Account on the date such prepayment is made.
(f) The Issuing Bank shall have the right, upon the occurrence and
during the continuance of an Event of Default, to deliver to the Collateral
Agent and the Trustee a notice in the form of Annex 2 to the DSR Letter of
Credit (a "Termination Notice"), which notice shall be given at least sixty (60)
days prior to the date of termination referred to in such notice. After the
delivery by the Issuing Bank of a Termination Notice, the Stated Amount shall be
neither increased, nor reinstated upon payment of any DSR LOC Loans,
notwithstanding any other provision of this Agreement to the contrary.
(g) The Agent shall, solely for informational purposes, deliver to the
Company a copy of any Termination Notice given to the beneficiary under the DSR
Letter of Credit; provided, however, that the Banks' ability to terminate the
DSR Letter of Credit shall not be contingent upon the Agent's delivery to the
Company of such notice and that neither the Agent nor the Banks shall incur any
liability whatsoever as a result of the Agent's failure to deliver such notice
to the Company.
SECTION 2.3 Participation in DSR Letter of Credit.
Simultaneously with the issuance of the DSR Letter of Credit, the
Issuing Bank shall be deemed to have sold and transferred to each Bank, and each
Bank shall be deemed to have purchased and received from the Issuing Bank, in
each case irrevocably and without any further action by any party, an undivided
interest and participation in the DSR Letter of Credit, each Drawing and the
other Loan Obligations in respect thereof in an amount equal to such Bank's
Percentage Interest therein. The Agent shall promptly advise each Bank of any
reduction in the Maximum Stated Amount, change in the Stated Amount or
Expiration Date in respect of the DSR Letter of Credit or the cancellation or
other termination of the DSR Letter of Credit and any Drawing; provided,
however, that failure to provide such notice shall not limit or impair the
rights of the Agent hereunder or under the Financing Documents.
SECTION 2.4 Drawing and Reimbursement.
(a) The payment by the Issuing Bank of a Drawing shall constitute the
making by the Issuing Bank of a loan to the Company in the amount of such
payment. In the event that a Drawing is not repaid by the Company by 10:00 a.m.
(New York City time), on the day of such Drawing, the Agent shall promptly
notify each other Bank. Each such Bank (including the Issuing Bank in its
capacity as a Bank) shall, on the day of such notification, make a loan to the
Company, which shall be used to repay the applicable portion of the Issuing
Bank's loan with
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respect to such Drawing, in an amount equal to the amount of such Bank's
Percentage Interest in such Drawing, for application to repay the Issuing Bank
(each such loan by a Bank to be referred to as a "DSR LOC Loan"), and shall
deliver to the Agent for the Issuing Bank's account, on the day of such
notification and in immediately available funds, the amount of such DSR LOC
Loan. In the event that any Bank fails to make available to the Agent for the
account of the Issuing Bank the amount of such DSR LOC Loan, the Issuing Bank
shall be entitled to recover such amount on demand from such Bank together with
interest thereon at the Federal Funds Rate and until such reimbursement is made,
the unreimbursed amount of the Issuing Bank's loan shall be deemed to be a DSR
LOC Loan for all purposes of this Agreement.
(b) If a Step-Up Event shall have occurred, the Collateral Agent shall
(i) make a Drawing on the DSR Letter of Credit in an amount equal to the lesser
of (A) the Stated Amount of the DSR Letter of Credit as in effect immediately
prior to such Drawing and (B) the positive difference between (x) the DSRA
Required Balance and (y) amounts then on deposit in the Debt Service Reserve
Account (such Drawing shall be funded as a DSR LOC Term Loan), and (ii) deposit
such amount in the Debt Service Reserve Account, and the DSR Letter of Credit
shall thereupon terminate.
SECTION 2.5 Fees.
The Company shall pay the following fees to the Agent for the
respective accounts of the Persons specified below:
(a) on the Closing Date, for the account of the Issuing Bank an upfront
fee equal to the product of (x) the Maximum Stated Amount and (y) 1% per annum;
(b) after the Closing Date and up to but not including the Issue Date,
for the respective accounts of the Banks, a commitment fee equal to the product
of (x) the Maximum Stated Amount and (y) 0.375% per annum, payable quarterly in
arrears on the last Business Day of each February, May, August and November
(each such Business Day, a "Quarterly Date") occurring after the Closing Date;
(c) from and including the Issue Date, for the respective accounts of
the Banks, a letter of credit fee equal to the product of (x) the average daily
Maximum Stated Amount and (y) 1.3% per annum, payable quarterly in arrears on
each Quarterly Date occurring after the Issue Date; and
(d) from and including the Issue Date, for the account of the Issuing
Bank, a fronting fee equal to the product of (x) the average daily Maximum
Stated Amount and (y) 0.15% per annum payable quarterly in arrears on each
Quarterly Date occurring after the Issue Date.
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SECTION 2.6 Interest.
(a) Rate. The Company shall pay interest on the unpaid principal amount
of each DSR Loan from the date such DSR Loan is made until such principal amount
has been paid in full as follows:
(i) Base Rate Loans.
As to Base Rate Loans, at a rate per annum equal to the
sum of (x) the Adjusted Base Rate plus (y) 1%, payable monthly in
arrears on the first Business Day of each month; and
(ii) Eurodollar Rate Loans.
As to Eurodollar Rate Loans, at a rate per annum equal to
the sum of (x) the Eurodollar Rate plus (y) 2%, payable on the last
day of the applicable Interest Period or, if such Interest Period
exceeds three months, at intervals of three months from the first day
of such Interest Period.
(b) Method of Electing Interest Rates. (i) Each DSR Loan shall
constitute a Base Rate Loan unless the Company elects otherwise pursuant to the
following provisions of this Section 2.6(b).
(ii) Each DSR Loan shall constitute a Base Rate Loan or a
Eurodollar Rate Loan as the Company may elect in accordance with this
Section 2.6(b). If no such election is timely made with respect to a
DSR Loan, such DSR Loan shall constitute a Base Rate Loan in accordance
with Section 2.6(b)(i); provided that, in the case of DSR LOC Term
Loans or DSR Bonds that arise on the occasion of a conversion from DSR
LOC Loans in accordance with Section 2.7(d) or 2.7(h), such DSR LOC
Term Loans shall be continued as the same type of DSR Loan (i.e., Base
Rate Loan or Eurodollar Loan), and if any such DSR LOC Loan was a
Eurodollar Loan, the then current Interest Period shall continue after
such conversion, until the end of such Interest Period, at which time
the provisions for election of Interest Periods contained in this
Section 2.6(b) shall apply. The Company may from time to time elect to
change or continue the interest rate borne by each DSR Loan, subject to
the conditions set forth below, as follows:
(A) with respect to DSR Loans that are Base Rate Loans, the
Company may elect to convert all or any portion of such DSR Loans
to Eurodollar Rate Loans as of any Business Day; and
(B) with respect to DSR Loans that are Eurodollar Rate Loans,
the Company may elect to convert all or any portion of such DSR
Loans to Base Rate Loans or elect to continue all or any portion
of such DSR Loans as Eurodollar Rate Loans for an additional
Interest Period, in each case effective on the last day of the
then current Interest Period applicable to such DSR Loans.
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Each such election shall be made by delivering a notice (a "Notice of
Interest Rate Election") to the Agent (1) in the case of a conversion
to or continuation of a Eurodollar Rate Loan, not later than 10:00 a.m.
(New York City time) on the third Business Day prior to the day on
which such conversion or continuation is to be effective or (2) in the
case of a conversion to a Base Rate Loan, at any time prior to the day
on which such conversion is to be effective. Each Notice of Interest
Rate Election shall be in writing (including facsimile transmission) or
by voice, promptly confirmed in writing. A Notice of Interest Rate
Election may, if it so specifies, apply to only a portion of the
aggregate principal amount of the relevant DSR Loan.
(iii) Each Notice of Interest Rate Election shall specify:
(A) the DSR Loans (or portion thereof) together with
amount of each thereof to which such notice applies;
(B) the date on which the conversion or continuation
selected in such notice is to be effective, which shall comply
with the applicable clause of subsection (i) above;
(C) if DSR Loans are to be converted, each new type
of DSR Loan together with amount thereof, and if such new DSR
Loans are Eurodollar Rate Loans, the duration of the initial
Interest Period applicable thereto; and
(D) if such DSR Loans are to be continued as
Eurodollar Rate Loans for additional Interest Periods, the
duration of such Interest Periods.
Each Interest Period specified in a Notice of Interest Rate Election
shall comply with the provisions of the definition of Interest Period.
No conversion into or continuation of a Eurodollar Rate Loans shall be
permitted when a Default or an Event of Default has occurred and is
continuing, and if a Default or an Event of Default has occurred and is
continuing, each Eurodollar Rate Loan shall automatically be converted
into a Base Rate Loan on the last day of the then current Interest
Period applicable thereto.
(iv) A Notice of Interest Rate Election shall not be revocable
by the Company. If the Company fails to deliver a timely Notice of
Interest Rate Election to the Agent for any Eurodollar Rate Loan, such
DSR Loans shall be converted into Base Rate Loans on the last day of
the then current Interest Period applicable thereto.
(v) Anything to the contrary in this Agreement
notwithstanding, at no time shall there be outstanding more than four
different Interest Periods applicable to the DSR Loans, and Eurodollar
Rate Loans that bear a single Interest Period shall not be less than $1
million and shall be in integral multiples of $100,000.
(c) Funding Losses. If the Company makes any payment of principal with
respect to any Eurodollar Rate Loan or any Eurodollar Rate Loan is converted to
a Base Rate Loan on any day other than the last day of an Interest Period
applicable thereto, or if the Company fails to
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borrow, repay or prepay any Eurodollar Rate Loan after notice has been given to
the Agent in accordance with the terms hereof, the Company shall reimburse the
Agent, for the ratable account of the Banks, within 30 days after demand for any
resulting loss or expense incurred by them, including any loss incurred in
obtaining, liquidating or employing deposits from third parties. Without
prejudice to the foregoing, the Company shall indemnify the Agent and the Banks
against any direct (as opposed to consequential) loss or expense that the Agent
or the Banks may sustain or incur as a consequence of a failure by the Company
in payment of principal of, or interest on, any Eurodollar Rate Loan, or any
part thereof, including any interest, premium or penalty paid by the Agent or
any Bank to lenders of funds borrowed by it or deposited with it for the purpose
of making or maintaining such Eurodollar Rate Loan. A certificate as to the
amount of any such loss or expense in reasonable detail (specifying the basis of
such loss or expense) shall be promptly submitted by the Agent, or by any Bank
through the Agent, to the Company and shall be conclusive and binding as to the
amount thereof, absent manifest error.
(d) Basis for Determining Interest Rate Inadequate or Unfair. If on or
prior to the first day of any Interest Period for any Eurodollar Rate Loan:
(i) the Agent or any Bank determines, in its reasonable
judgment, that deposits in Dollars (in the applicable amounts) are not
being offered to the Agent or such Bank in the relevant market for such
Interest Period, or
(ii) the Agent or such Bank, in its reasonable judgment, shall
determine that the Eurodollar Rate will not adequately and fairly
reflect the cost to the Agent or such Bank of funding its Eurodollar
Rate Loans for such Interest Period,
the Agent, or such Bank through the Agent, shall forthwith give notice thereof
(which notice shall describe in reasonable detail the basis for such
determination) to the Company, whereupon until the Agent, or such Bank through
the Agent, notifies the Company that the circumstances giving rise to such
suspension no longer exist, (A) the obligations of the Agent or such Bank to
make or continue Eurodollar Rate Loans or to convert outstanding DSR Loans into
Eurodollar Rate Loans shall be suspended and (B) each outstanding Eurodollar
Rate Loan, or if a Bank only shall be affected, each Eurodollar Rate Loan held
by such Bank shall be converted into a Base Rate Loan on the last day of the
then current Interest Period applicable thereto.
(e) Maximum Rate. This Agreement is hereby expressly limited so that in
no contingency or event, whether by reason of acceleration of the maturity of
any indebtedness hereunder or otherwise, shall the interest contracted for or
charged or received by the Banks exceed the maximum amount permissible under
Applicable Law. If, from any circumstance whatsoever, interest would otherwise
be payable to the Banks in excess of the maximum lawful amount, the interest
payable to the Banks shall be reduced to the maximum amount permitted under
Applicable Law, and the amount of interest for any subsequent period, to the
extent less than that permitted by Applicable Law, shall to that extent be
increased by the amount of such reduction.
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SECTION 2.7 Repayment.
(a) The Company shall repay the principal amount of each DSR LOC Loan
as, when and to the extent monies are available for such purpose pursuant to
Section 3.10 of the Collateral Agency Agreement. Each DSR LOC Loan shall mature
on the applicable DSR LOC Loan Required Payment Date; provided, that the
outstanding principal of each such DSR LOC Loan shall be due and payable as,
when and to the extent that monies are available for the purpose of repayment of
principal pursuant to Section 3.10 of the Collateral Agency Agreement.
(b) The Issuing Bank shall reduce the Stated Amount by the outstanding
principal amount of each DSR LOC Loan.
(c) Subject to Sections 2.2 and 6.2, the Issuing Bank shall, upon
receipt of written notice from the Company, reinstate the Stated Amount Values
set forth in Schedule 1 to the DSR Letter of Credit to the extent of any
repayment or prepayment of the principal amount of any DSR LOC Loan; provided,
that such reinstatement shall not cause the Stated Amount to exceed the Maximum
Stated Amount as then in effect or (when added to the cash balance in the Debt
Service Reserve Account) to exceed the DSRA Required Balance (with interest
calculated as provided for in Section 2.2(a)(i)) as then in effect.
(d) Notwithstanding the foregoing provisions of this Section 2.7, if a
Step-Up Event shall have occurred, all outstanding DSR LOC Loans shall be
automatically converted into DSR LOC Term Loans on the date the Collateral Agent
makes the Drawing pursuant to Section 2.4(b), and such DSR LOC Term Loan shall
for purposes of this Agreement be treated as made when so converted.
(e) Each DSR LOC Term Loan shall (i) amortize and be payable on
successive Quarterly Dates in amounts of principal and interest computed on a
Mortgage Basis, and (ii) finally mature and be due and payable on the applicable
DSR LOC Term Loan Required Payment Date in the amount of remaining principal
thereof and accrued interest thereon.
(f) Upon the expiration of the thirty (30)-day period specified in
Section 2.7(d), or such shorter period agreed to by the Agent and the Company,
the Company shall deliver to the Agent an appropriately completed DSR LOC Term
Loan Note substantially in the form of Exhibit E (each a "DSR LOC Term Loan
Note").
(g) The Company shall pay interest and principal on each DSR LOC Term
Loan quarterly in arrears in accordance with Section 3.10 of the Collateral
Agency Agreement. Payments of DSR LOC Term Loans shall not give rise to a
reinstatement of the Stated Amount of the DSR Letter of Credit.
(h) If a Bond Conversion Event shall have occurred, then from and after
the date such Bond Conversion Event occurs, the Agent may, subject to the
approval of the Required Banks and upon thirty (30) days' prior written notice
to the Company and the other Senior Parties, convert any such DSR LOC Loan into
a substitute security (such converted DSR LOC Loan, a "DSR Bond"), the interest
and principal of which shall be payable at the same level of priority as
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the Bonds. The Company shall pay the entire remaining principal amount of such
DSR Bond in accordance with Section 3.10 of the Collateral Agency Agreement.
(i) Each DSR Bond shall (x) amortize and be payable on successive
Quarterly Dates in amounts of principal (proportionate in amount to the amount
of the Bonds being paid) and interest computed on the same amortization schedule
as the Bonds and (y) finally mature and be due and payable on the Final Maturity
Date in the amount of remaining principal thereof and interest accrued thereon.
(j) Upon the expiration of the thirty (30)-day period specified in
Section 2.7(h), or such shorter period agreed to by the Agent and the Company,
the Company shall deliver to the Agent an appropriately completed DSR Bond Note
substantially in the form of Exhibit F (each a "DSR Bond Note").
(k) The Company shall pay interest and principal on each DSR Bond
quarterly in arrears in accordance with Section 3.10 of the Collateral Agency
Agreement. Payments of DSR Bonds shall not give rise to a reinstatement of the
Stated Amount of the DSR Letter of Credit.
SECTION 2.8 Prepayments.
The Company may, at any time and from time to time on any Business Day,
upon prior written notice to the Agent not later than 11:00 a.m. (New York City
time), at least one Business Day before the day of any prepayment of the DSR LOC
Loans, such notice stating the proposed date and aggregate principal amount of
the prepayment, and if such notice is given the Company shall, prepay without
premium or penalty, except as provided in Section 2.6(c), the outstanding
principal amounts of the DSR LOC Loans in whole or in part, together with
accrued interest to the date of such prepayment on the principal amount prepaid.
DSR LOC Term Loans and DSR Bonds shall be prepaid ratably with the Bonds in the
event the Bonds are prepaid.
All prepayments made hereunder shall be applied by the Agent and the
Banks against the installments of principal amount of outstanding DSR Loans of a
particular class (i.e., DSR LOC Loans, DSR LOC Term Loans or DSR Bonds), in
inverse order of maturity; such prepayments shall first be applied to the
prepayment of outstanding Base Rate Loans of a particular class (i.e., DSR LOC
Loans, DSR LOC Term Loans or DSR Bonds) to the extent thereof and then to the
prepayment of outstanding Eurodollar Rate Loans of such class.
SECTION 2.9 Security.
The Obligations shall be secured by the Security Documents, the rights
and remedies in respect of which shall be exercised pursuant to the Collateral
Agency Agreement.
SECTION 2.10 Payments.
(a) The Company shall make each payment hereunder and under any DSR
Note not later than 10:00 a.m. (New York City time), on the day when due to the
Agent at its address set forth in Section 9.2, in Dollars in immediately
available funds. The Agent will promptly
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thereafter cause to be distributed like funds relating to the payment of
principal (including reimbursement of Drawings), interest or fees ratably (other
than amounts payable for the account of the Issuing Bank pursuant to Section
2.5(a) and (d), which shall be payable solely to the Issuing Bank, or payable
pursuant to Section 9.4) to the Banks and like funds relating to the payment of
any other amount payable to any Bank, to such Bank, in each case to be applied
in accordance with the terms of this Agreement. The Agent may withhold from any
interest payment to any Bank an amount equal to any applicable withholding tax
(including upon the failure of any Bank to provide the forms or other
documentation required under Section 2.17(e)).
(b) Unless the Agent receives notice from the Company before the date
on which any payment is due to the Banks hereunder that the Company will not
make such payment in full, the Agent may assume that the Company has made such
payment in full to the Agent on such date, and the Agent may, in reliance upon
such assumption, cause to be distributed to each Bank on such due date an amount
equal to the amount then due to such Bank. If and to the extent that the Company
has not so made such payment in full to the Agent on the date on which such
payment is due, each Bank agrees, irrevocably and without qualification or
exception, to repay to the Agent forthwith on demand such amount distributed to
such Bank together with interest thereon, for each day from the date such amount
is distributed to such Bank until the date on which such Bank repays such amount
to the Agent, at the Federal Funds Rate.
(c) All payments made by the Company to each of the Banks and the Agent
under this Agreement and the DSR Notes will be made without set-off,
counterclaim or other defense.
SECTION 2.11 Computation of Interest and Fees.
All computations of interest and fees hereunder shall be made on the
basis of a year of 360 days for the actual number of days (including the first
day but excluding the last day) occurring in the period for which such interest
or fees are payable. Each calculation and each determination by the Agent of an
interest rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.
SECTION 2.12 Payments on Non-Business Days.
Whenever any payment hereunder or under any DSR Note is stated to be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be.
If no due date is specified for the payment of any amount payable by the Company
hereunder, such amount shall be due and payable not later than 10 Business Days
after receipt by the Company of written demand from the Agent for payment
thereof.
SECTION 2.13 Sharing of Payments, Etc.
(a) Each Bank agrees that if, as a result of the exercise of a right of
set-off, banker's lien or counterclaim or other similar right or the receipt of
a secured claim it receives any payment in respect of the DSR Loans or other
Obligations hereunder it shall promptly notify the
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Agent thereof (and the Agent shall promptly notify the other Banks). If, as a
result of such payment, such Bank receives a greater percentage of the
Obligations owed to it under this Agreement than the percentage received by any
other Bank, such Bank shall purchase a participation (which it shall be deemed
to have purchased simultaneously upon the receipt of such payment) in the
Obligations then held by such other Banks so that all such recoveries of
principal and interest with respect to all Obligations owed to each Bank shall
be pro rata on the basis of its respective amount of such Obligations owed to
all Banks; provided, that if all or part of such proportionately greater payment
received by such purchasing Bank is thereafter recovered by or on behalf of the
Company from such Bank, such purchase shall be rescinded and the purchase price
paid for such participation shall be returned to such Bank to the extent of such
recovery, but without interest.
(b) Each Bank which receives a secured claim as described in subsection
(a) above shall, to the extent practicable, exercise its rights in respect of
such secured claim in accordance with such subsection (a) and otherwise in a
manner consistent with the rights of the Banks entitled under this Section 2.13
to share in the benefits of any recovery on such secured claim.
(c) The Company expressly consents to the foregoing arrangements and
agrees that any holder of a participation in any Obligation so purchased or
otherwise acquired of which the Company has received notice may exercise any and
all rights of set-off, banker's lien or counterclaim with respect to any and all
monies owing by the Company to such holder as fully as if such holder were a
holder of such Obligation in the amount of the participation held by such
holder.
SECTION 2.14 Evidence of Debt.
(a) The indebtedness of the Company resulting from all DSR Loans shall
be evidenced by this Agreement and the promissory note substantially in the form
of Exhibit B in the case of the DSR LOC Loans (the "DSR LOC Loan Note"), the DSR
LOC Term Loan Note and the DSR Bond Note delivered by the Company to the Agent
for the benefit of the Banks in accordance with the terms hereof.
(b) The books and accounts of the Agent shall be conclusive evidence,
absent manifest error, of the amounts of all Drawings, DSR Loans, fees, interest
and other amounts advanced, due, outstanding, payable or paid pursuant to this
Agreement or the DSR Notes.
SECTION 2.15 Increased Costs and Reduced Returns.
(a) If, on or after the date hereof, the adoption of any Applicable
Law, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Agent or any Bank with any request or directive (whether or not having
the force of law) of any such authority, central bank or comparable agency:
(i) shall subject the Agent or such Bank to any tax, duty or
other charge (other than routine examination fees or Taxes) with
respect to the Eurodollar Rate Loans,
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the DSR Notes or its obligation to make or continue Eurodollar Rate
Loans, or shall change the basis of taxation of payments to the Agent
or any Bank of the principal of or interest on its Eurodollar Rate
Loans or any other amounts due under this Agreement in respect of its
Eurodollar Rate Loans or its obligation to make or continue DSR Loans
or Eurodollar Rate Loans (except for changes in the rate of tax on the
net income of the Agent or such Bank imposed by the federal, state or
local jurisdiction in which the Agent's or such Bank's principal
executive office is located); or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including any such requirement
imposed by the Board of Governors of the Federal Reserve System, but
excluding with respect to any Eurodollar Rate Loan any such requirement
provided in Section 2.17(b)), against assets of, deposits with or for
the account of, or credit extended by, the Agent or any Bank or shall
impose on the Agent or any Bank or on the London interbank market any
other condition affecting the Eurodollar Rate Loans, the DSR Notes or
its obligation to advance Eurodollar Rate Loans;
and the result of any of the foregoing is to increase the cost to the Agent or
such Bank of making or continuing any Eurodollar Rate Loan or to reduce the
amount of any sum received or receivable by the Agent or such Bank under this
Agreement or under the DSR Notes with respect thereto by an amount deemed by the
Agent or such Bank to be material, then, the Agent, or such Bank through the
Agent, shall deliver to the Company as promptly as practicable a certificate
setting forth in reasonable detail the additional amounts that the Agent or such
Bank, as the case may be, determines will fully compensate it for such
reduction, increased cost or payment and the basis for the determination of such
amount; provided, that the Company shall not be obligated to compensate the
Agent or any Bank for the amount of such increased cost incurred with respect to
a period of time prior to the date which is 90 days before the date on which the
Agent first notifies the Company of a claim for such compensation or that an
event had occurred which will entitle the Agent or a Bank to such compensation.
Any such amount claimed by the Agent or any Bank shall, in the case of clause
(i) above, be net of applicable tax savings, if any, directly attributable
thereto. Within 30 days after demand by the Agent, the Company shall pay to the
Agent, for its account or for the account of the applicable Bank, as the case
may be, such additional amount shown as due on any such certificate, absent
manifest error.
(b) In the event that the Agent or any Bank shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
on all the parties hereto) at any time that the Agent or such Bank is required
to maintain reserves in respect of Eurocurrency Liabilities during any period
during which any DSR Loan owing to it bears interest based on the Eurodollar
Rate (each such period, for the Agent or such Bank, a "Eurocurrency Reserve
Period"), but only in respect of any period during which any reserve shall
actually be maintained by the Agent or such Bank for any Eurodollar Rate Loan as
a result of a reserve requirement applicable to it under Regulation D in
connection with Eurocurrency Liabilities, then the Agent, or such Bank through
the Agent, shall promptly give notice to the Company of such determination, and
the Company shall directly pay to the Agent, for its account or for the account
of the applicable Bank, as the case may be, additional interest on the unpaid
principal amount of
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such DSR Loan during such Eurocurrency Reserve Period at a rate per annum which
shall, during each monthly period applicable to such DSR Loan, be the amount by
which (x) the Eurodollar Rate for such monthly period divided (and rounded
upward to the next whole multiple of 1/100 of 1%) by a percentage equal to 100%
minus the then stated maximum rate of all reserve requirements (including any
marginal, emergency, supplemental, special or other reserves) applicable to the
Agent or such Bank in respect of Eurocurrency Liabilities exceeds (y) the
Eurodollar Rate for such monthly period. The Agent, or such Bank through the
Agent, shall furnish along with such notice a certificate setting forth in
reasonable detail the cost actually incurred to maintain such reserves and the
basis for the determination of such amount; provided, that the Company shall not
be obligated to compensate the Agent or any Bank for the amount of such
increased cost incurred with respect to a period of time prior to the date which
is 90 days before the date on which the Agent first notifies the Company of a
claim for such compensation or that an event has occurred which will entitle the
Agent or a Bank to such compensation. Additional interest payable pursuant to
the immediately preceding sentence shall be paid by the Company at the time that
it is otherwise required to pay interest in respect of such DSR Loan, or, if
later demanded by the Agent or any Bank, promptly on demand. Each of the Agent
and the Banks agrees that, if notice is given to the Company of the existence of
a Eurocurrency Reserve Period, the Agent, or the applicable Bank through the
Agent, shall promptly notify the Company of any termination thereof, at which
time the Company shall cease to be obligated to pay additional interest to the
Agent or such Bank pursuant to the first sentence of this paragraph until such
time, if any, as a subsequent Eurocurrency Reserve Period shall occur.
(c) The Agent, and each Bank through the Agent, will promptly notify
the Company of any event of which it has knowledge, occurring after the date
hereof, which will entitle the Agent or such Bank to compensation pursuant to
this Section and will designate a different lending office if such designation
will avoid the need for, or reduce the amount of, such compensation and will
not, in the sole judgment of the Agent or such Bank, be otherwise
disadvantageous to the Agent or such Bank.
SECTION 2.16 Capital Adequacy.
If the Agent or any Bank shall determine that, after the date hereof,
the adoption of any Applicable Law regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on capital of the Agent or such Bank or its holding company as a
consequence of the Agent's or such Bank's obligations hereunder to a level below
that which the Agent or such Bank could have achieved but for such adoption,
change, request or directive (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by the Agent or such Bank to be
material, then the Agent, or such Bank through the Agent, shall deliver to the
Company as promptly as practicable (but in no event later than 120 days after
the Agent or such Bank has actual knowledge of such claim for capital adequacy)
a certificate setting forth in reasonable detail the amount being charged by the
Agent or such Bank and the basis for the
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determination of such amount. Within 30 days after the delivery of such
certificates by the Agent, the Company shall pay to the Agent, for its account
or for the account of the applicable Bank, as the case may be, the amount shown
as due on any such certificate.
SECTION 2.17 Taxes.
(a) Payments by the Company to the Agent and the Banks under this
Agreement and the DSR Notes will be made free and clear of and without deduction
for Taxes, other than Taxes based on the net income of the Agent or any Bank
(including franchise taxes imposed in lieu of net income taxes) imposed by (i)
the United States federal government, (ii) the jurisdiction where the Agent or
such Bank is organized or has its principal office or (iii) the jurisdiction of
the branch of such Bank maintaining any DSR Loan or the branch of the Agent
through which it renders its services as the Agent ("Excluded Taxes"). If the
Company is required by law to deduct Taxes (other than Excluded Taxes) from such
a payment, then the sum payable under the instrument to which the payment
relates will be increased so that such deduction does not result in a diminution
in the amount the Agent or any Bank actually receives.
(b) To the extent permitted by law, without duplication of amounts paid
by the Company under Section 2.17(a), the Company hereby indemnifies and holds
harmless the Agent and each Bank from and against, and agrees to reimburse the
Agent and each Bank on an after-tax basis (computed taking into account any
deductions or other benefits available for federal income tax purposes for the
Agent or such Bank if it is a United States taxpayer and any deductions and
benefits available for income tax purposes in any jurisdiction in which the
Agent or such Bank is a taxpayer) on demand for, any and all Taxes paid or
incurred by the Agent or such Bank in connection with the transactions
contemplated by this Agreement; provided, however, that the foregoing indemnity
does not cover Excluded Taxes. Reimbursement on an "after-tax basis" means on a
basis such that the Agent or such Bank is made whole after taking into account
income taxes that the Agent or such Bank will owe on the indemnity or
reimbursement payment in any jurisdiction and any related tax benefits, assuming
the Agent or such Bank is subject to income taxes at the highest marginal rates.
Nothing in this paragraph shall interfere with the right of the Agent or any
Bank to arrange its tax affairs in whatever manner it thinks fit and, in
particular, the Agent and the Banks are under no obligation to claim a deduction
or other benefit relating to these transactions ahead of any other claim,
relief, credit, deduction or other benefit to which it is entitled. The Agent,
or applicable Bank through the Agent, shall promptly give written notice to the
Company after (but in no event later than 60 days after) the Agent or such Bank
has actual knowledge of the imposition of any Taxes subject to indemnification
hereunder; provided, however, that failure to give such notice within such 60
day period will not relieve the Company of the obligation to indemnify the Agent
or such Bank in accordance with the terms hereof, except to the extent of
interest that would have been avoided had the notice been given prior to the end
of such 60-day period.
(c) The Company will provide evidence that all Taxes imposed on
payments under this Agreement, any DSR Loan or any DSR Note have been fully paid
to the appropriate authorities by delivering official receipts or notarized
copies to the Agent within 30 days after payment. The Company will compensate
the Agent or any Bank that has to pay any Taxes
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because the Company failed to timely furnish such evidence; provided, that prior
to paying such Taxes, the Agent, or such Bank through the Agent, shall have
notified the Company of its intent to make such payment.
(d) If the Company so requests promptly in writing after receipt of any
notice under Section 2.17 hereof, the Agent or applicable Bank will contest in
good faith the Taxes at the Company's expense, keep the Company fully informed
about the progress of the contest, consult in good faith with the Company's
counsel regarding conduct of the contest, and not compromise or otherwise settle
the contest without the Company's consent (which shall not be unreasonably
withheld or delayed); provided, that the Agent or such Bank may in its sole
discretion select the forum for the contest and determine whether the contest
will be by resisting payment of the Taxes or by paying the Taxes and seeking a
refund; provided, further that the Agent or such Bank will be under no
obligation to contest unless (A) if the Agent or such Bank requests, the Company
has provided the Agent or such Bank an opinion of independent tax counsel
selected by the Company and reasonably acceptable to the Agent or such Bank to
the effect that there is a reasonable basis for the contest, (B) the amount in
controversy is at least $75,000, (C) the Agent or such Bank has received
satisfactory indemnification and security for any liability, loss, cost or
expense arising out of the contest (including, but not limited to, all
reasonable legal and accounting fees and expenses, penalties, interest and
additions to tax), (D) if requested by the Agent or such Bank, the Company has
admitted in writing its duty to indemnify the Agent or such Bank for the Taxes
if the contest is lost (but such admission shall not preclude the Company from
raising a defense to liability if a court of competent jurisdiction has rendered
a decision articulating the cause of such Taxes, and the cause is not one for
which the Company is responsible under this Section 2.17), and (E) if the
contest is conducted in a manner that requires paying all or part of the Taxes,
the Company has paid the amount required.
(e) If the Company so requests within 10 days of notice to the Company
of the imposition of any Taxes on payments to any of the Banks of a type not
generally imposed on United States or foreign lenders making advances of the
types contemplated hereunder, such Banks shall (consistent with legal and
regulatory restrictions) comply with Section 2.19 hereof.
(f) At such times as may be required by Applicable Law or as the Agent
or the Company may reasonably request, each Bank agrees that it will deliver to
the Agent and the Company duly completed forms of any applicable jurisdiction or
other documentation reasonably satisfactory to the Agent and the Company that
such Bank is entitled to receive payments under this Agreement without deduction
or withholding of income tax under the Applicable Law of such jurisdiction. Each
Bank further agrees to notify the Agent and the Company of the occurrence of any
event (including any change in treaty, law or regulation) that would render such
Bank unable to receive payments hereunder without such deduction or withholding.
The provisions of this Section 2.17(f) shall apply to any successor holder of a
DSR Note.
SECTION 2.18 Illegality.
If, on or after the date of this Agreement, the adoption of any
Applicable Law, or any change therein, or any change in the interpretation or
administration thereof by any
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Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Agent or any Bank
with any request or directive (whether or not having the force of law) of any
such Governmental Authority, central bank or comparable agency shall make it
unlawful or impossible for the Agent or such Bank to make, continue or convert
its Eurodollar Rate Loans, the Agent, or such Bank through the Agent, shall so
notify the Company, whereupon until the Agent, or such Bank through the Agent,
notifies the Company that the circumstances giving rise to such suspension no
longer exist, the obligation of the Agent or such Bank to make or continue
Eurodollar Rate or convert outstanding DSR Loans into Eurodollar Rate Loans,
shall be suspended. Before giving any notice to the Company pursuant to this
Section, the Agent or applicable Bank shall designate a different lending office
for the Eurodollar Rate Loans if such designation will avoid the need for giving
such notice and will not, in the sole judgment of the Agent or such Bank, be
otherwise disadvantageous to the Agent or such Bank. If such notice is given,
each Eurodollar Rate Loan of the Agent or such Bank then outstanding shall
either (i) be converted to a Base Rate Loan on the last day of the then current
Interest Period applicable to such Eurodollar Rate Loan if the Agent or such
Bank may lawfully make or continue such DSR Loan to such day, or (ii) be
immediately converted to a Base Rate Loan if the Agent or such Bank shall
determine that it may not lawfully continue to make or continue such DSR Loan to
such day; provided, that the Company shall not be obligated to make any payment
pursuant to Section 2.6(c) as a result of such conversion. If the Company so
requests within 10 days of receipt of the notice referred to above, the
applicable Bank shall (consistent with legal and regulatory restrictions) comply
with Section 2.19(b) hereof.
SECTION 2.19 Extension of DSR Letter of Credit; Assignments by Banks.
(a) If at least one hundred and eighty (180) days before the Expiration
Date, the Agent shall have requested the consent of each of the other Banks to
the extension of the DSR Letter of Credit, and if the Agent shall not, within
twenty-five (25) days of issuing such request, have received the written consent
of any such Bank to the extension proposed by the Agent, the Agent shall have
the right to require such Bank to transfer all of its proportionate share of the
DSR Loans in accordance with Section 2.19(b). Prior to the Notice Date, each
Bank shall give the Agent written notice of such Bank's election to extend or
not to extend the original or extended Expiration Date of the DSR Letter of
Credit for an additional one or more years as specified by the Agent.
(b) In the event that (i) a Bank is required to comply with this
Section 2.19(b) after a request from the Company pursuant to Sections 2.17 or
2.18, (ii) the Company or the Issuing Bank requests that the provisions of this
Section 2.19(b) apply to a Bank within 10 days after the Company receives a
notice from the Agent that (A) such Bank has failed to make available to the
Agent its portion of any DSR LOC Loan or DSR LOC Term Loan on the date required
to be made available to the Agent pursuant to this Agreement after the Agent has
made written demand upon such Bank for such payment, (B) such Bank has provided
the Agent with notice that such Bank shall not make available to the Agent such
portion of any DSR LOC Loan or DSR LOC Term Loan required to be made available
to the Agent pursuant to this Agreement or (C) such Bank has failed to reimburse
the Agent pursuant to the terms of this Agreement, (iii) the Issuing Bank
requests that the provisions of this Section 2.19(b) apply to a Bank in the
event the
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long-term debt rating of such Bank shall at any time be less than a rating of
"A" or the equivalent by S&P or by Moody's, or (iv) the Agent requests that the
provisions of this Section 2.19(b) apply to a Bank in the event that such Bank
has failed to consent to extend the original or extended Expiration Date within
twenty-five (25) days after the Agent's request for such consent, then such Bank
shall assign all or a part of its proportionate share of the DSR Loans (as
applicable) and its Commitment to a replacement Bank (which may be, but is not
required to be, one of the other Banks, and shall be subject to the prior
written consent of the Issuing Bank) designated by the Company; provided, that
any assignment or transfer made by a Bank to a replacement Bank shall
substantially be in the form of Exhibit C hereto, and any assignment of all or
part of the DSR Loans or other obligations with respect to any DSR Letter of
Credit shall be made without recourse, representation or warranty. The Company
shall promptly pay when due all reasonable fees and expenses which such Bank
incurs in connection with such transfer or assignment and the Company shall
cause the replacement Bank to pay to the Agent for the account of the assigning
Bank in immediately available funds all amounts outstanding or payable under
this Agreement to each Bank assigning its interest in the DSR Loans or other
obligations with respect to the DSR Letter of Credit.
SECTION 2.20 Reduction in Commitments/Reimbursements.
The Company shall have the right to refinance the Commitment and any
outstanding DSR Loans, if any, without premium or penalty, except as provided in
Section 2.6(c), upon at least 10 Business Days' prior written notice to the
Agent.
SECTION 2.21 Right of Set-off.
Subject to the terms and conditions of the Collateral Agency Agreement,
the Company hereby authorizes each Bank (in addition to, and without limitation
of, any right of set-off, banker's lien or counterclaim a Bank may otherwise
have), upon the occurrence and during the continuance of any Event of Default,
at any time and from time to time, without notice to the Company or any Person
other than the Collateral Agent (any such notice being hereby expressly waived
by the Company to the extent it may legally do so) to set off and appropriate
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held, and other indebtedness at any time owing, by such
Bank in any of its offices, wherever located (whether such deposits or
indebtedness be in dollars or in any other currency), to or for the credit or
the account of the Company against any and all of the Obligations and
liabilities of the Company now or hereafter existing under this Agreement,
irrespective of whether or not such Bank shall have made any demand hereunder or
thereunder and although such Obligations may be contingent or unmatured.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.1 Conditions Precedent to Closing Date.
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The occurrence of the Closing Date is subject to satisfaction or waiver
of the following conditions precedent:
(a) issuance of the Bonds and submission to the Agent of duplicate
originals or certified copies of all of the documents submitted in connection
with the issuance of the Bonds on the Closing Date, which shall be in form and
substance satisfactory to the Agent;
(b) receipt by the Issuing Bank of the following, in each case in the
form approved by the Agent on the Closing Date:
(i) this Agreement and the DSR LOC Loan Note duly executed by
the Company;
(ii) an original of each of the Security Documents, duly
executed by the parties thereto;
(iii) a copy of each other Financing Document, duly executed
by the parties thereto and certified by the Company as to completeness
and authenticity;
(iv) written opinions of counsel acceptable to the Agent,
addressed to the Agent and the Banks, and in form and substance
satisfactory to the Agent and covering such matters as the Agent may
reasonably request;
(v) evidence satisfactory to the Agent that each of the
parties to the Project Contracts, Financing Documents and Security
Documents shall have duly and irrevocably appointed a process agent to
act for and on behalf of such person, to receive summonses and other
legal process in connection with any suit, action or proceeding
relating to such documents in the jurisdictions in which it is required
to submit to such jurisdiction and such appointment shall have been
accepted and all fees scheduled to accrue to each such agent for the
service of process shall have been paid in full; and
(vi) evidence satisfactory to the Agent that all actions
necessary or appropriate in order to effectively establish, create or
perfect the Security Interest have been duly taken.
(c) payment by the Company of all accrued fees and expenses (as
provided in Sections 2.5 and 9.4) of the Agent and the Banks (including the
reasonable accrued fees and disbursements of counsel to the Agent and the
Banks), to the extent that one or more statements for such fees and expenses
have been presented for payment.
SECTION 3.2 Conditions Precedent to Issue Date.
The DSR Letter of Credit shall be issued by the Issuing Bank and
immediately thereafter shall be available for drawing upon the earliest to occur
of (i) the Commercial Operation Date, (ii) the Guaranteed Completion Date, and
(iii) the Date Certain, the occurrence of which event
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shall be conclusively evidenced by the Collateral Agent's delivery of a
certificate to the Agent substantially in the form of Annex 3 to the DSR Letter
of Credit.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 Representations and Warranties of Company.
The Company hereby makes for the benefit of the Agent and the Banks all
of the representations and warranties of the Company contained in Article III of
the Indenture (which representations and warranties are incorporated by
reference herein as if fully set forth herein together with all related
definitions and which representations and warranties shall be true and correct
as of the date hereof and the Closing Date).
SECTION 4.2 Representations and Warranties of the Issuing Bank.
The Issuing Bank represents and warrants to the Company as of the
Closing Date that:
(a) The Issuing Bank is duly formed, validly existing and in good
standing under the laws of its jurisdiction of organization.
(b) The Issuing Bank has all necessary power and authority to execute
and deliver, and to perform its obligations under this Agreement, and when
issued, the DSR Letter of Credit.
(c) All action on the part of the Issuing Bank that is required for the
authorization, execution and delivery of, and performance by the Issuing Bank of
its obligations under this Agreement, and when issued, the DSR Letter of Credit
has been duly and effectively taken.
(d) This Agreement has been, and when issued, the DSR Letter of Credit
will have been, duly executed and delivered by the Issuing Bank on behalf of
Dresdner Bank AG ("Dresdner"), a banking corporation under the laws of the
Republic of Germany.
(e) The contractual obligations incurred by virtue of the execution and
delivery by the Issuing Bank of this Agreement and, when issued, the DSR Letter
of Credit, are and will be the obligations of Dresdner and if the Issuing Bank
ceases to exist or defaults on its obligations under the Agreement or, when
issued, the DSR Letter of Credit, then Dresdner has no defense against the
performance of such defaulted obligations that is based on the fact that
Dresdner acted through the Issuing Bank in executing this Agreement or, when
issued, the DSR Letter of Credit, subject to exceptions based on public policy
of the Republic of Germany and the exceptions and qualifications set forth in
subsection (f) and (g) below.
(f) This Agreement constitutes, and the DSR Letter of Credit upon the
issuance thereof will constitute, the legal, valid and binding obligations of
the Issuing Bank and Dresdner, enforceable against the Issuing Bank in
accordance with the respective terms thereof, and (to the extent such
obligations are embodied in a final and conclusive judgment for a definite sum
by the
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courts of the State of New York or the United States District Court of the
Southern District of New York), enforceable against Dresdner in accordance with
the respective terms thereof at its head office in Germany in a German court if
the Issuing Bank ceases to exist or defaults in such obligations; except as such
enforceability (i) is limited by applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, liquidation, moratorium and similar laws relating to
or affecting the enforcement of creditors' rights and remedies generally,
including but not limited to any implied contractual obligations of good faith
and limitations on enforcement of specific performance, (ii) is subject to
general principles of equity and similar laws (regardless of whether
enforceability is considered in a proceeding in equity or at law), (iii) is
subject to the equitable power of a court or the power of a governmental or
regulating authority to restrain payments by the Issuing Bank or Dresdner under
the Agreement and to similar laws and powers, and (iv) is subject to the rules
of civil procedure of the Federal Republic of Germany or similar laws (including
but not limited to the German Code of Civil Procedure) which might exclude
enforceability.
(g) The representations and warranties herein by the Issuing Bank are
based on the assumption that the Agreement constitutes the legal, valid and
binding agreement of each of the other parties thereto other than the Issuing
Bank, and are solely for the benefit of the Company, the Collateral Agent and
the Senior Parties, and may not be relied upon for any other purpose or by any
other person. To the extent that these representations and warranties depend on
the status of applicable law, it is assumed that at the time this Agreement is
required to be performed and the DSR Letter of Credit is required to be issued
and performed, the law relevant to the foregoing representations and warranties
will be the same as it is on the date of the making of such representations and
warranties.
ARTICLE V
COVENANTS
SECTION 5.1 Covenants.
So long as any Commitment is in effect, the DSR Letter of Credit is
outstanding or the Obligations remain unpaid, the Company shall observe and
perform all of the covenants of the Company contained in Article VI of the
Indenture (which covenants together with all related definitions are
incorporated herein by reference as if fully set forth herein).
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ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.1 Events of Default.
Each of the following shall constitute an "Event of Default" under this
Agreement so long as the same shall be continuing:
(a) the Company shall fail to pay any amount due under this Agreement
(including under any DSR Note) within 15 days after the due date thereof; or
(b) an "Event of Default" under the Indenture shall have occurred and
be continuing; or
(c) an "Event of Default" under the CP LOC Reimbursement Agreement
shall have occurred and be continuing.
SECTION 6.2 Remedies.
Upon the occurrence and during the continuation of an Event of Default,
the Agent shall, at the request of the Required Banks, take one or more of the
following actions: (i) after giving any required notice to the beneficiary of
the DSR Letter of Credit and the lapse of the time period required prior to
termination of the DSR Letter of Credit, terminate the DSR Letter of Credit in
accordance with Section 2.2(f), (ii) declare the Obligations, all interest
thereon and all other amounts payable under this Agreement, and any DSR Note to
be forthwith due and payable, including but not limited to the amount of any and
all DSR LOC Loans which may be made upon a Drawing under the DSR Letter of
Credit which occurs after the date on which the Agent declares such amounts to
be due and payable, but prior to the effective date of a termination of the DSR
Letter of Credit in accordance with Section 2.2(f), whereupon the Obligations,
all such interest and all such amounts shall become and be immediately due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Company, (iii) terminate the ability
of the Company to cause reinstatement of the Stated Amount through the
reimbursement of Drawings, as contemplated by the terms hereof, or (iv)
terminate the ability of the Company to continue DSR Loans as, or convert DSR
Loans to, Eurodollar Rate Loans; provided, that, in each case, the Agent and the
Banks shall not have the right to exercise any other remedy hereunder or
otherwise available to the Agent or any Bank except in accordance with the
provisions of the Collateral Agency Agreement.
SECTION 6.3 Collateralization upon Acceleration of the Bonds.
In the event that an Event of Default hereunder results from an "Event
of Default" under the Indenture and the Trustee accelerates amounts due under
the Indenture, the DSR LOC Provider shall be entitled to require
collateralization of the Maximum Stated Amount by having the Collateral Agent
deposit (in a separate account to be held by the Collateral Agent), at the time
that any amounts are paid to the Trustee in respect of accelerated amounts due
under the
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Indenture, an amount equal to the amount that would have been disbursed to the
Agent at such time (based on pro rata payment requirements) if Drawings had been
made to the full extent of the Maximum Stated Amount ("Deemed DSR LOC Loans")
and the Deemed DSR LOC Loans had been accelerated at the same time as an
acceleration under the Indenture. Upon a Drawing on the DSR Letter of Credit, a
portion of the amount in the separate account equal to such Drawing's
proportionate share of the Maximum Stated Amount shall be transferred by the
Collateral Agent to the DSR LOC Provider. The Agent, the Issuing Bank and each
Bank agree that upon termination or expiration of the DSR Letter of Credit, the
Collateral Agent shall become entitled to all amounts in such separate
collateral account that have not been transferred pursuant to the previous
sentence (to the extent of such expiration or termination) for application in
accordance with the provisions of Section 4.1(a) of the Collateral Agency
Agreement.
ARTICLE VII
CHARACTER OF OBLIGATIONS
SECTION 7.1 Obligations Absolute.
The Obligations shall be absolute, unconditional and irrevocable and
shall not be affected or impaired under any circumstances whatsoever, including
the following circumstances:
(a) any lack of validity or enforceability of any provision of any
Project Contract or Financing Document;
(b) any amendment or waiver of, or any consent to departure from, any
provision of any Project Contract or Financing Document;
(c) the existence of any claim, set-off, defense or other right that
the Company may have at any time against the beneficiary of the DSR Letter of
Credit (or any Person for whom such beneficiary may be acting), any Bank, the
Agent or any other Person, whether in connection with any Project Contract or
Financing Document, the transactions contemplated thereby or any unrelated
transaction;
(d) any statement or signature in any certificate or other document
presented under the DSR Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect, or any such statement being untrue or
inaccurate in any respect whatsoever;
(e) any exchange, release or nonperfection of any Collateral or other
collateral, or any release, amendment or waiver of or consent to departure from
any Project Contract, Financing Document or any guaranty, for any of the
Obligations;
(f) payment by the Issuing Bank under the DSR Letter of Credit against
presentation of a draft or certificate that does not comply with the terms of
the DSR Letter of Credit; or
(g) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
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SECTION 7.2 Limited Liability of Agent and Banks.
As among the Company, the Agent and the Banks (including the Issuing
Bank), the Company assumes all risks of the acts or omissions of the
beneficiaries of the DSR Letter of Credit with respect to the use of the DSR
Letter of Credit. Neither the Agent nor any Bank nor any of their respective
officers, directors, employees or agents shall be liable or responsible for (i)
the use that may be made of the DSR Letter of Credit or any acts or omissions of
any beneficiaries of the DSR Letter of Credit in connection with the DSR Letter
of Credit; (ii) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any document submitted in connection with the DSR Letter of Credit or
of any endorsement thereon, even if such document or endorsement should prove to
be in any or all respects invalid, insufficient, inaccurate, fraudulent or
forged; (iii) payment by the Issuing Bank against presentation of any document
that does not comply with the terms of the DSR Letter of Credit, including
failure of any document to bear any reference or adequate reference to the DSR
Letter of Credit; or (iv) any other circumstance whatsoever in making, delaying
to make or failing to make payment under the DSR Letter of Credit; provided,
however, that the Company shall have a claim against the Issuing Bank, and the
Issuing Bank shall be liable to the Company, to the extent of any direct, as
opposed to consequential, damages suffered by the Company that the Company
proves were the result of the Issuing Bank's willful misconduct or gross
negligence in paying under the DSR Letter of Credit or the Issuing Bank's
willful or grossly negligent failure to pay under the DSR Letter of Credit after
the presentation to it by the beneficiary of a draft and certificate strictly
complying with the terms and conditions of the DSR Letter of Credit (unless the
Issuing Bank in good faith believed itself (based upon an opinion of counsel) to
be prohibited by law or legal authority from making such payment). In
furtherance and not in limitation of the foregoing, the Issuing Bank may accept
any document that appears on its face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
ARTICLE VIII
THE AGENT
SECTION 8.1 Authorization and Action.
(a) Each Bank hereby appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Agent by the terms hereof, together with such powers as
are reasonably incidental thereto. As to any matters not expressly provided for
by the Credit Documents (including enforcement of and collection under any
Credit Document or other Project Contract), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Banks, and such instructions
shall be binding upon all Banks and the holders of any DSR Note; provided,
however, that the Agent shall not be required to take any action that, in the
Agent's sole judgment, exposes the Agent to personal liability or that is
contrary to any Credit Document or other Project Contract or Applicable Law. In
performing its function and duties hereunder as Agent, the Agent shall act
solely as the agent of the Banks and in its capacity as
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Issuing Bank it shall act solely as issuer of the DSR Letter of Credit, and does
not assume and shall not be deemed to have assumed in either such capacity any
obligation towards or relationship of agency or trust or other fiduciary
relationship with or for the Company or any other party to any Project Contract.
(b) Each Bank hereby authorizes the Agent in the name of and on behalf
of such Bank to sign such documents, take all such actions and perform such
obligations that the Agent deems necessary or appropriate to bind each of the
Banks under the Credit Documents and to create, perfect or maintain the
existence or perfected status of any security interest created pursuant to any
such Credit Documents.
SECTION 8.2 Agent's Reliance, Etc.
Neither the Agent nor the Issuing Bank nor any of its or their
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with any Credit
Document or other Project Contract, except for its or their own gross negligence
or willful misconduct. Without limitation of the generality of the foregoing,
the Agent and the Issuing Bank (i) may treat any Bank that has signed an
Assignment and Acceptance as the holder of the applicable portion of the
Obligations; (ii) may consult with legal counsel (including counsel for the
Company or any Affiliate), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Bank
and shall not be responsible to any Bank for any statements, warranties or
representations made in or in connection with any Credit Document or other
Project Contract; (iv) shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions of
any Credit Document or other Project Contract on the part of the Company or any
Affiliate or to inspect the property (including the books and records) of the
Company or any Affiliate thereof; (v) shall not be responsible to any Bank for
the due execution, legality, validity, enforceability, genuineness, sufficiency
or value of any Credit Document or other Project Contract or any other
instrument or document furnished pursuant hereto or thereto; and (vi) shall
incur no liability under or in respect of any Credit Document or other Project
Contract by acting upon any notice, consent, certificate or other instrument or
writing (which may be by telecopier or otherwise) believed by it to be genuine
and signed or sent by the proper party or parties.
SECTION 8.3 The Agent, the Issuing Bank and Affiliates.
With respect to its Commitment and participation in the DSR Letter of
Credit, the Issuing Bank shall have the same rights and powers under this
Agreement as any other Bank and may exercise the same as though it were not the
Agent or the Issuing Bank, as the case may be; and the term "Bank" or "Banks"
shall, unless otherwise expressly indicated, include the Agent and the Issuing
Bank in their capacity as a Bank (including the Issuing Bank in its capacity as
such). The Agent and the Issuing Bank and their Affiliates may accept deposits
from, lend money to, act as trustee under indentures of, and generally engage in
any kind of business with, the Company, any Affiliate thereof and any Person
that may do business with or own securities of
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the Company or any Affiliate thereof, all as if the Agent and the Issuing Bank,
respectively, were not the Agent and the Issuing Bank and without any duty to
account therefor to the Banks.
SECTION 8.4 Bank Credit Decision.
Each Bank agrees that it has, independently and without reliance on the
Agent, the Issuing Bank or any other Bank and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Bank also agrees that it will,
independently and without reliance on the Agent, the Issuing Bank or any other
Bank and based on such documents and information as it deems appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement.
SECTION 8.5 Indemnification.
The Banks agree to indemnify the Agent and the Issuing Bank (to the
extent not promptly reimbursed by the Company and without limiting the
obligation of the Company to do so), on demand, ratably according to such Bank's
Percentage Interest, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind or nature whatsoever that may at any time (including
at any time following the payment of any Obligations or termination of this
Agreement) be imposed on, incurred by or asserted against the Agent or the
Issuing Bank in any way relating to or arising out of any Credit Document or
other Project Contract or any action taken or omitted by the Agent under any
Credit Document or other Project Contract; provided, however, that no Bank shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements to the
extent resulting solely from the Agent's gross negligence or willful misconduct.
Without limitation of the foregoing, each Bank agrees to reimburse the Agent
promptly upon demand for its ratable share of any costs and expenses payable by
the Company under Section 9.4, to the extent that the Agent is not reimbursed
for such costs and expenses by the Company.
SECTION 8.6 Successor Agent.
The Agent may resign at any time by giving written notice thereof to
the Banks and the Company and may be removed at any time with or without cause
with the written approval of the Required Banks. Upon any such resignation or
removal, the Required Banks shall have the right to appoint a successor Agent
with the consent of the Company, which shall not be unreasonably withheld. If no
successor Agent has been so appointed by the Required Banks, and has accepted
such appointment, within 30 days after the retiring Agent's giving of notice of
resignation or the Required Banks' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Banks, appoint a successor Agent with the
consent of the Company (which shall not be unreasonably withheld), which
successor Agent shall be a commercial bank organized under the laws of the
United States of America or of any state thereof and having a combined capital
and surplus of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all of the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations under the Credit Documents and the other Project
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Contracts. After any retiring Agent's resignation or removal hereunder as Agent,
the provisions of this Article 8 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was agent under this Agreement.
SECTION 8.7 Collateral.
(a) Except as expressly provided herein, the Agent shall have no duty
to take any affirmative steps with respect to the collection of amounts payable
in respect of the Collateral. The Agent shall incur no liability as a result of
any private sale of the Collateral.
(b) The Banks hereby consent, and agree upon written request by the
Agent to execute and deliver such instruments and other documents as the Agent
may deem desirable to confirm such consent, to the release of the Liens on the
Collateral, including any release in connection with any sale, transfer or other
disposition of the Collateral or any part thereof, in accordance with the
Project Contracts.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Amendments, Etc.
No amendment or waiver of any provision of this Agreement or any DSR
Note or consent to any departure by the Company therefrom, shall be effective
unless in writing and signed or consented to (in writing) by the Required Banks
(and, in the case of amendments, the Company), and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that (A) no amendment, waiver or consent
shall, unless in writing and signed or consented to (in writing) by all of the
Banks do any of the following: (i) waive any of the conditions specified in
Article 3; (ii) increase the Commitments of the Banks or subject the Banks to
any additional obligations; (iii) reduce the principal of, or interest on, the
DSR Loans or any fees or other amounts payable hereunder; (iv) postpone any date
fixed for (a) payment of principal of, or interest on, any DSR Loans (b)
reimbursement of drawings under the DSR Letter of Credit or (c) payment of fees
or other amounts payable hereunder; (v) change the percentage of the Commitments
or the number of Banks, required for the Banks or any of them to take any action
hereunder; or (vi) amend this Section 9.1; (B) no amendment, waiver or consent
shall, unless in writing or consented to (in writing) by the Issuing Bank,
affect the rights and obligations of the Issuing Bank hereunder; (C) no
amendment, waiver or consent shall, unless in writing and signed by the Agent in
addition to the Persons required above to take such action, affect the rights or
duties of the Agent under this Agreement or any other Credit Document and (D)
any provision that is a part of this Agreement as a result of an incorporation
by reference to the Indenture shall be amended or waived as provided in Section
2.5 of the Collateral Agency Agreement.
SECTION 9.2 Notices, Etc.
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All notices and other communications provided for hereunder shall be in
writing (including by telecopier and shall be mailed, telecopied or delivered,
if to the Company, to it at AES Ironwood, L.L.C., 829 Cumberland Street,
Lebanon, Pennsylvania 17042, Attention: Project Manager, telephone 717-228-1328,
telecopier 717-228-1271; if to any Bank other than the Issuing Bank, to it at
the address or telecopier number set forth below its name in the Assignment and
Acceptance by which it became a party hereto; if to the Agent or the Issuing
Bank, to it at Dresdner Bank AG, New York Branch, 75 Wall Street, 25th Floor,
New York, New York 10005-2889, Attention: Project Finance Group; telephone
212-429-2226, telecopier 212-429-2192, or as to each party, to it at such other
address or telecopier number as designated by such party in a written notice to
the other parties. All such notices and communications shall be deemed received,
(i) if personally delivered, upon delivery, (ii) if sent by first-class mail, on
the third Business Day following deposit into the mails and (iii) if sent by
telecopier, upon acknowledgment of receipt thereof by the intended recipient,
except that notices and communications to the Agent pursuant to Article 2 or 8
shall not be effective until received by the Agent.
SECTION 9.3 No Waiver, Remedies.
No failure on the part of any Bank (including the Issuing Bank) or the
Agent to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof, and no single or partial exercise of any such right shall
preclude any other or further exercise thereof or the exercise of any other
right. The remedies provided herein are cumulative and not exclusive of any
remedies provided by law.
SECTION 9.4 Costs and Expenses.
The Company agrees to pay on demand (i) all reasonable costs and
expenses of the Agent and the Banks (including the Issuing Bank) in connection
with the preparation, execution, delivery, syndication, administration,
modification and amendment of this Agreement, any DSR Note, the other Credit
Documents, and the other documents to be delivered hereunder, including (a) the
reasonable fees and out-of-pocket expenses of counsel for the Agent and the
Banks with respect thereto and with respect to advising the Agent and the Banks
as to their rights and responsibilities, or the perfection, protection or
reservation of rights or interests, under this Agreement, the other Credit
Documents, the other Project Contracts and the other documents to be delivered
hereunder, (b) the reasonable fees and expenses of any consultants, auditors or
accountants engaged by the Agent with the written consent (which shall not be
unreasonably withheld) of the Company pursuant hereto, and (ii) all reasonable
costs and expenses of the Agent and the Banks (including the Issuing Bank)
(including reasonable counsel fees and expenses of the Agent and the Banks) in
connection with the enforcement (whether through negotiations, legal proceedings
or otherwise) of this Agreement, the other Credit Documents, the other Project
Contracts and the other documents to be delivered hereunder, whether in any
action, suit or litigation, bankruptcy, insolvency or similar proceeding. In
addition, the Company shall pay any and all stamp and other taxes and fees
payable or determined to be payable in connection with the execution, delivery,
filing and recording of the aforementioned documents, and the Company agrees to
indemnify and hold the Agent and the Banks (including the Issuing
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<PAGE>
Bank) harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay any of the foregoing.
SECTION 9.5 Application of Money.
If any sum paid or recovered in respect of the Obligations is less than
the amount then due, the Agent may apply that sum to principal, interest, fees
or any other amount due under this Agreement in such proportions and order and
generally in such manner as the Agent shall reasonably determine.
SECTION 9.6 Severability.
Any provision of this Agreement that is prohibited, unenforceable or
not authorized in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, unenforceability or
nonauthorization without invalidating the remaining provisions of this Agreement
or affecting the validity, enforceability or authorization of such provision in
any other jurisdiction.
SECTION 9.7 Non-Recourse Liability.
Satisfaction of the Obligations shall be had solely from the
Collateral. Notwithstanding any provision to the contrary in the Transaction
Documents, there shall be no recourse against any Affiliates, stockholders,
officers, directors, representatives or employees of the Company, other than the
Company (each a "Non-Recourse Party"), for any payment due hereunder or under
any other Financing Document or Security Document from the Company or for the
performance of any obligation of such Non-Recourse Party, or breach of any
representation or warranty made by such Non-Recourse Party hereunder or
thereunder. The sole recourse of the Agent and the Banks hereunder or under any
other Transaction Document or for the performance of any obligation of the
Company, or breach of any representation or warranty made hereunder or
thereunder by the Company, shall be against the Company and its assets, it being
expressly understood by the Senior Parties that such obligations of the Company
are obligations solely of the Company and that no such personal liability shall
attach to, or be incurred by any Non-Recourse Party; provided, that nothing
contained in this Section 9.7 shall (i) impair in respect of the Company the
validity of any DSR Note, or any other Credit Document, as applicable, prevent
the taking of any action permitted by law against the Company or any of its
Affiliates, or in any way affect or impair the rights of the Agent and the Banks
to take any action permitted by law, in either case to realize upon the
Collateral, (ii) be deemed to release the Company or any of its Affiliates, or
any past, present or future shareholder, partner, officer, employee, director or
agent of any thereof, from liability for its fraudulent actions, fraudulent
misrepresentations, gross negligence or willful misconduct or (iii) limit or
affect the obligations and liabilities of any Non-Recourse Party in accordance
with the terms of any other Transaction Document creating such obligations and
liabilities to which such Non-Recourse Party is a party.
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SECTION 9.8 Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
Company, the Agent and the Banks and their respective successors and assigns,
except that the Company shall not have the right to assign any of its rights and
obligations hereunder without the prior written consent of the Required Banks,
and, except as provided in Section 9.9, no Bank other than the Issuing Bank
shall have the right to assign any of its rights and obligations hereunder.
SECTION 9.9 Assignments and Participations.
(a) Any Bank may at any time (with the consent of the Company, such
consent not to be unreasonably withheld or delayed, the consent of the Agent,
such consent not to be unreasonably withheld or delayed, and the consent of the
Issuing Bank) sell to one or more banks or other entities whose long-term
unsecured debt is rated at least "A" or the equivalent by S&P and Moody's (a
"Purchasing Bank") all or any part of its rights and obligations under this
Agreement and any DSR Note (which, except in the case of an assignment to a
Person that, immediately before such assignment, was a Bank, shall be in an
amount equal to not less than the lesser of (x) $7,000,000 and (y) 33 1/3% of
the Maximum Stated Amount pursuant to an Assignment and Acceptance, executed by
such Purchasing Bank, such transferor Bank, the Agent and the Issuing Bank (and,
in the case of a Purchasing Bank that is not then a Bank or an Affiliate
thereof, by the Company). Upon (i) such execution of such Assignment and
Acceptance and (ii) delivery of a copy thereof to the Company and payment of the
amount of its participation to the Agent or such transferor Bank, such
Purchasing Bank shall for all purposes be a Bank party to this Agreement and
shall have all the rights and obligations of a Bank under this Agreement, to the
same extent as if it were an original party hereto with the Percentage Interest
as set forth in such Assignment and Acceptance, which shall be deemed to amend
this Agreement to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing Bank and the resulting adjustment of Percentage
Interests arising from the purchase by such Purchasing Bank of all or a portion
of the rights and obligations of such transferor Bank under this Agreement and
any DSR Note.
(b) Any Bank may, from time to time, sell or offer to sell
participating interests in any DSR Loans owing to such Bank, such Bank's
interest in any DSR Note, any Commitment of such Bank or any other interests and
obligations of such Bank hereunder, to one or more banks or other entities
(each, a "Participant"), on such terms and conditions as may be determined by
the selling Bank, without the consent of or notice to the Company, and the grant
of such participation shall not relieve any Bank of its obligations, or impair
the rights of any Bank, hereunder. In the event of any such sale by a Bank of a
participating interest to a Participant, such Bank shall remain solely
responsible for the performance of such Bank's obligations under this Agreement,
the Company, the Agent and the Issuing Bank will continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
under this Agreement and such Bank shall retain the sole right and
responsibility to exercise the rights of such Bank, and enforce the obligations
of the Company, including the right to approve any amendment, modification,
supplement or waiver of any provision of any Credit Document and the right to
take action under Article 6 hereof and such Bank shall not grant any such
Participant
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any voting rights or veto power over any such action by such Bank under this
Agreement (provided, that such Bank may agree not to consent to any
modification, amendment or waiver of this Agreement, without the consent of the
Participant, that would alter the principal of or interest on any DSR Loans,
postpone the date fixed for any payment of principal of or interest thereon or
extend the term of any Commitment). No Participant shall have any rights under
this Agreement to receive payment of principal, interest or any other amount
payable hereunder except through a Bank and as provided in this Section 9.9. The
Company agrees that, upon the occurrence and during the continuance of any Event
of Default, each Participant shall have the right of set-off in respect of its
participating interest in amounts owing under this Agreement and any DSR Note as
set forth in Section 2.21 hereof to the same extent as if the amount of its
participating interest was owing directly to it as a Bank under this Agreement
or any DSR Note. The Company also agrees that each Participant shall be entitled
to the benefits of Sections 2.15, 2.16, 2.17 and 2.18 hereof with respect to its
participation granted hereunder; provided, that no Participant shall be entitled
to receive any greater amount pursuant to such Sections than the Bank
transferring such participation would have been entitled to receive in respect
of the amount of the participation transferred to such Participant had no such
transfer occurred.
(c) Any Bank may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 9.9, disclose to
the Purchasing Bank or Participant or proposed Purchasing Bank or Participant
any information relating to the Company furnished to such Bank by or on behalf
of the Company; provided, however, that prior to any such disclosure, the Person
receiving such disclosure shall sign such confidentiality agreements as the
Company may reasonably request.
SECTION 9.10 Indemnification.
The Company agrees to indemnify, on demand, and hold harmless the Agent
and each Bank (including the Issuing Bank) and each of their respective
officers, directors, employees, agents and affiliates from and against any and
all claims, damages, losses, liabilities, costs and expenses whatsoever that
such indemnified party may incur (or that may be claimed against such
indemnified party by any Person) by reason of (i) any untrue statement or
alleged untrue statement of any material fact concerning the Company or the
Collateral, or the omission or alleged omission to state any fact concerning the
Company or the Collateral necessary to make any such statement, in light of the
circumstances under which it was made, not misleading; (ii) the issuance, sale
or delivery of the Senior Debt; (iii) the use of the proceeds of the Senior Debt
or any Drawing; (iv) any reasonable action taken by such indemnified party in
protecting and enforcing the rights and remedies of the Agent and the Banks
under the Project Contracts; (v) subject to Section 7.2, the execution, delivery
or transfer of, or payment or failure to pay under, the DSR Letter of Credit;
(vi) any claim of any Person with respect to any finder's fee, brokerage
commission or other similar sum due in connection with any Project Contract; or
(vii) any failure by the Company to comply with any Environmental Requirement;
provided, however, that the Company shall not be required to indemnify the
Issuing Bank for any claims, damages, losses, liabilities, costs or expenses to
the extent caused by the Issuing Bank's willful misconduct or gross negligence
in paying under the DSR Letter of Credit or the Issuing Bank's willful or
grossly negligent failure to pay under the DSR Letter of Credit after the
presentation to it by the
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<PAGE>
beneficiary of a draft and certificate strictly complying with the terms and
conditions of the DSR Letter of Credit (unless the Issuing Bank in good faith
believed itself (based upon an opinion of counsel) to be prohibited by law or
legal authority from making such payment). The Company, upon demand by any party
indemnified or intended to be indemnified pursuant to this Section 9.10 at any
time, shall also reimburse such party for any reasonable legal or other expenses
incurred in connection with investigating or defending against any of the
foregoing. If any action, suit or proceeding arising from any of the foregoing
is brought against any party indemnified or intended to be indemnified pursuant
to this Section 9.10 (an "Indemnified Party"), such Indemnified Party shall
promptly notify the Company in writing, enclosing a copy of all papers served,
but the omission so to notify the Company of any such action shall not relieve
it of any liability that it may have to any Indemnified Party otherwise than
under this Section 9.10; provided, however, that the Company shall not be liable
for any settlement of any such action effected without the Company's prior
written consent. In case any such action shall be brought against any
Indemnified Party and it shall notify the Company of the commencement thereof,
the Company shall be entitled to participate in and, to the extent that it shall
wish, to assume the defense thereof with counsel reasonably satisfactory to such
Indemnified Party, and after notice from the Company to such Indemnified Party
of the Company's election so to assume the defense thereof, the Company shall
not be liable to such Indemnified Party for any subsequent legal or other
expenses attributable to such defense, except as provided below, other than
reasonable costs of investigation subsequently incurred by such Indemnified
Party in connection with the defense thereof. The Indemnified Party shall have
the right to employ its own counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party
unless (i) the employment of counsel by such Indemnified Party has been
authorized by the Company, (ii) the Indemnified Party shall have reasonably
concluded that there may be a conflict of interest between the Company and the
Indemnified Party in the conduct of the defense of such action (in which case
the Company shall not have the right to direct the defense of such action on
behalf of the Indemnified Party) or counsel for the Company shall have declined
to represent the Indemnified Party in light of a potential conflict of interest
or (iii) the Company shall not in fact have employed counsel reasonably
satisfactory to the Indemnified Party to assume the defense of such action.
SECTION 9.11 Governing Law; Submission of Jurisdiction; Venue; Waiver
of Jury Trial.
(a) THE RIGHTS AND OBLIGATIONS OF EACH OF THE PARTIES UNDER THIS
AGREEMENT AND ANY DSR NOTE SHALL, PURSUANT TO NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1401, BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING AGAINST THE COMPANY WITH
RESPECT TO THIS AGREEMENT, ANY DSR NOTE OR ANY OTHER CREDIT 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, THE COMPANY HEREBY IRREVOCABLY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE
JURISDICTION OF
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THE AFORESAID COURTS. THE COMPANY HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND
EMPOWERS CT CORPORATION SYSTEM, WITH OFFICES ON THE DATE HEREOF AT 1633
BROADWAY, NEW YORK, NY 10019, AS ITS DESIGNEE, APPOINTEE AND AGENT WITH RESPECT
TO ANY ACTION OR PROCEEDING IN NEW YORK 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 AND AGREES THAT THE FAILURE OF SUCH AGENT TO GIVE ANY ADVICE OF
ANY SUCH SERVICE OF PROCESS TO THE COMPANY SHALL NOT IMPAIR OR AFFECT THE
VALIDITY OF SUCH SERVICE OR OF ANY CLAIM BASED THEREON. IF FOR ANY REASON SUCH
DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE
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 AGENT.
THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY
AT ITS ADDRESS SET FORTH IN SECTION 9.2, SUCH SERVICE TO BECOME EFFECTIVE 30
DAYS AFTER SUCH MAILING.
(b) THE 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, ANY DSR NOTE OR
ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN SECTION 9.11(a)
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.
(c) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO ANY OF THIS AGREEMENT, ANY DSR NOTE, OR THE CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 9.12 Headings.
The section and subsection headings used herein have been inserted for
convenience of reference only and do not constitute matters to be considered in
interpreting this Agreement.
SECTION 9.13 Execution in Counterparts.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized, as of the
day and year first above written.
AES IRONWOOD, L.L.C.
By: /s/ Patricia L. Rollin
---------------------------------
Name: PATRICIA L. ROLLIN
Title: VICE PRESIDENT
Commitment Percentage Interest
$17,529,452.00 100% DRESDNER BANK AG, NEW YORK BRANCH,
as Agent, the Issuing Bank and as a Bank
By: /s/ Andrew Schroeder
-------------------------------------
Name: ANDREW SCHROEDER
Title: VICE PRESIDENT
By: /s/ Kirk Edelman
-------------------------------------
Name: KIRK EDELMAN
Title: VICE PRESIDENT
[DSR LETER OF CREDIT
AND REIMBURSEMENT AGREEMENT]
<PAGE>
EXHIBIT A
FORM OF DEBT SERVICE RESERVE LETTER OF CREDIT
<TABLE>
<S> <C>
Dresdner Bank AG Letter of Credit No. [__________]
New York Branch
75 Wall Street, 25th Floor Irrevocable Standby Credit
New York, New York 10005-2889
Date and Place of Issue: Date and Place of Expiry:
New York, New York New York, New York
[__________], 200_ [five years from Issue Date], as the same may be extended
from time to time in accordance with the terms hereof
Applicant:
AES Ironwood, L.L.C.
829 Cumberland Street
Lebanon, PA 17042
Amount: Up to an aggregate of
[__________] United States Dollars
(US$ [________])
Beneficiary: Credit Available With:
[ ] Dresdner Bank AG
[Address] New York Branch
Attn: 75 Wall Street, 25th Floor
New York, New York 10005-2889
By: Negotiation, Against Presentation of the Documents
Detailed Herein Drawn on
Dresdner Bank AG
New York Branch
75 Wall Street, 25th Floor
New York, New York 10005-2889
</TABLE>
Ladies and Gentlemen:
We irrevocably authorize you to draw on us for the account of the
Applicant up to an aggregate amount of [_______________________________________]
[to be revised in accordance with Section 2.2(a)(i) prior to issuance] or, on
any day, such other amount as shall be specified for such day on Schedule 1
attached to this Letter of Credit, (as reinstated from time to time as set forth
in this Letter of Credit, the "Stated Amount") available against
Ex. A-1
<PAGE>
presentation of a dated drawing request drawn on Dresdner Bank AG, New York
Branch, manually signed by an authorized officer of the Beneficiary (who is
identified as such) appropriately completed in the form of Annex 1 hereto.
The above drawing request and all communications with respect to this
Letter of Credit shall be in writing, addressed to us at:
Dresdner Bank AG,
New York Branch
75 Wall Street
New York, NY 10005
Attention: Christina Fiore
Credit Administration Department
Telephone: 212-429-2280
Facsimile: 212-429-2130
with a copy to:
Dresdner Bank, New York Branch
Global Project Finance
75 Wall Street
New York, NY 10005
Attention: Andrew Cullinan
Portfolio Management Group
Telephone: 212-429-2226
Facsimile: 212-429-2192
referencing this Letter of Credit No. [ ] and presented to us by delivery in
person or facsimile transmission at such address, provided that the original of
the above drawing request or such communications, as the case may be, shall be
sent to us at such address by overnight courier for receipt by us within two (2)
Business Days of the date of any such facsimile transmission.
If the drawing request is presented in compliance with the terms of
this Letter of Credit to us at such address by 12:00 noon New York City time on
any Business Day, payment will be made no later than 3:00 p.m. New York City
time on such Business Day and if such drawing request is so presented to us
after 12:00 noon New York City time on any Business Day, payment will be made no
later than 12:00 noon New York City time on the following Business Day. Payment
under this Letter of Credit shall be made in immediately available funds by wire
transfer to such account as may be designated by the Beneficiary in the
applicable drawing request.
Ex. A-2
<PAGE>
As used in this Letter of Credit, "Business Day" means any day on which
commercial banks located in New York, New York are not required or authorized to
remain closed.
This Letter of Credit shall expire on the then applicable Stated
Expiration Date or New Stated Expiration Date (as each such term is hereinafter
defined), as the case may be. Notwithstanding the foregoing, we may at any time,
subject to the provisions of the Debt Service Reserve Letter of Credit and
Reimbursement Agreement, dated as of June 1, 1999, among the Applicant, the
Issuing Bank and the other Banks party thereto and the Issuing Bank, as Agent
(the "Reimbursement Agreement"), terminate this Letter of Credit by giving the
Beneficiary and IBJ Whitehall Bank & Trust Company, as Trustee (in such
capacity, the "Trustee") under the Indenture referred to in the Reimbursement
Agreement, written notice thereof in the form of Annex 2 hereto by delivery in
person or facsimile transmission (with written confirmation by overnight courier
for receipt by the Beneficiary and the Trustee within two (2) Business Days)
addressed to in the case of the Beneficiary, [ ], Attention: [ ], telephone no.
____________, telecopier no. ____________, and in the case of the Trustee, [ ],
Attention: [ ], telephone no. ____________, telecopier no. ____________, at
least sixty (60) days prior to termination whereupon the Beneficiary is
authorized to draw on us prior to such termination the Stated Amount of this
Letter of Credit by presentation to us, in the manner and at the address
specified in the third preceding paragraph, of a drawing request appropriately
completed in the form of Annex 1 hereto and signed by the Beneficiary's
authorized officer.
This Letter of Credit is effective immediately but drawings hereunder
shall not be permitted until we shall have received at the address set forth in
the fourth preceding paragraph a dated certificate manually signed by an officer
of the Beneficiary in the form of Annex 3 hereto. Unless terminated earlier in
accordance with the provisions hereof, the date of expiry set forth hereinabove
(the "Stated Expiration Date") may be extended for a period of one or more years
at the option of the Agent effective upon the Stated Expiration Date (each
expiration date of any extension being referred to as the "New Stated Expiration
Date") upon notice of such extension given by Dresdner Bank AG, New York Branch,
to the Beneficiary, the Collateral Agent and the Trustee by delivery in person
or facsimile transmission (with written confirmation by overnight courier for
receipt by the Beneficiary, the Collateral Agent and the Trustee within two (2)
Business Days) addressed to in the case of the Beneficiary, [ ], Attention: [ ],
the Collateral Agent, [ ], Attention: [ ], and in the case of the Trustee, [ ],
Attention: [ ] on or before the date that is forty-five (45) days prior to the
Stated Expiration Date or any such New Stated Expiration Date which notice of
extension shall have attached to it a revised Schedule 1, to be attached to this
Letter of Credit, setting forth the Stated Amount Values (as defined in the
Reimbursement Agreement) for each day of the term of this Letter of Credit
(including any reductions effected pursuant to a Certificate in the form of
Annex 6, but not including any reductions or reinstatements effected pursuant to
a Certificate in the form of Annex 5) for the period from and including the
effective date of the extension, to and including the New Stated Expiration
Date.
In the event that a drawing request fails to comply with the terms of
this Letter of Credit, we shall provide the Beneficiary prompt notice of same
stating the reasons therefor and shall upon your instructions hold any
non-conforming drawing request and other documents at your
Ex. A-3
<PAGE>
disposal or return any non-conforming drawing request and other documents to the
Beneficiary at the address set forth above by delivery in person or facsimile
transmission (with originals thereof sent by overnight courier for receipt
within two (2) Business Days). Upon being notified that the drawing was not
effected in compliance with this Letter of Credit, the Beneficiary may attempt
to correct such non-complying drawing request in accordance with the terms of
this Letter of Credit.
This Letter of Credit sets forth in full the terms of our undertaking
and this undertaking shall not in any way be modified, amended, limited or
amplified by reference to any document, instrument or agreement referred to
herein, except only defined terms used herein and the drawing requests and
certificates referred to herein; and any such reference shall not be deemed to
incorporate herein by reference any document, instrument, or agreement except
for such defined terms, drawing requests and certificates.
This Letter of Credit may be assigned upon presentation to us of a
signed transfer certificate in the form of Annex 4 accompanied by this Letter of
Credit, in which the Beneficiary irrevocably transfers to such transferee all of
its rights hereunder, whereupon we agree to either issue a substitute letter of
credit to such successor or endorse such transfer on the reverse of this Letter
of Credit.
Partial drawings under this Letter of Credit are allowed and each such
partial drawing shall reduce the amount thereafter available hereunder for
drawings under this Letter of Credit. This Letter of Credit shall be reinstated
as provided in Section 2.7(c) of the Reimbursement Agreement and we shall so
advise the Beneficiary in a certificate in the form of Annex 5 hereto. The
Stated Amount shall be reduced as provided in Section 2.7(b) of the
Reimbursement Agreement. In addition, the Stated Amount Values in Schedule 1 to
this Letter of Credit shall be reduced as provided in Sections 2.2(c)(ii) and
(e) of the Reimbursement Agreement to the extent that we so advise the
Beneficiary pursuant to a certificate in the form of Annex 6 hereto.
All banking charges, including any advising and negotiating bank
charges, are for the account of the Applicant.
All drawing requests under this Letter of Credit must bear the clause:
"Drawn under [the Issuing Bank], Letter of Credit No. [ ]
dated __________ __, 200_."
This Letter of Credit shall not be amended except with the
written concurrence of Dresdner Bank AG, New York Branch, the
Applicant and the Beneficiary.
We hereby engage with you that a drawing request drawn
strictly in compliance with the terms of this Letter of Credit
and amendments thereto shall meet with due honor upon
presentation.
Ex. A-4
<PAGE>
This Letter of Credit is subject to the Uniform Customs and Practice
for Documentary Credits (1993 Revision in force as from 1st of January 1994),
International Chamber of Commerce Publication Number 500 (the "Uniform
Customs"). This Letter of Credit shall be deemed to be a contract made under the
laws of the State of New York and shall, as to matters not governed by the
Uniform Customs, be governed by and construed in accordance with the laws of
such State.
We irrevocably agree with you that any legal action or proceeding with
respect to this Letter of Credit shall be brought in the courts of the State of
New York in the County of New York or of the United States of America in the
Southern District of New York. By signing this Letter of Credit, we irrevocably
submit to the jurisdiction of such courts solely for the purposes of this Letter
of Credit. We hereby waive, to the fullest extent permitted by law, any
objection we may now or hereafter have to the laying of venue in any such action
or proceeding in any such court.
DRESDNER BANKAG,
NEW YORK BRANCH
By:
------------------------------
Authorized Signature
By:
------------------------------
Authorized Signature
Ex. A-5
<PAGE>
ANNEX 1
DRAWING REQUEST
[Date]
"Drawn under Dresdner Bank AG, New York Branch
Letter of Credit No. [ ] Irrevocable Standby Letter of Credit
dated __________ __, 200_."
Dresdner Bank AG,
New York Branch
75 Wall Street
New York, NY 10005
Attention: Christina Fiore
Credit Administration Department
cc: Dresdner Bank, New York Branch
Global Project Finance
75 Wall Street
New York, NY 10005
Attention: Andrew Cullinan
Portfolio Management Group
Ladies and Gentlemen:
The undersigned hereby draws on Dresdner Bank AG, New York Branch,
Letter of Credit No. [ ] Irrevocable Standby Letter of Credit (the "Letter of
Credit"), dated __________ __, 200_, issued by you in favor of us. Any
capitalized term used herein and not defined herein shall have its respective
meaning as set forth in the Letter of Credit.
In connection with this drawing, we hereby certify that:
(A) "This drawing in the amount of US$_________ is being made pursuant to
Dresdner Bank AG, New York Branch, Letter of Credit No. [ ] Irrevocable Standby
Letter of Credit issued to [Collateral Agent] pursuant to Section 3.12 of the
Collateral Agency and Intercreditor Agreement, dated as of June 1, 1999, by and
among the Company, IBJ Whitehall Bank & Trust Company, as Trustee, Collateral
Agent and Depositary Bank, and Dresdner Bank AG, New York Branch, as DSR LOC
Provider, and CP LOC Provider (as the same may be amended, supplemented or
modified from time to time, the "Collateral Agency Agreement")"; and
(B) "The [Commercial Operation Date] [Guaranteed Completion Date] [Date Certain]
has occurred (each capitalized term being used as defined in the Indenture)";
and
Ex. A-6
<PAGE>
[Use one or more of the following forms of paragraph C, as applicable]
(C) "After the transfer of monies on deposit in the Debt Service Reserve Account
to the Bond Payment Account, there are insufficient monies in the Bond Payment
Account on the [Interest] [Principal] Payment Date occurring _______________,
200_ to pay the [interest] [and] [principal] due on the Bonds on such date (each
capitalized term being used as defined in the Indenture)";
or
(C) "The long-term debt rating of Dresdner Bank AG, New York Branch has fallen
below the Required Rating, and the Company has failed within 45 days to deliver
a replacement letter of credit from a financial institution which meets the
Required Rating (each capitalized term being used as defined in the Collateral
Agency Agreement)";
or
(C) "A Trigger Event has occurred and is continuing and the written request of
the Required Senior Parties contained in the Senior Party Certificates has been
delivered to the Collateral Agent and not been rescinded (each capitalized term
being used as defined in the Collateral Agency Agreement)";
or
(C) "You have delivered to us notice that the Letter of Credit will not be
extended or replaced upon its stated expiry date of [insert Stated Expiration
Date or New Stated Expiration Date, as applicable] and the Company has failed to
deliver no later than 45 days prior to such stated expiry date a replacement
letter of credit from a financial institution which meets the Required Rating
(each capitalized term being used as defined in the Collateral Agency
Agreement)";
or
(C) "There are insufficient funds available pursuant to Section 3.10(b) of the
Collateral Agency Agreement to repay interest now due and payable on any DSR LOC
Loans made by Dresdner Bank AG, New York Branch, in respect of drawings under
Dresdner Bank AG, New York Branch, Letter of Credit No. [ ] Irrevocable Standby
Letter of Credit[, and the drawing requested hereunder, together with all
drawings under the Letter of Credit do not exceed the LOC Interest Amount
$____________ in the aggregate] (each capitalized term being used as defined in
the Collateral Agency Agreement)"; and
(D) "The amount requested to be drawn does not exceed the Stated Amount"; and
(E) "You are directed to make payment of the requested drawing to account no.
____________ at ____________________________ [insert bank name, address and
account number]."
Ex. A-7
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed and delivered this
request on this _____ day of _______________, 200_.
[ ], AS
COLLATERAL AGENT
By:
------------------------------
Name:
Title:
Ex. A-8
<PAGE>
ANNEX 2
NOTICE OF TERMINATION OF LETTER OF CREDIT
[Date]
[Name of Trustee],
as Trustee
[Address]
[Address]
Attention:
[Name of Collateral Agent],
as Collateral Agent
[Address]
[Address]
Attention:
AES Ironwood, L.L.C.
829 Cumberland Street
Lebanon, PA 17042
Attention: Project Manager
Facsimile: 717-228-1271
Ladies and Gentlemen:
Reference is made to Dresdner Bank AG, New York Branch, Letter of
Credit No. [ ] Irrevocable Standby Letter of Credit (the "Letter of Credit"),
dated __________ __, 200_, issued by us in favor of [Collateral Agent].
This constitutes our notice to you pursuant to the Letter of Credit
that the Letter of Credit shall terminate on ___________, 200_ [insert a date
which is 60 or more days after the date of this notice of termination (the
"Termination Date")].
Ex. A-9
<PAGE>
Pursuant to the terms of the Letter of Credit, you are authorized to
draw (pursuant to one or more drawings), prior to the Termination Date, on the
Letter of Credit in an aggregate amount that does not exceed the Stated Amount
(as defined in the Letter of Credit).
Very truly yours,
DRESDNER BANK AG, NEW YORK BRANCH
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
Ex. A-10
<PAGE>
ANNEX 3
CERTIFICATE AS TO OCCURRENCE
OF COMMERCIAL OPERATION DATE/GUARANTEED
COMPLETION DATE/DATE CERTAIN
[Date]
"Delivered under Dresdner Bank AG, New York Branch,
Letter of Credit No. [ ]
dated __________ __, 200_."
Dresdner Bank AG,
New York Branch
75 Wall Street
New York, NY 10005
Attention: Christina Fiore
Credit Administration Department
cc: Dresdner Bank, New York Branch
Global Project Finance
75 Wall Street
New York, NY 10005
Attention: Andrew Cullinan
Portfolio Management Group
Ladies and Gentlemen:
The undersigned hereby refers to Dresdner Bank AG, New York Branch,
Letter of Credit No. [ ] Irrevocable Standby Letter of Credit (the "Letter of
Credit"), dated __________ __, 200_, issued by you in favor of us.
We hereby certify that we have received a certificate of the Company
stating that the [Commercial Operation Date] [Guaranteed Completion Date] [Date
Certain] has occurred (each capitalized word being used as defined in the Trust
Indenture, dated as of June 1, 1999, by and among the Company, IBJ Whitehall
Bank & Trust Company, as Trustee, and IBJ Whitehall Bank & Trust Company, as
Depositary Bank (as the same may be amended, supplemented or modified from time
to time)).
Ex. A-11
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed and delivered this
request on this _____ day of ______________, 200_.
[ ], AS
COLLATERAL AGENT
By:
------------------------------
Name:
Title:
Ex. A-12
<PAGE>
ANNEX 4
TRANSFER OF LETTER OF CREDIT
[Date]
"Delivered under Dresdner Bank AG, New York Branch,
Letter of Credit No. [ ]
dated __________ __, 200_."
Dresdner Bank AG,
New York Branch
75 Wall Street
New York, NY 10005
Attention: Christina Fiore
Credit Administration Department
cc: Dresdner Bank, New York Branch
Global Project Finance
75 Wall Street
New York, NY 10005
Attention: Andrew Cullinan
Portfolio Management Group
Gentlemen:
Reference is made to Dresdner Bank AG, New York Branch, Letter of
Credit No. [ ] Irrevocable Standby Letter of Credit, dated __________ __, 200_,
originally issued by you in favor of [Collateral Agent] (the "Letter of
Credit"). Any capitalized terms used, but not defined, herein shall have its
respective meaning as set forth in the Letter of Credit.
For value received, the undersigned, as Beneficiary under the Letter of
Credit, hereby irrevocably transfers to _____________ (the "Transferee") all
rights of the undersigned to draw under the Letter of Credit in their entirety.
The Transferee is the successor to the Beneficiary, as Collateral Agent
under the Collateral Agency and Intercreditor Agreement, dated as of June 1,
1999, by and among the Company, IBJ Whitehall Bank & Trust Company, as Trustee,
Collateral Agent and Depositary Bank, and Dresdner Bank AG, New York Branch, as
DSR LOC Provider, and CP LOC Provider (as the same may be amended, supplemented
or modified from time to time, the "Collateral Agency Agreement") and all
conditions to appointment of such successor set forth in the Collateral Agency
Agreement have been satisfied.
Ex. A-13
<PAGE>
By this transfer, all rights of the undersigned, as Beneficiary under
the Letter of Credit, are transferred to the Transferee, and the Transferee
shall have the sole rights with respect to the Letter of Credit relating to any
amendments thereof and any notices thereunder. All amendments to the Letter of
Credit are to be consented to by the Transferee without necessity of any consent
of or notice to the undersigned.
Simultaneously with the delivery of this notice to you, copies of this
notice are being transmitted to the Transferee.
The Letter of Credit is returned herewith, and we ask you to either
issue a substitute letter of credit for the benefit of the Transferee or endorse
the transfer on the reverse thereof, and forward it directly to the Transferee
with your customary notice of transfer.
Very truly yours,
[ ], AS
COLLATERAL AGENT
By:
------------------------------
Name:
Title:
Ex. A-14
<PAGE>
ANNEX 5
CERTIFICATE OF REINSTATEMENT OF STATED AMOUNT
[Date]
[ ], as
Collateral Agent
[Address]
[Address]
Attention:
Ladies and Gentlemen:
Reference is made to Dresdner Bank AG, New York Branch, Letter of
Credit No. [ ] Irrevocable Standby Letter of Credit (the "Letter of Credit"),
dated __________ __, 200_, issued by us in your favor. Any capitalized term used
herein and not defined shall have its respective meaning as set forth in the
Letter of Credit. Reference is also made to that certain Collateral Agency and
Intercreditor Agreement, dated as of June 1, 1999, by and among the Company, IBJ
Whitehall Bank & Trust Company, as Trustee, Collateral Agent and Depositary
Bank, and Dresdner Bank AG, New York Branch, as DSR LOC Provider, and CP LOC
Provider (as the same may be amended, supplemented or modified from time to
time, the "Collateral Agency Agreement").
This constitutes our notice to you pursuant to the Letter of Credit
that:
[use one or more of the following paragraphs]
We have received repayment of a DSR LOC Loan in accordance with the
provisions of the Reimbursement Agreement in the amount of $_________, and,
pursuant to Section 2.7(c) of the Reimbursement Agreement, the Stated Amount is
therefore increased by such amount to $___________.
or
We have received payment of a DSR LOC Loan in accordance with the
provisions of the Reimbursement Agreement in the amount of $____________. The
DSRA Required Balance (as defined in the Collateral Agency Agreement) has been
previously reduced. Accordingly, the Stated Amount is hereby increased by
$___________ to $__________ to the extent that such
Ex. A-15
<PAGE>
increase shall not cause the Stated Amount (when added to the balance in the
Debt Service Reserve Account (as defined in the Collateral Agency Agreement)) to
exceed the DSRA Required Balance.
Very truly yours,
DRESDNER BANK AG, NEW YORK BRANCH
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
Ex. A-16
<PAGE>
ANNEX 6
CERTIFICATE OF REDUCTION OF STATED AMOUNT
[Date]
[ ], as
Collateral Agent
[Address]
[Address]
Attention:
Ladies and Gentlemen:
Reference is made to Dresdner Bank AG, New York Branch, Letter of
Credit No. [ ] Irrevocable Standby Letter of Credit (the "Letter of Credit"),
dated __________ __, 200_, issued by us in your favor. Any capitalized term used
herein and not defined shall have its respective meaning as set forth in the
Letter of Credit. Reference is also made to that certain Collateral Agency and
Intercreditor Agreement, dated as of June 1, 1999, by and among the Company, IBJ
Whitehall Bank & Trust Company, as Trustee, Collateral Agent and Depositary
Bank, and Dresdner Bank AG, New York Branch, as DSR LOC Provider, and CP LOC
Provider (as the same may be amended, supplemented or modified from time to
time, the "Collateral Agency Agreement").
This constitutes our notice to you pursuant to the Letter of Credit
that we have been advised by the Applicant that:
[use one or more of the following paragraphs]
An event specified in Section 2.2(c)(ii) of the Reimbursement Agreement
has occurred and, accordingly, each of the Stated Amount Values specified in
Schedule 1 attached to this Letter of Credit is reduced by $______ [insert
amount of DSR LOC Loan being converted into DSR Bond].
or
The DSRA Required Balance (as defined in the Collateral Agency
Agreement) has been reduced by the amount of $__________. Accordingly, pursuant
to Section 2.2(e) of the Reimbursement Agreement, each of the Stated Amount
Values specified in Schedule 1 attached to this Letter of Credit is reduced by
$__________ [insert appropriate portion of reduction in DSRA Required Balance].
Ex. A-17
<PAGE>
Attached hereto is a revised Schedule 1, to be attached to the Letter
of Credit, modifying the Stated Amount Values in accordance with this
Certificate.
Very truly yours,
DRESDNER BANK AG, NEW YORK BRANCH
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
Ex. A-18
<PAGE>
EXHIBIT B
FORM OF DSR LOAN PROMISSORY NOTE
[$__________] New York, New York
_________ __, 200_
FOR VALUE RECEIVED, the undersigned, AES Ironwood, L.L.C., a Delaware
limited liability company (the "Company"), hereby unconditionally promises to
pay to the order of Dresdner Bank AG, New York Branch (the "Agent") for the
benefit of the Banks party from time to time to the Reimbursement Agreement
referred to below the lesser of (i) the principal sum of dollars ($________) and
(ii) the aggregate unpaid principal amount of DSR LOC Loans owing to the Banks
by the Company under the Reimbursement Agreement, on the dates and in the
amounts described therein and, if any such DSR LOC Loans shall have been
converted into DSR LOC Term Loans or DSR Bonds, and replacement DSR Notes (as
defined in the Reimbursement Agreement) evidencing such converted Loans shall
not have been executed and delivered to the Agent, the aggregate unpaid
principal amount of such DSR LOC Term Loans or DSR Bonds.
The Company further promises to pay interest on the daily unpaid
principal amount hereof from time to time outstanding on the dates and at the
rates specified in the Reimbursement Agreement. This DSR LOC Loan Note is hereby
expressly limited so that in no contingency or event, whether by reason of
acceleration of the maturity of any indebtedness evidenced hereby or otherwise,
shall the interest contracted for or charged or received by the Agent for the
account of the Banks exceed the maximum amount permissible under Applicable Law.
If, from any circumstance whatsoever, interest would otherwise be payable to the
Agent for the account of the Banks, in excess of the maximum lawful amount, the
interest payable to the Agent for the account of the Banks shall be reduced to
the maximum amount permitted under Applicable Law, and the amount of interest
for any subsequent period, to the extent less than that permitted by Applicable
Law, shall to that extent be increased by the amount of such reduction.
The holder hereof is irrevocably authorized to endorse on the schedule
attached hereto, or on a continuation thereof, the date each such interest
payment is due and the amount of each such interest payment determined in
accordance with the Reimbursement Agreement. All such notations shall constitute
prima facie evidence of the accuracy of the information so recorded and be
enforceable against the Company with the same force and effect as if such
amounts were each set forth in a separate DSR LOC Loan Note executed by the
Company.
All payments due hereunder shall be made without set-off, counterclaim
or deduction of any nature to the Agent, for the account of the Banks, in lawful
money of the United States of America and in immediately available funds, at
such place and in such manner as may be specified by the Agent pursuant to the
Reimbursement Agreement.
The holder hereof is irrevocably authorized to endorse on the schedule
attached hereto, or on a continuation thereof, the date and amount of each DSR
LOC Loan made by the Banks and
Ex. B-1
<PAGE>
each payment or prepayment of principal thereof, provided that the failure of
the holder to make, or any error in making, any such recordation or endorsement
shall not affect the obligations of the Company hereunder or under the
Reimbursement Agreement. All such notations shall constitute prima facie
evidence of the accuracy of the information so recorded and be enforceable
against the Company with the same force and effect as if such amounts were each
set forth in a separate DSR LOC Loan Note executed by the Company.
This DSR LOC Loan Note is the "DSR LOC Loan Note" of the Company to the
Agent, for the benefit of the Banks, referred to in, evidences each DSR LOC Loan
owing to the Banks by the Company under, is subject to the provisions of, and
entitles the holder to the benefits of, the Debt Service Reserve Letter of
Credit and Reimbursement Agreement, dated as of June 1, 1999 (the "Reimbursement
Agreement"), among the Company, the Banks (including the Issuing Bank), parties
thereto, and the Agent, as the same may be amended, supplemented or otherwise
modified from time to time and to which reference is hereby made for a more
complete statement of the terms and conditions under which each DSR LOC Loan
evidenced hereby is to be incurred and paid. Capitalized terms in this DSR LOC
Loan Note that are not specifically defined herein shall have the meanings
ascribed to them in the Reimbursement Agreement.
The Reimbursement Agreement provides for, among other things, the
acceleration of the maturity of the unpaid principal amount hereof upon the
occurrence of certain stated events and for voluntary prepayments in certain
circumstances and upon certain terms and conditions. The obligations of the
Company under the Reimbursement Agreement and this DSR LOC Loan Note are secured
by, and the holder hereof is entitled to the benefit of, the Security Documents.
In addition to any and all costs, fees and expenses for which the
Company is liable under the Reimbursement Agreement, the Company promises to pay
all costs and expenses, including reasonable attorneys' fees and disbursements,
incurred in the collection and enforcement hereof or any appeal of any judgment
rendered hereon.
The Company hereby expressly waives diligence, presentment, protest,
demand, dishonor, nonpayment and notice of every kind to the fullest extent
permitted by Applicable Law. No failure or delay by the holder of this DSR LOC
Loan Note to exercise any right or remedy under this DSR LOC Loan Note or any
other document or instrument entered into pursuant to the Reimbursement
Agreement shall operate or be construed as a waiver or modification hereof or
thereof.
This DSR LOC Loan Note shall be binding upon the successors and assigns
of the Company and shall inure to the Agent and its successors, endorsees and
assigns. If any term or provision of this DSR LOC Loan Note shall be held
invalid, illegal or unenforceable, the validity of all other terms and
provisions hereof shall in no way be affected thereby.
Recourse under this DSR LOC Loan Note is limited in accordance with
Section 9.7 of the Reimbursement Agreement, and the provisions of said Section
9.7 are incorporated herein by reference.
Ex. B-2
<PAGE>
THIS DSR LOC LOAN NOTE SHALL, PURSUANT TO NEW YORK GENERAL OBLIGATIONS
LAW SECTION 5-1401, BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING AGAINST THE COMPANY WITH
RESPECT TO THIS DSR LOC LOAN NOTE 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 DSR LOC LOAN NOTE,
THE COMPANY HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS. THE 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 DSR LOC LOAN NOTE
BROUGHT IN THE COURTS REFERRED TO 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.
AES IRONWOOD, L.L.C.
By:
------------------------------
Name:
Title:
Ex. B-3
<PAGE>
SCHEDULE
<TABLE>
<CAPTION>
Total Principal
Principal Amount and Amount of DSR
Amount of Date of Unpaid Date Interest LOC Loans
Date Reimbursement Principal Paid Principal Payment is Amount of Outstanding Notation
Made Obligation or Prepaid Balance Due Interest Due Made By
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
Ex. B-4
<PAGE>
EXHIBIT C
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated __________, 199__/200__
Reference is made to the Debt Service Reserve Letter of Credit and
Reimbursement Agreement, dated as of June 1, 1999 (the "Reimbursement
Agreement"), among AES Ironwood, L.L.C., a Delaware limited liability company
(the "Company"), the Issuing Bank (as defined in the Reimbursement Agreement),
the Banks (as defined in the Reimbursement Agreement) and Dresdner Bank AG, New
York Branch, as Agent for the Banks (the "Agent"). Terms defined in the
Reimbursement Agreement are used herein with the same meaning.
_________________ (the "Assignor") and ___________________ (the
"Assignee") agree as follows:
(1) The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, the percentage interest
specified on Schedule 1 hereto in and to all of the Assignor's rights and
obligations under the Reimbursement Agreement as of the date hereof (after
giving effect to any other assignments thereof made before the date hereof,
whether or not such assignments have become effective, but without giving effect
to any other assignments thereof also made on the date hereof), including,
without limitation, such percentage interest in the Assignor's Commitment, each
of the DSR Loans owing to the Assignor and the DSR Letter of Credit. The
Assignee shall pay to the Assignor, at or before 12:00 noon, local time of the
Assignor, on the Effective Date, the purchase price therefor in an amount equal
to the percentage interest of each of the the DSR Loans owing to the Assignor,
as reflected on Schedule 1 hereto, in immediately available funds.
(2) The Assignor (a) represents and warrants that as of the date hereof
its Commitment, each of the DSR Loans owing to it and its participation in the
DSR Letter of Credit (after giving effect to any other assignments of the
foregoing made before the date hereof, whether or not such assignments have
become effective, but without giving effect to any other such assignments also
made on the date hereof) are in the respective dollar amounts specified therefor
on Schedule 1 hereto; (b) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (c) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with any of the Credit
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of any of the Credit Documents or any other instrument or
document furnished pursuant thereto; and (d) makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Company or the performance or observance by the Company or any other Person of
any of its obligations under any of the Credit Documents or any other instrument
or document furnished pursuant thereto.
Ex. C-1
<PAGE>
(3) The Assignee (a) confirms that it has received copies of the Credit
Documents and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Assignment and
Acceptance, including such documents evidencing satisfaction of the conditions
precedent set forth in the Reimbursement Agreement; (b) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any other
Bank (including the Issuing Bank) and based on such documents and information as
it may deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under the Reimbursement Agreement; (c) appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under the Credit Documents as are delegated to the Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto; (d) agrees that it will perform in accordance with their terms all of
the obligations that by the terms of the Reimbursement Agreement are required to
be performed by it as a Bank; and (e) specifies as its address for notices the
address set forth beneath its name on Schedule 1 hereto.
(4) Following the execution of this Assignment and Acceptance by the
Assignor and the Assignee, it will be delivered to the Agent for acceptance and
recording by the Agent in the Register maintained by the Agent for such purpose.
The effective date of this Assignment and Acceptance shall be the date of
acceptance thereof by the Agent, unless otherwise specified on Schedule 1 hereto
(the "Effective Date").
(5) Upon such acceptance and recording by the Agent, as of the
Effective Date (a) the Assignee shall be a party to the Reimbursement Agreement
and, to the extent provided in this Assignment and Acceptance, have the rights
and obligations of a Bank thereunder and (b) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Reimbursement Agreement.
(6) Upon such acceptance and recording by the Agent, from and after the
Effective Date the Agent shall make all payments under the Reimbursement
Agreement in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and fees with respect thereto)
to the Assignee. The Assignor and the Assignee shall make all appropriate
adjustments directly between themselves in respect of payments of principal,
interest and/or fees under the Reimbursement Agreement for periods before the
Effective Date.
(7) Each of the Assignor and the Assignee agrees that at any time and
from time to time upon the written request of the other party, it will execute
and deliver such further documents and do such further acts and things as the
other party may reasonably request in order to effect the purposes of this
Assignment and Acceptance.
(8) THE RIGHTS AND OBLIGATIONS OF EACH OF THE PARTIES UNDER THIS
ASSIGNMENT AND ACCEPTANCE SHALL, PURSUANT TO NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1401, BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
(9) This Assignment and Acceptance is executed by the parties on
Schedule 1 hereto and may be executed in one or more counterparts, each of which
shall be deemed an original and
Ex. C-2
<PAGE>
all of which together shall constitute one and the same document. Execution of
this Assignment and Acceptance by the Agent and the Company on Schedule 1 hereto
shall constitute any consent of such Person required pursuant to Section 9.9 of
the Reimbursement Agreement.
Ex. C-3
<PAGE>
Schedule 1 to
Assignment and Acceptance
Section 1.
Percentage of Assignor interest
in Drawings, Commitments, and
DSR Loans to be assigned: _______%
Section 2.
Immediately prior to Effective Date:
Assignor's Commitment: $_______
DSR Loans owing to Assignor:
DSR LOC Loan $_______
DSR LOC Term Loan $_______
DSR Bond $_______
Assignor's participation in DSR Letter
of Credit: $_______
Assignor's Percentage Interest (as defined
in the Reimbursement Agreement) _______%
Section 3.
Upon Effective Date:
Assignor's Commitment: $_______
Assignor's Percentage Interest: _______%
Assignee's Commitment: $_______
Assignee's Percentage Interest: _______%
Section 4.
Effective Date: ____________________
Ex. C-4
<PAGE>
[ASSIGNOR]
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
[ASSIGNEE]
By:
------------------------------
Name:
Title:
[ADDRESS FOR NOTICES]
Consented to on this _____ day of
__________, 199__/200__:
Dresdner Bank AG, New York Branch,
as Agent and the Issuing Bank
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
Ex. C-5
<PAGE>
Consented to on this _____ day of
__________, 199__/200__:
AES IRONWOOD, L.L.C.
By:
------------------------------
Name:
Title:
Ex. C-6
<PAGE>
EXHIBIT D
AMORTIZATION SCHEDULE
The principal amount of each DSR LOC Loan shall be due and payable to
the extent of 100% of the cost available therefor on consecutive Quarterly
Dates, commencing on the first such Quarterly Date to occur after such DSR LOC
Loan is made, and shall in any event be due and payable, to the extent not
previously paid, on the applicable DSR LOC Loan Required Payment Date. The
Company shall pay interest on any DSR LOC Loan on such Quarterly Dates and on
the DSR LOC Loan Required Payment Date out of cash available in the Revenue
Account at the same level in the flow of funds as interest on other Senior Debt
and shall repay the principal amount, if any, of DSR LOC Loans on such Quarterly
Dates and on the DSR LOC Loan Required Payment Date out of 100% of the cash
available in the Revenue Account after payment of Debt Service on all Senior
Debt other than principal of DSR LOC Loans.
The principal amount of each DSR LOC Term Loan shall be due and payable
in quarterly installments on consecutive Quarterly Dates, commencing on the
first such Quarterly Date to occur after such DSR LOC Term Loan is made, and
maturing in full on the applicable DSR LOC Term Loan Required Payment Date. The
amount of principal payable on each such Quarterly Date shall be equal to the
amount of the principal component only of an amortization schedule based on the
foregoing payment schedule and a final maturity date ten (10) years after the
date on which such DSR LOC Term Loan is made and assuming (i) a fixed per annum
interest rate equal to the interest rate (whether determined with reference to
the Adjusted Base Rate or the Eurodollar Rate) applicable to such DSR LOC Term
Loan on such date and (ii) mortgage-style payments of principal and interest.
The principal amount of each DSR Bond shall be due and payable in
quarterly installments on consecutive Quarterly Dates, commencing on the first
such Quarterly Date to occur after such DSR Bond is issued, and maturing in full
on the Final Maturity Date. Each DSR Bond shall be amortized on the same
amortization schedule and in an amount on each Quarterly Date that bears the
same proportion to the original principal amount of such DSR Bond (on the date
of the conversion of the relevant DSR LOC Loan into such DSR Bond) as the amount
of the required payment of principal on the Bonds bears to the remaining unpaid
principal amount of the Bonds outstanding on the date of such conversion.
Interest on and principal of any DSR Bond will be paid, respectively, at the
same levels as interest on and principal of the Bonds.
Ex. D-1
<PAGE>
EXHIBIT E
FORM OF DSR LOC TERM LOAN PROMISSORY NOTE
[$________] New York, New York
_________ __, 200_
FOR VALUE RECEIVED, the undersigned, AES Ironwood, L.L.C., a Delaware limited
liability company (the "Company"), hereby unconditionally promises to pay to the
order of Dresdner Bank AG, New York Branch (the "Agent") for the benefit of the
Banks party from time to time to the Reimbursement Agreement referred to below
the lesser of (i) the principal sum of dollars ($________) and (ii) the
aggregate unpaid principal amount of the DSR LOC Term Loans owing to the Banks
by the Company under the Reimbursement Agreement, on the dates and in the
amounts described therein.
The Company further promises to pay interest on the daily unpaid principal
amount hereof from time to time outstanding on the dates and at the rates
specified in the Reimbursement Agreement. This DSR LOC Term Loan Note is hereby
expressly limited so that in no contingency or event, whether by reason of
acceleration of the maturity of any indebtedness evidenced hereby or otherwise,
shall the interest contracted for or charged or received by the Agent for the
account of the Banks exceed the maximum amount permissible under Applicable Law.
If, from any circumstance whatsoever, interest would otherwise be payable to the
Agent for the account of the Banks in excess of the maximum lawful amount, the
interest payable to the Agent for the account of the Banks shall be reduced to
the maximum amount permitted under Applicable Law, and the amount of interest
for any subsequent period, to the extent less than that permitted by Applicable
Law, shall to that extent be increased by the amount of such reduction.
The holder hereof is irrevocably authorized to endorse on the schedule attached
hereto, or on a continuation thereof, the date each such interest payment is due
and the amount of each such interest payment determined in accordance with the
Reimbursement Agreement. All such notations shall constitute prima facie
evidence of the accuracy of the information so recorded and be enforceable
against the Company with the same force and effect as if such amounts were each
set forth in a separate DSR LOC Term Loan Note executed by the Company.
All payments due hereunder shall be made without set-off, counterclaim or
deduction of any nature to the Agent, for the account of the Banks, in lawful
money of the United States of America and in immediately available funds, at
such place and in such manner as may be specified by the Agent pursuant to the
Reimbursement Agreement.
The holder hereof is irrevocably authorized to endorse on the schedule attached
hereto, or on a continuation thereof, the date and amount of each DSR LOC Term
Loan made by the Banks and each payment or prepayment of principal thereof,
provided that the failure of the holder to make, or any error in making, any
such recordation or endorsement shall not affect the obligations of the Company
hereunder or under the Reimbursement Agreement. All such notations shall
constitute prima facie evidence of the accuracy of the information so recorded
and be enforceable
Ex. E-1
<PAGE>
against the Company with the same force and effect as if such amounts were each
set forth in a separate DSR LOC Term Loan Note executed by the Company.
This DSR LOC Term Loan Note is the "DSR LOC Term Loan Note" of the Company to
the Agent, for the benefit of the Banks, referred to in, evidences each DSR LOC
Term Loan owing to the Banks by the Company under, is subject to the provisions
of, and entitles the holder to the benefits of, the Debt Service Reserve Letter
of Credit and Reimbursement Agreement, dated as of June 1, 1999 (the
"Reimbursement Agreement"), among the Company, the Banks (including the Issuing
Bank) parties thereto, and the Agent, as the same may be amended, supplemented
or otherwise modified from time to time and to which reference is hereby made
for a more complete statement of the terms and conditions under which each DSR
LOC Term Loan evidenced hereby is to be incurred and paid. Capitalized terms in
this DSR LOC Term Loan Note that are not specifically defined herein shall have
the meanings ascribed to them in the Reimbursement Agreement.
The Reimbursement Agreement provides for, among other things, the acceleration
of the maturity of the unpaid principal amount hereof upon the occurrence of
certain stated events and for voluntary prepayments in certain circumstances and
upon certain terms and conditions. The obligations of the Company under the
Reimbursement Agreement and this DSR LOC Term Loan Note are secured by, and the
holder hereof is entitled to the benefit of, the Security Documents.
In addition to any and all costs, fees and expenses for which the Company is
liable under the Reimbursement Agreement, the Company promises to pay all costs
and expenses, including reasonable attorneys' fees and disbursements, incurred
in the collection and enforcement hereof or any appeal of any judgment rendered
hereon.
The Company hereby expressly waives diligence, presentment, protest, demand,
dishonor, nonpayment and notice of every kind to the fullest extent permitted by
Applicable Law. No failure or delay by the holder of this DSR LOC Term Loan Note
to exercise any right or remedy under this DSR LOC Term Loan Note or any other
document or instrument entered into pursuant to the Reimbursement Agreement
shall operate or be construed as a waiver or modification hereof or thereof.
This DSR LOC Term Loan Note shall be binding upon the successors and assigns of
the Company and shall inure to the Agent and its successors, endorsees and
assigns. If any term or provision of this DSR LOC Term Loan Note shall be held
invalid, illegal or unenforceable, the validity of all other terms and
provisions hereof shall in no way be affected thereby.
Recourse under this DSR LOC Term Loan Note is limited in accordance with Section
9.7 of the Reimbursement Agreement, and the provisions of said Section 9.7 are
incorporated herein by reference.
THIS DSR LOC TERM LOAN NOTE SHALL, PURSUANT TO NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1401, BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING AGAINST THE COMPANY WITH
RESPECT TO THIS DSR
Ex. E-2
<PAGE>
LOC TERM LOAN NOTE 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 DSR LOC TERM LOAN NOTE, THE COMPANY
HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. THE
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 DSR LOC TERM LOAN NOTE BROUGHT IN THE
COURTS REFERRED TO 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.
AES IRONWOOD, L.L.C.
By:
------------------------------
Name:
Title:
Ex. E-3
<PAGE>
SCHEDULE
<TABLE>
<CAPTION>
Principal Amount and Total Principal
Amount of Date of Unpaid Date Interest Amount of DSR
Date Reimbursement Principal Paid Principal Payment is Amount of LOC Term Loans Notation
Made Obligation or Prepaid Balance Due Interest Due Outstanding Made By
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
Ex. E-4
<PAGE>
EXHIBIT F
FORM OF DSR BOND PROMISSORY NOTE
[$________] New York, New York
_________ __, 200_
FOR VALUE RECEIVED, the undersigned, AES Ironwood, L.L.C., a Delaware limited
liability company (the "Company"), hereby unconditionally promises to pay to the
order of Dresdner Bank AB, New York Branch (the "Agent") for the benefit of the
Banks party from time to time to the Reimbursement Agreement referred to below
the lesser of (i) the principal sum ___________________________________________
dollars ($________) and (ii) the aggregate unpaid principal amount of the DSR
Bonds owing to the Banks by the Company under the Reimbursement Agreement,
on the dates and in the amounts described therein.
The Company further promises to pay interest on the daily unpaid principal
amount hereof from time to time outstanding on the dates and at the rates
specified in the Reimbursement Agreement. This DSR Bond Note is hereby expressly
limited so that in no contingency or event, whether by reason of acceleration of
the maturity of any indebtedness evidenced hereby or otherwise, shall the
interest contracted for or charged or received by the Agent for the account of
the Banks exceed the maximum amount permissible under Applicable Law. If, from
any circumstance whatsoever, interest would otherwise be payable to the Agent
for the account of the Banks in excess of the maximum lawful amount, the
interest payable to the Agent for the account of the Banks shall be reduced to
the maximum amount permitted under Applicable Law, and the amount of interest
for any subsequent period, to the extent less than that permitted by Applicable
Law, shall to that extent be increased by the amount of such reduction.
The holder hereof is irrevocably authorized to endorse on the schedule attached
hereto, or on a continuation thereof, the date each such interest payment is due
and the amount of each such interest payment determined in accordance with the
Reimbursement Agreement. All such notations shall constitute prima facie
evidence of the accuracy of the information so recorded and be enforceable
against the Company with the same force and effect as if such amounts were each
set forth in a separate DSR Bond Note executed by the Company.
All payments due hereunder shall be made without set-off, counterclaim or
deduction of any nature to the Agent, for the account of the Banks, in lawful
money of the United States of America and in immediately available funds, at
such place and in such manner as may be specified by the Agent pursuant to the
Reimbursement Agreement.
The holder hereof is irrevocably authorized to endorse on the schedule attached
hereto, or on a continuation thereof, the date and amount of each DSR Bond made
by the Banks and each payment or prepayment of principal thereof, provided that
the failure of the holder to make, or any error in making, any such recordation
or endorsement shall not affect the obligations of the Company hereunder or
under the Reimbursement Agreement. All such notations shall constitute prima
facie evidence of the accuracy of the information so recorded and be enforceable
against
Ex. F-1
<PAGE>
the Company with the same force and effect as if such amounts were each set
forth in a separate DSR Bond Note executed by the Company.
This DSR Bond Note is the "DSR Bond Note" of the Company to the Agent, for the
benefit of the Banks, referred to in, evidences each DSR Bond owing to the Banks
by the Company under, is subject to the provisions of, and entitles the holder
to the benefits of, the Debt Service Reserve Letter of Credit and Reimbursement
Agreement, dated as of June 1, 1999 (the "Reimbursement Agreement"), among the
Company, the Banks (including the Issuing Bank) parties thereto, and the Agent,
as the same may be amended, supplemented or otherwise modified from time to time
and to which reference is hereby made for a more complete statement of the terms
and conditions under which each DSR Bond evidenced hereby is to be incurred and
paid. Capitalized terms in this DSR Bond Note that are not specifically defined
herein shall have the meanings ascribed to them in the Reimbursement Agreement.
The Reimbursement Agreement provides for, among other things, the acceleration
of the maturity of the unpaid principal amount hereof upon the occurrence of
certain stated events and for voluntary prepayments in certain circumstances and
upon certain terms and conditions. The obligations of the Company under the
Reimbursement Agreement and this DSR Bond Note are secured by, and the holder
hereof is entitled to the benefit of, the Security Documents.
In addition to any and all costs, fees and expenses for which the Company is
liable under the Reimbursement Agreement, the Company promises to pay all costs
and expenses, including reasonable attorneys' fees and disbursements, incurred
in the collection and enforcement hereof or any appeal of any judgment rendered
hereon.
The Company hereby expressly waives diligence, presentment, protest, demand,
dishonor, nonpayment and notice of every kind to the fullest extent permitted by
Applicable Law. No failure or delay by the holder of this DSR Bond Note to
exercise any right or remedy under this DSR Bond Note or any other document or
instrument entered into pursuant to the Reimbursement Agreement shall operate or
be construed as a waiver or modification hereof or thereof.
This DSR Bond Note shall be binding upon the successors and assigns of the
Company and shall inure to the Agent and its successors, endorsees and assigns.
If any term or provision of this DSR Bond Note shall be held invalid, illegal or
unenforceable, the validity of all other terms and provisions hereof shall in no
way be affected thereby.
Recourse under this DSR Bond Note is limited in accordance with Section 9.7 of
the Reimbursement Agreement, and the provisions of said Section 9.7 are
incorporated herein by reference.
THIS DSR BOND NOTE SHALL, PURSUANT TO NEW YORK GENERAL OBLIGATIONS LAW SECTION
5-1401, BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. ANY LEGAL ACTION OR PROCEEDING AGAINST THE COMPANY WITH RESPECT TO
THIS DSR BOND NOTE MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN THE
COUNTY OF NEW YORK
Ex. F-2
<PAGE>
OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK AND, BY EXECUTION
AND DELIVERY OF THIS DSR BOND NOTE, THE COMPANY HEREBY IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. THE 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 DSR BOND NOTE BROUGHT IN THE COURTS REFERRED TO 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.
AES IRONWOOD, L.L.C.
By:
------------------------------
Name:
Title:
Ex. F-3
<PAGE>
SCHEDULE
<TABLE>
<CAPTION>
Principal Amount and Total Principal
Amount of Date of Unpaid Date Interest Amount of DSR
Date Reimbursement Principal Paid Principal Payment is Amount of Bonds Notation
Made Obligation or Prepaid Balance Due Interest Due Outstanding Made By
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
Ex. F-4
<PAGE>
Exhibit 4.4
EXECUTION COPY
- --------------------------------------------------------------------------------
CONSTRUCTION PERIOD LETTER OF CREDIT
AND REIMBURSEMENT AGREEMENT
Dated as of June 1, 1999
among
AES IRONWOOD, L.L.C.,
as Company,
DRESDNER BANK AG, NEW YORK BRANCH,
as the Issuing Bank, a Bank and Agent
and
THE BANKS PARTY HERETO
- --------------------------------------------------------------------------------
<PAGE>
Table of Contents
Page
----
ARTICLE I DEFINITIONS..........................................................1
SECTION 1.1 DEFINITIONS...............................................1
SECTION 1.2 CONSTRUCTION..............................................5
ARTICLE II CP LETTER OF CREDIT.................................................6
SECTION 2.1 COMMITMENTS...............................................6
SECTION 2.2 AMOUNT AND TERM OF CP LETTER OF CREDIT....................6
SECTION 2.3 PARTICIPATION IN CP LETTER OF CREDIT......................6
SECTION 2.4 DRAWING AND REIMBURSEMENT.................................6
SECTION 2.5 FEES......................................................7
SECTION 2.6 INTEREST..................................................7
SECTION 2.7 REPAYMENT................................................10
SECTION 2.8 PREPAYMENTS..............................................10
SECTION 2.9 SECURITY.................................................10
SECTION 2.10 PAYMENTS.................................................10
SECTION 2.11 COMPUTATION OF INTEREST AND FEES.........................11
SECTION 2.12 PAYMENTS ON NON-BUSINESS DAYS............................11
SECTION 2.13 SHARING OF PAYMENTS, ETC.................................11
SECTION 2.14 EVIDENCE OF DEBT.........................................12
SECTION 2.15 INCREASED COSTS AND REDUCED RETURNS......................12
SECTION 2.16 CAPITAL ADEQUACY.........................................14
SECTION 2.17 TAXES....................................................14
SECTION 2.18 ILLEGALITY...............................................16
SECTION 2.19 ASSIGNMENTS BY BANKS.....................................17
SECTION 2.20 REDUCTION IN COMMITMENTS/REIMBURSEMENTS..................17
SECTION 2.21 RIGHT OF SET-OFF.........................................17
ARTICLE III CONDITIONS PRECEDENT..............................................18
SECTION 3.1 CONDITIONS PRECEDENT TO THE CLOSING DATE.................18
SECTION 3.2 [RESERVED]...............................................19
ARTICLE IV REPRESENTATIONS AND WARRANTIES.....................................19
SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF COMPANY................19
SECTION 4.2 REPRESENTATIONS AND WARRANTIES OF THE ISSUING BANK.......19
ARTICLE V COVENANTS...........................................................20
SECTION 5.1 COVENANTS................................................20
ARTICLE VI DEFAULTS AND REMEDIES..............................................20
SECTION 6.1 EVENTS OF DEFAULT........................................20
SECTION 6.2 REMEDIES.................................................20
SECTION 6.3 COLLATERALIZATION UPON ACCELERATION OF THE BONDS.........21
ARTICLE VII CHARACTER OF OBLIGATIONS..........................................21
SECTION 7.1 OBLIGATIONS ABSOLUTE.....................................21
SECTION 7.2 LIMITED LIABILITY OF AGENT AND BANKS.....................22
ARTICLE VIII THE AGENT........................................................22
SECTION 8.1 AUTHORIZATION AND ACTION.................................22
SECTION 8.2 AGENT'S RELIANCE, ETC....................................23
SECTION 8.3 THE AGENT, THE ISSUING BANK AND AFFILIATES...............23
i
<PAGE>
Table of Contents
Page
----
SECTION 8.4 BANK CREDIT DECISION.....................................24
SECTION 8.5 INDEMNIFICATION..........................................24
SECTION 8.6 SUCCESSOR AGENT..........................................24
SECTION 8.7 COLLATERAL...............................................25
ARTICLE IX MISCELLANEOUS......................................................25
SECTION 9.1 AMENDMENTS, ETC..........................................25
SECTION 9.2 NOTICES, ETC.............................................26
SECTION 9.3 NO WAIVER, REMEDIES......................................26
SECTION 9.4 COSTS AND EXPENSES.......................................26
SECTION 9.5 APPLICATION OF MONEY.....................................27
SECTION 9.6 SEVERABILITY.............................................27
SECTION 9.7 NON-RECOURSE LIABILITY...................................27
SECTION 9.8 BINDING EFFECT...........................................28
SECTION 9.9 ASSIGNMENTS AND PARTICIPATIONS...........................28
SECTION 9.10 INDEMNIFICATION..........................................29
SECTION 9.11 GOVERNING LAW; SUBMISSION OF JURISDICTION; VENUE;
WAIVER OF JURY TRIAL.....................................30
SECTION 9.12 HEADINGS.................................................31
SECTION 9.13 EXECUTION IN COUNTERPARTS................................31
Exhibit A Form of CP Letter of Credit
Exhibit B Form of CP LOC Loan Promissory Note
Exhibit C Form of Assignment and Acceptance
Exhibit D Amortization Schedule
ii
<PAGE>
CONSTRUCTION PERIOD LETTER OF CREDIT
AND REIMBURSEMENT AGREEMENT
This Construction Period Letter of Credit and Reimbursement Agreement,
dated as of June 1, 1999 (this "Agreement"), is entered into by and among (1)
AES IRONWOOD, L.L.C., a Delaware limited liability company (the "Company"); (2)
DRESDNER BANK AG, NEW YORK BRANCH, as the Issuing Bank (the "Issuing Bank"); (3)
DRESDNER BANK AG, NEW YORK BRANCH, in its individual capacity, together with
each other bank that becomes a party hereto pursuant to Section 9.9 (each,
including the Issuing Bank, a "Bank" and collectively, the "Banks"); and (4)
DRESDNER BANK AG, NEW YORK BRANCH, as agent for the Banks (in such capacity,
together with its successors in such capacity, the "Agent").
WHEREAS, the Company is constructing and will own a gas-fired combined
cycle electric generating facility in South Lebanon Township, Lebanon County,
Pennsylvania, with a net design capacity of approximately 705 megawatts and
related property and facilities;
WHEREAS, the Company intends to finance the construction and equipping
of the Facility primarily through the issuance of the Bonds, the net proceeds of
which shall be received by the Company and shall be used to pay project costs
related to the Facility;
WHEREAS, the Company has duly authorized the creation and issuance of
the Bonds pursuant to the Indenture; and
WHEREAS, the Company has requested that the Issuing Bank agree to issue
and the Banks participate in, and the Issuing Bank is willing to agree to issue
and the Banks are willing to participate in, the CP Letter of Credit upon the
terms and conditions hereinafter set forth.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
(a) Capitalized terms used but not otherwise defined herein shall have
the respective meanings ascribed to them in the Indenture.
(b) The following terms are used in this Agreement with the following
respective meanings:
"Adjusted Base Rate" means the higher of (i) the Federal Funds Rate
plus .50% and (ii) the Reference Rate.
"Assignment and Acceptance" means an Assignment and Acceptance entered
into by a Bank and another Person, substantially in the form of Exhibit C.
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"Bank" has the meaning set forth in the preamble of this Agreement.
"Base Rate Loan" means a CP LOC Loan, or a portion thereof, bearing
interest at a rate determined with reference to the Adjusted Base Rate.
"Business Day" means a day (other than a Saturday or Sunday) on which
banks are open for business in New York, New York, and with respect to all
notices and determinations in connection with, advances of, continuations of,
conversions from and to, and payments of principal and interest on, Eurodollar
Rate Loans, any day that is also a day for trading by and between banks in U.S.
dollar deposits in the London interbank Eurodollar market.
"Closing Date" means the date on which the conditions precedent set
forth in Section 3.1 have been fulfilled.
"Commitment" of a Bank means (i) the amount set forth opposite such
Bank's name on the signature pages hereof or, if such Bank has entered into one
or more Assignments and Acceptances, set forth for such Bank in the register
maintained by the Agent for such purpose, as the same may be reduced from time
to time in accordance with the provisions of this Agreement or (ii) as the
context may require, the obligation of such Bank to make loans in an aggregate
amount of principal not exceeding such amount.
"Commitments" means all of the Commitments.
"Company" has the meaning set forth in the preamble of this Agreement.
"CP Letter of Credit" means a letter of credit in favor of the
Collateral Agent substantially in the form of Exhibit A, issued or to be issued
by the Issuing Bank.
"CP LOC Loan" has the meaning set forth in Section 2.4.
"CP LOC Loan Note" has the meaning set forth in Section 2.14(a).
"CP LOC Loan Required Payment Date" means, in respect of each CP LOC
Loan, the date ten (10) years from the date such CP LOC Loan is made by the
Banks pursuant to the terms of this Agreement.
"Credit Documents" means this Agreement, the Security Documents, the
Collateral Agency Agreement, the CP LOC Loan Note and the CP Letter of Credit.
"Default" means an event that with the giving of any required notice
and/or the lapse of any required time would constitute an Event of Default.
"Dollars" and "$" means freely transferable United States dollars.
"Drawing" means a drawing under the CP Letter of Credit.
"Eurocurrency Liabilities" has the meaning set forth in Regulation D.
"Eurocurrency Reserve Period" has the meaning set forth in Section
2.15(b).
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"Eurodollar Rate" means, for any Interest Period with respect to a
Eurodollar Rate Loan, the rate per annum equal to the average (rounded upwards,
if necessary, to the nearest 1/100 of 1%) of the offered rates which appear on
the Telerate page 3750, British Bankers Association Interest Settlement Rates
for deposits in Dollars (or such other system for the purpose of displaying
rates of leading reference banks in the London interbank market, as designated
by the Agent) as of 11:00 a.m. (London time) on the day two Business Days prior
to the first day of such Interest Period in an amount approximately equal to the
principal amount of the Eurodollar Rate Loan to which such Interest Period is to
apply and for a period of time comparable to such Interest Period.
"Eurodollar Rate Loan" means a CP LOC Loan, or a portion thereof,
bearing interest at a rate determined with reference to the Eurodollar Rate.
"Event of Default" has the meaning set forth in Section 6.1.
"Excluded Taxes" has the meaning set forth in Section 2.17(a).
"Expiration Date" means the earlier of (i) the date on which the CP LOC
Provider receives notice from the Company that the Commercial Operation Date has
occurred, (ii) four years from the Issue Date and (iii) the 30th day after
written notice of termination of the CP Letter of Credit is given by the Agent
to the Collateral Agent and the Power Purchaser upon the occurrence of an Event
of Default; provided, however, that if the Company replaces the CP Letter of
Credit with substitute collateral in accordance with the requirements of the
Power Purchase Agreement, the Expiration Date of the CP Letter of Credit shall
be the date upon which the CP LOC Provider receives notice of such replacement.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it.
"Indemnified Party" has the meaning set forth in Section 9.10.
"Interest Period" means with respect to each Eurodollar Rate Loan, a
period commencing on the date specified in the applicable Notice of Interest
Rate Election and ending one, three or six calendar months thereafter, as the
Company may elect in the applicable Notice of Interest Rate Election; provided,
that:
(a) any Interest Period which would otherwise end on a day which is not
a Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Business Day;
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(b) any Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month;
(c) no Interest Period shall be selected to be applicable to a CP LOC
Loan or portion thereof if such Interest Period ends after the next scheduled
principal payment date pursuant to this Agreement and the CP LOC Loan Note
unless, at the time of such selection, there are outstanding Base Rate Loans
and/or Eurodollar Rate Loans the Interest Period(s) applicable to which end on
or before such scheduled payment date which the Company reasonably determines
are in an aggregate principal amount at least equal to the amount of such next
scheduled principal payment; and
(d) no Interest Period shall end after the CP LOC Loan Required Payment
Date.
"Issuing Bank" has the meaning set forth in the preamble of this
Agreement.
"Loan Obligations" means the Drawing and the principal of all CP LOC
Loans (including but not limited to the Company's obligations in respect of
amounts not yet disbursed).
"Non-Recourse Party" has the meaning specified in Section 9.7.
"Notice of Interest Rate Election" has the meaning set forth in Section
2.6(b).
"Obligations" means all of the Loan Obligations and any and all other
obligations of the Company to the Issuing Bank, the Banks or the Agent under or
in connection with the Credit Documents whether for interest, fees, expenses,
indemnification or otherwise.
"Participant" has the meaning set forth in Section 9.9(b).
"Percentage Interest" means, for each Bank, the fraction, expressed as
a percentage, where the numerator is the Commitment of such Bank and the
denominator is the aggregate of all the Commitments held by all the Banks, as
set forth on the signature page opposite the name and signature of each
respective Bank or if applicable, in Schedule 1 to any Assignment and
Acceptance.
"Purchasing Bank" has the meaning set forth in Section 9.9(a).
"Quarterly Date" means each Bond Payment Date during the term of this
Agreement.
"Reference Rate" means the variable rate of interest per annum
officially announced or published by the Agent from time to time as its
"reference rate," such rate being set by the Agent as a general reference rate
of interest, taking into account such factors as the Agent may deem appropriate,
it being understood that many of the Agent's commercial or other loans are
priced in relation to such rate, that it is not necessarily the lowest or best
rate actually charged to any customer and that the Agent may make various
commercial or other loans at rates of interest having no relationship to such
rate. For purposes of this Agreement, each change in the Reference Rate shall be
effective as of the opening of business on the date announced as the effective
date of the change in such "reference rate."
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"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Regulatory Change" means, subsequent to the date of this Agreement,
any adoption or change in United States Federal, state or municipal or foreign
law or regulations (including Regulation D) or the adoption or change or making
of any application, interpretation, directive, request or guideline of or under
any United States Federal, state or municipal or foreign law or regulations by
any court, central bank or Governmental Authority.
"Required Banks" means, at any time, Banks (one of which shall be the
Agent) owed at least 66-2/3% of the sum of Loan Obligations then outstanding
and/or the Commitments; provided, however, that, if and so long as there are
only two Banks, then "Required Banks" shall mean both of such Banks.
"Stated Amount" means $30,000,000.
"Taxes" means any and all present or future income, stamp, transfer,
turnover and other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, and any and all interest, penalties, claims or
other liabilities arising under or relating thereto, including those imposed on
any of the Banks or on payments to be made to or received by any of them from
the Company hereunder.
"Termination Notice" has the meaning set forth in Section 2.2(b).
SECTION 1.2 Construction.
In this Agreement, unless expressly specified to the contrary: the
singular includes the plural and the plural the singular; words importing any
gender include the other genders; references to statutes or regulations are to
be construed as including all statutory or regulatory provisions consolidating,
amending or replacing the statute or regulation referred to; references to
"writing" include printing, typing, lithography and other means of reproducing
words in a tangible, visible form, but shall not include electronic mail; the
words "including," "includes" and "include" shall be deemed to be followed by
the words "without limitation;" references to articles, sections (or
subdivisions of sections), recitals, appendices, exhibits, annexes or schedules
are to those of this Agreement; references to agreements and other instruments
shall be deemed to include all amendments and other modifications to such
agreements and instruments, but only to the extent such amendments and other
modifications are not prohibited by the terms of this Agreement; references to
Persons include their respective permitted successors and assigns and, in the
case of Governmental Authorities, Persons succeeding to their respective
functions and capacities; and all accounting terms used in this Agreement shall
be interpreted, all accounting determinations under this Agreement shall be made
and all financial statements required to be delivered under this Agreement shall
be prepared in accordance with GAAP as in effect from time to time, on a basis
consistent with the most recent audited financial statements, if any, of the
relevant Person delivered to the Agent, or otherwise reasonably acceptable to
the Agent.
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ARTICLE II
CP LETTER OF CREDIT
SECTION 2.1 Commitments.
Each Bank irrevocably agrees severally, on the terms and conditions
contained in this Agreement, to participate in the CP Letter of Credit and in
the Drawing thereunder in the Percentage Interest of such Bank and in an
aggregate amount not to exceed at any time such Bank's Commitment.
SECTION 2.2 Amount and Term of CP Letter of Credit.
(a) Subject to the terms and conditions contained in this Agreement,
the Issuing Bank irrevocably agrees to issue the CP Letter of Credit on the
Closing Date for the account of the Company and in a face amount not to exceed
the Stated Amount. The conditions precedent to the Issue Date are set forth in
Section 3.2.
(b) The Issuing Bank shall have the right, upon the occurrence and
during the continuance of an Event of Default, to deliver to the Collateral
Agent and the Power Purchaser a notice in the form of Annex 2 to the CP Letter
of Credit (a "Termination Notice"), which notice shall be given at least thirty
(30) days prior to the date of termination referred to in such notice.
(c) The Agent shall, solely for informational purposes, deliver to the
Company a copy of any Termination Notice given to the beneficiary under the CP
Letter of Credit; provided, however, that the Issuing Banks' ability to
terminate the CP Letter of Credit shall not be contingent upon the Agent's
delivery to the Company of such notice and that neither the Agent nor the Banks
shall incur any liability whatsoever as a result of the Agent's failure to
deliver such notice to the Company.
SECTION 2.3 Participation in CP Letter of Credit.
Simultaneously with the issuance of the CP Letter of Credit, the
Issuing Bank shall be deemed to have sold and transferred to each Bank, and each
Bank shall be deemed to have purchased and received from the Issuing Bank, in
each case irrevocably and without any further action by any party, an undivided
interest and participation in the CP Letter of Credit, the Drawing and the other
Loan Obligations in respect thereof in an amount equal to such Bank's Percentage
Interest therein. The Agent shall promptly advise each Bank of any cancellation
or other termination of the CP Letter of Credit and any Drawing; provided,
however, that failure to provide such notice shall not limit or impair the
rights of the Agent hereunder or under the Financing Documents.
SECTION 2.4 Drawing and Reimbursement.
The payment by the Issuing Bank of the Drawing shall constitute the
making by the Issuing Bank of a loan to the Company in the amount of such
payment. In the event that the Drawing is not repaid by the Company by 10:00
a.m. (New York City time), on the day of such
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Drawing, the Agent shall promptly notify each other Bank. Each such Bank
(including the Issuing Bank in its capacity as a Bank) shall, on the day of such
notification, make a loan to the Company, which shall be used to repay the
applicable portion of the Issuing Bank's loan with respect to the Drawing, in an
amount equal to the amount of such Bank's Percentage Interest in the Drawing,
for application to repay the Issuing Bank (such loan by a Bank to be referred to
as a "CP LOC Loan"), and shall deliver to the Agent for the Issuing Bank's
account, on the day of such notification and in immediately available funds, the
amount of such loan. In the event that any Bank fails to make available to the
Agent for the account of the Issuing Bank the amount of such CP LOC Loan, the
Issuing Bank shall be entitled to recover such amount on demand from such Bank
together with interest thereon at the Federal Funds Rate and until such
reimbursement is made, the unreimbursed amount of the Issuing Bank's loan shall
be deemed to be a CP LOC Loan for all purposes under this Agreement.
SECTION 2.5 Fees.
The Company shall pay the following fees to the Agent for the
respective accounts of the Persons specified below:
(a) on the Closing Date, for the account of the Issuing Bank, an
upfront fee equal to the product of (x) the Stated Amount and (y) 1.0% per
annum;
(b) from and including the Closing Date, for the respective accounts of
the Banks, a letter of credit fee equal to the product of (x) the Stated Amount
and (y) 1% per annum, payable quarterly in arrears on each Quarterly Date
occurring after the Closing Date; and
(c) from and including the Closing Date, for the account of the Issuing
Bank, a fronting fee equal to the product of (x) the Stated Amount and (y) 0.15%
per annum, payable quarterly in arrears on each Quarterly Date occurring after
the Closing Date.
SECTION 2.6 Interest.
(a) Rate. The Company shall pay interest on the unpaid principal amount
of each CP LOC Loan from the date such CP LOC Loan is made until such principal
amount has been paid in full as follows:
(i) Base Rate Loans. As to Base Rate Loans, at a rate per
annum equal to the sum of (x) the Adjusted Base Rate plus (y) 1%,
payable monthly in arrears on the first Business Day of each month; and
(ii) Eurodollar Rate Loans. As to Eurodollar Rate Loans, at a
rate per annum equal to the sum of (x) the Eurodollar Rate plus (y) 2%,
payable on the last day of the applicable Interest Period or, if such
Interest Period exceeds three months, at intervals of three months from
the first day of such Interest Period.
(b) Method of Electing Interest Rates.
(i) Each CP LOC Loan shall constitute a Base Rate Loan unless
the Company elects otherwise pursuant to the following provisions of
this Section 2.6(b).
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(ii) Each CP LOC Loan shall constitute a Base Rate Loan or a
Eurodollar Rate Loan as the Company may elect in accordance with this
Section 2.6(b). If no such election is timely made with respect to a CP
LOC Loan, such CP LOC Loan shall initially constitute a Base Rate Loan
in accordance with Section 2.6(b)(i). The Company may from time to time
elect to change or continue the interest rate borne by each CP LOC
Loan, subject to the conditions set forth below, as follows:
(A) with respect to CP LOC Loans that are Base Rate
Loans, the Company may elect to convert all or any portion of
such CP LOC Loans to Eurodollar Rate Loans as of any Business
Day; and
(B) with respect to CP LOC Loans that are Eurodollar
Rate Loans, the Company may elect to convert all or any
portion of such CP LOC Loans to Base Rate Loans or elect to
continue all or any portion of such CP LOC Loans as Eurodollar
Rate Loans for an additional Interest Period, in each case
effective on the last day of the then current Interest Period
applicable to such CP LOC Loans.
Each such election shall be made by delivering a notice (a "Notice of
Interest Rate Election") to the Agent (1) in the case of a conversion
to or continuation of a Eurodollar Rate Loan, not later than 10:00 a.m.
(New York City time) on the third Business Day prior to the day on
which such conversion or continuation is to be effective or (2) in the
case of a conversion to a Base Rate Loan, at any time prior to the day
on which such conversion is to be effective. Each Notice of Interest
Rate Election shall be in writing (including facsimile transmission) or
by voice, promptly confirmed in writing. A Notice of Interest Rate
Election may, if it so specifies, apply to only a portion of the
aggregate principal amount of the relevant CP LOC Loan.
(iii) Each Notice of Interest Rate Election shall specify:
(A) the CP LOC Loan (or portion thereof) together
with the amount of each thereof, to which such notice applies;
(B) the date on which the conversion or continuation
selected in such notice is to be effective, which shall comply
with the applicable clause of subsection (ii) above;
(C) if CP LOC Loans are to be converted, each new
type of CP LOC Loan together with the amount thereof, and if
such new CP LOC Loans are Eurodollar Rate Loans, the duration
of the initial Interest Period applicable thereto; and
(D) if such CP LOC Loans are to be continued as
Eurodollar Rate Loans for additional Interest Periods, the
duration of such Interest Periods.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period. No conversion
into or continuation of a Eurodollar Rate Loans shall be permitted when a
Default or an Event of Default has occurred and is continuing, and if a Default
or an Event of Default has occurred and is continuing, each
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Eurodollar Rate Loan shall automatically be converted into a Base Rate Loan on
the last day of the then current Interest Period applicable thereto.
(iv) A Notice of Interest Rate Election shall not be revocable
by the Company. If the Company fails to deliver a timely Notice of
Interest Rate Election to the Agent for any Eurodollar Rate Loan, such
CP LOC Loans shall be converted into Base Rate Loans on the last day of
the then current Interest Period applicable thereto.
(v) Anything to the contrary in this Agreement
notwithstanding, at no time shall there be outstanding more than four
different Interest Periods applicable to the CP LOC Loans, and
Eurodollar Rate Loans that bear a single Interest Period shall not be
less than $1 million and shall be in integral multiples of $100,000.
(c) Funding Losses. If the Company makes any payment of principal with
respect to any Eurodollar Rate Loan or any Eurodollar Rate Loan is converted to
a Base Rate Loan on any day other than the last day of an Interest Period
applicable thereto, or if the Company fails to borrow, repay or prepay any
Eurodollar Rate Loan after notice has been given to the Agent in accordance with
the terms hereof, the Company shall reimburse the Agent, for the ratable account
of the Banks, within 30 days after demand for any resulting loss or expense
incurred by them, including any loss incurred in obtaining, liquidating or
employing deposits from third parties. Without prejudice to the foregoing, the
Company shall indemnify the Agent and the Banks against any direct (as opposed
to consequential) loss or expense that the Agent or the Banks may sustain or
incur as a consequence of a failure by the Company in payment of principal of,
or interest on, any Eurodollar Rate Loan, or any part thereof, including any
interest, premium or penalty paid by the Agent or any Bank to lenders of funds
borrowed by it or deposited with it for the purpose of making or maintaining
such Eurodollar Rate Loan. A certificate as to the amount of any such loss or
expense in reasonable detail (specifying the basis of such loss or expense)
shall be promptly submitted by the Agent, or by any Bank through the Agent, to
the Company and shall be conclusive and binding as to the amount thereof, absent
manifest error.
(d) Basis for Determining Interest Rate Inadequate or Unfair. If on or
prior to the first day of any Interest Period for any Eurodollar Rate Loan:
(i) the Agent or any Bank determines, in its reasonable
judgment, that deposits in Dollars (in the applicable amounts) are not
being offered to the Agent or such Bank in the relevant market for such
Interest Period, or
(ii) the Agent or such Bank, in its reasonable judgment, shall
determine that the Eurodollar Rate will not adequately and fairly
reflect the cost to the Agent or such Bank of funding its Eurodollar
Rate Loans for such Interest Period,
the Agent, or such Bank through the Agent, shall forthwith give notice thereof
(which notice shall describe in reasonable detail the basis for such
determination) to the Company, whereupon until the Agent, or such Bank through
the Agent, notifies the Company that the circumstances giving rise to such
suspension no longer exist, (A) the obligations of the Agent or such Bank to
make Eurodollar Rate
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Loans or to convert outstanding CP LOC Loans into Eurodollar Rate Loans shall be
suspended and (B) each outstanding Eurodollar Rate Loan or, if only a Bank shall
be affected, each Eurodollar Rate Loan held by such Bank shall be converted into
a Base Rate Loan on the last day of the then current Interest Period applicable
thereto.
(e) Maximum Rate. This Agreement is hereby expressly limited so that in
no contingency or event, whether by reason of acceleration of the maturity of
any indebtedness hereunder or otherwise, shall the interest contracted for or
charged or received by the Banks exceed the maximum amount permissible under
Applicable Law. If, from any circumstance whatsoever, interest would otherwise
be payable to the Banks in excess of the maximum lawful amount, the interest
payable to the Banks shall be reduced to the maximum amount permitted under
Applicable Law, and the amount of interest for any subsequent period, to the
extent less than that permitted by Applicable Law, shall to that extent be
increased by the amount of such reduction.
SECTION 2.7 Repayment.
On each Quarterly Date, the Company shall repay the principal amount of
each CP LOC Loan in accordance with Exhibit D to this Agreement. Each CP LOC
Loan shall mature and be repaid in full on the applicable CP LOC Loan Required
Payment Date.
SECTION 2.8 Prepayments.
The Company may, at any time and from time to time on any Business Day,
upon prior written notice to the Agent not later than 11:00 a.m. (New York City
time), at least one Business Day before the day of any prepayment of the CP LOC
Loans, such notice stating the proposed date and aggregate principal amount of
the prepayment, and if such notice is given the Company shall, prepay without
premium or penalty, except as provided in Section 2.6(c), the outstanding
principal amounts of the CP LOC Loans in whole or in part, together with accrued
interest to the date of such prepayment on the principal amount prepaid.
All prepayments made hereunder shall be applied by the Agent and the
Banks against the principal amount of outstanding CP LOC Loans in inverse order
of maturity; provided, that such prepayments shall first be applied to the
prepayment of outstanding Base Rate Loans to the extent thereof and then to the
prepayment of outstanding Eurodollar Rate Loans.
SECTION 2.9 Security.
The Obligations shall be secured by the Security Documents, the rights
and remedies in respect of which shall be exercised pursuant to the Collateral
Agency Agreement.
SECTION 2.10 Payments.
(a) The Company shall make each payment hereunder and under the CP LOC
Loan Note not later than 10:00 a.m. (New York City time), on the day when due to
the Agent at its address set forth in Section 9.2, in Dollars in immediately
available funds. The Agent will promptly thereafter cause to be distributed like
funds relating to the payment of principal (including reimbursement of the
Drawing), interest or fees ratably (other than amounts payable for the account
of the Issuing Bank pursuant to Section 2.5(a) and (c), which shall be payable
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solely to the Issuing Bank, or payable pursuant to Section 9.4) to the Banks and
like funds relating to the payment of any other amount payable to any Bank to
such Bank, in each case to be applied in accordance with the terms of this
Agreement. The Agent may withhold from any interest payment to any Bank an
amount equal to any applicable withholding tax (including upon the failure of
any Bank to provide the forms or other documentation required under Section
2.17(e)).
(b) Unless the Agent receives notice from the Company before the date
on which any payment is due to the Banks hereunder that the Company will not
make such payment in full, the Agent may assume that the Company has made such
payment in full to the Agent on such date, and the Agent may, in reliance upon
such assumption, cause to be distributed to each Bank on such due date an amount
equal to the amount then due to such Bank. If and to the extent that the Company
has not so made such payment in full to the Agent on the date on which such
payment is due, each Bank agrees, irrevocably and without qualification or
exception, to repay to the Agent forthwith on demand such amount distributed to
such Bank together with interest thereon, for each day from the date such amount
is distributed to such Bank until the date on which such Bank repays such amount
to the Agent, at the Federal Funds Rate.
(c) All payments made by the Company to each of the Banks and the Agent
under this Agreement and the CP LOC Loan Note will be made without set-off,
counterclaim or other defense.
SECTION 2.11 Computation of Interest and Fees.
All computations of interest and fees hereunder shall be made on the
basis of a year of 360 days for the actual number of days (including the first
day but excluding the last day) occurring in the period for which such interest
or fees are payable. Each calculation and each determination by the Agent of an
interest rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.
SECTION 2.12 Payments on Non-Business Days.
Whenever any payment hereunder or under the CP LOC Loan Note is stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be.
If no due date is specified for the payment of any amount payable by the Company
hereunder, such amount shall be due and payable not later than 10 Business Days
after receipt by the Company of written demand from the Agent for payment
thereof.
SECTION 2.13 Sharing of Payments, Etc.
(a) Each Bank agrees that if, as a result of the exercise of a right of
set-off, banker's lien or counterclaim or other similar right or the receipt of
a secured claim, it receives any payment in respect of the CP LOC Loans or other
Obligations hereunder it shall promptly notify the Agent thereof (and the Agent
shall promptly notify the other Banks). If, as a result of such payment, such
Bank receives a greater percentage of the Obligations owed to it under this
Agreement than the percentage received by any other Bank, such Bank shall
purchase a
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participation (which it shall be deemed to have purchased simultaneously upon
the receipt of such payment) in the Obligations then held by such other Banks so
that all such recoveries of principal and interest with respect to all
Obligations owed to each Bank shall be pro rata on the basis of its respective
amount of such Obligations owed to all Banks; provided, that if all or part of
such proportionately greater payment received by such purchasing Bank is
thereafter recovered by or on behalf of the Company from such Bank, such
purchase shall be rescinded and the purchase price paid for such participation
shall be returned to such Bank to the extent of such recovery, but without
interest.
(b) Each Bank which receives a secured claim as described in subsection
(a) above shall, to the extent practicable, exercise its rights in respect of
such secured claim in accordance with such subsection (a) and otherwise in a
manner consistent with the rights of the Banks entitled under this Section 2.13
to share in the benefits of any recovery on such secured claim.
(c) The Company expressly consents to the foregoing arrangements and
agrees that any holder of a participation in any Obligation so purchased or
otherwise acquired of which the Company has received notice may exercise any and
all rights of set-off, banker's lien or counterclaim with respect to any and all
monies owing by the Company to such holder as fully as if such holder were a
holder of such Obligation in the amount of the participation held by such
holder.
SECTION 2.14 Evidence of Debt.
(a) The indebtedness of the Company resulting from all CP LOC Loans
shall be evidenced by this Agreement and the promissory note substantially in
the form of Exhibit B (the "CP LOC Loan Note"), delivered by the Company to the
Agent for the benefit of the Banks in accordance with the terms hereof.
(b) The books and accounts of the Agent shall be conclusive evidence,
absent manifest error, of the amounts of the Drawing, all CP LOC Loans, fees,
interest and other amounts advanced, due, outstanding, payable or paid pursuant
to this Agreement or the CP LOC Loan Note.
SECTION 2.15 Increased Costs and Reduced Returns.
(a) If, on or after the date hereof, the adoption of any Applicable
Law, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Agent or any Bank with any request or directive (whether or not having
the force of law) of any such authority, central bank or comparable agency:
(i) shall subject the Agent or such Bank to any tax, duty or
other charge (other than routine examination fees or Taxes) with
respect to the Eurodollar Rate Loans, the CP LOC Loan Note or its
obligation to make or continue Eurodollar Rate Loans, or shall change
the basis of taxation of payments to the Agent or any Bank of the
principal of or interest on its Eurodollar Rate Loans or any other
amounts due under this Agreement in respect of its Eurodollar Rate
Loans or its obligation to make or continue Eurodollar Rate Loans
(except for changes in the rate of tax on the net income of the
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Agent or such Bank imposed by the federal, state or local jurisdiction
in which the Agent's or such Bank's principal executive office is
located); or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including any such requirement
imposed by the Board of Governors of the Federal Reserve System, but
excluding with respect to any Eurodollar Rate Loan any such requirement
provided in Section 2.17(b), against assets of, deposits with or for
the account of, or credit extended by, the Agent or any Bank or shall
impose on the Agent or any Bank or on the London interbank market any
other condition affecting the Eurodollar Rate Loans, the CP LOC Loan
Note or its obligation to advance Eurodollar Rate Loans;
and the result of any of the foregoing is to increase the cost to the Agent or
such Bank of making or continuing any Eurodollar Rate Loan or to reduce the
amount of any sum received or receivable by the Agent or such Bank under this
Agreement or under the CP LOC Loan Note with respect thereto by an amount deemed
by the Agent or such Bank to be material, then the Agent, or such Bank through
the Agent, shall deliver to the Company as promptly as practicable a certificate
setting forth in reasonable detail the additional amounts that the Agent or such
Bank, as the case may be, determines will fully compensate it for such
reduction, increased cost or payment and the basis for the determination of such
amount; provided, that the Company shall not be obligated to compensate the
Agent or any Bank for the amount of such increased cost incurred with respect to
a period of time prior to the date which is 90 days before the date on which the
Agent first notifies the Company of a claim for such compensation or that an
event had occurred which will entitle the Agent or a Bank to such compensation.
Any such amount claimed by the Agent or any Bank shall, in the case of clause
(i) above, be net of applicable tax savings, if any, directly attributable
thereto. Within 30 days after demand by the Agent, the Company shall pay to the
Agent, for its account or for the account of the applicable Bank, as the case
may be, such additional amount shown as due on any such certificate, absent
manifest error.
(b) In the event that the Agent or any Bank shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
on all the parties hereto) at any time that the Agent or such Bank is required
to maintain reserves in respect of Eurocurrency Liabilities during any period
during which any CP LOC Loan owing to it bears interest based on the Eurodollar
Rate (each such period, for the Agent or such Bank, a "Eurocurrency Reserve
Period"), but only in respect of any period during which any reserve shall
actually be maintained by the Agent or such Bank for any Eurodollar Rate Loan as
a result of a reserve requirement applicable to it under Regulation D in
connection with Eurocurrency Liabilities, then the Agent, or such Bank through
the Agent, shall promptly give notice to the Company of such determination, and
the Company shall directly pay to the Agent, for its account or for the account
of the applicable Bank, as the case may be, additional interest on the unpaid
principal amount of such CP LOC Loan during such Eurocurrency Reserve Period at
a rate per annum which shall, during each monthly period applicable to such CP
LOC Loan, be the amount by which (x) the Eurodollar Rate for such monthly period
divided (and rounded upward to the next whole multiple of 1/100 of 1%) by a
percentage equal to 100% minus the then stated maximum rate of all reserve
requirements (including any marginal, emergency, supplemental, special or other
reserves) applicable to the Agent or such Bank in respect of Eurocurrency
Liabilities exceeds (y) the Eurodollar Rate for such monthly period. The Agent,
or such Bank through the Agent, shall
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furnish along with such notice a certificate setting forth in reasonable detail
the cost actually incurred to maintain such reserves and the basis for the
determination of such amount; provided, that the Company shall not be obligated
to compensate the Agent or any Bank for the amount of such increased cost
incurred with respect to a period of time prior to the date which is 90 days
before the date on which the Agent first notifies the Company of a claim for
such compensation or that an event has occurred which will entitle the Agent or
a Bank to such compensation. Additional interest payable pursuant to the
immediately preceding sentence shall be paid by the Company at the time that it
is otherwise required to pay interest in respect of such CP LOC Loan, or, if
later demanded by the Agent or any Bank, promptly on demand. Each of the Agent
and the Banks agrees that, if notice is given to the Company of the existence of
a Eurocurrency Reserve Period, the Agent, or the applicable Bank through the
Agent, shall promptly notify the Company of any termination thereof, at which
time the Company shall cease to be obligated to pay additional interest to the
Agent or such Bank pursuant to the first sentence of this paragraph until such
time, if any, as a subsequent Eurocurrency Reserve Period shall occur.
(c) The Agent, and each Bank through the Agent, will promptly notify
the Company of any event of which it has knowledge, occurring after the date
hereof, which will entitle the Agent or such Bank to compensation pursuant to
this Section and will designate a different lending office if such designation
will avoid the need for, or reduce the amount of, such compensation and will
not, in the sole judgment of the Agent or such Bank, be otherwise
disadvantageous to the Agent or such Bank.
SECTION 2.16 Capital Adequacy.
If the Agent or any Bank shall determine that, after the date hereof,
the adoption of any Applicable Law regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on capital of the Agent or such Bank or its holding company as a
consequence of the Agent's or such Bank's obligations hereunder to a level below
that which the Agent or such Bank could have achieved but for such adoption,
change, request or directive (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by the Agent or such Bank to be
material, then the Agent, or such Bank through the Agent, shall deliver to the
Company as promptly as practicable (but in no event later than 120 days after
the Agent or such Bank has actual knowledge of such claim for capital adequacy)
a certificate setting forth in reasonable detail the amount being charged by the
Agent or such Bank and the basis for the determination of such amount. Within 30
days after the delivery of such certificates by the Agent, the Company shall pay
to the Agent, for its account or for the account of the applicable Bank, as the
case may be, the amount shown as due on any such certificate.
SECTION 2.17 Taxes.
(a) Payments by the Company to the Agent and the Banks under this
Agreement and the CP LOC Loan Note will be made free and clear of and without
deduction for Taxes, other than Taxes based on the net income of the Agent or
any Bank (including franchise taxes imposed
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in lieu of net income taxes) imposed by (i) the United States federal
government, (ii) the jurisdiction where the Agent or such Bank is organized or
has its principal office or (iii) the jurisdiction of the branch of such Bank
maintaining any CP LOC Loan or the branch of the Agent through which it renders
its services as the Agent ("Excluded Taxes"). If the Company is required by law
to deduct Taxes (other than Excluded Taxes) from such a payment, then the sum
payable under the instrument to which the payment relates will be increased so
that such deduction does not result in a diminution in the amount the Agent or
any Bank actually receives.
(b) To the extent permitted by law, without duplication of amounts paid
by the Company under Section 2.17(a), the Company hereby indemnifies and holds
harmless the Agent and each Bank from and against, and agrees to reimburse the
Agent and each Bank on an after-tax basis (computed taking into account any
deductions or other benefits available for federal income tax purposes for the
Agent or such Bank if it is a United States taxpayer and any deductions and
benefits available for income tax purposes in any jurisdiction in which the
Agent or such Bank is a taxpayer) on demand for, any and all Taxes paid or
incurred by the Agent or such Bank in connection with the transactions
contemplated by this Agreement; provided, however, that the foregoing indemnity
does not cover Excluded Taxes. Reimbursement on an "after-tax basis" means on a
basis such that the Agent or such Bank is made whole after taking into account
income taxes that the Agent or such Bank will owe on the indemnity or
reimbursement payment in any jurisdiction and any related tax benefits, assuming
the Agent or such Bank is subject to income taxes at the highest marginal rates.
Nothing in this paragraph shall interfere with the right of the Agent or any
Bank to arrange its tax affairs in whatever manner it thinks fit and, in
particular, the Agent and the Banks are under no obligation to claim a deduction
or other benefit relating to these transactions ahead of any other claim,
relief, credit, deduction or other benefit to which it is entitled. The Agent,
or applicable Bank through the Agent, shall promptly give written notice to the
Company after (but in no event later than 60 days after) the Agent or such Bank
has actual knowledge of the imposition of any Taxes subject to indemnification
hereunder; provided, however, that failure to give such notice within such 60
day period will not relieve the Company of the obligation to indemnify the Agent
or such Bank in accordance with the terms hereof, except to the extent of
interest that would have been avoided had the notice been given prior to the end
of such 60-day period.
(c) The Company will provide evidence that all Taxes imposed on
payments under this Agreement, any CP LOC Loan or the CP LOC Loan Note, have
been fully paid to the appropriate authorities by delivering official receipts
or notarized copies to the Agent within 30 days after payment. The Company will
compensate the Agent or any Bank that has to pay any Taxes because the Company
failed to timely furnish such evidence; provided, that prior to paying such
Taxes, the Agent, or such Bank through the Agent, shall have notified the
Company of its intent to make such payment.
(d) If the Company so requests promptly in writing after receipt of any
notice under Section 2.17 hereof, the Agent or applicable Bank will contest in
good faith the Taxes at the Company's expense, keep the Company fully informed
about the progress of the contest, consult in good faith with the Company's
counsel regarding conduct of the contest, and not compromise or otherwise settle
the contest without the Company's consent (which shall not be unreasonably
withheld or delayed); provided, that the Agent or such Bank may in its sole
discretion select the forum for the contest and determine whether the contest
will be by resisting payment of the
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Taxes or by paying the Taxes and seeking a refund; provided, further that the
Agent or such Bank will be under no obligation to contest unless (A) if the
Agent or such Bank requests, the Company has provided the Agent or such Bank an
opinion of independent tax counsel selected by the Company and reasonably
acceptable to the Agent or such Bank to the effect that there is a reasonable
basis for the contest, (B) the amount in controversy is at least $75,000, (C)
the Agent or such Bank has received satisfactory indemnification and security
for any liability, loss, cost or expense arising out of the contest (including,
but not limited to, all reasonable legal and accounting fees and expenses,
penalties, interest and additions to tax), (D) if requested by the Agent or such
Bank, the Company has admitted in writing its duty to indemnify the Agent or
such Bank for the Taxes if the contest is lost (but such admission shall not
preclude the Company from raising a defense to liability if a court of competent
jurisdiction has rendered a decision articulating the cause of such Taxes, and
the cause is not one for which the Company is responsible under this Section
2.17), and (E) if the contest is conducted in a manner that requires paying all
or part of the Taxes, the Company has paid the amount required.
(e) If the Company so requests within 10 days of notice to the Company
of the imposition of any Taxes on payments to any of the Banks of a type not
generally imposed on United States or foreign lenders making advances of the
types contemplated hereunder, such Banks shall (consistent with legal and
regulatory restrictions) comply with Section 2.19 hereof.
(f) At such times as may be required by Applicable Law or as the Agent
or the Company may reasonably request, each Bank agrees that it will deliver to
the Agent and the Company duly completed forms of any applicable jurisdiction or
other documentation reasonably satisfactory to the Agent and the Company that
such Bank is entitled to receive payments under this Agreement without deduction
or withholding of income tax under the Applicable Law of such jurisdiction. Each
Bank further agrees to notify the Agent and the Company of the occurrence of any
event (including any change in treaty, law or regulation) that would render such
Bank unable to receive payments hereunder without such deduction or withholding.
The provisions of this Section 2.17(f) shall apply to any successor holder of a
CP LOC Loan Note.
SECTION 2.18 Illegality.
If, on or after the date of this Agreement, the adoption of any
Applicable Law, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Agent or any Bank with any request or directive (whether or not having
the force of law) of any such Governmental Authority, central bank or comparable
agency shall make it unlawful or impossible for the Agent or such Bank to make,
continue or convert its Eurodollar Rate Loans, the Agent, or such Bank through
the Agent, shall so notify the Company, whereupon until the Agent, or such Bank
through the Agent, notifies the Company that the circumstances giving rise to
such suspension no longer exist, the obligation of the Agent or such Bank to
make or continue Eurodollar Rate Loans, or to convert outstanding CP LOC Loans
into Eurodollar Rate Loans, shall be suspended. Before giving any notice to the
Company pursuant to this Section, the Agent or applicable Bank shall designate a
different lending office for the Eurodollar Rate Loans if such designation will
avoid the need for giving such notice and will not, in the sole judgment of the
Agent or such Bank, be otherwise
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disadvantageous to the Agent or such Bank. If such notice is given, each
Eurodollar Rate Loan of the Agent or such Bank then outstanding shall either (i)
be converted to a Base Rate Loan on the last day of the then current Interest
Period applicable to such Eurodollar Rate Loan if the Agent or such Bank may
lawfully continue to make and continue such CP LOC Loan to such day, or (ii) be
immediately converted to a Base Rate Loan if the Agent or such Bank shall
determine that it may not lawfully continue to make and continue such CP LOC
Loan to such day; provided, that the Company shall not be obligated to make any
payment pursuant to Section 2.6(c) as a result of such conversion. If the
Company so requests within 10 days of receipt of the notice referred to above,
the applicable Bank shall (consistent with legal and regulatory restrictions)
comply with Section 2.19 hereof.
SECTION 2.19 Assignments by Banks.
In the event that (i) a Bank is required to comply with this Section
2.19 after a request from the Company pursuant to Sections 2.17 or 2.18, (ii)
the Company or the Issuing Bank requests that the provisions of this Section
2.19 apply to a Bank within 10 days after the Company receives a notice from the
Agent that (a) such Bank has failed to make available to the Agent its portion
of any CP LOC Loan on the date required to be made available to the Agent
pursuant to this Agreement after the Agent has made written demand upon such
Bank for such payment, (b) such Bank has provided the Agent with notice that
such Bank shall not make available to the Agent such portion of any CP LOC Loan
required to be made available to the Agent pursuant to this Agreement or (c)
such Bank has failed to reimburse the Agent pursuant to the terms of this
Agreement, or (iii) the Issuing Bank requests that the provisions of this
Section 2.19 apply to a Bank in the event the long-term debt rating of such Bank
shall at any time be less than a rating of "A" or the equivalent by S&P or by
Moody's, then such Bank shall assign all or a part of its proportionate share of
the CP LOC Loans and its Commitment to a replacement Bank (which may be, but is
not required to be, one of the other Banks, and shall be subject to the prior
written consent of the Issuing Bank) designated by the Company; provided, that
any assignment or transfer made by a Bank to a replacement Bank shall
substantially be in the form of Exhibit C hereto, and any assignment of all or
part of the CP LOC Loans or other obligations with respect to the CP Letter of
Credit shall be made without recourse, representation or warranty. The Company
shall promptly pay when due all reasonable fees and expenses which such Bank
incurs in connection with such transfer or assignment and the Company shall
cause the replacement Bank to pay to the Agent for the account of the assigning
Bank in immediately available funds all amounts outstanding or payable under
this Agreement to each Bank assigning its interest in the CP LOC Loans or other
obligations with respect to the CP Letter of Credit.
SECTION 2.20 Reduction in Commitments/Reimbursements.
The Company shall have the right to refinance the Commitment and any
outstanding CP LOC Loans, if any, without premium or penalty, except as provided
in Section 2.6(c), upon at least 10 Business Days' prior written notice to the
Agent.
SECTION 2.21 Right of Set-off.
Subject to the provisions of the Collateral Agency Agreement, the
Company hereby authorizes each Bank (in addition to, and without limitation of,
any right of set-off, banker's lien
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or counterclaim a Bank may otherwise have), upon the occurrence and during the
continuance of any Event of Default, at any time and from time to time, without
notice to the Company or any Person other than the Collateral Agent (any such
notice being hereby expressly waived by the Company to the extent it may legally
do so) to set off and appropriate and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held, and other
indebtedness at any time owing, by such Bank in any of its offices, wherever
located (whether such deposits or indebtedness be in dollars or in any other
currency), to or for the credit or the account of the Company against any and
all of the Obligations and liabilities of the Company now or hereafter existing
under this Agreement, irrespective of whether or not such Bank shall have made
any demand hereunder or thereunder and although such Obligations may be
contingent or unmatured.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.1 Conditions Precedent to the Closing Date.
The occurrence of the Closing Date is subject to satisfaction or waiver
of the following conditions precedent:
(a) issuance of the Bonds and submission to the Agent of duplicate
originals or certified copies of all documents submitted in connection with the
issuance of the Bonds on the Closing Date, which shall be in form and substance
satisfactory to the Agent;
(b) receipt by the Issuing Bank and the Agent of the following, in each
case in the form approved by the Agent on the Closing Date:
(i) this Agreement and the CP LOC Loan Note duly executed by
the Company;
(ii) an original of each of the Security Documents, duly
executed by the parties thereto;
(iii) a copy of each other Financing Document, certified by
the Company as to completeness and authenticity;
(iv) written opinions of counsel acceptable to the Agent,
addressed to the Agent and the Banks, and in form and substance
satisfactory to the Agent and covering such matters as the Agent may
reasonably request;
(v) evidence satisfactory to the Agent that each of the
parties to the Project Contracts, Financing Documents and Security
Documents shall have duly and irrevocably appointed a process agent to
act for and on behalf of such person, to receive summonses and other
legal process in connection with any suit, action or proceeding
relating to such documents in the jurisdictions in which it is required
to submit to such
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jurisdiction and such appointment shall have been accepted and all fees
scheduled to accrue to each such agent for the service of process shall
have been paid in full; and
(vi) evidence satisfactory to the Agent that all actions
necessary or appropriate in order to effectively establish, create or
perfect the security interest have been duly taken.
(c) payment by the Company of all accrued fees and expenses (as
provided in Sections 2.5 and 9.4) of the Agent and the Banks (including the
reasonable accrued fees and disbursements of counsel to the Agent and the
Banks), to the extent that one or more statements for such fees and expenses
have been presented for payment.
SECTION 3.2 [Reserved].
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 Representations and Warranties of Company.
The Company hereby makes for the benefit of the Agent and the Banks all
of the representations and warranties of the Company contained in Article III of
the Indenture (which representations and warranties are incorporated by
reference herein as if fully set forth herein and which representations and
warranties shall be true and correct as of the date hereof and the Closing
Date).
SECTION 4.2 Representations and Warranties of the Issuing Bank.
The Issuing Bank hereby represents and warrants to the Company and the
Agent as follows:
(a) The Issuing Bank is duly formed, validly existing and in good
standing under the laws of its jurisdiction of organization.
(b) The Issuing Bank has all necessary power and authority to execute
and deliver, and to perform its obligations under, this Agreement and the CP
Letter of Credit.
(c) All action on the part of the Issuing Bank that is required for the
authorization, execution and delivery of, and performance by the Issuing Bank of
its obligations under, this Agreement and the CP Letter of Credit has been duly
and effectively taken.
(d) This Agreement has been, and, upon issuance thereof, the CP Letter
of Credit will have been, duly executed and delivered by the Issuing Bank.
(e) This Agreement constitutes, and the CP Letter of Credit upon
issuance thereof will constitute, legal, valid and binding obligations of the
Issuing Bank, enforceable against it in accordance with the respective terms
thereof, except as such enforceability (i) may be limited by
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applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights and remedies generally and (ii)
is subject to general principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law.
ARTICLE V
COVENANTS
SECTION 5.1 Covenants.
So long as any Commitment is in effect, the CP Letter of Credit is
outstanding or the Obligations remain unpaid, the Company shall observe and
perform all of the covenants of the Company contained in Article VI of the
Indenture (which covenants are incorporated herein by reference as if fully set
forth herein.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.1 Events of Default.
Each of the following shall constitute an "Event of Default" under this
Agreement so long as the same shall be continuing:
(a) the Company shall fail to pay any amount due under this Agreement
(including under any CP LOC Loan Note) within 15 days after the due date
thereof; or
(b) an "Event of Default" under the Indenture shall have occurred and
be continuing; or
(c) an "Event of Default" under the DSR LOC Reimbursement Agreement
shall have occurred and be continuing.
SECTION 6.2 Remedies.
Upon the occurrence and during the continuation of an Event of Default,
the Agent shall, at the request of the Required Banks, take one or more of the
following actions: (i) terminate the CP Letter of Credit, (ii) declare the
Obligations, all interest thereon and all other amounts payable under this
Agreement and the CP LOC Loan Note to be forthwith due and payable, including
but not limited to the amount of any and all CP LOC Loans which may be made upon
a Drawing under the CP Letter of Credit which occurs after the date on which the
Agent declares such amounts to be due and payable, but prior to the effective
date of termination of such CP Letter of Credit in accordance with Section
2.2(f), whereupon the Obligations, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Company or (iii) terminate the ability of the Company to continue CP LOC Loans
as, or to
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convert CP LOC Loans to, Eurodollar Rate Loans; provided, that the Agent and the
Banks shall not have the right to exercise any other remedy hereunder or
otherwise available to the Agent or any Bank except in accordance with the
provisions of the Collateral Agency Agreement.
SECTION 6.3 Collateralization upon Acceleration of the Bonds.
In the event that an Event of Default hereunder results from an "Event
of Default" under the Indenture and the Trustee accelerates amounts due under
the Indenture, the CP LOC Provider shall be entitled to require
collateralization of the Stated Amount by having the Collateral Agent deposit
(in a separate account to be held by the Collateral Agent), at the time that any
amounts are paid to the Trustee in respect of accelerated amounts due under the
Indenture, an amount equal to the amount that would have been disbursed to the
Agent at such time (based on pro rata payment requirements) if Drawings had been
made to the full extent of the Stated Amount ("Deemed CP LOC Loans") and the
Deemed CP LOC Loans had been accelerated at the same time as an acceleration
under the Indenture. Upon a Drawing on the CP Letter of Credit, a portion of the
amount in the separate account equal to such Drawing's proportionate share of
the Stated Amount shall be transferred by the Collateral Agent to the CP LOC
Provider. The Agent, the Issuing Bank and each Bank agree that upon termination
or expiration of the CP Letter of Credit, all amounts in such separate
collateral account that have not been transferred pursuant to the previous
sentence (to the extent of such expiration or termination) shall be transferred
to the Collateral Agent.
ARTICLE VII
CHARACTER OF OBLIGATIONS
SECTION 7.1 Obligations Absolute.
The Obligations shall be absolute, unconditional and irrevocable and
shall not be affected or impaired under any circumstances whatsoever, including
the following circumstances:
(a) any lack of validity or enforceability of any provision of any
Project Contract or Financing Document;
(b) any amendment or waiver of, or any consent to departure from, any
provision of any Project Contract or Financing Document;
(c) the existence of any claim, set-off, defense or other right that
the Company may have at any time against the beneficiary of the CP Letter of
Credit (or any Person for whom such beneficiary may be acting), any Bank, the
Agent or any other Person, whether in connection with any Project Contract or
Financing Document, the transactions contemplated thereby or any unrelated
transaction;
(d) any statement or signature in any certificate or other document
presented under the CP Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect, or any such statement being untrue or
inaccurate in any respect whatsoever;
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(e) any exchange, release or nonperfection of any Collateral or other
collateral, or any release, amendment or waiver of or consent to departure from
any Project Contract, Financing Document or any guaranty, for any of the
Obligations;
(f) payment by the Issuing Bank under the CP Letter of Credit against
presentation of a draft or certificate that does not comply with the terms of
the CP Letter of Credit; or
(g) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
SECTION 7.2 Limited Liability of Agent and Banks.
As among the Company, the Agent and the Banks (including the Issuing
Bank), the Company assumes all risks of the acts or omissions of the
beneficiaries of the CP Letter of Credit with respect to the use of the CP
Letter of Credit. Neither the Agent nor any Bank nor any of their respective
officers, directors, employees or agents shall be liable or responsible for (i)
the use that may be made of the CP Letter of Credit or any acts or omissions of
any beneficiaries of the CP Letter of Credit in connection with the CP Letter of
Credit; (ii) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any document submitted in connection with the CP Letter of Credit or
of any endorsement thereon, even if such document or endorsement should prove to
be in any or all respects invalid, insufficient, inaccurate, fraudulent or
forged; (iii) payment by the Issuing Bank against presentation of any document
that does not comply with the terms of the CP Letter of Credit, including
failure of any document to bear any reference or adequate reference to the CP
Letter of Credit; or (iv) any other circumstance whatsoever in making, delaying
to make or failing to make payment under the CP Letter of Credit; provided,
however, that the Company shall have a claim against the Issuing Bank, and the
Issuing Bank shall be liable to the Company, to the extent of any direct, as
opposed to consequential, damages suffered by the Company that the Company
proves were the result of the Issuing Bank's willful misconduct or gross
negligence in paying under the CP Letter of Credit or the Issuing Bank's willful
or grossly negligent failure to pay under the CP Letter of Credit after the
presentation to it by the beneficiary of a draft and certificate strictly
complying with the terms and conditions of the CP Letter of Credit (unless the
Issuing Bank in good faith believed itself (based upon an opinion of counsel) to
be prohibited by law or legal authority from making such payment). In
furtherance and not in limitation of the foregoing, the Issuing Bank may accept
any document that appears on its face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
ARTICLE VIII
THE AGENT
SECTION 8.1 Authorization and Action.
(a) Each Bank hereby appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Agent by the terms hereof, together with such powers as
are reasonably incidental thereto. As to any
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matters not expressly provided for by the Credit Documents (including
enforcement of and collection under any Credit Document or other Project
Contract), the Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Banks, and such instructions shall be binding upon all Banks and
the holders of any CP LOC Loan Note; provided, however, that the Agent shall not
be required to take any action that, in the Agent's sole judgment, exposes the
Agent to personal liability or that is contrary to any Credit Document or other
Project Contract or Applicable Law. In performing its function and duties
hereunder as Agent, the Agent shall act solely as the agent of the Banks and in
its capacity as Issuing Bank it shall act solely as issuer of the CP LOC Letter
of Credit, and does not assume and shall not be deemed to have assumed in either
such capacity any obligation towards or relationship of agency or trust or other
fiduciary relationship with or for the Company or any other party to any Project
Contract.
(b) Each Bank hereby authorizes the Agent in the name of and on behalf
of such Bank to sign such documents, take all such actions and perform such
obligations that the Agent deems necessary or appropriate to bind each of the
Banks under the Credit Documents and to create, perfect or maintain the
existence or perfected status of any security interest.
SECTION 8.2 Agent's Reliance, Etc.
Neither the Agent nor the Issuing Bank nor any of their directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or them under or in connection with any Credit Document or other
Project Contract, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the Agent and
the Issuing Bank (i) may treat any Bank that has signed an Assignment and
Acceptance as the holder of the applicable portion of the Obligations; (ii) may
consult with legal counsel (including counsel for the Company or any Affiliate),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (iii) makes
no warranty or representation to any Bank and shall not be responsible to any
Bank for any statements, warranties or representations made in or in connection
with any Credit Document or other Project Contract; (iv) shall not have any duty
to ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of any Credit Document or other Project Contract
on the part of the Company or any Affiliate or to inspect the property
(including the books and records) of the Company or any Affiliate thereof; (v)
shall not be responsible to any Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Credit Document or
other Project Contract or any other instrument or document furnished pursuant
hereto or thereto; and (vi) shall incur no liability under or in respect of any
Credit Document or other Project Contract by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopier or
otherwise) believed by it to be genuine and signed or sent by the proper party
or parties.
SECTION 8.3 The Agent, the Issuing Bank and Affiliates.
With respect to its Commitment and participation in the CP Letter of
Credit, the Agent and the Issuing Bank shall have the same rights and powers
under this Agreement as any other
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Bank and may exercise the same as though it were not the Agent or the Issuing
Bank, as the case may be; and the term "Bank" or "Banks" shall, unless otherwise
expressly indicated, include the Agent and Issuing Bank in their capacity as a
Bank (including the Issuing Bank in its capacity as such). The Agent and the
Issuing Bank and their Affiliates may accept deposits from, lend money to, act
as trustee under indentures of, and generally engage in any kind of business
with, the Company, any Affiliate thereof and any Person that may do business
with or own securities of the Company or any Affiliate thereof, all as if the
Agent and the Issuing Bank, respectively, were not the Agent and the Issuing
Bank, and without any duty to account therefor to the Banks.
SECTION 8.4 Bank Credit Decision.
Each Bank agrees that it has, independently and without reliance on the
Agent, the Issuing Bank or any other Bank and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Bank also agrees that it will,
independently and without reliance on the Agent, the Issuing Bank or any other
Bank and based on such documents and information as it deems appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement.
SECTION 8.5 Indemnification.
Each of the Banks agree to indemnify the Agent and the Issuing Bank (to
the extent not promptly reimbursed by the Company and without limiting the
obligation of the Company to do so), on demand, ratably according to such Bank's
Percentage Interest, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind or nature whatsoever that may at any time (including
at any time following the payment of any Obligations or termination of this
Agreement) be imposed on, incurred by or asserted against the Agent or the
Issuing Bank in any way relating to or arising out of any Credit Document or
other Project Contract or any action taken or omitted by the Agent under any
Credit Document or other Project Contract; provided, however, that no Bank shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements to the
extent resulting solely from the Agent's gross negligence or willful misconduct.
Without limitation of the foregoing, each Bank agrees to reimburse the Agent
promptly upon demand for its ratable share of any costs and expenses payable by
the Company under Section 9.4, to the extent that the Agent is not reimbursed
for such costs and expenses by the Company.
SECTION 8.6 Successor Agent.
The Agent may resign at any time by giving written notice thereof to
the Banks and the Company and may be removed at any time with or without cause
with the written approval of the Required Banks. Upon any such resignation or
removal, the Required Banks shall have the right to appoint a successor Agent
with the consent of the Company, which shall not be unreasonably withheld. If no
successor Agent has been so appointed by the Required Banks, and has accepted
such appointment, within 30 days after the retiring Agent's giving of notice of
resignation or the Required Banks' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Banks, appoint a successor Agent with the
consent of the Company (which shall not be unreasonably withheld), which
successor Agent shall be a commercial bank organized under the
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laws of the United States of America or of any state thereof and having a
combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under the Credit Documents and the
other Project Contracts. After any retiring Agent's resignation or removal
hereunder as Agent, the provisions of this Article 8 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was agent under
this Agreement.
SECTION 8.7 Collateral.
(a) Except as expressly provided herein, the Agent shall have no duty to
take any affirmative steps with respect to the collection of amounts payable in
respect of the Collateral. The Agent shall incur no liability as a result of any
private sale of the Collateral.
(b) The Banks hereby consent, and agree upon written request by the
Agent to execute and deliver such instruments and other documents as the Agent
may deem desirable to confirm such consent, to the release of the Liens on the
Collateral, including any release in connection with any sale, transfer or other
disposition of the Collateral or any part thereof, in accordance with the
Project Contracts.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Amendments, Etc.
No amendment or waiver of any provision of this Agreement or any CP LOC
Loan Note, or consent to any departure by the Company therefrom, shall be
effective unless in writing and signed or consented to (in writing) by the
Required Banks (and, in the case of amendments, the Company), and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that (A) no amendment,
waiver or consent shall, unless in writing and signed or consented to (in
writing) by all of the Banks do any of the following: (i) waive any of the
conditions specified in Article 3; (ii) increase the Commitments of the Banks or
subject the Banks to any additional obligations; (iii) reduce the principal of,
or interest on, the CP LOC Loans or any fees or other amounts payable hereunder;
(iv) postpone any date fixed for (a) payment of principal of, or interest on,
any CP LOC Loans, (b) reimbursement of drawings under any of the CP Letter of
Credit or (c) payment of fees or other amounts payable hereunder; (v) change the
percentage of the Commitments, or the number of Banks, required for the Banks or
any of them to take any action hereunder; or (vi) amend this Section 9.1; (B)
that no amendment, waiver or consent shall, unless in writing or consented to
(in writing) by the Issuing Bank, affect the rights and obligations of the
Issuing Bank hereunder; (C) no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Persons required above to
take such action, affect the rights or duties of the Agent under this Agreement
or any other Credit Document and (D) any provision that is a part of this
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Agreement as a result of an incorporation by reference to the Indenture shall be
amended or waived as provided in Section 2.5 of the Collateral Agency Agreement.
SECTION 9.2 Notices, Etc.
All notices and other communications provided for hereunder shall be in
writing (including by telecopier) and shall be mailed, telecopied or delivered,
if to the Company, to it at AES Ironwood, L.LC., 829 Cumberland Street, Lebanon,
Pennsylvania 17042, Attention: Project Manager, telephone no. 717-228-1328,
telecopier no. 717-228-1271; if to any Bank other than the Issuing Bank, to it
at the address or telecopier number set forth below its name in the Assignment
and Acceptance by which it became a party hereto; if to the Agent or the Issuing
Bank, to it at Dresdner Bank AG, New York Branch, 75 Wall Street, 25th Floor,
New York, New York 10005-2889, Attention: Project Finance Group, telecopier no.
212-429-2192, telephone no. 212-429-2226, or, as to each party, to it at such
other address or telecopier number as designated by such party in a written
notice to the other parties. All such notices and communications shall be deemed
received, (i) if personally delivered, upon delivery, (ii) if sent by
first-class mail, on the third Business Day following deposit into the mails and
(iii) if sent by telecopier, upon acknowledgment of receipt thereof by the
intended recipient, except that notices and communications to the Agent pursuant
to Article 2 or 8 shall not be effective until received by the Agent.
SECTION 9.3 No Waiver, Remedies.
No failure on the part of any Bank (including the Issuing Bank) or the
Agent to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof, and no single or partial exercise of any such right shall
preclude any other or further exercise thereof or the exercise of any other
right. The remedies provided herein are cumulative and not exclusive of any
remedies provided by law.
SECTION 9.4 Costs and Expenses.
The Company agrees to pay on demand (i) all reasonable costs and
expenses of the Agent and the Banks (including the Issuing Bank) in connection
with the preparation, execution, delivery, syndication, administration,
modification and amendment of this Agreement, any CP LOC Loan Note, the other
Credit Documents and the other documents to be delivered hereunder, including
(a) the reasonable fees and out-of-pocket expenses of counsel for the Agent and
the Banks with respect thereto and with respect to advising the Agent and the
Banks as to their rights and responsibilities, or the perfection, protection or
reservation of rights or interests, under this Agreement, the other Credit
Documents, the other Project Contracts and the other documents to be delivered
hereunder, (b) the reasonable fees and expenses of any consultants, auditors or
accountants engaged by the Agent with the written consent (which shall not be
unreasonably withheld) of the Company pursuant hereto, and (ii) all reasonable
costs and expenses of the Agent and the Banks (including the Issuing Bank)
(including reasonable counsel fees and expenses of the Agent and the Banks) in
connection with the enforcement (whether through negotiations, legal proceedings
or otherwise) of this Agreement, the other Credit Documents, the other Project
Contracts and the other documents to be delivered hereunder, whether in any
action, suit or litigation, bankruptcy, insolvency or similar proceeding. In
addition, the Company
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shall pay any and all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of the
aforementioned documents, and the Company agrees to indemnify and hold the Agent
and the Banks (including the Issuing Bank) harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission to
pay any of the foregoing.
SECTION 9.5 Application of Money.
If any sum paid or recovered in respect of the Obligations is less than
the amount then due, the Agent may apply that sum to principal, interest, fees
or any other amount due under this Agreement in such proportions and order and
generally in such manner as the Agent shall reasonably determine.
SECTION 9.6 Severability.
Any provision of this Agreement that is prohibited, unenforceable or
not authorized in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, unenforceability or
nonauthorization without invalidating the remaining provisions of this Agreement
or affecting the validity, enforceability or authorization of such provision in
any other jurisdiction.
SECTION 9.7 Non-Recourse Liability.
Satisfaction of the Obligations shall be had solely from the
Collateral. Notwithstanding any provision to the contrary in the Transaction
Documents, there shall be no recourse against any Affiliates, stockholders,
officers, directors, representatives or employees of the Company, other than the
Company (each a "Non-Recourse Party"), for any payment due hereunder or under
any other Financing Document or Security Document from the Company or for the
performance of any obligation of such Non-Recourse Party, or breach of any
representation or warranty made by such Non-Recourse Party hereunder or
thereunder. The sole recourse of the Agent and the Banks hereunder or under any
other Transaction Document or for the performance of any obligation of the
Company, or breach of any representation or warranty made hereunder or
thereunder by the Company, shall be against the Company and its assets, it being
expressly understood by the Senior Parties that such obligations are obligations
solely of the Company and that no such personal liability shall attach to, or be
incurred by any Non-Recourse Party; provided, that nothing contained in this
Section 9.7 shall (i) impair in respect of the Company the validity of any CP
LOC Loan Note, or any other Credit Documents, as applicable, prevent the taking
of any action permitted by law against the Company or any of its Affiliates, or
in any way affect or impair the rights of the Agent and the Banks to take any
action permitted by law, in either case to realize upon the Collateral, (ii) be
deemed to release the Company or any of its Affiliates, or any past, present or
future shareholder, partner, officer, employee, director or agent of any
thereof, from liability for its fraudulent actions, fraudulent
misrepresentations, gross negligence or willful misconduct or (iii) limit or
affect the obligations and liabilities of any Non-Recourse Party in accordance
with the terms of any other Transaction Document creating such obligations and
liabilities to which such Non-Recourse Party is a party.
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SECTION 9.8 Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
Company, the Agent and the Banks and their respective successors and assigns,
except that the Company shall not have the right to assign any of its rights and
obligations hereunder without the prior written consent of the Required Banks,
and, except as provided in Section 9.9, no Bank other than the Issuing Bank
shall have the right to assign any of its rights and obligations hereunder.
SECTION 9.9 Assignments and Participations.
(a) Any Bank may at any time (with the consent of the Company, such
consent not to be unreasonably withheld or delayed, the consent of the Agent,
such consent not to be unreasonably withheld or delayed, and the consent of the
Issuing Bank) sell to one or more banks or other entities whose long-term
unsecured debt is rated at least "A" or the equivalent by S&P and Moody's (a
"Purchasing Bank") all or any part of its rights and obligations under this
Agreement and any CP LOC Loan Note (which, except in the case of an assignment
to a Person that, immediately before such assignment, was a Bank, shall be in an
amount equal to not less than the lesser of (x) $7,000,000 and (y) 33 1/3% of
the Maximum Stated Amount pursuant to an Assignment and Acceptance, executed by
such Purchasing Bank, such transferor Bank, the Agent and the Issuing Bank (and,
in the case of a Purchasing Bank that is not then a Bank or an Affiliate
thereof, by the Company). Upon (i) such execution of such Assignment and
Acceptance and (ii) delivery of a copy thereof to the Company and payment of the
amount of its participation to the Agent or such transferor Bank, such
Purchasing Bank shall for all purposes be a Bank party to this Agreement and
shall have all the rights and obligations of a Bank under this Agreement, to the
same extent as if it were an original party hereto with the Percentage Interest
as set forth in such Assignment and Acceptance, which shall be deemed to amend
this Agreement to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing Bank and the resulting adjustment of Percentage
Interests arising from the purchase by such Purchasing Bank of all or a portion
of the rights and obligations of such transferor Bank under this Agreement and
any CP LOC Loan Note.
(b) Any Bank may, from time to time, sell or offer to sell
participating interests in any CP LOC Loans owing to such Bank, such Bank's
interest in any CP LOC Loan Note, any Commitment of such Bank or any other
interests and obligations of such Bank hereunder, to one or more banks or other
entities (each, a "Participant"), on such terms and conditions as may be
determined by the selling Bank, without the consent of or notice to the Company,
and the grant of such participation shall not relieve any Bank of its
obligations, or impair the rights of any Bank, hereunder. In the event of any
such sale by a Bank of a participating interest to a Participant, such Bank
shall remain solely responsible for the performance of such Bank's obligations
under this Agreement, the Company, the Agent and the Issuing Bank will continue
to deal solely and directly with such Bank in connection with such Bank's rights
and obligations under this Agreement and such Bank shall retain the sole right
and responsibility to exercise the rights of such Bank, and enforce the
obligations of the Company, including the right to approve any amendment,
modification, supplement or waiver of any provision of any Credit Document and
the right to take action under Article 6 hereof and such Bank shall not grant
any such Participant any voting rights or veto power over any such action by
such Bank under this Agreement (provided, that such Bank may agree not to
consent to any modification, amendment
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or waiver of this Agreement, without the consent of the Participant, that would
alter the principal of or interest on any CP LOC Loans, postpone the date fixed
for any payment of principal of or interest thereon or extend the term of any
Commitment). No Participant shall have any rights under this Agreement to
receive payment of principal, interest or any other amount payable hereunder
except through a Bank and as provided in this Section 9.9. The Company agrees
that, upon the occurrence and during the continuance of any Event of Default,
each Participant shall have the right of set-off in respect of its participating
interest in amounts owing under this Agreement and any CP LOC Loan Note as set
forth in Section 2.21 hereof to the same extent as if the amount of its
participating interest was owing directly to it as a Bank under this Agreement
or any CP LOC Loan Note. The Company also agrees that each Participant shall be
entitled to the benefits of Sections 2.15, 2.16, 2.17 and 2.18 hereof with
respect to its participation granted hereunder; provided, that no Participant
shall be entitled to receive any greater amount pursuant to such Sections than
the Bank transferring such participation would have been entitled to receive in
respect of the amount of the participation transferred to such Participant had
no such transfer occurred.
(c) Any Bank may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 9.9, disclose to
the Purchasing Bank or Participant or proposed Purchasing Bank or Participant
any information relating to the Company furnished to such Bank by or on behalf
of the Company; provided, however, that prior to any such disclosure, the Person
receiving such disclosure shall sign such confidentiality agreements as the
Company may reasonably request.
SECTION 9.10 Indemnification.
The Company agrees to indemnify, on demand, and hold harmless the Agent
and each Bank (including the Issuing Bank) and each of their respective
officers, directors, employees, agents and affiliates from and against any and
all claims, damages, losses, liabilities, costs and expenses whatsoever that
such indemnified party may incur (or that may be claimed against such
indemnified party by any Person) by reason of (i) any untrue statement or
alleged untrue statement of any material fact concerning the Company or the
Collateral, or the omission or alleged omission to state any fact concerning the
Company or the Collateral necessary to make any such statement, in light of the
circumstances under which it was made, not misleading; (ii) the issuance, sale
or delivery of the Senior Debt; (iii) the use of the proceeds of the Senior Debt
or any Drawing; (iv) any reasonable action taken by such indemnified party in
protecting and enforcing the rights and remedies of the Agent and the Banks
under the Project Contracts; (v) subject to Section 7.2, the execution, delivery
or transfer of, or payment or failure to pay under, the CP Letter of Credit;
(vi) any claim of any Person with respect to any finder's fee, brokerage
commission or other similar sum due in connection with any Project Contract; or
(vii) any failure by the Company to comply with any Environmental Requirement;
provided, however, that the Company shall not be required to indemnify the
Issuing Bank for any claims, damages, losses, liabilities, costs or expenses to
the extent caused by the Issuing Bank's willful misconduct or gross negligence
in paying under the CP Letter of Credit or the Issuing Bank's willful or grossly
negligent failure to pay under the CP Letter of Credit after the presentation to
it by the beneficiary of a draft and certificate strictly complying with the
terms and conditions of the CP Letter of Credit (unless the Issuing Bank in good
faith believed itself (based upon an opinion of counsel) to be prohibited by law
or legal authority from making such payment). The
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Company, upon demand by any party indemnified or intended to be indemnified
pursuant to this Section 9.10 at any time, shall also reimburse such party for
any reasonable legal or other expenses incurred in connection with investigating
or defending against any of the foregoing. If any action, suit or proceeding
arising from any of the foregoing is brought against any party indemnified or
intended to be indemnified pursuant to this Section 9.10 (an "Indemnified
Party"), such Indemnified Party shall promptly notify the Company in writing,
enclosing a copy of all papers served, but the omission so to notify the Company
of any such action shall not relieve it of any liability that it may have to any
Indemnified Party otherwise than under this Section 9.10; provided, however,
that the Company shall not be liable for any settlement of any such action
effected without the Company's prior written consent. In case any such action
shall be brought against any Indemnified Party and it shall notify the Company
of the commencement thereof, the Company shall be entitled to participate in
and, to the extent that it shall wish, to assume the defense thereof with
counsel reasonably satisfactory to such Indemnified Party, and after notice from
the Company to such Indemnified Party of the Company's election so to assume the
defense thereof, the Company shall not be liable to such Indemnified Party for
any subsequent legal or other expenses attributable to such defense, except as
provided below, other than reasonable costs of investigation subsequently
incurred by such Indemnified Party in connection with the defense thereof. The
Indemnified Party shall have the right to employ its own counsel in any such
action, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the employment of counsel by such Indemnified
Party has been authorized by the Company, (ii) the Indemnified Party shall have
reasonably concluded that there may be a conflict of interest between the
Company and the Indemnified Party in the conduct of the defense of such action
(in which case the Company shall not have the right to direct the defense of
such action on behalf of the Indemnified Party) or counsel for the Company shall
have declined to represent the Indemnified Party in light of a potential
conflict of interest or (iii) the Company shall not in fact have employed
counsel reasonably satisfactory to the Indemnified Party to assume the defense
of such action.
SECTION 9.11 Governing Law; Submission of Jurisdiction; Venue;
Waiver of Jury Trial.
(a) THE RIGHTS AND OBLIGATIONS OF EACH OF THE PARTIES UNDER THIS
AGREEMENT AND ANY CP LOC LOAN NOTE SHALL, PURSUANT TO NEW YORK GENERAL
OBLIGATIONS LAW SECTION 5-1401, BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING AGAINST THE
COMPANY WITH RESPECT TO THIS AGREEMENT, ANY CP LOC LOAN NOTE OR ANY OTHER CREDIT
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, THE COMPANY HEREBY IRREVOCABLY ACCEPTS
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. THE COMPANY HEREBY
IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION SYSTEM, WITH
OFFICES ON THE DATE HEREOF AT 1633 BROADWAY, NEW YORK, NY 10019, AS ITS
DESIGNEE, APPOINTEE AND AGENT WITH RESPECT TO ANY ACTION OR PROCEEDING IN NEW
YORK TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND
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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 AND
AGREES THAT THE FAILURE OF SUCH AGENT TO GIVE ANY ADVICE OF ANY SUCH SERVICE OF
PROCESS TO THE COMPANY SHALL NOT IMPAIR OR AFFECT THE VALIDITY OF SUCH SERVICE
OR OF ANY CLAIM BASED THEREON. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND
AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE 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 AGENT. THE COMPANY
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY AT ITS
ADDRESS SET FORTH IN SECTION 9.2, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER
SUCH MAILING.
(b) THE 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, ANY CP LOC LOAN
NOTE OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN SECTION
9.11(a) 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.
(c) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
ANY OF THIS AGREEMENT, ANY CP LOC LOAN NOTE OR THE CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 9.12 Headings.
The section and subsection headings used herein have been inserted for
convenience of reference only and do not constitute matters to be considered in
interpreting this Agreement.
SECTION 9.13 Execution in Counterparts.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized, as of the
day and year first above written.
AES IRONWOOD, L.L.C.
By: /s/ Patricia L. Rollin
------------------------------
Name: Patricia L. Rollin
Title: Vice President
Commitment
- ----------
$30,000,000.00 DRESDNER BANK AG, NEW YORK BRANCH, as
Agent, the Issuing Bank and as a Bank
By: /s/ Andrew Schroeder
------------------------------
Name: Andrew Schroeder
Title: Vice President
By: /s/ Kirk Edelman
------------------------------
Name: Kirk Edelman
Title: Vice President
[CP LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT]
<PAGE>
EXHIBIT A
FORM OF
-------
Construction Period Letter of Credit
------------------------------------
Dresdner Bank AG, Letter of Credit No. [________]
New York Branch
75 Wall Street Irrevocable Standby Credit
New York, New York 10005
Date and Place of Issue: Date and Place of Expiry:
New York, New York Dresdner Bank AG,
[ ,] 2000 New York Branch
New York, New York
June 25, 2003 as the same may be extended
from time to time in accordance with the
terms hereof
Applicant:
AES Ironwood, L.L.C.
829 Cumberland Street
Lebanon, PA 17042
Amount: Up to an aggregate of
[ ] United States Dollars
(US$[ ])
Beneficiary: Credit Available With:
[________] Dresdner Bank AG,
[Address] New York Branch
Attn: By: Negotiation, Against Presentation of
the Documents Detailed Herein Drawn on
Dresdner Bank AG
New York Branch
Ladies and Gentlemen:
We irrevocably authorize you to draw on us for the account of the Applicant up
to an aggregate amount of [________]UNITED STATES DOLLARS (US$[________]) (the
"Stated Amount") available against presentation of a dated drawing request drawn
on Dresdner Bank AG, New York Branch, manually signed by an authorized officer
of the Beneficiary (who is identified as such) appropriately completed in the
form of Annex 1 hereto.
The above drawing request shall be in writing, addressed to us at Dresdner Bank
AG, New York Branch, 75 Wall Street, New York, NY 10005, Attn: Maria Penna,
Credit Administration Department telecopier no. 212-429-2130, or 212-429-2115
and all other communications with respect to this Letter of Credit shall be in
writing addressed to us at Dresdner Bank AG, New York Branch, 75 Wall Street,
New York, NY 10005, Attn: Andrew Schroeder, telecopier no. 212-429-2081, with a
copy to Michael Higgins, telecopier no. 212-429-2192, referencing this
Ex. A-1
<PAGE>
Letter of Credit No. [________] and presented to us by delivery in person or
facsimile transmission at such address, provided that the original of the above
drawing request or such communications, as the case may be, shall be sent to us
at such address by overnight courier for receipt by us within two (2) Business
Days of the date of any such facsimile transmission.
If the drawing request is presented in compliance with the terms of this Letter
of Credit to us at such address by 12:00 noon New York City time on any Business
Day, payment will be made no later than 3:00 p.m. New York City time on such
Business Day and if such drawing request is so presented to us after 12:00 noon
New York City time on any Business Day, payment will be made no later than 12:00
noon New York City time on the following Business Day. Payment under this Letter
of Credit shall be made in immediately available funds by wire transfer to such
account as may be designated by the Beneficiary in the applicable drawing
request.
As used in this Letter of Credit, "Business Day" means any day on which
commercial banks located in New York, New York are not required or authorized to
remain closed.
This Letter of Credit shall expire on the date of expiry set forth above.
Notwithstanding the foregoing, we may at any time, subject to the provisions of
the Construction Period Letter of Credit and Reimbursement Agreement, dated as
of June 1, 1999, among the Applicant, the Issuing Bank and the other Banks party
thereto and on Dresdner Bank AG, New York Branch, as Agent (the "Reimbursement
Agreement"), terminate this Letter of Credit by giving the Beneficiary written
notice thereof in the form of Annex 2 hereto by delivery in person or facsimile
transmission (with written confirmation by overnight courier for receipt by the
Beneficiary within two (2) Business Days) addressed to [________], Attn:
[________], telephone no. [________], telecopier no. [________], at least thirty
(30) days prior to termination whereupon the Beneficiary is authorized to draw
on us prior to such termination the Stated Amount of this Letter of Credit by
presentation to us, in the manner and at the address specified in the third
preceding paragraph, of a drawing request appropriately completed in the form of
Annex 1 hereto and signed by the Beneficiary's authorized officer.
This Letter of Credit is effective immediately.
In the event that a drawing request fails to comply with the terms of this
Letter of Credit, we shall provide the Beneficiary prompt notice of same stating
the reasons therefor and shall upon your instructions hold any non-conforming
drawing request and other documents at your disposal or return any
non-conforming drawing request and other documents to the Beneficiary at the
address set forth above by delivery in person or facsimile transmission (with
originals thereof sent by overnight courier for receipt within two (2) Business
Days). Upon being notified that the drawing was not effected in compliance with
this Letter of Credit, the Beneficiary may attempt to correct such non-complying
drawing request in accordance with the terms of this Letter of Credit.
This Letter of Credit sets forth in full the terms of our undertaking and this
undertaking shall not in any way be modified, amended, limited or amplified by
reference to any document, instrument or agreement referred to herein, except
only defined terms used herein and the drawing requests and certificates
referred to herein; and any such reference shall not be deemed to incorporate
herein by reference any document, instrument, or agreement except for such
defined terms, drawing requests and certificates.
Ex. A-2
<PAGE>
This Letter of Credit may be assigned upon presentation to us of a signed
transfer certificate in the form of Annex 3 accompanied by this Letter of
Credit, in which the Beneficiary irrevocably transfers to such transferee all of
its rights hereunder, whereupon we agree to either issue a substitute letter of
credit to such successor or endorse such transfer on the reverse of this Letter
of Credit.
Only one drawing will be allowed under this Letter of Credit.
All banking charges, including any advising and negotiating bank charges, are
for the account of the Applicant.
All drawing requests under this Letter of Credit must bear the clause:
"Drawn under Dresdner Bank AG, New York Branch,
Letter of Credit No.[________] dated June 25, 1999."
This Letter of Credit shall not be amended except with the written concurrence
of Dresdner Bank AG, New York Branch, the Applicant and the Beneficiary.
We hereby engage with you that a drawing request drawn strictly in compliance
with the terms of this Letter of Credit and amendments thereto shall meet with
due honor upon presentation.
This Letter of Credit is subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision in force as from 1st of January 1994),
International Chamber of Commerce Publication Number 500 (the "Uniform
Customs"). This Letter of Credit shall be deemed to be a contract made under the
laws of the State of New York and shall, as to matters not governed by the
Uniform Customs, be governed by and construed in accordance with the laws of
such State, other than its conflict of laws rules that would result in the
application of the law of any jurisdiction other than the laws of such State.
We irrevocably agree with you that any legal action or proceeding with respect
to this Letter of Credit shall be brought in the courts of the State of New York
in the County of New York or of the United States of America in the Southern
District of New York. By signing this Letter of Credit, we irrevocably submit to
the jurisdiction of such courts solely for the purposes of this Letter of
Credit. We hereby waive, to the fullest extent permitted by law, any objection
we may now or hereafter have to the laying of venue in any such action or
proceeding in any such court.
Dresdner Bank AG,
New York Branch
By:
------------------------
Authorized Signature
By:
------------------------
Authorized Signature
Ex. A-3
<PAGE>
ANNEX 1
DRAWING REQUEST
---------------
[Date]
------
"Drawn under Dresdner Bank AG, New York Branch,
-----------------------------------------------
Letter of Credit No. [________] Irrevocable Standby Letter of Credit
--------------------------------------------------------------------
dated [________]."
------------------
Dresdner Bank AG
New York Branch
75 Wall Street
New York, NY 10005
Attn: Maria Penna,
Credit Administration Department
Ladies and Gentlemen:
The undersigned hereby draws on Dresdner Bank AG, New York Branch, Letter of
Credit No. [________] Irrevocable Standby Letter of Credit (the "Letter of
Credit"), dated [________], issued by you in favor of us. Any capitalized term
used herein and not defined herein shall have its respective meaning as set
forth in the Letter of Credit.
In connection with this drawing, we hereby certify that:
A "This drawing in the amount of US$_________ is being made pursuant to
Dresdner Bank AG, New York Branch, Letter of Credit No. [________]
Irrevocable Standby Letter of Credit issued to [________] pursuant to
Section 19.2 of the Amended and Restated Power Purchase Agreement dated
February 5, 1999, by and between the Company and [________] (as the same
may be amended, supplemented or modified from time to time, the "Power
Purchase Agreement")"; and
B The Facility has not achieved the Commercial Operation Date by the date
specified in Section 2.2 of the Power Purchase Agreement (each capitalized
term being used as defined in the Power Purchase Agreement)"; and
C "The amount requested to be drawn does not exceed the Stated Amount"; and
D "You are directed to make payment of the requested drawing to account no.
____________ at ____________________________ [insert bank name, address and
account number]."
Ex. A-4
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed and delivered this request on
this _____ day of _______________, 199_/200_.
[________]
By:
------------------------
Name:
Title:
Ex. A-5
<PAGE>
ANNEX 2
NOTICE OF TERMINATION OF LETTER OF CREDIT
-----------------------------------------
[Date]
------
[--------]
[--------]
[--------]
Attn: [________]
AES Ironwood, L.L.C.
829 Cumberland Street
Lebanon, PA 17042
Attn: Project Manager
Ladies and Gentlemen:
Reference is made to [the Issuing Bank], Letter of Credit No. [________]
Irrevocable Standby Letter of Credit (the "Letter of Credit"), dated [________],
1999, issued by us in favor of [________].
This constitutes our notice to you pursuant to the Letter of Credit that the
Letter of Credit shall terminate on ___________, 199_/200_ [insert a date which
is 30 or more days after the date of this notice of termination (the
"Termination Date")].
Pursuant to the terms of the Letter of Credit, you are authorized to draw, in a
single drawing, prior to the Termination Date, on the Letter of Credit in an
amount that does not exceed the Stated Amount (as defined in the Letter of
Credit).
Very truly yours,
DRESDNER BANK AG, NEW YORK BRANCH
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
Ex. A-6
<PAGE>
ANNEX 3
TRANSFER OF LETTER OF CREDIT
----------------------------
[Date]
------
"Delivered under Dresdner Bank AG, New York Branch
--------------------------------------------------
Letter of Credit No. [________]
-------------------------------
dated _[________], 1999."
-------------------------
Dresdner Bank AG
New York Branch
75 Wall Street
New York, New York 10005
Attn: Maria Penna,
Credit Administration Department
Gentlemen:
Reference is made to Dresdner Bank AG, New York Branch, Letter of Credit No.
[________] Irrevocable Standby Letter of Credit, dated [________], 1999,
originally issued by you in favor of [________] (the "Letter of Credit"). Any
capitalized terms used, but not defined, herein shall have its respective
meaning as set forth in the Letter of Credit.
For value received, the undersigned, as Beneficiary under the Letter of Credit,
hereby irrevocably transfers to _____________ (the "Transferee") all rights of
the undersigned to draw under the Letter of Credit in their entirety.
The Transferee is the successor to the Beneficiary, as Power Purchaser under the
Amended and Restated Power Purchase Agreement, dated as of February 5, 1999, by
and between the Company and the Power Purchaser (as the same may be amended,
supplemented or modified from time to time, the "Power Purchase Agreement") and
all conditions to appointment of such successor set forth in the Power Purchase
Agreement have been satisfied.
By this transfer, all rights of the undersigned, as Beneficiary under the Letter
of Credit, are transferred to the Transferee, and the Transferee shall have the
sole rights with respect to the Letter of Credit relating to any amendments
thereof and any notices thereunder. All amendments to the Letter of Credit are
to be consented to by the Transferee without necessity of any consent of or
notice to the undersigned.
Simultaneously with the delivery of this notice to you, copies of this notice
are being transmitted to the Transferee.
The Letter of Credit is returned herewith, and we ask you to either issue a
substitute letter of credit for the benefit of the Transferee or endorse the
transfer on the reverse thereof, and forward it directly to the Transferee with
your customary notice of transfer.
Ex. A-7
<PAGE>
Very truly yours,
[--------]
By:
------------------------
Name:
Title:
Ex. A-8
<PAGE>
EXHIBIT B
FORM OF CP LOC LOAN PROMISSORY NOTE
[$___________] New York, New York
____________, 2000
FOR VALUE RECEIVED, the undersigned, AES Ironwood, L.L.C., a Delaware limited
liability company (the "Company"), hereby unconditionally promises to pay to the
order of Dresdner Bank AG, New York Branch (the "Agent") for the benefit of the
Banks party from time to time to the Reimbursement Agreement referred to below
the lesser of (i) the principal sum of _______ _______________________ dollars
($___________) and (ii) the aggregate unpaid principal amount of the CP LOC
Loans owing to the Banks by the Company under the Reimbursement Agreement, on
the dates and in the amounts specified therein.
The Company further promises to pay interest on the daily unpaid principal
amount hereof from time to time outstanding on the dates and at the rates
specified in the Reimbursement Agreement. This CP LOC Loan Note is hereby
expressly limited so that in no contingency or event, whether by reason of
acceleration of the maturity of any indebtedness evidenced hereby or otherwise,
shall the interest contracted for or charged or received by the Agent for the
account of the Banks exceed the maximum amount permissible under Applicable Law.
If, from any circumstance whatsoever, interest would otherwise be payable to the
Agent for the account of the Banks in excess of the maximum lawful amount, the
interest payable to the Agent for the account of the Banks shall be reduced to
the maximum amount permitted under Applicable Law, and the amount of interest
for any subsequent period, to the extent less than that permitted by Applicable
Law, shall to that extent be increased by the amount of such reduction.
The holder hereof is irrevocably authorized to endorse on the schedule attached
hereto, or on a continuation thereof, the date each such interest payment is due
and the amount of each such interest payment determined in accordance with the
Reimbursement Agreement. All such notations shall constitute prima facie
evidence of the accuracy of the information so recorded and be enforceable
against the Company with the same force and effect as if such amounts were each
set forth in a separate CP LOC Loan Note executed by the Company.
All payments due hereunder shall be made without set-off, counterclaim or
deduction of any nature to the Agent, for the account of the Banks, in lawful
money of the United States of America and in immediately available funds, at
such place and in such manner as may be specified by the Agent pursuant to the
Reimbursement Agreement.
The holder hereof is irrevocably authorized to endorse on the schedule attached
hereto, or on a continuation thereof, the date and amount of each CP LOC Loan
incurred by the Company and each payment or prepayment of principal thereof,
provided that the failure of the holder to make, or any error in making, any
such recordation or endorsement shall not affect the obligations of the Company
hereunder or under the Reimbursement Agreement. All such notations shall
constitute prima facie evidence of the accuracy of the information so recorded
and be enforceable against the Company with the same force and effect as if such
amounts were each set forth in a separate CP LOC Loan Note executed by the
Company.
Ex. B-1
<PAGE>
This CP LOC Loan Note is the "CP LOC Loan Note" of the Company to the Agent, for
the benefit of the Banks, referred to in, evidences each CP LOC Loan owing to
the Banks by the Company under, is subject to the provisions of, and entitles
the holder to the benefits of, the Construction Period Letter of Credit and
Reimbursement Agreement, dated as of June 1, 1999 (the "Reimbursement
Agreement"), among the Company, the Banks (including the Issuing Bank), parties
thereto, and the Agent, as the same may be amended, supplemented or otherwise
modified from time to time and to which reference is hereby made for a more
complete statement of the terms and conditions under which each CP LOC Loan
evidenced hereby is to be incurred and paid. Capitalized terms in this CP LOC
Loan Note that are not specifically defined herein shall have the meanings
ascribed to them in the Reimbursement Agreement.
The Reimbursement Agreement provides for, among other things, the acceleration
of the maturity of the unpaid principal amount hereof upon the occurrence of
certain stated events and for voluntary prepayments in certain circumstances and
upon certain terms and conditions. The obligations of the Company under the
Reimbursement Agreement and this CP LOC Loan Note are secured by, and the holder
hereof is entitled to the benefit of, the Security Documents.
In addition to any and all costs, fees and expenses for which the Company is
liable under the Reimbursement Agreement, the Company promises to pay all costs
and expenses, including reasonable attorneys' fees and disbursements, incurred
in the collection and enforcement hereof or any appeal of any judgment rendered
hereon.
The Company hereby expressly waives diligence, presentment, protest, demand,
dishonor, nonpayment and notice of every kind to the fullest extent permitted by
Applicable Law. No failure or delay by the holder of this CP LOC Loan Note to
exercise any right or remedy under this CP LOC Loan Note or any other document
or instrument entered into pursuant to the Reimbursement Agreement shall operate
or be construed as a waiver or modification hereof or thereof.
This CP LOC Loan Note shall be binding upon the successors and assigns of the
Company and shall inure to the Agent and its successors, endorsees and assigns.
If any term or provision of this CP LOC Loan Note shall be held invalid, illegal
or unenforceable, the validity of all other terms and provisions hereof shall in
no way be affected thereby.
Recourse under this CP LOC Loan Note is limited in accordance with Section 9.7
of the Reimbursement Agreement, and the provisions of said Section 9.7 are
incorporated herein by reference.
THIS CP LOC LOAN NOTE SHALL, PURSUANT TO NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1401, BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING AGAINST THE COMPANY WITH
RESPECT TO THIS CP LOC LOAN NOTE 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 CP LOC LOAN NOTE,
THE COMPANY HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND
Ex. B-2
<PAGE>
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. THE
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 CP LOC LOAN NOTE BROUGHT IN THE COURTS
REFERRED TO 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.
AES IRONWOOD, L.L.C.
By:
------------------------
Name:
Title:
Ex. B-3
<PAGE>
SCHEDULE
--------
<TABLE>
<CAPTION>
Principal Amount and Total Principal
Amount of Date of Unpaid Date Interest Amount of CP
Date Reimbursement Principal Paid Principal Payment is Amount of LOC Loans Notation
Made Obligation or Prepaid Balance Due Interest Due Outstanding Made By
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT C
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated __________, 199__/200_
Reference is made to the Construction Period Letter of Credit and
Reimbursement Agreement, dated as of June 1, 1999 (the "Reimbursement
Agreement"), among AES Ironwood, L.L.C., a Delaware limited liability company
(the "Company"), the Issuing Bank (as defined in the Reimbursement Agreement),
the Banks (as defined in the Reimbursement Agreement) and Dresdner Bank AG, New
York Branch, as Agent for the Banks (the "Agent"). Terms defined in the
Reimbursement Agreement are used herein with the same meaning.
_________________ (the "Assignor") and ___________________ (the
"Assignee") agree as follows:
(1) The Assignor hereby sells and assigns to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, the
percentage interest specified on Schedule 1 hereto in and to all of the
Assignor's rights and obligations under the Reimbursement Agreement as
of the date hereof (after giving effect to any other assignments
thereof made before the date hereof, whether or not such assignments
have become effective, but without giving effect to any other
assignments thereof also made on the date hereof), including, without
limitation, such percentage interest in the Assignor's Commitment, each
of the CP LOC Loans owing to the Assignor and the CP Letter of Credit.
The Assignee shall pay to the Assignor, at or before 12:00 noon, local
time of the Assignor, on the Effective Date, the purchase price
therefor in an amount equal to the percentage interest of the CP LOC
Loans owing to the Assignor, as reflected on Schedule 1 hereto, in
immediately available funds.
(2) The Assignor (a) represents and warrants that as of the
date hereof its Commitment, the CP LOC Loans owing to it and its
participation in the CP Letter of Credit (after giving effect to any
other assignments of the foregoing made before the date hereof, whether
or not such assignments have become effective, but without giving
effect to any other such assignments also made on the date hereof) are
in the respective dollar amounts specified therefor on Schedule 1
hereto; (b) represents and warrants that it is the legal and beneficial
owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (c) makes no
representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in
connection with any of the Credit Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of any of
the Credit Documents or any other instrument or document furnished
pursuant thereto; and (d) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of
the Company or the performance or observance by the Company or any
other Person of any of its obligations under any of the Credit
Documents or any other instrument or document furnished pursuant
thereto.
Ex. C-1
<PAGE>
(3) The Assignee (a) confirms that it has received copies of
the Credit Documents and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to
enter into this Assignment and Acceptance, including such documents
evidencing satisfaction of the conditions precedent set forth in the
Reimbursement Agreement; (b) agrees that it will, independently and
without reliance upon the Agent, the Assignor or any other Bank
(including the Issuing Bank) and based on such documents and
information as it may deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under the
Reimbursement Agreement; (c) appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under
the Credit Documents as are delegated to the Agent by the terms
thereof, together with such powers as are reasonably incidental
thereto; (d) agrees that it will perform in accordance with their terms
all of the obligations that by the terms of the Reimbursement Agreement
are required to be performed by it as a Bank; and (e) specifies as its
address for notices the address set forth beneath its name on Schedule
1 hereto.
(4) Following the execution of this Assignment and Acceptance
by the Assignor and the Assignee, it will be delivered to the Agent for
acceptance and recording by the Agent in the Register maintained by the
Agent for such purpose. The effective date of this Assignment and
Acceptance shall be the date of acceptance thereof by the Agent, unless
otherwise specified on Schedule 1 hereto (the "Effective Date").
(5) Upon such acceptance and recording by the Agent, as of the
Effective Date (a) the Assignee shall be a party to the Reimbursement
Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Bank thereunder and
(b) the Assignor shall, to the extent provided in this Assignment and
Acceptance, relinquish its rights and be released from its obligations
under the Reimbursement Agreement.
(6) Upon such acceptance and recording by the Agent, from and
after the Effective Date the Agent shall make all payments under the
Reimbursement Agreement in respect of the interest assigned hereby
(including, without limitation, all payments of principal, interest and
fees with respect thereto) to the Assignee. The Assignor and the
Assignee shall make all appropriate adjustments directly between
themselves in respect of payments of principal, interest and/or fees
under the Reimbursement Agreement for periods before the Effective
Date.
(7) Each of the Assignor and the Assignee agrees that at any
time and from time to time upon the written request of the other party,
it will execute and deliver such further documents and do such further
acts and things as the other party may reasonably request in order to
effect the purposes of this Assignment and Acceptance.
(8) THE RIGHTS AND OBLIGATIONS OF EACH OF THE PARTIES UNDER
THIS ASSIGNMENT AND ACCEPTANCE SHALL, PURSUANT TO NEW YORK GENERAL
OBLIGATIONS LAW SECTION 5-1401, BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Ex. C-2
<PAGE>
(9) This Assignment and Acceptance is executed by the parties
on Schedule 1 hereto and may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together
shall constitute one and the same document. Execution of this
Assignment and Acceptance by the Agent and the Company on Schedule 1
hereto shall constitute any consent of such Person required pursuant to
Section 9.9 of the Reimbursement Agreement.
Ex. C-3
<PAGE>
Schedule 1
to Assignment and Acceptance
Section 1.
Percentage of Assignor's interest in
Commitments, Drawing and
CP LOC Loans to be assigned: _______%
Section 2.
Immediately prior to Effective Date:
Assignor's Commitment: $_______
CP LOC Loans then owing to Assignor: $_______
Assignor's participation in CP Letter
of Credit: $_______
Assignor's Percentage Interest (as defined
in the Reimbursement Agreement) _______%
Section 3.
Upon Effective Date:
Assignor's Commitment: $_______
Assignor's Percentage Interest: _______%
Assignee's Commitment: $_______
Assignee's Percentage Interest: _______%
Section 4.
Effective Date: __________________
[Assignor]
By:
------------------------------
Name:
Title:
Ex. C-4
<PAGE>
By:
------------------------------
Name:
Title:
[Assignee]
By:
------------------------------
Name:
Title:
[address for notices]
Consented to on this _____ day of
__________, 199__/200__:
[ ],
as Agent and the Issuing Bank
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
Consented to on this _____ day of
__________, 199__/200__:
AES IRONWOOD, L.L.C.
By:
------------------------------
Name:
Title:
Ex. C-5
<PAGE>
EXHIBIT D
AMORTIZATION SCHEDULE
The principal amount of each CP LOC Loan shall be due and payable in
quarterly installments on consecutive Quarterly Dates, commencing on the first
such Quarterly Date to occur after such CP LOC Loan is made, and maturing in
full on the applicable CP LOC Loan Required Payment Date. The amount of
principal payable on each such Quarterly Date shall be equal to the amount of
the principal component only of an amortization schedule based on the foregoing
payment schedule and a final maturity date ten years from the date on which such
CP LOC Loan is made and assuming (i) a fixed per annum interest rate equal to
the interest rate (whether determined with reference to the Adjusted Base Rate
or the Eurodollar Rate) applicable to such CP LOC Loan on such date and (ii)
mortgage-style payments of principal and interest.
Ex. D-1
<PAGE>
Exhibit 4.5
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS BOND (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM AND IN ANY EVENT MAY BE SOLD OR OTHERWISE TRANSFERRED ONLY
IN ACCORDANCE WITH THE INDENTURE, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION
AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE IN NEW YORK, NEW YORK.
EACH PURCHASER OF THIS BOND IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER. EACH HOLDER OF THIS BOND REPRESENTS TO AES
IRONWOOD, L.L.C. (THE "COMPANY") THAT (A) SUCH HOLDER WILL NOT SELL, PLEDGE OR
OTHERWISE TRANSFER THIS BOND (WITHOUT THE CONSENT OF THE COMPANY) OTHER THAN (I)
TO A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION COMPLYING WITH RULE 144A
UNDER THE SECURITIES ACT, (II) IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES
ACT, (III) OUTSIDE THE UNITED STATES OF AMERICA IN A TRANSACTION MEETING THE
REQUIREMENTS OF REGULATION S UNDER THE SECURITIES ACT, (IV) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, SUBJECT, IN THE
CASE OF CLAUSES (II), (III) OR (IV), TO THE RECEIPT BY THE COMPANY OF AN OPINION
OF COUNSEL OR SUCH OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH RESALE,
PLEDGE, OR TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND THAT
(B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER OF THIS BOND OF THE RESALE RESTRICTIONS REFERRED TO HEREIN AND DELIVER
TO THE TRANSFEREE (OTHER THAN A QUALIFIED INSTITUTIONAL BUYER) PRIOR TO THE SALE
A COPY OF A NOTICE TO INVESTORS (COPIES OF WHICH MAY BE OBTAINED FROM THE
TRUSTEE).
<PAGE>
AES IRONWOOD, L.L.C.
8.857% SENIOR SECURED BOND
DUE 2025
B-1
$200,000,000 CUSIP No. 00103XAA1
AES IRONWOOD, L.L.C., a Delaware limited liability company (the
"Company"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of Two Hundred Million Dollars
($200,000,000) in consecutive quarterly installments on February 28, May 31,
August 31 and November 30 of each year (each such date being a "Bond Payment
Date"), beginning August 31, 1999, in an amount equal to the amount specified
for such date on Annex 1 hereto until the outstanding principal hereof is repaid
in full, in any coin or currency of the United States of America which at the
time of payment is legal tender for public and private debts, and to pay on each
Bond Payment Date occurring after the date hereof at said offices or agencies to
the registered owner hereof, in like coin or currency, interest on the
outstanding principal hereof from the date of issuance hereof at the rate of
8.857% per annum. The final maturity hereof shall be November 30, 2025. All
payments of principal of, premium, if any, and interest on this Bond shall be
made at the Corporate Trust Office of the Trustee.
The provisions of this Bond are continued on the reverse hereof and
such continued provisions shall for all purposes have the same effect as though
fully set forth at this place.
This Bond shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Authentication Certificate hereon shall have been signed by or on behalf of the
Trustee.
IN WITNESS WHEREOF, the Company has caused this Bond to be signed in
its name by its Authorized Officer.
Dated: June 25, 1999
AES IRONWOOD, L.L.C.
By: /s/ Patricia L. Rollin
----------------------------------
Name: Patricia L. Rollin
Title: Vice President
<PAGE>
TRUSTEE'S AUTHENTICATION CERTIFICATE
This bond is one of the Bonds referred to in the within-mentioned
Indenture.
IBJ WHITEHALL BANK & TRUST COMPANY,
as Trustee
By: /s/ Thomas McCutcheon
----------------------------------
Authorized Officer
Dated: June 25, 1999
<PAGE>
Reverse of Global Bond
AES IRONWOOD, L.L.C.
8.857% SENIOR SECURED BOND
DUE 2025
This bond is one of an issue of bonds of the Company, issuable in
series, and is one of a series known as its 8.857% Senior Secured Bonds Due 2025
(collectively, the "Bonds"), all issued and to be issued under and equally
secured (except as to any sinking fund established in accordance with the
provisions of the Indenture hereinafter mentioned for the bonds of any
particular series) by a Trust Indenture, dated as of June 1, 1999, executed and
delivered between the Company and IBJ Whitehall Bank & Trust Company, as Trustee
and Depositary Bank (the "Original Indenture"), as amended and supplemented by
the First Supplemental Indenture, dated as of June 1, 1999, to which the
Original Indenture is so amended and supplemented (herein collectively referred
to as the "Indenture"). A description of the rights of the Bondholders and the
terms and conditions upon which the Bonds are issued are set forth in the
Indenture. Capitalized terms used but not otherwise defined herein shall have
the meanings assigned thereto in the Indenture.
THE BONDS ARE SUBJECT TO OPTIONAL AND MANDATORY REDEMPTION AND
PREPAYMENT AS PROVIDED IN THE INDENTURE.
As more fully described in the Indenture, the Company has the right,
without the consent by Holders of the Bonds, to amend the Indenture in certain
respects of the Bondholders. As more fully described in the indenture, with the
consent of Bondholders of not less than a majority in aggregate principal amount
of the Bonds of all series then Outstanding, the Company may amend the Indenture
in any other respect; provided, however, that no amendment shall, without the
consent of the Holder of each Outstanding Bond, (1) change the maturity date of
any Bond, or change the amount, of any payment of principal, interest or
premium, if any, on any Bond, (2) permit the creation of any lien on the
Collateral not otherwise permitted, prior to or on a parity with the lien of the
Indenture, or terminate the lien of the Indenture, (3) reduce the percentage of
the principal amount of Bonds the Holders of which are required to approve any
such amendment or (4) waive a Default in the payment of principal, interest or
premium, if any, or the remedies available in the case of an Event of Default.
The principal hereof may be declared or may become due on the
conditions, in the manner and at the time set forth in the Indenture, including
an acceleration of payment of the principal upon the occurrence and during the
continuance of an Event of Default as in the Indenture provided.
Recourse under this Bond is limited as set forth under the Indenture.
Satisfaction of the obligations of the Company under this Indenture, for the
payment of the principal of or premium, if any, or interest on any Bonds, or any
part thereof, or for any claim based thereon or otherwise in respect thereof or
related thereto, shall be had solely from the Collateral and the assets of the
Company and no recourse shall be had in the event of any non-performance by the
Company of
<PAGE>
any such obligations to (i) any assets or properties of the Members (or any
Person that controls any Member within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) or (ii) any Affiliate of the
Company or any incorporators, officers, directors or employees thereof, and no
judgment for any deficiency upon the obligations of the Company under this
Indenture, for the payment of the principal of or premium, if any, or interest
on any Bonds, or any part thereof, or for any claim based thereon or otherwise
in respect thereof or related thereto, shall be obtainable by the Bondholders or
the Trustee against any Member or Affiliate of the Company or any other
incorporator, stockholder, officer, employee or director, past, present or
future of the Company or any Affiliate of the Company; provided, however, that
nothing contained herein shall prevent the taking of any action permitted by law
against the Company or any of its Affiliates, or in any way affect or impair the
rights of the Trustee or Bondholders to take any action permitted by law, in
either case to realize upon the Collateral and, provided further, that nothing
herein shall be deemed to affect the obligations of any Affiliate of the Company
under any Transaction Document to which such Affiliate is a party.
The Bonds are issuable only as bonds without coupons in denominations
of $100,000 and integral multiples of $1,000 in excess thereof and authorized
multiples thereof. This Bond is transferable as prescribed in the Indenture by
the registered owner hereof, in person or by attorney duly authorized, at the
Corporate Trust Office of the Trustee, upon surrender and cancellation of this
Bond, and thereupon a new registered Bond or Bonds for a like principal amount
in authorized denominations will be issued to the transferee in exchange
therefor, as provided in the Indenture, and upon payment, if the Company shall
require it, of the transfer charges therein prescribed. The Company and the
Trustee shall deem and treat the person in whose name this Bond is registered as
the absolute owner for the purpose of receiving payment of or on account of the
principal and interest due hereon and for all other purposes. Registered Bonds
shall be exchangeable at said office of the Trustee for registered Bonds of
other authorized denominations having the same aggregate principal amount, in
the manner and upon the conditions prescribed in the Indenture. Notwithstanding
any provision of the Indenture, (a) neither the Company nor the Trustee shall be
required to make transfers or exchanges of Bonds during the period between any
interest payment date for such Bonds and the Regular Record Date next preceding
such interest payment date, and (b) no charge shall be made upon any transfer or
exchange of Bonds other than for any tax or taxes or other government charges
required to be paid by the Company.
All payments of principal and interest with respect to certificated
Bonds will be made by dollar check drawn on a bank in The City of New York or,
for Bondholders of at least U.S.$1,000,000 in aggregate principal amount of
Bonds, by wire transfer to a dollar account maintained by the payee with a bank
in The City of New York; provided, that a written request from such Bondholder
to such effect designating such account is received by the Trustee or the Paying
Agent no later than the Regular Record Date immediately preceding such Bond
Payment Date. Unless such designation is revoked, any such designation made by
such person with respect to such certificated Bonds will remain in effect with
respect to any future payments with respect to such certificated Bond payable to
such person.
<PAGE>
ANNEX 1
PERCENTAGE OF ORIGINAL PRINCIPAL AMOUNT PAYABLE
<TABLE>
<CAPTION>
YEAR FEBRUARY 28 MAY 31 AUGUST 31 NOVEMBER 30 ANNUAL TOTAL
- ---- ----------- ------ --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
2001 0.0000% 0.0000% 0.0000% 0.0000% 0.0000%
2002 0.1600% 0.1600% 0.1600% 0.1600% 0.6400%
2003 0.3850% 0.3850% 0.3850% 0.3850% 1.5400%
2004 0.5150% 0.5150% 0.5150% 0.5150% 2.0600%
2005 0.5700% 0.5700% 0.5700% 0.5700% 2.2800%
2006 0.5800% 0.5800% 0.5800% 0.5800% 2.3200%
2007 0.7400% 0.7400% 0.7400% 0.7400% 2.9600%
2008 0.9200% 0.9200% 0.9200% 0.9200% 3.6800%
2009 0.7800% 0.7800% 0.7800% 0.7800% 3.1200%
2010 0.8150% 0.8150% 0.8150% 0.8150% 3.2600%
2011 1.0300% 1.0300% 1.0300% 1.0300% 4.1200%
2012 0.7600% 0.7600% 0.7600% 0.7600% 3.0400%
2013 0.9600% 0.9600% 0.9600% 0.9600% 3.8400%
2014 1.2900% 1.2900% 1.2900% 1.2900% 5.1600%
2015 1.2400% 1.2400% 1.2400% 1.2400% 4.9600%
2016 1.3550% 1.3550% 1.3550% 1.3550% 5.4200%
2017 1.4650% 1.4650% 1.4650% 1.4650% 5.8600%
2018 1.0100% 1.0100% 1.0100% 1.0100% 4.0400%
2019 1.2050% 1.2050% 1.2050% 1.2050% 4.8200%
2020 1.6250% 1.6250% 1.6250% 1.6250% 6.5000%
2021 1.6500% 1.6500% 1.2000% 1.2000% 5.7000%
2022 1.3900% 1.3900% 1.3900% 1.3900% 5.5600%
2023 1.5000% 1.5000% 1.5000% 1.5000% 6.0000%
2024 1.5500% 1.5500% 1.5500% 1.5500% 6.2000%
2025 1.7300% 1.7300% 1.7300% 1.7300% 6.9200%
=======
100%
</TABLE>
At the direction of the Company, the Trustee shall round principal
amounts to be redeemed to the nearest $1,000.
<PAGE>
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS BOND (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM AND IN ANY EVENT MAY BE SOLD OR OTHERWISE TRANSFERRED ONLY
IN ACCORDANCE WITH THE INDENTURE, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION
AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE IN NEW YORK, NEW YORK.
EACH PURCHASER OF THIS BOND IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER. EACH HOLDER OF THIS BOND REPRESENTS TO AES
IRONWOOD, L.L.C. (THE "COMPANY") THAT (A) SUCH HOLDER WILL NOT SELL, PLEDGE OR
OTHERWISE TRANSFER THIS BOND (WITHOUT THE CONSENT OF THE COMPANY) OTHER THAN (I)
TO A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION COMPLYING WITH RULE 144A
UNDER THE SECURITIES ACT, (II) IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES
ACT, (III) OUTSIDE THE UNITED STATES OF AMERICA IN A TRANSACTION MEETING THE
REQUIREMENTS OF REGULATION S UNDER THE SECURITIES ACT, (IV) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, SUBJECT, IN THE
CASE OF CLAUSES (II), (III) OR (IV), TO THE RECEIPT BY THE COMPANY OF AN OPINION
OF COUNSEL OR SUCH OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH RESALE,
PLEDGE, OR TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND THAT
(B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER OF THIS BOND OF THE RESALE RESTRICTIONS REFERRED TO HEREIN AND DELIVER
TO THE TRANSFEREE (OTHER THAN A QUALIFIED INSTITUTIONAL BUYER) PRIOR TO THE SALE
A COPY OF A NOTICE TO INVESTORS (COPIES OF WHICH MAY BE OBTAINED FROM THE
TRUSTEE).
<PAGE>
AES IRONWOOD, L.L.C.
8.857% SENIOR SECURED BOND
DUE 2025
B-2
$108,500,000 CUSIP No. 00103XAA1
AES IRONWOOD, L.L.C., a Delaware limited liability company (the
"Company"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of One Hundred Eight Million Five Hundred
Thousand Dollars ($108,500,000) in consecutive quarterly installments on
February 28, May 31, August 31 and November 30 of each year (each such date
being a "Bond Payment Date"), beginning August 31, 1999, in an amount equal to
the amount specified for such date on Annex 1 hereto until the outstanding
principal hereof is repaid in full, in any coin or currency of the United States
of America which at the time of payment is legal tender for public and private
debts, and to pay on each Bond Payment Date occurring after the date hereof at
said offices or agencies to the registered owner hereof, in like coin or
currency, interest on the outstanding principal hereof from the date of issuance
hereof at the rate of 8.857% per annum. The final maturity hereof shall be
November 30, 2025. All payments of principal of, premium, if any, and interest
on this Bond shall be made at the Corporate Trust Office of the Trustee.
The provisions of this Bond are continued on the reverse hereof and
such continued provisions shall for all purposes have the same effect as though
fully set forth at this place.
This Bond shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Authentication Certificate hereon shall have been signed by or on behalf of the
Trustee.
IN WITNESS WHEREOF, the Company has caused this Bond to be signed in
its name by its Authorized Officer.
Dated: June 25, 1999
AES IRONWOOD, L.L.C.
By: /s/ Patricia L. Rollin
-----------------------------
Name: Patricia L. Rollin
Title: Vice President
<PAGE>
TRUSTEE'S AUTHENTICATION CERTIFICATE
This bond is one of the Bonds referred to in the within-mentioned
Indenture.
IBJ WHITEHALL BANK & TRUST COMPANY,
as Trustee
By: /s/ Thomas McCutcheon
-----------------------------
Authorized Officer
Dated: June 25, 1999
<PAGE>
Reverse of Global Bond
AES IRONWOOD, L.L.C.
8.857% SENIOR SECURED BOND
DUE 2025
This bond is one of an issue of bonds of the Company, issuable in
series, and is one of a series known as its 8.857% Senior Secured Bonds Due 2025
(collectively, the "Bonds"), all issued and to be issued under and equally
secured (except as to any sinking fund established in accordance with the
provisions of the Indenture hereinafter mentioned for the bonds of any
particular series) by a Trust Indenture, dated as of June 1, 1999, executed and
delivered between the Company and IBJ Whitehall Bank & Trust Company, as Trustee
and Depositary Bank (the "Original Indenture"), as amended and supplemented by
the First Supplemental Indenture, dated as of June 1, 1999, to which the
Original Indenture is so amended and supplemented (herein collectively referred
to as the "Indenture"). A description of the rights of the Bondholders and the
terms and conditions upon which the Bonds are issued are set forth in the
Indenture. Capitalized terms used but not otherwise defined herein shall have
the meanings assigned thereto in the Indenture.
THE BONDS ARE SUBJECT TO OPTIONAL AND MANDATORY REDEMPTION AND
PREPAYMENT AS PROVIDED IN THE INDENTURE.
As more fully described in the Indenture, the Company has the right,
without the consent by Holders of the Bonds, to amend the Indenture in certain
respects of the Bondholders. As more fully described in the indenture, with the
consent of Bondholders of not less than a majority in aggregate principal amount
of the Bonds of all series then Outstanding, the Company may amend the Indenture
in any other respect; provided, however, that no amendment shall, without the
consent of the Holder of each Outstanding Bond, (1) change the maturity date of
any Bond, or change the amount, of any payment of principal, interest or
premium, if any, on any Bond, (2) permit the creation of any lien on the
Collateral not otherwise permitted, prior to or on a parity with the lien of the
Indenture, or terminate the lien of the Indenture, (3) reduce the percentage of
the principal amount of Bonds the Holders of which are required to approve any
such amendment or (4) waive a Default in the payment of principal, interest or
premium, if any, or the remedies available in the case of an Event of Default.
The principal hereof may be declared or may become due on the
conditions, in the manner and at the time set forth in the Indenture, including
an acceleration of payment of the principal upon the occurrence and during the
continuance of an Event of Default as in the Indenture provided.
Recourse under this Bond is limited as set forth under the Indenture.
Satisfaction of the obligations of the Company under this Indenture, for the
payment of the principal of or premium, if any, or interest on any Bonds, or any
part thereof, or for any claim based thereon or otherwise in respect thereof or
related thereto, shall be had solely from the Collateral and the assets of the
Company and no recourse shall be had in the event of any non-performance by the
Company of
<PAGE>
any such obligations to (i) any assets or properties of the Members (or any
Person that controls any Member within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) or (ii) any Affiliate of the
Company or any incorporators, officers, directors or employees thereof, and no
judgment for any deficiency upon the obligations of the Company under this
Indenture, for the payment of the principal of or premium, if any, or interest
on any Bonds, or any part thereof, or for any claim based thereon or otherwise
in respect thereof or related thereto, shall be obtainable by the Bondholders or
the Trustee against any Member or Affiliate of the Company or any other
incorporator, stockholder, officer, employee or director, past, present or
future of the Company or any Affiliate of the Company; provided, however, that
nothing contained herein shall prevent the taking of any action permitted by law
against the Company or any of its Affiliates, or in any way affect or impair the
rights of the Trustee or Bondholders to take any action permitted by law, in
either case to realize upon the Collateral and, provided further, that nothing
herein shall be deemed to affect the obligations of any Affiliate of the Company
under any Transaction Document to which such Affiliate is a party.
The Bonds are issuable only as bonds without coupons in denominations
of $100,000 and integral multiples of $1,000 in excess thereof and authorized
multiples thereof. This Bond is transferable as prescribed in the Indenture by
the registered owner hereof, in person or by attorney duly authorized, at the
Corporate Trust Office of the Trustee, upon surrender and cancellation of this
Bond, and thereupon a new registered Bond or Bonds for a like principal amount
in authorized denominations will be issued to the transferee in exchange
therefor, as provided in the Indenture, and upon payment, if the Company shall
require it, of the transfer charges therein prescribed. The Company and the
Trustee shall deem and treat the person in whose name this Bond is registered as
the absolute owner for the purpose of receiving payment of or on account of the
principal and interest due hereon and for all other purposes. Registered Bonds
shall be exchangeable at said office of the Trustee for registered Bonds of
other authorized denominations having the same aggregate principal amount, in
the manner and upon the conditions prescribed in the Indenture. Notwithstanding
any provision of the Indenture, (a) neither the Company nor the Trustee shall be
required to make transfers or exchanges of Bonds during the period between any
interest payment date for such Bonds and the Regular Record Date next preceding
such interest payment date, and (b) no charge shall be made upon any transfer or
exchange of Bonds other than for any tax or taxes or other government charges
required to be paid by the Company.
All payments of principal and interest with respect to certificated
Bonds will be made by dollar check drawn on a bank in The City of New York or,
for Bondholders of at least U.S.$1,000,000 in aggregate principal amount of
Bonds, by wire transfer to a dollar account maintained by the payee with a bank
in The City of New York; provided, that a written request from such Bondholder
to such effect designating such account is received by the Trustee or the Paying
Agent no later than the Regular Record Date immediately preceding such Bond
Payment Date. Unless such designation is revoked, any such designation made by
such person with respect to such certificated Bonds will remain in effect with
respect to any future payments with respect to such certificated Bond payable to
such person.
<PAGE>
ANNEX 1
PERCENTAGE OF ORIGINAL PRINCIPAL AMOUNT PAYABLE
<TABLE>
<CAPTION>
YEAR FEBRUARY 28 MAY 31 AUGUST 31 NOVEMBER 30 ANNUAL TOTAL
---- ----------- ------ --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
2001 0.0000% 0.0000% 0.0000% 0.0000% 0.0000%
2002 0.1600% 0.1600% 0.1600% 0.1600% 0.6400%
2003 0.3850% 0.3850% 0.3850% 0.3850% 1.5400%
2004 0.5150% 0.5150% 0.5150% 0.5150% 2.0600%
2005 0.5700% 0.5700% 0.5700% 0.5700% 2.2800%
2006 0.5800% 0.5800% 0.5800% 0.5800% 2.3200%
2007 0.7400% 0.7400% 0.7400% 0.7400% 2.9600%
2008 0.9200% 0.9200% 0.9200% 0.9200% 3.6800%
2009 0.7800% 0.7800% 0.7800% 0.7800% 3.1200%
2010 0.8150% 0.8150% 0.8150% 0.8150% 3.2600%
2011 1.0300% 1.0300% 1.0300% 1.0300% 4.1200%
2012 0.7600% 0.7600% 0.7600% 0.7600% 3.0400%
2013 0.9600% 0.9600% 0.9600% 0.9600% 3.8400%
2014 1.2900% 1.2900% 1.2900% 1.2900% 5.1600%
2015 1.2400% 1.2400% 1.2400% 1.2400% 4.9600%
2016 1.3550% 1.3550% 1.3550% 1.3550% 5.4200%
2017 1.4650% 1.4650% 1.4650% 1.4650% 5.8600%
2018 1.0100% 1.0100% 1.0100% 1.0100% 4.0400%
2019 1.2050% 1.2050% 1.2050% 1.2050% 4.8200%
2020 1.6250% 1.6250% 1.6250% 1.6250% 6.5000%
2021 1.6500% 1.6500% 1.2000% 1.2000% 5.7000%
2022 1.3900% 1.3900% 1.3900% 1.3900% 5.5600%
2023 1.5000% 1.5000% 1.5000% 1.5000% 6.0000%
2024 1.5500% 1.5500% 1.5500% 1.5500% 6.2000%
2025 1.7300% 1.7300% 1.7300% 1.7300% 6.9200%
=======
100%
</TABLE>
At the direction of the Company, the Trustee shall round principal
amounts to be redeemed to the nearest $1,000.
<PAGE>
Exhibit 4.6
EXECUTION COPY
- --------------------------------------------------------------------------------
EQUITY SUBSCRIPTION AGREEMENT
Dated as of
June 1, 1999
among
AES IRONWOOD, L.L.C.,
AES IRONWOOD, INC.,
and
IBJ WHITEHALL BANK & TRUST COMPANY,
as Collateral Agent
- --------------------------------------------------------------------------------
705 MW (Net) Gas-Fired Combined Cycle Electric Generating Facility
South Lebanon Township, Lebanon County, Pennsylvania
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS.............................................1
SECTION 2. EQUITY CONTRIBUTIONS....................................3
SECTION 3. NOTIFICATION OF SECURITY INTEREST.......................5
SECTION 4. REPRESENTATIONS AND WARRANTIES..........................5
SECTION 5. COVENANTS...............................................6
SECTION 6. ADDITIONAL COVENANTS OF AESI............................6
SECTION 7. EVENTS OF DEFAULT.......................................8
SECTION 8. TRANSFERS OF INTEREST IN THE COMPANY....................8
SECTION 9. OBLIGATIONS ABSOLUTE, ETC...............................8
SECTION 10. WAIVER.................................................10
SECTION 11. SUPPORT INSTRUMENTS....................................10
SECTION 12. RESCISSION OF PAYMENT..................................12
SECTION 13. SEPARATE UNDERTAKINGS..................................12
SECTION 14. NOTICES................................................13
SECTION 15. SUCCESSORS AND ASSIGNS.................................14
SECTION 16. AMENDMENT, ETC.........................................14
SECTION 17. REMEDIES...............................................14
SECTION 18. HEADINGS...............................................14
SECTION 19. GOVERNING LAW..........................................15
SECTION 20. CONSENT TO JURISDICTION................................15
SECTION 21. WAIVER OF JURY TRIAL...................................15
SECTION 22. EXPENSES...............................................15
SECTION 23. COUNTERPARTS...........................................15
SECTION 24. SEVERABILITY...........................................15
SECTION 25. TERMINATION............................................16
EXHIBIT A FORM OF ACCEPTABLE LETTER OF CREDIT
EXHIBIT B FORM OF ACCEPTABLE BOND
i
<PAGE>
EQUITY SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of June 1,
1999, made by and among AES IRONWOOD, L.L.C., a Delaware limited liability
company (the "Company"), AES IRONWOOD, INC., a Delaware corporation ("AESI") and
IBJ WHITEHALL BANK & TRUST COMPANY, in its capacity as Collateral Agent under
the Collateral Agency Agreement referred to below (together with its successors
and assigns, the "Collateral Agent"). (Each of the Company, AESI and the
Collateral Agent, a "Party" and collectively, the "Parties").
RECITALS
AESI owns 100% of the membership interests of the Company.
The Company will issue certain Senior Secured Bonds in one or more
series pursuant to the Trust Indenture dated as of the date hereof (as amended,
restated, supplemented or otherwise modified, the "Indenture") among the
Company, IBJ Whitehall Bank & Trust Company, as Trustee (together with its
successors in such capacity, the "Trustee") and IBJ Whitehall Bank & Trust
Company, as Depositary Bank, in the aggregate principal amount of $308,500,000
(the "Bonds"), the proceeds of which will be used (i) to pay costs incurred in
connection with the development, construction, startup and testing of the
Facility and (ii) to pay certain transaction costs incurred in connection with
the issuance of the Bonds.
The Company, the Collateral Agent, the Trustee, the DSR Letter of
Credit Provider and the CP Letter of Credit Provider have entered into the
Collateral Agency and Intercreditor Agreement, dated as of even date herewith
(as the same may be amended, supplemented or otherwise modified from time to
time, the "Collateral Agency Agreement"), pursuant to which the Collateral Agent
has been appointed to act as Collateral Agent and representative for the Senior
Parties in connection with, among other things, the matters referred to herein.
In order to ensure the making of certain equity contributions that may
become due under the Collateral Agency Agreement, the Collateral Agent, solely
on behalf of the Senior Secured Parties, requires commitments from AESI to
contribute capital to the Company on the terms and conditions, and for the
purposes, provided herein.
It is a condition precedent to the obligation of Lehman Brothers Inc.,
Morgan Stanley & Co. Incorporated and Dresdner Kleinwort Benson North America
LLC (the "Initial Purchasers") to purchase and pay for the Bonds pursuant to the
Bond Purchase Agreement (the "Purchase Agreement") dated as of June 18, 1999,
between the Company and Lehman Brothers on behalf of the Initial Purchasers,
that the parties hereto enter into this Agreement.
THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions.
(a) All capitalized terms used in this Agreement shall have the
meanings ascribed
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thereto in the Indenture. As used and not defined herein, the following
additional terms shall have the following meanings:
"Acceptable Letter of Credit" means an irrevocable letter of credit or
letters of credit in the form of Exhibit A or otherwise in form and substance
satisfactory to the Collateral Agent in its reasonable judgment, issued for the
benefit of the Collateral Agent and for the account of AESI or an Affiliate
other than the Company, in the stated amount of $50,149,285.00, by a domestic or
foreign commercial bank whose outstanding senior unsecured long-term debt is
rated at least A or the equivalent by S&P and Moody's.
"Acceptable Bond" means a bond or bonds, issued by a domestic or
foreign insurance company whose outstanding senior unsecured long-term debt is
rated at least "A" by Standard & Poor's and "A2" by Moody's issued for the
benefit of the Collateral Agent in the aggregate initial stated amount of
$50,149,285.00, and in the form attached hereto as Exhibit B or otherwise in
form and substance satisfactory to the Collateral Agent in its reasonable
judgment and as to which the Company shall have no obligations to the insurance
company or its Affiliates.
"AESI Event of Default" has the meaning given such term in Section 7.
"AESI Support Account" has the meaning set forth in Section 11(d) of
this Agreement.
"AESI Support Amount" means, as of any date, $50,149,285.00 reduced by
the sum of all Equity Contributions made prior to such date.
"AESI Support Instrument" means (i) an Acceptable Letter of Credit,
(ii) an Acceptable Bond, or (iii) a Substitute Support Instrument.
"Bond Payment Account" shall mean the Account of such name created
pursuant to Section 4.1 of the Indenture.
"Cash Deposit" means a cash deposit to a AESI Support Account in an
amount equal to all or a portion of the AESI Support Amount.
"Commercial Operation Date" has the meaning given such term in the
Power Purchase Agreement.
"Construction Account" shall mean the account of such name created
pursuant to Section 3.1 of the Collateral Agency Agreement.
"Construction Interest Account" shall mean the Account of such name
created pursuant to Section 4.1 of the Indenture.
"Downgrade Event" has the meaning given such term in Section 11(f).
"Equity Contribution" has the meaning given such term in Section 2(a).
"Equity Contribution Commitment" shall mean $50,149,285.00.
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"Equity Contribution Date" shall mean any date on which AESI is
required to contribute equity to the Construction Account pursuant to the terms
of this Agreement.
"Final Acceptance" shall have the meaning given such term in the EPC
Contract.
"Final Acceptance Date" shall mean the later of (i) the Commercial
Operation Date and (ii) the date on which Final Acceptance is achieved (or is
deemed to have been achieved) pursuant to Section 6.5 of the EPC Contract.
"IC Downgrade Event" has the meaning given such term in Section 11(g).
"Moody's" shall mean Moody's Investors Service, Inc., a Delaware
corporation.
"Remaining Required Equity Contribution" shall mean the amount required
as of the Final Acceptance Date to pay Project Costs and principal, if any, on
the Bonds less the aggregate of the amounts then on deposit in or credited to
the Construction Account, the Construction Interest Account and the Bond Payment
Account.
"SEC" shall mean the United States Securities and Exchange Commission.
"Securities" shall mean any shares, stock, bonds, debentures, notes,
evidences of indebtedness or any other instruments commonly known as
"securities".
"S&P" shall mean Standard & Poor's Ratings Group, a New York
corporation.
"Substitute Support Instrument" means (i) an Acceptable Letter of
Credit, (ii) a Cash Deposit with Support Account Documentation as set forth in
Section 11(d), or (iii) an Acceptable Bond.
"Support Account Documentation" has the meaning set forth in Section
11(d) of this Agreement.
(b) All references to Persons herein shall include their permitted
successors and assigns.
SECTION 2. Equity Contributions.
AESI shall make or cause to be made to the Company cash equity
contributions or loans pursuant to an Affiliate Subordinated Loan Agreement
between AESI, and/or an Affiliate of AESI, and the Company (each an "Equity
Contribution") by depositing such Equity Contributions in the Construction
Account in accordance with the following terms and conditions; provided,
however, that the aggregate amount of such Equity Contributions shall not at any
time exceed the Equity Contribution Commitment:
(a) Commencing on the Closing Date to and including the Final
Acceptance Date, the Collateral Agent shall notify AESI on the Business Day
immediately following any date on which (i) the aggregate amount then required
to pay Project Costs in accordance with Section 3.8
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of the Collateral Agency Agreement is greater than (ii) the aggregate amount of
the available amounts then on deposit in or credited to the Construction
Account, the Interest Payment Subaccount of the Bond Payment Account and the
Construction Interest Subaccount (such difference, the "Shortfall Amount"). On
the second Business Day immediately following the Collateral Agent's notice,
AESI shall make an Equity Contribution to the Construction Account in an amount
equal to the lesser of (i) such Shortfall Amount as specified in such notice
from the Collateral Agent or (ii) the then current unutilized Equity
Contribution Commitment. On the Final Acceptance Date, AESI shall make an Equity
Contribution to the Construction Account in an amount equal to the then current
unutilized Equity Contribution Commitment, provided that the amount required to
be contributed pursuant to this sentence shall be reduced to the Remaining
Required Equity Contribution if the Company delivers an Officer's Certificate to
the Collateral Agent on the Final Acceptance Date certifying that:
(A) all other amounts due and payable under this Agreement
have been paid as required under this Agreement on and as of the Final
Acceptance Date;
(B) Final Acceptance has occurred;
(C) the Commercial Operation Date has occurred;
(D) no Default or Event of Default under the Indenture or any
other Financing Document has occurred and is continuing on and as of
the Final Acceptance Date; and
(E) all Accounts are fully funded on and as of the Final
Acceptance Date to the extent required under the Collateral Agency
Agreement.
(b) Upon the occurrence of any Event of Default under the Indenture or
an AESI Event of Default on or prior to the Final Acceptance Date, AESI shall
immediately make an Equity Contribution to the Construction Account in an amount
equal to the then current unutilized Equity Contribution Commitment. Any Equity
Contribution made pursuant to this clause (b) shall be applied in accordance
with Section 3.8 of the Collateral Agency Agreement.
(c) As security for its obligations under Section 2(a) and Section
2(b), AESI shall provide to the Collateral Agent, on the Closing Date, one or
more AESI Support Instruments in the aggregate amount of the AESI Support
Amount. In the event that AESI shall fail to make any Equity Contribution when
due in accordance with Section 2(a) or Section 2(b), the Collateral Agent shall
promptly make a drawing on an AESI Support Instrument or AESI Support
Instruments in the amount of such Equity Contribution required to be made by
AESI and not paid under Section 2(a) or Section 2(b); provided that the
Collateral Agent's failure to make such demand for payment shall not relieve
AESI of its obligations under this Agreement, including but not limited to its
obligations under Section 2(a) and Section 2(b). Any proceeds of a drawing on an
AESI Support Instrument received by the Collateral Agent shall be applied to,
and in satisfaction of, AESI's obligations under this Agreement. In the event
that AESI has provided two or more AESI Support Instruments in fulfillment of
its obligations under this Section 2(c), drawings made by the Collateral Agent
pursuant to the first sentence of this Section 2(c) shall be made by drawings on
one of such AESI Support Instruments until the earlier of (i) such time as
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all amounts available under such AESI Support Instrument have been drawn and
(ii) such time as the provider of such AESI Support Instrument fails to make
payment in accordance with the terms of such AESI Support Instrument, and then,
subject to the same conditions, by drawings on the other AESI Support Instrument
or AESI Support Instruments in turn.
(d) Any amount which is not paid when due pursuant to this Section 2
shall bear interest at a rate per annum equal to two percent (2%) plus the
interest rate on the Bonds until paid in full.
(e) AESI agrees that, unless otherwise instructed by the Collateral
Agent following an Event of Default, it shall make all payments required to be
made by it in immediately available funds directly to the Collateral Agent for
the benefit of the Company, and such amounts shall be applied as provided in the
Collateral Agency Agreement.
SECTION 3. Notification of Security Interest.
In order to perfect the security interest of the Collateral Agent in
the Collateral in accordance with Section 9-103 of the Uniform Commercial Code
of the State of New York, Company hereby notifies AESI of the existence of such
security interest and AESI hereby acknowledges the receipt and sufficiency of
such notice.
SECTION 4. Representations and Warranties.
AESI represents and warrants to the Collateral Agent that:
(a) Organization and Qualification. It (i) is a corporation, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with full right, power and authority under
its corporate charter and by-laws and under the laws of the state of its
incorporation to enter into this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby, (ii) is duly qualified
to do business and in good standing in each other jurisdiction where the
character of its properties or the nature of its activities makes such
qualification necessary, except where the failure to so qualify or be authorized
would not materially and adversely affect its ability to perform its obligations
hereunder, and, (iii) has the corporate power to carry on its business as now
being conducted and as proposed to be conducted.
(b) Authorization and Enforceability. It has taken all necessary
corporate action to authorize the transactions contemplated by this Agreement.
This Agreement has been duly executed and delivered by it and constitutes its
legal, valid and binding obligation enforceable in accordance with its terms,
except as the enforceability thereof may be limited by (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance 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.
(c) No Conflict. Neither the execution and delivery of this Agreement
nor compliance with any of the terms and provisions hereof (i) contravenes any
Applicable Law or
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Governmental Approval applicable to it or any of its respective properties or
other assets, (ii) conflicts with, breaches or contravenes the provisions of its
corporate charter or by-laws or any contractual obligation applicable to it, or
(iii) results in the creation or imposition of any Lien upon any of its property
or assets under, or in a condition or event that constitutes (or that, upon
notice or lapse of time or both, would constitute) an event of default under,
any of its contractual obligations.
(d) Governmental Approvals. No Governmental Approval is required to
authorize, or is required in connection with, its execution, delivery and
performance of this Agreement or the taking of any action by it contemplated
hereby.
(e) Litigation. There are no actions, suits or proceedings at law or in
equity by or before any Governmental Authority now pending or, to the best of
its knowledge, threatened against or affecting it or any of its properties or
rights which could materially and adversely affect its right or ability to
fulfill its obligations hereunder, or which questions or challenges the validity
of this Agreement or any action taken or to be taken by it pursuant to this
Agreement or in connection with the transactions contemplated hereby.
SECTION 5. Covenants.
So long as any obligation of AESI under this Agreement is outstanding,
AESI covenants and agrees with the Collateral Agent, as follows:
(a) Corporate Existence. It shall (i) preserve and maintain its legal
existence, (ii) preserve and maintain all of its rights, privileges and
franchises, if any, necessary for the operation of its business and the
maintenance of its existence, and (iii) comply in all material respects with all
Applicable Laws, where in the case of clause (ii) and (iii) any failure to
comply would reasonably be expected to have a material adverse effect on its
ability to comply with its obligations under this Agreement.
(b) Reporting Requirements. It shall furnish (i) written notice of any
AESI Event of Default, specifically stating that an AESI Event of Default has
occurred and describing such AESI Event of Default and any action being taken
with respect to such AESI Event of Default, and (ii) notice of the occurrence of
a Material Adverse Change with respect to it.
(c) Other Activities. It shall not amend the Company's certificate of
formation or limited liability company agreement in a manner that would
reasonably be expected to result in a Material Adverse Effect or take any action
which might result in the dissolution of the Company.
SECTION 6. Additional Covenants of AESI.
(a) So long as any of its obligations under this Agreement is
outstanding and it is a party to this Agreement, AESI covenants and agrees with
the Collateral Agent that it shall not enter into any transaction of merger or
consolidation, or change its form of organization or its business or liquidate
or dissolve itself (or suffer any liquidation or dissolution) or transfer all or
substantially all of its assets other than to an Affiliate in accordance with
Section 8 below.
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(b) Notwithstanding any other provision in AESI's Certificate of
Incorporation and any other provision of law to the contrary, until such time as
the Bonds shall be indefeasibly paid in full and all liens and security
interests securing such indebtedness shall be indefeasibly released and
discharged, AESI at all times shall:
(i) maintain its books, records and bank accounts separate and
apart from those of all other Persons;
(ii) not commingle any of its assets with those of any other
Person;
(iii) pay the salaries of its own employees, if any, and maintain a
sufficient number of employees in light of its contemplated
business operations
(iv) pay its own liabilities out of its own funds;
(v) maintain financial statements separate and apart from those of
all other Persons;
(vi) observe all corporate formalities, organizational formalities
and other applicable or customary formalities;
(vii) not guarantee or become obligated for the debts of any other
Person or hold out its credit as being available to satisfy
the obligations of any other Person;
(viii) not pledge its assets for the benefit of any other Person or
make any loans or advances to any other Person;
(ix) not acquire the direct obligations of, or securities issued
by, its shareholders or any Affiliate;
(x) allocate fairly and reasonably any overhead for expenses that
are shared with an Affiliate, including paying for the office
space and services performed by any employee of any Affiliate;
(xi) use stationery, invoices and checks bearing its own name;
(xii) conduct business in its own name, promptly correct any known
misunderstandings regarding its separate identity, and not
identify itself as a division of any other Person;
(xiii) maintain adequate capital in light of its contemplated
business operations;
(xiv) maintain arm's length relationships with all Affiliates and
enter into transactions with Affiliates only on commercial
reasonable bases; and
(xv) not have any employees other than employees necessary to
perform authorized activities.
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SECTION 7. Events of Default.
If any of the following events (each an "AESI Event of Default") shall
occur and be continuing:
(a) AESI shall fail to make or cause to be made any Equity Contribution
when required pursuant to Section 2(a) or Section 2(b) of this Agreement;
(b) A Bankruptcy Event in respect of AESI shall have occurred and be
continuing; or
(c) This Agreement shall at any time for any reason cease to be valid
and binding and in full force and effect or the validity or enforceability
thereof shall be contested by any party thereto or any party thereto (other than
the Collateral Agent) shall deny that it has any liability or obligation under
such Agreement;
then at any time thereafter if an AESI Event of Default shall then be
continuing, the Collateral Agent may, and at the direction of the Required
Senior Parties shall, by notice to the Company, take any or all of the following
actions, without prejudice to the rights of the Collateral Agent to enforce its
claims against the Company, in respect of such AESI Event of Default: (i)
declare all Equity Contributions required under this Agreement to be, whereupon
the same shall become, forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Company and the AESI and (ii) exercise any other remedies against the Company
and AESI available at law or in equity.
SECTION 8. Transfers of Interest in the Company.
AESI shall not directly or indirectly transfer any of its interest in
the Company if such transfer would result in a Change in Control or would
otherwise conflict with the Indenture; provided, however, AESI may, if such
transfer would not result in a Change in Control and is otherwise in accordance
with the Indenture, transfer its entire interest in the Company to an Affiliate
and be released from all of its obligations under this Agreement so long as (A)
such Affiliate assumes all of AESI's obligations under this Agreement, (B) such
Affiliate provides Substitute Support Instruments satisfactory to the Collateral
Agent and (C) the Parties and any such transferee or transferees enter into
conforming amendments to this Agreement reflecting any applicable transfer,
assumption and release of obligations hereunder.
SECTION 9. Obligations Absolute, Etc.
AESI further covenants and agree as follows:
(a) The obligations of AESI to make, or cause to be made, Equity
Contributions pursuant to Section 2 of this Agreement constitute direct
obligations of AESI to the Collateral Agent, and shall be enforceable by the
Collateral Agent.
(b) The obligations of AESI to make, or cause to be made, Equity
Contributions pursuant to Section 2 hereof are and shall be absolute and
unconditional and are not, and shall
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not be, subject to any defense or right of set-off, counterclaim, deduction,
diminution, abatement, recoupment, defense, suspension, deferment or reduction
or any other legal or equitable defense which such party has or hereafter may
have, against any other Person (including the Company) for any reason whatsoever
(including, without limitation, any circumstance which constitutes, or might be
construed to constitute, an equitable or legal discharge of any or all of the
Company's obligations in bankruptcy or otherwise).
(c) To the extent permitted by Applicable Law, the obligations of AESI
hereunder shall be absolute and unconditional, shall remain in full force and
effect, and shall not be released, discharged or in any way affected,
notwithstanding:
(i) any lack of validity, enforceability or value of any
Financing Documents or any other agreement or instrument relating
thereto or to any collateral therefor;
(ii) any change in the time, manner or place of payment of, or
in any other term of, the Financing Documents or any amendment or
waiver thereof, or any consent to departure from any of those
documents;
(iii) any failure to pay any taxes which may be payable with
respect to the performance of its obligations hereunder by AESI or
failure to obtain any authorization or approval from or other action
by, or to notify or file with, any Governmental Authority required in
connection with the performance of such obligations by AESI;
(iv) any impossibility or impracticality of performance, force
majeure, any act of any government, or other circumstance which might
constitute a defense available to, or a discharge of, AESI, or any
other circumstance, event or happening whatsoever, whether foreseen or
unforeseen and whether similar or dissimilar to anything referred to
above in this Section 9;
(v) any merger or consolidation of the Company or AESI into or
with any other entity, or any sale, lease or transfer of all or any of
the assets of the Company or AESI to any other Person;
(vi) any change in the ownership in the Company; or
(vii) to the fullest extent permitted by law, any other
circumstance which might otherwise constitute a defense available to,
or a discharge of, AESI or the Company.
(d) AESI has no right, and shall have no right, to terminate this
Agreement or to be released, relieved or discharged (other than by full and
strict compliance by it with the terms hereof) from any obligation or liability
hereunder for any reason whatsoever.
(e) The obligations of the AESI hereunder will be performed regardless
of any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of the terms of the Financing Documents or any other document
related thereto or the rights of any Person with respect thereto.
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SECTION 10. Waiver.
To the fullest extent permitted by Applicable Law, AESI hereby
expressly waives diligence, presentment, demand for payment, protest, benefit of
any statute of limitations affecting the liability of the Company under the
Financing Documents, benefit of any act or omission by the Collateral Agent
which directly or indirectly results in or aids the discharge of the Company by
operation of law or otherwise, all notices relating to this Agreement,
including, without limitation, notice of acceptance of this Agreement and the
incurring of the obligation to make or to cause to be made any payment hereunder
and notice of any of the circumstances referred to in Section 8, and any
requirement that the Collateral Agent exhaust any right, power, or remedy, or
proceed against the Company for the Equity Contributions.
SECTION 11. Support Instruments.
(a) Any payments made to the Collateral Agent under, or pursuant to
drawings on or from, an AESI Support Instrument shall (i) be deemed to be a
capital contribution by AESI to the Company and to satisfy, to the extent of
such payment, the obligation of AESI to make the applicable AESI Equity
Contribution hereunder.
(b) At any time prior to the termination of AESI's obligations under
this Agreement, AESI may deliver to the Collateral Agent a Substitute Support
Instrument or Substitute Support Instruments having a stated amount or combined
stated amounts, as the case may be, equal to the amount covered by any
previously delivered AESI Support Instrument, in substitution for such existing
Support Instrument. Upon such delivery, the previously delivered AESI Support
Instrument may be terminated by the issuer thereof.
(c) Upon the earlier of (i) the termination of AESI's obligations under
this Agreement or (ii) the delivery to the Collateral Agent of a Substitute
Support Instrument, or Substitute Support Instruments, as the case may be,
pursuant to and in the amount specified in Section 11(b), the Collateral Agent
shall promptly return to the issuer thereof, with a copy to AESI, the applicable
Support Instrument or Support Instruments, as the case may be, previously
delivered to the Collateral Agent, together with any certificate or other
documentation that may be required to effect the cancellation of such Support
Instrument or Support Instruments.
(d) (i) Upon the request of AESI and subject to the receipt of the
Support Account Documentation, as defined below, in form and substance
satisfactory to the Collateral Agent, the Collateral Agent shall open with a
bank or trust company an account in the name of AESI but under the sole dominion
and control of the Collateral Agent (the "AESI Support Account"). Any Cash
Deposit by AESI and any Equity Contribution made upon the occurrence of an event
set forth in Section 11(f) shall be deposited in the AESI Support Account (as
provided therein). The Collateral Agent shall not withdraw funds from the AESI
Support Account except as provided in this Section 11(d). The term "Support
Account Documentation" shall mean documentation in form and substance
satisfactory to the Collateral Agent which (A) grants the Collateral Agent, for
the benefit of the Senior Parties, a security interest in any Cash Deposit or
other amounts deposited in the AESI Support Account and (B) contains the
agreement of AESI to transfer additional cash to the AESI Support Account in
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the event that the aggregate market value of the Permitted Investments (plus any
cash deposits) in such AESI Support Account is, at any time, less than the AESI
Support Amount.
(ii) On each Equity Contribution Date, the Collateral Agent
shall withdraw an amount equal to the required Equity Contribution from
the AESI Support Account, and such withdrawal shall be deemed to
satisfy the obligation of AESI to make, or cause to be made, the
related Equity Contribution hereunder. The Collateral Agent shall apply
all such withdrawn amounts to the satisfaction of amounts owing as
Equity Contributions.
(iii) Amounts on deposit in the AESI Support Account shall be
invested and reinvested by the Collateral Agent, at the direction,
expense and risk of AESI, in Permitted Investments. If the amount on
deposit in such AESI Support Account exceeds the applicable AESI
Support Amount, an amount equal to the amount of such excess shall be
withdrawn at the end of each calendar quarter by the Collateral Agent
and the net amount thereof (after giving effect to any broker
commissions or other expenses of withdrawal or sale) shall be paid to
AESI.
(iv) If, following a Cash Deposit by AESI into the AESI
Support Account, AESI shall deliver a Substitute Support Instrument or
Substitute Support Instruments in respect of such amount to the
Collateral Agent, the Collateral Agent shall promptly withdraw and pay
to AESI such amount (after giving effect to any broker commissions or
other expenses of withdrawal or sale).
(v) Upon the satisfaction or other termination of the
obligations of AESI hereunder, the remaining balance, if any, of the
AESI Support Account shall be paid forthwith to AESI.
(e) If, at any time prior to the termination of this Agreement, an AESI
Support Instrument then in effect shall fail to be renewed or extended in
accordance with the terms of such Support Instrument fifteen (15) Business Days
prior to the day upon which such Support Instrument is scheduled to expire or
terminate and AESI shall have failed to furnish a Substitute Support Instrument
or Substitute Support Instruments in substitution for such Support Instrument,
then the Collateral Agent shall draw upon such Support Instrument in accordance
with its terms prior to such expiration or termination date and shall deposit
the proceeds of any such drawing into the AESI Support Account; provided that if
no such AESI Support Account is then currently in existence, the Collateral
Agent shall hold such proceeds in a separate account until such AESI Support
Account is established in accordance with Section 11(d)(i) and shall promptly
deposit such proceeds in such AESI Support Account upon its establishment.
(f) AESI shall cause any AESI Support Instrument that is an Acceptable
Letter of Credit to be issued by a bank whose senior unsecured debt is rated at
least "A-" or the equivalent by S&P and Moody's. If, at any time prior to the
termination of this Agreement, the outstanding long-term senior unsecured debt
of the bank providing an AESI Support Instrument that is an Acceptable Letter of
Credit fails at any time to be rated at least "A-" or the equivalent by S&P and
Moody's (such event, a "Downgrade Event"), AESI shall, within fifteen (15)
Business Days of its receipt of written notice from the Collateral Agent of the
occurrence of such event, furnish
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a Substitute Support Instrument in substitution for such Support Instrument and
if prior to the expiration of such fifteen (15) day period, AESI shall have
failed to furnish a Substitute Support Instrument, then the Collateral Agent
shall draw upon the Support Instrument then in effect in accordance with its
terms and shall deposit the proceeds of such drawing into the AESI Support
Account for application in accordance with the provisions of Section 11(d);
provided that if no such AESI Support Account is then currently in existence,
the Collateral Agent shall hold such proceeds in a separate account until such
AESI Support Account is established in accordance with Section 11(d)(i) and
shall promptly deposit such proceeds in such AESI Support Account upon its
establishment.
(g) AESI shall cause any AESI Support Instrument that is an Acceptable
Bond to be issued by an insurance company whose senior unsecured debt is rated
at least "A" or the equivalent by S&P and Moody's. If, at any time prior to the
termination of this Agreement, the outstanding senior unsecured long-term debt
of the bank providing an AESI Support Instrument that is an Acceptable Bond
fails at any time to be rated at least "A" or the equivalent by S&P and Moody's
(such event, an "IC Downgrade Event"), AESI shall, within fifteen (15) Business
Days of its receipt of written notice from the Collateral Agent of the
occurrence of such event, furnish a Substitute Support Instrument or Substitute
Support Instruments in substitution for such AESI Support Instrument and if
prior to the expiration of such fifteen (15) day period, AESI shall have failed
to furnish a Substitute Support Instrument, then the Collateral Agent shall draw
upon the AESI Support Instrument then in effect in accordance with its terms and
shall deposit in the proceeds of such drawing into the AESI Support Account for
application in accordance with the provisions of Section 11(d); provided, that
if no such AESI Support Account is then currently in existence, the Collateral
Agent shall hold such proceeds in a separate account until such AESI Support
Account is established in accordance with Section 11(d)(i) and shall promptly
deposit such proceeds in such AESI Support Account upon its establishment.
SECTION 12. Rescission of Payment.
To the fullest extent permitted by Applicable Law and notwithstanding
any prior release or termination, this Agreement shall continue to be effective
or be reinstated, as the case may be, with respect to AESI if at any time any
payment (or part thereof) made or caused to be made by AESI pursuant to this
Agreement is rescinded or must otherwise be restored or returned to AESI or the
Company by any beneficiary of this Agreement upon the insolvency, bankruptcy or
reorganization of AESI or the Company or otherwise, all as though such payment
has not been made or caused to be made.
SECTION 13. Separate Undertakings.
Without limiting the generality of any of the foregoing provisions of
this Agreement, AESI irrevocably waives, to the fullest extent permitted by
applicable law and for the benefit of, and as a separate undertaking with, the
Collateral Agent, for the benefit of the Senior Parties, any defense to the
performance of this Agreement which may be available to it as a consequence of
this Agreement being rejected or otherwise not assumed by the Company or any
trustee or other similar official for the Company or for any substantial part of
the property of the Company, or as
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a consequence of this Agreement being otherwise terminated or modified, in any
proceeding seeking to adjudicate the Company a bankrupt or insolvent or seeking
liquidation, winding up, reorganization, arrangement, protection, relief or
composition of the Company or the debts of the Company under any law relating to
bankruptcy, insolvency or reorganization or relief or protection of debtors,
whether such rejection, non-assumption, termination or modification be by reason
of this Agreement being held to be an executory contract or by reason of any
other circumstance. If this Agreement shall be so rejected or otherwise not
assumed, or so terminated or modified, AESI agrees for the benefit of, and as a
separate undertaking with the Collateral Agent, for the benefit of the Senior
Parties, that it will be unconditionally liable to pay or to cause to be paid to
the Collateral Agent, for the benefit of the Senior Parties, an amount equal to
each payment which would otherwise be payable by it pursuant to the provisions
of this Agreement, or by such party that it would have caused to make payment,
under or in connection with this Agreement if this Agreement were not so
rejected or otherwise not assumed or were otherwise not so terminated or
modified, such amount to be payable to the Collateral Agent, for the benefit of
the Senior Parties, in accordance with the instructions of the Collateral Agent,
as and when such payment would otherwise be payable hereunder and such amount to
be applied as such payment would otherwise be applied hereunder.
SECTION 14. Notices.
Any notice or other communication hereunder shall be given in the
manner set forth in the Collateral Agency Agreement to the Parties at the
following addresses:
(a) If to Company, at:
AES Ironwood, L.L.C.
829 Cumberland Street
Lebanon, PA 17042
Attention: Project Manager
(Telephone): 717-228-1328
(Facsimile): 717-228-1271
(with a copy to AESI at its addresses set forth below)
(b) If to AESI, at:
AES Ironwood, Inc.
1001 North 19th Street
Arlington, VA 22209
Attention: General Counsel
(Telephone): 703-522-1315
(Facsimile): 703-528-4510
13
<PAGE>
(c) If to the Collateral Agent, at:
IBJ Whitehall Bank & Trust Company
One State Street
New York, NY 10004
Attention: Capital Markets Trust Services
(Telephone): 212-858-2814
(Facsimile): 212-858-2952
SECTION 15. Successors and Assigns.
This Agreement shall be binding upon each of the Parties and their
successors and inure to the benefit of the Collateral Agent and its respective
successors and permitted assigns as Collateral Agent under the Collateral Agency
Agreement. This Agreement may not be assigned by either AESI or the Company;
provided, however, the obligations of the AESI and the Company hereunder may be
assigned as provided in Section 8 or otherwise with the prior express written
consent of the Required Senior Parties.
SECTION 16. Amendment, Etc.
No amendment or waiver of any provision of this Agreement nor any
consent to any departure by a Party herefrom shall in any event be effective
unless the same shall be in writing and signed by each Party, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No failure or delay on the part of the
Collateral Agent in exercising any right or remedy hereunder shall operate as a
waiver thereof nor shall any single or partial exercise of any power or right
preclude other or further exercise thereof or the exercise of any other right or
remedy.
SECTION 17. Remedies.
No remedy herein conferred upon or reserved to the Collateral Agent is
intended to be exclusive of any other available remedy or remedies, but each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given under this Agreement or now or hereafter existing at law or in
equity or by statute. In order to entitle the Collateral Agent to exercise any
remedy reserved to it in this Agreement, it shall not be necessary to give any
notice, other than such notice as may be expressly required by this Agreement.
No notice to or demand on AESI in any case shall entitle it to any other or
further notice or demand in the same or similar circumstances. Each and every
right and remedy of the Collateral Agent shall, to the extent permitted by law,
be cumulative and shall be in addition to any other remedy given hereunder or
under the Collateral Agency Agreement or any other document now or hereafter
existing at law or in equity or by statute.
SECTION 18. Headings.
The headings herein are included for convenience of reference only and
shall be ignored in the construction or interpretation hereof.
14
<PAGE>
SECTION 19. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW
PROVISIONS OF SUCH LAWS).
SECTION 20. Consent to Jurisdiction.
To the fullest extent permitted by applicable law, with respect to any
legal action or proceeding against AESI arising out of or in connection with
this Agreement, AESI hereby irrevocably (i) consents to the jurisdiction of any
court of the State of New York or of the United States of America located in The
City of New York, (ii) consents to the service of process outside the
territorial jurisdiction of said courts in any such action or proceeding by
mailing copies thereof by registered United States mail, postage prepaid, to the
address specified pursuant to Section 12 hereof, and (iii) waives any objection
to the venue of the aforesaid courts and any objection that the aforesaid courts
are an inconvenient forum.
SECTION 21. Waiver of Jury Trial.
THE COLLATERAL AGENT, THE COMPANY AND AESI HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
SECTION 22. Expenses.
The Company will, upon demand, pay to the Collateral Agent any and all
reasonable expenses, including attorneys' fees and expenses, which the
Collateral Agent may incur in connection with the exercise or enforcement of any
of the rights or interests of the Collateral Agent hereunder.
SECTION 23. Counterparts.
This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
SECTION 24. Severability.
If any provision of this Agreement shall be held or deemed to be or
shall, in fact, be illegal, inoperative or unenforceable, the same shall not
affect any other provision or provisions herein contained or render the same
invalid, inoperative or unenforceable to any extent whatever.
15
<PAGE>
SECTION 25. Termination.
This Agreement and the obligations hereunder shall terminate upon the
payment in full of all Equity Contributions required under this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
16
<PAGE>
IN WITNESS WHEREOF, the Parties have each caused this Agreement to be
executed by its duly appointed representatives as of the date first written
above.
AES IRONWOOD, L.L.C., a Delaware limited
liability company
By: /s/ Patricia L. Rollin
--------------------------------
Name: Patricia L. Rollin
Title: Vice President
AES IRONWOOD, INC., a Delaware corporation
By: /s/ Patricia L. Rollin
--------------------------------
Name: Patricia L. Rollin
Title: Vice President
IBJ WHITEHALL BANK & TRUST COMPANY,as
Collateral Agent
By: /s/ Thomas McCutcheon
--------------------------------
Name: Thomas McCutcheon
Title: Assistant Vice President
[EQUITY SUBSCRIPTION AGREEMENT]
<PAGE>
EXHIBIT A
_______ __, 1999
Beneficiary: IBJ Whitehall Bank & Trust Company,
as Collateral Agent
c/o________________________
___________________________
___________________________
Attention: ______________
______________
Subject: Irrevocable Standby Letter of Credit No. [L/C______]
Gentlemen:
We hereby issue in your favor our Irrevocable Letter of Credit No. __________
(this "Letter of Credit") for the account of AES Ironwood, Inc. ("Ironwood") for
an amount (the "Stated Amount") on any date equal to the difference between (x)
$50,149,285.00 (the "Maximum Stated Amount") and (y) the total amount of prior
draws received and honored by us pursuant to this Letter of Credit.
We understand that this Letter of Credit is being issued to you in connection
with that certain Equity Subscription Agreement dated as of June 1, 1999, among
Ironwood, AES Ironwood, L.L.C. and IBJ Whitehall Bank & Trust Company, in its
capacity as Collateral Agent (the "Collateral Agent") under the Collateral
Agency Agreement by and among Ironwood, AES Ironwood, L.L.C., the Collateral
Agent and the other parties thereto and each other person party thereto, and
Prior to the Termination Date (as hereinafter defined) of this Letter of Credit,
you may draw from time to time an amount not exceeding the Stated Amount, on the
conditions set forth herein against presentation in the manner provided herein
of your sight draft on us (marked "Drawn under Letter of Credit No. L/C ")
accompanied by a signed Drawing Certificate in the form attached hereto as Annex
A appropriately completed (such sight draft and Drawing Certificate being
referred to hereinafter collectively as the "Documents").
Presentation of the Documents shall be made at our office, ___________________
__________________________________________________ (fax no. __________) Attn:
Letter of Credit Department, either by physical delivery of such documents or by
facsimile transmission of such documents to the office stated above. Upon such
presentation, the payment of a drawing shall be made in accordance with the
terms herein. Such Documents shall be sent to our office by overnight courier
for receipt by us within one Business Day of the date of such facsimile
transmission. Our only obligation with regard to a drawing under this Letter of
Credit shall be to
Exhibit A-1
<PAGE>
examine the Documents and to pay in accordance therewith, and we shall not be
obligated to make any inquiry in connection with the presentation of the
Documents.
If the requisite Documents are presented to us at or prior to 12:00 noon (New
York time) on a Business Day (as hereinafter defined), and provided that such
Documents conform to the terms and conditions hereof, payment of the amount
specified shall be made to you in immediately available funds on or prior to
3:00 p.m. (New York time) on such day. If a drawing is made hereunder after
12:00 noon (New York time) on a Business Day, and provided that such Documents
conform to the terms and conditions hereof, payment of the amount specified
shall be made to you in immediately available funds, not later than 12:00 noon
(New York time), on the following Business Day. If a demand for payment made
hereunder does not, in any instance, conform to the terms and conditions of this
Letter of Credit, we shall give you prompt notice that the Documents were not in
accordance with the terms and conditions of this Letter of Credit, stating the
reasons therefor and that we will hold the Documents at your disposal or return
the same to you. Upon being notified that the Documents were not in conformity
with this Letter of Credit, you may attempt to correct any such nonconforming
Documents if and to the extent that you are able to do so.
This Letter of Credit is effective immediately and, unless terminated earlier in
accordance with the provisions hereof, expires at the close of business at our
office in _______________ three hundred sixty four (364) days from today's date
(the "Stated Expiration Date") but such Stated Expiration Date shall be
automatically extended for a period of three hundred sixty four (364) days
effective upon the Stated Expiration Date and each annual anniversary of the
Stated Expiration Date (each such annual anniversary date being referred to
herein as the "New Stated Expiration Date") unless, thirty days prior to the
Stated Expiration Date or any such New Stated Expiration Date, we notify you, by
registered mail or courier service at the above address, that this Letter of
Credit shall not be extended beyond the Stated Expiration Date or the New Stated
Expiration Date, as the case may be, provided that this letter of credit shall
not be extended for more than three (3) such additional periods. If you are so
notified, you may on or within fifteen (15) Business Days before the Stated
Expiration Date or the New Stated Expiration Date, as the case may be, draw the
full Stated Amount then available hereunder. Any drawing under this Letter of
Credit will be paid with our own funds and not out of any other funds or other
assets.
Only you may make a drawing under this Letter of Credit. Multiple drawings may
be made under this Letter of Credit. Upon the payment of a drawing, we shall be
fully discharged of our obligation under this Letter of Credit in respect of any
amount in excess of the Stated Amount, as the case may be, after giving effect
to such drawing, and we shall not thereafter be obligated to make any further
payments under this Letter of Credit in respect of any amount in excess of the
Stated Amount, as the case may be, after giving effect to such drawing.
Upon the earliest of (i) the close of business at our office in ______________
on the Stated Expiration Date or New Stated Expiration Date, as the case may be,
(ii) the date we have paid the Maximum Stated Amount under all drawings made
hereunder or (iii) the date of our receipt of a
Exhibit A-2
<PAGE>
certificate in the form of Annex B purportedly signed by two (2) Authorized
Officers (a "Certificate as to Defeasance"), (which earliest date of (i), (ii)
or (iii) is referred to herein as the "Termination Date"), this Letter of Credit
shall automatically terminate and expire and the original of this Letter of
Credit shall be immediately delivered to us for cancellation.
Communications with respect to this Letter of Credit shall be in writing and
shall be addressed to us at ______________________________________, specifically
referring therein to this Letter of Credit by number.
As used herein (a) "Authorized Officer" shall mean any of your Vice Presidents
and (b) "Business Day" shall mean any day on which commercial banks in New York,
New York are open for the purpose of conducting commercial banking business.
This Letter of Credit sets forth in full our undertaking, and such undertaking
shall not in any way be modified, amended, amplified or limited by reference to
any document, instrument or agreement referred to herein, except only the
certificates referred to herein, and any such reference shall not be deemed to
incorporate herein by reference any documents, instrument or agreement except
for such certificates.
This Letter of Credit shall be subject to the provisions (to the extent that
such provisions are not inconsistent with this Letter of Credit) of the Uniform
Customs and Practice for Documentary Credits, 1993 Revision, International
Chamber of Commerce Publication No. 500. To the extent that the provisions of
this Letter of Credit are not covered by such Uniform Customs and Practice, this
Letter of Credit shall be governed by, and enforced and construed in accordance
with the laws of the State of New York.
Very truly yours,
[_______________________ _______________________
Vice President Vice President]
Exhibit A-3
<PAGE>
ANNEX A
(Form of Drawing Certificate)
Date:
TO: [Letter of Credit Provider] ("Issuing Bank")
Attn: Letter of Credit Department
RE: Irrevocable Letter of Credit No. ____________ (the "Letter of Credit")
The undersigned, duly authorized officers of IBJ Whitehall Bank & Trust Company
in its capacity as Collateral Agent (the "Collateral Agent") hereby certify to
Issuing Bank with reference to the Letter of Credit that:
(1)
_____ No Certificate as to Defeasance (as defined in the Letter of
Credit) has been delivered and AESI has become obligated to
make or cause to be made an Equity Contribution under Section
2 of the Equity Subscription Agreement referred to in the
Letter of Credit in the amount of $____________, which amount
does not exceed $___________, such amount being the current
AESI Support Amount under the Equity Subscription Agreement;
and
[or (1)]
_____ No Certificate as to Defeasance has been delivered and the
Letter of Credit will expire within fifteen (15) Business Days
and AESI has not furnished a Substitute Support Instrument (as
defined in the Equity Subscription Agreement) in substitution
for the Letter of Credit and as a consequence thereof the
entire Stated Amount of $___________ is due and payable.
[or (1)]
_____ No Certificate as to Defeasance has been delivered and there
has been a Downgrade Event (as defined in the Equity
Subscription Agreement) and AESI has not furnished a
Substitute Support Instrument (as defined in the Equity
Subscription Agreement) in substitution for the Letter of
Credit and as a consequence thereof the entire Stated Amount
of $______ is due and payable.
Exhibit A-4
<PAGE>
(2) The amount of the sight draft accompanying this certificate equals the
amount due and payable as set forth above and does not exceed the
Stated Amount (as defined in the Letter of Credit).
IBJ WHITEHALL BANK & TRUST COMPANY, as
Agent
By: __________________________________
Name:
Title:
By: __________________________________
Name:
Title:
Exhibit A-5
<PAGE>
ANNEX B
(Form of Certificate as to Defeasance)
Date:
TO: [Letter of Credit Provider] ("Issuing Bank")
Attn: Letter of Credit Department
RE: Irrevocable Letter of Credit No. ____________ (the "Letter of Credit")
The undersigned, duly authorized officers of IBJ Whitehall Bank & Trust Company,
in its capacity as Collateral Agent (the "Collateral Agent") hereby certify to
Issuing Bank with reference to the Letter of Credit that:
_____ the AESI Support Amount (as defined in the Equity Subscription
Agreement referred to in the Letter of Credit) has been
reduced to zero as a result of drawings on the Letter of
Credit or Equity Contributions pursuant to Section 2(a) or (b)
of the Equity Subscription Agreement which have the effect of
reducing the AESI Support Amount; or
_____ a Substitute Support Instrument (as defined in the Equity
Subscription Agreement referred to in the Letter of Credit)
for the Stated Amount has been provided to the Collateral
Agent by or on behalf of AESI.
IBJ WHITEHALL BANK & TRUST COMPANY, AS
COLLATERAL AGENT
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
Exhibit A-6
<PAGE>
Exhibit B
EXHIBIT B
___________ INSURANCE COMPANY
________________________________
(A Stock Company)
BOND NO. ______________
EQUITY CONTRIBUTION BOND
KNOW ALL PERSONS BY THESE PRESENTS, that we, AES IRONWOOD, INC., 1001
North 19th Street, Arlington,VA 22209 as Principal, and ____________________, as
Surety, are held and firmly bound unto IBJ WHITEHALL BANK & TRUST COMPANY, as
COLLATERAL AGENT, as Obligee, in the amount of _______________________US DOLLARS
($___________ ), lawful money of the United States, the payment of which we bind
ourselves, our heirs, administrators, executors and assigns, jointly and
severally, firmly by these presents.
WHEREAS, Principal and AES Ironwood L.L.C. (the "Company") have entered
into an Equity Subscription Agreement with the Obligee dated as of June 1, 1999
(the "Equity Subscription Agreement") which is incorporated herein by reference
as if copied at length herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Surety hereby agrees for the
benefit of the Obligee as follows:
1. The Surety's obligation under this Equity Contribution Bond is such
that, if the Principal strictly abides by the terms and conditions of
Sections 2(a) and (b) of the Equity Subscription Agreement, then such
obligation shall become void, but otherwise will remain in full force
and effect during the term hereof.
2. This Equity Contribution Bond is for the term beginning JUNE 25, 1999
and ending JUNE 25, 2002 (the "Expiration Date"), and may be renewed by
the Surety with notification to the Obligee and Principal thirty (30)
days prior to the Expiration Date through issuance of a continuation
certificate to such effect.
3. Any request for payment under this Equity Contribution Bond must be in
writing, accompanied by the Obligee's certification in the form
attached hereto as Annex A, which certification shall supersede all
information that Surety may have received to the contrary as to the
matters so certified. The Obligee shall direct its request for payment
by facsimile to _____________________________________, FACSIMILE NUMBER
( ) ____________________. Surety hereby agrees that all claims
submitted in said manner during the term of this Equity Contribution
Bond will be paid by the close of business on the second business day
after the day the claim is made by wire transfer in immediately
available funds to the account of Obligee specified in such
certification. Any request for payment under this Equity Contribution
Bond in accordance with this paragraph 3 purporting to be signed by the
Obligee is conclusive and binding on Surety as to the
Exhibit B-1
<PAGE>
matters stated therein and the obligation of Surety to pay upon receipt
of such request is irrevocable and binding on Surety.
4. Subject to paragraph 7 hereof, Surety may terminate this Equity
Contribution Bond as to future liability by delivering to the Obligee
at the above address via certified mail return receipt, thirty (30)
days prior to the date of such termination, notice of its intention to
be relieved of its liability hereunder. Said notice shall in no way
exonerate the Surety from liability incurred during the term of this
Equity Contribution Bond or limit in any manner Obligee's ability to
make, and be paid with respect to, claims submitted as provided in the
Form of Drawing Certificate attached hereto as Annex A.
5. Multiple claims may be made on this Equity Contribution Bond; provided,
however, that all such claims in the aggregate shall not exceed _______
_________________U.S. Dollars ($_____________ ) (the "Maximum Amount").
6. If, for any reason whatsoever, the Principal shall fail or be unable
duly, punctually and fully to pay any Equity Contribution as and when
the same shall become due and payable, Surety shall forthwith pay or
cause to be paid such Equity Contribution to the Obligee in accordance
with the terms hereof and of the Equity Subscription Agreement.
Surety's obligations under this Equity Contribution Bond are absolute,
unconditional, present and continuing obligations and are in no way
conditioned or contingent upon any attempt to collect from or enforce
payment by the Principal or upon any other event, contingency or
circumstance whatsoever, including payment under any other AESI Support
Instrument as such term is defined in the Equity Subscription
Agreement, and shall be binding upon and against Surety without regard
to the validity or enforceability of the Equity Subscription Agreement.
7. Any other provision of this Equity Contribution Bond to the contrary
notwithstanding, Surety agrees that the obligations of Surety set forth
in this Equity Contribution Bond shall be direct obligations of Surety,
and such obligations shall be absolute and unconditional, shall not be
subject to any counterclaim, set-off, deduction, diminution, abatement,
recoupment, suspension, deferment, reduction or defense (other than
full and strict compliance by the Surety with its obligations
hereunder) based upon any claim Surety or any other Person may have
against the Obligee, the Principal, the Company or any other Person,
including the provider of any other AESI Support Instrument, and shall
remain in full force and effect without regard to, and shall not be
released, discharged or in any way affected or impaired by, any
circumstance or condition whatsoever (other than full and strict
compliance by the Surety with its obligations hereunder), whether or
not Surety shall have any knowledge or notice thereof, including,
without limitation any occurrence or circumstance whatsoever which
might otherwise constitute a legal or equitable defense or discharge of
the liabilities of a surety or which might otherwise limit recourse
under this Equity Contribution Bond against Surety. The obligations of
Surety set forth herein constitute the full recourse obligations of
Surety enforceable against it to the full extent of all its assets and
properties. Without limiting the generality of the foregoing, Surety
agrees that (a) repeated and successive demands may be made and
Exhibit B-2
<PAGE>
recoveries may be had hereunder as and when, from time to time, the
Principal shall default under or fail to comply with the terms of
Section 2 of the Equity Subscription Agreement and that notwithstanding
the recovery hereunder for or in respect of any such default or failure
to so comply by the Principal under the Equity Subscription Agreement,
this Equity Contribution Bond shall remain in full force and effect and
shall apply to each and every subsequent such default or failure, and
(b) if any Equity Contribution is paid by the Principal, and thereafter
all or any part of such payment is recovered from the Obligee upon the
insolvency, bankruptcy or reorganization of the Principal, the
liability of Surety hereunder with respect to such Equity Contribution
so paid and recovered shall, notwithstanding any prior release or
termination hereof, continue and remain in full force and effect, or
shall be reinstated, as the case may be, as if, to the extent of such
recovery, such payment had not been made.
8. Surety hereby unconditionally waives, to the extent permitted by
applicable law, (i) all notices which may be required by statute, rule
of law or otherwise, now or hereafter in effect, to preserve any rights
against the Surety hereunder, including, without limitation, any
demand, proof or notice of non-payment of any Equity Contribution; (ii)
any right to the enforcement, assertion or exercise of any right,
remedy, power or privilege under or in respect of the Equity
Subscription Agreement; (iii) notice of acceptance of this Equity
Contribution Bond, demand, protest, presentment, notice of default and
any requirement of diligence; (iv) any requirement to exhaust any
remedies or to mitigate any damages resulting from default by the
Principal under the Equity Subscription Agreement; (v) the benefit of
any and all applicable laws which are or might be in conflict with the
terms of this Equity Contribution Bond; and (vi) any other circumstance
whatsoever which might otherwise constitute a legal or equitable
discharge, release or defense of a surety, or which might otherwise
limit recourse under this Equity Contribution Bond against Surety.
9. Surety shall be subrogated to all rights of the Company against
Principal under the Equity Subscription Agreement in respect of any
amounts paid by Surety pursuant to the provisions of this Equity
Contribution Bond; provided, however, that Surety shall be entitled to
enforce, or to receive any payments arising out of or based upon, such
right of subrogation only after all required Equity Contributions under
and as defined in the Equity Subscription Agreement have been paid in
full. Surety acknowledges and agrees that no proper payment by Surety
under this Equity Contribution Bond shall give rise to (i) any claim by
Surety against the Obligee or (ii) any indebtedness of the Company.
10. The Obligee shall have all of the rights and remedies available under
applicable law and may proceed by appropriate court action to enforce
the terms hereof and to recover damages for the breach hereof. Each and
every remedy of the Obligee shall, to the extent permitted by law, be
cumulative and shall be in addition to any other remedy now or
hereafter existing at law or in equity. At the option of the Obligee
and upon notice to Surety, Surety may be joined in any action or
proceeding commenced by such Obligee against the Principal in respect
of any Equity Contribution, and recovery may be had against Surety in
such action or proceeding or in any independent action or proceeding
Exhibit B-3
<PAGE>
against Surety, without any requirement that such Obligee first assert,
prosecute or exhaust any remedy or claim against the Principal.
11. THIS EQUITY CONTRIBUTION BOND SHALL IN ALL RESPECTS BE GOVERNED,
INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS PROVISIONS OF
SUCH LAWS.
12. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, WITH RESPECT TO ANY
LEGAL ACTION OR PROCEEDING AGAINST SURETY ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT, SURETY HEREBY IRREVOCABLY (I) CONSENTS
TO THE JURISDICTION OF ANY COURT OF THE STATE OF NEW YORK OR OF THE
UNITED STATES OF AMERICA LOCATED IN THE CITY OF NEW YORK, (II) CONSENTS
TO THE SERVICE OF PROCESS OUTSIDE THE TERRITORIAL JURISDICTION OF SAID
COURTS IN ANY SUCH ACTION OR PROCEEDING BY MAILING COPIES THEREOF BY
REGISTERED UNITED STATES MAIL, POSTAGE PREPAID, TO THE ADDRESS
SPECIFIED IN THE FIRST PARAGRAPH OF THE EQUITY CONTRIBUTION BOND, AND
(III) WAIVES ANY OBJECTION TO THE VENUE OF THE AFORESAID COURTS AND ANY
OBJECTION THAT THE AFORESAID COURTS ARE IN INCONVENIENT FORUM.
Signed, sealed and dated this the ____________ day of June 1999.
WITNESS: AES IRONWOOD, INC.
- --------------------------------- ------------------------------------
WITNESS: ____________INSURANCE COMPANY
- --------------------------------- ------------------------------------
, ATTORNEY-IN-FACT
Exhibit B-4
<PAGE>
ANNEX A
(Form of Drawing Certificate)
Date:
TO: [Name of Insurance Company issuing the Equity Contribution Bond] ("Issuer")
RE: Equity Contribution Bond No. ____________ (the "Bond")
The undersigned, duly authorized officers of IBJ Whitehall Bank & Trust Company,
in its capacity as Collateral Agent (the "Agent"), hereby certify to Issuer with
reference to the Equity Contribution Bond (the "Bond"):
(1) Principal (as such term is defined in the Bond) has become obligated to
make or cause to be made an Equity Contribution under Section 2 of the
Equity Subscription Agreement referred to in the Bond in the amount of
$____________;
[or (1)]
The Bond will terminate or expire within fifteen (15) Business Days and
Principal has not furnished a Substitute Support Instrument(s) (as
defined in the Equity Subscription Agreement) in substitution for the
Bond and as a consequence thereof the entire remaining amount of the
Bond ($___________) is due and payable; and
[or (1)]
There has been an IC Downgrade Event (as defined in the Equity
Subscription Agreement) and Principal has not furnished a Substitute
Support Instrument(s) (as defined in the Equity Subscription Agreement)
in substitution for the Bond and as a consequence thereof the entire
remaining amount of the Bond ($________) is due and payable; and
Exhibit B-5
<PAGE>
(2) The amount specified above equals the amount due and payable as set
forth above and, when added to all previous amounts paid under the
Bond, does not exceed the Maximum Amount (as defined in the Bond);
(3) The amount specified above is to be sent by wire transfer to ________.
IBJ WHITEHALL BANK & TRUST COMPANY,
AS COLLATERAL AGENT
By: ________________________________
Name:
Title:
By: ________________________________
Name:
Title:
Exhibit B-6
<PAGE>
Exhibit 4.7
EXECUTION COPY
- --------------------------------------------------------------------------------
SECURITY AGREEMENT
by and between
AES Ironwood, L.L.C.
and
IBJ Whitehall Bank & Trust Company, as Collateral Agent
Dated as of June 1, 1999
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
Section 1.1 Definitions.................................................2
Section 1.2 References to Assignment....................................8
ARTICLE II
ASSIGNMENT, SECURITY INTEREST; POWER OF ATTORNEY
Section 2.1 Pledge and Security Interest................................8
Section 2.2 Power of Attorney...........................................9
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Company..............10
ARTICLE IV
COVENANTS AND SPECIAL PROVISIONS
Section 4.1 Maintenance of Records.....................................11
Section 4.2 Payment under Contracts and Receivables....................11
Section 4.3 Instruments................................................11
Section 4.4 Consents...................................................11
ARTICLE V
COLLATERAL
Section 5.1 Protection of the Collateral Agent's Interests.............12
Section 5.2 Further Action.............................................12
Section 5.3 Financing Statements.......................................12
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ARTICLE VI
REMEDIES UPON OCCURRENCE OF TRIGGER EVENT
Section 6.1 Remedies...................................................12
Section 6.2 Disposition of the Collateral..............................13
Section 6.3 Waiver of Claims...........................................14
Section 6.4 Application of Proceeds....................................15
Section 6.5 Remedies Cumulative........................................15
Section 6.6 Discontinuance of Proceedings..............................15
ARTICLE VII
INDEMNITY
Section 7.1 Indemnity..................................................16
Section 7.2 Indemnity Obligations Secured by Collateral................17
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Notices....................................................17
Section 8.2 Amendment..................................................18
Section 8.3 No Waiver..................................................18
Section 8.4 Obligations of the Company.................................18
Section 8.5 Successors and Assigns.....................................19
Section 8.6 Governing Law..............................................19
Section 8.7 Continuing Liability of the Company........................20
Section 8.8 No Third Party Beneficiaries...............................20
Section 8.9 Continuing Assignment and Security Interest................20
Section 8.10 Headings...................................................20
Section 8.11 Severability...............................................20
Section 8.12 Counterparts...............................................20
Section 8.13 Non-Recourse...............................................21
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SECURITY AGREEMENT
SECURITY AGREEMENT dated as of June 1, 1999, by and between AES
IRONWOOD, L.L.C., a limited liability company organized and validly existing
under the laws of the State of Delaware (the "Company") and IBJ WHITEHALL BANK &
TRUST COMPANY, a bank duly organized and existing under the laws of the State of
New York ("IBJ"), as collateral agent (together with its successors in such
capacity, the "Collateral Agent") for the benefit of and on behalf of the Senior
Parties defined below.
A. The Company is providing for the development, construction,
ownership and operation of a nominal 705 MW (net) gas-fired combined cycle
electric generating facility and related equipment and facilities (the
"Project") to be located in South Lebanon Township, Lebanon County,
Pennsylvania.
B. The Company intends to finance the development and construction of
the Project, in part, through the issuance, from time to time, of certain
securities (the "Securities") pursuant to a Trust Indenture, dated as of June 1,
1999 between the Company and IBJ, as trustee (the "Trustee") and depositary
bank, as it may be amended or supplemented from time to time (the "Indenture").
C. In connection with the commencement of commercial operation of the
Project, the Company is required to deliver the Debt Service Reserve Letter of
Credit (the "DSR Letter of Credit"). Dresdner Bank AG, New York Branch
("Dresdner"), as issuing bank, has agreed to issue the DSR Letter of Credit
subject to the terms and conditions contained in the DSR LOC Reimbursement
Agreement, dated as of June 1, 1999 (as amended, supplemented or modified and in
effect from time to time, the "DSR LOC Reimbursement Agreement"), among each of
the banks and financial institutions parties thereto and Dresdner, as issuing
bank and as agent for such banks (including the issuing bank) and financial
institutions (in such capacity as agent, and together with its successors and
assigns, the "DSR LOC Provider").
D. In connection with the Company's obligations under Section 19.2 of
the Power Purchase Agreement, the Company may deliver the Construction Period
Letter of Credit (the "CP LOC"). Dresdner, as issuing bank, has agreed to issue
the CP LOC subject to the terms and conditions contained in the CP LOC
Reimbursement Agreement, dated as of June 1, 1999 (as amended, supplemented or
modified and in effect from time to time, the "CP LOC Reimbursement Agreement"),
among each of the banks (including the issuing bank) and financial institutions
parties thereto and Dresdner, as issuing bank and as agent for such banks and
financial institutions (in such capacity as agent, and together with its
successors and assigns, the "CP LOC Provider").
E. The Company may finance certain working capital requirements of the
Project by entering into a working capital agreement with a financial
institution for the provision of credit to the Company (such financial
institution, the "Working Capital Provider").
F. All obligations of the Company under the Securities, the DSR LOC
Reimbursement Agreement and related evidences of indebtedness, the CP LOC
Reimbursement Agreement and related evidences of indebtedness, the Collateral
Agency Agreement (defined
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below), and any working capital agreement (collectively, the "Financing
Documents") to the Trustee, the DSR LOC Provider, the CP LOC Provider, the
Collateral Agent, any Working Capital Provider, each successor to any such
person and any person providing Senior Debt to the Company who becomes a party
to the Collateral Agency Agreement in accordance with its terms (collectively,
the "Senior Parties") will be secured by a certain Mortgage, this Agreement, the
Indenture, the Pledge Agreement and the Assignment of Leases and Income, each
between the Company and the Collateral Agent (collectively, the "Security
Documents").
G. The Collateral Agent, the Company, the DSR LOC Provider, the CP LOC
Provider and the Trustee entered into the Collateral Agency and Intercreditor
Agreement (as amended, supplemented or modified and in effect from time to time,
the "Collateral Agency Agreement") to set forth their mutual understanding with
respect to (a) the exercise of certain rights, remedies and options by the
respective parties thereto under the above described documents, (b) the priority
of their respective security interests created by the Security Documents, (c)
the application of project revenues and certain other monies and items and (d)
the appointment of the Collateral Agent as collateral agent.
H. It is a condition precedent to the obligations of the Senior Parties
under the Financing Documents that the Company duly execute and deliver this
Agreement to further secure the Company's obligations under the Financing
Documents and the other Obligations (as hereinafter defined).
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Company hereby agrees with the Collateral Agent as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Except as otherwise provided herein, for the
purposes of this Agreement, capitalized terms used and not otherwise defined
herein shall have the meanings ascribed to such terms in the Indenture. Unless
otherwise stated, any reference herein to any document shall mean such document
and all schedules, exhibits, and attachments thereto as amended, supplemented or
modified in accordance with the terms of this Agreement or the Collateral Agency
Agreement and in effect from time to time and any reference herein to any Person
shall include its successors and permitted assigns. References to any law or
regulations shall be deemed references to such law or regulation or any
successor law or regulation as the same may have been or may be amended or
supplemented from time to time. In addition, wherever used in this Agreement and
unless the context requires otherwise, the following terms shall have the
following meanings:
"Account" and "Accounts" shall mean, individually and collectively, the
Construction Account, Revenue Account, Operating and Maintenance Account,
Restoration Account, Major Maintenance Reserve Account, Fuel Conversion Volume
Rebate Account, Subordinated Debt Account, Distribution Account, DSR LOC
Reimbursement Fund, CP LOC Reimbursement Fund, Bond Payment Account, Bond
Proceeds Account, Construction Interest Account and Debt
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Service Reserve Account, as each such account (and each such subaccount thereof)
is defined under the Collateral Agency Agreement, and each other account
established, created or modified from time to time pursuant to the provisions of
the Indenture and the Collateral Agency Agreement.
"Agreement" means this Security Agreement as originally executed and as
the same may from time to time be amended, modified or supplemented.
"Assigned Agreements" means the following contracts:
(a) i. the Power Purchase Agreement;
ii. the Williams Guaranty;
iii. the EPC Contract;
iv. the Siemens Guaranty;
v. the Operations Agreement;
vi. the Maintenance Services Agreement;
vii. the Interconnection Agreement;
viii. the Services Agreement;
ix. the Effluent Supply Agreement;
x. the Pennsy Agreements;
xi. the Equity Subscription Agreement;
(b) any contract with a third party assigned to the Company;
(c) the Consents; and
(d) all Contracts (and Contract Rights), other than the
Contracts (and Contract Rights) specifically itemized in the foregoing
list of Assigned Agreements,
as each such Assigned Agreement identified in (a)-(d) above may be
amended, supplemented or otherwise modified from time to time in
accordance with the terms of this Agreement or the Collateral Agency
Agreement, including, without limitation, to the extent of the
Company's rights in such Assigned Agreement, (i) all rights of the
Company to receive moneys due and to become due under or pursuant to
the Assigned Agreements, (ii) all rights of the Company to receive
proceeds of any insurance, indemnity, warranty or guaranty with respect
to any Assigned Agreement, (iii) all claims of the Company for damages
arising out of default under any Assigned Agreement, (iv) the right of
the Company to terminate, amend, supplement or modify any Assigned
Agreement, to give any waiver, consent or notice thereunder, to make
any election
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thereunder, to exercise and perform any option or purchase right
thereunder, to perform thereunder, and to compel performance and
otherwise exercise all remedies thereunder and (v) to the extent not
included in the foregoing, all proceeds of any and all of the
foregoing.
"Bank Account" means (i) a deposit, custody, or other account (whether,
in any case, time or demand or interest or non-interest bearing and whether
maintained at a branch or office located within or without the United States) of
the Company or in which the Company has any interest, (ii) all amounts from time
to time credited to such account, (iii) all cash, securities, instruments,
documents, Chattel Paper, general intangibles, accounts and other property from
time to time credited to such account or representing investments and
reinvestments of amounts from time to time credited to such account and (iv) all
interest, principal payments, dividends and other distributions payable on or
with respect to, and all proceeds of, (A) all property so credited or
representing such investments and reinvestments and (B) such account.
"Chattel Paper" shall have the meaning assigned to that term under the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Collateral" means, in each case whether now or hereafter existing or
now owned or hereafter acquired by the Company whether or not the same is now
contemplated, anticipated or foreseeable, choate or inchoate, tangible or
intangible, all of the rights, titles and interests of the Company in and to the
following wherever the same may be located except to the extent that the
assignment of any of the following is prohibited under Applicable Law or that
under such law the assignment of such Collateral would create a significant risk
of termination or loss of such Collateral or the Company's rights thereto or
therein:,
(a) the Assigned Agreements;
(b) to the extent permitted by Applicable Law and all
Governmental Approvals;
(c) all Receivables;
(d) proceeds of all insurance contracts;
(e) all (i) Accounts, subject to the qualifications below,
(ii) other accounts (including all Bank Accounts), (iii) any funds held
in any escrow account established or created by the Contracts and (iv)
Eminent Domain Proceeds;
(f) proceeds of any Permitted Investments;
(g) all Information;
(h) any guarantees, and, to the extent evidencing or
pertaining to other items of Collateral, all documents of title,
policies and certificates of insurance, surety bonds, securities,
Chattel Paper, other Documents or Instruments, including but not
limited to all insurance with respect to the Project, business
interruption, workers compensation and comprehensive automobile,
bodily, injury, and property damage;
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(i) all General Intangibles including but not limited to the
name and goodwill of the Company;
(j) all claims (including the right to sue or otherwise
recover on such claims) with respect to (i) the items referred to in
the definition of Collateral, (ii) warranties relating to any
Collateral, (iii) any breach of any Contract constituting Collateral or
any Assigned Agreement and (iv) rights against third parties for (A)
loss, destruction, requisition, confiscation, condemnation, seizure,
forfeiture or infringement of, or damage to, any Collateral, (B)
payments due or to become due under leases, rentals and hires of any
Collateral and (C) proceeds payable under or unearned premiums with
respect to policies of insurance relating to any Collateral;
(k) all Inventory;
(l) all Machinery and Equipment;
(m) all books, manuals, records, charts, ledgercards, files,
correspondence, drawings, schematics, computer programs, tapes, disks
and related data processing software that at any time evidence or
contain information relating to any Collateral or are otherwise
necessary or helpful in the collection thereof, realization thereupon
or operation or maintenance of the Facility;
(n) all goods and other property, whether or not delivered (i)
the sale, lease or furnishing of which gives or purports to give rise
to any Receivables or (ii) securing any Receivables, including all of
the Company's rights as an unpaid vendor or lienor, including stoppage
in transit, replevin and reclamation with respect to such goods and
other properties;
(o) all documents of title, policies and certificate of
insurance, securities, chattel paper and other documents or instruments
evidencing or pertaining to any Collateral;
(p) any fixture and improvement to the Site including, without
limitation, the structures, buildings and chattels constituting the
Facility, and otherwise contemplated by the Contracts, except to the
extent a valid and perfected first priority security interest in such
assets has been created by the Mortgage;
(q) any other assets of the Company except to the extent a
valid and perfected first priority security interest in such assets has
been created by the Mortgage;
(r) all products and proceeds (including cash) of all of the
foregoing Collateral;
provided, however, that, notwithstanding anything to the contrary herein or
hereto, (i) the Bond Payment Account, the Bond Proceeds Account, the
Construction Interest Account and the Debt Service Reserve Account (and each
Subaccount thereof) shall constitute Collateral absolutely and exclusively for
the
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benefit of the holders of Securities (and the Trustee on their behalf), (ii) the
DSR LOC Reimbursement Fund shall constitute Collateral absolutely and
exclusively for the benefit of the DSR LOC Provider and (iii) the CP LOC
Reimbursement Fund shall constitute Collateral absolutely and exclusively for
the benefit of the CP LOC Provider.
"Consents" shall mean each of the following Consents:
(i) Consent to Assignment, dated as of June 1, 1999, by and
between the Power Purchaser and the Collateral Agent, and consented to
by the Company;
(ii) Consent to Assignment, dated as of June 1, 1999, by and
between the PPA Guarantor and the Collateral Agent, and consented to by
the Company;
(iii) Consent to Assignment, dated as of June 1, 1999, by and
between the Contractor and the Collateral Agent, and consented to by
the Company;
(iv) Consent to Assignment, dated as of June 1, 1999, by and
between Siemens Corporation and the Collateral Agent, and consented to
by the Company;
(v) Consent to Assignment, dated as of June 1, 1999, by and
between AES Prescott, L.L.C. and the Collateral Agent, and consented to
by the Company;
(vi) Consent to Assignment, dated as of June 1, 1999, by and
between Metropolitan Edison Company d/b/a GPU Energy and the Collateral
Agent, and consented to by the Company;
(vii) Consent to Assignment, dated as of June 1, 1999, by and
between City of Lebanon Authority and the Collateral Agent, and
consented to by the Company; and
(viii) Consent to Assignment, dated as of June 1, 1999, by and
between Pennsy Supply, Inc. and the Collateral Agent, and consented to
by the Company
"Contract Rights" means all rights of the Company (including, without
limitation, all rights to payment) under each Contract, except to the extent
that a valid and perfected first priority security interest over such rights is
created by and contained within the Mortgage.
"Contracts" means all contracts or agreements to which the Company is
or becomes a party or under which the Company is a beneficiary or has rights
thereto.
"Documents" shall have the meaning assigned to that term under the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, and shall include, but not be limited to, any bills of lading, dock
warrants, dock receipts or warehouse receipts.
"General Intangibles" means general intangibles as defined in the
Uniform Commercial Code in effect on the date hereof in the State of New York,
and shall include, but not be limited to, all trademarks, trademark
applications, trademark and service mark registrations (including, without
limitation, all renewals of trademark and servicemark registrations, and all
rights corresponding thereto throughout the world, but excluding any such
registration that would be rendered invalid, abandoned, void or unenforceable by
reason of its being included as part of the Collateral), tradenames, business
names, fictitious business names, company names, business
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identifiers, prints, labels, trade styles and service marks (whether or not
registered), trade dress, including logos or designs, copyrights, patents,
patent applications (including, without limitation, the inventions and
improvements described and claimed therein together with the reissues, division,
continuations, renewals, extensions and continuations in-part thereof), goodwill
of the Company's business symbolized by any of the foregoing, all inventions,
processes, production methods, proprietary information, know-how, trade secrets,
license rights, license agreements, permits, franchises and any rights to tax
refunds.
"Indemnitee" means the Trustee, any co-Trustee or Successor Trustee,
the DSR LOC Provider, the DSR LOC Issuing Bank, the DSR LOC Banks, the CP LOC
Provider, the CP LOC Issuing Bank, the CP LOC Banks, the holders of Securities,
the Collateral Agent and their respective officers, directors, employees,
representatives and agents.
"Information" means all information, data, plans, blueprints, designs,
recorded knowledge, surveys, architectural, structural, mechanical and
engineering plans and specifications, studies, data, reports and drawings, test
reports, manuals, material standards, processing standards, performance
standards, catalogs, computer and automatic machinery software and programs, all
accounting information and all media in which or on which any information or
knowledge or data or records may be recorded or stored and all computer programs
used for the compilation or printout of such information, knowledge, records or
data, prepared by or on behalf of, or acquired by and on behalf of, the Company
specifically for the acquisition, occupancy, use, operation, maintenance, repair
or restoration of the Facility or any part thereof.
"Instrument" shall have the meaning assigned that term under the
Uniform Commercial Code in effect on the date hereof in the State of New York,
and shall include, but not be limited to, any drafts, checks, certificates of
deposit, notes, shares, participation or transferable warrants.
"Inventory" means (i) all inventory, including (A) all goods held for
sale or lease or to be furnished under the Assigned Agreements, (B) all work in
process and (C) all raw materials, other by-products and other materials, and
supplies of every nature and description used or that might be used or consumed
in the Company's business and (ii) all documents evidencing and general
intangibles relating to any of the foregoing.
"Machinery and Equipment" means (i) all machinery, equipment, spare
parts, tools, furniture, furnishings and instruments of conveyance, including
vessels and automotive vehicles, (ii) all other goods except goods that
constitute General Intangibles and (iii) all replacements and substitutions for,
and all accessions to, the foregoing, in each case wherever located and whether
or not the same constitutes a "fixture".
"Obligations" means, collectively, all indebtedness, obligations and
Financing Liabilities for which the Company is liable to the Senior Parties
under or pursuant to any and all Financing Documents whether direct or indirect,
primary or secondary, fixed or contingent, now or hereafter arising out of or in
relation to any such agreements.
"Receivables" means any and all rights to the payment of money or other
forms of consideration of any kind at any time now or hereafter owing or to be
owing to the Company,
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including, without limitation, all of the Company's rights to payment for
capacity and energy, fuel conversion services and ancillary services under the
Power Purchase Agreement, and any other goods or products sold or services
performed, whether now in existence or arising from time to time hereafter,
including, without limitation, accounts receivable, letters of credit and the
right of the Company to receive payment thereunder, insurance proceeds, notes,
drafts, Instruments, Documents, acceptances, the right to receive payment from
AES and AES Ironwood pursuant to, and subject to the conditions of, the Equity
Subscription Agreement, and all other debts, obligations, and liabilities in
whatever form, now or hereafter owing to the Company from any other Person, and
whether evidenced by an account, note, contract, security agreement, Chattel
Paper or other evidence of indebtedness or security, together with (i) all
security pledged, assigned, hypothecated or granted to or held by the Company to
secure the foregoing, (ii) all of the Company's right, title and interest in and
to any goods of the Company, the sale of which gave rise thereto, (iii) all
guarantees (if any), endorsements and indemnifications 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
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 secured parties, and certificates from
filing or other registration officers and (vi) all other writings related in any
way to the foregoing.
"Uniform Commercial Code" means the Uniform Commercial Code in effect
in the State of New York.
Section 1.2 References to Assignment. Any reference in this Agreement
to an assignment shall include, as the case may require, a sale, conveyance,
setting over or transfer whether conditional or unconditional and whether direct
or indirect.
ARTICLE II
ASSIGNMENT, SECURITY INTEREST; POWER OF ATTORNEY
Section 2.1 Pledge and Security Interest. (a) As security for the
prompt and complete payment and performance and observance when due of the
Obligations, the Company hereby grants, pledges, assigns and transfers to the
Collateral Agent for the benefit of the Senior Parties a continuing lien on and
a continuing security interest in, to and under the Collateral, which shall at
all times be (i) a valid and, upon the making of all necessary filings or the
taking of possession of all requisite items of Collateral, to the extent
perfectible in accordance with applicable law, perfected lien and security
interest, (ii) a first priority lien and security interest (subject only to
Permitted Liens) and (iii) enforceable against the Company, and (upon the making
of all necessary filings or the taking of possession of all requisite items of
Collateral to the extent perfectible under applicable law) all third parties in
accordance with the terms hereof as security for the Obligations, and the
Collateral shall not at any time be subject to any lien (other than Permitted
Liens) that is prior to, on a parity with or junior to the lien and security
interest created hereunder.
(b) The Company agrees and confirms that the execution and delivery of
the Consents to which the Company is a party will constitute, (i) notice to each
consenting party of
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the assignment by the Company of all of the Company's right, title and interest
in and to the Collateral that is the subject of such Consent and its proceeds
and (ii) if such party is required to make payments to the Collateral Agent of
amounts due under the relevant Assigned Agreement, unconditional and (subject to
provisions regarding release in this Agreement and the Collateral Agency
Agreement) irrevocable instructions from the Company to each such party, that
all payments due or to become due and all amounts payable to the Company
thereunder shall, until the Obligations are paid in full, be made directly to
the Revenue Account or as otherwise directed by the Collateral Agent.
Section 2.2 Power of Attorney. To the fullest extent permitted by
applicable law and until the Obligations are paid in full, the Company hereby
irrevocably appoints the Collateral Agent as its attorney-in-fact with right of
substitution, to act, upon the occurrence and during the continuance of a
Trigger Event and provided the Collateral Agent has received the Senior Party
Certificates from the Required Senior Parties pursuant to Section 2.3 of the
Collateral Agency Agreement (except with respect to a bankruptcy event in
respect of the Company in which case no Senior Party Certificates are required),
as the Company's attorney-in-fact, with full authority in the place and stead of
the Company and in the name of the Company or otherwise, from time to time in
the Collateral Agent's discretion, to take any action and to execute any and all
documents and instruments that the Collateral Agent may deem necessary or
advisable to accomplish the purpose of this Agreement.
To the fullest extent permitted by applicable law, the Company hereby
confirms and ratifies any and all actions and things performed or done by the
Collateral Agent, or any of its representatives hereunder, as attorney-in-fact
for the Company in each case pursuant to the powers granted hereunder and
exercised in accordance with this Agreement and in a manner not inconsistent
with the Collateral Agency Agreement. The powers conferred on the Collateral
Agent hereunder, and the exercise by the Collateral Agent of such powers, shall
not impose any duty on the Collateral Agent to exercise any such powers.
This special power of attorney shall be deemed to be coupled with an
interest and cannot be revoked by the Company until the Obligations have been
fully paid, performed and indefeasibly discharged. Upon the occurrence and
during the continuance of a Trigger Event, and provided the Collateral Agent has
received the Senior Party Certificates from the Required Senior Parties pursuant
to Section 2.3 of the Collateral Agency Agreement (except with respect to a
bankruptcy event in respect of the Company in which case no Senior Party
Certificates are required), the Company shall abstain from exercising any rights
under any of the Contracts or the Security Documents which shall be inconsistent
with the exercise of the rights and functions herein granted to the Collateral
Agent as the attorney-in-fact, including abstaining from collecting, claiming
and receiving any moneys under the Assigned Agreements; provided, that nothing
herein shall prevent the Company from undertaking the Company's operations in
the ordinary course of business in accordance with the Security Documents and
the Contracts.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Company. The Company
represents and warrants, which representations and warranties shall survive
execution and delivery of this Agreement and the repayment and full performance
of the Obligations, as follows:
(a) All filings, registrations and recordings necessary to
create, preserve, protect and (in the case of the security interest in the
Collateral, to the extent perfectible in accordance with applicable law) perfect
the security interest granted by the Company to the Collateral Agent hereby in
respect of the Collateral have been accomplished and such security interest
constitutes a valid and enforceable and (to the extent perfectible in accordance
with applicable law) perfected security interest in the Collateral superior and
prior to the rights of all other Persons and subject to no other Liens or
assignments, other than Permitted Liens. The Company hereby represents that it
has not, prior to the date of this Agreement, assigned or granted any other
security interest in the Collateral, respectively, to any other Person.
(b) The Company is the owner of all Receivables and all of its
rights, title and interest in and to all Assigned Agreements, free from any Lien
or other right, title or interest of any Person, other than the Liens created
under this Agreement and other than Permitted Liens. The Company is not in
default under or in breach of, and no Authorized Officer of the Company knows of
any default by any other party under or breach by any other party of, any of the
Contracts that in either case could reasonably be expected to result in a
Material Adverse Effect.
(c) As to Collateral (other than Assigned Agreements and
Receivables), the Company is or will become the sole owner of all such
Collateral, free from any Lien or other right, title or interest of any Person
(other than the Liens created under this Agreement and other than Permitted
Liens).
(d) Except for the Consents and for approvals to transfer
Governmental Approvals, no other consent of any other Person and no Governmental
Approval is required as at the date of the execution and delivery of this
Agreement (i) for the grant by the Company of its respective pledge, assignment,
and security interest with respect to the Collateral or for the execution,
delivery or performance of this Agreement by the Company, (ii) for the pledge,
assignment and security interest granted by the Company with respect to the
Collateral or (iii) for the exercise by the Collateral Agent of the rights,
remedies and powers provided for in this Agreement or the Collateral Agency
Agreement or the remedies with respect to the Collateral pursuant to this
Agreement or the Collateral Agency Agreement, assuming in the case of this
clause (iii) that the Collateral Agent has all requisite power and authority to
conduct its business generally.
(e) Except for financing statements filed or to be filed in
respect of the security interests granted by the Company under or as permitted
by this Agreement or the Collateral Agency Agreement, there is no financing
statement (or similar instrument) filed under the law of any jurisdiction
covering or purporting to cover any interest of any kind in the Collateral.
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ARTICLE IV
COVENANTS AND SPECIAL PROVISIONS
Section 4.1 Maintenance of Records. The Company will keep and maintain,
at its own cost and expense, complete (in all material respects) records of the
Collateral (including the Information, any records to be prepared and maintained
under the Assigned Agreements, the Receivables and the Contracts), including,
but not limited to, the originals of all documentation, records of all payments
received, all credits granted thereon and all other dealings therewith, and the
Company will make the same available to the Collateral Agent, at the Company's
own cost and expense, at all reasonable times upon demand. The Company shall, at
the Company's own cost and expense, deliver copies (or, if a Trigger Event has
occurred and is continuing, originals) of all Collateral (including the Assigned
Agreements, the Information, the Receivables and the Contracts), including
documentation and relevant books and records, to the Collateral Agent or to its
representatives at any time upon its demand.
Section 4.2 Payment under Contracts and Receivables. If the Company
receives any payment or moneys directly from any party to the Assigned
Agreements, or from any account debtor or other obligor under any Receivable
constituting a part of the Collateral, the Company shall receive such payments
in a constructive trust for the benefit of the Collateral Agent and shall
immediately transmit and deliver such payment or moneys to the Collateral Agent
in the same form as received, together with any necessary endorsement, for
application as set forth in the Collateral Agency Agreement.
Section 4.3 Documents and Instruments. If the Company owns or acquires
any Document or Instrument, the Company shall forthwith, but in any event no
later than 10 days after such acquisition, as the case may be, promptly deliver
such Document or Instrument to the Collateral Agent, appropriately endorsed to
the order of the Collateral Agent as further security under this Agreement.
Section 4.4 Consents. The Company shall use its commercially reasonable
efforts to obtain, at the expense of the Company, after the date of the
execution and delivery of this Agreement, such other consents and Government
Approvals as may be necessary after the date of this Agreement, (i) for the
grant by the Company of its pledge, assignment, and security interest granted
hereby or for the execution, delivery or performance of this Agreement by the
Company, (ii) for the perfection (to the extent perfectible in accordance with
applicable law) or maintenance of the pledge, assignment, and security interest
created hereby with respect to the Collateral (including the first priority
nature of such pledge, assignment and security interest with respect to the
Collateral) or (iii) for the exercise by the Collateral Agent of the rights,
remedies and powers provided for in this Agreement or the Collateral Agency
Agreement or the remedies with respect to the Collateral pursuant to this
Agreement or the Collateral Agency Agreement.
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ARTICLE V
COLLATERAL
Section 5.1 Protection of the Collateral Agent's Interests. The Company
will not do anything to impair the rights of the Collateral Agent or the Senior
Parties in the Collateral, provided that, nothing herein shall prevent the
Company, prior to the exercise by the Collateral Agent of any such rights, from
undertaking its operations in the ordinary course of business as contemplated by
the Project Contracts, Security Documents and the Financing Documents. The
Company retains all liability and responsibility in connection with the
Collateral, and agrees that its liability with respect to the Obligations shall
in no way be affected or diminished by reason of the fact that such Collateral
may be lost, destroyed, stolen, damaged or for any reason whatsoever unavailable
to the Company; provided, that this sentence shall not limit the remedies that
the Company might otherwise have under the Collateral Agency Agreement in the
event the Collateral Agent, or its agents or designees, fails to perform its
obligations under the Collateral Agency Agreement in accordance with the
standards set forth therein.
Section 5.2 Further Action. The Company will, at the Company's own
expense, make, execute, endorse, acknowledge, file and deliver to the Collateral
Agent such lists, descriptions and designations of the 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, certificates, reports
and other assurances or instruments and take such further steps relating to the
Collateral and other property or rights covered by the interests hereby granted,
which the Collateral Agent reasonably requests to perfect, preserve or protect
its ownership and security interests in the Collateral.
Section 5.3 Financing Statements. The Company agrees to sign and file
in the appropriate jurisdictions such financing statements and continuation
statements (or similar statements or instruments of registration under the law
of any applicable jurisdiction) as are necessary to establish and maintain the
security interests contemplated hereunder as, to the extent stated herein,
valid, enforceable, first priority security interests and the other rights and
security contemplated herein, all in accordance with the Uniform Commercial
Code, or its equivalent, as enacted in any relevant jurisdictions or any other
relevant law. The Company will pay any applicable filing fees and related
expenses in connection therewith. The Company authorizes the Collateral Agent to
file any such financing statements and any continuation statement or amendments
thereto naming the Company as debtor with respect to its interest in the
Collateral without the signature of the Company.
ARTICLE VI
REMEDIES UPON OCCURRENCE OF TRIGGER EVENT
Section 6.1 Remedies. If a Trigger Event under the Collateral Agency
Agreement shall have occurred and be continuing and, subject to the provisions
of the Collateral Agency Agreement (including without limitation Section 2.3
thereof) and any mandatory requirements of applicable law then in effect, the
Collateral Agent, in addition to any rights under applicable law
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or the Collateral Agency Agreement, may exercise, without any further demand,
advertisement or notice (except as provided herein or otherwise required under
applicable law or the Collateral Agency Agreement) all rights as a secured party
under the Uniform Commercial Code, or its equivalent, in any relevant
jurisdiction and may, acting pursuant to the Collateral Agency Agreement to the
fullest extent permitted by law (and the Company hereby waives all restrictions
on exercise that lawfully may be waived):
(a) personally, or by agents or attorneys, immediately retake
possession, physical or otherwise, of the Collateral or any part
thereof, from the Company 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 Company's premises where any of the
Collateral is located and remove the same, and use any and all
services, supplies and other facilities and materials of in connection
with such removal;
(b) instruct the obligor under any agreement or instrument
evidencing or constituting Collateral to make any payment required by
the terms of such agreement or instrument directly to the Collateral
Agent;
(c) apply all amounts, securities, investments and other
property credited to the Accounts in accordance with the Collateral
Agency Agreement;
(d) sell, assign or otherwise liquidate, or direct the Company
to sell, assign or otherwise liquidate, any or all of the Collateral,
and take possession of the proceeds of any such sale or liquidation to
the fullest extent permitted by Applicable Law;
(e) take possession of the Collateral or any part thereof, by
directing the Company in writing to deliver the same to the Collateral
Agent at any place designated by the Collateral Agent, in which event
the Company shall, at its own expense, forthwith cause the same to be
moved and delivered to the place so designated by the Collateral Agent,
it being understood that the obligation of the Company to deliver its
interest in the Collateral is of the essence of this Agreement and that
the Collateral Agent shall be entitled to a decree requiring specific
performance by the Company, of such obligation; and
(f) enforce any or all of the rights and remedies of the
Company under the Assigned Agreements.
Section 6.2 Disposition of the Collateral. (a) Any Collateral
repossessed by the Collateral Agent pursuant to and in accordance with Section
6.1, and any other Collateral whether or not so repossessed by the Collateral
Agent, may be sold, assigned, leased or otherwise disposed of, in general, in
such manner, at such time, at such place and on such terms as the Collateral
Agent may fix in the notice of sale described below. Any of the Collateral may
be sold, leased or otherwise disposed of in any commercially reasonable manner.
Any such disposition shall be by public or private sale upon not less than 10
days' written notice (which the Company agrees is reasonable notification) to
the Company specifying the time at which such disposition is to be made and the
intended sale or offering price or other consideration therefor, and shall be
subject, for the 10 days after the giving of such notice, to the right of the
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Company to acquire the Collateral at a price or for such other consideration at
least equal to the intended sale or offering price or other consideration so
specified. To the extent permitted by applicable law, the Collateral Agent on
behalf of the Senior Parties may bid for and become the purchaser of the
Collateral or any item thereof, offered for sale in accordance with this Section
6.2. If, under mandatory requirements of applicable law, the Collateral Agent
shall be required to make disposition of the Collateral within a period of time
which does not permit the giving of notice to the Company as specified, then the
Collateral Agent shall only be required to give the Company such notice of
disposition as shall be reasonably practicable in view of such mandatory
requirements of applicable law. In lieu of exercising the power of sale
hereunder, the Collateral Agent may proceed by a suit at law or in equity to
foreclose the pledge and security interest under this Agreement and sell the
Collateral or any portion thereof under a judgment or decree of a court or
courts of competent jurisdiction.
(b) As used herein, the term "proceeds" includes all cash,
securities and other property received in respect of the Collateral, including
any cash, securities or other property received under any reorganization,
liquidation or adjustment of debt of the Company, and any portion of the
Collateral or the products, profits or proceeds thereof which are distributed in
kind.
(c) 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 and in good faith. The Company
hereby waives, to the full 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 a 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.
Section 6.3 Waiver of Claims. (a) Except as otherwise provided in this
Agreement, the Company hereby waives, to the extent permitted by applicable law,
notice and judicial hearing in connection with the Collateral Agent's taking
possession or the Collateral Agent's disposition of any 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 Company would
otherwise have under the constitution or any statute of the United States,
state, or any political subdivision of any such jurisdiction, and the Company
hereby further waives, to the extent permitted by applicable law:
(i) all damages occasioned by such taking of possession except
any damages which are the direct result of the gross negligence or
willful misconduct of the Collateral Agent or any Person acting on its
behalf or instruction;
(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; and
(iii) all rights of redemption, appraisal, valuation, stay,
extension or moratorium in force under any applicable law in order to
prevent or delay the
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enforcement of this Agreement or the absolute sale of the Collateral or
any portion thereof, and the Company, for itself and all who may claim
under it, insofar as it or they now or hereafter lawfully may, hereby
waives the benefit of all such laws.
(b) Any sale of, or the grant of options to purchase, or any
other realization upon, any Collateral shall operate to divest all right, title,
interest, claim and demand, either at law or in equity, of the Company therein,
and shall be a perpetual bar both at law and in equity against the Company and
against any Persons claiming or attempting to claim the Collateral so sold,
optioned or realized upon, or any part thereof, through the Company.
Section 6.4 Application of Proceeds. (a) The proceeds in cash of any
Collateral obtained pursuant to Section 6.1 or disposed of pursuant to Section
6.2 shall be applied in accordance with Section 4.1 of the Collateral Agency
Agreement.
(b) The Company shall remain liable to the extent of any
deficiency between (i) the amount of the proceeds in cash of the Collateral
received and recovered by the Collateral Agent and (ii) the aggregate amount of
the Obligations.
Section 6.5 Remedies Cumulative. (a) No failure or delay on the part of
the Collateral Agent or any Senior Party in exercising any right, power or
privilege hereunder or under the Collateral Agency Agreement and no course of
dealing between the Company, on the one hand, and the Collateral Agent or any
Senior Party, on the other hand, shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege under this
Agreement, the Mortgage or the Collateral Agency Agreement preclude any other
exercise thereof or the exercise of any other right, power or privilege
hereunder. To the fullest extent permitted by law, the rights, powers and
remedies herein, in the Mortgage or in the Collateral Agency Agreement are
cumulative and not exclusive of any rights, powers or remedies which the
Collateral Agent or any Senior Party would otherwise have. No notice to or
demand on the Company shall entitle the Company to any further notice or demand
in similar circumstances or constitute a waiver of the rights of the Collateral
Agent or any Senior Party to any other action in any circumstances without
notice or demand.
(b) The Collateral Agent is not required to take any
discretionary action under this Agreement unless it receives written direction
from the Required Senior Parties. The Collateral Agent is entitled to receive
indemnification to its satisfaction before taking any action as directed by the
Required Senior Parties.
Section 6.6 Discontinuance of Proceedings. In case the Collateral Agent
shall have instituted any proceeding to enforce any right, power or remedy under
this 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 the Company, the Collateral
Agent and each Senior Party shall be restored to their former positions and
rights under this Agreement with respect to the Collateral subject to the
security interests created under this Agreement, and all rights, remedies and
powers of the Collateral Agent shall continue as if no such proceeding had been
instituted.
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ARTICLE VII
INDEMNITY
Section 7.1 Indemnity. (a) The Company shall indemnify, reimburse and
hold each Indemnitee harmless from and against any and all liabilities,
obligations, losses, damages, penalties, claims, actions, judgments, suits,
costs, expenses or disbursements of whatsoever kind or nature, including
reasonable attorneys' fees and expenses in connection therewith (herein referred
to as "expenses"), which may be imposed on, asserted against or incurred by any
of the Indemnitees in any way arising out of their entering into, or the
enforcement by the Collateral Agent (by itself or through one of more other
Indemnitees) of its rights under, this Agreement or the documents executed in
connection herewith, or in any other way connected with the performance or the
administration of the transactions contemplated hereby or thereby or the
enforcement of any of the terms of or the preservation of any rights, remedies
and powers of the Collateral Agent (or such other Indemnitees) hereunder or
thereunder, or in any way relating to or arising out of the manufacture,
ownership, ordering, purchase, delivery, control, acceptance, lease, financing,
possession, operation, condition, sale, return or other disposition or use of
the Collateral (including, without limitation, latent or other defects, whether
or not discoverable), the violation of the laws of any country, state or other
governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or for
property damage, or negligence of any form) or any contract claim arising from
the transactions contemplated hereby or by the Collateral Agency Agreement;
provided, that no Indemnitee shall be indemnified for expenses to the extent
caused by the gross negligence or willful misconduct of such Indemnitee. The
Company agrees that upon notice by any Indemnitee of any assertion that could
give rise to an expense, the Company shall assume full responsibility for the
defense thereof, and the Company may assume such responsibility regardless of
any notice by the Collateral Agent or an Indemnitee if the Company shall
unconditionally assume such responsibility pursuant to an assumption agreement
reasonably satisfactory in form and substance to the Collateral Agent (unless
such Indemnitee shall decline to permit such assumption); provided, that the
Collateral Agent shall retain the right, at the expense of the Company, to
monitor any such assertion by engaging a single firm of counsel of its choice,
and provided, further, that the Company shall obtain the consent of the
Collateral Agent, which consent shall not be unreasonably withheld or delayed,
prior to the settlement of any such assertion. Each Indemnitee agrees to notify
the Company promptly of any such assertion of which such Indemnitee has
knowledge; provided, that its failure to do so or delay in doing so shall not
impair its right to indemnification in accordance with this paragraph, except to
the extent such failure or delay shall materially impair the ability of the
Company to defend such claim.
(b) Without limiting the application of Section 7.l(a), to the
extent there are insufficient revenues in the Revenue Account for such purpose,
the Company agrees, promptly on demand, to pay or reimburse the Collateral Agent
for any fees, costs and expenses of whatever kind or nature paid or incurred in
connection with the exercise of any of the rights, remedies or powers granted
under this Agreement, including without limitation the creation, preservation or
protection of the Collateral Agent's rights to the Collateral Agent's Liens on,
and security interest in, the Collateral, including, without limitation, all
fees and taxes in connection
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with the recording or filing of instruments and documents in public offices,
payment or discharge of any taxes or Liens upon or in respect of the Collateral,
premiums for insurance with respect to the Collateral and all other fees, costs,
and expenses in connection with protecting, maintaining or preserving the
Collateral and the Collateral Agent's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits or
proceedings arising out of or relating to the Collateral. From the date such
amounts shall have been paid by the Collateral Agent or its agents,
representatives, successors and assigns until actually paid by the Company.
(c) Without limiting the application of Section 7.1(a) or (b),
the Company agrees to pay, indemnify and hold each Indemnitee harmless from and
against any expenses which such Indemnitee may suffer, expend or incur in
consequence of or growing out of any misrepresentation by the Company in this
Agreement or in any statement or writing contemplated by or made or delivered
pursuant to or in connection with this Agreement.
(d) If and to the extent that the obligations of the Company
under this Section 7.1 are unenforceable for any reason, the Company hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
Section 7.2 Indemnity Obligations Secured by Collateral. (a) Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of the Company contained in this Article VII shall
continue in full force and effect notwithstanding the full repayment of the
Obligations or the prior termination of this Agreement, the Collateral Agency
Agreement or any Project Contracts.
(b) The Collateral Agent shall, as soon as practicable after
any claim for which it will seek indemnification hereunder is made against it,
(i) provide the Company with reasonable detail thereof, (ii) apprise the Company
of the Collateral Agent's proposals to define or to settle such claims and any
development in relation thereto and (iii) to the extent reasonably available,
provide the Company with an estimate as to the likely costs (legal or otherwise)
which the Collateral Agent may have to incur in relation to such claim.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Notices. All notices required to be given under this
Agreement shall be in writing and shall be delivered personally (by hand
delivery or by overnight courier) or by facsimile transmission (with receipt of
transmission confirmation) or mailed (certified mail, postage prepaid) to the
Parties at the following addresses or facsimile numbers and shall be effective
upon receipt (when sent by personal delivery or by certified mail) and upon
receipt of transmission conformation (when sent by facsimile):
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If to Collateral Agent, to:
IBJ Whitehall Bank & Trust Company
One State Street
New York, New York 10004
Attention: Capital Markets Trust Services, 10th Floor
Facsimile: 212-858-2952
If to the Company, to:
AES Ironwood, L.L.C.
829 Cumberland Street
Lebanon, Pennsylvania 17042
Attention:
Facsimile: 717-228-1271
Either Party from time to time may change its address, facsimile number or other
information for the purposes of notices to such Party by giving notice
specifying such change to the other Party.
Section 8.2 Amendment. This Agreement may be changed, waived,
discharged, or terminated only by an instrument in writing and signed by the
Collateral Agent and the Company and any waiver shall be effective only in the
specific instance and for the specific purpose for which given.
Section 8.3 No Waiver. No failure on the part of the Collateral Agent
or any of its agents 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 of its agents 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.
Section 8.4 Obligations of the Company. Notwithstanding anything to the
contrary contained in this Agreement, the obligations of the Company specified
in this Agreement shall be absolute and unconditional (except to the extent
expressly provided otherwise) and shall remain in full force and effect without
regard to, and shall not be released, suspended, discharged, terminated or
otherwise affected by, any circumstance or occurrence whatsoever (other than
termination as provided in Section 8.9), including, without limitation: (i) any
renewal, extension, amendment or modification of, or addition or supplement to
or deletion from, the Collateral Agency Agreement, any other Security Document,
any Financing Document, Project Contract or any other instrument or agreement
referred to therein, or any assignment or transfer of any thereof; (ii) any
waiver, consent, extension, indulgence or other action or inaction under or in
respect of any such instrument or agreement or this Agreement or any exercise or
non-exercise of any right, remedy, power or privilege under or in respect of
this Agreement, the Collateral Agency Agreement, any other Security Document,
any Financing Document or any Project Contract; (iii) any furnishing of any
additional security to the Collateral Agent or any acceptance thereof or any
sale, exchange, release, surrender or realization of or upon any security by the
Collateral Agent; or (iv) any invalidity, irregularity or unenforceability
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of all or part of the Obligations or of any security therefor. In the event of
any inconsistency between this Agreement and the Collateral Agency Agreement,
the latter shall govern.
Section 8.5 Successors and Assigns. Any corporation or bank into which
the Collateral Agent may be merged or converted or with which it may be
consolidated, or any corporation or bank resulting from any merger, conversion
or consolidation to which the Collateral Agent shall be a party, or any
corporation or bank succeeding to all or substantially all of the corporate
trust business of the Collateral Agent, shall be the successor of the Collateral
Agent hereunder, provided such corporation or bank shall be otherwise qualified
and eligible under this Section 8.5, without the execution or filing of any
paper or any further act on the part of any of the parties hereto. This
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and permitted assigns of the parties and shall
inure to the benefit of the Collateral Agent; provided, that the Company may not
assign or transfer any of its rights or obligations under this Agreement without
the prior written consent of the Collateral Agent (which consent shall be
subject to the terms of the Collateral Agency Agreement), and the Collateral
Agent may assign its rights only to a successor Collateral Agent under the
Collateral Agency Agreement or in connection with the exercise of its rights and
remedies under this Agreement. All agreements, statements, representations and
warranties made by the Company herein or in any certificate or other instrument
delivered by the Company or on its behalf under this Agreement shall be
considered to have been relied upon by the Senior Parties and the Collateral
Agent and shall survive the execution and delivery of this Agreement, the
Collateral Agency Agreement, any other Financing Document or any Project
Contract, regardless of any investigation made by the Collateral Agent or any
other Person.
Section 8.6 Governing Law. (a) THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW EXCEPT SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW).
(b) Any legal action or proceeding with respect to this Security
Agreement and any action for enforcement of any judgment in respect thereof may
be brought in the courts of the State of New York or of the United States of
America for the Southern District of New York, and, by execution and delivery of
this Security Agreement, the Company hereby accepts for itself and in respect of
its property, generally and unconditionally, the non-exclusive jurisdiction of
the aforesaid courts and appellate courts from any appeal thereof. The Company
hereby irrevocably designates, appoints and empowers CT Corporation System, 1633
Broadway, New York, New York, 10019, 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 action or proceeding. If for any reason such
designee, appointee and agent shall cease to be available to act as such, the
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
Collateral Agent. The 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, in
accordance with Section 8.1. The Company hereby irrevocably waives any objection
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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
Security Agreement brought in the courts referred to 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. 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 Company in any other jurisdiction.
Section 8.7 Continuing Liability of the Company. Notwithstanding
anything to the contrary contained in this Agreement, the Company shall remain
liable to perform all of the obligations binding upon it with respect to the
Collateral to the same extent as if this Agreement had not been executed. The
exercise by the Collateral Agent of any of the rights hereunder shall not
release the Company from any of its duties or obligations in respect of any of
the Collateral except, to the extent that such Collateral is foreclosed upon
hereunder, in which event the Company shall be released only in respect of the
obligations under or in respect of such Collateral that arise after such
foreclosure.
Section 8.8 No Third-Party Beneficiaries. The agreements of the parties
hereto are solely for the benefit of the Company, the Collateral Agent, the
Indemnitees and the Senior Parties, and no other Person shall have any rights
hereunder.
Section 8.9 Continuing Assignment and Security Interest. This Agreement
shall create a continuing security interest in the Collateral and shall remain
in full force and effect until the discharge of the Collateral Agency Agreement
as provided in Section 7.11 thereof. At such time, the security interest granted
and Liens and the assignment made hereby shall terminate and all rights to the
Collateral shall revert to the Company. Upon any such termination, the
Collateral Agent shall, at the Company's expense, execute and deliver to the
Company such documents as the Company shall reasonably request to evidence such
termination.
Section 8.10 Headings. Headings used in this Agreement are for
convenience of reference only and do not constitute part of this Agreement for
any purpose.
Section 8.11 Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(a) 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 (b) 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.
Section 8.12 Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
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Section 8.13 Limited-Recourse. In the event of no-performance by the
Company of its Obligations under this Agreement, or any part thereof, or for any
claim based thereon or otherwise in respect thereof or related thereto, no
recourse shall be had to (i) any assets or properties of any of the Members (or
any person that controls any Members within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) or (ii) any Affiliate of the
Company or any incorporators, officers, directors or employees thereof, and no
judgment relating to the obligations of the Company under this Agreement, the
Obligations, or any part thereof, or for any claim based thereon or otherwise in
respect thereof or related thereto, shall be obtainable by the Senior Parties or
the Collateral Agent against any Members or Affiliate of the Company or any
other incorporator, stockholder, officer, employee or director past, present or
future of the Company or any Affiliate of the Company; provided, however, that
nothing contained herein shall prevent the taking of any action permitted by law
against the Company or any of its Affiliates, or in any way affect or impair the
rights of the Collateral Agent or Senior Parties to take any action permitted by
law, in either case to realize upon the Collateral and, provided further, that
nothing herein shall be deemed to affect the obligations of any Affiliate of the
Company under any Transaction Document to which such Affiliate is a party.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
AES IRONWOOD, L.L.C.
By /s/ Patricia L. Rollin
--------------------------------
Name: Patricia L. Rollin
Title: Vice President
IBJ WHITEHALL BANK & TRUST
COMPANY, as Collateral Agent
By /s/ Thomas McCutcheon
--------------------------------
Name: Thomas McCutcheon
Title: Assistant Vice President
IN PRESENCE OF:
/s/ Cynthia Fraser
- -------------------------------
Witness:
/s/ Cynthia Fraser
- -------------------------------
Witness:
<PAGE>
CORPORATE ACKNOWLEDGMENT
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 25th day of
June, 1999 by Patricia L. Rollin, who is Vice President of AES Ironwood, L.L.C.,
a Delaware limited liability company, on behalf of the company.
/s/ Katherine Lee Dominus
---------------------------------------
Notary Public
KATHERINE LEE DOMINUS
Notary Public, State of New York
No. 31-6014464
Qualified in New York County
Commission Expires Oct. 13, 2000
My Commission Expires: October 13, 2000
<PAGE>
CORPORATE ACKNOWLEDGMENT
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 25th day of
June, 1999 by Thomas McCutcheon, who is Assistant Vice President of IBJ
Whitehall Bank & Trust Company, a New York banking corporation, on behalf of the
corporation.
/s/ Katherine Lee Dominus
---------------------------------------
Notary Public
KATHERINE LEE DOMINUS
Notary Public, State of New York
No. 31-6014464
Qualified in New York County
Commission Expires Oct. 13, 2000
My Commission Expires: October 13, 2000
<PAGE>
Exhibit 4.8
EXECUTION COPY
- --------------------------------------------------------------------------------
PLEDGE AND SECURITY AGREEMENT
between
AES IRONWOOD, INC.
as Pledgor
and
IBJ WHITEHALL BANK & TRUST COMPANY
as Collateral Agent
Dated as of June 1, 1999
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
1. Definitions............................................................2
2. Pledge.................................................................2
3. Representations, Warranties and Covenants..............................3
4. Default................................................................5
5. Rights and Remedies Upon Event of Default..............................5
6. Security Interest Absolute.............................................5
7. Pledgor Remains Liable.................................................6
8. No Duty on Collateral Agent's Part.....................................6
9. Notices................................................................6
10. Waiver.................................................................6
11. Time of Essence........................................................7
12. Binding Upon Successors................................................7
13. Captions...............................................................7
14. Governing Law, Legal Proceedings and Waiver of Jury Trial..............7
15. Amendments, Changes and Modifications..................................8
16. Severability...........................................................8
17. Collateral Agent Not Liable............................................8
18. Limitation of Recourse.................................................8
19. Counterparts...........................................................9
20. Continuing Assignment, Pledge and Security Interest....................9
21. Security Only..........................................................9
22. Payments Set Aside.....................................................9
Annexes
i
<PAGE>
PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (this "Pledge Agreement"), dated as
of June 1, 1999, by and between AES IRONWOOD, INC., a corporation organized and
validly existing under the laws of the State of Delaware (the "Pledgor") and IBJ
Whitehall Bank and Trust Company, a bank duly organized and existing under the
laws of the State of New York ("IBJ"), as collateral agent (together with its
successors in such capacity, the "Collateral Agent") for the benefit of and on
behalf of the Senior Parties defined below.
A. AES IRONWOOD, L.L.C., a limited liability company organized and
validly existing under the laws of the State of Delaware (the
"Company") is providing for the development, construction,
ownership and operation of a nominal 705 MW (net) gas-fired
combined cycle electric generating facility and related equipment
and facilities (the "Project") to be located in South Lebanon
Township, Lebanon County, Pennsylvania.
B. The Company intends to finance the development and construction of
the Project, in part, through the issuance, from time to time, of
certain securities (the "Securities") pursuant to a Trust
Indenture, dated as of June 1, 1999 between the Company and IBJ, as
trustee (the "Trustee") and depositary bank, as it may be amended
or supplemented from time to time (the "Indenture").
C. In connection with the commencement of commercial operation of the
Project, the Company is required to deliver the Debt Service
Reserve Letter of Credit (the "DSR Letter of Credit"). Dresdner
Bank New York Branch ("Dresdner"), as issuing bank, has agreed to
issue the DSR Letter of Credit subject to the terms and conditions
contained in the DSR LOC Reimbursement Agreement, dated as of June
1, 1999 (as amended, supplemented or modified and in effect from
time to time, the "DSR LOC Reimbursement Agreement"), among each of
the banks and financial institutions parties thereto and Dresdner,
as issuing bank and as agent for such banks including the issuing
bank and financial institutions (in such capacity as agent, and
together with its successors and assigns, the "DSR LOC Provider").
D. In connection with the Company's obligations under Section 19.2 of
the Power Purchase Agreement, the Company may deliver the
Construction Period Letter of Credit (the "CP LOC"). Dresdner, as
issuing bank, has agreed to issue the CP LOC subject to the terms
and conditions contained in the CP LOC Reimbursement Agreement,
dated as of June 1, 1999 (as amended, supplemented or modified and
in effect from time to time, the "CP LOC Reimbursement Agreement"),
among each of the banks and financial institutions parties thereto
and Dresdner, as issuing bank and as agent for such banks and the
issuing bank and financial institutions (in such capacity as agent,
and together with its successors and assigns, the "CP LOC
Provider").
E. The Company may finance certain working capital requirements of the
Project by entering into a working capital agreement with a
financial institution for the
<PAGE>
provision of credit to the Company (such financial institution, the
"Working Capital Provider").
F. All obligations of the Company under the Securities, the DSR LOC
Reimbursement Agreement and related evidences of indebtedness, the
CP LOC Reimbursement Agreement and related evidences of
indebtedness, the Collateral Agency Agreement (defined below), and
any working capital agreement (collectively, the "Financing
Documents") to the Trustee, the DSR LOC Provider, the CP LOC
Provider, the Collateral Agent, any Working Capital Provider, each
successor to any such person and any person providing Senior Debt
to the Company who becomes a party to the Collateral Agency
Agreement in accordance with its terms (collectively, the "Senior
Parties") will be secured by a certain Mortgage, the Security
Agreement, the Indenture, this Pledge Agreement and the Assignment
of Leases and Income, each between the Company and the Collateral
Agent (collectively, the "Security Documents").
G. The Collateral Agent, the Company, the DSR LOC Provider, the CP LOC
Provider and the Trustee entered into the Collateral Agency and
Intercreditor Agreement dated as of June 1, 1999 (as amended,
supplemented or modified and in effect from time to time, the
"Collateral Agency Agreement") to set forth their mutual
understanding with respect to (a) the exercise of certain rights,
remedies and options by the respective parties thereto under the
above described documents, (b) the priority of their respective
security interests created by the Security Documents, (c) the
application of project revenues and certain other monies and items
and (d) the appointment of the Collateral Agent as collateral
agent.
H. On the Closing Date, the Pledgor owns 100% of all of the ownership
interests of the Company.
I. In order to better secure the benefits of the other Collateral
subject of the Security Documents, the Pledgor has agreed to pledge
the ownership interests of the Company owned by the Pledgor from
time to time.
NOW, THEREFORE, in consideration of the premises set forth above, the
mutual covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
FOR THE PURPOSE OF SECURING the payment and performance of the Senior Debt,
which Senior Debt may increase, decrease and increase again, from time to time,
the parties hereto hereby agree as follows:
1. Definitions. Except as otherwise expressly provided herein,
capitalized terms used in this Pledge Agreement and its Annexes shall have the
meaning given to them in the Indenture and the rules of construction set forth
in Section 1.1. of the Indenture shall apply herein as if set forth in this
Pledge Agreement.
2. Pledge. (a) As security for the full payment or performance when due
(whether at stated maturity, by acceleration or otherwise) of any and all of the
Senior Debt now existing or
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<PAGE>
hereafter arising, the Pledgor hereby grants, pledges and collaterally assigns
to and creates in favor of the Collateral Agent, a lien on (the "Security
Interest") in all estate, right, title and interest of the Pledgor in, to and
under the following collateral, whether now existing or hereafter acquired (the
"LLC Collateral"):
(i) the ownership interests in the Company and to the extent
any of the following shall now or hereinafter exist any certificates
identified in Annex I hereto and all other ownership interests of
whatever class in the Company, now or hereafter owned by the Pledgor,
in each case together with the certificates evidencing the same
(collectively, the "Pledged Interests");
(ii) to the extent any of the following shall now or hereafter
exist all shares, securities, moneys or property representing a
dividend on any of the Pledged Interests, or representing a
distribution or return of capital upon or in respect of the Pledged
Interests (a "Dividend"), or resulting from a split-up, revision,
reclassification or other like change of the Pledged Interests or
otherwise received in exchange therefor, and any subscription warrants,
rights or options issued to the holders of, or otherwise in respect of,
the Pledged Interests; provided, however, that such Security Interest
in any Dividend shall not apply to, or to the extent such Security
Interest is then existing, shall be released without any notice or
required action from, such Dividend once such Dividend is distributed
from the Distribution Account in accordance with the terms of the
Collateral Agency Agreement and is no longer an asset of the Company;
(iii) without affecting the obligations of the Pledgor or the
Company under any provision prohibiting such action hereunder, in the
event of any consolidation or merger in which the Company is not the
surviving entity, all shares owned by the Pledgor of each class of the
capital stock of the successor entity formed by or resulting from such
consolidation or merger;
(iv) to the extent not included in the foregoing, all
proceeds, products and accessions of and to any and all of the
foregoing, including, without limitation, "proceeds," as defined in the
Uniform Commercial Code of the State of New York (the "UCC"), including
whatever is received upon any collection, exchange, sale or other
disposition of any of the LLC Collateral, and any property into which
any of the LLC Collateral is converted, whether cash or noncash
proceeds, and any and all other amounts paid or payable under or in
connection with any of the LLC Collateral; it being understood that the
Security Interest in the proceeds, products and accessions of and to
any LLC Collateral shall not apply to, or to the extent such Security
Interest is then existing, shall be released without any notice or
required action from, such LLC Collateral once such LLC Collateral is
distributed from the Distribution Account in accordance with the terms
of the Collateral Agency Agreement and is no longer an asset of the
Company.
(b) This Pledge Agreement secures, in accordance with the provisions
hereof, the Senior Debt.
3
<PAGE>
(c) The Collateral Agent and the Pledgor acknowledge and agree that
remedies, if any, that may be exercised from time to time hereunder during the
continuance of a Trigger Event under the Collateral Agency Agreement, will be
exercised by the Collateral Agent subject to, and in accordance with, the terms
of the Collateral Agency Agreement.
3. Representations, Warranties and Covenants. The Pledgor hereby
represents, warrants and covenants as follows:
(a) The Security Interest granted and created pursuant to this Pledge
Agreement is a legal and valid security interest in the LLC Collateral now owned
by the Pledgor or hereafter acquired.
(b) The Security Interest granted and created pursuant to this Pledge
Agreement (i) with respect to such of the LLC Collateral in which a security
interest may be perfected by the filing of a Financing Statement, will, upon the
filing of the necessary Financing Statements in all appropriate jurisdictions,
create a perfected security interest in the LLC Collateral now owned by the
Pledgor or hereafter acquired in which a security interest may be perfected by
filing; and (ii) with respect to such of the LLC Collateral in which a security
interest may be perfected by possession, will, upon the Collateral Agent's
taking possession of such LLC Collateral, create a perfected security interest
in such LLC Collateral now owned by the Pledgor or hereafter acquired in which a
security interest may be perfected by possession.
(c) The Pledgor shall cause (i) the organizational documents in respect
of the formation of the Company and (ii) the certificates representing the
Pledged Interests in the Company to each recite that such organizational
documents and Pledged Interests shall be governed by Article 8 of the UCC.
(d) The Pledgor is the legal and beneficial owner of the LLC Collateral
now owned by it, free and clear of all Liens.
(e) The Pledgor shall notify the Collateral Agent promptly in writing
of any claim against the LLC Collateral adverse (other than to a de minimis
extent) to the interest of the Collateral Agent hereunder.
(f) The Pledgor agrees that from time to time upon the request of the
Collateral Agent, the Pledgor will, at its sole cost and expense, promptly
execute and deliver all further instruments and documents, and take all further
action, which may be necessary or reasonably advisable, or that the Collateral
Agent may reasonably request, in order to perfect, maintain, preserve and
protect the Security Interest granted or purported to be granted hereby. Without
limiting the generality of the foregoing, the Pledgor will: (i) if any LLC
Collateral shall be evidenced by a promissory note or other instrument, deliver
and pledge to the Collateral Agent hereunder such note or instrument duly
endorsed and accompanied by duly executed instruments of transfer or assignment,
all in form and substance reasonably satisfactory to the Collateral Agent, and
(ii) execute and file such financing or continuation statements, or amendments
thereto and assignments thereof, and such other instruments, endorsements or
notices, as may be necessary, or as the Collateral Agent may reasonably request
in writing, in order to perfect, maintain, preserve and protect the Security
Interest granted or purported to be granted hereby.
4
<PAGE>
The Pledgor hereby authorizes the Collateral Agent to file one or more financing
or continuation statements, and amendments thereto and assignments thereof,
relating to all or any part of the LLC Collateral without the signature of the
Pledgor where permitted by law.
(g) The Pledgor shall keep and maintain, at its sole cost and expense,
satisfactory and complete records of the LLC Collateral. The Pledgor shall
furnish to the Collateral Agent from time to time statements and schedules
further identifying and describing the LLC Collateral and such other reports in
connection with the LLC Collateral as the Collateral Agent may reasonably
request, all in reasonable detail.
(h) The Pledgor shall not create, incur or permit to exist, and will
defend the LLC Collateral against, and shall take such other action as is
necessary, to remove any Lien or claim on or to the LLC Collateral and will
defend the right, title and interest of the Collateral Agent in and to any of
the LLC Collateral against the claims and demands of all Persons whomsoever. In
furtherance thereof, the Pledgor agrees (i) not to enter into a "control
agreement" with or grant "control" (within the meaning of the UCC) to any Person
other than the Collateral Agent in respect of any of the LLC Collateral that
constitutes "uncertificated securities" (within the meaning of the UCC) or (ii)
not to cause the Collateral Agent to register any transfer of any of the LLC
Collateral that constitutes "uncertificated securities" (within the meaning of
the UCC) to any Person other than the Collateral Agent.
(i) The principal place of business and chief executive office of the
Pledgor and the office where the Pledgor keeps its records concerning the LLC
Collateral, including the registration book in which all ownership interests of
the Company and pledges and transfers thereof are recorded (hereinafter,
collectively called the "Records") is located at the Pledgor's address for
notices set forth in the signature pages hereto.
(j) The Pledged Interests are duly authorized, validly existing, fully
paid and non-assessable and none of such Pledged Interests are subject to any
contractual restriction, or any restriction under the organic documents of the
Company, upon the transfer of such Pledged Interests (except for any such
restriction contained herein).
(k) The Pledged Interests constitute all of the issued and outstanding
shares of ownership interests of any class of the Company beneficially owned by
the Pledgor on the date hereof (whether or not registered in the name of the
Pledgor).
(l) The Pledgor owns 100% of the issued and outstanding ownership
interests of the Company as of the date hereof.
4. Default. The occurrence and continuation of a Trigger Event under
the Collateral Agency Agreement shall be deemed an "Event of Default" under this
Pledge Agreement:
5. Rights and Remedies Upon Event of Default. The remedies of the
Collateral Agent following an Event of Default hereunder or otherwise are set
forth in the Collateral Agency Agreement and the exercise of such remedies, if
any, shall be done by the Collateral Agent as, when and to the extent permitted
thereunder.
5
<PAGE>
6. Security Interest Absolute. All rights of the Collateral Agent
hereunder, the Security Interest and all obligations of the Pledgor hereunder,
shall be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of the Collateral
Agency Agreement or any other agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Senior Debt, or any other
amendment or waiver of or any consent to any departure from the
Collateral Agency Agreement or any of the LLC Collateral;
(iii) any exchange, release or non-perfection of any LLC
Collateral or any other collateral, or any release or amendment or
waiver of or consent to or departure from any guaranty, for all or any
of the Senior Debt; or
(iv) to the fullest 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.
7. Pledgor Remains Liable. Anything herein to the contrary
notwithstanding, the Pledgor shall remain liable under any agreements included
in the LLC Collateral 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 Trustee or 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 agreements included in the LLC
Collateral, except to the extent the Pledgor is expressly released therefrom by
the Trustee or the Collateral Agent in writing. The Collateral Agent shall not
have any obligation or liability under the LLC Collateral by reason of this
Pledge Agreement, nor shall the Collateral Agent be obligated to perform any of
the obligations or duties of the Pledgor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder, except to the
extent the Collateral Agent expressly assumes such obligations or duties in
writing consistent with its rights under this Pledge Agreement.
8. 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 LLC Collateral and shall not impose any duty upon it to
exercise any such powers. The Collateral Agent shall be accountable only for
amounts that it receives as a result of the exercise of such powers, and neither
it nor any of its officers, directors, employees or agents shall be responsible
to the Pledgor for any act or failure to act hereunder, except for its own gross
negligence or willful misconduct.
9. 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 the Collateral Agency Agreement.
10. Waiver. 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 shall not be
6
<PAGE>
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.
11. Time of Essence. TIME IS OF THE ESSENCE WITH RESPECT TO THIS PLEDGE
AGREEMENT AND ALL OF ITS PROVISIONS.
12. Binding Upon Successors. This Pledge Agreement shall be binding
upon and inure to the benefit of the respective successors and permitted assigns
of each of the parties hereto.
13. 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.
14. Governing Law, Legal Proceedings and Waiver of Jury Trial. (a) THIS
PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF
LAW EXCEPT SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
(b) Any legal action or proceeding with respect to this Pledge
Agreement and any action for enforcement of any judgment in respect thereof may
be brought in the courts of the State of New York or of the United States of
America for the Southern District of New York, and, by execution and delivery of
this Pledge Agreement, the Pledgor hereby accepts for itself and in respect of
its property, generally and unconditionally, the non-exclusive jurisdiction of
the aforesaid courts and appellate courts from any appeal thereof. The Pledgor
hereby irrevocably designates, appoints and empowers CT Corporation System, 1633
Broadway, New York, New York, 10019, 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 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
Collateral Agent. The Pledgor 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, in
accordance with Section 9. 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 brought in the courts referred to 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. Nothing herein shall affect the right of the Collateral
Agent to serve process in any other
7
<PAGE>
manner permitted by law or to commence legal proceedings or otherwise proceed
against the Pledgor in any other jurisdiction.
(c) EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES THE RIGHT EACH MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS PLEDGE
AGREEMENT AND ANY AGREEMENTS CONTEMPLATED HEREBY TO BE EXECUTED IN CONJUNCTION
THEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF EACH PARTY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES ENTERING INTO THIS PLEDGE AGREEMENT.
15. Amendments, Changes and Modifications. This Pledge Agreement may
not be effectively amended or terminated except with the written consent of the
Pledgor and the Collateral Agent.
16. Severability. Any provision of this Pledge Agreement that 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.
17. Collateral Agent Not Liable. Neither this Pledge Agreement nor any
action on the part of the Collateral Agent (other than an express written
assumption) shall constitute an assumption by the Collateral Agent of any of the
obligations of the Pledgor related to any of the LLC Collateral, and the Pledgor
shall continue to be liable for all such obligations whether incurred before or
after an Event of Default.
18. Limitation of Recourse. In the event of non-performance by the
Pledgor under this Pledge Agreement, or any part thereof, or for any claim based
thereon or otherwise in respect thereof or related thereto, no recourse shall be
had to (i) any other assets or properties of the Pledgor (or any person that
controls the Pledgor within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) or (ii) any Affiliate of the Pledgor or any
incorporators, officers, directors or employees thereof, and no judgment
relating to the obligations of the Pledgor under this Pledge Agreement, or any
part thereof, or for any claim based thereon or otherwise in respect thereof or
related thereto, shall be obtainable by the Senior Parties or the Collateral
Agent against the Pledgor or any Affiliate of the Pledgor or any other
incorporator, stockholder, officer, employee or director past, present or future
of the Pledgor or any Affiliate of the Pledgor; provided, however, that nothing
contained herein shall prevent the taking of any action permitted by law against
the Pledgor or any of its Affiliates, or in any way affect or impair the rights
of the Collateral Agent or Senior Parties to take any action permitted by law,
in either case to realize upon the LLC Collateral and, provided further, that
nothing herein shall be deemed to affect the obligations of any Affiliate of the
Pledgor under any Transaction Document to which such Affiliate is a party.
8
<PAGE>
19. 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.
20. Continuing Assignment, Pledge and Security Interest. This Pledge
Agreement shall create a continuing assignment, pledge and security interest in
the LLC Collateral and shall remain in full force and effect for the benefit of
the Collateral Agent until the satisfaction in full of the Senior Debt. Except
as set forth in Section 22 hereof, upon the payment in full of the Senior Debt
and all other amounts owing to the Collateral Agent under the Financing
Documents, the Security Interest granted hereby shall terminate and all rights
to the LLC Collateral shall revert to the Pledgor. In connection with such
termination, the Collateral Agent shall execute such instruments of release
prepared by the Pledgor as the Pledgor shall reasonably request at the Pledgor's
sole cost and expense.
21. Security Only. This Pledge Agreement is granted for security
purposes only. Accordingly, the Collateral Agent shall not enforce its rights
with respect to the LLC Collateral until such time as an Event of Default shall
have occurred and be continuing.
22. Payments Set Aside. To the extent that the Pledgor or any other
Person on behalf of the Pledgor makes a payment or payments to the Collateral
Agent, or the Collateral Agent enforces its security interests or exercise its
rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff of 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
Senior Debt 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 setoff had not occurred.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed as of the date first written above.
AES IRONWOOD, INC.
By: /s/ Patricia L. Rollin
--------------------------------
Name: Patricia L. Rollin
Title: Vice President
IBJ WHITEHALL BANK & TRUST COMPANY
By: /s/ Thomas McCutcheon
--------------------------------
Name: Thomas McCutcheon
Title: Assistant Vice President
[PLEDGE AND SECURITY AGREEMENT]
<PAGE>
Annex I
AES IRONWOOD, L.L.C.
Witnesseth, this Certificate represents
TEN (10) COMMON SHARES
of AES IRONWOOD, L.L.C. (the "Company") and is registered in the name of AES
IRONWOOD, INC. (the "Initial Shareholder"). The Initial Shareholder is entitled
to those preferences and rights as set forth in Article III of the Limited
Liability Company Agreement (the "Agreement") of the Company. This Certificate
is transferable only in accordance with Section 3.2 and Section 6.1 of the
Agreement. This Certificate is governed by Article 8 of the Uniform Commercial
Code of the State of New York.
/s/ Patricia L. Rollin /s/ Eileen M. Cates
- ----------------------------- -----------------------------
<PAGE>
Annex II
to
PLEDGE AND SECURITY AGREEMENT
DATED AS OF JUNE 1, 1999
FORM OF STOCK POWER
FOR VALUE RECEIVED, the undersigned, AES IRONWOOD, INC., a corporation
organized and validly existing under the laws of the State of Delaware, does
hereby sell, assign and transfer to ___________________________________ ten (10)
Common Shares of AES IRONWOOD, L.L.C. (the "Company"), a limited liability
company organized and validly existing under the laws of the State of Delaware
(the "Stock"), standing in the name of the undersigned on the books of said
company and does hereby irrevocably constitute and appoint
______________________ _________________ as the undersigned's true and lawful
attorney, for it and in its name and stead, to, as and to the extent permitted
pursuant to Section 2.3 of the Collateral Agency and Intercreditor Agreement,
dated as of June 1, 1999, among the Company, IBJ Whitehall Bank & Trust Company,
in its various capacities as described therein and Dresdner Bank AG, New York
Branch, in its various capacities as described therein (the "Collateral Agency
Agreement"), sell, assign and transfer all or any of the Stock, and for that
purpose to make and execute all necessary acts of assignment and transfer
thereof; and to substitute one or more persons with like full power, hereby
ratifying and confirming all that said attorney or substitute or substitutes
shall lawfully do by virtue hereof in accordance with the provisions of the
Collateral Agency Agreement.
Dated:
AES IRONWOOOD, INC.
By:
--------------------------------
Name:
Title:
II-1
<PAGE>
Exhibit 4.9
EXECUTION VERSION
WILLIAMS ENERGY MARKETING & TRADING COMPANY
CONSENT TO ASSIGNMENT
THIS CONSENT TO ASSIGNMENT (this "Consent to Assignment") is entered
into as of June 1, 1999 by WILLIAMS ENERGY MARKETING & TRADING COMPANY, a
Delaware corporation (the "Consenting Party"), and IBJ WHITEHALL BANK & TRUST
COMPANY, as collateral agent (the "Collateral Agent", together with any
successors thereto in such capacity, referred to as the "Assignee"), for the
benefit of and on behalf of the Senior Parties defined below.
A. AES Ironwood, L.L.C. (the "Company"), a Delaware limited liability
company, is providing for the development, construction, ownership and operation
of a nominal 705 MW (net) gas-fired combined cycle electric generating facility
(the "Facility") and the financing, development and construction thereof (the
Facility, equipment and facilities associated with the Facility and such
financing, development and construction, the "Project") to be located in South
Lebanon Township, Lebanon County, Pennsylvania.
B. The Company intends to finance the development and construction of
the Project, in part, through the issuance, from time to time, of certain
securities (the "Securities") pursuant to a Trust Indenture, dated as of June 1,
1999 between the Company and IBJ Whitehall Bank & Trust Company, as trustee (the
"Trustee"), as it may be amended or supplemented from time to time (the
"Indenture").
C. All obligations of the Company under the Securities, the Collateral
Agency Agreement (defined below) and any other agreements evidencing senior debt
of the Company (collectively, the "Financing Documents") to the Trustee, the
Collateral Agent, each successor to any such person and each other person
providing senior debt to the Company who is or becomes a party to the Collateral
Agency Agreement pursuant to its terms (collectively, the "Senior Parties") will
be secured by a certain Mortgage, Security Agreement, Indenture, Pledge
Agreement and Assignment of Leases and Income, each between the Company and IBJ
Whitehall Bank & Trust Company (collectively, the "Security Documents").
D. The Senior Parties and the Company have entered into the Collateral
Agency and Intercreditor Agreement, dated as of June 1, 1999 (as amended,
supplemented or modified and in effect from time to time, the "Collateral Agency
Agreement") to set forth their mutual understanding with respect to (a) the
exercise of certain rights, remedies and options by the respective parties
thereto under the above described documents, (b) the priority of their
respective security interests created by the Security Documents, (c) the
application of project revenues and certain other monies and items and (d) the
appointment of the Collateral Agent as collateral agent.
E. The Company and the Consenting Party have entered into that certain
Amended and Restated Power Purchase Agreement, dated as of February 5, 1999, as
amended by that
<PAGE>
certain amendment dated June 18, 1999 (as amended, the "Assigned Agreement") for
the sale of the Facility's net capacity and ancillary services and the provision
of fuel conversion services.
F. The Company has notified the Consenting Party that all of the
Company's right, title and interest in the Assigned Agreement is to be assigned
to the Assignee as security pursuant to one or more of the Security Documents.
G. It is a condition precedent to the extension of credit by the Senior
Parties that the Consenting Party execute and deliver this Consent to Assignment
for the benefit of the Senior Parties.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:
1. Definitions. Capitalized terms used herein shall have the respective
meanings specified herein or, if not defined herein, as defined in the Assigned
Agreement.
2. Consent to Assignment. Subject to the terms and conditions of this
Consent to Assignment, the Consenting Party hereby irrevocably consents to the
assignment of the Assigned Agreement by the Company to the Assignee for the
benefit of the Senior Parties as security, and the Consenting Party shall
continue performance under the Assigned Agreement in accordance with its terms
and the terms of this Consent to Assignment.
3. No Defaults. The Consenting Party acknowledges and agrees that (a)
the Assigned Agreement is in full force and effect and there are no amendments,
modifications or supplements thereto, either oral or written agreed to by it,
(b) the Consenting Party has not assigned, transferred or hypothecated the
Assigned Agreement or any interest therein, (c) the Consenting Party has no
knowledge of any default by the Company in any respect of the performance of any
provision of the Assigned Agreement and no knowledge of any grounds for
termination of the Assigned Agreement by the Consenting Party, (d) to its
knowledge none of the Company's rights under the Assigned Agreement has been
waived, (e) the assignment by the Company of the Assigned Agreement to the
Assignee, as security, and the acknowledgment of and consent to such assignment
by the Consenting Party pursuant to and in accordance with this Consent to
Assignment, will not cause or constitute a default under the Assigned Agreement
or an event or condition which would, with the giving of notice or lapse of time
or both, constitute a default under the Assigned Agreement, and (f) a
foreclosure or other exercise of remedies under any of the Security Documents or
any sale thereunder by the Assignee, any of the Senior Parties or any of their
respective designees or assignees, whether by judicial proceedings or under any
power of sale contained therein, or any conveyance from the Company to the
Assignee, any of the Senior Parties or any of their respective designees or
assignees, in lieu thereof pursuant to and in accordance with this Consent to
Assignment, shall not require the consent of the Consenting Party or cause or
constitute a default under the Assigned Agreement or an event or condition which
would, with the giving of notice or lapse of time or both, constitute a default
under the Assigned Agreement.
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<PAGE>
4. Notice of Company's Defaults and Termination. Anything in the
Assigned Agreement notwithstanding, for so long as any financing liabilities are
outstanding under the Financing Documents and until the same have been satisfied
in full, the Consenting Party shall not exercise any right it may have under the
Assigned Agreement, at law or in equity, to cancel, suspend or terminate the
Assigned Agreement, or any of its obligations thereunder, as the result of any
default or other action or omission of the Company without first giving a copy
of a notice of default to the Assignee, such notice to be coupled with an
opportunity to cure any such default during the same cure period as provided to
the Company in the Assigned Agreement, but in no event less than sixty (60) days
from notice to Assignee (or, with respect to nonmonetary defaults or defaults
the curing of which requires the Assignee's possession of the Facility through
foreclosure, such longer period of time as may be necessary under the
circumstances, but not more than 120 days beyond the expiration of the cure
period provided in the Assigned Agreement, to complete such foreclosure or cure
such default, provided the Assignee, any of the Senior Parties, or any of their
respective assignees or designees is diligently pursuing such cure or
foreclosure), such cure period to commence upon delivery of such notice to the
Assignee, or, with respect to any defaults which are not susceptible of being so
corrected, to rectify to the Consenting Party's reasonable satisfaction the
effect upon the Consenting Party of such default by the Company within such
period. Such notice shall be in writing and shall be deemed to have been given
(a) when presented personally, (b) one business day after being deposited for
overnight delivery with a nationally recognized overnight courier, such as
FedEx, (c) when received, if deposited in a regularly maintained receptacle for
the United States Postal Service, postage prepaid, registered or certified,
return receipt requested, addressed to the Assignee at the address indicated
below or such other address as the Assignee may have specified by written notice
delivered in accordance herewith, or (d) when transmitted by telecopy to the
number specified below and the receipt confirmed telephonically by recipient,
provided that such telecopy is then followed by a copy of such notice delivered
by a method specified in clause (a), (b) or (c) above.
IBJ Whitehall Bank & Trust Company, as Collateral Agent
One State Street
New York, New York 10004
Attention: Capital Markets Trust Services
Facsimile: 212-858-2952
Failure of the Consenting Party to provide such notice to the Assignee
shall not constitute a breach of this Consent to Assignment, and the Assignee
agrees that the Consenting Party shall have no liability to the Assignee for
such failure whatsoever; however, no cancellation, suspension or termination of
the Assigned Agreement by the Consenting Party, or of any of the Consenting
Party's obligations thereunder by the Consenting Party, shall be binding upon
the Assignee or any of the Senior Parties without such notice and the lapse of
the applicable cure period. Any dispute that may arise under the Assigned
Agreement notwithstanding, the Consenting Party shall continue performance under
the Assigned Agreement and resolve any dispute without discontinuing such
performance until the lapse of the notice and applicable cure periods or
extension periods. The Assignee, any of the Senior Parties or any of their
respective assignees or designees may, but shall be under no obligation to, make
any payment or perform
3
<PAGE>
any act required thereunder to be made or performed by the Company, with the
same effect as if made or performed by the Company. If the Assignee, any of the
Senior Parties or any of their respective assignees or designees fails to cure
or rectify the effect of a default under the Assigned Agreement within the same
cure period as provided to the Company in the Assigned Agreement or within sixty
(60) days from notice to the Assignee (or, with respect to nonmonetary defaults
or defaults the curing of which requires the curing party's possession of the
Facility through foreclosure, such longer period of time as may be necessary
under the circumstances, but not more than 120 days beyond the expiration of the
cure period provided in the Assigned Agreement, to complete such foreclosure or
cure such default, provided the Assignee, any of the Senior Parties or any of
their respective assignees or designees is diligently pursuing such cure or such
foreclosure), whichever is longer, such cure period to commence upon such notice
to the Assignee, the Consenting Party shall have all its rights and remedies
with respect to such default as set forth in the Assigned Agreement.
5. Amendment and Modification Without Consent. The Consenting Party
shall not amend, modify or consent to the amendment or modification of the
Assigned Agreement without the prior written consent of the Assignee, unless the
Company has certified to the Consenting Party in writing that such amendment,
modification or consent to amendment or modification is permitted under the
terms of the Financing Documents.
6. Payments to Revenue Account. The Consenting Party hereby agrees
that, so long as any notes, bonds, loans, letters of credit, commitments or
other obligations are outstanding under the Financing Documents and until the
same have been satisfied in full, all payments to be made by the Consenting
Party with respect to the Assigned Agreement shall be in lawful money of the
United States of America, in immediately available funds. The Company hereby
directs the Consenting Party to, and the Consenting Party hereby agrees to, make
all such payments with respect to the Assigned Agreement directly to the
Assignee at ABA No. 026007825, for credit to AES Ironwood, L.L.C., for further
credit to Account No. 630000041.2 (Revenue Account) Attention: Capital Markets
Trust Services, or to such other person and/or at such other address as the
Assignee may from time to time specify in writing to the Consenting Party. Any
such payment shall be deemed to be a payment by the Consenting Party to the
Company under the Assigned Agreement.
7. Protection of the Assignee. In the event that either (a) the
Company's interest in the Project shall be sold, assigned or otherwise
transferred pursuant to the exercise of any right, power or remedy by the
Assignee or pursuant to judicial proceedings, or (b) the Company rejects all or
a portion of the Assigned Agreement under Title 11, United States Code, or other
similar Federal or state statute and such rejection is approved by the
appropriate bankruptcy court or is otherwise effective pursuant to such statute,
and in either case (i) no funds payable under the Assigned Agreement shall be
due and payable to the Consenting Party, (ii) the effect upon the Consenting
Party of any default not susceptible of being corrected shall have been
rectified to Consenting Party's reasonable satisfaction, (iii) the Assigned
Agreement shall have been validly terminated pursuant to the terms of the
Assigned Agreement by reason of a default or a rejection by the Company or a
trustee in bankruptcy under Title 11, United States Code, or other similar
Federal or state statute, and (iv) the Assignee or any of the Senior Parties
shall have cured, or shall be diligently pursuing a cure of, or shall have
entered into a binding obligation providing
4
<PAGE>
for the cure of, any default susceptible of being corrected by Assignee or any
of the Senior Parties or by a purchaser at any judicial or non-judicial sale,
the Consenting Party shall, promptly, and in no event longer than ten (10) days
after receipt of written request therefor; provided, such request is received by
the Consenting Party not more than 60 days after any event specified in clause
(a) or (b) above, execute and deliver an agreement to the Assignee, any of the
Senior Parties or any of their respective nominees, purchasers, assignees or
transferees, as the case may be, for the remainder of the term of the Assigned
Agreement and with the same terms as are contained therein; provided, that any
nominee, purchaser, assignee, or transferee of the Assignee or the Senior
Parties (x) shall have operated, or contracted with a party that has operated a
power generating facility using technology similar to that of the Facility and
(y) shall assume in writing the obligations of the Company under the Assigned
Agreement. References in this Consent to Assignment to "Assigned Agreement"
shall be deemed also to include such new agreement.
8. Acknowledgement of the Assignee's Obligations and Rights. Neither
the Assignee nor any of the Senior Parties has any obligation hereunder to
extend credit to the Consenting Party or any contractor of the Consenting Party
at any time for any purpose. Neither the Assignee nor any of the Senior Parties
shall have any obligation to the Consenting Party under the Assigned Agreement
unless and until such time as such entity succeeds to the interest of the
Company under the Assigned Agreement pursuant to the Assignee's election to
exercise its rights hereunder. Upon the occurrence and during the continuance of
an event of default under any of the Security Documents, the Assignee or any of
the Senior Parties shall have the right to the extent authorized under the
Security Documents, to (a) take possession of the Project and operate the same,
(b) sell or otherwise transfer their interest in the Project and any purchaser
at such sale shall succeed to the Assignee's or the Senior Parties' rights
hereunder, as the case may be, and (c) exercise all rights of the Company under
the Assigned Agreement in accordance with the terms thereof. In the case of
subsection (b) above, the Assignee and the Senior Parties agree that any
purchaser, assignee, or transferee of the Project (x) shall have operated, or
contracted with a party that has operated a power generating facility using
technology similar to that of the Facility and (y) shall assume in writing the
obligations of the Company under the Assigned Agreement. Subject to the
Assignee's compliance with the provisions of the Assigned Agreement (if
applicable) and the terms of this Consent to Assignment, the Consenting Party
shall cooperate with the Assignee and comply in all respects in the Assignee's
exercise of such rights. Without limiting the generality of the foregoing, upon
the occurrence and during the continuance of an event of default under any of
the Financing Documents, the Assignee, any of the Senior Parties or any of their
respective designees or assignees satisfying the qualifications set forth in
clause (x) and (y) of this Section 8 shall have the full right and power to
enforce directly against the Consenting Party all obligations of the Consenting
Party under the Assigned Agreement and to otherwise exercise all remedies
thereunder, and to make all demands and give all notices and make all requests
required or permitted to be made by the Company under the Assigned Agreement.
The Assignee, any of the Senior Parties or any of their respective assignees or
designees satisfying the qualifications set forth in clause (x) and (y) of this
Section 8 shall have the right, but not the obligation, to perform any act, duty
or obligation required of the Company thereunder within the time periods
provided in the Assigned Agreement; provided that nothing herein shall require
the Assignee, any of the Senior Parties or any of their respective
5
<PAGE>
designees or assignees to cure any default of the Company under the Assigned
Agreement or to perform any act, duty or obligation of the Company under the
Assigned Agreement.
9. Refinancing. The Consenting Party hereby acknowledges that the
Company may from time to time obtain refinancing for the Project (including
privately or publicly placed bonds or notes), and the Consenting Party agrees
that it will promptly upon request execute in favor of the lenders providing
such refinancing a new consent to assignment as requested by such lenders;
provided that the terms and conditions contained in such consent to assignment
shall be no less favorable to the Consenting Party than those terms and
conditions contained in this Consent to Assignment unless the documentation
governing such refinancing adversely affects the Consenting Party's rights or
remedies under the Assigned Agreement compared to its position prior to such
refinancing.
10. Representations. The Consenting Party represents and warrants to
the Assignee as follows:
(a) The Consenting Party is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is in good standing in all jurisdictions where necessary in light of the
business it conducts (including, without limitation, performance of its
obligations under the Assigned Agreement) and the properties it owns.
(b) The Consenting Party has the necessary corporate power,
corporate authority and legal right to execute, deliver and perform its
obligations under the Assigned Agreement and this Consent to Assignment, and the
execution and delivery by the Consenting Party of the Assigned Agreement and
this Consent to Assignment and the performance of its obligations thereunder and
hereunder have been duly authorized by all necessary corporate action and do not
and will not (i) require any consent or approval of the Consenting Party's board
of directors or any shareholder of the Consenting Party (except those previously
obtained, in full force and effect and attached hereto as Exhibit 10(b)(i)),
(ii) violate any provision of the corporate charter or by-laws of the Consenting
Party or any provision of any material law, rule or regulation, or any material
order, writ, judgment, injunction, decree, determination or award having
applicability to the Consenting Party, (iii) result in a breach of or constitute
a default under any material indenture, loan or credit agreement or any other
material agreement, lease or instrument to which the Consenting Party is a party
or by which it or its properties may be bound or affected or (iv) result in, or
require, the creation or imposition of any mortgage, deed of trust, pledge,
lien, security interest, charge or encumbrance of any nature upon or with
respect to any of the properties now owned or hereafter acquired by the
Consenting Party; and the Consenting Party is not in violation, breach or
default of any provision of the corporate charter or by-laws of the Consenting
Party or any provision of any material law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award having applicability to the
Consenting Party or any agreement referred to above in clause (iii) of this
subsection (b), which violation could have a material adverse effect on the
ability of the Consenting Party to perform its obligations under this Consent to
Assignment or the Assigned Agreement.
(c) The Assigned Agreement and this Consent to Assignment have
been duly executed and delivered and each constitutes a valid and binding
obligation of the Consenting
6
<PAGE>
Party, enforceable in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
fraudulent conveyance, reorganization or other similar laws affecting the
enforcement of creditors' rights and general equitable principles.
(d) No consent or approval of, or other action by, or any
notice or filing with, any court or administrative or governmental body (except
those previously obtained, in full force and effect and attached hereto as
Exhibit 10(d)) is required in connection with the execution and delivery of the
Assigned Agreement or this Consent to Assignment or the performance by the
Consenting Party of its obligations thereunder or hereunder. The Consenting
Party has obtained all permits, licenses, approvals, consents, authorizations
and exemptions, if any, with respect to the performance of its obligations under
the Assigned Agreement and this Consent to Assignment required by applicable
laws, statutes, rules and regulations in effect as of the date hereof.
(e) The Consenting Party is not in default with respect to the
Assigned Agreement and has no knowledge, as of the date hereof, of any claims or
rights of set-off by the Consenting Party or by any of its affiliates against
the Company.
(f) There are no proceedings pending or, to the best of the
Consenting Party's knowledge after due inquiry, threatened against or affecting
the Consenting Party in any court or before any governmental authority or
arbitration board or tribunal (whether or not purportedly on behalf of the
Consenting Party) which may result in a material or adverse effect upon the
business, condition (financial or otherwise) or operations of the Consenting
Party, or the ability of the Consenting Party to perform its obligations under,
or which purports to affect the legality, validity or enforceability of, the
Assigned Agreement or this Consent to Assignment; and the Consenting Party is
not in default with respect to any order of any court, governmental authority or
arbitration board or tribunal.
11. Concerning the Assigned Agreement.
(a) Section 9.9.
The Consenting Party acknowledges and accepts that certain
maintenance services will be provided to the Company pursuant to that certain
Maintenance Program Parts, Shop Repairs and Scheduled Outage TFA Services
Contract, dated as of September 23, 1998 between the Company and Siemens
Westinghouse Power Corporation.
(b) Section 11.4.
The Consenting Party agrees that Fuel Conversion Volume
Rebates and Non-Dispatch Payments from the Company to the Consenting Party that
are expressly stated under the Assigned Agreement to be paid on a basis
subordinate to the Company's debt service shall be so subordinated and shall not
be subject to set-off under the Assigned Agreement.
7
<PAGE>
(c) Section 22.2.
Upon the occurrence and during the continuance of an event of
default under any of the Security Documents, and to the extent authorized under
the Security Documents, the Assignee or any of the Senior Parties, subject to
the prior right of the Consenting Party pursuant to Section 27.6 of the Assigned
Agreement, shall have the right to sell or otherwise transfer their interest in
the Project, including their interest in the Assigned Agreement, to any
purchaser and Section 22.2 of the Assigned Agreement shall not apply to such
sale or other transfer.
(d) Section 27.6.
The Consenting Party acknowledges that, in calculating the
amount referred to in clause (ii) of the second sentence of Section 27.6, the
amount due and owing to the Senior Secured Parties shall be determined by
reference to the Financing Documents and that no consummation of the transaction
contemplated by Section 27.6 shall occur without the execution and delivery by
the Collateral Agent of an agreement of satisfaction and release in a form
satisfactory to the Collateral Agent and the Consenting Party.
12. Binding Upon Successors. All agreements, covenants, conditions and
provisions of this Consent to Assignment shall be binding upon and inure to the
benefit of the successors and assigns of each of the parties hereto.
13. Captions. The captions or headings at the beginning of each Section
hereof are for the convenience of the parties hereto only and are not a part of
this Consent to Assignment.
14. Governing Law.
(a) THIS CONSENT TO ASSIGNMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF
RELATING TO CONFLICTS OF LAW EXCEPT SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).
(b) Any legal action or proceeding with respect to this Consent to
Assignment and any action for enforcement of any judgment in respect thereof may
be brought in the courts of the State of New York or of the United States of
America for the Southern District of New York, and, by execution and delivery of
this Consent to Assignment, each of the Consenting Party, the Company and the
Collateral Agent hereby accepts for itself and in respect of its property,
generally and unconditionally, the non-exclusive jurisdiction of the aforesaid
courts and appellate courts from any appeal thereof. Each of the Consenting
Party and the Company hereby irrevocably designates, appoints and empowers CT
Corporation System 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 action or proceeding. If for any reason such designee, appointee and agent
shall cease to be available to act as such, the Company or the Consenting Party,
as applicable, 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. Each of the Consenting Party, the Company and the
Collateral Agent irrevocably consents to the service of process out of any of
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<PAGE>
the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the
Consenting Party at its notice address provided herein. Each of the Consenting
Party, the Company and the Collateral Agent 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
Consent to Assignment brought in the courts referred to 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. Nothing herein shall affect the right of the Collateral
Agent or its designees to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against the Consenting Party
in any other jurisdiction.
15. Amendment. This Consent to Assignment may be modified, amended or
rescinded only by a writing expressly referring to this Consent to Assignment
and signed by both the Consenting Party and the Assignee. The Assignee may
request the direction of the Senior Parties prior to signing any amendments
described herein.
16. Severability. Every provision of this Consent to Assignment is
intended to be severable. If any term or provision hereof is declared by a court
of competent jurisdiction to be illegal, invalid or unenforceable for any reason
whatsoever, such illegality, invalidity or unenforceability shall not affect the
other terms and provisions hereof, which terms and provisions shall remain
binding and enforceable, and to the extent possible all of such other provisions
shall remain in full force and effect.
17. Counterparts. This Consent to Assignment 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.
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<PAGE>
IN WITNESS WHEREOF, each of the Consenting Party and the Assignee has
duly executed this Consent to Assignment as of the date first above written.
WILLIAMS ENERGY MARKETING & TRADING
COMPANY
By: /s/ Philip J. Scalzo
-------------------------------
Name: Philip J. Scalzo
Title: Vice President
IBJ WHITEHALL BANK & TRUST COMPANY,
as COLLATERAL AGENT
By: /s/ Thomas McCutcheon
-------------------------------
Name: Thomas McCutcheon
Title: Assistant Vice President
REVIEWED AND CONSENTED TO:
AES IRONWOOD, L.L.C.
By: /s/ Patricia L. Rollin
------------------------------
Name: Patricia L. Rollin
Title: Vice President
<PAGE>
Exhibit 4.10
EXECUTION VERSION
THE WILLIAMS COMPANIES, INC.
CONSENT TO ASSIGNMENT
THIS CONSENT TO ASSIGNMENT (this "Consent to Assignment") is entered
into as of June 1, 1999 by THE WILLIAMS COMPANIES, INC., a Delaware corporation
(the "Consenting Party"), and IBJ WHITEHALL BANK & TRUST COMPANY, as collateral
agent (the "Collateral Agent", together with any successors thereto in such
capacity, referred to as the "Assignee"), for the benefit of and on behalf of
the Senior Parties defined below.
A. AES Ironwood, L.L.C. (the "Company"), a Delaware limited liability
company, is providing for the development, construction, ownership and operation
of a nominal 705 MW (net) gas-fired combined cycle electric generating facility
(the "Facility") and the financing, development and construction thereof (the
Facility, equipment and facilities associated with the Facility and such
financing, development and construction, the "Project") to be located in South
Lebanon Township, Lebanon County, Pennsylvania.
B. The Company intends to finance the development and construction of
the Project, in part, through the issuance, from time to time, of certain
securities (the "Securities") pursuant to a Trust Indenture, dated as of June 1,
1999 between the Company and IBJ Whitehall Bank & Trust Company, as trustee (the
"Trustee"), as it may be amended or supplemented from time to time (the
"Indenture").
C. All obligations of the Company under the Securities, the Collateral
Agency Agreement (defined below) and any other agreements evidencing senior debt
of the Company (collectively, the "Financing Documents") to the Trustee, the
Collateral Agent, each successor to any such person and each other person
providing senior debt to the Company who is or becomes a party to the Collateral
Agency Agreement pursuant to its terms (collectively, the "Senior Parties") will
be secured by a certain Mortgage, Security Agreement, Indenture, Pledge
Agreement and Assignment of Leases and Income, each between the Company and IBJ
Whitehall Bank & Trust Company (collectively, the "Security Documents").
D. The Senior Parties and the Company have entered into the Collateral
Agency and Intercreditor Agreement, dated as of June 1, 1999 (as amended,
supplemented or modified and in effect from time to time, the "Collateral Agency
Agreement") to set forth their mutual understanding with respect to (a) the
exercise of certain rights, remedies and options by the respective parties
thereto under the above described documents, (b) the priority of their
respective security interests created by the Security Documents, (c) the
application of project revenues and certain other monies and items and (d) the
appointment of the Collateral Agent as collateral agent.
E. The Consenting Party has issued in favor of the Company that certain
Guaranty (the "Assigned Agreement") dated as of June 25, 1999 in respect of the
Power Purchase Agreement.
<PAGE>
F. The Company has notified the Consenting Party that all of the
Company's right, title and interest in the Assigned Agreement is to be assigned
to the Assignee as security pursuant to one or more of the Security Documents.
G. It is a condition precedent to the extension of credit by the Senior
Parties that the Consenting Party execute and deliver this Consent to Assignment
for the benefit of the Senior Parties.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:
1. Definitions. Capitalized terms used herein shall have the respective
meanings specified herein or, if not defined herein, as defined in the Assigned
Agreement.
2. Consent to Assignment. Subject to the terms and conditions of this
Consent to Assignment, the Consenting Party hereby irrevocably consents to the
assignment of the Assigned Agreement by the Company to the Assignee for the
benefit of the Senior Parties as security, and the Consenting Party shall
continue performance under the Assigned Agreement in accordance with its terms
and the terms of this Consent to Assignment.
3. No Defaults. The Consenting Party acknowledges and agrees that (a)
the Assigned Agreement is in full force and effect and there are no amendments,
modifications or supplements thereto, either oral or written agreed to by it,
(b) the Consenting Party has not assigned, transferred or hypothecated the
Assigned Agreement or any interest therein, (c) the Consenting Party has no
knowledge of any default by the Company in any respect of the performance of any
provision of the Assigned Agreement and no knowledge of any grounds for
termination of the Assigned Agreement by the Consenting Party, (d) to its
knowledge none of the Company's rights under the Assigned Agreement has been
waived, (e) the assignment by the Company of the Assigned Agreement to the
Assignee, as security, and the acknowledgment of and consent to such assignment
by the Consenting Party pursuant to and in accordance with this Consent to
Assignment, will not cause or constitute a default under the Assigned Agreement
or an event or condition which would, with the giving of notice or lapse of time
or both, constitute a default under the Assigned Agreement, and (f) a
foreclosure or other exercise of remedies under any of the Security Documents or
any sale thereunder by the Assignee, any of the Senior Parties or any of their
respective designees or assignees, whether by judicial proceedings or under any
power of sale contained therein, or any conveyance from the Company to the
Assignee, any of the Senior Parties or any of their respective designees or
assignees, in lieu thereof pursuant to and in accordance with this Consent to
Assignment, shall not require the consent of the Consenting Party or cause or
constitute a default under the Assigned Agreement or an event or condition which
would, with the giving of notice or lapse of time or both, constitute a default
under the Assigned Agreement.
4. Notice of Company's Defaults and Termination. Anything in the
Assigned Agreement notwithstanding, for so long as any financing liabilities are
outstanding under the Financing Documents and until the same have been satisfied
in full, the Consenting Party shall not exercise any right it may have under the
Assigned Agreement, at law or in equity, to cancel,
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suspend or terminate the Assigned Agreement, or any of its obligations
thereunder, as the result of any default or other action or omission of the
Company without first giving a copy of a notice of default to the Assignee, such
notice to be coupled with an opportunity to cure any such default during the
same cure period as provided to the Company in the Assigned Agreement, but in no
event less than sixty (60) days from notice to Assignee (or, with respect to
nonmonetary defaults or defaults the curing of which requires the Assignee's
possession of the Facility through foreclosure, such longer period of time as
may be necessary under the circumstances, but not more than 120 days beyond the
expiration of the cure period provided in the Assigned Agreement, to complete
such foreclosure or cure such default, provided the Assignee, any of the Senior
Parties, or any of their respective assignees or designees is diligently
pursuing such cure or foreclosure), such cure period to commence upon delivery
of such notice to the Assignee, or, with respect to any defaults which are not
susceptible of being so corrected, to rectify to the Consenting Party's
reasonable satisfaction the effect upon the Consenting Party of such default by
the Company within such period. Such notice shall be in writing and shall be
deemed to have been given (a) when presented personally, (b) one business day
after being deposited for overnight delivery with a nationally recognized
overnight courier, such as FedEx, (c) when received, if deposited in a regularly
maintained receptacle for the United States Postal Service, postage prepaid,
registered or certified, return receipt requested, addressed to the Assignee at
the address indicated below or such other address as the Assignee may have
specified by written notice delivered in accordance herewith, or (d) when
transmitted by telecopy to the number specified below and the receipt confirmed
telephonically by recipient, provided that such telecopy is then followed by a
copy of such notice delivered by a method specified in clause (a), (b) or (c)
above.
IBJ Whitehall Bank & Trust Company, as Collateral Agent
One State Street
New York, New York 10004
Attention: Capital Markets Trust Services
Facsimile: 212-858-2952
Failure of the Consenting Party to provide such notice to the Assignee
shall not constitute a breach of this Consent to Assignment, and the Assignee
agrees that the Consenting Party shall have no liability to the Assignee for
such failure whatsoever; however, no cancellation, suspension or termination of
the Assigned Agreement by the Consenting Party, or of any of the Consenting
Party's obligations thereunder by the Consenting Party, shall be binding upon
the Assignee or any of the Senior Parties without such notice and the lapse of
the applicable cure period. Any dispute that may arise under the Assigned
Agreement notwithstanding, the Consenting Party shall continue performance under
the Assigned Agreement and resolve any dispute without discontinuing such
performance until the lapse of the notice and applicable cure periods or
extension periods. The Assignee, any of the Senior Parties or any of their
respective assignees or designees may, but shall be under no obligation to, make
any payment or perform any act required thereunder to be made or performed by
the Company, with the same effect as if made or performed by the Company. If the
Assignee, any of the Senior Parties or any of their respective assignees or
designees fails to cure or rectify the effect of a default under the Assigned
Agreement within the same cure period as provided to the Company in the Assigned
Agreement
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or within sixty (60) days from notice to the Assignee (or, with respect to
nonmonetary defaults or defaults the curing of which requires the curing party's
possession of the Facility through foreclosure, such longer period of time as
may be necessary under the circumstances, but not more than 120 days beyond the
expiration of the cure period provided in the Assigned Agreement, to complete
such foreclosure or cure such default, provided the Assignee, any of the Senior
Parties or any of their respective assignees or designees is diligently pursuing
such cure or such foreclosure), whichever is longer, such cure period to
commence upon such notice to the Assignee, the Consenting Party shall have all
its rights and remedies with respect to such default as set forth in the
Assigned Agreement.
5. Amendment and Modification Without Consent. The Consenting Party
shall not amend, modify or consent to the amendment or modification of the
Assigned Agreement without the prior written consent of the Assignee, unless the
Company has certified to the Consenting Party in writing that such amendment,
modification or consent to amendment or modification is permitted under the
terms of the Financing Documents.
6. Payments to Revenue Account. The Consenting Party hereby agrees
that, so long as any notes, bonds, loans, letters of credit, commitments or
other obligations are outstanding under the Financing Documents and until the
same have been satisfied in full, all payments to be made by the Consenting
Party with respect to the Assigned Agreement shall be in lawful money of the
United States of America, in immediately available funds. The Company hereby
directs the Consenting Party to, and the Consenting Party hereby agrees to, make
all such payments with respect to the Assigned Agreement directly to the
Assignee at ABA No. 026007825, for credit to AES Ironwood, L.L.C., for further
credit to Account No. 630000041.2 (Revenue Account) Attention: Capital Markets
Trust Services, or to such other person and/or at such other address as the
Assignee may from time to time specify in writing to the Consenting Party. Any
such payment shall be deemed to be a payment by the Consenting Party to the
Company under the Assigned Agreement.
7. Protection of the Assignee. In the event that either (a) the
Company's interest in the Project shall be sold, assigned or otherwise
transferred pursuant to the exercise of any right, power or remedy by the
Assignee or pursuant to judicial proceedings, or (b) the Company rejects all or
a portion of the Assigned Agreement under Title 11, United States Code, or other
similar Federal or state statute and such rejection is approved by the
appropriate bankruptcy court or is otherwise effective pursuant to such statute,
and in either case (i) no funds payable under the Assigned Agreement shall be
due and payable to the Consenting Party, (ii) the effect upon the Consenting
Party of any default not susceptible of being corrected shall have been
rectified to Consenting Party's reasonable satisfaction, (iii) the Assigned
Agreement shall have been validly terminated pursuant to the terms of the
Assigned Agreement by reason of a default or a rejection by the Company or a
trustee in bankruptcy under Title 11, United States Code, or other similar
Federal or state statute, and (iv) the Assignee or any of the Senior Parties
shall have cured, or shall be diligently pursuing a cure of, or shall have
entered into a binding obligation providing for the cure of, any default
susceptible of being corrected by Assignee or any of the Senior Parties or by a
purchaser at any judicial or non-judicial sale, the Consenting Party shall,
promptly, and in no event longer than ten (10) days after receipt of written
request therefor; provided, such request is received by the Consenting Party not
more than 60 days after any event
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<PAGE>
specified in clause (a) or (b) above, execute and deliver an agreement to the
Assignee, any of the Senior Parties or any of their respective nominees,
purchasers, assignees or transferees, as the case may be, for the remainder of
the term of the Assigned Agreement and with the same terms as are contained
therein; provided, that any nominee, purchaser, assignee, or transferee of the
Assignee or the Senior Parties (x) shall have operated, or contracted with a
party that has operated a power generating facility using technology similar to
that of the Facility and (y) shall assume in writing the obligations of the
Company under the Assigned Agreement. References in this Consent to Assignment
to "Assigned Agreement" shall be deemed also to include such new agreement.
8. Acknowledgement of the Assignee's Obligations and Rights. Neither
the Assignee nor any of the Senior Parties has any obligation hereunder to
extend credit to the Consenting Party or any contractor of the Consenting Party
at any time for any purpose. Neither the Assignee nor any of the Senior Parties
shall have any obligation to the Consenting Party under the Assigned Agreement
unless and until such time as such entity succeeds to the interest of the
Company under the Assigned Agreement pursuant to the Assignee's election to
exercise its rights hereunder. Upon the occurrence and during the continuance of
an event of default under any of the Security Documents, the Assignee or any of
the Senior Parties shall have the right to the extent authorized under the
Security Documents, to (a) take possession of the Project and operate the same,
(b) sell or otherwise transfer their interest in the Project and any purchaser
at such sale shall succeed to the Assignee's or the Senior Parties' rights
hereunder, as the case may be, and (c) exercise all rights of the Company under
the Assigned Agreement in accordance with the terms thereof. In the case of
subsection (b) above, the Assignee and the Senior Parties agree that any
purchaser, assignee, or transferee of the Project (x) shall have operated, or
contracted with a party that has operated a power generating facility using
technology similar to that of the Facility and (y) shall assume in writing the
obligations of the Company under the Assigned Agreement. Subject to the
Assignee's compliance with the provisions of the Assigned Agreement (if
applicable) and the terms of this Consent to Assignment, the Consenting Party
shall cooperate with the Assignee and comply in all respects in the Assignee's
exercise of such rights. Without limiting the generality of the foregoing, upon
the occurrence and during the continuance of an event of default under any of
the Financing Documents, the Assignee, any of the Senior Parties or any of their
respective designees or assignees satisfying the qualifications set forth in
clause (x) and (y) of this Section 8 shall have the full right and power to
enforce directly against the Consenting Party all obligations of the Consenting
Party under the Assigned Agreement and to otherwise exercise all remedies
thereunder, and to make all demands and give all notices and make all requests
required or permitted to be made by the Company under the Assigned Agreement.
The Assignee, any of the Senior Parties or any of their respective assignees or
designees satisfying the qualifications set forth in clause (x) and (y) of this
Section 8 shall have the right, but not the obligation, to perform any act, duty
or obligation required of the Company thereunder within the time periods
provided in the Assigned Agreement; provided that nothing herein shall require
the Assignee, any of the Senior Parties or any of their respective designees or
assignees to cure any default of the Company under the Assigned Agreement or to
perform any act, duty or obligation of the Company under the Assigned Agreement.
9. Refinancing. The Consenting Party hereby acknowledges that the
Company may from time to time obtain refinancing for the Project (including
privately or publicly placed bonds
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<PAGE>
or notes), and the Consenting Party agrees that it will promptly upon request
execute in favor of the lenders providing such refinancing a new consent to
assignment as requested by such lenders; provided that the terms and conditions
contained in such consent to assignment shall be no less favorable to the
Consenting Party than those terms and conditions contained in this Consent to
Assignment unless the documentation governing such refinancing adversely affects
the Consenting Party's rights or remedies under the Assigned Agreement compared
to its position prior to such refinancing.
10. Representations. The Consenting Party represents and warrants to
the Assignee as follows:
(a) The Consenting Party is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is in
good standing in all jurisdictions where necessary in light of the business it
conducts (including, without limitation, performance of its obligations under
the Assigned Agreement) and the properties it owns.
(b) The Consenting Party has the necessary corporate power,
corporate authority and legal right to execute, deliver and perform its
obligations under the Assigned Agreement and this Consent to Assignment, and the
execution and delivery by the Consenting Party of the Assigned Agreement and
this Consent to Assignment and the performance of its obligations thereunder and
hereunder have been duly authorized by all necessary corporate action and do not
and will not (i) require any consent or approval of the Consenting Party's board
of directors or any shareholder of the Consenting Party (except those previously
obtained, in full force and effect and attached hereto as Exhibit 10(b)(i)),
(ii) violate any provision of the corporate charter or by-laws of the Consenting
Party or any provision of any material law, rule or regulation, or any material
order, writ, judgment, injunction, decree, determination or award having
applicability to the Consenting Party, (iii) result in a breach of or constitute
a default under any material indenture, loan or credit agreement or any other
material agreement, lease or instrument to which the Consenting Party is a party
or by which it or its properties may be bound or affected or (iv) result in, or
require, the creation or imposition of any mortgage, deed of trust, pledge,
lien, security interest, charge or encumbrance of any nature upon or with
respect to any of the properties now owned or hereafter acquired by the
Consenting Party; and the Consenting Party is not in violation, breach or
default of any provision of the corporate charter or by-laws of the Consenting
Party or any provision of any material law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award having applicability to the
Consenting Party or any agreement referred to above in clause (iii) of this
subsection (b), which violation could have a material adverse effect on the
ability of the Consenting Party to perform its obligations under this Consent to
Assignment or the Assigned Agreement.
(c) The Assigned Agreement and this Consent to Assignment have been
duly executed and delivered and each constitutes a valid and binding obligation
of the Consenting Party, enforceable in accordance with its terms, except to the
extent that enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, fraudulent conveyance, reorganization or other similar laws
affecting the enforcement of creditors' rights and general equitable principles.
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(d) No consent or approval of, or other action by, or any notice or
filing with, any court or administrative or governmental body (except those
previously obtained, in full force and effect and attached hereto as Exhibit
10(d)) is required in connection with the execution and delivery of the Assigned
Agreement or this Consent to Assignment or the performance by the Consenting
Party of its obligations thereunder or hereunder. The Consenting Party has
obtained all permits, licenses, approvals, consents, authorizations and
exemptions, if any, with respect to the performance of its obligations under the
Assigned Agreement and this Consent to Assignment required by applicable laws,
statutes, rules and regulations in effect as of the date hereof.
(e) The Consenting Party is not in default with respect to the
Assigned Agreement and has no knowledge, as of the date hereof, of any claims or
rights of set-off by the Consenting Party or by any of its affiliates against
the Company.
(f) There are no proceedings pending or, to the best of the
Consenting Party's knowledge after due inquiry, threatened against or affecting
the Consenting Party in any court or before any governmental authority or
arbitration board or tribunal (whether or not purportedly on behalf of the
Consenting Party) which may result in a material or adverse effect upon the
business, condition (financial or otherwise) or operations of the Consenting
Party, or the ability of the Consenting Party to perform its obligations under,
or which purports to affect the legality, validity or enforceability of, the
Assigned Agreement or this Consent to Assignment; and the Consenting Party is
not in default with respect to any order of any court, governmental authority or
arbitration board or tribunal.
11. Binding Upon Successors. All agreements, covenants, conditions and
provisions of this Consent to Assignment shall be binding upon and inure to the
benefit of the successors and assigns of each of the parties hereto.
12. Captions. The captions or headings at the beginning of each Section
hereof are for the convenience of the parties hereto only and are not a part of
this Consent to Assignment.
13. Governing Law.
(a) THIS CONSENT TO ASSIGNMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF
RELATING TO CONFLICTS OF LAW EXCEPT SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).
(b) Any legal action or proceeding with respect to this Consent to
Assignment and any action for enforcement of any judgment in respect thereof may
be brought in the courts of the State of New York or of the United States of
America for the Southern District of New York, and, by execution and delivery of
this Consent to Assignment, each of the Consenting Party, the Company and the
Collateral Agent hereby accepts for itself and in respect of its property,
generally and unconditionally, the non-exclusive jurisdiction of the aforesaid
courts and appellate courts from any appeal thereof. Each of the Consenting
Party and the Company hereby
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irrevocably designates, appoints and empowers CT Corporation System 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 action or proceeding.
If for any reason such designee, appointee and agent shall cease to be available
to act as such, the Company or the Consenting Party, as applicable, 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. Each of
the Consenting Party, the Company and the Collateral Agent 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 Consenting Party at its notice address provided
herein. Each of the Consenting Party, the Company and the Collateral Agent
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 Consent to Assignment brought in the courts
referred to 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. Nothing herein shall
affect the right of the Collateral Agent or its designees to serve process in
any other manner permitted by law or to commence legal proceedings or otherwise
proceed against the Consenting Party in any other jurisdiction.
14. Amendment. This Consent to Assignment may be modified, amended or
rescinded only by a writing expressly referring to this Consent to Assignment
and signed by both the Consenting Party and the Assignee. The Assignee may
request the direction of the Senior Parties prior to signing any amendments
described herein.
15. Severability. Every provision of this Consent to Assignment is
intended to be severable. If any term or provision hereof is declared by a court
of competent jurisdiction to be illegal, invalid or unenforceable for any reason
whatsoever, such illegality, invalidity or unenforceability shall not affect the
other terms and provisions hereof, which terms and provisions shall remain
binding and enforceable, and to the extent possible all of such other provisions
shall remain in full force and effect.
16. Counterparts. This Consent to Assignment 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.
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IN WITNESS WHEREOF, each of the Consenting Party and the Assignee has
duly executed this Consent to Assignment as of the date first above written.
THE WILLIAMS COMPANIES, INC.
By: /s/ James G. Ivey
--------------------------------
Name: James G. Ivey
Title: Treasurer
IBJ WHITEHALL BANK & TRUST COMPANY,
as COLLATERAL AGENT
By: /s/ Thomas McCutcheon
--------------------------------
Name: Thomas McCutcheon
Title: Assistant Vice Preisdent
REVIEWED AND CONSENTED TO:
AES IRONWOOD, L.L.C.
By: /s/ Patricia L. Rollin
-----------------------------
Name: Patricia L. Rollin
Title: Vice President
<PAGE>
Exhibit 4.11
EXECUTION COPY
SIEMENS WESTINGHOUSE POWER CORPORATION
CONSENT TO ASSIGNMENT
THIS CONSENT TO ASSIGNMENT (this "Consent to Assignment") is entered
into as of June 1, 1999 by SIEMENS WESTINGHOUSE POWER CORPORATION, a Delaware
corporation (the "Consenting Party"), and IBJ WHITEHALL BANK & TRUST COMPANY, as
collateral agent (the "Collateral Agent", together with any successors thereto
in such capacity, referred to as the "Assignee"), for the benefit of and on
behalf of the Senior Parties defined below.
A. AES Ironwood, L.L.C. (the "Company"), a Delaware limited liability
company, intends to develop, construct, own, operate and finance a nominal 705
MW (net) gas-fired combined cycle electric generating facility (the "Facility")
(the Facility, equipment and facilities associated with the Facility and such
financing, development and construction, the "Project") to be located in South
Lebanon Township, Lebanon County, Pennsylvania.
B. The Company intends to finance the Project, in part, through the
issuance, from time to time, of certain securities (the "Securities") pursuant
to a Trust Indenture, dated as of June 1, 1999 between the Company and IBJ
Whitehall Bank & Trust Company, as trustee (the "Trustee"), as it may be amended
or supplemented from time to time (the "Indenture").
C. All obligations of the Company under the Securities, the Collateral
Agency Agreement (defined below), and any other agreements evidencing senior
debt of the Company (collectively, the "Financing Documents") to the Trustee,
the Collateral Agent, each successor to any such person and each other person
providing senior debt to the Company who is or becomes a party to the Collateral
Agency Agreement pursuant to its terms (collectively, the "Senior Parties") will
be secured by a certain Mortgage, Security Agreement, Indenture, Pledge
Agreement and Assignment of Leases and Income, each between the Company and IBJ
Whitehall Bank & Trust Company (collectively, the "Security Documents").
D. The Senior Parties and the Company have entered into the Collateral
Agency Agreement (as amended, supplemented or modified and in effect from time
to time, the "Collateral Agency Agreement") to set forth their mutual
understanding with respect to (a) the exercise of certain rights, remedies and
options by the respective parties thereto under the above described documents,
(b) the priority of their respective security interests created by the Security
Documents, (c) the application of project revenues and certain other monies and
items and (d) the appointment of the Collateral Agent as collateral agent.
E. The Company (as assignee of AES Ironwood, Inc.) and the Consenting
Party have entered into that certain Agreement for Engineering, Procurement and
Construction Services, as
<PAGE>
amended by the letters set forth in Annex A hereto (the "Assigned Agreement")
dated as of September 23, 1998, pursuant to which, among other things, the
Consenting Party will design, engineer, procure and construct the Project on a
fixed-price turnkey basis and will provide certain warranties and guarantees.
F. The Company has notified the Consenting Party that all of the
Company's right, title and interest in the Assigned Agreement are to be assigned
to the Collateral Agent as security pursuant to one or more of the Security
Documents.
G. It is a condition precedent to the extension of credit by the Senior
Parties that the Consenting Party execute and deliver this Consent to Assignment
for the benefit of the Senior Parties.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:
1. Definitions. Capitalized terms used herein shall have the respective
meanings specified herein or, if not defined herein, as defined in the Assigned
Agreement.
2. Consent to Assignment. The Consenting Party acknowledges that prior
to the date hereof, AES Ironwood, Inc. has assigned all of its right, title and
interest in the Assigned Agreement to the Company. The Consenting Party hereby
irrevocably consents to the assignment of the Assigned Agreement by the Company
to the Assignee for the benefit of the Senior Parties as security. The
Consenting Party shall continue performance under the Assigned Agreement in
accordance with its terms and the terms of this Consent to Assignment.
3. No Defaults. The Consenting Party acknowledges and agrees that (a)
the Assigned Agreement is in full force and effect and there are no amendments,
modifications or supplements thereto, either oral or written, (b) the Consenting
Party has not assigned, transferred or hypothecated the Assigned Agreement or
any interest therein, (c) the Consenting Party has no knowledge of any default
by the Company in any respect of the performance of any material provision of
the Assigned Agreement and without having performed any specific due diligence
no knowledge of any event or condition which would either immediately or with
the passage of any applicable grace period or giving of notice or both, enable
the Consenting Party to terminate or suspend its obligations under the Assigned
Agreement, (d) none of the Company's rights under the Assigned Agreement has
been waived in writing, (e) the assignment by the Company of the Assigned
Agreement to the Assignee, as security, and the acknowledgment of and consent to
such assignment by the Consenting Party, will not cause or constitute a default
under the Assigned Agreement or an event or condition which would, with the
giving of notice or lapse of time or both, constitute a default under the
Assigned Agreement, and (f) subject to the provisions of Section 9 hereof, a
foreclosure or other exercise of remedies under any of the Security Documents or
any sale thereunder by the Assignee, any of the Senior Parties or any of their
respective designees or assignees, whether by judicial proceedings or under any
power of sale contained therein, or any conveyance from the Company to the
Assignee, any of the Senior Parties or any of their respective designees or
assignees, in lieu thereof, shall not require the consent of the Consenting
Party, or cause or constitute a default under the Assigned Agreement or an event
or condition which would,
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with the giving of notice or lapse of time or both, constitute a default under
the Assigned Agreement.
4. Notice of Company's Defaults and Termination. Anything in the
Assigned Agreement notwithstanding, for so long as any Financing Liabilities (as
defined in the Collateral Agency Agreement) are outstanding under the Financing
Documents and until the same have been satisfied in full, the Consenting Party
shall not exercise any right it may have under the Assigned Agreement, at law or
in equity, to cancel, suspend or terminate the Assigned Agreement, or any of its
obligations thereunder, as the result of any default or other action or omission
(each herein a "default") of the Company unless the Consenting Party, shall have
given a copy of any notice of default to the Assignee when such notice was given
to the Company, such notice to be coupled with an opportunity to cure any such
default , in the case of a payment default within the time period provided for
in the Assigned Agreement (plus accrued interest thereon pursuant to Section
25.1 of the Assigned Agreement) or, with respect to nonmonetary defaults, 30
days after the expiration of all periods for cure to which the Company is
entitled under the Assigned Agreement, and written notice of such expiration has
been given to the Assignee (or for defaults the curing of which requires the
Assignee's possession of the Facility through foreclosure, such longer period of
time as may be reasonably necessary under the circumstances to complete such
foreclosure or cure such default, provided the Assignee, any of the Senior
Parties, or any of their respective designees or assignees is diligently
pursuing such cure or foreclosure, such cure period to commence upon delivery of
such further notice to the Assignee, or, with respect to any defaults which are
not susceptible of being so corrected, to rectify to the Consenting Party's
reasonable satisfaction the effect upon the Consenting Party of such default by
the Company within such period provided, however, that if any such party is
prohibited from curing any such default by any process, stay or injunction
issued by any governmental authority or pursuant to any bankruptcy or insolvency
proceeding, then the time periods specified in this Section 4 for curing a
default shall be extended for the period of such prohibition if the Assignee
shall have notified the Consenting Party in writing of its intent to commence
such cure or cause such cure to be commenced immediately upon cessation of such
prohibition. All notices provided hereunder shall be in writing and shall be
deemed to have been given (a) when presented personally, (b) one business day
after being deposited for overnight delivery with a nationally recognized
overnight courier, such as FedEx, (c) when received, if deposited in a regularly
maintained receptacle for the United States Postal Service, postage prepaid,
registered or certified, return receipt requested, addressed to the Assignee at
the address indicated below or such other address as the Assignee may have
specified by written notice delivered in accordance herewith, or (d) when
transmitted by telecopy to the number specified below and the receipt confirmed
telephonically by recipient, provided that such telecopy is then followed by a
copy of such notice delivered by a method specified in clause (a), (b) or (c)
above.
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IBJ Whitehall Bank & Trust Company, as Collateral Agent
One State Street
New York, New York 10004
Attention: Capital Markets Trust Services
Facsimile: 212-858-2952
No cancellation, suspension or termination of the Assigned Agreement by
the Consenting Party, or of any of the Consenting Party's obligations thereunder
by the Consenting Party, shall be binding upon the Assignee or any of the Senior
Parties without such notice and the lapse of the applicable cure period. Any
dispute that may arise under the Assigned Agreement notwithstanding, the
Consenting Party shall continue performance under the Assigned Agreement for the
benefit of the Assignee and resolve any dispute without discontinuing such
performance until the lapse of the notice and applicable cure periods or
extension periods in favor of the Assignee as provided herein. Except as
otherwise provided in Section 9 hereof, the Assignee, any of the Senior Parties
or any of their respective designees or assignees may, but shall be under no
obligation to, make any payment or perform any act required thereunder to be
made or performed by the Company, with the same effect as if made or performed
by the Company. Except as otherwise specifically provided in the immediately
preceding paragraph, the Consenting Party shall have all its rights and remedies
with respect to such default as set forth in the Assigned Agreement. The
Assignee shall promptly notify the Company upon satisfaction in full of all
Financing Liabilities.
5. No Previous Assignment. The Consenting Party represents and warrants
to the Assignee that it has not assigned, transferred or hypothecated, nor
previously consented to any assignment, transfer or hypothecation by the Company
of the Assigned Agreement or any interest therein.
6. Amendment and Modification Without Consent. The Consenting Party
acknowledges and confirms that under the terms of the Financing Documents, the
Company is not permitted to request or approve Scope Changes that exceed $5
million individually or $10 million in the aggregate without certain
certifications to the Assignee. The Consenting Party shall not agree to any
Scope Changes that exceed such amounts unless the Company shall have provided
the Consenting Party with evidence (with a copy to the Assignee) of such
certification.
7. Payments to Revenue Account. The Consenting Party hereby agrees
that, so long as any notes, bonds, loans, letters of credit, commitments or
other obligations, or any other Financing Liabilities, are outstanding under the
Financing Documents and until the same have been satisfied in full, all payments
to be made by the Consenting Party with respect to the Assigned Agreement shall
be in lawful money of the United States of America, in immediately available
funds. The Company hereby directs the Consenting Party to, and the Consenting
Party hereby agrees to, make all such payments with respect to the Assigned
Agreement directly to the Assignee at ABA No. 026007825, for credit to AES
Ironwood, L.L.C., for further credit to Account No. 630000041.2 (Revenue
Account) Attention: Capital Markets Trust Services, or to such other person
and/or at such other address as the Assignee may from time to time specify in
writing to the Consenting Party. All payments required to be made by the
Consenting Party under the Assigned Agreement shall be made without any offset,
recoupment, abatement, withholding, reduction or
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defense whatsoever, except for such offset, recoupment, abatement, withholding
or reduction as is not prohibited by the terms of the Assigned Agreement.
8. Protection of Assignee. In the event that either (a) the Company's
interest in the Project shall be sold, assigned or otherwise transferred
pursuant to the exercise of any right, power or remedy by the Assignee or
pursuant to judicial proceedings, or (b) the Company rejects all or a portion of
the Assigned Agreement under Title 11, United States Code, or other similar
Federal or state statute and such rejection is approved by the appropriate
bankruptcy court or is otherwise effective pursuant to such statute, the
Consenting Party shall, promptly, and in no event longer than ten (10) days
after receipt of written request therefor which request shall be made no more
than thirty (30) days after the date such assignment, sale, transfer or
rejection is approved or is otherwise made effective (as applicable), execute
and deliver an agreement, which shall in the case of (a) supersede the earlier
agreement, to the Assignee, any Senior Parties or any of their respective
nominees, purchasers, assignees or transferees, as the case may be, for the
remainder of the term of the Assigned Agreement and with substantially the same
terms as are contained therein provided that such Assignee, Senior Party or
their respective nominee, purchaser, assignee or transferee, as the case may be,
(i) shall agree in writing, to the extent curable, to cure any existing default
under the Assigned Agreement, (ii) shall in the reasonable opinion of the
Consenting Party be as financially and otherwise capable of performing all
obligations of the Company under the Assigned Agreement as the Company at the
time it closed the financing of the Project and received the first advance
thereunder, (iii) shall not be a direct competitor of the Consenting Party in
the manufacture and sale of power generation equipment or a wholly owned
subsidiary of such entity and (iv) shall not be an adverse party to the
Consenting Party or any of its affiliates in any arbitration or litigation. If
the Assignee notifies the Consenting Party of the identity of any proposed
purchaser, assignee or transferee, as the case may be, the Consenting Party
shall notify the Assignee within 10 days of receipt of such notification by the
Assignee as to whether such purchaser, assignee or transferee of the Company
fails to meet the requirements of clause (iii) or (iv), and stating the reasons
therefor.
9. Acknowledgement of Assignee's Obligations and Rights. Neither the
Assignee nor any of the Senior Parties has any obligation hereunder to extend
credit to the Consenting Party or any contractor of the Consenting Party at any
time for any purpose. The Assignee shall have no obligation to the Consenting
Party under the Assigned Agreement until such time as the Assignee notifies the
Consenting Party in writing of the Assignee's election to exercise its rights
hereunder. Upon the occurrence and during the continuance of an event of default
under any of the Security Documents, the Assignee or any of the Senior Parties
shall have the right to the extent authorized under the Security Documents, to
(a) take possession of the Project and operate the same as attorney-in-fact for
the Company, (b) foreclose upon, sell or otherwise transfer their interest in
the Project and any purchaser at such sale which may include the Assignee or its
designees or assignees, shall have the right to succeed to the Assignee's or the
Senior Parties' rights hereunder ("Substitute Owner"), as the case may be,
provided that the (i) Substitute Owner shall on or before succeeding to such
rights agree in writing to assume the obligations of the Company under the
Assigned Agreement and (where curable) to cure any existing default thereunder,
(ii) Substitute Owner shall in the reasonable opinion of the Consenting Party be
as financially and otherwise capable of performing all obligations of the
Company under the Assigned Agreement as the Company at the time it closed the
financing of the Project and received the first advance thereunder
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and (iii) Substitute Owner shall not be an adverse party to the Consenting Party
or any of its affiliates in any arbitration or litigation and (iv) Substitute
Owner shall not be a direct competitor in the manufacture and sale of power
generation equipment or a wholly owned subsidiary of such entity, (provided that
if the Assignee notifies the Consenting Party of the identity of any proposed
purchaser, assignee or transferee, as the case may be, the Consenting Party
shall notify the Assignee within 10 days of receipt of such notification by the
Assignee as to whether such purchaser, assignee or transferee of the Company
fails to meet the requirements of clause (iii) or (iv), and stating the reasons
therefor) and (c) as attorney-in-fact for the Company exercise all rights of the
Company under the Assigned Agreement in accordance with the terms thereof.
Subject to compliance with the provisions of the Assigned Agreement (if
applicable) and the terms of this Consent to Assignment, the Consenting Party
shall cooperate with the Assignee and with the Assignee's exercise of such
rights. Without limiting the generality of the foregoing, upon the occurrence
and during the continuance of an event of default under any of the Financing
Documents, the Assignee, any of the Senior Parties or any of their respective
designees or assignees shall have the full right and power to enforce directly
against the Consenting Party all obligations of the Consenting Party under the
Assigned Agreement and otherwise to exercise all remedies thereunder, and to
make all demands and give all notices and make all requests required or
permitted to be made by the Company under the Assigned Agreement. The Assignee,
any of the Senior Parties or any of their respective designees or assignees
shall have the right, but not the obligation, to perform any act, duty or
obligation required of the Company thereunder at any time; provided that nothing
herein shall require the Assignee, any of the Senior Parties or any of their
respective designees or assignees to cure any default of the Company under the
Assigned Agreement or to perform any act, duty or obligation of the Company
under the Assigned Agreement except during any such period that it shall have
become a Substitute Owner and assumed such duties and obligations. The
obligations of any Substitute Owner shall be no more than that of the Company
under such Assigned Agreement, any Substitute Owner shall have no personal
liability to the Consenting Party for the performance of such obligations and
the sole recourse of the Consenting Party, if there is a Substitute Owner, shall
be to Substitute Owner's interest in the Facility. The Assignee is not required
to take any discretionary action under this Agreement unless it receives written
direction from the Required Senior Parties. The Assignee is entitled to receive
indemnification to its satisfaction before taking any action as directed by the
Required Senior Parties.
10. Refinancing. The Consenting Party hereby acknowledges that the
Company may from time to time obtain refinancing for the Project (including
privately or publicly placed bonds or notes), and the Consenting Party agrees
that it will promptly upon request execute in favor of the lenders providing
such refinancing a consent to assignment containing terms and conditions that
are mutually agreed between the parties.
11. Representations. The Consenting Party represents and warrants to
the Assignee as follows:
(a) The Consenting Party is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is in good standing in all jurisdictions
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<PAGE>
where necessary in light of the business it conducts (including, without
limitation, performance of its obligations under the Assigned Agreement) and the
properties it owns.
(b) The Consenting Party has the necessary corporate power,
corporate authority and legal right to execute, deliver and perform its
obligations under the Assigned Agreement and this Consent to Assignment, and the
execution and delivery by the Consenting Party of the Assigned Agreement and
this Consent to Assignment and the performance of its obligations thereunder and
hereunder have been duly authorized by all necessary corporate action and do not
and will not (i) require any consent or approval of the Consenting Party's board
of directors or any shareholder of the Consenting Party, (ii) violate any
provision of the corporate charter or by-laws of the Consenting Party or any
provision of any material law, rule or regulation, or any material order, writ,
judgment, injunction, decree, determination or award having applicability to the
Consenting Party and the performance of the Assigned Agreement and this Consent
to Assignment, (iii) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which the Consenting Party is a party or by which it or its
properties may be bound or affected or (iv) result in, or require, the creation
or imposition of any mortgage, deed of trust, pledge, lien, security interest,
charge or encumbrance of any nature upon or with respect to any of the
properties now owned or hereafter acquired by the Consenting Party; and the
Consenting Party is not in violation, breach or default of any provision of the
corporate charter or by-laws of the Consenting Party or any provision of any
material law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award having applicability to the Consenting Party and the
performance of the Assigned Agreement and this Consent to Assignment or any
agreement referred to above in clause (iii) of this subsection (b), which
violation could reasonably be expected to have a material adverse effect on the
ability of the Consenting Party to perform its obligations under this Consent to
Assignment or the Assigned Agreement.
(c) The Assigned Agreement and this Consent to Assignment have
been duly executed and delivered and each constitutes a valid and binding
obligation of the Consenting Party, enforceable in accordance with their terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting the enforcement of creditors' rights and general equitable principles.
(d) No consent or approval of, or other action by, or any
notice or filing with, any court or administrative or governmental body (except
those previously obtained and in full force and effect) is required in
connection with the execution and delivery of the Assigned Agreement or this
Consent to Assignment or the performance by the Consenting Party of its
obligations thereunder or hereunder. The Consenting Party has obtained all
Applicable Permits designated in the Assigned Agreement as being the
responsibility of the Contractor, if any, with respect to the performance of its
obligations under the Assigned Agreement and this Consent to Assignment required
by applicable laws, statutes, rules and regulations in effect as of the date
hereof other than Applicable Permits which are not yet required and which the
Consenting Party has no reason to believe will not be obtained in due course
when required.
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(e) The Consenting Party is not in default with respect to the
Assigned Agreement and has no knowledge, as of the date hereof, of any claims or
rights of set off by the Consenting Party or by any of its affiliates against
the Company. To the best of the Consenting Party's knowledge after due inquiry,
each other party to the Assigned Agreement have complied with all conditions
precedent to the respective obligations of such party to perform under the
Assigned Agreement.
(f) There are no proceedings pending or, to the best of the
Consenting Party's knowledge after due inquiry, threatened against or affecting
the Consenting Party in any court or before any governmental authority or
arbitration board or tribunal (whether or not purportedly on behalf of the
Consenting Party) which may result in a material or adverse effect upon the
property, business, prospects, profits or condition (financial or otherwise) of
the Consenting Party, or the ability of the Consenting Party to perform its
obligations under, or which purports to affect the legality, validity or
enforceability of, the Assigned Agreement or this Consent to Assignment; and the
Consenting Party is not in default with respect to any order of any court,
governmental authority or arbitration board or tribunal which default could
reasonably be expected to have a material adverse effect on the ability of the
Consenting Party to perform its obligations under this Consent to Assignment or
the Assigned Agreement.
(g) All representations, warranties and other statements made
by the Consenting Party in the Assigned Agreement were true and correct as of
the date when made and are true and correct as of the date of this Consent to
Assignment.
12. Concerning the Assigned Agreement. Independent Engineer: The
Consenting Party acknowledges that the Company has designated Stone and Webster
Management Consultants, Inc. together with Stone and Webster Engineering
Corporation as Independent Engineer.
13. Binding Upon Successors. All agreements, covenants, conditions and
provisions of this Consent to Assignment shall be binding upon and inure to the
benefit of the successors and assigns of each of the parties hereto.
14. Captions. The captions or headings at the beginning of each Section
hereof are for the convenience of the parties hereto only and are not a part of
this Consent to Assignment.
15. Governing Law. (a) THIS CONSENT TO ASSIGNMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW EXCEPT SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW).
(b) Any legal action or proceeding with respect to this
Consent to Assignment and any action for enforcement of any judgment in respect
thereof may be brought in the courts of the State of New York or of the United
States of America for the Southern District of New York, and, by execution and
delivery of this Consent to Assignment, each of the Consenting Party and the
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Assignee hereby accepts for itself and in respect of its property, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts and
appellate courts from any appeal thereof. Each of the Consenting Party and the
Assignee hereby irrevocably designates, appoints and empowers CT Corporation
System, 1633 Broadway, New York, NY 10019, 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 action or proceeding. If for any reason such
designee, appointee and agent shall cease to be available to act as such, the
Assignee or the Consenting Party, as applicable, 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 Assignee. Each of the Consenting Party and
the Assignee 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 Consenting
Party at its notice address being 4400 Alafaya Trail, Orlando, Florida 32826,
Attn: Law Department MC 475 and to the Assignee at the address set forth in
Section 4. Each of the Consenting Party and the Assignee 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 Consent to Assignment brought in the courts referred to 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. Nothing herein shall affect the right of the
Assignee or any of their respective designees or assignees to serve process in
any other manner permitted by law or to commence legal proceedings or otherwise
proceed against the Consenting Party in any other jurisdiction.
16. Amendment. This Consent to Assignment may be modified, amended or
rescinded only by a writing expressly referring to this Consent to Assignment
and signed by both the Consenting Party and the Assignee. The Assignee may
request the direction of the Senior Parties prior to signing any amendments
described herein.
17. Severability. Every provision of this Consent to Assignment is
intended to be severable. If any term or provision hereof is declared by a court
of competent jurisdiction to be illegal, invalid or unenforceable for any reason
whatsoever, such illegality, invalidity or unenforceability shall not affect the
other terms and provisions hereof, which terms and provisions shall remain
binding and enforceable, and to the extent possible all of such other provisions
shall remain in full force and effect.
18. Counterparts. This Consent to Assignment 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.
19. Authority to Take Specific Actions. Notwithstanding any provision
of this Consent to Assignment to the contrary, if an action by the Assignee is
authorized by the Assigned Agreement or by this Consent to Assignment, the
Consenting Party shall be obligated to recognize or follow instructions given by
a Senior Party or any of its respective designees or assignees, or any successor
or assign of the Assignee or any Senior Party, only if such person has provided
to the Consenting Party reasonable written documentation of its authority by or
on behalf of the Assignee
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to undertake the action which it is requesting or directing, and a written
certification to the Consenting Party that it is so authorized to act.
20. Consenting Party Liability. This Consent to Assignment is intended
to be solely for the benefit of the Assignee and is not intended to provide any
additional rights to the Company. In no event shall the Consenting Party be
liable for damages or have any liability pursuant to this Consent to Assignment
in excess of the maximum liability for which the Consenting Party is liable
under the Assigned Agreement. In addition, the terms of Article 9 of the
Assigned Agreement shall apply to the Consenting Party's liability under this
Consent to Assignment.
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IN WITNESS WHEREOF, each of the Consenting Party and the Assignee has
duly executed this Consent to Assignment as of the date first above written.
SIEMENS WESTINGHOUSE POWER CORPORATION
By: /s/ James Mackey
------------------------------------
Name: James Mackey
Title: Director Project Management
IBJ WHITEHALL BANK & TRUST COMPANY,
as COLLATERAL AGENT
By: /s/ Thomas McCutcheon
------------------------------------
Name: Thomas McCutcheon
Title: Assistant Vice President
REVIEWED AND CONSENTED TO:
AES IRONWOOD, L.L.C.
By: /s/ Patricia L. Rollin
-------------------------
Name: Patricia L. Rollin
Title: Vice President
<PAGE>
Annex A
-------
1. Letter, dated May 3, 1999 to Siemens Westinghouse Power Corporation from AES
Ironwood, Inc.
2. Letter Agreement, dated February 3, 1999 between Siemens Westinghouse Power
Corporation and AES Enterprises, Inc.
3. Letter Agreement, dated March 31, 1999 between Siemens Westinghouse Power
Corporation and AES Ironwood, Inc.
4. Letter Agreement, dated May 12, 1999 between Siemens Westinghouse Power
Corporation and AES Enterprises, Inc.
5. Letter Agreement, dated May 26, 1999 between Siemens Westinghouse Power
Corporation and AES Ironwood, Inc.
6. Letter, dated February 4, 1999 to Siemens Westinghouse Power Corporation from
AES Ironwood, Inc.
7. Letter Agreement, dated April 7, 1999 between Siemens Westinghouse Power
Corporation and AES Ironwood, Inc.
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Exhibit 4.12
EXECUTION COPY
SIEMENS WESTINGHOUSE POWER CORPORATION
CONSENT TO ASSIGNMENT
THIS CONSENT TO ASSIGNMENT (this "Consent to Assignment") is entered
into as of June 1, 1999 by SIEMENS WESTINGHOUSE POWER CORPORATION, a Delaware
corporation (the "Consenting Party"), and IBJ WHITEHALL BANK & TRUST COMPANY, as
collateral agent (the "Collateral Agent", together with any successors thereto
in such capacity, referred to as the "Assignee"), for the benefit of and on
behalf of the Senior Parties defined below.
A. AES Ironwood, L.L.C. (the "Company"), a Delaware limited liability
company, intends to develop, construct, own, operate and finance a nominal 705
MW (net) gas-fired combined cycle electric generating facility (the "Facility")
(the Facility, equipment and facilities associated with the Facility and such
financing, development and construction, the "Project") to be located in South
Lebanon Township, Lebanon County, Pennsylvania.
B. The Company intends to finance the Project, in part, through the
issuance, from time to time, of certain securities (the "Securities") pursuant
to a Trust Indenture, dated as of June 1, 1999 between the Company and IBJ
Whitehall Bank & Trust Company, as trustee (the "Trustee"), as it may be amended
or supplemented from time to time (the "Indenture").
C. All obligations of the Company under the Securities, the Collateral
Agency Agreement (defined below), and any other agreements evidencing senior
debt of the Company (collectively, the "Financing Documents") to the Trustee,
the Collateral Agent, each successor to any such person and each other person
providing senior debt to the Company who is or becomes a party to the Collateral
Agency Agreement pursuant to its terms (collectively, the "Senior Parties") will
be secured by a certain Mortgage, Security Agreement, Indenture, Pledge
Agreement and Assignment of Leases and Income, each between the Company and IBJ
Whitehall Bank & Trust Company (collectively, the "Security Documents").
D. The Senior Parties and the Company have entered into the Collateral
Agency Agreement (as amended, supplemented or modified and in effect from time
to time, the "Collateral Agency Agreement") to set forth their mutual
understanding with respect to (a) the exercise of certain rights, remedies and
options by the respective parties thereto under the above described documents,
(b) the priority of their respective security interests created by the Security
Documents, (c) the application of project revenues and certain other monies and
items and (d) the appointment of the Collateral Agent as collateral agent.
E. The Company (as assignee of AES Ironwood, Inc.) and the Consenting
Party have entered into that certain Maintenance Program parts, Shop Repairs and
Scheduled Outage TFA
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Services Contract (the "Assigned Agreement") dated as of September 23, 1998,
pursuant to which, among other things, the Consenting Party will provide to the
Company certain combustion turbine parts, shop repairs and scheduled outage
technical field assistance services.
F. The Company has notified the Consenting Party that all of the
Company's right, title and interest in the Assigned Agreement are to be assigned
to the Collateral Agent as security pursuant to one or more of the Security
Documents.
G. It is a condition precedent to the extension of credit by the Senior
Parties that the Consenting Party execute and deliver this Consent to Assignment
for the benefit of the Senior Parties.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:
1. Definitions. Capitalized terms used herein shall have the respective
meanings specified herein or, if not defined herein, as defined in the Assigned
Agreement.
2. Consent to Assignment. The Consenting Party acknowledges that prior
to the date hereof, AES Ironwood, Inc. has assigned all of its right, title and
interest in the Assigned Agreement to the Company. The Consenting Party hereby
irrevocably consents to the assignment of the Assigned Agreement by the Company
to the Assignee for the benefit of the Senior Parties as security. The
Consenting Party shall continue performance under the Assigned Agreement in
accordance with its terms and the terms of this Consent to Assignment.
3. No Defaults. The Consenting Party acknowledges and agrees that (a)
the Assigned Agreement is in full force and effect and there are no amendments,
modifications or supplements thereto, either oral or written, (b) the Consenting
Party has not assigned, transferred or hypothecated the Assigned Agreement or
any interest therein, (c) the Consenting Party has no knowledge of any default
by the Company in any respect of the performance of any material provision of
the Assigned Agreement and without having performed any specific due diligence
no knowledge of any event or condition which would either immediately or with
the passage of any applicable grace period or giving of notice or both, enable
the Consenting Party to terminate or suspend its obligations under the Assigned
Agreement, (d) none of the Company's rights under the Assigned Agreement has
been waived in writing, (e) the assignment by the Company of the Assigned
Agreement to the Assignee, as security, and the acknowledgment of and consent to
such assignment by the Consenting Party, will not cause or constitute a default
under the Assigned Agreement or an event or condition which would, with the
giving of notice or lapse of time or both, constitute a default under the
Assigned Agreement, and (f) subject to the provisions of Section 9 hereof, a
foreclosure or other exercise of remedies under any of the Security Documents or
any sale thereunder by the Assignee, any of the Senior Parties or any of their
respective designees or assignees, whether by judicial proceedings or under any
power of sale contained therein, or any conveyance from the Company to the
Assignee, any of the Senior Parties or any of their respective designees or
assignees, in lieu thereof, shall not require the consent of the Consenting
Party, or cause or constitute a default under the Assigned Agreement or an event
or condition which would,
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with the giving of notice or lapse of time or both, constitute a default under
the Assigned Agreement.
4. Notice of Company's Defaults and Termination. Anything in the
Assigned Agreement notwithstanding, for so long as any Financing Liabilities (as
defined in the Collateral Agency Agreement) are outstanding under the Financing
Documents and until the same have been satisfied in full, the Consenting Party
shall not exercise any right it may have under the Assigned Agreement, at law or
in equity, to cancel, suspend or terminate the Assigned Agreement, or any of its
obligations thereunder, as the result of any default or other action or omission
(each herein a "default") of the Company unless the Consenting Party, shall have
given a copy of any notice of default to the Assignee when such notice was given
to the Company, such notice to be coupled with an opportunity to cure any such
default, in the case of a payment default, within the time period provided for
in the Assigned Agreement (plus accrued interest thereon pursuant to Section 4.6
of the Assigned Agreement) or, with respect to nonmonetary defaults, 30 days
after the expiration of all periods for cure to which the Company is entitled
under the Assigned Agreement, and written notice of such expiration has been
given to the Assignee (or for defaults the curing of which requires the
Assignee's possession of the Facility through foreclosure, such longer period of
time as may be reasonably necessary under the circumstances to complete such
foreclosure or cure such default, provided the Assignee, any of the Senior
Parties, or any of their respective designees or assignees is diligently
pursuing such cure or foreclosure, such cure period to commence upon delivery of
such further notice to the Assignee, or, with respect to any defaults which are
not susceptible of being so corrected, to rectify to the Consenting Party's
reasonable satisfaction the effect upon the Consenting Party of such default by
the Company within such period provided, however, that if any such party is
prohibited from curing any such default by any process, stay or injunction
issued by any governmental authority or pursuant to any bankruptcy or insolvency
proceeding, then the time periods specified in this Section 4 for curing a
default shall be extended for the period of such prohibition if the Assignee
shall have notified the Consenting Party in writing of its intent to commence
such cure or cause such cure to be commenced immediately upon cessation of such
prohibition. All notices provided hereunder shall be in writing and shall be
deemed to have been given (a) when presented personally, (b) one business day
after being deposited for overnight delivery with a nationally recognized
overnight courier, such as FedEx, (c) when received, if deposited in a regularly
maintained receptacle for the United States Postal Service, postage prepaid,
registered or certified, return receipt requested, addressed to the Assignee at
the address indicated below or such other address as the Assignee may have
specified by written notice delivered in accordance herewith, or (d) when
transmitted by telecopy to the number specified below and the receipt confirmed
telephonically by recipient, provided that such telecopy is then followed by a
copy of such notice delivered by a method specified in clause (a), (b) or (c)
above.
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IBJ Whitehall Bank & Trust Company, as Collateral Agent
One State Street
New York, New York 10004
Attention: Capital Markets Trust Services
Facsimile: 212-858-2952
No cancellation, suspension or termination of the Assigned Agreement by
the Consenting Party, or of any of the Consenting Party's obligations thereunder
by the Consenting Party, shall be binding upon the Assignee or any of the Senior
Parties without such notice and the lapse of the applicable cure period. Any
dispute that may arise under the Assigned Agreement notwithstanding, the
Consenting Party shall continue performance under the Assigned Agreement for the
benefit of the Assignee and resolve any dispute without discontinuing such
performance until the lapse of the notice and applicable cure periods or
extension periods in favor of the Assignee as provided herein. Except as
otherwise provided in Section 9 hereof, the Assignee, any of the Senior Parties
or any of their respective designees or assignees may, but shall be under no
obligation to, make any payment or perform any act required thereunder to be
made or performed by the Company, with the same effect as if made or performed
by the Company. Except as otherwise specifically provided in the immediately
preceding paragraph, the Consenting Party shall have all its rights and remedies
with respect to such default as set forth in the Assigned Agreement. The
Assignee shall promptly notify the Company upon satisfaction in full of all
Financing Liabilities.
5. No Previous Assignment. The Consenting Party represents and warrants
to the Assignee that it has not assigned, transferred or hypothecated, nor
previously consented to any assignment, transfer or hypothecation by the Company
of the Assigned Agreement or any interest therein.
6. Amendment and Modification. The Consenting Party acknowledges and
confirms that under the terms of the Financing Documents, the Company is not
permitted to request or approve Changes without certain certifications to the
Assignee.
7. Payments to Revenue Account. The Consenting Party hereby agrees
that, so long as any notes, bonds, loans, letters of credit, commitments or
other obligations, or any other Financing Liabilities, are outstanding under the
Financing Documents and until the same have been satisfied in full, all payments
to be made by the Consenting Party with respect to the Assigned Agreement shall
be in lawful money of the United States of America, in immediately available
funds. The Company hereby directs the Consenting Party to, and the Consenting
Party hereby agrees to, make all such payments with respect to the Assigned
Agreement directly to the Assignee at ABA No. 026007825, for credit to AES
Ironwood, L.L.C, for further credit to Account No. 630000041.2 (Revenue Account)
Attention: Capital Markets Trust Services, or to such other person and/or at
such other address as the Assignee may from time to time specify in writing to
the Consenting Party. All payments required to be made by the Consenting Party
under the Assigned Agreement shall be made without any offset, recoupment,
abatement, withholding, reduction or defense whatsoever, except for such offset,
recoupment, abatement, withholding or reduction as is not prohibited by the
terms of the Assigned Agreement.
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8. Protection of Assignee. In the event that either (a) the Company's
interest in the Project shall be sold, assigned or otherwise transferred
pursuant to the exercise of any right, power or remedy by the Assignee or
pursuant to judicial proceedings, or (b) the Company rejects all or a portion of
the Assigned Agreement under Title 11, United States Code, or other similar
Federal or state statute and such rejection is approved by the appropriate
bankruptcy court or is otherwise effective pursuant to such statute, the
Consenting Party shall, promptly, and in no event longer than ten (10) days
after receipt of written request therefor which request shall be made no more
than thirty (30) days after the date such assignment, sale, transfer or
rejection is approved or is otherwise made effective (as applicable), execute
and deliver an agreement, which shall in the case of (a) supersede the earlier
agreement, to the Assignee, any Senior Parties or any of their respective
nominees, purchasers, assignees or transferees, as the case may be, for the
remainder of the term of the Assigned Agreement and with substantially the same
terms as are contained therein provided that such Assignee, Senior Party or
their respective nominee, purchaser, assignee or transferee, as the case may be,
(i) shall agree in writing, to the extent curable, to cure any existing default
under the Assigned Agreement, (ii) shall in the reasonable opinion of the
Consenting Party be as financially and otherwise capable of performing all
obligations of the Company under the Assigned Agreement as the Company at the
time it closed the financing of the Project and received the first advance
thereunder, (iii) shall not be a direct competitor of the Consenting Party in
the manufacture and sale of power generation equipment or a wholly owned
subsidiary of such entity and (iv) shall not be an adverse party to the
Consenting Party or any of its affiliates in any arbitration or litigation. If
the Assignee notifies the Consenting Party of the identity of any proposed
purchaser, assignee or transferee, as the case may be, the Consenting Party
shall notify the Assignee within 10 days of receipt of such notification by the
Assignee as to whether such purchaser, assignee or transferee of the Company
fails to meet the requirements of clause (iii) or (iv), and stating the reasons
therefor.
9. Acknowledgement of Assignee's Obligations and Rights. Neither the
Assignee nor any of the Senior Parties has any obligation hereunder to extend
credit to the Consenting Party or any contractor of the Consenting Party at any
time for any purpose. The Assignee shall have no obligation to the Consenting
Party under the Assigned Agreement until such time as the Assignee notifies the
Consenting Party in writing of the Assignee's election to exercise its rights
hereunder. Upon the occurrence and during the continuance of an event of default
under any of the Security Documents, the Assignee or any of the Senior Parties
shall have the right to the extent authorized under the Security Documents, to
(a) take possession of the Project and operate the same as attorney-in-fact for
the Company, (b) foreclose upon, sell or otherwise transfer their interest in
the Project and any purchaser at such sale which may include the Assignee or its
designees or assignees, shall have the right to succeed to the Assignee's or the
Senior Parties' rights hereunder ("Substitute Owner"), as the case may be,
provided that the (i) Substitute Owner shall on or before succeeding to such
rights agree in writing to assume the obligations of the Company under the
Assigned Agreement and (where curable) to cure any existing default thereunder,
(ii) Substitute Owner shall in the reasonable opinion of the Consenting Party be
as financially and otherwise capable of performing all obligations of the
Company under the Assigned Agreement as the Company at the time it closed the
financing of the Project and received the first advance thereunder and (iii)
Substitute Owner shall not be an adverse party to the Consenting Party or any of
its affiliates in any arbitration or litigation and (iv) Substitute Owner shall
not be a direct competitor of the Consenting Party in the manufacture and sale
of power generation equipment or a wholly
5
<PAGE>
owned subsidiary of such entity, (provided that if the Assignee notifies the
Consenting Party of the identity of any proposed purchaser, assignee or
transferee, as the case may be, the Consenting Party shall notify the Assignee
within 10 days of receipt of such notification by the Assignee as to whether
such purchaser, assignee or transferee of the Company fails to meet the
requirements of clause (iii) or (iv), and stating the reasons therefor) and (c)
as attorney-in-fact for the Company exercise all rights of the Company under the
Assigned Agreement in accordance with the terms thereof. Subject to compliance
with the provisions of the Assigned Agreement (if applicable) and the terms of
this Consent to Assignment, the Consenting Party shall cooperate with the
Assignee and with the Assignee's exercise of such rights. Without limiting the
generality of the foregoing, upon the occurrence and during the continuance of
an event of default under any of the Financing Documents, the Assignee, any of
the Senior Parties or any of their respective designees or assignees shall have
the full right and power to enforce directly against the Consenting Party all
obligations of the Consenting Party under the Assigned Agreement and otherwise
to exercise all remedies thereunder, and to make all demands and give all
notices and make all requests required or permitted to be made by the Company
under the Assigned Agreement. The Assignee, any of the Senior Parties or any of
their respective designees or assignees shall have the right, but not the
obligation, to perform any act, duty or obligation required of the Company
thereunder at any time; provided that nothing herein shall require the Assignee,
any of the Senior Parties or any of their respective designees or assignees to
cure any default of the Company under the Assigned Agreement or to perform any
act, duty or obligation of the Company under the Assigned Agreement except
during any such period that it shall have become a Substitute Owner and assumed
such duties and obligations. The obligations of any Substitute Owner shall be no
more than that of the Company under such Assigned Agreement, any Substitute
Owner shall have no personal liability to the Consenting Party for the
performance of such obligations and the sole recourse of the Consenting Party,
if there is a Substitute Owner, shall be to Substitute Owner's interest in the
Facility. The Assignee is not required to take any discretionary action under
this Agreement unless it receives written direction from the Required Senior
Parties. The Assignee is entitled to receive indemnification to its satisfaction
before taking any action as directed by the Required Senior Parties.
10. Refinancing. The Consenting Party hereby acknowledges that the
Company may from time to time obtain refinancing for the Project (including
privately or publicly placed bonds or notes), and the Consenting Party agrees
that it will promptly upon request execute in favor of the lenders providing
such refinancing a consent to assignment containing terms and conditions that
are mutually agreed between the parties.
11. Representations. The Consenting Party represents and warrants to
the Assignee as follows:
(a) The Consenting Party is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is in good standing in all jurisdictions where necessary in light of the
business it conducts (including, without limitation, performance of its
obligations under the Assigned Agreement) and the properties it owns.
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(b) The Consenting Party has the necessary corporate power,
corporate authority and legal right to execute, deliver and perform its
obligations under the Assigned Agreement and this Consent to Assignment, and the
execution and delivery by the Consenting Party of the Assigned Agreement and
this Consent to Assignment and the performance of its obligations thereunder and
hereunder have been duly authorized by all necessary corporate action and do not
and will not (i) require any consent or approval of the Consenting Party's board
of directors or any shareholder of the Consenting Party, (ii) violate any
provision of the corporate charter or by-laws of the Consenting Party or any
provision of any material law, rule or regulation, or any material order, writ,
judgment, injunction, decree, determination or award having applicability to the
Consenting Party and the performance of the Assigned Agreement and this Consent
to Assignment, (iii) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which the Consenting Party is a party or by which it or its
properties may be bound or affected or (iv) result in, or require, the creation
or imposition of any mortgage, deed of trust, pledge, lien, security interest,
charge or encumbrance of any nature upon or with respect to any of the
properties now owned or hereafter acquired by the Consenting Party; and the
Consenting Party is not in violation, breach or default of any provision of the
corporate charter or by-laws of the Consenting Party or any provision of any
material law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award having applicability to the Consenting Party and the
performance of the Assigned Agreement and this Consent to Assignment or any
agreement referred to above in clause (iii) of this subsection (b), which
violation could reasonably be expected to have a material adverse effect on the
ability of the Consenting Party to perform its obligations under this Consent to
Assignment or the Assigned Agreement.
(c) The Assigned Agreement and this Consent to Assignment have
been duly executed and delivered and each constitutes a valid and binding
obligation of the Consenting Party, enforceable in accordance with their terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting the enforcement of creditors' rights and general equitable principles.
(d) No consent or approval of, or other action by, or any
notice or filing with, any court or administrative or governmental body (except
those previously obtained and in full force and effect) is required in
connection with the execution and delivery of the Assigned Agreement or this
Consent to Assignment or the performance by the Consenting Party of its
obligations thereunder or hereunder. The Consenting Party has obtained all
permits, licenses, approvals, consents, authorizations and exemptions, if any,
with respect to the performance of its obligations under the Assigned Agreement
and this Consent to Assignment required by applicable laws, statutes, rules and
regulations in effect as of the date hereof other than permits, licenses,
approvals, consents, authorizations and exemptions, which are not yet required
and which the Consenting Party has no reason to believe will not be obtained in
due course when required.
(e) The Consenting Party is not in default with respect to the
Assigned Agreement and has no knowledge, as of the date hereof, of any claims or
rights of set off by the Consenting Party or by any of its affiliates against
the Company. To the best of the Consenting Party's knowledge after due inquiry,
each other party to the Assigned Agreement have complied
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<PAGE>
with all conditions precedent to the respective obligations of such party to
perform under the Assigned Agreement.
(f) There are no proceedings pending or, to the best of the
Consenting Party's knowledge after due inquiry, threatened against or affecting
the Consenting Party in any court or before any governmental authority or
arbitration board or tribunal (whether or not purportedly on behalf of the
Consenting Party) which may result in a material or adverse effect upon the
property, business, prospects, profits or condition (financial or otherwise) of
the Consenting Party, or the ability of the Consenting Party to perform its
obligations under, or which purports to affect the legality, validity or
enforceability of, the Assigned Agreement or this Consent to Assignment; and the
Consenting Party is not in default with respect to any order of any court,
governmental authority or arbitration board or tribunal which default could
reasonably be expected to have a material adverse effect on the ability of the
Consenting Party to perform its obligations under this Consent to Assignment or
the Assigned Agreement.
(g) All representations, warranties and other statements made
by the Consenting Party in the Assigned Agreement were true and correct as of
the date when made and are true and correct as of the date of this Consent to
Assignment.
12. Concerning the Assigned Agreement. Independent Engineer: The
Consenting Party acknowledges that the Company has designated Stone and Webster
Management Consultants, Inc. together with Stone and Webster Engineering
Corporation as Independent Engineer.
13. Binding Upon Successors. All agreements, covenants, conditions and
provisions of this Consent to Assignment shall be binding upon and inure to the
benefit of the successors and assigns of each of the parties hereto.
14. Captions. The captions or headings at the beginning of each Section
hereof are for the convenience of the parties hereto only and are not a part of
this Consent to Assignment.
15. Governing Law. (a) THIS CONSENT TO ASSIGNMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW EXCEPT SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW).
(b) Any legal action or proceeding with respect to this
Consent to Assignment and any action for enforcement of any judgment in respect
thereof may be brought in the courts of the State of New York or of the United
States of America for the Southern District of New York, and, by execution and
delivery of this Consent to Assignment, each of the Consenting Party and the
Assignee hereby accepts for itself and in respect of its property, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts and
appellate courts from any appeal thereof. Each of the Consenting Party and the
Assignee hereby irrevocably designates, appoints and empowers CT Corporation
System, 1633 Broadway, New York, NY 10019, as its designee,
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<PAGE>
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 action or proceeding. If for
any reason such designee, appointee and agent shall cease to be available to act
as such, the Assignee or the Consenting Party, as applicable, 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 Assignee. Each of the
Consenting Party and the Assignee 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 Consenting Party at its notice address being 4400 Alafaya Trail, Orlando,
Florida 32826, Attn: Law Department MC 475 and to the Assignee at the address
set forth in Section 4. Each of the Consenting Party and the Assignee 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 Consent to Assignment brought in the courts referred to
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. Nothing herein shall affect the right of
the Assignee or any of their respective designees or assignees to serve process
in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Consenting Party in any other jurisdiction.
16. Amendment. This Consent to Assignment may be modified, amended or
rescinded only by a writing expressly referring to this Consent to Assignment
and signed by both the Consenting Party and the Assignee. The Assignee may
request the direction of the Senior Parties prior to signing any amendments
described herein.
17. Severability. Every provision of this Consent to Assignment is
intended to be severable. If any term or provision hereof is declared by a court
of competent jurisdiction to be illegal, invalid or unenforceable for any reason
whatsoever, such illegality, invalidity or unenforceability shall not affect the
other terms and provisions hereof, which terms and provisions shall remain
binding and enforceable, and to the extent possible all of such other provisions
shall remain in full force and effect.
18. Counterparts. This Consent to Assignment 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.
19. Authority to Take Specific Actions. Notwithstanding any provision
of this Consent to Assignment to the contrary, if an action by the Assignee is
authorized by the Assigned Agreement or by this Consent to Assignment, the
Consenting Party shall be obligated to recognize or follow instructions given by
a Senior Party or any of its respective designees or assignees, or any successor
or assign of the Assignee or any Senior Party, only if such person has provided
to the Consenting Party reasonable written documentation of its authority by or
on behalf of the Assignee to undertake the action which it is requesting or
directing, and a written certification to the Consenting Party that it is so
authorized to act.
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20. Consenting Party Liability. This Consent to Assignment is intended
to be solely for the benefit of the Assignee and is not intended to provide any
additional rights to the Company. In no event shall the Consenting Party be
liable for damages or have any liability pursuant to this Consent to Assignment
in excess of the maximum liability for which the Consenting Party is liable
under the Assigned Agreement. In addition, the terms of Article 14 of the
Assigned Agreement shall apply to the Consenting Party's liability under this
Consent to Assignment.
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IN WITNESS WHEREOF, each of the Consenting Party and the Assignee has
duly executed this Consent to Assignment as of the date first above written.
SIEMENS WESTINGHOUSE POWER CORPORATION
By: /s/ James Mackey
----------------------------------
Name: James Mackey
Title: Director Project Management
IBJ WHITEHALL BANK & TRUST COMPANY,
as COLLATERAL AGENT
By: /s/ Thomas McCutcheon
----------------------------------
Name: Thomas McCutcheon
Title: Assistant Vice President
REVIEWED AND CONSENTED TO:
AES IRONWOOD, L.L.C.
By: /s/ Patricia L. Rollin
------------------------------
Name: Patricia L. Rollin
Title: Vice President
<PAGE>
Exhibit 4.13
EXECUTION COPY
SIEMENS CORPORATION
CONSENT TO ASSIGNMENT
THIS CONSENT TO ASSIGNMENT (this "Consent to Assignment") is entered
into as of June 1, 1999 by SIEMENS CORPORATION, a Delaware corporation (the
"Consenting Party"), and IBJ WHITEHALL BANK & TRUST COMPANY, as collateral agent
(the "Collateral Agent," together with any successors thereto in such capacity,
referred to as the "Assignee"), for the benefit of and on behalf of the Senior
Parties defined below.
A. AES Ironwood, L.L.C. (the "Company"), a Delaware limited liability
company, intends to develop, construct, own, operate and finance a nominal 705
MW (net) gas-fired combined cycle electric generating facility (the "Facility")
(the Facility, equipment and facilities associated with the Facility and such
financing, development and construction, the "Project") to be located in South
Lebanon Township, Lebanon County, Pennsylvania.
B. The Company intends to finance the Project, in part, through the
issuance, from time to time, of certain securities (the "Securities") pursuant
to a Trust Indenture, dated as of June 1, 1999 between the Company and IBJ
Whitehall Bank & Trust Company, as trustee (the "Trustee"), as it may be amended
or supplemented from time to time (the "Indenture").
C. All obligations of the Company under the Securities, the Collateral
Agency Agreement (defined below), and any other agreements evidencing senior
debt of the Company (collectively, the "Financing Documents") to the Trustee,
the Collateral Agent, each successor to any such person and each other person
providing senior debt to the Company who is or becomes a party to the Collateral
Agency Agreement pursuant to its terms (collectively, the "Senior Parties") will
be secured by a certain Mortgage, Security Agreement, Indenture, Pledge
Agreement and Assignment of Leases and Income, each between the Company and IBJ
Whitehall Bank & Trust Company (collectively, the "Security Documents").
D. The Senior Parties and the Company have entered into the Collateral
Agency Agreement (as amended, supplemented or modified and in effect from time
to time, the "Collateral Agency Agreement") to set forth their mutual
understanding with respect to (a) the exercise of certain rights, remedies and
options by the respective parties thereto under the above described documents,
(b) the priority of their respective security interests created by the Security
Documents, (c) the application of project revenues and certain other monies and
items and (d) the appointment of the Collateral Agent as collateral agent.
E. The Company (as assignee of AES Ironwood, Inc.) and the Consenting
Party have entered into that certain Guaranty (the "Assigned Guaranty") dated as
of September 23, 1998
<PAGE>
pursuant to which, among other things, the Consenting Party will guarantee to
the Company Siemens Westinghouse Power Corporation's obligations under the EPC
Contract (as defined in the Assigned Guaranty).
F. The Company has notified the Consenting Party that all of the
Company's right, title and interest in the Assigned Guaranty are to be assigned
to the Collateral Agent as security pursuant to one or more of the Security
Documents.
G. It is a condition precedent to the extension of credit by the Senior
Parties that the Consenting Party execute and deliver this Consent to Assignment
for the benefit of the Senior Parties.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:
1. Definitions. Capitalized terms used herein shall have the respective
meanings specified herein or, if not defined herein, as defined in the Assigned
Guaranty.
2. Consent to Assignment. The Consenting Party acknowledges that on or
prior to the date hereof, AES Ironwood, Inc. has assigned all of its right,
title and interest in the Assigned Guaranty to the Company. The Consenting Party
hereby irrevocably consents to the assignment of the Assigned Guaranty by the
Company to the Assignee for the benefit of the Senior Parties as security. The
Consenting Party shall continue performance under the Assigned Guaranty in
accordance with its terms and the terms of this Consent to Assignment.
3. No Defaults. The Consenting Party acknowledges and agrees that (a)
the Assigned Guaranty is in full force and effect and there are no amendments,
modifications or supplements thereto, either oral or written, (b) the Consenting
Party has not assigned, transferred or hypothecated the Assigned Guaranty or any
interest therein, (c) the Consenting Party has no knowledge of any default by
the Company in any respect of the performance of any material provision of the
Assigned Guaranty and without having performed any specific due diligence no
knowledge of any event or condition which would either immediately or with the
passage of any applicable grace period or giving of notice or both, enable the
Consenting Party to terminate or suspend its obligations under the Assigned
Guaranty, (d) none of the Company's rights under the Assigned Guaranty has been
waived in writing, (e) the assignment by the Company of the Assigned Guaranty to
the Assignee, as security, and the acknowledgment of and consent to such
assignment by the Consenting Party, will not cause or constitute a default under
the Assigned Guaranty or an event or condition which would, with the giving of
notice or lapse of time or both, constitute a default under the Assigned
Guaranty, and (f) a foreclosure or other exercise of remedies under any of the
Security Documents or any sale thereunder by the Assignee, any of the Senior
Parties or any of their respective designees or assignees, whether by judicial
proceedings or under any power of sale contained therein, or any conveyance from
the Company to the Assignee, any of the Senior Parties or any of their
respective designees or assignees, in lieu thereof, shall not require the
consent of the Consenting Party subject to the provisions of Section 9 hereof,
or cause or constitute a default under the Assigned Guaranty or an event or
condition which would, with the giving of notice or lapse of time or both,
constitute a default under the Assigned Guaranty.
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4. Notice of Company's Defaults and Termination. Anything in the
Assigned Guaranty notwithstanding, for so long as any Financing Liabilities (as
defined in the Collateral Agency Agreement) are outstanding under the Financing
Documents and until the same have been satisfied in full, the Consenting Party
shall not exercise any right it may have under the Assigned Guaranty, at law or
in equity, to cancel, suspend or terminate the Assigned Guaranty, or any of its
obligations thereunder, as the result of any default or other action or omission
(each herein a "default") of the Company unless the Consenting Party, shall have
given (i) a copy of a notice of default to the Assignee when such notice was
given to the Company and (ii) following expiry of all periods given the Company
to cure such default, the Consenting Party shall have given a further notice of
default (the "further notice") to the Assignee, such notice to be coupled with
an opportunity to cure any such default within 15 days from the further notice
to the Assignee (or, with respect to nonmonetary defaults or defaults the curing
of which requires the Assignee's possession of the Facility through foreclosure,
such longer period of time as may be reasonably necessary under the
circumstances to complete such foreclosure or cure such default, provided the
Assignee, any of the Senior Parties, or any of their respective designees or
assignees is diligently pursuing such cure or foreclosure such cure period to
commence upon delivery of such further notice to the Assignee, or, with respect
to any defaults which are not susceptible of being so corrected, to rectify to
the Consenting Party's reasonable satisfaction the effect upon the Consenting
Party of such default by the Company within such period provided, however, that
if any such party is prohibited from curing any such default by any process,
stay or injunction issued by any governmental authority or pursuant to any
bankruptcy or insolvency proceeding, then the time periods specified in this
Section 4 for curing a default shall be extended for the period of such
prohibition if the Assignee shall have notified the Consenting Party in writing
of its intent to commence such cure or cause such cure to be commenced
immediately upon cessation of such prohibition. All notices provided hereunder
shall be in writing and shall be deemed to have been given (a) when presented
personally, (b) one business day after being deposited for overnight delivery
with a nationally recognized overnight courier, such as FedEx, (c) when
received, if deposited in a regularly maintained receptacle for the United
States Postal Service, postage prepaid, registered or certified, return receipt
requested, addressed to the Assignee at the address indicated below or such
other address as the Assignee may have specified by written notice delivered in
accordance herewith, or (d) when transmitted by telecopy to the number specified
below and the receipt confirmed telephonically by recipient, provided that such
telecopy is then followed by a copy of such notice delivered by a method
specified in clause (a), (b) or (c) above.
IBJ Whitehall Bank & Trust Company, as Collateral Agent
One State Street
New York, New York 10004
Attention: Capital Markets Trust Services
Facsimile: 212-858-2952
No cancellation, suspension or termination of the Assigned Guaranty by
the Consenting Party, or of any of the Consenting Party's obligations thereunder
by the Consenting Party, shall be binding upon the Assignee or any of the Senior
Parties without such notice and the lapse of the applicable cure period. Any
dispute that may arise under the Assigned Guaranty notwithstanding, the
Consenting Party shall continue performance under the Assigned Guaranty for the
benefit of the
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Assignee and resolve any dispute without discontinuing such performance until
the lapse of the notice and applicable cure periods or extension periods. The
Assignee, any of the Senior Parties or any of their respective designees or
assignees may, but shall be under no obligation to, make any payment or perform
any act required thereunder to be made or performed by the Company, with the
same effect as if made or performed by the Company. Except as otherwise
specifically provided in the immediately preceding paragraph, the Consenting
Party shall have all its rights and remedies with respect to such default as set
forth in the Assigned Guaranty. The Assignee shall promptly notify the Company
upon satisfaction in full of all Financing Liabilities.
5. No Previous Assignment. The Consenting Party represents and warrants
to the Assignee that it has not assigned, transferred or hypothecated, nor
previously consented to any assignment, transfer or hypothecation by the Company
of the Assigned Guaranty or any interest therein.
6. Amendment and Modification Without Consent. The Consenting Party
shall not amend, modify or consent to the amendment or modification of the
Assigned Guaranty without giving 30 days prior written notice to the Assignee,
unless the Company has certified to the Consenting Party in writing that such
amendment, modification or consent to amendment or modification is permitted
under the terms of the Financing Documents.
7. Payments to Revenue Account. The Consenting Party hereby agrees
that, so long as any notes, bonds, loans, letters of credit, commitments or
other obligations, or any other Financing Liabilities, are outstanding under the
Financing Documents and until the same have been satisfied in full, all payments
to be made by the Consenting Party with respect to the Assigned Guaranty shall
be in lawful money of the United States of America, in immediately available
funds. The Company hereby directs the Consenting Party to, and the Consenting
Party hereby agrees to, make all such payments with respect to the Assigned
Guaranty directly to the Assignee at ABA No. 026007825, for credit to AES
Ironwood, L.L.C, for further credit to Account No. 630000041.2 (Revenue Account)
Attention: Capital Markets Trust Services, or to such other person and/or at
such other address as the Assignee may from time to time specify in writing to
the Consenting Party. All payments required to be made by the Consenting Party
under the Assigned Guaranty shall be made without any offset, recoupment,
abatement, withholding, reduction or defense whatsoever, except for such offset,
recoupment, abatement, withholding or reduction as is not prohibited by the
terms of the Assigned Guaranty.
8. Protection of Assignee. In the event that either (a) the Company's
interest in the Project shall be sold, assigned or otherwise transferred
pursuant to the exercise of any right, power or remedy by the Assignee or
pursuant to judicial proceedings, or (b) the Company rejects all or a portion of
the Assigned Guaranty under Title 11, United States Code, or other similar
Federal or state statute and such rejection is approved by the appropriate
bankruptcy court or is otherwise effective pursuant to such statute, the
Consenting Party shall, promptly, and in no event longer than ten (10) days
after receipt of written request therefor, execute and deliver an agreement to
the Assignee, any Senior Parties or any of their respective nominees,
purchasers, assignees or transferees, as the case may be, for the remainder of
the term of the Assigned Guaranty and with the
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same terms as are contained therein. References in this Consent to Assignment to
"Assigned Guaranty" shall be deemed also to include such new agreement.
9. Acknowledgement of Assignee's Obligations and Rights. Neither the
Assignee nor any of the Senior Parties has any obligation hereunder to extend
credit to the Consenting Party or any contractor of the Consenting Party at any
time for any purpose. The Assignee shall have no obligation to the Consenting
Party under the Assigned Guaranty until such time as the Assignee notifies the
Consenting Party in writing of the Assignee's election to exercise its rights
hereunder. Upon the occurrence and during the continuance of an event of default
under any of the Security Documents, the Assignee or any of the Senior Parties
shall have the right to the extent authorized under the Security Documents, to
(a) take possession of the Project and operate the same, (b) sell or otherwise
transfer their interest in the Project and any purchaser at such sale shall
succeed to the Assignee's or the Senior Parties' rights hereunder ("Substitute
Owner"), as the case may be, provided that the Substitute Owner thereof shall
agree in writing to assume the obligations of the Company under the EPC
Agreement and (c) exercise all rights of the Company under the Assigned Guaranty
in accordance with the terms thereof. Subject to compliance with the provisions
of the Assigned Guaranty (if applicable) and the terms of this Consent to
Assignment, the Consenting Party shall cooperate with the Assignee and with the
Assignee's exercise of such rights. Without limiting the generality of the
foregoing, upon the occurrence and during the continuance of an event of default
under any of the Financing Documents, the Assignee, any of the Senior Parties or
any of their respective designees or assignees shall have the full right and
power to enforce directly against the Consenting Party all obligations of the
Consenting Party under the Assigned Guaranty and otherwise to exercise all
remedies thereunder, and to make all demands and give all notices and make all
requests required or permitted to be made by the Company under the Assigned
Guaranty. The Assignee, any of the Senior Parties or any of their respective
designees or assignees shall have the right, but not the obligation, to perform
any act, duty or obligation required of the Company thereunder at any time;
provided that nothing herein shall require the Assignee, any of the Senior
Parties or any of their respective designees or assignees to cure any default of
the Company under the Assigned Guaranty or to perform any act, duty or
obligation of the Company under the Assigned Guaranty except during any such
period that it shall have become a Substitute Owner and assumed such duties and
obligations. The obligations of any Substitute Owner shall be no more than that
of the Company under such Assigned Guaranty, any Substitute Owner shall have no
personal liability to the Consenting Party for the performance of such
obligations and the sole recourse of the Consenting Party, if there is a
Substitute Owner, shall be to Substitute Owner's interest in the Facility. The
Collateral Agent is not required to take any discretionary action under this
Agreement unless it receives written direction from the Required Senior Parties.
The Collateral Agent is entitled to receive indemnification to its satisfaction
before taking any action as directed by the Required Senior Parties.
10. Refinancing. The Consenting Party hereby acknowledges that the
Company may from time to time obtain refinancing for the Project (including
privately or publicly placed bonds or notes), and the Consenting Party agrees
that it will promptly upon request execute in favor of the lenders providing
such refinancing a consent to assignment containing terms and conditions that
are customary for such transactions.
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11. Representations. The Consenting Party represents and warrants to
the Assignee as follows:
(a) The Consenting Party is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is in
good standing in all jurisdictions where necessary in light of the business it
conducts (including, without limitation, performance of its obligations under
the Assigned Guaranty) and the properties it owns.
(b) The Consenting Party has the necessary corporate power,
corporate authority and legal right to execute, deliver and perform its
obligations under the Assigned Guaranty and this Consent to Assignment, and the
execution and delivery by the Consenting Party of the Assigned Guaranty and this
Consent to Assignment and the performance of its obligations thereunder and
hereunder have been duly authorized by all necessary corporate action and do not
and will not (i) require any consent or approval of the Consenting Party's board
of directors or any shareholder of the Consenting Party, (ii) violate any
provision of the corporate charter or by-laws of the Consenting Party or any
provision of any material law, rule or regulation, or any material order, writ,
judgment, injunction, decree, determination or award having applicability to the
Consenting Party and the performance of the Assigned Guaranty and this Consent
to Assignment, (iii) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which the Consenting Party is a party or by which it or its
properties may be bound or affected or (iv) result in, or require, the creation
or imposition of any mortgage, deed of trust, pledge, lien, security interest,
charge or encumbrance of any nature upon or with respect to any of the
properties now owned or hereafter acquired by the Consenting Party; and the
Consenting Party is not in violation, breach or default of any provision of the
corporate charter or by-laws of the Consenting Party or any provision of any
material law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award having applicability to the Consenting Party and the
performance of the Assigned Guaranty and this Consent to Assignment or any
agreement referred to above in clause (iii) of this subsection (b), which
violation could reasonably be expected to have a material adverse effect on the
ability of the Consenting Party to perform its obligations under this Consent to
Assignment or the Assigned Guaranty.
(c) The Assigned Guaranty and this Consent to Assignment have been
duly executed and delivered and each constitutes a valid and binding obligation
of the Consenting Party, enforceable in accordance with their terms, except to
the extent that enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting the
enforcement of creditors' rights and general equitable principles.
(d) No consent or approval of, or other action by, or any notice or
filing with, any court or administrative or governmental body (except those
previously obtained and in full force and effect) is required in connection with
the execution and delivery of the Assigned Guaranty or this Consent to
Assignment or the performance by the Consenting Party of its obligations
thereunder or hereunder. The Consenting Party has obtained all permits,
licenses, approvals, consents, authorizations and exemptions, if any, with
respect to the performance of its obligations under the Assigned Guaranty and
this Consent to Assignment required by applicable laws, statutes, rules and
regulations in effect as of the date hereof.
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(e) The Consenting Party is not in default with respect to the
Assigned Guaranty and has no knowledge, as of the date hereof, of any claims or
rights of set off by the Consenting Party against the Company. To the best of
the Consenting Party's knowledge after due inquiry, each other party to the
Assigned Guaranty have complied with all conditions precedent to the respective
obligations of such party to perform under the Assigned Guaranty.
(f) There are no proceedings pending or, to the best of the
Consenting Party's knowledge after due inquiry, threatened against or affecting
the Consenting Party in any court or before any governmental authority or
arbitration board or tribunal (whether or not purportedly on behalf of the
Consenting Party) which may result in a material or adverse effect upon the
property, business, prospects, profits or condition (financial or otherwise) of
the Consenting Party, or the ability of the Consenting Party to perform its
obligations under, or which purports to affect the legality, validity or
enforceability of, the Assigned Guaranty or this Consent to Assignment; and the
Consenting Party is not in default with respect to any order of any court,
governmental authority or arbitration board or tribunal which default could
reasonably be expected to have a material adverse effect on the ability of the
Consenting Party to perform its obligations under this Consent to Assignment or
the Assigned Guaranty.
(g) All representations, warranties and other statements made by
the Consenting Party in the Assigned Guaranty were true and correct as of the
date when made and are true and correct as of the date of this Consent to
Assignment.
12. Binding Upon Successors. All agreements, covenants, conditions and
provisions of this Consent to Assignment shall be binding upon and inure to the
benefit of the successors and assigns of each of the parties hereto.
13. Captions. The captions or headings at the beginning of each Section
hereof are for the convenience of the parties hereto only and are not a part of
this Consent to Assignment.
14. Governing Law. (a) THIS CONSENT TO ASSIGNMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW EXCEPT SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW).
(b) Any legal action or proceeding with respect to this Consent to
Assignment and any action for enforcement of any judgment in respect thereof may
be brought in the courts of the State of New York or of the United States of
America for the Southern District of New York, and, by execution and delivery of
this Consent to Assignment, each of the Consenting Party and the Assignee hereby
accepts for itself and in respect of its property, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts and
appellate courts from any appeal thereof. Each of the Consenting Party and the
Assignee hereby irrevocably designates, appoints and empowers CT Corporation
System, 1633 Broadway, New York, New York, 10019, 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
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served in any action or proceeding. If for any reason such designee, appointee
and agent shall cease to be available to act as such, the Assignee or the
Consenting Party, as applicable, 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 Assignee. Each of the Consenting Party and the Assignee
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 Consenting Party at its
notice address being 4400 Alafaya Trail, Orlando, Florida 32826, Attn: Law
Department MC 475 and to the Assignee at the address set forth in Section 4.
Each of the Consenting Party and the Assignee 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
Consent to Assignment brought in the courts referred to 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. Nothing herein shall affect the right of the Assignee or any
of their respective designees or assignees to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
the Consenting Party in any other jurisdiction.
15. Amendment. This Consent to Assignment may be modified, amended or
rescinded only by a writing expressly referring to this Consent to Assignment
and signed by both the Consenting Party and the Assignee. The Assignee may
request the direction of the Senior Parties prior to signing any amendments
described herein.
16. Severability. Every provision of this Consent to Assignment is
intended to be severable. If any term or provision hereof is declared by a court
of competent jurisdiction to be illegal, invalid or unenforceable for any reason
whatsoever, such illegality, invalidity or unenforceability shall not affect the
other terms and provisions hereof, which terms and provisions shall remain
binding and enforceable, and to the extent possible all of such other provisions
shall remain in full force and effect.
17. Counterparts. This Consent to Assignment 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.
18. Authority to Take Specific Actions. Notwithstanding any provision
of this Consent to Assignment to the contrary, if an action by the Assignee is
authorized by the Assigned Guaranty or by this Consent to Assignment, the
Consenting Party shall be obligated to recognize or follow instructions given by
a Senior Party or any of its respective designees or assignees, or any successor
or assign of the Assignee or any Senior Party, only if such person has provided
to the Consenting Party reasonable written documentation of its authority by or
on behalf of the Assignee to undertake the action which it is requesting or
directing, and a written certification to the Consenting Party that it is so
authorized to act.
19. Consenting Party Liability. This Consent to Assignment is intended
to be solely for the benefit of the Assignee and is not intended to provide any
additional rights to the Company. In no event shall the Consenting Party be
liable for damages or have any liability pursuant to this
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Consent to Assignment in excess of the maximum liability for which the
Consenting Party is liable under the Assigned Guaranty. Any rights herein
granted Assignee, Company, Collateral Agent, Trustee, or the Senior Parties and
any of their respective permitted successors and assigns with respect to the EPC
Contract shall be subject to the provisions of the Consent to Assignment for
said EPC Contract between Siemens Westinghouse Power Corporation and IBJ
Whitehall Bank and Trust Company effective June 1, 1999.
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IN WITNESS WHEREOF, each of the Consenting Party and the Assignee has
duly executed this Consent to Assignment as of the date first above written.
SIEMENS CORPORATION
By: /s/ Walter G. Gans
---------------------------------
Name: Walter G. Gans
Title: Vice President, General Counsel
and Secretary
IBJ WHITEHALL BANK & TRUST COMPANY,
as COLLATERAL AGENT
By: /s/ Thomas McCutcheon
---------------------------------
Name: Thomas McCutcheon
Title: Assistant Vice President
REVIEWED AND CONSENTED TO:
AES IRONWOOD, L.L.C.
By: /s/ Patricia L. Rollin
--------------------------------
Name: Patricia L. Rollin
Title: Vice President
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Exhibit 4.14
EXECUTION COPY
AES PRESCOTT, L.L.C.
CONSENT TO ASSIGNMENT
THIS CONSENT TO ASSIGNMENT (this "Consent to Assignment") is entered
into as of June 1, 1999 by AES PRESCOTT, L.L.C., a Delaware limited liability
company (the "Consenting Party"), and IBJ WHITEHALL BANK & TRUST COMPANY, as
collateral agent (the "Collateral Agent", together with any successors thereto
in such capacity, referred to as the "Assignee"), for the benefit of and on
behalf of the Senior Parties defined below.
A. AES Ironwood, L.L.C. (the "Company"), a Delaware limited liability
company, intends to develop, construct, own, operate and finance a nominal 705
MW (net) gas-fired combined cycle electric generating facility (the "Facility")
(the Facility, equipment and facilities associated with the Facility and such
financing, development and construction, the "Project") to be located in South
Lebanon Township, Lebanon County, Pennsylvania.
B. The Company intends to finance the Project, in part, through the
issuance, from time to time, of certain securities (the "Securities") pursuant
to a Trust Indenture, dated as of June 1, 1999 between the Company and IBJ
Whitehall Bank & Trust Company, as trustee (the "Trustee"), as it may be amended
or supplemented from time to time (the "Indenture").
C. All obligations of the Company under the Securities, the Collateral
Agency Agreement (defined below), and any other agreements evidencing senior
debt of the Company (collectively, the "Financing Documents") to the Trustee,
the Collateral Agent, each successor to any such person and each other person
providing senior debt to the Company who is or becomes a party to the Collateral
Agency Agreement pursuant to its terms (collectively, the "Senior Parties") will
be secured by a certain Mortgage, Security Agreement, Indenture, Pledge
Agreement and Assignment of Leases and Income, each between the Company and IBJ
Whitehall Bank & Trust Company (collectively, the "Security Documents").
D. The Senior Parties and the Company have entered into the Collateral
Agency Agreement (as amended, supplemented or modified and in effect from time
to time, the "Collateral Agency Agreement") to set forth their mutual
understanding with respect to (a) the exercise of certain rights, remedies and
options by the respective parties thereto under the above described documents,
(b) the priority of their respective security interests created by the Security
Documents, (c) the application of project revenues and certain other monies and
items and (d) the appointment of the Collateral Agent as collateral agent.
E. The Company and the Consenting Party have entered into that certain
Management and Operations Services Agreement (the "Assigned Agreement") dated as
of May 1, 1999 pursuant to which, among other things, the Consenting Party will
manage the development and construction of the Project and, following the
Commercial Operation Date, operate and maintain the Project.
<PAGE>
F. The Company has notified the Consenting Party that all of the
Company's right, title and interest in the Assigned Agreement are to be assigned
to the Collateral Agent as security pursuant to one or more of the Security
Documents.
G. It is a condition precedent to the extension of credit by the Senior
Parties that the Consenting Party execute and deliver this Consent to Assignment
for the benefit of the Senior Parties.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:
1. Definitions.
Capitalized terms used herein shall have the respective meanings
specified herein or, if not defined herein, as defined in the Assigned
Agreement.
2. Consent to Assignment.
The Consenting Party hereby irrevocably consents to the assignment of
the Assigned Agreement by the Company to the Assignee for the benefit of the
Senior Parties as security. The Consenting Party shall continue performance
under the Assigned Agreement in accordance with its terms and the terms of this
Consent to Assignment and shall maintain the Assigned Agreement in full force
and effect. Until all obligations under the Financing Documents have been
performed and paid in full, all obligations of the Consenting Party under the
Assigned Agreement shall inure to the benefit of the Assignee for the benefit of
the Senior Parties to the same extent as if the Assignee was an original party
to the Assigned Agreement instead of the Company.
3. No Defaults.
The Consenting Party acknowledges and agrees that (a) the Assigned
Agreement is in full force and effect and there are no amendments, modifications
or supplements thereto, either oral or written, (b) the Consenting Party has not
assigned, transferred or hypothecated the Assigned Agreement or any interest
therein, (c) the Consenting Party has no knowledge of any default by the Company
in any respect of the performance of any provision of the Assigned Agreement and
no knowledge of any event or condition which would either immediately or with
the passage of any applicable grace period or giving of notice or both, enable
the Consenting Party to terminate or suspend its obligations under the Assigned
Agreement, (d) none of the Company's rights under the Assigned Agreement has
been waived, (e) the assignment by the Company of the Assigned Agreement to the
Assignee, as security, and the acknowledgment of and consent to such assignment
by the Consenting Party, will not cause or constitute a default under the
Assigned Agreement or an event or condition which would, with the giving of
notice or lapse of time or both, constitute a default under the Assigned
Agreement, and (f) a foreclosure or other exercise of remedies under any of the
Security Documents or any sale thereunder by the Assignee, any of the Senior
Parties or any of their respective designees or assignees, whether by judicial
proceedings or under any power of sale contained therein, or any conveyance from
the Company to the Assignee, any of the Senior Parties or any of their
respective designees or assignees, in lieu thereof, shall not require the
consent
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of the Consenting Party or cause or constitute a default under the Assigned
Agreement or an event or condition which would, with the giving of notice or
lapse of time or both, constitute a default under the Assigned Agreement.
4. Notice of Company's Defaults and Termination.
Anything in the Assigned Agreement notwithstanding, for so long as any
Financing Liabilities (as defined in the Collateral Agency Agreement) are
outstanding under the Financing Documents and until the same have been satisfied
in full, the Consenting Party shall not claim prevention of or interference with
performance of its obligations under the Assigned Agreement, nor shall the
Consenting Party exercise any right it may have under the Assigned Agreement, at
law or in equity, to cancel, suspend or terminate the Assigned Agreement, or any
of its obligations thereunder, as the result of any default or other action or
omission (each, herein, a "default") of the Company unless the Consenting Party,
following expiry of all periods given the Company to cure such default, action
or omission, shall have given a copy of a notice of default to the Assignee,
such notice to be coupled with an opportunity to cure any such default within a
reasonable period, but in no event less than ninety (90) days from notice to the
Assignee (or, with respect to nonmonetary defaults or defaults the curing of
which requires the Assignee's possession of the Facility through foreclosure,
such longer period of time as may be necessary under the circumstances to
complete such foreclosure or cure such default, provided the Assignee, any of
the Senior Parties, or any of their respective designees or assignees is
diligently pursuing such cure or foreclosure), such cure period to commence upon
delivery of such notice to the Assignee, or, with respect to any defaults which
are not susceptible of being so corrected, to rectify to the Consenting Party's
reasonable satisfaction the effect upon the Consenting Party of such default by
the Company within such period provided, however, that if any such party is
prohibited from curing any such default by any process, stay or injunction
issued by any governmental authority or pursuant to any bankruptcy or insolvency
proceeding, then the time periods specified in this Section 4 for curing a
default shall be extended for the period of such prohibition . Such notice shall
be in writing and shall be deemed to have been given (a) when presented
personally, (b) one business day after being deposited for overnight delivery
with a nationally recognized overnight courier, such as FedEx, (c) when
received, if deposited in a regularly maintained receptacle for the United
States Postal Service, postage prepaid, registered or certified, return receipt
requested, addressed to the Assignee at the address indicated below or such
other address as the Assignee may have specified by written notice delivered in
accordance herewith, or (d) when transmitted by telecopy to the number specified
below and the receipt confirmed telephonically by recipient, provided that such
telecopy is then followed by a copy of such notice delivered by a method
specified in clause (a), (b) or (c) above.
IBJ Whitehall Bank & Trust Company, as Collateral Agent
One State Street
New York, New York 10004
Attention: Capital Markets Trust Services
Facsimile: 212-858-2952
No cancellation, suspension or termination of the Assigned Agreement by
the Consenting Party, or of any of the Consenting Party's obligations thereunder
by the Consenting Party, shall be binding upon the Assignee or any of the Senior
Parties without such notice and the lapse of the
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applicable cure period. Any dispute that may arise under the Assigned Agreement
notwithstanding, the Consenting Party shall continue performance under the
Assigned Agreement and resolve any dispute without discontinuing such
performance until the lapse of the notice and applicable cure periods or
extension periods. The Assignee, any of the Senior Parties or any of their
respective designees or assignees may, but shall be under no obligation to, make
any payment or perform any act required thereunder to be made or performed by
the Company, with the same effect as if made or performed by the Company. If the
Assignee, any of the Senior Parties or any of their respective designees or
assignees fails to cure or rectify the effect of a default under the Assigned
Agreement or within ninety (90) days from notice to the Assignee (or, with
respect to nonmonetary defaults or defaults the curing of which requires the
curing party's possession of the Facility through foreclosure, such longer
period of time as may be necessary under the circumstances to complete such
foreclosure or cure such default, provided the Assignee, any of the Senior
Parties or any of their respective designees or assignees is diligently pursuing
such cure or such foreclosure), whichever is longer, such cure period to
commence upon such notice to the Assignee, the Consenting Party shall have all
its rights and remedies with respect to such default as set forth in the
Assigned Agreement.
5. No Previous Assignment.
The Consenting Party represents and warrants to the Assignee that it
has not assigned, transferred or hypothecated, nor previously consented to any
assignment, transfer or hypothecation of, the Assigned Agreement or any interest
therein.
6. No Amendments Without Consent.
The Consenting Party shall not amend, modify or consent to the
amendment or modification of the Assigned Agreement without the prior written
consent of the Assignee, unless the Company has certified to the Consenting
Party in writing that such amendment, modification or consent to amendment or
modification is permitted under the terms of the Financing Documents.
7. Payments to Revenue Account.
The Consenting Party hereby agrees that, so long as any notes, bonds,
loans, letters of credit, commitments or other obligations, or any other
Financing Liabilities, are outstanding under the Financing Documents and until
the same have been satisfied in full, all payments to be made by the Consenting
Party with respect to the Assigned Agreement shall be in lawful money of the
United States of America, in immediately available funds. The Company hereby
directs the Consenting Party to, and the Consenting Party hereby agrees to, make
all such payments with respect to the Assigned Agreement directly to the
Assignee at ABA No. 026007825, for credit to AES Ironwood, L.L.C., for further
credit to Account No. 630000041.2 (Revenue Account) Attention: Capital Markets
Trust Services, or to such other person and/or at such other address as the
Assignee may from time to time specify in writing to the Consenting Party. All
payments required to be made by the Consenting Party under the Assigned
Agreement shall be made without any offset, recoupment, abatement, withholding,
reduction or defense whatsoever, except as specifically permitted under the
Assigned Agreement.
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8. Protection of Assignee.
In the event that either (a) the Company's interest in the Project
shall be sold, assigned or otherwise transferred pursuant to the exercise of any
right, power or remedy by the Assignee or pursuant to judicial proceedings, or
(b) the Company rejects all or a portion of the Assigned Agreement under Title
11, United States Code, or other similar Federal or state statute and such
rejection is approved by the appropriate bankruptcy court or is otherwise
effective pursuant to such statute, the Consenting Party shall, promptly, and in
no event longer than ten (10) days after receipt of written request therefor,
execute and deliver an agreement to the Assignee, any Senior Parties or any of
their respective nominees, purchasers, assignees or transferees, as the case may
be, for the remainder of the term of the Assigned Agreement and with the same
terms as are contained therein.. References in this Consent to Assignment to
"Assigned Agreement" shall be deemed also to include such new agreement.
9. Acknowledgement of Assignee's Obligations and Rights.
Neither the Assignee nor any of the Senior Parties has any obligation
hereunder to extend credit to the Consenting Party or any contractor of the
Consenting Party at any time for any purpose. The Assignee shall have no
obligation to the Consenting Party under the Assigned Agreement until such time
as the Assignee notifies the Consenting Party in writing of the Assignee's
election to exercise its rights hereunder. Upon the occurrence and during the
continuance of an event of default under any of the Security Documents, the
Assignee or any of the Senior Parties shall have the right to the extent
authorized under the Security Documents, to (a) take possession of the Project
and operate the same, (b) sell or otherwise transfer their interest in the
Project and any purchaser at such sale which may include the Assignee or its
designees or assignees, shall have the right to succeed to the Assignee's or the
Senior Parties' rights hereunder ("Substitute Owner"), as the case may be, and
(c) exercise all rights of the Company under the Assigned Agreement in
accordance with the terms thereof. Subject to compliance with the provisions of
the Assigned Agreement (if applicable) and the terms of this Consent to
Assignment, the Consenting Party shall cooperate with the Assignee comply in all
respects in the Assignee's exercise of such rights. Without limiting the
generality of the foregoing, upon the occurrence and during the continuance of
an event of default under any of the Financing Documents, the Assignee, any of
the Senior Parties or any of their respective designees or assignees shall have
the full right and power to enforce directly against the Consenting Party all
obligations of the Consenting Party under the Assigned Agreement and otherwise
to exercise all remedies thereunder, and to make all demands and give all
notices and make all requests required or permitted to be made by the Company
under the Assigned Agreement. The Assignee, any of the Senior Parties or any of
their respective designees or assignees shall have the right, but not the
obligation, to perform any act, duty or obligation required of the Company
thereunder at any time; provided that nothing herein shall require the Assignee,
any of the Senior Parties or any of their respective designees or assignees to
cure any default of the Company under the Assigned Agreement or to perform any
act, duty or obligation of the Company under the Assigned Agreement except
during any such period that it shall have been a Substitute Owner and assumed
such duties and obligations. The obligations of any Substitute Owner shall be no
more than that of the Company under such Assigned Agreement, any Substitute
Owner shall have no personal liability to the Consenting Party for the
performance of such obligations and the sole recourse of the Consenting Party,
if there is a Substitute Owner, shall be to Substitute Owner's
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interest in the Facility. The Collateral Agent is not required to take any
discretionary action under this Agreement unless it receives written direction
from the Required Senior Parties. The Collateral Agent is entitled to receive
indemnification to its satisfaction before taking any action as directed by the
Required Senior Parties.
10. Refinancing.
The Consenting Party hereby acknowledges that the Company may from time
to time obtain refinancing for the Project (including privately or publicly
placed bonds or notes), and the Consenting Party agrees that it will promptly
upon request execute in favor of the lenders providing such refinancing a
consent to assignment containing terms and conditions that are no less favorable
to the Consenting Party than those terms and conditions contained in this
Consent to Assignment.
11. Representations.
The Consenting Party represents and warrants to the Assignee as
follows:
(a) The Consenting Party is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is in good standing in all jurisdictions where necessary in light of the
business it conducts (including, without limitation, performance of its
obligations under the Assigned Agreement) and the properties it owns.
(b) The Consenting Party has the necessary corporate power,
corporate authority and legal right to execute, deliver and perform its
obligations under the Assigned Agreement and this Consent to Assignment, and the
execution and delivery by the Consenting Party of the Assigned Agreement and
this Consent to Assignment and the performance of its obligations thereunder and
hereunder have been duly authorized by all necessary corporate action and do not
and will not (i) require any consent or approval of the Consenting Party's board
of directors or any shareholder of the Consenting Party, (ii) violate any
provision of the corporate charter or by-laws of the Consenting Party or any
provision of any material law, rule or regulation, or any material order, writ,
judgment, injunction, decree, determination or award having applicability to the
Consenting Party, (iii) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which the Consenting Party is a party or by which it or its
properties may be bound or affected or (iv) result in, or require, the creation
or imposition of any mortgage, deed of trust, pledge, lien, security interest,
charge or encumbrance of any nature upon or with respect to any of the
properties now owned or hereafter acquired by the Consenting Party; and the
Consenting Party is not in violation, breach or default of any provision of the
corporate charter or by-laws of the Consenting Party or any provision of any
material law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award having applicability to the Consenting Party or any
agreement referred to above in clause (iii) of this subsection (b), which
violation could have a material adverse effect on the ability of the Consenting
Party to perform its obligations under this Consent to Assignment or the
Assigned Agreement.
(c) The Assigned Agreement and this Consent to Assignment have
been duly executed and delivered and each constitutes a valid and binding
obligation of the Consenting Party, enforceable in accordance with their terms,
except to the extent that enforceability may be limited
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by applicable bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting the enforcement of creditors' rights and general
equitable principles.
(d) No consent or approval of, or other action by, or any
notice or filing with, any court or administrative or governmental body (except
those previously obtained and in full force and effect) is required in
connection with the execution and delivery of the Assigned Agreement or this
Consent to Assignment or the performance by the Consenting Party of its
obligations thereunder or hereunder. The Consenting Party has obtained all
permits, licenses, approvals, consents, authorizations and exemptions, if any,
with respect to the performance of its obligations under the Assigned Agreement
and this Consent to Assignment required by applicable laws, statutes, rules and
regulations in effect as of the date hereof.
(e) The Consenting Party is not in default with respect to the
Assigned Agreement and has no knowledge, as of the date hereof, of any claims or
rights of set off by the Consenting Party or by any of its affiliates against
the Company. To the best of the Consenting Party's knowledge after due inquiry,
each other party to the Assigned Agreement have complied with all conditions
precedent to the respective obligations of such party to perform under the
Assigned Agreement.
(f) There are no proceedings pending or, to the best of the
Consenting Party's knowledge after due inquiry, threatened against or affecting
the Consenting Party in any court or before any governmental authority or
arbitration board or tribunal (whether or not purportedly on behalf of the
Consenting Party) which may result in a material or adverse effect upon the
property, business, prospects, profits or condition (financial or otherwise) of
the Consenting Party, or the ability of the Consenting Party to perform its
obligations under, or which purports to affect the legality, validity or
enforceability of, the Assigned Agreement or this Consent to Assignment; and the
Consenting Party is not in default with respect to any order of any court,
governmental authority or arbitration board or tribunal.
(g) All representations, warranties and other statements made
by the Consenting Party in the Assigned Agreement were true and correct as of
the date when made and are true and correct as of the date of this Consent to
Assignment.
12. Binding Upon Successors.
All agreements, covenants, conditions and provisions of this Consent to
Assignment shall be binding upon and inure to the benefit of the successors and
assigns of each of the parties hereto.
13. Captions.
The captions or headings at the beginning of each Section hereof are
for the convenience of the parties hereto only and are not a part of this
Consent to Assignment.
14. Governing Law.
(a) THIS CONSENT TO ASSIGNMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN
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ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT
GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW EXCEPT
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
(b) Any legal action or proceeding with respect to this
Consent to Assignment and any action for enforcement of any judgment in respect
thereof may be brought in the courts of the State of New York or of the United
States of America for the Southern District of New York, and, by execution and
delivery of this Consent to Assignment, each of the Consenting Party and the
Assignee hereby accepts for itself and in respect of its property, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts and
appellate courts from any appeal thereof. Each of the Consenting Party and the
Assignee hereby irrevocably designates, appoints and empowers CT Corporation
System, 1633 Broadway, New York, New York, 10019, 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 action or proceeding. If for any reason
such designee, appointee and agent shall cease to be available to act as such,
the Assignee or the Consenting Party, as applicable, 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 Assignee. Each of the Consenting Party and
the Assignee 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 Consenting
Party at its notice address being [ ] and to the Assignee at the address set
forth in Section 4. Each of the Consenting Party and the Assignee 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 Consent to Assignment brought in the courts referred to
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. Nothing herein shall affect the right of
the Assignee or any of their respective designees or assignees to serve process
in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Consenting Party in any other jurisdiction.
15. Amendment.
This Consent to Assignment may be modified, amended or rescinded only
by a writing expressly referring to this Consent to Assignment and signed by
both the Consenting Party and the Assignee. The Assignee may request the
direction of the Senior Parties prior to signing any amendments described
herein.
16. Severability.
Every provision of this Consent to Assignment is intended to be
severable. If any term or provision hereof is declared by a court of competent
jurisdiction to be illegal, invalid or unenforceable for any reason whatsoever,
such illegality, invalidity or unenforceability shall not affect the other terms
and provisions hereof, which terms and provisions shall remain binding and
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enforceable, and to the extent possible all of such other provisions shall
remain in full force and effect.
17. Counterparts.
This Consent to Assignment 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.
18. Authority to Take Specific Actions.
Notwithstanding any provision of this Consent to Assignment to the
contrary, if an action by the Assignee is authorized by the Assigned Agreement
or by this Consent to Assignment, the Consenting Party shall be obligated to
recognize or follow instructions given by a Senior Party or any of its
respective designees or assignees, or any successor or assign of the Assignee or
any Senior Party, only if such person has provided to the Consenting Party
reasonable written documentation of its authority by or on behalf of the
Assignee to undertake the action which it is requesting or directing, and a
written certification to the Consenting Party that it is so authorized to act.
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IN WITNESS WHEREOF, each of the Consenting Party and the Assignee has
duly executed this Consent to Assignment as of the date first above written.
AES PRESCOTT, L.L.C.
By: /s/ Patricia L. Rollin
----------------------------------
Name: Patricia L. Rollin
Title: Vice President
IBJ WHITEHALL BANK & TRUST COMPANY,
as COLLATERAL AGENT
By: /s/ Thomas McCutcheon
----------------------------------
Name: Thomas McCutcheon
Title: Assistant Vice President
REVIEWED AND CONSENTED TO:
AES IRONWOOD, L.L.C.
By: /s/ Patricia L. Rollin
------------------------------
Name: Patricia L. Rollin
Title: Vice President
<PAGE>
Exhibit 4.15
EXECUTION COPY
Metropolitan Edison Company d/b/a GPU Energy
CONSENT TO ASSIGNMENT
THIS CONSENT TO ASSIGNMENT (this "Consent to Assignment") is entered
into as of June 1, 1999 by Metropolitan Edison Company d/b/a GPU Energy, a
corporation and public utility organized and existing under the laws of the
Commonwealth of Pennsylvania (the "Consenting Party"), and IBJ WHITEHALL BANK &
TRUST COMPANY, as collateral agent (the "Collateral Agent", together with any
successors thereto in such capacity, referred to as the "Assignee"), for the
benefit of and on behalf of the Senior Parties defined below.
A. AES Ironwood, L.L.C. (the "Company"), a Delaware limited liability
company, intends to develop, construct, own, operate and finance a nominal 705
MW (net) gas-fired combined cycle electric generating facility (the "Facility")
(the Facility, equipment and facilities associated with the Facility and such
financing, development and construction, the "Project") to be located in South
Lebanon Township, Lebanon County, Pennsylvania.
B. The Company intends to finance the Project, in part, through the
issuance, from time to time, of certain securities (the "Securities") pursuant
to a Trust Indenture, dated as of June 1, 1999 between the Company and IBJ
Whitehall Bank & Trust Company, as trustee (the "Trustee"), as it may be amended
or supplemented from time to time (the "Indenture").
C. All obligations of the Company under the Securities, the Collateral
Agency Agreement (defined below), and any other agreements evidencing senior
debt of the Company (collectively, the "Financing Documents") to the Trustee,
the Collateral Agent, each successor to any such person and each other person
providing senior debt to the Company who is or becomes a party to the Collateral
Agency Agreement pursuant to its terms (collectively, the "Senior Parties") will
be secured by a certain Mortgage, Security Agreement, Indenture, Pledge
Agreement and Assignment of Leases and Income, each between the Company and IBJ
Whitehall Bank & Trust Company (collectively, the "Security Documents").
D. The Senior Parties and the Company have entered into the Collateral
Agency Agreement (as amended, supplemented or modified and in effect from time
to time, the "Collateral Agency Agreement") to set forth their mutual
understanding with respect to (a) the exercise of certain rights, remedies and
options by the respective parties thereto under the above described documents,
(b) the priority of their respective security interests created by the Security
Documents, (c) the application of project revenues and certain other monies and
items and (d) the appointment of the Collateral Agent as collateral agent.
E. The Company and the Consenting Party have entered into that certain
Generation Facility Transmission Interconnection Agreement (the "Assigned
Agreement") dated as of March 23, 1999.
<PAGE>
F. The Company has notified the Consenting Party that all of the
Company's right, title and interest in the Assigned Agreement is to be assigned
to the Collateral Agent as security pursuant to one or more of the Security
Documents.
G. It is a condition precedent to the extension of credit by the Senior
Parties that the Consenting Party execute and deliver this Consent to Assignment
for the benefit of the Senior Parties.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:
1. Definitions. Capitalized terms used herein shall have the respective
meanings specified herein or, if not defined herein, as defined in the Assigned
Agreement.
2. Consent to Assignment. The Consenting Party hereby irrevocably
consents to the assignment of the Assigned Agreement by the Company to the
Assignee for the benefit of the Senior Parties as security. The Consenting Party
shall continue performance under the Assigned Agreement in accordance with its
terms and the terms of this Consent to Assignment and shall maintain the
Assigned Agreement in full force and effect. Until all obligations under the
Financing Documents have been performed and paid in full, all obligations of the
Consenting Party under the Assigned Agreement shall inure to the benefit of the
Assignee for the benefit of the Senior Parties to the same extent as if the
Assignee was an original party to the Assigned Agreement instead of the Company.
3. No Defaults. The Consenting Party acknowledges and agrees that (a)
the Assigned Agreement is in full force and effect and other than the agreement
between the Consenting Party and the Company to defer until financial closing
payment of $1,000,000 that was formerly due at the time of execution of the
Assigned Agreement, there are no amendments, modifications or supplements
thereto, either oral or written, (b) the Consenting Party has not assigned,
transferred or hypothecated the Assigned Agreement or any interest therein, (c)
the Consenting Party has no knowledge of any default by the Company in any
respect of the performance of any provision of the Assigned Agreement and no
knowledge of any event or condition which would either immediately or with the
passage of any applicable grace period or giving of notice or both, enable the
Consenting Party to terminate or suspend its obligations under the Assigned
Agreement, (d) none of the Company's rights under the Assigned Agreement has
been waived, (e) the assignment by the Company of the Assigned Agreement to the
Assignee, as security, and the acknowledgment of and consent to such assignment
by the Consenting Party, will not cause or constitute a default under the
Assigned Agreement or an event or condition which would, with the giving of
notice or lapse of time or both, constitute a default under the Assigned
Agreement, and (f) a foreclosure or other exercise of remedies under any of the
Security Documents or any sale thereunder by the Assignee, any of the Senior
Parties or any of their respective designees or assignees, whether by judicial
proceedings or under any power of sale contained therein, or any conveyance from
the Company to the Assignee, any of the Senior Parties or any of their
respective designees or assignees, in lieu thereof, shall not require the
consent of the Consenting Party or cause or constitute a default under the
Assigned Agreement or an event or condition which would, with the giving of
notice or lapse of time or both, constitute a default under the Assigned
Agreement.
4. Notice of Company's Defaults and Termination. Anything in the
Assigned Agreement notwithstanding, for so long as any Financing Liabilities (as
defined in the Collateral Agency
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Agreement) are outstanding under the Financing Documents and until the same have
been satisfied in full, the Consenting Party shall not claim prevention of or
interference with performance of its obligations under the Assigned Agreement,
nor shall the Consenting Party exercise any right it may have under the Assigned
Agreement, at law or in equity, to cancel, suspend or terminate the Assigned
Agreement, or any of its obligations thereunder, as the result of any default or
other action or omission (each, herein, a "default") of the Company unless the
Consenting Party, following expiry of all periods given the Company to cure such
default, action or omission, shall have given a copy of a notice of default to
the Assignee, such notice to be coupled with an opportunity to cure any such
default within a reasonable period, but in no event less than sixty (60) days
from notice to the Assignee (or, with respect to nonmonetary defaults or
defaults the curing of which requires the Assignee's possession of the Facility
through foreclosure, such longer period of time as may be necessary under the
circumstances to complete such foreclosure or cure such default, provided the
Assignee, any of the Senior Parties, or any of their respective designees or
assignees is diligently pursuing such cure or foreclosure), such cure period to
commence upon delivery of such notice to the Assignee, or, with respect to any
defaults which are not susceptible of being so corrected, to rectify to the
Consenting Party's reasonable satisfaction the effect upon the Consenting Party
of such default by the Company within such period provided, however, that if any
such party is prohibited from curing any such default by any process, stay or
injunction issued by any governmental authority or pursuant to any bankruptcy or
insolvency proceeding, then the time periods specified in this Section 4 for
curing a default shall be extended for the period of such prohibition. Such
notice shall be in writing and shall be deemed to have been given (a) when
presented personally, (b) one business day after being deposited for overnight
delivery with a nationally recognized overnight courier, such as FedEx, (c) when
received, if deposited in a regularly maintained receptacle for the United
States Postal Service, postage prepaid, registered or certified, return receipt
requested, addressed to the Assignee at the address indicated below or such
other address as the Assignee may have specified by written notice delivered in
accordance herewith, or (d) when transmitted by telecopy to the number specified
below and the receipt confirmed telephonically by recipient, provided that such
telecopy is then followed by a copy of such notice delivered by a method
specified in clause (a), (b) or (c) above.
IBJ Whitehall Bank & Trust Company, as Collateral Agent
One State Street
New York, New York 10004
Attention: Capital Markets Trust Services
Facsimile: 212-858-2952
No cancellation, suspension or termination of the Assigned Agreement by
the Consenting Party, or of any of the Consenting Party's obligations thereunder
by the Consenting Party, shall be binding upon the Assignee or any of the Senior
Parties without such notice and the lapse of the applicable cure period. Any
dispute that may arise under the Assigned Agreement notwithstanding, the
Consenting Party shall continue performance under the Assigned Agreement and
resolve any dispute without discontinuing such performance until the lapse of
the notice and applicable cure periods or extension periods. The Assignee, any
of the Senior Parties or any of their respective designees or assignees may, but
shall be under no obligation to, make any payment or perform any act required
thereunder to be made or performed by the Company, with the same effect as if
made or performed by the Company. If the Assignee, any of the Senior Parties or
any of their respective designees or
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assignees fails to cure or rectify the effect of a default under the Assigned
Agreement or within sixty (60) days from notice to the Assignee (or, with
respect to nonmonetary defaults or defaults the curing of which requires the
curing party's possession of the Facility through foreclosure, such longer
period of time as may be necessary under the circumstances to complete such
foreclosure or cure such default, provided the Assignee, any of the Senior
Parties or any of their respective designees or assignees is diligently pursuing
such cure or such foreclosure), whichever is longer, such cure period to
commence upon such notice to the Assignee, the Consenting Party shall have all
its rights and remedies with respect to such default as set forth in the
Assigned Agreement.
5. No Previous Assignment. The Consenting Party represents and warrants
to the Assignee that it has not assigned, transferred or hypothecated, nor
previously consented to any assignment, transfer or hypothecation of, the
Assigned Agreement or any interest therein.
6. No Amendments Without Consent. The Consenting Party shall not amend,
modify or consent to the amendment or modification of the Assigned Agreement
without the prior written consent of the Assignee, unless the Company has
certified to the Consenting Party in writing that such amendment, modification
or consent to amendment or modification is permitted under the terms of the
Financing Documents.
7. Payments to Revenue Account. The Consenting Party hereby agrees
that, so long as any notes, bonds, loans, letters of credit, commitments or
other obligations, or any other Financing Liabilities, are outstanding under the
Financing Documents and until the same have been satisfied in full, all payments
to be made by the Consenting Party with respect to the Assigned Agreement shall
be in lawful money of the United States of America, in immediately available
funds. The Company hereby directs the Consenting Party to, and the Consenting
Party hereby agrees to, make all such payments with respect to the Assigned
Agreement directly to the Assignee at ABA No. 026007825, for credit to AES
Ironwood, L.L.C., for further credit to Account No. 630000041.2 (Revenue
Account) Attention: Capital Markets Trust Services, or to such other person
and/or at such other address as the Assignee may from time to time specify in
writing to the Consenting Party. All payments required to be made by the
Consenting Party under the Assigned Agreement shall be made without any offset,
recoupment, abatement, withholding, reduction or defense whatsoever, except as
specifically permitted under the Assigned Agreement.
8. Protection of Assignee. In the event that either (a) the Company's
interest in the Project shall be sold, assigned or otherwise transferred
pursuant to the exercise of any right, power or remedy by the Assignee or
pursuant to judicial proceedings, or (b) the Company rejects all or a portion of
the Assigned Agreement under Title 11, United States Code, or other similar
Federal or state statute and such rejection is approved by the appropriate
bankruptcy court or is otherwise effective pursuant to such statute, the
Consenting Party shall, promptly, and in no event longer than thirty (30) days
after receipt of written request therefor, execute and deliver an agreement to
the Assignee, any Senior Parties or any of their respective nominees,
purchasers, assignees or transferees, as the case may be, for the remainder of
the term of the Assigned Agreement and with the same terms as are contained
therein. In such event, the Assignee represents and warrants that it will
procure the requisite expertise needed in order to operate the Facility pursuant
to Good Utility Practice and the entity that undertakes the operation of the
Facility will fully perform all of the Power Producer obligations set forth in
the
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Assigned Agreement. References in this Consent to Assignment to "Assigned
Agreement" shall be deemed also to include such new agreement.
9. Acknowledgement of Assignee's Obligations and Rights. Neither the
Assignee nor any of the Senior Parties has any obligation hereunder to extend
credit to the Consenting Party or any contractor of the Consenting Party at any
time for any purpose. The Assignee shall have no obligation to the Consenting
Party under the Assigned Agreement until such time as the Assignee notifies the
Consenting Party in writing of the Assignee's election to exercise its rights
hereunder. Upon the occurrence and during the continuance of an event of default
under any of the Security Documents, the Assignee or any of the Senior Parties
shall have the right to the extent authorized under the Security Documents, to
(a) take possession of the Project and operate the same, (b) sell or otherwise
transfer their interest in the Project and any purchaser at such sale which may
include the Assignee or its designees or assignees, shall have the right to
succeed to the Assignee's or the Senior Parties' rights hereunder ("Substitute
Owner"), as the case may be, and (c) exercise all rights of the Company under
the Assigned Agreement in accordance with the terms thereof. Subject to
compliance with the provisions of the Assigned Agreement (if applicable) and the
terms of this Consent to Assignment, the Consenting Party shall cooperate with
the Assignee comply in all respects in the Assignee's exercise of such rights.
Without limiting the generality of the foregoing, upon the occurrence and during
the continuance of an event of default under any of the Financing Documents, the
Assignee, any of the Senior Parties or any of their respective designees or
assignees shall have the full right and power to enforce directly against the
Consenting Party all obligations of the Consenting Party under the Assigned
Agreement and otherwise to exercise all remedies thereunder, and to make all
demands and give all notices and make all requests required or permitted to be
made by the Company under the Assigned Agreement. The Assignee, any of the
Senior Parties or any of their respective designees or assignees shall have the
right, but not the obligation, to perform any act, duty or obligation required
of the Company thereunder at any time; provided that nothing herein shall
require the Assignee, any of the Senior Parties or any of their respective
designees or assignees to cure any default of the Company under the Assigned
Agreement or to perform any act, duty or obligation of the Company under the
Assigned Agreement except during any such period when it shall have become a
Substitute Owner and assumed such duties and obligations. The obligations of any
Substitute Owner shall be no more than that of the Company under such Assigned
Agreement, any Substitute Owner shall have no personal liability to the
Consenting Party for the performance of such obligations and the sole recourse
of the Consenting Party, if there is a Substitute Owner, shall be to Substitute
Owner's interest in the Facility. The Collateral Agent is not required to take
any discretionary action under this Agreement unless it receives written
direction from the Required Senior Parties. The Collateral Agent is entitled to
receive indemnification to its satisfaction before taking any action as directed
by the Required Senior Parties.
10. Refinancing. The Consenting Party hereby acknowledges that the
Company may from time to time obtain refinancing for the Project (including
privately or publicly placed bonds or notes), and the Consenting Party agrees
that it will promptly upon request execute in favor of the lenders providing
such refinancing a consent to assignment containing terms and conditions that
are no less favorable to the Consenting Party than those terms and conditions
contained in this Consent to Assignment.
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11. Representations. The Consenting Party represents and warrants to
the Assignee as follows:
(a) The Consenting Party is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is in good standing in all jurisdictions where necessary in light of the
business it conducts (including, without limitation, performance of its
obligations under the Assigned Agreement) and the properties it owns.
(b) The Consenting Party has the necessary corporate power,
corporate authority and legal right to execute, deliver and perform its
obligations under the Assigned Agreement and this Consent to Assignment, and the
execution and delivery by the Consenting Party of the Assigned Agreement and
this Consent to Assignment and the performance of its obligations thereunder and
hereunder have been duly authorized by all necessary corporate action and do not
and will not (i) require any consent or approval of the Consenting Party's board
of directors or any shareholder of the Consenting Party, (ii) violate any
provision of the corporate charter or by-laws of the Consenting Party or any
provision of any material law, rule or regulation, or any material order, writ,
judgment, injunction, decree, determination or award having applicability to the
Consenting Party, (iii) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which the Consenting Party is a party or by which it or its
properties may be bound or affected or (iv) result in, or require, the creation
or imposition of any mortgage, deed of trust, pledge, lien, security interest,
charge or encumbrance of any nature upon or with respect to any of the
properties now owned or hereafter acquired by the Consenting Party; and the
Consenting Party is not in violation, breach or default of any provision of the
corporate charter or by-laws of the Consenting Party or any provision of any
material law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award having applicability to the Consenting Party or any
agreement referred to above in clause (iii) of this subsection (b), which
violation could have a material adverse effect on the ability of the Consenting
Party to perform its obligations under this Consent to Assignment or the
Assigned Agreement.
(c) The Assigned Agreement and this Consent to Assignment have
been duly executed and delivered and each constitutes a valid and binding
obligation of the Consenting Party, enforceable in accordance with their terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting the enforcement of creditors' rights and general equitable principles.
(d) No consent or approval of, or other action by, or any
notice or filing with, any court or administrative or governmental body (except
those previously obtained and in full force and effect) is required in
connection with the execution and delivery of the Assigned Agreement or this
Consent to Assignment or the performance by the Consenting Party of its
obligations thereunder or hereunder. The Consenting Party has obtained all
permits, licenses, approvals, consents, authorizations and exemptions, if any,
with respect to the performance of its obligations under the Assigned Agreement
and this Consent to Assignment required by applicable laws, statutes, rules and
regulations in effect as of the date hereof other than clarification from the
Pennsylvania Public Utility Commission staff that no approval is required for
construction of the 230kV looped tap and stress bus interconnection that will
connect the AES Ironwood facility to the Consenting Party's 230kV system. The
Consenting Party has requested an opinion from the PaPUC's Chief Council
clarifying that the
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proposed 230kV tap and interconnection is not high voltage line construction
which would be subject to the Commission's High Voltage Line Application
Regulations at 52 Pa Code 57.71 et seq. The Consenting Party expects this to be
a routine ruling from the Chief Council which would close out the matter in
about 30 days. If that were not the case, however, it would mean preparing a
filing that would take several months but which should not effect our ability to
proceed with construction of the interconnection and complete it on schedule.
(e) The Consenting Party is not in default with respect to the
Assigned Agreement and has no knowledge, as of the date hereof, of any claims or
rights of set off by the Consenting Party or by any of its affiliates against
the Company. To the best of the Consenting Party's knowledge after due inquiry,
each other party to the Assigned Agreement have complied with all conditions
precedent to the respective obligations of such party to perform under the
Assigned Agreement.
(f) There are no proceedings pending or, to the best of the
Consenting Party's knowledge after due inquiry, threatened against or affecting
the Consenting Party in any court or before any governmental authority or
arbitration board or tribunal (whether or not purportedly on behalf of the
Consenting Party) which may result in a material or adverse effect upon the
property, business, prospects, profits or condition (financial or otherwise) of
the Consenting Party, or the ability of the Consenting Party to perform its
obligations under, or which purports to affect the legality, validity or
enforceability of, the Assigned Agreement or this Consent to Assignment; and the
Consenting Party is not in default with respect to any order of any court,
governmental authority or arbitration board or tribunal.
(g) All representations, warranties and other statements made
by the Consenting Party in the Assigned Agreement were true and correct as of
the date when made and are true and correct as of the date of this Consent to
Assignment.
12. Binding Upon Successors. All agreements, covenants, conditions and
provisions of this Consent to Assignment shall be binding upon and inure to the
benefit of the successors and assigns of each of the parties hereto.
13. Captions. The captions or headings at the beginning of each Section
hereof are for the convenience of the parties hereto only and are not a part of
this Consent to Assignment.
14. Governing Law. (a) THIS CONSENT TO ASSIGNMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW EXCEPT SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW).
(b) Any legal action or proceeding with respect to this
Consent to Assignment and any action for enforcement of any judgment in respect
thereof may be brought in the courts of the State of New York or of the United
States of America for the Southern District of New York, and, by execution and
delivery of this Consent to Assignment, each of the Consenting Party and the
Assignee hereby accepts for itself and in respect of its property, generally and
unconditionally, the non-exclusive
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jurisdiction of the aforesaid courts and appellate courts from any appeal
thereof. Each of the Consenting Party and the Assignee hereby irrevocably
designates, appoints and empowers CT Corporation System, 1633 Broadway, New
York, New York, 10019, 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 action or proceeding. If for any reason such designee, appointee and
agent shall cease to be available to act as such, the Assignee or the Consenting
Party, as applicable, 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 Assignee. Each of the Consenting Party and the Assignee 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 Consenting Party at its notice address
being 2800 Pottsville Pike, P.O. Box 16001, Reading, Pennsylvania, 19640-0001
and to the Assignee at the address set forth in Section 4. Each of the
Consenting Party and the Assignee 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 Consent to
Assignment brought in the courts referred to 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. Nothing herein shall affect the right of the Assignee or any
of their respective designees or assignees to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
the Consenting Party in any other jurisdiction.
15. Amendment. This Consent to Assignment may be modified, amended or
rescinded only by a writing expressly referring to this Consent to Assignment
and signed by both the Consenting Party and the Assignee. The Assignee may
request the direction of the Senior Parties prior to signing any amendments
described herein.
16. Severability. Every provision of this Consent to Assignment is
intended to be severable. If any term or provision hereof is declared by a court
of competent jurisdiction to be illegal, invalid or unenforceable for any reason
whatsoever, such illegality, invalidity or unenforceability shall not affect the
other terms and provisions hereof, which terms and provisions shall remain
binding and enforceable, and to the extent possible all of such other provisions
shall remain in full force and effect.
17. Counterparts. This Consent to Assignment 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.
18. Authority to Take Specific Actions. Notwithstanding any provision
of this Consent to Assignment to the contrary, if an action by the Assignee is
authorized by the Assigned Agreement or by this Consent to Assignment, the
Consenting Party shall be obligated to recognize or follow instructions given by
a Senior Party or any of their respective designees or assignees, or any
successor or assign of the Assignee or any Senior Party, only if such person has
provided to the Consenting Party reasonable written documentation of its
authority by or on behalf of the Assignee to undertake the action which it is
requesting or directing, and a written certification to the Consenting Party
that it is so authorized to act.
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IN WITNESS WHEREOF, each of the Consenting Party and the Assignee has
duly executed this Consent to Assignment as of the date first above written.
Metropolitan Edison Company d/b/a GPU Energy
By: /s/ Robert S. Zechman
----------------------------------
Name: Robert S. Zechman
Title: VP-Engineering & Operations
IBJ WHITEHALL BANK & TRUST COMPANY,
as COLLATERAL AGENT
By: /s/ Thomas McCutcheon
----------------------------------
Name: Thomas McCutcheon
Title: Assistant Vice President
REVIEWED AND CONSENTED TO:
AES IRONWOOD, L.L.C.
By: /s/ Patricia L. Rollin
-------------------------
Name: Patricia L. Rollin
Title: Vice President
<PAGE>
Exhibit 4.16
EXECUTION COPY
CITY OF LEBANON AUTHORITY
CONSENT TO ASSIGNMENT
THIS CONSENT TO ASSIGNMENT (this "Consent to Assignment") is entered
into as of June 1, 1999 by CITY OF LEBANON AUTHORITY, a Pennsylvania
governmental authority (the "Consenting Party"), and IBJ WHITEHALL BANK & TRUST
COMPANY, as collateral agent (the "Collateral Agent", together with any
successors thereto in such capacity, referred to as the "Assignee"), for the
benefit of and on behalf of the Senior Parties defined below.
A. AES Ironwood, L.L.C. (the "Company"), a Delaware limited liability
company, intends to develop, construct, own, operate and finance a nominal 705
MW (net) gas-fired combined cycle electric generating facility (the "Facility")
(the Facility, equipment and facilities associated with the Facility and such
financing, development and construction, the "Project") to be located in South
Lebanon Township, Lebanon County, Pennsylvania.
B. The Company intends to finance the Project, in part, through the
issuance, from time to time, of certain securities (the "Securities") pursuant
to a Trust Indenture, dated as of June 1, 1999 between the Company and IBJ
Whitehall Bank & Trust Company, as trustee (the "Trustee"), as it may be amended
or supplemented from time to time (the "Indenture").
C. All obligations of the Company under the Securities, the Collateral
Agency Agreement (defined below), and any other agreements evidencing senior
debt of the Company (collectively, the "Financing Documents") to the Trustee,
the Collateral Agent, each successor to any such person and each other person
providing senior debt to the Company who is or becomes a party to the Collateral
Agency Agreement pursuant to its terms (collectively, the "Senior Parties") will
be secured by a certain Mortgage, Security Agreement, Indenture, Pledge
Agreement and Assignment of Leases and Income, each between the Company and IBJ
Whitehall Bank & Trust Company (collectively, the "Security Documents").
D. The Senior Parties and the Company have entered into the Collateral
Agency Agreement (as amended, supplemented or modified and in effect from time
to time, the "Collateral Agency Agreement") to set forth their mutual
understanding with respect to (a) the exercise of certain rights, remedies and
options by the respective parties thereto under the above described documents,
(b) the priority of their respective security interests created by the Security
Documents, (c) the application of project revenues and certain other monies and
items and (d) the appointment of the Collateral Agent as collateral agent.
E. The Company (as assignee of AES Ironwood, Inc.) and the Consenting
Party have entered into that certain Effluent Supply Agreement (the "Assigned
Agreement") dated as of March 3, 1998 pursuant to which, among other things, the
Consenting Party will make available to the Company a supply of Effluent.
<PAGE>
F. The Company has notified the Consenting Party that all of the
Company's right, title and interest in the Assigned Agreement is to be assigned
to the Collateral Agent as security pursuant to one or more of the Security
Documents.
G. It is a condition precedent to the extension of credit by the Senior
Parties that the Consenting Party execute and deliver this Consent to Assignment
for the benefit of the Senior Parties.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:
1. Definitions. Capitalized terms used herein shall have the respective
meanings specified herein or, if not defined herein, as defined in the Assigned
Agreement.
2. Consent to Assignment. The Consenting Party acknowledges that on or
prior to the date hereof, AES Ironwood, Inc. has assigned all of its right,
title and interest in the Assigned Agreement to the Company. The Consenting
Party hereby irrevocably consents to the assignment of the Assigned Agreement by
the Company to the Assignee for the benefit of the Senior Parties as security.
The Consenting Party shall continue performance under the Assigned Agreement in
accordance with its terms and the terms of this Consent to Assignment and shall
maintain the Assigned Agreement in full force and effect. Until all obligations
under the Financing Documents have been performed and paid in full, all
obligations of the Consenting Party under the Assigned Agreement shall inure to
the benefit of the Assignee for the benefit of the Senior Parties to the same
extent as if the Assignee was an original party to the Assigned Agreement
instead of the Company.
3. No Defaults. The Consenting Party acknowledges and agrees that (a)
the Assigned Agreement is in full force and effect and there are no amendments,
modifications or supplements thereto, either oral or written, (b) the Consenting
Party has not assigned, transferred or hypothecated the Assigned Agreement or
any interest therein, (c) the Consenting Party has no knowledge of any default
by the Company in any respect of the performance of any provision of the
Assigned Agreement and no knowledge of any event or condition which would either
immediately or with the passage of any applicable grace period or giving of
notice or both, enable the Consenting Party to terminate or suspend its
obligations under the Assigned Agreement, (d) none of the Company's rights under
the Assigned Agreement has been waived, (e) the assignment by the Company of the
Assigned Agreement to the Assignee, as security, and the acknowledgment of and
consent to such assignment by the Consenting Party, will not cause or constitute
a default under the Assigned Agreement or an event or condition which would,
with the giving of notice or lapse of time or both, constitute a default under
the Assigned Agreement, and (f) a foreclosure or other exercise of remedies
under any of the Security Documents or any sale thereunder by the Assignee, any
of the Senior Parties or any of their respective designees or assignees, whether
by judicial proceedings or under any power of sale contained therein, or any
conveyance from the Company to the Assignee, any of the Senior Parties or any of
their respective designees or assignees, in lieu thereof, shall not require the
consent of the Consenting Party or cause or constitute a default under the
Assigned Agreement or an event or condition which would, with the giving of
notice or lapse of time or both, constitute a default under the Assigned
Agreement.
4. Notice of Company's Defaults and Termination. Anything in the
Assigned Agreement notwithstanding, for so long as any Financing Liabilities (as
defined in the Collateral Agency
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Agreement) are outstanding under the Financing Documents and until the same have
been satisfied in full, the Consenting Party shall not claim prevention of or
interference with performance of its obligations under the Assigned Agreement,
nor shall the Consenting Party exercise any right it may have under the Assigned
Agreement, at law or in equity, to cancel, suspend or terminate the Assigned
Agreement, or any of its obligations thereunder, as the result of any default or
other action or omission (each, herein, a "default") of the Company unless the
Consenting Party, following expiry of all periods given the Company to cure such
default, action or omission, shall have given a copy of a notice of default to
the Assignee, such notice to be coupled with an opportunity to cure any such
default within a reasonable period, but in no event less than ninety (90) days
from notice to the Assignee (or, with respect to nonmonetary defaults or
defaults the curing of which requires the Assignee's possession of the Facility
through foreclosure, such longer period of time as may be necessary under the
circumstances to complete such foreclosure or cure such default, provided the
Assignee, any of the Senior Parties, or any of their respective designees or
assignees is diligently pursuing such cure or foreclosure), such cure period to
commence upon delivery of such notice to the Assignee, or, with respect to any
defaults which are not susceptible of being so corrected, to rectify to the
Consenting Party's reasonable satisfaction the effect upon the Consenting Party
of such default by the Company within such period provided, however, that if any
such party is prohibited from curing any such default by any process, stay or
injunction issued by any governmental authority or pursuant to any bankruptcy or
insolvency proceeding, then the time periods specified in this Section 4 for
curing a default shall be extended for the period of such prohibition . Such
notice shall be in writing and shall be deemed to have been given (a) when
presented personally, (b) one business day after being deposited for overnight
delivery with a nationally recognized overnight courier, such as FedEx, (c) when
received, if deposited in a regularly maintained receptacle for the United
States Postal Service, postage prepaid, registered or certified, return receipt
requested, addressed to the Assignee at the address indicated below or such
other address as the Assignee may have specified by written notice delivered in
accordance herewith, or (d) when transmitted by telecopy to the number specified
below and the receipt confirmed telephonically by recipient, provided that such
telecopy is then followed by a copy of such notice delivered by a method
specified in clause (a), (b) or (c) above.
IBJ Whitehall Bank & Trust Company, as Collateral Agent
One State Street
New York, New York 10004
Attention: Capital Markets Trust Services
Facsimile: 212-858-2952
No cancellation, suspension or termination of the Assigned Agreement by
the Consenting Party, or of any of the Consenting Party's obligations thereunder
by the Consenting Party, shall be binding upon the Assignee or any of the Senior
Parties without such notice and the lapse of the applicable cure period. Any
dispute that may arise under the Assigned Agreement notwithstanding, the
Consenting Party shall continue performance under the Assigned Agreement and
resolve any dispute without discontinuing such performance until the lapse of
the notice and applicable cure periods or extension periods. The Assignee, any
of the Senior Parties or any of their respective designees or assignees may, but
shall be under no obligation to, make any payment or perform any act required
thereunder to be made or performed by the Company, with the same effect as if
made or performed by the Company. If the Assignee, any of the Senior Parties or
any of their respective designees or
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assignees fails to cure or rectify the effect of a default under the Assigned
Agreement or within ninety (90) days from notice to the Assignee (or, with
respect to nonmonetary defaults or defaults the curing of which requires the
curing party's possession of the Facility through foreclosure, such longer
period of time as may be necessary under the circumstances to complete such
foreclosure or cure such default, provided the Assignee, any of the Senior
Parties or any of their respective designees or assignees is diligently pursuing
such cure or such foreclosure), whichever is longer, such cure period to
commence upon such notice to the Assignee, the Consenting Party shall have all
its rights and remedies with respect to such default as set forth in the
Assigned Agreement.
5. No Previous Assignment. The Consenting Party represents and warrants
to the Assignee that it has not assigned, transferred or hypothecated, nor
previously consented to any assignment, transfer or hypothecation of, the
Assigned Agreement or any interest therein.
6. No Amendments Without Consent. The Consenting Party shall not amend,
modify or consent to the amendment or modification of the Assigned Agreement
without the prior written consent of the Assignee, unless the Company has
certified to the Consenting Party in writing that such amendment, modification
or consent to amendment or modification is permitted under the terms of the
Financing Documents.
7. Payments to Revenue Account. The Consenting Party hereby agrees
that, so long as any notes, bonds, loans, letters of credit, commitments or
other obligations, or any other Financing Liabilities, are outstanding under the
Financing Documents and until the same have been satisfied in full, all payments
to be made by the Consenting Party with respect to the Assigned Agreement shall
be in lawful money of the United States of America, in immediately available
funds. The Company hereby directs the Consenting Party to, and the Consenting
Party hereby agrees to, make all such payments with respect to the Assigned
Agreement directly to the Assignee at ABA No. 026007825, for credit to AES
Ironwood, L.L.C., for further credit to Account No. 630000041.2 (Revenue
Account) Attention: Capital Markets Trust Services, or to such other person
and/or at such other address as the Assignee may from time to time specify in
writing to the Consenting Party. All payments required to be made by the
Consenting Party under the Assigned Agreement shall be made without any offset,
recoupment, abatement, withholding, reduction or defense whatsoever, except as
specifically permitted under the Assigned Agreement.
8. Protection of Assignee. In the event that either (a) the Company's
interest in the Project shall be sold, assigned or otherwise transferred
pursuant to the exercise of any right, power or remedy by the Assignee or
pursuant to judicial proceedings, or (b) the Company rejects all or a portion of
the Assigned Agreement under Title 11, United States Code, or other similar
Federal or state statute and such rejection is approved by the appropriate
bankruptcy court or is otherwise effective pursuant to such statute, the
Consenting Party shall, promptly, and in no event longer than ten (10) days
after receipt of written request therefor, execute and deliver an agreement to
the Assignee, any Senior Parties or any of their respective nominees,
purchasers, assignees or transferees, as the case may be, for the remainder of
the term of the Assigned Agreement and with the same terms as are contained
therein.. References in this Consent to Assignment to "Assigned Agreement" shall
be deemed also to include such new agreement.
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9. Acknowledgement of Assignee's Obligations and Rights. Neither the
Assignee nor any of the Senior Parties has any obligation hereunder to extend
credit to the Consenting Party or any contractor of the Consenting Party at any
time for any purpose. The Assignee shall have no obligation to the Consenting
Party under the Assigned Agreement until such time as the Assignee notifies the
Consenting Party in writing of the Assignee's election to exercise its rights
hereunder. Upon the occurrence and during the continuance of an event of default
under any of the Security Documents, the Assignee or any of the Senior Parties
shall have the right to the extent authorized under the Security Documents, to
(a) take possession of the Project and operate the same, (b) sell or otherwise
transfer their interest in the Project and any purchaser at such sale which may
include the Assignee or its designees or assignees, shall have the right to
succeed to the Assignee's or the Senior Parties' rights hereunder ("Substitute
Owner"), as the case may be, and (c) exercise all rights of the Company under
the Assigned Agreement in accordance with the terms thereof. Subject to
compliance with the provisions of the Assigned Agreement (if applicable) and the
terms of this Consent to Assignment, the Consenting Party shall cooperate with
the Assignee comply in all respects in the Assignee's exercise of such rights.
Without limiting the generality of the foregoing, upon the occurrence and during
the continuance of an event of default under any of the Financing Documents, the
Assignee, any of the Senior Parties or any of their respective designees or
assignees shall have the full right and power to enforce directly against the
Consenting Party all obligations of the Consenting Party under the Assigned
Agreement and otherwise to exercise all remedies thereunder, and to make all
demands and give all notices and make all requests required or permitted to be
made by the Company under the Assigned Agreement. The Assignee, any of the
Senior Parties or any of their respective designees or assignees shall have the
right, but not the obligation, to perform any act, duty or obligation required
of the Company thereunder at any time; provided that nothing herein shall
require the Assignee, any of the Senior Parties or any of their respective
designees or assignees to cure any default of the Company under the Assigned
Agreement or to perform any act, duty or obligation of the Company under the
Assigned Agreement except during any such period that it shall have become a
Substitute Owner and assumed such duties and obligations. The obligations of any
Substitute Owner shall be no more than that of the Company under such Assigned
Agreement, any Substitute Owner shall have no personal liability to the
Consenting Party for the performance of such obligations and the sole recourse
of the Consenting Party, if there is a Substitute Owner, shall be to Substitute
Owner's interest in the Facility. The Collateral Agent is not required to take
any discretionary action under this Agreement unless it receives written
direction from the Required Senior Parties. The Collateral Agent is entitled to
receive indemnification to its satisfaction before taking any action as directed
by the Required Senior Parties.
10. Refinancing. The Consenting Party hereby acknowledges that the
Company may from time to time obtain refinancing for the Project (including
privately or publicly placed bonds or notes), and the Consenting Party agrees
that it will promptly upon request execute in favor of the lenders providing
such refinancing a consent to assignment containing terms and conditions that
are no less favorable to the Consenting Party than those terms and conditions
contained in this Consent to Assignment.
11. Representations. The Consenting Party represents and warrants to
the Assignee as follows:
(a) The Consenting Party is a municipal authority duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and is in good standing in
5
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all jurisdictions where necessary in light of the business it conducts
(including, without limitation, performance of its obligations under the
Assigned Agreement) and the properties it owns.
(b) The Consenting Party has the necessary corporate power,
corporate authority and legal right to execute, deliver and perform its
obligations under the Assigned Agreement and this Consent to Assignment, and the
execution and delivery by the Consenting Party of the Assigned Agreement and
this Consent to Assignment and the performance of its obligations thereunder and
hereunder have been duly authorized by all necessary corporate action and do not
and will not (i) require any consent or approval of the Consenting Party's board
of directors or any shareholder of the Consenting Party other than Resolution
No. 4-99 of the City of Lebanon Authority authorizing and approving this
Consent to Assignment, (ii) violate any provision of the corporate charter or
by-laws of the Consenting Party or any provision of any material law, rule or
regulation, or any material order, writ, judgment, injunction, decree,
determination or award having applicability to the Consenting Party, (iii)
result in a breach of or constitute a default under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which the
Consenting Party is a party or by which it or its properties may be bound or
affected or (iv) result in, or require, the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest, charge or encumbrance
of any nature upon or with respect to any of the properties now owned or
hereafter acquired by the Consenting Party; and the Consenting Party is not in
violation, breach or default of any provision of the corporate charter or
by-laws of the Consenting Party or any provision of any material law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
having applicability to the Consenting Party or any agreement referred to above
in clause (iii) of this subsection (b), which violation could have a material
adverse effect on the ability of the Consenting Party to perform its obligations
under this Consent to Assignment or the Assigned Agreement.
(c) The Assigned Agreement and this Consent to Assignment have
been duly executed and delivered and each constitutes a valid and binding
obligation of the Consenting Party, enforceable in accordance with their terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting the enforcement of creditors' rights and general equitable principles.
(d) No consent or approval of, or other action by, or any
notice or filing with, any court or administrative or governmental body (except
those previously obtained and in full force and effect) is required in
connection with the execution and delivery of the Assigned Agreement or this
Consent to Assignment or the performance by the Consenting Party of its
obligations thereunder or hereunder. The Consenting Party has obtained or will
obtain all permits, licenses, approvals, consents, authorizations and
exemptions, if any, with respect to the performance of its obligations under the
Assigned Agreement and this Consent to Assignment required by applicable laws,
statutes, rules and regulations in effect as of the date hereof.
(e) The Consenting Party is not in default with respect to the
Assigned Agreement and has no knowledge, as of the date hereof, of any claims or
rights of set off by the Consenting Party or by any of its affiliates against
the Company. To the best of the Consenting Party's knowledge after due inquiry,
each other party to the Assigned Agreement have complied with all conditions
precedent to the respective obligations of such party to perform under the
Assigned Agreement.
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(f) There are no proceedings pending or, to the best of the
Consenting Party's knowledge after due inquiry, threatened against or affecting
the Consenting Party in any court or before any governmental authority or
arbitration board or tribunal (whether or not purportedly on behalf of the
Consenting Party) which may result in a material or adverse effect upon the
property, business, prospects, profits or condition (financial or otherwise) of
the Consenting Party, or the ability of the Consenting Party to perform its
obligations under, or which purports to affect the legality, validity or
enforceability of, the Assigned Agreement or this Consent to Assignment; and the
Consenting Party is not in default with respect to any order of any court,
governmental authority or arbitration board or tribunal.
(g) All representations, warranties and other statements made
by the Consenting Party in the Assigned Agreement were true and correct as of
the date when made and are true and correct as of the date of this Consent to
Assignment.
12. Binding Upon Successors. All agreements, covenants, conditions and
provisions of this Consent to Assignment shall be binding upon and inure to the
benefit of the successors and assigns of each of the parties hereto.
13. Captions. The captions or headings at the beginning of each Section
hereof are for the convenience of the parties hereto only and are not a part of
this Consent to Assignment.
14. Governing Law. (a) THIS CONSENT TO ASSIGNMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA (WITHOUT GIVING
EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW).
(b) Any legal action or proceeding with respect to this
Consent to Assignment and any action for enforcement of any judgment in respect
thereof may be brought in the courts of the Commonwealth of Pennsylvania or of
the United States of America for the Middle District of Pennsylvania, and, by
execution and delivery of this Consent to Assignment, each of the Consenting
Party and the Assignee hereby accepts for itself and in respect of its property,
generally and unconditionally, the non-exclusive jurisdiction of the aforesaid
courts and appellate courts from any appeal thereof. Each of the Consenting
Party and the Assignee hereby irrevocably designates, appoints and empowers CT
Corporation System 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 action or proceeding. If for any reason such designee, appointee and agent
shall cease to be available to act as such, the Assignee or the Consenting
Party, as applicable, 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 Assignee. Each of the Consenting Party and the Assignee 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 Consenting Party at its notice address
being 400 South Eighth Street, Lebanon, Pennsylvania, 17042, and to the Assignee
at the address set forth in Section 4. Each of the Consenting Party and the
Assignee 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
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connection with this Consent to Assignment brought in the courts referred to
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. Nothing herein shall affect the right of
the Assignee or any of their respective designees or assignees to serve process
in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Consenting Party in any other jurisdiction.
15. Amendment. This Consent to Assignment may be modified, amended or
rescinded only by a writing expressly referring to this Consent to Assignment
and signed by both the Consenting Party and the Assignee. The Assignee may
request the direction of the Senior Parties prior to signing any amendments
described herein.
16. Severability. Every provision of this Consent to Assignment is
intended to be severable. If any term or provision hereof is declared by a court
of competent jurisdiction to be illegal, invalid or unenforceable for any reason
whatsoever, such illegality, invalidity or unenforceability shall not affect the
other terms and provisions hereof, which terms and provisions shall remain
binding and enforceable, and to the extent possible all of such other provisions
shall remain in full force and effect.
17. Counterparts. This Consent to Assignment 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.
18. Authority to Take Specific Actions. Notwithstanding any provision
of this Consent to Assignment to the contrary, if an action by the Assignee is
authorized by the Assigned Agreement or by this Consent to Assignment, the
Consenting Party shall be obligated to recognize or follow instructions given by
a Senior Party or any of its respective designees or assignees, or any successor
or assign of the Assignee or any Senior Party, only if such person has provided
to the Consenting Party reasonable written documentation of its authority by or
on behalf of the Assignee to undertake the action which it is requesting or
directing, and a written certification to the Consenting Party that it is so
authorized to act.
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IN WITNESS WHEREOF, each of the Consenting Party and the Assignee has
duly executed this Consent to Assignment as of the date first above written.
CITY OF LEBANON AUTHORITY
By: /s/ David S. Etter
-----------------------
Name: David S. Etter
Title: Chairman
IBJ WHITEHALL BANK & TRUST COMPANY,
as COLLATERAL AGENT
By: /s/ Thomas McCutcheon
------------------------------------
Name: Thomas McCutcheon
Title: Assistant Vice President
REVIEWED AND CONSENTED TO:
AES IRONWOOD, L.L.C.
By: /s/ Patricia L. Rollin
-------------------------
Name: Patricia L. Rollin
Title: Vice President
<PAGE>
Exhibit 4.17
PROJECT PARTY
CONSENT TO ASSIGNMENT
THIS CONSENT TO ASSIGNMENT (this "Consent to Assignment") is entered
into as of June 1, 1999 by Pennsy Supply, Inc. (the "Consenting Party"), and IBJ
Whitehall Bank & Trust Company, as Collateral Agent (hereinafter, in such
capacity, together with any successors thereto in such capacity, referred to as
the "Assignee"), for the benefit of and on behalf of the Senior Parties defined
below.
A. AES Ironwood, L.L.C. (the "Company"), a Delaware limited liability
company, is providing for the development, construction, ownership and operation
of a nominal 705 MW (net) gas-fired combined cycle electric generating facility
and related equipment and facilities (the "Project") to be located in South
Lebanon Township, Lebanon County, Pennsylvania.
B. The Company intends to finance the development and construction of
the Project, in part, through the issuance, from time to time, of certain
securities (the "Securities") pursuant to a Trust Indenture, dated as of June 1,
1999 between the Company and IBJ Whitehall Bank & Trust Company, as trustee (the
"Trustee"), as it may be amended or supplemented from time to time (the
"Indenture").
C. In connection with the commencement of commercial operation of the
Project, the Company is required to deliver the Debt Service Reserve Letter of
Credit (the "DSR Letter of Credit"). Dresdner Bank AG, New York Branch, as
issuing bank, has agreed to issue the DSR Letter of Credit subject to the terms
and conditions contained in the DSR LOC Reimbursement Agreement, dated as of
June 1, 1999 (as amended, supplemented or modified and in effect from time to
time, the "DSR LOC Reimbursement Agreement"), among each of the banks and
financial institutions parties thereto and Dresdner Bank AG, New York Branch, as
issuing bank and as agent for such banks and financial institutions (in such
capacity as agent, and together with its successors and assigns, the "DSR LOC
Provider").
D. In connection with the Company's fulfillment of its obligations
under Section 19.2 of the Power Purchase Agreement, the Company may deliver the
Construction Period Letter of Credit (the "CP LOC"). Dresdner Bank AG, New York
Branch, as issuing bank, has agreed to issue the CP LOC subject to the terms and
conditions contained in the CP LOC Reimbursement Agreement, dated as of June 1,
1999 (as amended, supplemented or modified and in effect from time to time, the
"CP LOC Reimbursement Agreement"), among each of the banks and financial
institutions parties thereto and Dresdner Bank AG, New York Branch, as issuing
bank and as agent for such banks and financial institutions (in such capacity as
agent, and together with its successors and assigns, the "CP LOC Provider").
<PAGE>
E. The Company may finance certain working capital requirements of the
Project by entering into a working capital agreement with a financial
institution for the provision of credit to the Company (such financial
institution, the "Working Capital Provider").
F. All obligations of the Company under the Securities, the DSR LOC
Reimbursement Agreement, the CP LOC Reimbursement Agreement, the Collateral
Agency Agreement (defined below), and any working capital agreement
(collectively, the "Financing Documents") to the Trustee, the DSR LOC Provider,
the CP LOC Provider, the Collateral Agent, any Working Capital Provider, each
successor to any such person and each other person providing Senior Debt to the
Company who becomes a party to the Collateral Agency Agreement pursuant to its
terms (collectively, the "Senior Parties") will be secured by a certain
Mortgage, Security Agreement, Indenture, Pledge Agreement and Assignment of
Leases and Income, each between the Company and IBJ Whitehall Bank & Trust
Company (collectively, the "Security Documents").
G. The Collateral Agent, the Company, the DSR LOC Provider and the
Trustee entered into the Collateral Agency and Intercreditor Agreement (as
amended, supplemented or modified and in effect from time to time, the
"Collateral Agency Agreement") to set forth their mutual understanding with
respect to (a) the exercise of certain rights, remedies and options by the
respective parties thereto under the above described documents, (b) the priority
of their respective security interests created by the Security Documents, (c)
the application of project revenues and certain other monies and items and (d)
the appointment of the Collateral Agent as collateral agent.
H. The Company and the Consenting Party have entered into that certain
Agreement Relating to Real Estate dated October 22, 1998 and Easement and Right
of Access Agreement dated April 15, 1999, as amended from time to time,
(collectively the "Assigned Agreement") for the purposes therein set forth.
I. The Company has notified the Consenting Party that all of the
Company's right, title and interest in the Assigned Agreement is to be assigned
to the Collateral Agent as security pursuant to one or more of the Security
Documents.
J. It is a condition precedent to the extension of credit by the Senior
Parties that the Consenting Party execute and deliver this Consent to Assignment
for the benefit of the Senior Parties.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, and intending to be legally bound,
the parties hereto agree as follows:
1. Definitions. Capitalized terms used herein shall have the respective
meanings specified herein or, if not defined herein, as defined in the Assigned
Agreement.
2. Consent to Assignment. The Consenting Party hereby irrevocably
consents to the assignment of the Assigned Agreement by the Company to the
Assignee for the benefit of the Senior Parties as security, and the Consenting
Party shall continue performance under the Assigned Agreement in accordance with
its terms and the terms of this Consent to Assignment. Until all
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obligations under the Financing Documents have been performed and paid in full,
all obligations of the Consenting Party under the Assigned Agreement, subject to
the terms and conditions of the Assigned Agreement with respect to the rights of
the parties thereunder, shall inure to the benefit of the Assignee for the
benefit of the Senior Parties to the same extent as if the Assignee instead of
the Company were an original party to the Assigned Agreement.
3. No Defaults. The Consenting Party acknowledges and agrees that (a)
the Assigned Agreement is in full force and effect and there are no amendments,
modifications or supplements thereto, either oral or written, (b) the Consenting
Party has not assigned, transferred or hypothecated the Assigned Agreement or
any interest therein, (c) the Consenting Party has no knowledge of any default
by the Company in any respect of the performance of any provision of the
Assigned Agreement and no knowledge of any grounds for termination of the
Assigned Agreement by the Consenting Party, (d) none of the Company's rights
under the Assigned Agreement has been waived, (e) the assignment by the Company
of the Assigned Agreement to the Assignee, as security, and the acknowledgment
of and consent to such assignment by the Consenting Party, will not cause or
constitute a default under the Assigned Agreement or an event or condition which
would, with the giving of notice or lapse of time or both, constitute a default
under the Assigned Agreement, and (f) a foreclosure or other exercise of
remedies under any of the Security Documents or any sale thereunder by the
Assignee, any of the Senior Parties or any of their respective designees or
assignees, whether by judicial proceedings or under any power of sale contained
therein, or any conveyance from the Company to the Assignee, any of the Senior
Parties or any of their respective designees or assignees, in lieu thereof, if
made to a Permitted Assignee (only) in accordance with the terms and provisions
of the Assigned Agreement (a "Permitted Assignee") and provided such remedies do
not violate the terms of the Assigned Agreement, shall not require further
consent of the Consenting Party or cause or constitute a default under the
Assigned Agreement or an event or condition which would, with the giving of
notice or lapse of time or both, constitute a default under the Assigned
Agreement.
4. Notice of Company's Defaults and Termination. Anything in the
Assigned Agreement notwithstanding, for so long as any financing liabilities are
outstanding under the Financing Documents and until the same have been satisfied
in full, the Consenting Party shall not claim prevention of or interference with
performance of its obligations under the Assigned Agreement, nor shall the
Consenting Party exercise any right it may have under the Assigned Agreement, at
law or in equity, to cancel, suspend or terminate the Assigned Agreement, or any
of its obligations thereunder, as the result of any default or other action or
omission of the Company without first giving a copy of a notice of default to
the Assignee, such notice to be coupled with an opportunity to cure any such
default within forty-five (45) days from notice to the Assignee (or, with
respect to nonmonetary defaults or defaults the curing of which requires the
Assignee's possession of the Facility through foreclosure, such longer period of
time as may be necessary under the circumstances to cure such default or
complete such foreclosure, provided the Assignee, any of the Senior Parties, or
any of their respective assignees or designees is diligently pursuing such cure
or foreclosure), such cure period to commence upon delivery of such notice to
the Assignee, or, with respect to any defaults which are not susceptible of
being so corrected, to rectify to the Consenting Party's reasonable satisfaction
the effect upon the Consenting Party of such default by the Company within such
period. Such notice shall be in writing and shall be deemed to have been given
(a) when presented personally, (b) one business day after being deposited for
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overnight delivery with a nationally recognized overnight courier, such as
FedEx, (c) when received, if deposited in a regularly maintained receptacle for
the United States Postal Service, postage prepaid, registered or certified,
return receipt requested, addressed to the Assignee at the address indicated
below or such other address as the Assignee may have specified by written notice
delivered in accordance herewith), or (d) when transmitted by telecopy to the
number specified below and the receipt confirmed telephonically by recipient,
provided that such telecopy is then followed by a copy of such notice delivered
by a method specified in clause (a), (b) or (c) above.
IBJ Whitehall Bank & Trust Company, as Collateral Agent
One State Street
New York, New York 10004
Attention: Capital Markets Trust Services
Facsimile: 212-858-2952
Notwithstanding the foregoing or anything in the Assigned Agreement,
(a) with respect to Emergency Defaults only, the Assignee shall not be entitled
to any additional cure periods beyond the cure periods provided to the Company
under the Assigned Agreement; (b) the Consenting Party acknowledges that the
Consenting Party shall have no right to exercise any remedy for an Emergency
Default other than self-help and monetary damages; (c) the Consenting Party
agrees that it shall not unreasonably interfere with the operations of the
Project in exercising its self-help remedies; and (d) the Assignee may at any
time step in, in a commercially reasonable manner, to cure any Event of Default
whether or not the Consenting Party is exercising its self-help remedies with
respect thereto, and, upon the Assignee's assumption of the remedies being
exercised by the Consenting Party in a commercially reasonable manner, the
Consenting Party shall cease exercising self-help; provided, however, that, with
respect to an Event of Default relating to water pumping obligations, the
Assignee (or its Contractor) must meet the standards applicable to a Permitted
Assignee under Section 4(c) of the Assigned Agreement.
Failure of the Consenting Party to provide such notice to the Assignee
shall not constitute a breach of this Consent to Assignment, and the Assignee
agrees that the Consenting Party shall have no liability to the Assignee for
such failure whatsoever; however, no cancellation, suspension or termination of
the Assigned Agreement by the Consenting Party, or of any of the Consenting
Party's obligations thereunder by the Consenting Party, shall be binding upon
the Assignee or any of the Senior Parties without such notice and the lapse of
the applicable cure period. Any dispute that may arise under the Assigned
Agreement notwithstanding, the Consenting Party shall continue performance under
the Assigned Agreement and resolve any dispute without discontinuing such
performance until the lapse of the notice and applicable cure periods or
extension periods. The Assignee or any of the Senior Parties may, but shall be
under no obligation to, make any payment or perform any act required thereunder
to be made or performed by the Company, with the same effect as if made or
performed by the Company. If the Assignee or any of the Senior Parties fails to
cure or rectify the effect of a default under the Assigned Agreement within
forty-five (45) days from notice to the Assignee (or, with respect to
nonmonetary defaults or defaults the curing of which requires the Assignee's
possession of the Facility through foreclosure, such longer period of time as
may be necessary under the circumstances to cure such default or complete such
foreclosure, provided the Assignee, any of the Senior Parties, or any of their
respective assignees or designees is diligently pursuing such cure or such
foreclosure), whichever is longer, such cure period to
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<PAGE>
commence upon such notice to the Assignee, the Consenting Party shall have all
its rights and remedies with respect to such default as set forth in the
Assigned Agreement.
5. Payments to Revenue Account. The Consenting Party hereby agrees
that, so long as any notes, bonds, loans, letters of credit, commitments or
other obligations are outstanding under the Financing Documents and until the
same have been satisfied in full, all payments to be made by the Consenting
Party with respect to the Assigned Agreement shall be in lawful money of the
United States of America, in immediately available funds. The Company hereby
directs the Consenting Party to, and the Consenting Party hereby agrees to, make
all such payments with respect to the Assigned Agreement directly to the
Assignee at ABA No. 026007825, for credit to AES Ironwood, L.L.C., for further
credit to Account No. 630000041.2 (Revenue Account) Attention: Capital Markets
Trust Services, or to such other person and/or at such other address as the
Assignee may from time to time specify in writing to the Consenting Party. Any
such payment shall be deemed to be a payment by the Consenting Party to the
Company under the Assigned Agreement.
6. Protection of the Assignee. In the event that either (a) the
Company's interest in the Project shall be sold, assigned or otherwise
transferred to a Permitted Assignee pursuant to the exercise of any right, power
or remedy by the Assignee or pursuant to judicial proceedings, or (b) the
Company rejects all or a portion of the Assigned Agreement under Title 11,
United States Code, or other similar Federal or state statute and such rejection
is approved by the appropriate bankruptcy court or is otherwise effective
pursuant to such statute, and in either case (i) no funds payable under the
Assigned Agreement shall be due and payable to the Consenting Party, (ii) the
effect upon the Consenting Party of any default not susceptible of being
corrected shall have been rectified to the Consenting Party's reasonable
satisfaction, (iii) the Assigned Agreement shall have been validly terminated
pursuant to the terms of the Assigned Agreement by reason of a default or a
rejection by the Company or a trustee in bankruptcy under Title 11, United
States Code, or other similar Federal or state statute, and (iv) the Assignee or
any of the Senior Parties (or a designee or nominee) and shall be obligated to
cure, or shall have arranged for the curing, of any default susceptible of being
corrected by the Assignee or any of the Senior Parties or by a purchaser at any
judicial or non-judicial sale, provided the party actually curing the default is
a Permitted Assignee, the Consenting Party shall, promptly, and in no event
longer than ten (10) days after receipt of written request therefor, execute and
deliver an agreement to the Assignee, any of the Senior Parties or any of their
respective nominees, purchasers, assignees or transferees, as the case may be,
provided such party is a Permitted Assignee, for the remainder of the term of
the Assigned Agreement and with the same terms as are contained therein.
References in this Consent to Assignment to "Assigned Agreement" shall be deemed
also to include such new agreement.
7. Acknowledgement of the Assignee's Obligations and Rights. Neither
the Assignee nor any of the Senior Parties has any obligation hereunder to
extend credit to the Consenting Party or any contractor of the Consenting Party
at any time for any purpose. Neither the Assignee nor any of the Senior Parties
shall have any obligation to the Consenting Party under the Assigned Agreement
unless and until such time as such entity succeeds to the interest of the
Company under the Assigned Agreement pursuant to the Assignee's election to
exercise its rights hereunder. Upon the occurrence and during the continuance of
an event of default under any of the Security Documents, the Assignee or any of
the Senior Parties shall have the right to the extent authorized
5
<PAGE>
under the Assigned Agreement and the Security Documents, to (a) take possession
of the Project and operate the same, (b) sell or otherwise transfer their
interest in the Project if such purchaser at such sale is a Permitted Assignee,
and such purchaser shall succeed to the Assignee's or the Senior Parties' rights
hereunder, as the case may be, in accordance with the terms of the Assigned
Agreement and this Consent to Assignment and (c) exercise all rights of the
Company under the Assigned Agreement in accordance with the terms thereof.
Subject to the Assignee's compliance with the provisions of the Assigned
Agreement (if applicable) and the terms of this Consent to Assignment, the
Consenting Party shall cooperate with the Assignee and comply in all respects in
the Assignee's exercise of such rights. Without limiting the generality of the
foregoing, upon the occurrence and during the continuance of an event of default
under any of the Financing Documents, the Assignee, any of the Senior Parties or
any of their respective designees or assignees shall, in accordance with the
terms of the Assigned Agreement, have the full right and power to enforce
directly against the Consenting Party all obligations of the Consenting Party
under the Assigned Agreement and otherwise to exercise all remedies thereunder,
and to make all demands and give all notices and make all requests required or
permitted to be made by the Company under the Assigned Agreement. The Assignee,
any of the Senior Parties or any of their respective designees shall have the
right, but not the obligation, to perform any act, duty or obligation required
of the Company thereunder at any time; provided that nothing herein shall
require the Assignee, any of the Senior Parties or any of their respective
designees or assignees to cure any default of the Company under the Assigned
Agreement or to perform any act, duty or obligation of the Company under the
Assigned Agreement.
8. Refinancing. The Consenting Party hereby acknowledges that the
Company may from time to time obtain refinancing for the Project (including
privately or publicly placed bonds or notes), and the Consenting Party agrees
that it will promptly upon request execute in favor of the lenders providing
such refinancing a consent to assignment as requested by such lenders; provided
that the terms and conditions contained in such consent to assignment shall be
no less favorable to the Consenting Party than those terms and conditions
contained in this Consent to Assignment.
9. Representations. The Consenting Party represents and warrants to the
Assignee as follows:
(a) The Consenting Party is a corporation duly organized,
validly subsisting and in good standing under the laws of the Commonwealth of
Pennsylvania and is in good standing in all jurisdictions where necessary in
light of the business it conducts (including, without limitation, performance of
its obligations under the Assigned Agreement) and the properties it owns.
(b) The Consenting Party has the necessary corporate power,
corporate authority and legal right to execute, deliver and perform its
obligations under the Assigned Agreement and this Consent to Assignment, and the
execution and delivery by the Consenting Party of the Assigned Agreement and
this Consent to Assignment and the performance of its obligations thereunder and
hereunder have been duly authorized by all necessary corporate action and do not
and will not (i) require any consent or approval of the Consenting Party's board
of directors or any shareholder of the Consenting Party, (ii) violate any
provision of the corporate charter or by-laws of the Consenting Party or any
provision of any material law, rule or regulation, or any material order, writ,
judgment, injunction, decree, determination or award having applicability to the
Consenting
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Party, (iii) result in a breach of or constitute a default under any indenture
or loan or credit agreement or any other agreement, lease or instrument to which
the Consenting Party is a party or by which it or its properties may be bound or
affected or (iv) result in, or require, the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest, charge or encumbrance
of any nature upon or with respect to any of the properties now owned or
hereafter acquired by the Consenting Party; and the Consenting Party is not in
violation, breach or default of any provision of the corporate charter or
by-laws of the Consenting Party or any provision of any material law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
having applicability to the Consenting Party or any agreement referred to above
in clause (iii) of this subsection (b), which violation could have a material
adverse effect on the ability of the Consenting Party to perform its obligations
under this Consent to Assignment or the Assigned Agreement.
(c) The Assigned Agreement and this Consent to Assignment have
been duly executed and delivered and each constitutes a valid and binding
obligation of the Consenting Party, enforceable in accordance with its terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization or
other similar laws affecting the enforcement of creditors' rights and general
equitable principles.
(d) No consent or approval of, or other action by, or any
notice or filing with, any court or administrative or governmental body (except
those previously obtained and in full force and effect) is required in
connection with the execution and delivery of the Assigned Agreement or this
Consent to Assignment or the performance by the Consenting Party of its
obligations thereunder or hereunder. The Consenting Party has obtained all
permits, licenses, approvals, consents, authorizations and exemptions, if any,
with respect to the performance of its obligations under the Assigned Agreement
and this Consent to Assignment required by applicable laws, statutes, rules and
regulations in effect as of the date hereof.
(e) The Consenting Party is not in default with respect to the
Assigned Agreement and has no knowledge, as of the date hereof, of any claims or
rights of set-off by the Consenting Party or by any of its affiliates against
the Company.
(f) There are no proceedings pending or, to the best of the
Consenting Party's knowledge after due inquiry, threatened against or affecting
the Consenting Party in any court or before any governmental authority or
arbitration board or tribunal (whether or not purportedly on behalf of the
Consenting Party) which may result in a material or adverse effect upon the
property, business, prospects, profits or condition (financial or otherwise) of
the Consenting Party, or the ability of the Consenting Party to perform its
obligations under, or which purports to affect the legality, validity or
enforceability of, the Assigned Agreement or this Consent to Assignment; and the
Consenting Party is not in default with respect to any order of any court,
governmental authority or arbitration board or tribunal.
10. Binding Upon Successors. All agreements, covenants, conditions and
provisions of this Consent to Assignment shall be binding upon and inure to the
benefit of the successors and assigns of each of the parties hereto.
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11. Captions. The captions or headings at the beginning of each Section
hereof are for the convenience of the parties hereto only and are not a part of
this Consent to Assignment.
12. Governing Law. In accordance with New York General Obligations Law
Section 5-1401, this Consent to Assignment shall be governed by and construed in
accordance with the internal laws of the State of New York, provided, that the
parties agree that any interpretation of the Assigned Agreement shall be in
accordance with the laws of the Commonwealth of Pennsylvania.
13. Amendment. This Consent to Assignment may be modified, amended or
rescinded only by a writing expressly referring to this Consent to Assignment
and signed by both the Consenting Party and the Assignee. The Assignee may
request the direction of the Senior Parties prior to signing any amendments
described herein.
14. Severability. Every provision of this Consent to Assignment is
intended to be severable. If any term or provision hereof is declared by a court
of competent jurisdiction to be illegal, invalid or unenforceable for any reason
whatsoever, such illegality, invalidity or unenforceability shall not affect the
other terms and provisions hereof, which terms and provisions shall remain
binding and enforceable, and to the extent possible all of such other provisions
shall remain in full force and effect.
15. Counterparts. This Consent to Assignment 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.
16. Authority to Take Specific Actions. Notwithstanding any provision
of this Consent to Assignment to the contrary, if an action by the Assignee is
authorized by the Assigned Agreement or by this Consent to Assignment, the
Consenting Party shall be obligated to recognize or follow instructions given by
a Senior Party or any of its respective designees or assignees, or any successor
or assign of Assignee or any Senior Party, only if such person has provided to
the Consenting Party reasonable written documentation of its authority by or on
behalf of the Assignee to undertake the action which it is requesting or
directing, and a written certification to the Consenting Party that it is so
authorized to act.
8
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IN WITNESS WHEREOF, each of the Consenting Party and the Assignee has
duly executed this Consent to Assignment as of the date first above written.
PENNSY SUPPLY, INC.
By: /s/ Harry G. Lake, Jr.
--------------------------------
Name: Harry G. Lake, Jr.
Title: Sr. VP Sales & Marketing
IBJ WHITEHALL BANK & TRUST COMPANY,
as COLLATERAL AGENT
By: /s/ Thomas McCutcheon
------------------------------------
Name: Thomas McCutcheon
Title: Assistant Vice President
REVIEWED AND CONSENTED TO:
AES IRONWOOD, L.L.C.
By: /s/ Patricia L. Rollin
-------------------------
Name: Patricia L. Rollin
Title: Vice President
9
<PAGE>
Exhibit 4.18
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement, dated as of June 25, 1999
(this "Agreement"), is between AES Ironwood, Inc., a Delaware corporation (the
"Assignor"), having its principal office at 829 Cumberland Street, Lebanon,
Pennsylvania 17042, and AES Ironwood, L.L.C., a Delaware limited liability
company (the "Assignee"), having its principal office at 1001 North 19th Street,
Arlington, Virginia 22209.
W I T N E S S E T H:
WHEREAS, the Assignor is party to that certain Agreement for
Engineering, Procurement and Construction Services, dated as of September 23,
1998 (the "EPC Contract"), with Siemens Westinghouse Power Corporation;
WHEREAS, the Assignor desires to assign to the Assignee, and the
Assignee desires to assume, all of the Assignor's right, title and interest in,
to and under the EPC Contract.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Assignor and the
Assignee hereby act and agree as follows:
1. Assignment. The Assignor hereby conveys, assigns and transfers to
the Assignee and its successors and assigns all of the Assignor's right, title
and interest in, to and under the EPC Contract.
2. Assumption. The Assignee hereby accepts the foregoing assignment,
transfer and conveyance of the Assignor's right, title and interest in, to and
under the EPC Contract, and the Assignee hereby agrees and confirms that it
shall be bound by all the terms of, and undertake, assume and accept all of the
rights, obligations and liabilities of, the Assignor under the EPC Contract
whether arising before, on or after the date of this Agreement.
3. Release and Waiver. The Assignee hereby releases and forever
discharges the Assignor from all claims and liabilities arising out the EPC
Contract, and the Assignee hereby waives any and all claims it may have against
the Assignor now existing or hereafter arising out of the EPC Contract.
4. Counterparts. This Agreement may be executed in any number of
counterparts, and each counterpart hereof shall be deemed to be an original
instrument, but all such counterparts shall constitute but one assignment.
5. Further Assurances. The Assignor agrees to take all such further
reasonable actions and execute and deliver all such further documents as are
necessary to effectuate the purposes of this Agreement.
<PAGE>
6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York except any such laws that
would direct the application of the law of another jurisdiction.
7. Successors and Assigns. This Agreement shall bind the Assignor and
its respective successors and assigns and inure to the benefit of the Assignee
and its successors and assigns.
8. Descriptive Headings. The descriptive headings of the several
paragraphs of this Agreement are for convenience only and shall not be deemed to
affect the meaning or construction of any of the provisions hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
2
<PAGE>
IN WITNESS WHEREOF, the Assignor and the Assignee have executed this
Agreement by their duly authorized representatives as of the date and year first
above written.
ASSIGNOR:
AES IRONWOOD, INC.,
By: /s/ Patricia L. Rollin
-------------------------------
Name: Patricia L. Rollin
Title: Vice President
ASSIGNEE:
AES IRONWOOD, L.L.C.
By: /s/ Patricia L. Rollin
-------------------------------
Name: Patricia L. Rollin
Title: Vice President
[ASSIGNMENT AND ASSUMPTION AGREEMENT]
<PAGE>
CONSENT, ACKNOWLEDGMENT AND AGREEMENT:
Siemens Westinghouse Power
Corporation hereby (i) consents to the
assignment contemplated by this
Agreement, (ii) acknowledges the
assumption contemplated by this
Agreement and (iii) agrees that the
Assignor shall have no liability for any
claim now existing or hereafter arising
under the EPC Contract.
SIEMENS WESTINGHOUSE POWER CORPORATION
By: /s/ James Mackey
-----------------------------
Name: James Mackey
Title: Director Project Management
<PAGE>
Exhibit 4.19
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement, dated as of June 25, 1999
(this "Agreement"), is between AES Ironwood, Inc., a Delaware corporation (the
"Assignor"), having its principal office at 829 Cumberland Street, Lebanon,
Pennsylvania 17042, and AES Ironwood, L.L.C., a Delaware limited liability
company (the "Assignee"), having its principal office at 1001 North 19th Street,
Arlington, Virginia 22209.
W I T N E S S E T H:
WHEREAS, the Assignor is party to that certain Maintenance Program
Parts, Shop Repairs and Scheduled Outage TFA Services Contract, dated as of
September 23, 1998 (the "Maintenance Services Contract"), with Siemens
Westinghouse Power Corporation;
WHEREAS, the Assignor desires to assign to the Assignee, and the
Assignee desires to assume, all of the Assignor's right, title and interest in,
to and under the Maintenance Services Contract.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Assignor and the
Assignee hereby act and agree as follows:
1. Assignment. The Assignor hereby conveys, assigns and transfers to
the Assignee and its successors and assigns all of the Assignor's right, title
and interest in, to and under the Maintenance Services Contract.
2. Assumption. The Assignee hereby accepts the foregoing assignment,
transfer and conveyance of the Assignor's right, title and interest in, to and
under the Maintenance Services Contract, and the Assignee hereby agrees and
confirms that it shall be bound by all the terms of, and undertake, assume and
accept all of the rights, obligations and liabilities of, the Assignor under the
Maintenance Services Contract whether arising before, on or after the date of
this Agreement.
3. Release and Waiver. The Assignee hereby releases and forever
discharges the Assignor from all claims and liabilities arising out the
Maintenance Services Contract, and the Assignee hereby waives any and all claims
it may have against the Assignor now existing or hereafter arising out of the
Maintenance Services Contract.
4. Counterparts. This Agreement may be executed in any number of
counterparts, and each counterpart hereof shall be deemed to be an original
instrument, but all such counterparts shall constitute but one assignment.
5. Further Assurances. The Assignor agrees to take all such further
reasonable actions and execute and deliver all such further documents as are
necessary to effectuate the purposes of this Agreement.
<PAGE>
6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York except any such laws that
would direct the application of the law of another jurisdiction.
7. Successors and Assigns. This Agreement shall bind the Assignor and
its respective successors and assigns and inure to the benefit of the Assignee
and its successors and assigns.
8. Descriptive Headings. The descriptive headings of the several
paragraphs of this Agreement are for convenience only and shall not be deemed to
affect the meaning or construction of any of the provisions hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
2
<PAGE>
IN WITNESS WHEREOF, the Assignor and the Assignee have executed this
Agreement by their duly authorized representatives as of the date and year first
above written.
ASSIGNOR:
AES IRONWOOD, INC.,
By: /s/ Patricia L. Rollin
--------------------------
Name: Patricia L. Rollin
Title: Vice President
ASSIGNEE:
AES IRONWOOD, L.L.C.
By: /s/ Patricia L. Rollin
--------------------------
Name: Patricia L. Rollin
Title: Vice President
[ASSIGNMENT AND ASSUMPTION AGREEMENT]
<PAGE>
CONSENT, ACKNOWLEDGMENT AND AGREEMENT:
- --------------------------------------
Siemens Westinghouse Power Corporation hereby (i) consents to the
assignment contemplated by this Agreement, (ii) acknowledges the assumption
contemplated by this Agreement and (iii) agrees that the Assignor shall have no
liability for any claim now existing or hereafter arising under the Maintenance
Services Contract.
SIEMENS WESTINGHOUSE POWER CORPORATION
By: /s/ James Mackey
---------------------
Name: James Mackey
Title: Director Project Management
<PAGE>
Exhibit 10.1
GUARANTY BY
THE WILLIAMS COMPANIES, INC.
GUARANTY (this "Guaranty"), dated as of June 18, 1999, by The Williams
Companies, Inc., a Delaware corporation (the "Guarantor"), in favor of AES
Ironwood, L.L.C., a Delaware limited liability company ("Guaranteed Party"),
pursuant to Section 19.3 of that certain Amended and Restated Power Purchase
Agreement, dated as of February 5, 1999, by and between Guaranteed Party and
Williams Energy Marketing & Trading Company, a Delaware corporation and a
subsidiary of Guarantor (the "Company"), as modified or supplemented from time
to time (the "PPA").
RECITALS
WHEREAS, Guaranteed Party has agreed to enter into the PPA in reliance
upon the Guarantor's agreement, pursuant to the terms and conditions set forth
below, to provide this Guaranty to Guaranteed Party; and
WHEREAS, Guarantor is willing to provide this Guaranty to Guaranteed
Party, on the terms and conditions set forth below, as an inducement to
Guaranteed Party to enter into the PPA with the Company.
NOW, THEREFORE, in consideration of the above premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be bound hereby, the Guarantor agrees as follows:
1. Obligations of Guarantor. Subject to the Guaranty Cap set forth in
Section 2 of this Guaranty, the Guarantor unconditionally and irrevocably
guaranties, as primary obligor and not merely as surety, to and for the benefit
of Guaranteed Party, the prompt payment and performance when due of all present
and future obligations (i) of the Company to make Total Fixed Payments pursuant
to, and as such term is defined in, the PPA and (ii) to pay damages arising
under the PPA in respect of the Company's obligation to make Total Fixed
Payments under the PPA (including damages related to the loss by Guaranteed
Party of the Total Fixed Payments arising from any breach by the Company of the
PPA or a termination of the PPA for cause by Guaranteed Party) together with any
and all reasonable expenses (including reasonable attorneys' fees and expenses)
incurred by Guaranteed Party in enforcing this Guaranty (the obligations
referred to in clauses (i) and (ii) collectively and individually, the
"Obligations"). Subject to the Guaranty Cap set forth in Section 2 of this
Guaranty, the Guarantor agrees, that upon the failure of the Company to pay any
of the Obligations when they become due, the Guarantor will pay, or cause to be
paid, to Guaranteed Party any and all such unpaid Obligations.
2. Maximum Guaranteed Amount.
(a) The aggregate liability of the Guarantor under this Guaranty and
Guaranteed Party's right of recovery hereunder is limited to a total aggregate
amount of Four Hundred Eight Million, Four Hundred Thirty Two Thousand, Eight
Hundred Dollars ($408,432,800), as reduced from time to time as provided for in
the following paragraph (the "Guaranty Cap").
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<PAGE>
(b) The Guaranty Cap shall in each semi-annual period commencing on
January 1 of the first full calendar year after the Commercial Operation Date
(as such term is defined in the PPA), be reduced by the sum of (i) the
proportion of the amount set forth in Exhibit A hereto and corresponding to such
semiannual period that the amount of Fixed Payments for such semiannual period
actually paid by or on behalf of the Company under the PPA (other than pursuant
to clause (b)(ii) hereof) bears to the amount of Fixed Payments due and payable
for such semiannual period and (ii) without duplication of amounts referred to
in clause (i) of this paragraph (b), the amount paid by the Guarantor in such
semiannual period pursuant to the demand of or legal action by Guaranteed Party.
Each reduction in the Guaranty Cap shall be automatic and without further action
on the part of any Person (as such term is defined in the PPA).
3. Nature of Obligations. The Guarantor guaranties that the Obligations
shall be paid strictly in accordance with the terms of the PPA, regardless of
any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of Guaranteed Party with respect
thereto. The duties of the Guarantor under this Guaranty are independent of the
Obligations, and a separate action or actions may be brought and prosecuted
against the Guarantor to enforce this Guaranty, irrespective of whether any
action is brought against the Company or whether the Company is joined in any
such action or actions. Guaranteed Party shall not be obligated to file any
claim relating to the Obligations if the Company becomes subject to a
bankruptcy, reorganization or similar proceeding and neither the failure of
Guaranteed Party to so file, nor the existence of any such proceeding, shall
affect the Guarantor's obligations hereunder. The liability of the Guarantor
under this Guaranty as specified in Section 1 of this Guaranty shall, to the
fullest extent permitted by law, be absolute and unconditional irrespective of:
(i) 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 departure from the PPA,
including, without limitation, any increase in the Obligations;
provided, however, no action taken pursuant to this Section 3(i) shall
be construed to extend the term of this Guaranty or increase the amount
of the Guaranty Cap;
(ii) any manner of sale or other disposition of assets of the
Company or any of its Affiliates (as such term is defined in the PPA);
or
(iii) any change, restructuring or termination of the
structure or existence of the Company or any of its Affiliates.
The Guarantor shall not contest the amount, Guaranteed Party's right to
collect, or Guaranteed Party's collection of, the Obligations (as they may be
revised from time to time as provided for herein) in any future proceeding
including, without limitation, civil, criminal, regulatory, administrative,
judicial, equitable, or appellate, on the basis that the Obligations constitute
a penalty, are or will result in a forfeiture, or are otherwise unlawful;
provided, however, that, notwithstanding anything to the contrary contained
herein, the Guarantor may assert that Guaranteed Party's actual damages are less
than the Obligations, contest liability or assert any other claim or defense
that the Company could assert, except as expressly limited
2
<PAGE>
herein, so long as the Guarantor does not duplicate or reassert any claims or
initiate any proceedings that were resolved or concluded previously by the
Company.
The Guarantor agrees that the obligations of the Guarantor set forth in
this Guaranty shall be direct obligations of the Guarantor, and such obligations
shall be absolute and unconditional and shall not be subject to any
counterclaim, set-off, deduction, diminution, abatement, recoupment, suspension,
deferment, reduction or defense (other than full and strict compliance by the
Guarantor with its obligations hereunder) based upon any claim the Guarantor or
any other Person (as such term is defined in the PPA) may have against
Guaranteed Party or the Company. This Guaranty shall continue to be effective or
be reinstated, as the case may be, if at any time any payment of any of the
Obligations is rescinded or must otherwise be returned upon the insolvency,
bankruptcy or reorganization of the Company or otherwise, all as though such
payment had not been made.
4. Waiver. The Guarantor hereby waives demand, promptness, diligence,
presentment, notice of acceptance, notice of protest for non-payment and any
other notice or similar action with respect to any of the Obligations and this
Guaranty and any requirement that Guaranteed Party exhaust any right or take any
action against the Company or any other Person.
5. Subrogation. The Guarantor shall not exercise any rights which it
may acquire by way of subrogation under this Guaranty, by any payment made
hereunder or otherwise, until all Obligations and all other amounts payable
under this Guaranty shall have been paid in full to Guaranteed Party. If any
amount shall be paid to the Guarantor on account of any subrogation rights at
any time prior to the payment in full of the Obligations and all other amounts
payable under this Guaranty, such amount(s) shall be paid immediately to
Guaranteed Party to be credited and applied to the Obligations, whether matured
or unmatured, in accordance with the terms hereof and the PPA. Upon full payment
of the Obligations and all other amounts payable under this Guaranty, Guarantor
shall be subrogated to the rights of Guaranteed Party, and Guaranteed Party
shall take all such reasonable actions, at the Guarantor's sole expense, as
Guarantor shall reasonably request to effect such subrogation rights.
6. Certain Rights and Powers of Guaranteed Party. Guaranteed Party
shall have all of the rights and remedies available under applicable law and may
proceed by appropriate court action to enforce the terms hereof and to recover
damages for the breach hereof. Each and every remedy of Guaranteed Party shall,
to the extent permitted by law, be cumulative and shall be in addition to any
other remedy now or hereafter existing at law or in equity. At the option of
Guaranteed Party and upon notice to the Guarantor, the Guarantor may be joined
in any action or proceeding commenced by Guaranteed Party against the Company in
respect of any Obligation, and recovery may be had against the Guarantor in such
action or proceeding or in any independent action or proceeding against the
Guarantor, without any requirement that Guaranteed Party first assert, prosecute
or exhaust any remedy or claim against the Company.
7. Representations and Warranties. The Guarantor represents and
warrants to Guaranteed Party as follows:
3
<PAGE>
(a) Organization and Good Standing. The Guarantor is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and each jurisdiction in which it currently conducts its business. The
Guarantor has all requisite corporate power and authority to carry on its
business at it is now conducted and as contemplated by this Guaranty, and to
enter into and perform its obligations hereunder.
(b) Due Authorization; No Conflicts. The execution, delivery and
performance by the Guarantor of the Guaranty has been duly and effectively
authorized by all necessary corporate action of the Guarantor. No other
corporate proceedings are necessary to authorize the execution and delivery by
the Guarantor of this Guaranty; and this Guaranty is the valid and binding
obligation of Guarantor, enforceable in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency or
similar laws from time to time in effect that affect creditors' rights generally
or by general principles of equity. Neither the execution and delivery of this
Guaranty nor compliance by the Guarantor with any of the provisions hereof will
(i) violate, or conflict with, or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or laps of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in the creation of any lien
upon any of the properties or assets of the Guarantor under any of the terms,
conditions or provisions of, the Certificate of Incorporation or By-Laws of the
Guarantor in effect on the date of this Guaranty (hereinafter, the "Effective
Date") or any agreement or other instrument or obligation to which the Guarantor
is a party at the Effective Date, or by which the Guarantor or any of its
properties or assets or may be bound or affected as of the Effective Date, or
(ii) violate any order, writ, injunction decree, arbitration award, statute,
rule or regulation applicable at the Effective Date to the Guarantor or any of
its properties or assets.
(c) No Consent Required. No permit, authorization, consent, approval,
waiver, exception, variance, ruling, order decree, exemption, filing, recording,
registration, notice or declaration (collectively, "Governmental Approval"), is
required or to be made on the Guarantor's behalf with any federal, state,
county, municipal, regional, local, territorial or other governmental
department, regulatory body, commission, board, bureau, agency, taxing authority
or other instrumentality (collectively, "Governmental Authority") to authorize
the execution and delivery of this Guaranty or the taking of any future action
contemplated hereby, except for those Governmental Approvals (i) which have
already been obtained or (ii) the failure of which to obtain would not have an
adverse effect on the ability of the Guarantor to perform and satisfy its
obligations hereunder.
(d) No Default under Other Agreements. The Guarantor is not in default,
and no condition exists that with notice or lapse of time or both would
constitute a default, under any mortgage, deed of trust, indenture or other
instrument or agreement to which it is a party or by which it or any of its
properties or assets may be bound, that would have a material adverse effect on
the Guarantor's ability to perform under this Guaranty; and the Guarantor is not
in violation of any federal, state, or local rules, ordinances, judgments,
decrees, injunctions, writs, interpretations, licenses and permits or orders of
any court, arbitrator (collectively, "Requirements of Law"), or Governmental
Authority that could have a material adverse effect on the Guarantor's ability
to perform under this Guaranty.
4
<PAGE>
(e) Litigation. There is no litigation, proceeding, arbitration or
government investigation pending or, so far as known to the Guarantor,
threatened with respect to or otherwise relating to the Guarantor which if
adversely determined could, in any one case or in the aggregate, have a material
adverse effect on the ability of the Guarantor to comply with its obligations
under this Guaranty.
(f) Compliance with Law. (i) The Guarantor has complied in all material
respects with all Requirements of Law relating to this Guaranty, the Guarantor
has received no written notice to the effect that, or otherwise been advised in
writing that, it is not in compliance with any requirement of law or
governmental approval relating to this Guaranty, and the Guarantor has no reason
to believe that any currently existing circumstances are likely to result in
violations by the Guarantor of any such requirement of law which could in any
one case or in the aggregate, have a material adverse effect on the ability of
the Guarantor to perform under this Guaranty; and (ii) to the best of the
knowledge of the Guarantor, there is not now pending any proceeding, hearing or
investigation with respect to the adoption of amendments or modifications to any
existing requirement of law or governmental approval with respect to such
matters which, if adopted, would have a material adverse effect on the ability
of the Guarantor to comply with its obligations under the Guaranty.
8. Covenants. The Guarantor covenants and agrees that, so long as any
part of the Obligations shall remain unpaid, the Guarantor shall:
(a) Performance and Compliance with Other Agreements. Perform and
comply with each of the material provisions of each material indenture, credit
agreement, contract or other agreement by which the Guarantor is bound,
non-performance or non-compliance with which would have a material adverse
effect on its ability to perform its obligations hereunder, except material
contracts or other agreements being contested in good faith.
(b) Preservation of Corporate Existence, Etc. Preserve and maintain its
corporate existence and preserve its material rights, franchises and privileges
to conduct its business substantially as conducted on the date hereof.
(c) Compliance with Laws, Etc. Comply with all Requirements of Law and
Governmental Approvals, non-compliance with which would have a material adverse
effect on its ability to perform its obligations herein, except laws, rules,
regulations and orders being contested in good faith.
(d) Notice of Breach. Provide, as soon as possible and in any event
within three (3) business days after the occurrence of any default or breach of
the obligations applicable to the Guarantor hereunder, a statement of the Chief
Financial Officer or Vice-President and Treasurer of the Guarantor setting forth
details of the circumstances leading to such breach or default hereof and the
action which the Guarantor proposes to take with respect thereto.
(e) Mergers, Etc. Not merge with any person, corporation, partnership,
or other entity unless: (i) the surviving and resulting entity agrees in writing
to be bound hereby to the same
5
<PAGE>
extent as the Guarantor, and (ii) immediately after giving effect thereto, no
event of default or breach of this Guaranty shall have occurred and be
continuing.
9. No Waiver. No failure on the part of Guaranteed Party to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right.
10. Continuing Guaranty. This Guaranty is a continuing guaranty and
shall (i) remain in full force and effect until the payment in full of all
amounts payable under this Guaranty, (ii) be binding upon the Guarantor, its
successors and assigns, and (iii) inure to the benefit of, and be enforceable
by, Guaranteed Party and its successors, transferees and assigns.
11. Waiver of Notices. The Guarantor hereby unconditionally and
irrevocably waives all notices to and demands upon the Company or the Guarantor
and all other formalities, the omission of any of which or delay in performance
of which, might, but for the provisions of this paragraph, by rule of law, under
equitable principles or otherwise, constitute grounds for relieving or
discharging the Guarantor in whole or in part from its obligations hereunder.
12. No Consequential Damages. Neither Party shall be liable to the
other under this Guaranty or otherwise for any exemplary, consequential,
special, or punitive losses or damages that may be incurred by either Party as a
result of their execution of and performance under this Guaranty.
13. Further Assurances. The Guarantor, at its sole cost and expense,
shall cause to be promptly and duly taken, executed, acknowledged and delivered,
such further documents and instruments as Guaranteed Party may from time to time
reasonably request in order to carry-out more effectively the intent and
purposes of this Guaranty.
14. Severability. If any provision of this Guaranty shall be held or
deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the
same shall not affect any other provision or provisions herein contained or
render the same invalid, inoperative or unenforceable to any extent whatsoever.
15. Counterparts; Effectiveness. This Guaranty may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument. The effective
date of this Guaranty for all purposes shall be the date specified on page one
(1) above.
16. Amendment; Waiver; Requirement of Writing. This Guaranty cannot be
amended, changed, modified, released or discharged except by a writing signed by
the party against whom enforcement of the amendment, change, modification or
waiver is sought.
17. Address for Notices. Any notice, request, consent, waiver or other
communication required or permitted hereunder shall be effective only if it is
in writing and personally delivered or sent by certified or registered mail,
postage prepaid, or by nationally recognized overnight courier, addressed as set
forth below:
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<PAGE>
If to Guaranteed Party:
The AES Corporation
1001 North 19th Street
Arlington, VA 22209
Attention: General Counsel
Telephone: (703) 522-1315
Facsimile: (703) 528-4510
If to Guarantor:
The Williams Companies, Inc.
One Williams Center
Tulsa, OK 74172
Attention: Treasurer
Telephone: (918) 573-5551
Facsimile: (918) 573-2065
or to such other person or address as the addressee may have specified in a
notice duly given to the sender as provided herein. Such notice or communication
shall be deemed to have been given as of the date received by the recipient
thereof.
18. Governing Law. This Guaranty shall be construed in accordance with
and governed by the laws of the State of New York without regard to the conflict
of laws provisions of such laws.
19. Submission to Jurisdiction. Each of Guaranteed Party and the
Guarantor hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Guaranty, or for recognition and enforcement of any
judgment in respect thereof, to the exclusive general jurisdiction of the courts
of the State of New York, the courts of the United States of the Southern
District of New York, and appellate courts with jurisdiction over any appeals
therefrom;
(b) consents and agrees that any such action or proceeding may be
brought in and only in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(c) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to its address set forth
in Section 17 of this Guaranty, or at such other address of which the other
party shall have been notified pursuant thereto; and
(d) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law.
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<PAGE>
20. Assignment. This Guaranty may be assigned by the Guarantor only
with prior written consent of Guaranteed Party, which consent shall not be
unreasonably withheld. Guaranteed Party may assign this Guaranty only as
permitted under the PPA with respect to assignments by Guaranteed Party of its
rights thereunder. This Guaranty shall be binding upon, and inure to the benefit
of, the parties hereto and their respective successors and permitted assigns.
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8
<PAGE>
IN WITNESS WHEREOF, the Guarantor and Guaranteed Party have each caused
this Guaranty to be executed on its behalf by its duly authorized office as of
the date shown above.
THE WILLIAMS COMPANIES, INC.
as Guarantor
[seal] By: /s/ James G. Ivey
---------------------
Name: James G. Ivey
Title: Tresurer
ACCEPTED AND ACKNOWLEDGED:
AES IRONWOOD, L.L.C.
By: /s/ Patricia L. Rollin
------------------------
Name: Patricia L. Rollin
Title: Vice President
<PAGE>
EXHIBIT A
AES Ironwood Project
The Williams Companies, Inc.
Guaranty Cap Reduction Schedule
At end At end
Year of May of November
---- ------ -----------
2001 - -
2002 $987,200 $987,200
2003 $2,375,500 $2,375,500
2004 $3,177,600 $3,177,600
2005 $3,516,900 $3,516,900
2006 $3,578,600 $3,578,600
2007 $4,565,800 $4,695,600
2008 $5,676,400 $5,676,400
2009 $4,812,600 $4,812,600
2010 $5,028,600 $5,028,600
2011 $6,355,100 $6,355,100
2012 $4,689,200 $4,689,200
2013 $6,433,400 $6,105,300
2014 $7,959,300 $7,959,300
2015 $8,487,300 $7,650,800
2016 $8,431,900 $8,567,100
2017 $9,039,100 $9,039,100
2018 $6,231,700 $6,231,700
2019 $8,297,000 $7,664,200
2020 $10,026,300 $12,223,600
2021 $10,180,500 $7,404,000
2022 $9,443,900 $8,788,000
Exhibit A-1
<PAGE>
Exhibit 10.4
GUARANTY
GUARANTY, made effective as of September 23, 1998, by SIEMENS
CORPORATION, a corporation organized and existing under the laws of Delaware
("Guarantor"), in favor of AES IRONWOOD, INC., a Delaware corporation ("Owner")
or its AES Ironwood L.L.C. assignee.
WHEREAS, Owner wishes to have engineered, designed, procured,
constructed, equipped, commissioned and tested a combined-cycle electric
generating facility with a nominal electric generating capacity of 700 megawatts
(net) to be located in Lebanon, Pennsylvania (such facility and the construction
thereof, as more fully defined in the EPC Agreement referred to below, the
"Project");
WHEREAS, concurrently with the execution and delivery of this
Guaranty, Owner has entered into that certain Agreement for Engineering,
Procurement and Construction Services, of even date herewith, with Siemens
Westinghouse Power Corporation, a wholly-owned subsidiary of Guarantor
("Contractor") (as such Agreement may be amended, supplemented or modified from
time to time, the "EPC Agreement");
WHEREAS, Guarantor owns one hundred percent (100%) of the
capital stock of Contractor and does and will continue to obtain substantial
benefits as a result of the EPC Agreement;
WHEREAS, in order to induce Owner to enter into the EPC
Agreement, Contractor has agreed that it would cause Guarantor to execute and
deliver to Owner this Guaranty;
NOW, THEREFORE, in consideration of Owner's entering into the
EPC Agreement, the foregoing premises, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Guarantor, intending to be legally bound, hereby agrees as follows:
SECTION 1
Definitions
Unless otherwise defined herein, capitalized terms used in
this Guaranty shall have the respective meanings assigned thereto in the EPC
Agreement.
<PAGE>
SECTION 2
Guaranty
Guarantor hereby irrevocably and unconditionally guarantees to
Owner, as a primary obligor and not as a surety, the punctual performance and
payment in full of all obligations of Contractor under the EPC Agreement in
accordance with the terms and conditions thereof (subject to any rights and
defenses of Contractor thereunder, other than any rights and defenses arising
out of the matters described in Section 4 hereof) and agrees that if for any
reason whatsoever Contractor shall fail duly, punctually and fully to perform or
pay any such obligation under the EPC Agreement, Guarantor shall, upon receipt
of written notice from Owner of such failure, immediately perform or pay each
and every such obligation, or cause each such obligation to be performed or
paid, without regard to any exercise or nonexercise by Owner of any right,
remedy, power or privilege under or in respect of the EPC Agreement against
Contractor or under or in respect of any other guaranty or security relating
thereto. In addition, Guarantor agrees to reimburse Owner on demand for any and
all reasonable expenses (including, without limitation, attorneys' fees and
disbursements) incurred by Owner in enforcing or attempting to enforce any
rights under this Guaranty.
SECTION 3
No Subrogation
Notwithstanding any payment or payments made by Guarantor
hereunder or any set-off or application of funds of Guarantor by Owner, until
all of the obligations of Contractor under the EPC Agreement are performed or
paid in full, Guarantor shall not (a) be entitled to be subrogated to any of the
rights of Owner against Contractor or any other guarantor or in any collateral
security or guaranty or right of offset held by Owner for the performance and
payment of the obligations of Contractor under the EPC Agreement, or (b) seek
any reimbursement or contribution from Contractor or any other guarantor in
respect of any payment, set-off or application of funds made by Guarantor
hereunder.
2
<PAGE>
SECTION 4
Guaranty Absolute
The liability of Guarantor under this Guaranty with respect to
the guaranteed obligations shall be absolute and unconditional, irrespective of:
(a) any lack of validity or enforceability of the EPC Agreement or
any other agreement, guaranty or instrument relating thereto;
(b) any amendment to, waiver of or consent to departure from, or
failure to exercise any right, remedy, power or privilege
under or in respect of the EPC Agreement or any other
guaranty; provided, however, that for the avoidance of doubt,
the Guarantor and Owner hereby agree that the obligations of
Contractor under the EPC Agreement guaranteed by Guarantor
hereunder shall be such obligations of Contractor as they may
have been amended or waived in accordance with the terms of
the EPC Agreement;
(c) any exchange, release or nonperfection of any collateral, or
any release or amendment or waiver of, or consent to departure
from, any other guaranty of or security for the performance of
all or any of the obligations of Contractor under the EPC
Agreement;
(d) the insolvency of Guarantor or Contractor or any other party
or guarantor or any proceeding, voluntary or involuntary,
involving the bankruptcy, insolvency, receivership,
reorganization, arrangement, dissolution or liquidation of
Guarantor or Contractor or any other guarantor or any defense
which Guarantor or Contractor or any other guarantor may have
by reason of the order, decree or decision of any court or
administrative body resulting from any such proceeding;
(e) any change in ownership of Contractor or any change, whether
direct or indirect, in Guarantor's relationship to Contractor
or in the relationship of Contractor to any other guarantor,
including, without limitation, any such change by reason of
any merger or any sale, transfer, issuance, or other
disposition
3
<PAGE>
of any stock of, or other equity interest in, Contractor,
Guarantor or any other entity; and
(f) any other circumstance of a similar or different nature which
might otherwise constitute a defense available to Guarantor as
a guarantor (provided, however, that this clause 4(f) shall
not prevent Guarantor from being able to assert as a defense
to its performance under this Guaranty, any defense which is
available to Contractor under the EPC Agreement, other than
any defenses arising out of the matters described in this
Section 4).
This Guaranty shall continue to be effective, or be
reinstated, as the case may be, if at any time any payment, or any part thereof,
to Owner by Contractor under the EPC Agreement or by Guarantor hereunder or by
any other guarantor under any other guaranty of the EPC Agreement is rescinded
or must otherwise be returned by Owner to Guarantor or Contractor or any of
their representatives or any other guarantor for any reason, including, without
limitation, upon the insolvency, bankruptcy, reorganization, dissolution or
liquidation of Guarantor or Contractor or any other guarantor, all as though
such payment had not been made.
SECTION 5
Waiver
Guarantor hereby waives notice from Owner of its acceptance
and reliance on this Guaranty and notice of any liability to which it may apply,
and waives presentment, demand of payment, protest, notice of dishonor or
nonpayment of any such liability, and the taking of any other action by Owner
against, and (except for the notice specified in Section 2 hereof) any other
notice to, any party liable thereon, including Guarantor, and any requirement
that Owner exhaust any right or take any action against or with respect to
Contractor or any other person or entity or any property.
SECTION 6
Consent to Jurisdiction; Waiver of Immunities
(a) Guarantor hereby irrevocably submits to the jurisdiction
of any State or Federal court sitting in the Borough of Manhattan, City of New
York, in any action
4
<PAGE>
or proceeding arising out of or relating to this Guaranty, and Guarantor hereby
irrevocably agrees that, subject to the terms of Section 6(d) hereof and without
limiting Owner's rights under Section 6(b) hereof, all claims in respect of such
action or proceeding shall be heard and determined in such State or Federal
court. Guarantor hereby irrevocably waives, to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the maintenance of
such action or proceeding. Guarantor hereby irrevocably consents to the service
of any and all process in any such action or proceeding by the mailing of copies
of such process to Guarantor at its address specified in Section 11 hereof.
Guarantor agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner permitted by law.
(b) Nothing in this Section shall affect the right of Owner to
serve legal process in any other manner permitted by law or affect the right of
Owner to bring any action or proceeding against Guarantor or its property in the
courts of any other jurisdiction.
(c) To the extent that Guarantor has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property,
Guarantor hereby irrevocably waives such immunity in respect of its obligations
under this Guaranty.
(d) Notwithstanding the foregoing, any dispute arising under
the EPC Agreement and any claims under any of the EPC Agreement and/or this
Guaranty relating to any such dispute, whether arising contemporaneously with or
subsequent to such dispute, shall be resolved by Owner, Contractor and Guarantor
in a single, combined arbitration proceeding in accordance with the provisions
of Article 21 of the EPC Agreement. In any such arbitration proceeding,
Contractor and Guarantor shall together select one arbitrator, Owner shall
select one arbitrator, and the two selected arbitrators shall select the third
arbitrator, in accordance with Section 21.1 of the EPC Agreement. Subject to the
Guarantor's ability to assert as a defense to its performance under this
Guaranty Contractor's rights under Section 15.2.1 of the EPC Agreement,
notwithstanding the existence of a dispute between Owner and Guarantor and
regardless of whether such dispute is the subject of dispute resolution pursuant
to this Section 6(d), Guarantor shall not be
5
<PAGE>
entitled to suspend or otherwise delay the performance of this Guaranty.
SECTION 7
Representations and Warranties
Guarantor hereby represents and warrants as follows:
(a) Guarantor (i) is a duly organized and validly existing
corporation in good standing under the laws of Delaware and (ii) has the
corporate power and authority to own its property and assets and to transact the
business in which it is engaged;
(b) Guarantor has the corporate power, authority and legal
right to execute, deliver and carry out the terms and provisions of this
Guaranty and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Guaranty;
(c) This Guaranty has been duly executed and delivered by
Guarantor and constitutes the legal, valid and binding obligation of Guarantor
enforceable against it in accordance with its terms, except to the extent that
its enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of creditors generally or
by general principles of equity;
(d) Neither the execution, delivery or performance by
Guarantor of this Guaranty nor the consummation of the transactions herein
contemplated, nor compliance with the terms and provisions hereof, (i) will
contravene any applicable provision of any law, statute, rule, regulation,
order, writ, injunction or decree of any court or governmental instrumentality
or authority, or requires the authorization or approval of or any filing with
any such instrumentality or authority, (ii) will conflict or be inconsistent
with, or result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any lien upon or
assignment of any of the property or assets of Guarantor pursuant to the terms
of any agreement or other instrument to which Guarantor is a party or by which
it or any of its property or assets is bound or to which it is subject, or (iii)
will violate any provision of the charter, by-laws or like organizational
documents of Guarantor; and
6
<PAGE>
(e) As of the date on which this Guaranty is executed by
Guarantor, there are no actions, suits or proceedings pending or, to the best of
the knowledge of Guarantor, threatened against or affecting Guarantor before any
court or before any governmental or administrative body or agency which, if
adversely determined, would be reasonably likely to materially and adversely
affect its ability to fully perform its obligations hereunder.
SECTION 8
Covenants
Guarantor hereby covenants and agrees that, until performance
and payment in full of all obligations of Contractor under the EPC Agreement:
(a) Guarantor shall furnish to Owner: (i) as soon as possible
and in any event within five days after an executive officer of Guarantor
obtains knowledge thereof, notice of the occurrence of any Event of Default (as
defined in Section 9 hereof) or event which, with the giving of notice or lapse
of time, or both, would constitute an Event of Default, and setting forth the
details thereof and the action which Guarantor has taken and proposes to take
with respect thereto; and (ii) such other information necessary to demonstrate
the ability of Guarantor to perform its obligations under this Guaranty as Owner
may from time to time reasonably request;
(b) Guarantor shall comply, and shall cause each of its
subsidiaries to comply, with all applicable laws to the extent that
noncompliance therewith would be reasonably likely to have a material adverse
effect on the financial condition of Guarantor or on its ability to fully
perform its obligations under this Guaranty;
(c) Guarantor shall preserve and maintain, and shall cause
each of its subsidiaries to preserve and maintain, its corporate or legal
existence, rights and franchises to the extent that noncompliance therewith
would be reasonably likely to have a material adverse effect on the financial
condition of Guarantor or on its ability to fully perform its obligations under
this Guaranty; and
(d) Guarantor shall, in the event that at any time Owner shall
have reasonable grounds for believing that, were Contractor to default under the
EPC Agreement at that time, Guarantor would be unable to fully perform its
obligations hereunder, then within 15 days of Owner's
7
<PAGE>
written request therefor, Guarantor shall provide either (i) financial or other
information reasonably demonstrating its ability to so fully perform or (ii)
other assurances of its ability to so fully perform that are reasonably
satisfactory to Owner.
SECTION 9
Events of Default
(a) If any of the following events shall occur and be
continuing it shall constitute an "Event of Default" hereunder:
(i) Guarantor shall fail to observe or perform any
covenant or agreement contained in Section 2 hereof; provided, that if
and to the extent Contractor is entitled by the terms of the EPC
Agreement to a grace or cure period with respect to the failure of
performance thereunder that Guarantor's failure under Section 2 hereof
relates to, Guarantor shall have the same period of time as is
available to Contractor under the EPC Agreement to remedy such failure
of performance before such failure constitutes an Event of Default
hereunder, but in no event shall any such grace or cure period for
Guarantor hereunder extend past the grace or cure period available to
Contractor under the EPC Agreement;
(ii) Guarantor shall fail to observe or perform any
other covenant or agreement contained in this Guaranty (including
without limitation the covenants and agreements contained in Section 8
hereof), and such failure is not remedied within (1) 30 days after
Guarantor receives actual knowledge thereof, or (2) such longer period
as may be necessary for Guarantor to cure such failure, not to exceed
120 days, provided that Guarantor diligently pursues the cure of such
failure and such cure is effected in such a manner and within such time
that such failure to comply could not reasonably be expected to have a
material adverse effect on Owner or the Project;
(iii) Guarantor shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its 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
8
<PAGE>
it or any substantial part of its property, or shall consent to any
such relief or the appointment of or taking of possession by any such
official in an involuntary case or other proceeding commenced against
it, or shall generally not pay its debts as they become due, or shall
make a general assignment for the benefit of creditors, or shall take
any corporate action to authorize any of the foregoing;
(iv) An involuntary case or other proceeding shall
be commenced against Guarantor seeking liquidation, reorganization or
other relief with respect to it or its 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 it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed or
unstayed for a period of 60 days; or
(v) Any representation or warranty made by
Guarantor hereunder shall prove to have been false or misleading in any
material respect when made or deemed made and Guarantor fails to remedy
such false or misleading representation or warranty within 30 days
after Contractor receives a notice from Owner with respect thereto.
(b) Upon the occurrence of an Event of Default, Guarantor
shall be in material breach of this Guaranty and Owner may exercise any and all
remedies it may have hereunder or at law or in equity. Notwithstanding anything
stated to the contrary in this Guaranty, except as otherwise provided in this
sentence, Guarantor shall not be liable under this Guaranty, whether based in
contract, in tort (including negligence and strict liability), under warranty or
otherwise, for any indirect, incidental, special or consequential loss or damage
of any type, including but not limited to loss of use or loss of profit or
revenue, and Owner hereby releases Guarantor from any such liability; provided,
however, that this sentence shall not limit Guarantor's obligations to pay to
Owner the Provisional Acceptance Late Completion Payments and Performance
Guarantee Payments under Articles 7 and 8 of the EPC Agreement (as such terms
are defined therein) in accordance with the terms and provisions of the EPC
Agreement and this Guaranty.
9
<PAGE>
SECTION 10
Amendments
No amendment or waiver of any provision of this Guaranty nor
consent to any departure by Guarantor therefrom shall in any event be effective
unless the same shall be in writing and signed by Owner, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 11
Addresses for Notices
All notices and other communications provided for hereunder
shall be in writing and, (i) if to Guarantor, mailed or communicated by
facsimile or delivered to it, addressed to Siemens Corporation, 186 Wood Avenue
South, Iselin, New Jersey 08830-2770, Attention: Vice President, Corporate
Finance, Facsimile # (732) 321-3879, (ii) if to Owner, mailed or delivered to
it, addressed to it at its address specified in the EPC Agreement, or (iii) as
to each party at such other address as shall be designated by such party in a
written notice to the other party. All such notices and other communications
shall, when mailed or communicated by facsimile transmission, respectively, be
effective when deposited in the mails addressed as aforesaid or when such
facsimile transmission is confirmed.
SECTION 12
No Waiver; Remedies
No failure on the part of Owner to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise thereof or the exercise of any other right operate as
a waiver thereof. The remedies herein provided are cumulative and are not
exclusive of any remedies provided at law or in equity.
SECTION 13
Continuing Guaranty; Assignments
(a) This Guaranty shall be construed as a continuing, absolute
and unconditional guaranty of
10
<PAGE>
payment and performance, and not of collection only, and the obligations of
Guarantor hereunder shall not be conditioned or contingent upon the pursuit by
Owner at any time of any right or remedy against Contractor or against any other
person or entity which may be or become liable in respect of all or any part of
the obligations of Contractor under the EPC Agreement or against any collateral
security or guaranty therefor. This Guaranty shall: (i) remain in full force and
effect until satisfaction in full of all obligations of Contractor under the EPC
Agreement; (ii) be binding upon Guarantor and its successors and assigns; and
(iii) inure to the benefit of and be enforceable by Owner and its successors and
permitted assigns.
(b) Guarantor shall have no right, power or authority to
delegate all or any of its obligations hereunder. Guarantor hereby expressly
agrees that Owner may assign all or any of its rights hereunder without
Guarantor's approval to any person or entity to which it has assigned its rights
under the EPC Agreement (including, without limitation, the Financing Parties
referred to in the EPC Agreement) and that any such assignee of Owner may
further assign such rights assigned to it. Notwithstanding anything to the
contrary contained in the foregoing, no such assignment to any Person which
directly competes with Siemens AG or any of its affiliates in the field of
design, engineering, manufacturing, procurement and construction of power
generation, transmission or distribution facilities shall be permitted without
the prior written consent of Guarantor. In the event of any such assignment,
references herein to "Owner" shall be deemed to include references to the
relevant assignee. If in connection with such an assignment by Owner any
Financing Party requests Guarantor to consent in writing to such permitted
assignment even though such consent is not required hereunder, Guarantor shall
do so promptly, with such acknowledgment and consent agreement to contain such
terms and conditions as are mutually and reasonably agreed upon by Guarantor,
Owner and the Financing Parties. In addition, at Owner's request, Guarantor
shall provide to the Financing Parties a certificate from Guarantor and/or an
opinion of counsel addressed to the Financing Parties, in form and substance
reasonably satisfactory to Owner and the Financing Parties, concerning such
matters as the Financing Parties reasonably request, including that (w)
Guarantor is duly organized, validly existing and in good standing under the
laws of the state or commonwealth of its formation or incorporation, as the case
may be, (x) the execution,
11
<PAGE>
delivery and performance of this Guaranty and the related acknowledgment and
consent agreement are within the power and authority of Guarantor, and this
Guaranty and such acknowledgment and consent agreement are not in conflict with
Guarantor's organizational documents or any agreement to which Guarantor is a
party or by which it is bound or affected, (y) there is no law, rule or
regulation, nor is there any judgment, decree or order of any court or
governmental entity binding on Guarantor which would be contravened by the
execution, delivery, performance or enforcement of this Guaranty and such
acknowledgment and consent agreement, and (z) each of this Guaranty and such
acknowledgment and consent agreement is a legal, valid and binding obligation
enforceable against Guarantor in accordance with its terms, subject to usual and
customary qualifications.
SECTION 14
Waiver of Jury Trial
Guarantor hereby irrevocably and unconditionally waiveS any
and all right to trial by jury in any action, suit or counterclaim arising in
connection with this Guaranty.
SECTION 15
Governing Law
This Guaranty shall be governed by, and construed in
accordance with, the laws of the State of New York, the United States of
America, without regard to the conflict of laws rules thereof.
SECTION 16
Severability
If any provision hereof is invalid or unenforceable in any
jurisdiction, the other provisions hereof shall remain in full force and effect
in such jurisdiction and the remaining provisions hereof shall be liberally
construed in order to carry out the provisions hereof. The invalidity or
unenforceability of any provision of this Guaranty in any jurisdiction shall not
affect the validity or enforceability of any such provision in any other
jurisdiction.
12
<PAGE>
SECTION 17
Survival of Provisions
All provisions of this Guaranty which are expressly or by
implication to come into or continue in force and effect after the expiration or
termination of this Guaranty shall remain in effect and be enforceable following
such expiration or termination.
SECTION 18
Confidential Information
(a) Guarantor and Owner agree to hold in confidence for a
period commencing with the date hereof and ending five years from the date of
Project Completion any information supplied to it hereunder by the other.
Guarantor and Owner hereby further agree to require third parties to enter into
appropriate non-disclosure agreements relative to such confidential information
as may be communicated to them by Guarantor or Owner; provided, however, that in
the event Guarantor or Owner disclose any confidential information to a third
party pursuant to such non-disclosure agreement, Guarantor or Owner, as the case
may be, shall remain liable hereunder for any further disclosure by such
third-party which is in breach of such non-disclosure agreement or would be in
breach of this Section 18 if such further disclosure were made by Guarantor or
Owner, as applicable. The provisions of this Section 18(a) shall not apply to
information within any one of the following categories: (i) information which
was in the public domain prior to receipt thereof from the other party or which
subsequently becomes part of the public domain by publication or otherwise,
except by the receiving party's wrongful act; (ii) information which the
receiving party can show was in its possession prior to its receipt thereof from
the other party; (iii) information received by a party from a third party
without a confidentiality obligation with respect thereto known to Owner; (iv)
information which the receiving party developed independently; or (v)
information which a party is required by law to disclose; provided, however,
that prior to making any such disclosure under clause (v) of this Section 18(a),
such disclosing party shall: (1) provide the other party with timely advance
written notice of the confidential information requested by such government
authority and such disclosing party's intent
13
<PAGE>
to so disclose; (2) minimize the amount of confidential information to be
provided consistent with the interests of the non-disclosing party and the
requirements of the government authority involved; and (3) at the request and
expense of the non-disclosing party make every reasonable effort (which shall
include participation by the non-disclosing party in discussions with the
government authority involved) to secure confidential treatment and minimization
of the confidential information to be provided. Neither Guarantor nor Owner
shall publish the terms and conditions of this Guaranty, unless the other party
provides its express prior written consent thereto; provided, however, that
Owner shall be permitted to disclose, subject to the provisions of this Section
18(a), such terms and provisions to the Financing Parties or any applicable
rating agency and otherwise to the extent required to obtain financing for the
Facility. Notwithstanding any other provision of this Section 18(a), Owner shall
be permitted to summarize the material terms and conditions of this Guaranty for
purposes of including such summary in any offering document associated with the
issuance of debt by Owner for the purpose of obtaining financing for the
Facility.
(b) Guarantor shall not issue any press or publicity release
or any advertisement, or publish or otherwise disclose any photograph or other
information, concerning this Guaranty, the EPC Agreement or the Project without
the express prior written consent of Owner.
14
<PAGE>
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
SIEMENS CORPORATION
By: /s/ Walter G. Gans
-------------------------------------
Name: Walter G. Gans
Title: Vice President, General Counsel
and Secretary
By: /s/ Thomas J. Keller
-------------------------------------
Name: Thomas J. Keller
Title: Vice President, Corporate
Relations
15
<PAGE>
ACCEPTED AND AGREED
AES IRONWOOD, INC.
By:/s/ Patricia L. Rollin
-----------------------------------
Name: Patricia L. Rollin
Title: Vice President
<PAGE>
Appendix A
Actions, Suits and Proceedings
[None.]
<PAGE>
Exhibit 10.6
EXECUTION COPY
- --------------------------------------------------------------------------------
DEVELOPMENT AND OPERATIONS
SERVICES AGREEMENT
between
AES PRESCOTT, L.L.C.
and
AES IRONWOOD, L.L.C.
Dated as of June 1, 1999
- --------------------------------------------------------------------------------
705 MW (Net) Gas-Fired Combined Cycle Electric Generating Facility
South Lebanon Township, Lebanon County, Pennsylvania
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS..........................................................................1
SECTION 1.1 DEFINITIONS..................................................................1
ARTICLE II DEVELOPMENT AND CONSTRUCTION MANAGEMENT.............................................4
SECTION 2.1 DEVELOPMENT AND CONSTRUCTION MANAGEMENT SERVICES.............................4
SECTION 2.2 PAYMENT FOR DEVELOPMENT AND CONSTRUCTION MANAGEMENT SERVICES.................4
ARTICLE III OPERATION AND MAINTENANCE..........................................................5
SECTION 3.1 OPERATING AND MAINTENANCE PERSONNEL AND OTHER SERVICES.......................5
SECTION 3.2 PAYMENT FOR OPERATING AND MAINTENANCE SERVICES...............................5
ARTICLE IV PAYMENT OF FEES.....................................................................7
SECTION 4.1 PAYMENT OF FEES..............................................................7
ARTICLE V TERM, TERMINATION AND RELATIONSHIP OF PARTIES........................................8
SECTION 5.1 TERM.........................................................................8
SECTION 5.2 TERMINATION..................................................................8
ARTICLE VI REPRESENTATIONS AND WARRANTIES......................................................8
SECTION 6.1 REPRESENTATIONS AND WARRANTIES OF THE OPERATOR...............................8
SECTION 6.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................9
ARTICLE VII ARBITRATION........................................................................9
SECTION 7.1 ARBITRATION..................................................................9
ARTICLE VIII LIMITATIONS OF LIABILITY.........................................................10
SECTION 8.1 NO CONSEQUENTIAL DAMAGES....................................................10
SECTION 8.2 LIMITATION OF OPERATOR'S LIABILITY..........................................10
ARTICLE IX FORCE MAJEURE......................................................................10
SECTION 9.1 FORCE MAJEURE...............................................................10
ARTICLE X INDEMNIFICATION.....................................................................11
SECTION 10.1 INDEMNIFICATION.............................................................11
ARTICLE XI MISCELLANEOUS......................................................................11
SECTION 11.1 FURTHER ASSURANCES..........................................................11
SECTION 11.2 ENTIRE AGREEMENT............................................................11
SECTION 11.3 COUNTERPARTS................................................................11
SECTION 11.4 GOVERNING LAW...............................................................11
SECTION 11.5 ASSIGNABILITY...............................................................12
SECTION 11.6 BINDING EFFECT..............................................................12
SECTION 11.7 HEADINGS....................................................................12
SECTION 11.8 NOTICES.....................................................................12
SECTION 11.9 AMENDMENT...................................................................13
SECTION 11.10 NO IMPLIED WAIVER...........................................................13
SECTION 11.11 OVERDUE OBLIGATIONS TO BEAR INTEREST........................................13
SECTION 11.12 INDEPENDENT CONTRACTOR......................................................13
SECTION 11.13 ACCESS......................................................................13
</TABLE>
i
<PAGE>
DEVELOPMENT AND OPERATIONS SERVICES AGREEMENT
DEVELOPMENT AND OPERATIONS SERVICES AGREEMENT (this "Agreement"), dated
as of June 1, 1999, by and between AES PRESCOTT, L.L.C. a Delaware limited
liability company (the "Operator"), and AES IRONWOOD, L.L.C, a Delaware limited
liability company (the "Company") (the Company and Operator, each a "Party", and
collectively, the "Parties").
W I T N E S S E T H:
WHEREAS, the Company has been organized to develop, construct, own,
operate and maintain the Facility located at the Facility Site;
WHEREAS, the Company desires that the Operator provide certain
personnel and support services required by the Company for the development and
construction management of the Facility and for operation and maintenance of the
Facility after completion of such development and construction; and
WHEREAS, the Operator desires to provide such personnel and support
services in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the agreements and covenants
hereinafter set forth, and intending to be legally bound hereby, the Parties
hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
Capitalized terms not otherwise defined herein shall have the meanings
specified in the Indenture (as defined below). For the purposes of this
Agreement, the rules of construction set forth in the Indenture shall apply as
if such rules were set forth herein. The following terms shall have the meanings
specified below:
"AES Direct Costs" shall have the meaning specified in the Services
Agreement.
"AES Direct Labor Costs" shall have the meaning specified in the
Services Agreement.
"AES Overhead" shall have the meaning specified in the Services
Agreement.
"Annual Adjustment Date" means each January 1st occurring after the
date hereof.
"Annual Revision Date" means each March 1st occurring after the date
hereof.
"Capital Contributions" means the contributions by the Manager to the
Company required pursuant to the LLC Agreement.
1
<PAGE>
"Commercial Operation Date" has the necessary specified in the Power
Purchase Agreement.
"Company" has the meaning specified in the preamble to this Agreement.
"Direct Costs" means expenditures for all goods and services which, in
the opinion of the Operator, are necessary for the operation, maintenance and
management of the Facility or the performance by the Operator of its obligations
under this Agreement, including but not limited to goods and services (i)
necessary to operate the Facility and all associated facilities and equipment
and (ii) necessary to maintain, repair, replace and otherwise keep the Facility
and all associated facilities and equipment in good and serviceable working
order. Such goods and services shall include without limitation raw materials to
operate the boiler, pollution control equipment and other equipment, including
limestone, magnesium oxide, ammonia, urea, sand and any other additives as
appropriate; utilities, including natural gas, oil, electricity, raw water,
potable water, industrial waste water discharge, sanitary sewer and waste
disposal; transportation charges, including demurrage, for fuel, raw materials,
waste, personnel, equipment, and other items; contract maintenance services,
including electrical, mechanical, civil, chemical and instrumentation and
control; outside shops, warehousing and storage; expendable supplies, including
chemicals, resins, abrasives, lab supplies, protective clothing, paper products,
rags, rope, wire, glue, caulking, soaps, paint, primer and painting supplies,
clean-up supplies and equipment, lubricants and solvents; shop tools and
equipment; equipment rental and leasing; spare and replacement parts, repair and
replacement items and material and upgrading equipment and material;
communications, including telephone, facsimile transmission, postage, express
mail and parcel delivery; office furniture, supplies and equipment, computers
and computer equipment, and reproduction equipment, services and supplies;
mobile equipment and vehicles; insurance premiums; contract employee charges;
community relations programs and expenses; recruiting and training costs,
including advertising, physicals, recruiter fees and the like; professional
services, including legal, accounting, engineering, management and other; safety
arid employee relations expenses (awards, picnics, bonuses, etc.); travel and
business entertainment; taxes (such as sales, property, value added and gross
receipts taxes but excluding taxes based solely on income); and Direct Labor
Costs. Direct Costs shall include but not be duplicative of AES Direct Costs.
"Direct Labor Costs" means all labor costs of the Operator, including
but not limited to salaries, wages, overtime pay, shift differentials, fringe
benefits, profit sharing and pension, holiday pay, vacation pay, bonuses,
termination payments, travel and other similar costs of the Operator personnel
primarily engaged in activities at the Site pursuant to this Agreement. Direct
Labor Costs shall not include (i) labor costs related to Operator personnel who
are not primarily located at the Site or (ii) labor costs related to activities
unrelated to the Operator's performance of this Agreement which are undertaken
by Operator personnel who are primarily engaged in activities at the Site.
Direct Labor Costs shall include, but not be duplicative of, AES Direct Labor
Costs.
"Effective Date" means the date of this Agreement.
"Electric Delivery Point" has the meaning specified in the Power
Purchase Agreement.
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"Financing Parties" means the Trustee, acting on behalf of the
Bondholders, and any and all other lenders providing the construction or
long-term financing or any refinancing of the Facility pursuant to the Financing
Documents, and any trustee or agent acting in their behalf, including the
Collateral Agent. The term "Financing Parties" shall not include the Company,
any Affiliate of the Company or any Affiliate of any Partner.
"Force Majeure Event" shall have the meaning set forth in Section 9.1.
"Indenture" means the Trust Indenture, dated as of June 1, among the
Company, the Trustee and the Depositary Bank.
"LLC Agreement" means the Limited Liability Company Agreement of AES
Ironwood, L.L.C., dated as of November 1, 1998, as such agreement may be
amended, modified or supplemented from time to time.
"Management Fee"' means the monthly fee described in Section
2.2(a)(ii).
"Manager" means AES Ironwood, Inc., the owner of all of the membership
interests in the Company and the Manager of the Company pursuant to the LLC
Agreement.
"Operating and Maintenance Fee" means the monthly fee described in
Section 3.2(a)(ii).
"Operations" means any transaction in the ordinary course of the
Company's business, but does not include the making of Capital Contributions to
the Company or a Capital Event.
"Operator" has the meaning specified in the preamble to this Agreement.
"Operator Costs" means all Direct Costs and Overhead.
"Operator Fees" means, collectively, the Management Fee and the
Operating and Maintenance Fee.
"Overhead" means (to the extent not included in Direct Costs) the
Operator's cost of and any expenses related to employee relations, financial
controls, data processing, management and administration, and other similar
services required for performance by the Operator of its obligations under this
Agreement, including labor costs of the Operator's overhead personnel, if any;
provided, that all Overhead hereunder shall be allocated on a reasonable basis
to services rendered by Operator in the performance of its obligations under
this Agreement. Overhead shall include but not be duplicative of AES Overhead.
Notwithstanding anything herein to the contrary, from and after the Commercial
Operation Date through the remaining term of this Agreement, Overhead payable
under Sections 2.2 and 3.2 with respect to any period shall be deemed in the
aggregate to equal [45%] of Direct Labor Costs for such period.
"Prime-Based Rate" means the interest rate equal to the sum of (i) the
prime commercial lending rate announced by Citibank NA as in effect from time to
time, and (ii) two (2) percentage points, provided that such interest rate shall
in no event be greater than the maximum interest rate permitted by applicable
law.
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"Unpaid Fee Amount" shall have the meaning set forth in Section 4.1.
ARTICLE II
DEVELOPMENT AND CONSTRUCTION MANAGEMENT
SECTION 2.1 Development and Construction Management Services.
The Parties acknowledge that, under the Financing Documents and the
Project Contracts, the Company has certain obligations to develop and construct
the Facility. In order to assist the Company in the performance of such
obligations, but subject to Section 2.2(b), the Operator shall from the date
hereof until the Commercial Operation Date (i) supervise and manage the
development of the Facility, and the design, engineering and construction of the
Facility in accordance with (a) generally accepted engineering practices, (b)
generally accepted construction procedures, (c) the plans and standards set
forth in the EPC Contract, (d) the requirements of the Power Purchase Agreement
and (e) applicable law; (ii) exercise all rights of the Company under the EPC
Contract and any other contracts for the construction of the interconnection or
other facilities related to the Facility (including, but not limited to,
operational responsibilities arising prior to the Commercial Operation Date);
and (iii) use commercially reasonable efforts to provide the services and
perform the obligations the Company is then obligated to provide and perform
under the EPC Contract and to procure or provide any goods and services
necessary for the completion of the Facility for which provision is not made in
the EPC Contract.
SECTION 2.2 Payment for Development and Construction Management
Services.
(a) On the tenth (10th) Business Day of each calendar month following
the date of this Agreement, the Company, upon receipt of an invoice, shall pay
in arrears to the Operator, in consideration for the services provided in the
previous month and described in Section 2.1, as follows:
(i) Until the first calendar month following the Commercial
Operation Date, all Operator Costs after the Effective Date up to said
calendar month, to the extent the Operator has not been previously paid
therefor and to the extent it submits cost substantiation therefor, it
being understood that payment of certain cost items included in
Operator Costs may be made by the Collateral Agent pursuant to the
Financing Documents; and
(ii) A Management Fee of $125,000 for each calendar month (or
a pro rata portion of such fee for any portion of each calendar month)
from the Effective Date through the Commercial Operation Date (at which
date such fee shall cease) for services rendered during such calendar
month (or portion thereof).
(b) The Operator may suspend the performance of its obligations
hereunder during such time as any amount payable pursuant to Sections 2.2(a)(i)
or (ii) is more than 60 days past due; provided, however, that the Operator
shall not so suspend performance of its obligations hereunder if the amount
payable that is more than 60 days past due hereunder is subject to a good faith
dispute by the Company as to whether the cost in question was in fact incurred
by the Operator.
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ARTICLE III
OPERATION AND MAINTENANCE
SECTION 3.1 Operating and Maintenance Personnel and Other Services.
The Parties acknowledge that, under the Financing Documents and the
Project Contracts, the Company has certain obligations to maintain and operate
the Facility and in order to assist the Company therewith, but subject to
Section 3.2(c), the Operator shall provide operating personnel and other support
services necessary for the Company to perform its obligations arising out of or
in connection with, the ownership, management, maintenance and operation of the
Facility, including without limitation the following obligations:
(a) Operating and maintaining the Facility in accordance with the Power
Purchase Agreement, the Financing Documents and the practices, standards and
procedures customary in the independent power industry with respect to natural
gas and fuel oil-fired combined cycle electric generating facilities;
(b) Obtaining and maintaining insurance as required under the Financing
Documents and the Project Contracts, without limiting the rights of each of the
Company and the Operator to provide independently for its own additional
insurance coverage;
(c) Maintaining full and complete records of accounts and of technical
operations of the Facility and preparing all reports, statements, data and
information that may be required from time to time under the Financing
Documents, the Project Contracts or by any federal, state, or local governmental
authorities, and retaining records relating to a given year during the term
hereof, other than those records which are necessary to provide a history of the
operation and maintenance of the Facility (which the Operator agrees to retain
for the full term of this Agreement), for a period of at least three years after
the end of such year;
(d) Opening and maintaining bank accounts and performing cash
management functions in connection with the operation of the Facility,
including, subject to the provisions of the Financing Documents, the receipt of
revenues generated by the Company and the payment of all costs, expenses,
rentals and taxes incurred by the Company;
(e) Preparing all federal, state and local tax returns of the Company;
and
(f) Inspecting and testing metering devices used to measure and record
fuel oil and natural gas delivered to the Facility pursuant to the Power
Purchase Agreement and electricity delivered to the Electric Delivery Point
pursuant to the Power Purchase Agreement.
SECTION 3.2 Payment for Operating and Maintenance Services.
(a) (i) On the tenth (10th) Business Day of each calendar month
following the Commercial Operation Date through the remaining term of this
Agreement, the Company shall pay in arrears to the Operator, in consideration
for the services provided in the previous month and described in Section 3.1,
all Operator Costs incurred prior to and after the Commercial Operation Date up
to said calendar month to the extent the Operator has not been previously paid
therefor and to the extent it submits cost
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substantiation therefor, it being understood that payment of certain cost items
included in Operator Costs may be made by the Collateral Agent directly pursuant
to the Financing Documents; and
(ii) On each Bond Payment Date commencing with the first Bond Payment
Date after the Commercial Operation Date, and through the remaining term of this
Agreement, the Company shall pay in arrears to the Operator, in consideration
for the services provided in the previous months comprising the most recent
quarter and described in Section 3.1, an Operating and Maintenance Fee of
$400,000, as adjusted pursuant to Section 3.2(b), for each calendar month of
such quarter (or a pro rata portion of such fee for any portion of each calendar
month) for services rendered during such calendar month (or portion thereof);
provided, however, the Operating and Maintenance Fee shall be payable to the
Company only to the extent that funds are available for such payment pursuant to
the Collateral Agency Agreement and in accordance with Section 4.1.
(b) (i) Effective on each Annual Adjustment Date, the Operating and
Maintenance Fee shall be adjusted in accordance with the following formula:
AOMF = $400,000 x EGDP
O&M Base GDP --------
WHERE:
AOMF = The adjusted Operating and Maintenance Fee.
EGDP = The Manager's good faith estimate of the GDPIPD for the
calendar quarter immediately preceding such Annual
Adjustment Date.
O&M Base GDP = The GDPIPD for the second quarter 1999.
(ii) Effective on each Annual Revision Date, the Operating and
Maintenance Fee for the calendar year in which such calculation is made shall be
recalculated in accordance with the following formula:
RAOMF = $400,000 x AGDP
---------
O&M Base GDP
WHERE:
RAOMF = The readjusted Operating and Maintenance Fee.
AGDP = The actual GDPIPD for the calendar quarter
immediately preceding such Annual Adjustment
Date.
O&M Base GDP = The GDPIDP for the second quarter 1999.
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(iii) The Operating and Maintenance Fee payable pursuant to
Section 3.2(a)(ii) for the first two calendar months of each calendar
year shall be calculated in accordance with Section 3.2(b)(i). The
Operating and Maintenance Fee payable pursuant to Section 3.2(a)(ii)
for each calendar month of each calendar year commencing with the third
calendar month of such calendar year shall be calculated in accordance
with the formula set forth in this Section 3.2(b)(ii) and the monthly
amounts to be paid to the Operator by the Company over the remainder of
such calendar year shall be equitably adjusted by an allocation
thereover of the amount equal to the difference between (x) the sum of
the monthly fee calculated pursuant to Section 3.2(b)(i) and payable in
accordance with the first sentence of this Section 3.2(b)(iii) for the
first two calendar months of such calendar year and (y) the sum of the
monthly fees that would have been payable for the first two calendar
months of such calendar year if such monthly fees had been calculated
pursuant to Section 3.2(b)(ii).
(c) The Operator may suspend performance of its obligations during such
time as any amount payable pursuant to Section 3.2(a)(i) is more than 60 days
past due; provided, however, that the Operator shall not so suspend performance
of its obligations hereunder if the amount payable that is more than 60 days
past due hereunder is subject to a good faith dispute by the Company as to
whether the cost in question was in fact incurred by the Operator.
(d) The Operator may suspend the performance of its obligations
hereunder during such time as any amount payable pursuant to Section 3.2(a)(ii)
is past due for more than 60 days; provided, however, that the Operator shall
not so suspend performance of its obligations if the amount payable pursuant to
Section 3.2(a)(ii) is past due as a result of the application of Section 4.1 of
this Agreement and the provisions of the Collateral Agency Agreement.
ARTICLE IV
PAYMENT OF FEES
SECTION 4.1 Payment of Fees.
Notwithstanding anything to the contrary contained herein, the
Operating and Maintenance Fee payable pursuant to Section 3.2(a)(ii) shall be
payable by the Company if and to the extent that funds are available in the
Revenue Account for such payment after giving effect to the transfers and
payments (other than payment of such Operating and Maintenance Fee) specified in
paragraphs first through fifth of Section 3.10(b) of the Collateral Agency
Agreement. In the event that the Company is at any time unable to make payment
of the Operating and Maintenance Fee due pursuant to Section 3.2(a)(ii) because
of the unavailability of funds under the Collateral Agency Agreement, such
unpaid Operating and Maintenance Fee shall accumulate and shall accrue interest
at the Prime-Based Rate (or, if lower, the maximum rate permitted by applicable
law), compounded annually (the "Unpaid Fee Amount"). Until such time as the
Unpaid Fee Amount equals zero, if any amount of funds are available therefor
pursuant to Section 3.10(b) of the Collateral Agency Agreement, the Company
shall, after payment of the current quarter's Operating and Maintenance Fee on a
Bond Payment Date, pay to the Operator, on such Bond Payment Date (but only to
the extent that funds are available therefor pursuant to the Collateral Agency
Agreement and this Section 4.1), an amount equal to the lesser of such available
funds and the Unpaid Fee Amount.
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ARTICLE V
TERM, TERMINATION AND RELATIONSHIP OF PARTIES
SECTION 5.1 Term.
The term of this Agreement shall commence as of the Effective Date and,
except as otherwise provided herein, shall terminate upon the earlier of (i) the
last day of the month in which the twenty-seventh anniversary of the Effective
Date occurs, (ii) the date which is sixty (60) days after receipt by Operator of
a notice from the Collateral Agent specifying that (a) a Trigger Event under the
collateral Agency Agreement has occurred and the Collateral Agent, any Financing
Party or any agent, assignee or designee thereof has commenced the exercise of
remedies in respect of such Trigger Event and (b) the Collateral Agent has been
devoted by the Required Senior Partner to terminate this Agreement, and (iii)
the date specified by mutual written agreement of the Parties hereto.
SECTION 5.2 Termination.
This Agreement may be terminated by either Party upon the failure of
the other Party to perform any of its material obligations hereunder; provided,
that the Party seeking to terminate this Agreement under this Section 5.2 has
given the breaching Party 120 days' prior written notice of such breach, and
such breach has not been remedied within such 120-day period. Furthermore, this
Agreement may be terminated upon written notice by either Party upon the
bankruptcy, reorganization, dissolution or liquidation of the other Party. Upon
termination of this Agreement pursuant to this Section 5.2, the Operator agrees
to provide to the Company originals or copies of all records retained by the
Operator in accordance with Section 3.1(c) pertaining to the services rendered
by the Operator hereunder up to and including the date of such termination.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.1 Representations and Warranties of the Operator.
Operator represents and warrants as follows:
(a) It is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Delaware and is duly
qualified to do business and is in good standing in the Commonwealth of
Pennsylvania;
(b) It has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement, which action has not been
superseded or terminated, and this Agreement constitutes the legal, valid and
binding obligation of the Operator, enforceable against the Operator in
accordance with the terms hereof, except as the enforceability hereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other such laws affecting the rights of creditors generally or by general
equitable principles;
(c) The execution, delivery and performance of this Agreement do not
violate (i) the Operator's certificate of formation or Limited Liability Company
Agreement or any resolution of
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its members, (ii) any contract to which it is a party or (iii) any law, rule,
regulation, order, writ, judgment, injunction, decree or determination binding
upon the Operator or any of its properties; and
(d) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body (other than those
which have been obtained) are required for the due execution, delivery and
performance by the Operator of this Agreement.
SECTION 6.2 Representations and Warranties of the Company.
The Company represents and warrants as follows:
(a) It is a limited liability company duly organized and validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified to do business and is in good standing in the Commonwealth of
Pennsylvania;
(b) It has taken all necessary Company action to authorize the
execution, delivery and performance of this Agreement, which action has not been
superseded or terminated, and this Agreement constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with the terms hereof, except as the enforceability hereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other such laws
affecting the rights of creditors generally or by general equitable principles;
(c) The execution, delivery and performance of this Agreement do not
violate (i) the Company's certificate of formation or Limited Liability Company
Agreement or any rules of any committee charged thereunder with the governance
of its affairs, (ii) any contract to which it is a party or (iii) any law, rule,
regulation, order, writ, judgment, injunction, decree or determination binding
upon the Company or any of its properties; and
(d) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body (other than those
which have been obtained) are required for the due execution, delivery and
performance by the Company of this Agreement.
ARTICLE VII
ARBITRATION
SECTION 7.1 Arbitration.
In the event of a dispute between the Parties under this Agreement,
such dispute shall be submitted to a single arbitrator pursuant to the
commercial arbitration rules of the American Arbitration Association, and the
Parties shall proceed diligently so that the arbitrator shall render a decision
within 90 days from the filing of a demand for arbitration. This Agreement shall
not be terminated on the basis of any disputed matter until the arbitrator has
rendered his decision. Such arbitration shall be conducted in Washington, D.C.,
unless a related arbitration shall be contemplated under the provisions of any
of the Financing Documents or Project Contracts, in which event arbitration
hereunder shall be conducted where such related arbitration is conducted and,
whenever expedient, shall be consolidated with such related arbitration.
9
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ARTICLE VIII
LIMITATIONS OF LIABILITY
SECTION 8.1 No Consequential Damages.
Neither Party shall be liable to the other for any indirect, special,
incidental or consequential damages arising from or connected with its
performance hereunder or any breach of its obligations hereunder.
SECTION 8.2 Limitation of Operator's Liability.
The total aggregate liability of the Operator to the Company for all
liability, including without limitation the Operator's indemnity obligations
hereunder, arising out of or in connection with the performance of services
under this Agreement in any calendar year shall not exceed the amount of the
Operator Fees earned and paid for that calendar year.
ARTICLE IX
FORCE MAJEURE
SECTION 9.1 Force Majeure.
Notwithstanding any other provision of this Agreement to the contrary,
if the performance of the obligations of either Party under this Agreement, or
the fulfillment of any of the conditions hereof, shall be wholly or partially
prevented by any act or event beyond the reasonable control of the Party
alleging disability to perform obligations or fulfill conditions under this
Agreement, including without limitation, an act of God, nuclear emergency,
explosion, fire, epidemic, landslide, lightning, earthquake, flood or similar
cataclysmic occurrence, an act of public enemy, war, blockade, insurrection,
riot, civil disturbance, sabotage, unavailability of labor, fuel, power or raw
materials, strike, lockout or other labor disturbance, restrictions or
restraints imposed by law or by rule, regulation, or order of governmental
authorities, whether federal, state, or local, delays or interruptions in
transportation and interruption or loss of utilities ("Force Majeure Event"),
the Party alleging inability to perform obligations or fulfill conditions
hereunder shall be excused from whatever performance is affected by the Force
Majeure Event to the extent so affected; provided, however, that (i) economic
hardship shall not constitute a Force Majeure Event and (ii) no obligations of
either Party which arose before the Force Majeure Event causing the suspension
of performance and no payment obligations of either Party shall be excused as a
result of the Force Majeure Event. In the event that a Force Majeure Event
occurs:
(a) the non-performing Party shall give the other Party prompt written
notice describing the particulars of the Force Majeure Event, including but not
limited to the nature of the occurrence and its expected duration, and shall
continue to furnish timely regular reports with respect thereto during the
period of the Force Majeure Event;
(b) the suspension of performance shall be of no greater scope and of
no longer duration than is required by the Force Majeure Event; and
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(c) the non-performing Party shall use its best efforts to remedy its
inability to perform.
ARTICLE X
INDEMNIFICATION
SECTION 10.1 Indemnification.
Each Party shall indemnify, defend and hold the other Party and its
successors, assigns and agents harmless from and against all damages, losses or
expenses of every kind or character suffered or paid as a result of any and all
claims, demands, suits, penalties, causes of action, proceedings, judgments,
administrative and judicial orders and liabilities (including reasonable counsel
fees incurred in any litigation or otherwise) assessed, incurred or sustained by
or against such other Party and its successors, assigns and agents to the extent
arising out of any negligence or willful misconduct by the indemnifying Party in
performing its obligations hereunder.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Further Assurances.
If either Party reasonably determines or is reasonably advised that any
further instruments (including without limitation a consent to assignment for
the benefit of the Financing Parties or any similar documents) or actions are
necessary or desirable to carry out the terms of this Agreement, the other Party
shall execute and deliver all such instruments and perform all such actions
reasonably necessary and proper to carry out the terms of this Agreement.
SECTION 11.2 Entire Agreement.
This Agreement contains the entire agreement between the Parties with
respect to the subject matter hereof and supersedes all prior agreements,
negotiations and understandings. Neither of the Parties shall be bound by or be
deemed to have made any representations, warranties or commitments except those
contained herein.
SECTION 11.3 Counterparts.
This Agreement may be executed in any number of counterparts and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute one agreement.
SECTION 11.4 Governing Law.
This Agreement shall be construed in accordance with and governed by
the laws of the State of New York, without regard to principles of conflicts of
laws.
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SECTION 11.5 Assignability.
Neither this Agreement, nor the respective rights, obligations and
duties of either Party hereunder are assignable by such Party without the prior
written consent of the non-assigning Party, and any assignment without such
written consent shall be void, except (i) that the Operator may engage agents or
subcontractors to provide the services described herein, and may enter into the
Services Agreement, (ii) the Operator may assign any and all of its rights to
payments made, due or to become due hereunder, and (iii) the Company may assign
its rights and obligations hereunder to the Financing Parties pursuant to the
Financing Documents.
SECTION 11.6 Binding Effect.
This Agreement shall be binding upon and shall inure to the benefit of
the Parties hereto and their respective successors and permitted assigns. This
Agreement is not made for the benefit of any person or entity not a Party
hereto, and nothing in this Agreement shall be construed as giving any person or
entity, other than the Parties hereto and their respective successors and
permitted assigns, any right, remedy or claim under or in respect of this
Agreement or any provision hereof.
SECTION 11.7 Headings.
The headings used in this Agreement are for convenience only and shall
not affect the construction of any of the terms of this Agreement.
SECTION 11.8 Notices.
All notices or other communications which are required or permitted
hereunder shall be in writing and shall be deemed sufficiently given (i) upon
delivery, if delivered personally, (ii) five days after deposit in a U.S. Postal
Office mail box, (iii) the day it is received, if it is delivered by overnight
courier or (iv) upon the effective sending of electronic transmission,
facsimile, telex or telegram, to the addresses set forth below or such other
address as the addressee may have specified in a notice duly given to sender as
provided herein:
If to the Operator:
AES Prescott, L.L.C.
1001 N. 19th Street
Arlington, VA 22209
Attention: Patricia L. Rollin, Vice President
(Telephone): 703-358-0538
(Facsimile): 703-528-4510
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If to the Company:
AES Ironwood, L.L.C
827 Cumberland Street
Lebanon, PA 17402
Attn: Project Manager
(Telephone): (717) 228-1328
(Facsimile): (717) 228-1271
SECTION 11.9 Amendment.
Neither Party hereto shall be bound by any termination, amendment,
supplement, waiver or modification of any term hereof unless such Party shall
have consented thereto in writing. This Agreement may not be amended, modified
or supplemented without the consent of the Financing Parties to the extent such
consent is required under the Financing Documents.
SECTION 11.10 No Implied Waiver.
No delay or failure on the part of either Party in exercising any
rights hereunder, and no partial or single exercise thereof, shall constitute a
waiver of such rights or of any other rights hereunder.
SECTION 11.11 Overdue Obligations to Bear Interest.
Except as provided in Section 4.1, all amounts due hereunder, whether
as damages, credits, revenue or reimbursements, that are not paid when due shall
bear interest at the Prime-Based Rate or, if lower, the maximum interest rate
permitted by law, on the amount outstanding from time to time, on the basis of a
365-day year and the actual number of days elapsed.
SECTION 11.12 Independent Contractor.
The Operator shall at all times act as and be deemed an independent
contractor and shall not act as nor be deemed to be an agent, servant or
employee of the Company.
SECTION 11.13 Access.
The Company and its representatives shall have the right at all times
to visit and inspect the Facility and the Site, and shall have the right, upon
reasonable notice and at reasonable times, to take visitors onto the Site and
into the Facility; provided, however, that such visits shall be conducted in a
manner so as to minimize interference with the Operator's performance hereunder
and to be in accordance with reasonable rules and procedures prescribed by the
Operator for such visits; and provided, further, that the Company and its
representatives and invitees shall have the right to enter the Facility and the
Site without notice or obligation to minimize interference with the Operator's
performance in the event of an emergency, including fire, vandalism or other
threats to public health or safety. During the term of this Agreement, the
Company shall provide the Operator and its agents, employees, subcontractors and
consultants full and free access at all times to the Facility to the extent
required to perform the services required by this Agreement.
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IN WITNESS WHEREOF, each of the Parties hereto, intending to be legally
bound, has caused this Agreement to be duly executed on its behalf on the date
first above written.
AES Prescott, L.L.C.
By: /s/ Patricia L. Rollin
--------------------------
Name: Patricia L. Rollin
Title: Vice President
AES Ironwood, L.L.C.,
By AES Ironwood, Inc.
By: /s/ Patricia L. Rollin
--------------------------
Name: Patricia L. Rollin
Title: Vice President
[DEVELOPMENT AND OPERATIONS SERVICES AGREEMENT]
<PAGE>
Exhibit 10.7
EXECUTION COPY
- --------------------------------------------------------------------------------
EFFLUENT SUPPLY AGREEMENT
by and between
AES IRONWOOD, INC.
and
CITY OF LEBANON AUTHORITY
--------------------------------------
Dated as of March 3, 1998
--------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS.............................................................................................1
ARTICLE II SUPPLY OF EFFLUENT.....................................................................................4
SECTION 2.1 EFFLUENT SUPPLY..............................................................................4
SECTION 2.2 COMPENSATION.................................................................................5
SECTION 2.3 SERVICE INTERRUPTIONS........................................................................6
SECTION 2.4 NON-CONFORMING EFFLUENT......................................................................6
ARTICLE III PIPELINE AND REAL ESTATE RIGHTS.......................................................................7
SECTION 3.1 CONCERNING THE PIPELINE......................................................................7
SECTION 3.2 OPERATION AND MAINTENANCE OF THE PIPELINE....................................................8
SECTION 3.3 CAPITAL IMPROVEMENTS TO THE PIPELINE.........................................................9
ARTICLE IV POTABLE WATER.........................................................................................10
SECTION 4.1 POTABLE WATER GENERALLY.....................................................................10
SECTION 4.2 ADDITIONAL POTABLE WATER....................................................................10
SECTION 4.3 CONNECTION TO POTABLE WATER SYSTEM..........................................................11
ARTICLE V ADDITIONAL OBLIGATIONS OF THE PARTIES..................................................................12
SECTION 5.1 ADDITIONAL OBLIGATIONS OF THE AUTHORITY.....................................................12
SECTION 5.2 ADDITIONAL OBLIGATIONS OF IRONWOOD..........................................................12
ARTICLE VI FORCE MAJEURE.........................................................................................13
SECTION 6.1 FORCE MAJEURE...............................................................................13
ARTICLE VII TERM.................................................................................................14
SECTION 7.1 TERM........................................................................................14
SECTION 7.2 EARLY TERMINATION FOR EVENT OF DEFAULT......................................................14
ARTICLE VIII MISCELLANEOUS.......................................................................................15
SECTION 8.1 AMENDMENTS, ETC.............................................................................15
SECTION 8.2 AMENDMENT...................................................................................15
SECTION 8.3 COOPERATION IN FINANCING....................................................................15
SECTION 8.4 NOTICES, ETC................................................................................16
SECTION 8.5 SEVERABILITY................................................................................16
SECTION 8.6 BINDING EFFECT..............................................................................16
SECTION 8.7 GOVERNING LAW...............................................................................16
SECTION 8.8 HEADINGS....................................................................................16
SECTION 8.9 EXECUTION IN COUNTERPARTS...................................................................16
SECTION 8.10 WAIVER OF JURY TRIAL........................................................................16
ARTICLE IX REPRESENTATION AND WARRANTIES OF THE PARTIES..........................................................17
SECTION 9.1 REPRESENTATIONS AND WARRANTIES OF THE AUTHORITY.............................................17
SECTION 9.2 REPRESENTATIONS AND WARRANTIES OF IRONWOOD..................................................18
</TABLE>
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EFFLUENT SUPPLY AGREEMENT
EFFLUENT SUPPLY AGREEMENT (this "Agreement"), dated as of March 3,
1998, by and between AES Ironwood, Inc. ("Ironwood") and the City of Lebanon
Authority (the "Authority"). Both Ironwood and the Authority are hereinafter
sometimes referred to as a "Party" and, collectively as the "Parties".
WHEREAS, Ironwood is developing a power generation facility (as further
defined below, the "Project") which will provide substantial benefits for the
Commonwealth of Pennsylvania and the Lebanon area.
WHEREAS, the Authority owns and operates a publicly-owned wastewater
treatment facility (as further defined below, the "Authority's Facility") for
the handling, treatment and disposal of wastewater which meets and is
anticipated to continue to meet all applicable governmental requirements (such
treated water, as further defined below, "Effluent"); and
WHEREAS, the Authority is willing to provide and Ironwood is willing to
accept, in each case pursuant to the terms of this Agreement, Effluent;
NOW THEREFORE, the Parties hereto, for good and valuable consideration
the receipt and sufficiency of which is hereby acknowledged, do hereby agree as
follows:
ARTICLE I
DEFINITIONS
"Additional Potable Water" has the meaning specified in Section 4.2.
"Authority's Facility" means the wastewater treatment facility owned
and operated by the Authority located in Lebanon, Pennsylvania which will
provide Effluent transported by and through the Pipeline under and in accordance
with the terms of this Agreement.
"Bankruptcy Event" means, in respect of any Person, (a) such Person
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 of all
or substantially all 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 of the benefit of its creditors, (iv) commence a voluntary
case under the Bankruptcy Code or any similar or corresponding insolvency law,
(v) file a petition seeking to take advantage of any law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or readjustment of debts,
(vi) fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against such Person in an involuntary case under
the Bankruptcy Code or any similar or corresponding insolvency law, or (vii)
take any other action for the purpose of effecting any of the foregoing; or (b)
a proceeding or case shall be commenced without the application or consent of
such Person in any court of competent jurisdiction, seeking (i) its liquidation,
reorganization, dissolution, winding-up, or the composition or readjustment of
debts,
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(ii) the appointment of a trustee, receiver, custodian, liquidator or the like
of such Person under any law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of debts, and such proceeding or case
shall continue undismissed, or any order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of 90 or more consecutive days, or any order for relief
against such Person shall be entered in an involuntary case under the Bankruptcy
Code or any similar or corresponding insolvency law.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions are authorized or obligated by law or executive
order to close in the City of New York or the Commonwealth of Pennsylvania.
"Capital Improvements" means any new equipment or facilities, or
replacement of existing equipment or facilities (in either case such as force
main piping or pumps) and related items necessary to ensure that the Pipeline is
capable of delivering Effluent to the Point of Delivery in the quantities
specified in this Agreement.
"Commencement Notice" means a written notice from Ironwood to the
Authority specifying that delivery of Effluent is to commence in accordance with
the terms of this Agreement.
"Effluent" means treated water provided from the Authority's Facility
which meets all applicable Governmental Approvals and is delivered through the
Pipeline.
"Excess Effluent" has the meaning specified in Section 2.1(d).
"Financing Parties" shall mean those Persons (other than Ironwood)
party to the loan contracts, promissory notes, documents, guarantee contracts,
mortgages, pledges, subordination contracts, assignment contracts, subscription
contracts, capital contribution contracts and other documents related to the
acquisition of debt (whether senior or subordinate) and capital to carry out the
Project, including any modification, extension, renewal, refinancing or
replacement of the same.
"Force Majeure" means an event beyond the reasonable control, and not
attributable to the negligence or willful misconduct, of the Party affected,
including but not limited to the following: flood; earthquake; storm; lightning;
fire; explosion; war; riot; civil disturbance; strike; sabotage; or electrical
outage; provided, however, that Force Majeure shall not include any equipment
failure due to normal wear and tear or due to neglected maintenance or repair.
"GDPIPD" means the Gross Domestic Price Implicit Price Deflator for a
calendar year as published in the United States Department of Commerce, Bureau
of Analysis publication entitled "Survey of Current Business".
"Governmental Approval" means any law, rule or regulation of any
Governmental Authority and any authorization, consent, approval, license,
franchise, lease, ruling, permit (including but not limited to any National
Pollutant Discharge Elimination System (NPDES)
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permit), tariff, rate, certification, exemption, filing or registration by or
with any Governmental Authority (including, without limitation, zoning
variances, special exceptions and non-conforming uses) relating to the
construction, ownership, operation or maintenance of the Project, the Pipeline
or the Authority's Facility (including those relating to Effluent), as the case
may be.
"Governmental Authority" means any national, federal, state,
provincial, departmental or municipal government or any political subdivision
thereof, and any other entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, and any
other governmental entity with authority over any aspect of the construction or
operation of the Project, the Pipeline or the Authority's Facility, but
excluding in each case the Authority.
"Non-Conforming Effluent" means treated wastewater from the Authority's
Facility which would otherwise be Effluent but for its failure to meet all
requirements of applicable Governmental Approvals.
"Non-Conforming Notice" has the meaning specified in Section 2.4(a).
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, incorporated or unincorporated association,
joint stock company, trust, or other unincorporated organization, governmental
body, instrumentality or agency, or other entity of any kind.
"Pipeline" means the approximately 7 mile pipeline, related pumphouse
and ancillary facilities required to connect the Project with the Authority's
Facility for the purpose of delivery of Effluent in accordance with this
Agreement. The Pipeline will be comprised of, among other things, an
approximately 18" diameter force main piping and related pumphouse with a design
capacity of 3000 gallon per minute rate, such pumphouse to include separate
electric metering equipment to measure the consumption of electricity by the
equipment comprising the pumphouse.
"Point of Delivery" means the point where the Pipeline, including any
Capital Improvements thereto, is physically connected to the Project, which
location shall be at or inside the border of Ironwood's property and which shall
be as otherwise agreed to by the Parties.
"Potable Connection" has the meaning specified in Section 4.3.
"Potable Delivery Point" means the point where the Authority's potable
water system is physically connected to the Project, which location shall be at
or inside the border of Ironwood's property and which shall be as otherwise
agreed to by the Parties.
"Project" means the power generation facility to be constructed in
South Lebanon, Pennsylvania, including any water supply facilities installed by
Ironwood on Ironwood's side of the Point of Delivery.
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"Project Financial Closing" means the date Ironwood obtains an initial
drawdown on the financing for the construction of the Project. Ironwood agrees
to provide written notice to the Authority within thirty (30) days after
Ironwood obtains such initial drawdown.
"Real Estate Rights" means those interests in real estate of a
recordable and insurable nature, including but not limited to fee interests,
easements and rights of way and any other interests in real estate reasonably
acceptable to Ironwood including revocable or irrevocable licenses, necessary or
desirable for the siting of the Pipeline. All Real Estate Rights shall be in the
name of the Authority and shall explicitly provide for a right of access to
Ironwood or its contractors or agents in order to carry out Ironwood's rights or
obligations under this Agreement.
"Shortfall Notice" has the meaning specified in Section 2.1(b).
ARTICLE II
SUPPLY OF EFFLUENT
SECTION 2.1 Effluent Supply.
(a) Subsequent to completion of the Pipeline and promptly following
delivery of a Commencement Notice and throughout the Term of this Agreement, the
Authority shall make available to Ironwood a supply of Effluent not less than
the quantity specified in Section 2.1(b). Except as contemplated by Section
2.1(d), but without prejudice to Section 2.1(b), the amount of Effluent required
to be made available to Ironwood shall not exceed:
(i) 4,600,000 gallons per day; or
(ii) 1,679,000,000 gallons per calendar year.
(b) Upon commencement of deliveries of Effluent, the Authority shall
make available a daily quantity of Effluent of not less than 2,160,000 gallons
per day. If the Authority is unable on any day to make available such daily
minimum quantity of Effluent, whether due to a shortage of Effluent, due to the
presence of Non-Conforming Effluent or otherwise, the Authority shall promptly
(but in any event within 5 hours of obtaining knowledge thereof) notify Ironwood
orally (with prompt written confirmation thereof) or in writing of such
inability to provide the minimum daily quantity of Effluent (a "Shortfall
Notice"). Each Shortfall Notice shall specify (i) that a shortfall in the
delivery of Effluent has occurred or will occur, the amount of such shortfall,
the reasons for such shortfall and the anticipated length of such shortfall,
including in each case all relevant dates, (ii) the steps the Authority is
taking to remedy the shortfall, and (iii) the amount of additional potable
water, if any, that the Authority determines in its sole discretion that it can
make available to Ironwood from its potable water system. If Ironwood elects to
accept potable water from the Authority, the provisions of Section 4.2 shall
apply to such acceptances.
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(c) All Effluent shall be provided at a pressure customary for similar
service and mutually agreed to by the Parties. Actual acceptances of Effluent by
Ironwood may be less than the maximum allowed, and actual usage will, at the
sole discretion of Ironwood, vary according to the electric dispatch of the
Project, weather conditions and electrical outages (forced or scheduled).
Ironwood shall not be obligated to purchase any minimum amount of Effluent under
this Agreement and shall be entitled to seek and obtain water from other
available sources. Title and risk of loss of Effluent shall pass to Ironwood
upon Ironwood's receipt of such Effluent at the Point of Delivery. Until such
time as title to Effluent passes to Ironwood, the Authority shall bear risk of
loss of Effluent and shall retain liability for any and all claims, costs,
demands, damages, expenses, liabilities and losses relating to Effluent or other
discharges from the Authority's Facility.
(d) The Authority shall use best efforts to comply with requests by
Ironwood for Effluent in excess of the amounts specified in Section 2.1(a) above
("Excess Effluent") and any acceptances of Excess Effluent shall be in
accordance with the terms of this Agreement, including but not limited to
Section 2.2. The foregoing provisions of this Section 2.1(d) notwithstanding, if
the Authority shall receive a good faith proposal from an unaffiliated
third-party to purchase Excess Effluent on terms and conditions substantially
equivalent to those set forth in this Agreement (other than price), the
Authority may elect to provide such Excess Effluent to such unaffiliated
third-party; provided, however, prior to the Authority executing any binding
agreements with such unaffiliated third-party for the supply of Excess Effluent,
Ironwood shall have 90 days to match the offer of such unaffiliated third-party
and, provided Ironwood matches or exceeds the price specified by such
unaffiliated third-party, the Authority shall supply such Excess Effluent to
Ironwood pursuant to the terms of this Agreement and the Parties shall amend
this Agreement to provide for delivery of Excess Effluent and the price
therefore.
(e) Solely for informational purposes, Ironwood shall from time to time
notify the Authority of its anticipated Effluent needs and the Parties shall
work together in good faith to coordinate the timing of delivery of Effluent in
accordance with such notice and the other terms of this Agreement. Subject to
the requirements of applicable Governmental Approval and prudent practice, the
Authority shall use its best efforts to coordinate any transmission of Effluent
discharge so as to maximize the quantity of Effluent made available to Ironwood
with due regard to the timing of the Project's Effluent requirements.
(f) notwithstanding, the Authority shall, at all times during the Term,
use its best efforts to meet Ironwood's minimum Effluent requirements.
SECTION 2.2 Compensation.
(a) Ironwood will pay the Authority monthly for all Effluent delivered
to the Point of Delivery during the prior month. The base rate for Effluent
supplied shall be according to the following schedule:
GALLONS PER DAY $/PER THOUSAND GALLONS
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0 - 2,160,000 $0.29
2,160,001 or greater $0.21
(b) The amounts specified in Section 2.2(a) above are stated as of
January 1, 1998. During the Term such rates shall be subject to annual
escalation in accordance with GDPIPD (with 1998 being the base year), or if the
parties so elect, such other mutually agreeable escalation index.
SECTION 2.3 Service Interruptions.
Upon the event of a temporary interruption or curtailment in Effluent
delivery attributable to a break or leak in the Pipeline or otherwise, the
Authority shall have a reasonable period of time, not to exceed 18 hours from
the commencement of the interruption or curtailment, to make needed repairs and
to restore full service. The Authority shall provide a Shortfall Notice in
accordance with Section 2.1(b) upon the interruption or curtailment of Effluent
under this Section. If the Authority fails to restore full service within such
period of time, the following provisions shall apply:
(a) Ironwood has the right, but not the obligation, to contract with
such contractors as reasonably approved by the Authority from time to time to
step in and remedy the interruption or curtailment, with the good faith
cooperation and under the direction of an Authority engineer or other duly
appointed official of the Authority.
(b) All reasonable costs associated with the taking of actions under
Section 2.3(a) will be borne by Ironwood.
SECTION 2.4 Non-Conforming Effluent.
(a) If the Authority becomes aware that it has provided or will provide
Non-Conforming Effluent, the Authority shall promptly (but in any event within 5
hours of obtaining knowledge thereof) notify Ironwood orally (with prompt
written confirmation thereof) or in writing (a "Non-Conforming Notice"). Each
Non-Conforming Notice shall specify (i) when deliveries of Non-Conforming
Effluent began or will begin, (ii) the amount of Non-Conforming Effluent
delivered or to be delivered, (iii) the cause of such effluent being
Non-Conforming Effluent, (iv) the steps the Authority is taking to remedy the
situation and (v) the amount of potable water, if any, that the Authority
determines in its sole discretion it can make available to Ironwood from its
potable water system. If Ironwood elects to accept potable water from the
Authority, the provisions of Section 4.2 shall apply to such acceptances.
(b) Ironwood shall have the right to reject all Non-Conforming
Effluent. Authority shall have the responsibility at its own cost and expense to
accept and treat or re-treat any Non-Conforming Effluent rejected by Ironwood.
Ironwood shall have the responsibility at its own cost and expense to transport
to the Authority at the nearest available and practicable point of entry into
the Authority's Waste Water collection system any Non-Conforming Effluent it
rejects. Ironwood and the Authority will cooperate in Ironwood's creation of the
transportation
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<PAGE>
system for such rejected Non-Conforming Effluent in the same manner as set forth
in Section 3.1 of this Agreement. If Ironwood elects to construct a pipeline to
transport to the Authority Non-Conforming Effluent which it has rejected to said
point of entry, the Authority will, subject to its approval of plans and
specifications for said pipeline, accept, own and maintain said pipeline.
(c) If Ironwood elects to accept any Non-Conforming Effluent, the
Parties shall meet and agree to the price which shall apply to such
Non-Conforming Effluent.
(d) The Authority acknowledges and agrees that it shall, subject to the
applicable law of the Commonwealth of Pennsylvania (including those that relate
to municipality authorities) be solely responsible to pay for, or reimburse
Ironwood to the extent Ironwood has paid for, all claims, costs, demands,
damages, expenses, increased operation and maintenance expenses or costs
(including those relating to the Project, the Pipeline or the Authority's
Facility), liabilities and repairs or replacement of equipment (including
repairs or replacement of equipment of the Project, the Pipeline or the
Authority's Facility) arising, directly or indirectly, from the delivery of any
Non-Conforming Effluent under this Agreement unless the delivery of such
Non-Conforming Effluent was notified and accepted in accordance with the terms
of this Agreement.
ARTICLE III
PIPELINE AND REAL ESTATE RIGHTS
SECTION 3.1 Concerning the Pipeline.
(a) Ironwood shall be solely responsible, at its cost and expense, for
constructing and installing the Pipeline. As soon as is reasonably practical
following the execution of this Agreement and from time to time thereafter as is
reasonably necessary, the Parties shall meet to discuss the final design and
siting of the Pipeline. The Parties agree to cooperate in good faith to effect
the purposes of this Article.
(b) Ironwood shall be solely responsible, at its cost and expense, for
final design of the Pipeline, the selection of the contractor to construct the
Pipeline and the siting of the Pipeline. The Authority shall have the right to
review and comment on the design of the Pipeline, the selection of the
Contractor and the siting of the Pipeline and Ironwood shall incorporate those
of the Authority's comments that it finds reasonable and in accordance with
prudent practice and applicable Governmental Approvals.
(c) Ironwood and the Authority shall cooperate in good faith to obtain
the necessary Real Estate Rights for the construction, operation and maintenance
of and access to the Pipeline. From time to time Ironwood and the Authority
shall meet and discuss the siting of the Pipeline and the course of action best
suited to obtain such Real Estate Rights in the most time efficient manner and
with the least cost. If Ironwood provides the Authority with written notice
requesting the Authority to exercise its power of eminent domain in order to
obtain the Real Estate Rights, the Authority promptly shall exercise such
eminent domain power to obtain the applicable Real Estate Rights.
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(d) Ironwood shall, from time to time, provide the Authority with
progress reports (whether oral or written) relating to the design, siting and
construction of the Pipeline. Ironwood shall give the Authority prompt written
notice of completion of the Pipeline. Upon completion of the Pipeline, the
Parties shall execute such agreements and documents as shall be necessary to
evidence the Authority's ownership of the Pipeline. No compensation shall be due
to Ironwood from the Authority for construction of the Pipeline or for the
Authority accepting ownership of the Pipeline.
(e) Ironwood shall bear the costs and expenses in connection with the
design, construction and siting of the Pipeline. In addition, Ironwood shall
reimburse the Authority for its reasonable costs and expenses (including
reasonable costs and expenses of legal counsel and technical advisors approved
by Ironwood in writing) in connection with the design, construction and siting
of the Pipeline, including obtaining the necessary Real Estate Rights.
SECTION 3.2 Operation and Maintenance of the Pipeline.
(a) The Authority shall operate and maintain the Pipeline in a
workmanlike manner, consistent with prudent practices and shall continuously
maintain the Pipeline in good operating condition and in compliance with all
Governmental Approvals applicable to the Pipeline. Such operation and
maintenance shall be accomplished in a manner so as to minimize to the maximum
extent practicable any disruption or interruption in the services to be provided
under this Agreement.
(b) Ironwood shall own and maintain, on its side of the Point of
Delivery, metering equipment to measure the delivery of Effluent to the Point of
Delivery. Ironwood shall read the meters daily to determine the quantities of
Effluent supplied for billing purposes. Ironwood shall keep records of the daily
amount of Effluent delivered to the Point of Delivery in accordance with this
Agreement and, not later than five (5) days after the end of each month
following the commencement of delivery of Effluent under this Agreement, provide
written notice to the Authority of the amount of Effluent so delivered for each
day of such month. At least once every year, or more frequently if the Authority
reasonably requests, and with at least one week prior written notice to the
Authority, Ironwood shall test the accuracy of the metering equipment, at which
time the Authority shall have the right to be present. If such test indicates
that the metering equipment is not measuring accurately, Ironwood shall
recalibrate or replace the metering equipment and, if appropriate, a billing
adjustment shall be made.
(c) The Authority shall own and maintain metering equipment to measure
the delivery of Effluent to the Point of Delivery. The Authority may elect to
read the meters monthly to confirm the quantities of Effluent supplied. At least
once every year, or more frequently if requested by Ironwood, and with at least
one week prior written notice to Ironwood, the Authority shall test the accuracy
of the metering equipment, at which time Ironwood shall have the right to be
present. If such test indicates that the metering equipment is not measuring
accurately, the Authority shall recalibrate or replace the metering equipment.
(d) As compensation for the Authority operating and maintaining the
Pipeline in accordance with this Agreement, Ironwood shall pay to the Authority
$18,250 per year, pro rated
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for partial years. Such amount is stated as of January 1, 1998 and during the
Term such amount shall be subject to escalation in accordance with GDPIPD (with
1998 being the base year), or if the parties so elect, such other mutually
agreeable escalation index.
(e) In addition to the amount specified in the preceding subsection,
Ironwood shall reimburse the Authority for the cost of electricity consumed by
the pumphouse comprising part of the Pipeline, as measured by the electricity
meters included in the Pipeline. At least once every year, or more frequently if
reasonably requested by Ironwood, and with at least one week prior written
notice to Ironwood, the Authority shall test the accuracy of the electric
metering equipment, at which time Ironwood shall have the right to be present.
If such test indicates that the metering equipment is not measuring accurately,
the Authority shall recalibrate or replace the metering equipment and, if
appropriate, a billing adjustment shall be made. If Ironwood may, consistent
with all applicable Governmental Approvals and prudent practice, provide the
electric power required to operate the Pipeline, then Ironwood may elect to do
so by providing to the Authority written notice to that effect and the Parties
agree to cooperate in good faith to achieve that end. If Ironwood does provide
such electric power the other terms of this subsection shall no longer be
applicable.
(f) If the Authority reasonably determines that the compensation
provided for in the two preceding subsections does not adequately reimburse the
Authority for the costs and expenses actually incurred by the Authority in
connection with operation and maintenance of the Pipeline in accordance with
this Agreement, the Authority may provide written notice to Ironwood to that
effect. Thereafter the Parties shall meet in good faith to discuss the issue
with the goal of reaching a mutually acceptable reimbursement level for the
Authority's costs and expenses relating to operation and maintenance of and
access to the Pipeline. If the Parties are not able to reach a mutually
acceptable arrangement in respect thereof, Ironwood shall have the right to
determine if it may operate and maintain, or cause a third-party to operate and
maintain, the Pipeline. In connection therewith, the Authority shall use its
best efforts to accommodate any reasonable request of Ironwood or such
third-party to allow the operation and maintenance of the Pipeline, including
but not limited to the execution of all such documents and instruments as may be
necessary or advisable to allow such operation and maintenance. The foregoing
notwithstanding, until such time as mutually acceptable alternative arrangements
have been agreed to by the Parties, a dispute concerning the level of
reimbursement to the Authority shall not relieve the Authority of its obligation
to operate and maintain the Pipeline in accordance with the requirements of this
Agreement.
SECTION 3.3 Capital Improvements to the Pipeline.
(a) In the event the Authority or Ironwood reasonably determines that
Capital Improvements to the Pipeline are required, such Party shall notify the
other Party and the Parties shall meet in good faith to determine the scope of
such Capital Improvements.
(b) Ironwood shall determine if it would be more cost effective or
expeditious for it or a contractor, as opposed to the Authority, to implement
the Capital Improvements agreed upon in accordance with Section 3.3(a).
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(c) In the event Ironwood determines to implement the Capital
Improvements itself or through a contractor reasonably acceptable to the
Authority, Ironwood or such contractor shall coordinate with the Authority in
order to ensure the minimum disruption of the Parties' activities under this
Agreement. The Authority agrees to use its best efforts to assist Ironwood or
such contractor in completing the Capital Improvements and agrees to promptly
execute such documents and instruments as may be necessary or desirable to
complete the Capital Improvements.
(d) In the event Ironwood determines that it would be more cost
effective or expeditious for the Authority to implement the Capital
Improvements, Ironwood shall give the Authority written notice to that effect.
Upon receipt of such notice the Authority shall use its best efforts to promptly
implement the Capital Improvements with the minimum disruption of the Parties'
activities under this Agreement; provided, that prior to implementing such
Capital Improvements the Authority shall allow Ironwood to approve any
contractor performing the work (which approval shall not be unreasonably
withheld), and shall provide to Ironwood a budget and work plan (including
timetable) for the implementation of the Capital Improvements.
(e) Ironwood shall bear its own costs and expenses in connection with
the implementation of the Capital Improvements. In addition, Ironwood shall
reimburse the Authority for its reasonable costs and expenses in connection with
the implementation of the Capital Improvements; provided such costs and expenses
are consistent with the budget provided by the Authority and approved by
Ironwood.
(f) In the event that the Authority or its agents causes damage to the
property of Ironwood (including but not limited to the Project) while
constructing, installing, operating, maintaining or repairing the Capital
Improvements or the Pipeline, the Authority shall restore or pay Ironwood to
restore, at Ironwood's election, Ironwood's property or the Project as nearly as
possible to its condition prior to such damage. In the event that Ironwood
causes damage to the Capital Improvements or Pipeline while constructing,
installing, operating, maintaining or repairing the Project, Ironwood shall
restore or pay the Authority to restore, at the Authority's election, the
Capital Improvements or Pipeline as nearly as possible to its condition prior to
such damage. The provisions of this Section 3.3(f) are subject to all applicable
laws of the Commonwealth of Pennsylvania (including those that relate to
municipality authorities).
ARTICLE IV
POTABLE WATER
SECTION 4.1 Potable Water Generally.
The Authority shall make available to Ironwood on a continuous basis a
potable water supply of not less than fifty (50) gallons per minute. Ironwood
shall not be obligated to purchase a minimum amount of potable water under this
Agreement. Ironwood shall pay the Authority for potable water accepted at the
Potable Delivery Point at the rate applicable to Ironwood (based on
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user classification or consumption rate, as applicable) set forth in the
Authority's applicable rate schedule.
SECTION 4.2 Additional Potable Water.
In addition to the potable water to be provided under Section 4.1, in
the event the Authority has delivered a Shortfall Notice or a Non-Conforming
Notice specifying that Additional Potable Water is available, the Authority will
in accordance with the applicable notice delivered by the Authority, but subject
to prudent practice and applicable Governmental Approvals, make available to
Ironwood at the Potable Delivery Point such Additional Potable Water. Ironwood
shall pay the Authority for Additional Potable Water accepted at the Potable
Delivery Point at the rate applicable to Ironwood (based on user classification
or consumption rate, as applicable) set forth in the Authority's applicable rate
schedule.
SECTION 4.3 Connection to Potable Water System.
(a) As soon as reasonably practical after execution of this Agreement,
Ironwood and the Authority shall meet to discuss the connection of the Project
with the Authority's potable water system (the "Potable Connection").
(b) Ironwood shall determine if it would be more cost effective or
expeditious for it or a contractor, as opposed to the Authority, to implement
the Potable Connection agreed upon in accordance with Section 4.3(a).
(c) In the event Ironwood determines to implement the Potable
Connection itself or through a contractor reasonably acceptable to the
Authority, Ironwood or such contractor shall coordinate with the Authority in
order to ensure proper implementation of the Potable Connection. The Authority
agrees to use its best efforts to assist Ironwood or such contractor in
completing the Potable Connection and agrees to promptly execute such documents
and instruments as may be necessary or desirable to complete the Potable
Connection.
(d) In the event Ironwood determines that it would be more cost
effective or expeditious for the Authority to implement the Potable Connection,
Ironwood shall give the Authority written notice to that effect. Upon receipt of
such notice the Authority shall use its best efforts to promptly implement the
Potable Connection; provided, that prior to implementing such Potable Connection
the Authority shall allow Ironwood to approve any contractor performing the work
(which approval shall not be unreasonably withheld), and shall provide to
Ironwood a budget and work plan (including timetable) for the implementation of
the Potable Connection.
(e) Ironwood shall bear its own costs and expenses in connection with
the implementation of the Potable Connection. In addition, Ironwood shall
reimburse the Authority for its reasonable costs and expenses in connection with
the implementation of the Potable Connection; provided such costs and expenses
are consistent with the budget provided by the Authority and approved by
Ironwood.
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ARTICLE V
ADDITIONAL OBLIGATIONS OF THE PARTIES
SECTION 5.1 Additional Obligations of the Authority.
(a) Promptly upon obtaining knowledge thereof (but in any event within
5 hours of obtaining knowledge thereof), the Authority shall provide Ironwood
with oral (with prompt written confirmation thereof) or written notice of any
violation of applicable Governmental Approvals relating to the Authority's
Facility.
(b) Promptly after submission thereof to the applicable Governmental
Authority, the Authority shall provide Ironwood with a copy of any report,
filing, notice, request for variance or similar document filed with or submitted
to a Governmental Authority that relates to the Authority's Facility.
(c) Not later than the fifteenth day of each month following the
commencement of delivery of Effluent or at such other time as required in
accordance with this Agreement, the Authority shall provide to Ironwood a
written invoice specifying in reasonable detail (including the method of
calculation of any amounts invoiced) the amount claimed by the Authority from
Ironwood in accordance with this Agreement, including amounts under Sections
2.2, 3.1(e), 3.2(C), 3.2(d), 3.3, 4.1, 4.2 and 4.3. Undisputed amounts set forth
in any invoice shall be due and payable by Ironwood not later than 30 days
following receipt of such invoice.
(d) The Authority shall, upon prior written or oral request therefore,
provide Ironwood, the Financing Parties and each of their respective agents and
representatives with escorted access during normal business hours to the
Authority's Facility, the Pipeline and the other property of the Authority as
may be reasonably requested in connection with the development, financing,
construction, operation and maintenance of the Project. The Authority shall,
upon prior written or oral request therefore, provide Ironwood, the Financing
Parties and each of their respective agents and representatives with access
during normal business hours to (and the right to reproduce) the Authority's
books and records (including books and records relating to Governmental
Approvals and compliance therewith) as may be reasonably necessary in connection
with the development, financing, construction, operation and maintenance of the
Project.
(e) Upon the reasonable request of Ironwood, the Authority shall, at
the cost and expense of Ironwood, execute such additional certificates,
documents, instruments, agreements and take such actions as may be reasonably
required to give effect to the terms and conditions of this Agreement.
SECTION 5.2 Additional Obligations of Ironwood.
(a) Promptly upon obtaining knowledge thereof (but in any event within
5 hours of obtaining knowledge thereof), Ironwood shall provide the Authority
with oral (with prompt
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written confirmation thereof) or written notice of any violation by the
Authority of applicable Governmental Approvals relating to Effluent delivery by
the Authority in accordance with this Agreement.
(b) Not later than the fifteenth day of each month following the
commencement of delivery of Effluent or at such other time as required in
accordance with this Agreement, Ironwood shall provide to the Authority a
written invoice specifying in reasonable detail (including the method of
calculation of any amounts invoiced) the amount claimed by Ironwood from the
Authority in accordance with this Agreement. Undisputed amounts set forth in any
invoice shall be due and payable by the Authority not later than 30 days
following receipt of such invoice.
(c) Upon the reasonable request of the Authority, Ironwood shall, at
its cost and expense, execute such additional certificates, documents,
instruments, agreements and take such actions as may be reasonably required to
give effect to the terms and conditions of this Agreement.
ARTICLE VI
FORCE MAJEURE
SECTION 6.1 Force Majeure.
If either Party shall be unable to carry out any obligation under this
Agreement due to Force Majeure, this Agreement shall remain in effect, but such
obligation shall be suspended for the period necessary as a result of the Force
Majeure, provided, that:
(a) the non-performing Party gives the other Party written notice not
later than forty-eight (48) hours after the occurrence of the Force Majeure
describing the particulars of the Force Majeure, including but not limited to
the nature of the occurrence and the expected duration of the disability, and
continues to furnish timely regular reports with respect thereto during the
period of Force Majeure and the disability;
(b) the suspension of performance is of no greater scope and of no
longer duration than is required by the Force Majeure; and
(c) the non-performing Party uses its best efforts to remedy its
inability to perform.
Notwithstanding the foregoing, the settlement of strikes, lockouts, and other
labor disputes shall be entirely within the discretion of the affected Party,
and such Party shall not be required to settle any strike, lockout or other
labor dispute on terms which it deems inadvisable.
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ARTICLE VII
TERM
SECTION 7.1 Term.
(a) This Agreement shall take effect upon execution of the appropriate
counterpart by each Party and, except as provided in Section 7.1(b), Section
7.1(c) or Section 7.2 below, shall remain in effect for a period of twenty-five
(25) years (the "Term"). Ironwood may elect, in its sole election, to extend
this Agreement for one (1) or more (but in no event more than four (4))
successive five (5) year terms by providing written notice to that effect to the
Authority not later than one (1) month prior to the expiration of the then
effective Term. All references in this Agreement to the word "Term" shall mean
the initial twenty-five (25) year Term as extended by Ironwood.
(b) This Agreement may be terminated by Ironwood in its sole discretion
(i) if Ironwood is unable to obtain financing for the Project or (ii) if
Ironwood is unable to obtain all permits, licenses, and approvals necessary to
construct and operate the Project. Termination under this Section 7.1(b) shall
be effective upon the Authority's receipt of notice to that effect.
(c) Either Party may terminate this Agreement if Ironwood has not
delivered a Commencement Notice on or prior to December 31, 2004. In the event a
Commencement Notice is delivered subsequent to December 31, 2004, but prior to
the delivery of written notice terminating this Agreement under this Section
7.1(c), this Section 7.1(c) shall become inapplicable.
SECTION 7.2 Early Termination for Event of Default.
(a) Ironwood may terminate this Agreement (i) upon a Bankruptcy Event
of the Authority or (ii) if the Authority fails to perform or observe any of its
material obligations under this Agreement within the time contemplated by this
Agreement and such failure continues for a period of time greater than thirty
(30) days from the Authority's receipt of notice thereof; provided, that if the
Authority is diligently pursuing a cure of such failure and such failure is not
capable of remedy within such thirty (30) day period, such thirty (30) day
period shall be extended to such period of time as Ironwood may agree in its
sole discretion. For the avoidance of doubt, it is understood that the failure
to provide Effluent shall be grounds for early termination under this Section;
provided, that if the failure to provide Effluent is excused due to the
occurrence of Force Majeure, Ironwood may only terminate this Agreement if such
Force Majeure continues for a period of time in excess of 60 days whether or not
such failure is excused by the occurrence of such Force Majeure.
(b) The Authority may terminate this Agreement (i) upon a Bankruptcy
Event of Ironwood or (ii) if Ironwood fails to perform or observe any of its
material obligations under this Agreement within the time contemplated by this
Agreement and such failure continues for a period of time greater than thirty
(30) days from the Authority's receipt of notice thereof;
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provided, that if Ironwood is diligently pursuing a cure of such failure and
such failure is not capable of remedy within such thirty (30) day period, such
thirty (30) day period shall be extended to such period of time as the Authority
may agree in its sole discretion. The foregoing notwithstanding, the Authority
may not terminate this Agreement without first giving the Financing Parties
written notice of the Authority's intention to terminate this Agreement and
giving such Financing Parties an additional reasonable period of time (but in
any event not less than an additional 90 days) to remedy the event giving rise
to the right of the Authority to terminate this Agreement. Ironwood covenants
and agrees to give written notice to the Authority concerning the identities and
contact information of the Financing Parties from time to time and the Authority
shall only be obligated to provide the aforementioned notice to Financing
Parties of which it has received notice.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Amendments, Etc..
No amendment or waiver of any provision of this Agreement shall be
effective unless in writing and signed or consented to by the Parties and then
such waiver shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION 8.2 Amendment.
Neither Party may assign this Agreement without the prior written
consent of the other Party; provided, however, that Ironwood may assign this
Agreement to the Financing Parties without the prior written consent of the
Authority.
SECTION 8.3 Cooperation in Financing.
The Authority agrees to cooperate from time to time with Ironwood and
the Financing Parties in connection with the financing of the Project. In
furtherance thereof, the Authority agrees to enter into such consents to
assignments or other agreements as Ironwood or the Financing Parties may
reasonably request and the Authority agrees to provide such certificates from
its officers and such opinions of counsel (which may be outside counsel) as
Ironwood or the Financing Parties may reasonably request. Ironwood agrees to
reimburse the Authority for any costs and expenses reasonably incurred by the
Authority in complying with its obligations under this Section 8.3, including
the reasonable fees and expenses of counsel to the Authority.
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SECTION 8.4 Notices, Etc..
All notices and other communications provided for hereunder shall be in
writing (including by telecopier) and shall be mailed, telecopied or delivered,
if to Ironwood, to it at 829 Cumberland Street, Lebanon, Pennsylvania 17042,
Attention: Project Manager and a copy to The AES Corporation, 1001 North 19th
Street, Arlington, Virginia 22209; if to the Authority, to it at 400 South
Eighth Street, Lebanon, Pennsylvania 17042, Attention: Public Works Director, as
to each Party, to it at such other address or telecopier number as designated by
such Party in a written notice to the other Parties. All such notices and
communications shall be deemed received, (a) if personally delivered, upon
delivery, (b) if sent by first class mail, on the third business day following
deposit into the mails and (c) if sent by telecopier, upon acknowledgement of
receipt thereof by the recipient.
SECTION 8.5 Severability.
Any provision of this Agreement that is prohibited, unenforceable or
not authorized in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, unenforceability or
nonauthorization without invalidating the remaining provisions of this Agreement
or affecting the validity, enforceability or authorization of such provision in
any other jurisdiction.
SECTION 8.6 Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors and permitted assigns.
SECTION 8.7 Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA WITHOUT REFERENCE TO THE CONFLICT
OF LAW PRINCIPLES THEREOF.
SECTION 8.8 Headings.
The section and subsection headings used herein have been inserted for
convenience of reference only and do not constitute matters to be considered in
interpreting this Agreement.
SECTION 8.9 Execution in Counterparts.
This Agreement may be executed in any number of counterparts and by
different Parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
SECTION 8.10 Waiver of Jury Trial.
THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE
RIGHT EACH MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
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LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT AND ANY AGREEMENTS CONTEMPLATED HEREBY TO BE EXECUTED IN CONJUNCTION
THEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF EACH PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR THE PARTIES ENTERING INTO THIS AGREEMENT.
ARTICLE IX
REPRESENTATION AND WARRANTIES OF THE PARTIES
SECTION 9.1 Representations and Warranties of the Authority.
The Authority hereby represents and warrants to and for the benefit of
Ironwood as follows:
(a) Organization and Qualification. The Authority (i) is a governmental
body, duly organized and validly existing under the laws of the Commonwealth of
Pennsylvania, with full right, power and authority under its organizational
documents and under the laws of the Commonwealth of Pennsylvania to enter into
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby, and (ii) has the power to carry on its
business as now being conducted and as proposed to be conducted.
(b) Authorization and Enforceability. The Authority has taken all
necessary action to authorize the transactions contemplated by this Agreement.
This Agreement has been duly executed and delivered by the Authority and
constitutes the legal, valid and binding obligation of the Authority enforceable
in accordance with its terms, except as the enforceability thereof may be
limited by (i) bankruptcy, insolvency, reorganization 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.
(c) No Conflict. Neither the execution and delivery of this Agreement
nor compliance with any of the terms and provisions hereof (i) contravenes any
Governmental Approval applicable to the Authority or any of its respective
properties or other assets, (ii) conflicts with, breaches or contravenes the
provisions of the organizational documents of the Authority or any contractual
obligation of the Authority, or (iii) results in the creation or imposition of
any lien upon any of the property or assets of the Authority under, or in a
condition or event that constitutes (or that, upon notice or lapse of time or
both, would constitute) an event of default under any contractual obligation of
the Authority.
(d) Governmental Approvals. No Governmental Approval is required (other
than those which have previously been obtained and are in full force and effect)
to authorize, or is required in connection with the execution and delivery of
this Agreement by the Authority.
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SECTION 9.2 Representations and Warranties of Ironwood.
Ironwood hereby represents and warrants to and for the benefit of the
Authority as follows:
(a) Organization and Qualification. Ironwood (i) is a corporation, duly
organized and validly existing under the laws of the state of its incorporation,
with full right, power and authority under its organizational documents and
under the laws of the state of its incorporation to enter into this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby, and (ii) has the power to carry on its business as now
being conducted and as proposed to be conducted.
(b) Authorization and Enforceability. Ironwood has taken all necessary
action to authorize the transactions contemplated by this Agreement. This
Agreement has been duly executed and delivered by Ironwood and constitutes the
legal, valid and binding obligation of Ironwood enforceable in accordance with
its terms, except as the enforceability thereof may be limited by (i)
bankruptcy, insolvency, reorganization 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.
(c) No Conflict. Neither the execution and delivery of this Agreement
nor compliance with any of the terms and provisions hereof (i) contravenes any
Governmental Approval applicable to Ironwood or any of its respective properties
or other assets, (ii) conflicts with, breaches or contravenes the provisions of
the organizational documents of Ironwood or any contractual obligation of
Ironwood, or (iii) results in the creation or imposition of any lien upon any of
the property or assets of Ironwood under, or in a condition or event that
constitutes (or that, upon notice or lapse of time or both, would constitute) an
event of default under any contractual obligation of Ironwood.
(d) Governmental Approvals. No Governmental Approval is required (other
than those which have previously been obtained and are in full force and effect)
to authorize, or is required in connection with the execution and delivery of
this Agreement by Ironwood.
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IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be executed by their duly authorized officers and attested on the date first
above written.
AES IRONWOOD, INC.
ATTEST:
By: /s/ Alicia J. Slinn By: /s/ Patricia L. Rollin
----------------------------- --------------------------
Name: Alicia J. Slinn Name: Patricia L. Rollin
Title: Administrative Assistant Title: Vice President AES Ironwood, Inc.
AES Ironwood, Inc.
CITY OF LEBANON AUTHORITY
ATTEST:
By: /s/ George E. Patton, Jr. By: /s/ David S. Etter
----------------------------- --------------------------
Name: George E. Patton, Jr. Name: David S. Etter
Title: Secretary Title: Chairman
<PAGE>
Exhibit 10.8
GENERATION FACILITY
TRANSMISSION INTERCONNECTION AGREEMENT
BETWEEN
METROPOLITAN EDISON COMPANY
d/b/a GPU Energy
AND
AES IRONWOOD, L.L.C.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1: DEFINITIONS...................................................2
ARTICLE 2: EFFECTIVE DATE AND TERM.......................................8
ARTICLE 3: RESPONSIBILITIES OF THE COMPANY...............................9
ARTICLE 4: RESPONSIBILITIES OF THE POWER PRODUCER.......................11
ARTICLE 5: MODIFICATIONS TO FACILITIES, INTERCONNECTIONS................14
ARTICLE 6: OPERATION....................................................17
ARTICLE 7: MAINTENANCE NOTIFICATION AND COORDINATION....................18
ARTICLE 8: REVENUE METERING.............................................20
ARTICLE 9: LAND RIGHTS AND ACCESS.......................................23
ARTICLE 10: INSURANCE....................................................23
ARTICLE 11: PERFORMANCE..................................................26
ARTICLE 12: LIABILITY AND DEDICATION.....................................27
ARTICLE 13: INDEMNIFICATION..............................................28
ARTICLE 14: REPRESENTATIONS, WARRANTIES AND COVENANTS....................31
ARTICLE 15: EVENTS OF DEFAULT............................................33
ARTICLE 16: ASSIGNMENT...................................................36
ARTICLE 17: NOTICES......................................................38
ARTICLE 18: AMENDMENT AND MODIFICATION...................................38
ARTICLE 19: DISPUTES.....................................................39
ARTICLE 20: MISCELLANEOUS................................................40
APPENDIX A - Description of Facility
APPENDIX B - Interconnection Facilities
APPENDIX C - Transmission Operation Interconnection Requirements
APPENDIX D - System Protection and Control Interconnection Requirements
APPENDIX E - Interconnection Installation Agreement
<PAGE>
GENERATION FACILITY
TRANSMISSION INTERCONNECTION AGREEMENT
THIS AGREEMENT, made and entered into this 23rd day of March, 1999, by
and between Metropolitan Edison Company d/b/a GPU Energy ("Company"), a
corporation and a public utility organized and existing under the laws of the
Commonwealth of Pennsylvania, and AES Ironwood, L.L.C., an entity organized and
existing under the laws of the State of Delaware ("Power Producer"), both
Company and Power Producer hereinafter sometimes referred to collectively as the
"Parties", or individually as a "Party". The Parties acknowledge that GPU
Service, Inc., may act as agent for the Company concerning the administration of
this Agreement.
RECITALS
WHEREAS, the Company is a public utility engaged in the production,
transmission, distribution and sale of electric energy; and
WHEREAS, the Company is a member of the PJM Interconnection, L.L.C.
("PJM") operated under the PJM Agreement; and
WHEREAS, the Company is a member of the Mid-Atlantic Area Council
("MAAC"), a reliability council under Section 202 of the Federal Power Act
established pursuant to the Mid-Atlantic Coordination Agreement, dated December
26, 1967, and as amended and restated as of August 1, 1994 by the MAAC Executive
Board, and as may be further amended from time to time thereafter; and
WHEREAS, the Power Producer is an entity engaged or intending to be
engaged in the production and sale of electric energy and/or capacity from an
electric power generation
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facility to be located in the Commonwealth of Pennsylvania, and more fully
described in Appendix A; and
WHEREAS, in order for the Power Producer to sell electric energy and
capacity generated from the Facility, it must be interconnected with the
Transmission System; and
WHEREAS, the Parties are willing to enter into this agreement under
which the Facility will be interconnected with the Transmission System, subject
to terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual representations,
covenants, promises, and agreements hereinafter set forth, the Parties hereto,
intending to be legally bound, hereby covenant, promise and agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Any capitalized or abbreviated term not elsewhere defined in this
Agreement shall have the definition set forth below:
(a) Affiliate - With respect to a corporation, partnership or other
entity, each such other corporation, partnership or other entity that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such corporation, partnership or other entity.
(b) Agreement - This Generation Facility Transmission Interconnection
Agreement including all appendices attached hereto, and all amendments and
supplements.
(c) Capacity - The maximum generating capability of the Facility,
measured in
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megawatts at a defined ambient air temperature, as set forth in Appendix A.
(d) Company Interconnection Facilities All structures, facilities,
equipment, devices and apparatus owned or leased by, or under contract to, the
Company or its Affiliates, as identified in Appendix B, which facilities are
necessary, together with the Power Producer Interconnection Facilities, to allow
the interconnection of the Facility to the Transmission System.
(e) Emergency - A condition or situation which the PJM OI, the Company
or the Power Producer deem imminently likely to (i) endanger life or property;
(ii) adversely affect or impair the Transmission System, or imminently will
affect or impair, the Company's electrical system or the electrical or
transmission systems of others to which the Company's electrical system is
directly or indirectly connected; or (iii) adversely affect or impair the
Facility. Such a condition or situation includes, but is not limited to,
overloading or potential overloading of or excessive voltage drop on the
Company's or regional transmission and/or distribution circuits, unusual
operating conditions on either the Company's, regional or the Power Producer's
electrical system or conditions such that the output of the Power Producer's
Facility must be adjusted to avoid jeopardizing the Facility, the Company's
electrical system or the electrical systems of others to which the Company's
electrical system is directly or indirectly connected.
(f) Facility - The real and personal property owned by the Power
Producer at the electric power generating facility including, but not limited
to, the following assets: (a) the real property (including all buildings,
structures and other improvements thereon); (b) the turbines machinery,
equipment, vehicles, furniture, and other personal property located on the Power
Producer's property, and shall include any additions, modifications or
replacements thereto, as further defined in Appendix A.
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(g) FERC - The Federal Energy Regulatory Commission or any successor
agency thereto.
(h) Force Majeure Shall mean an event or occurrence or circumstance
beyond the reasonable control of and without the fault or negligence of the
Party claiming Force Majeure, including, but not limited to, acts of God, labor
dispute (including strike), acts of public enemy, war, civil disturbance, riot,
fire, storm, flood, explosion, earthquake, lightning, epidemic, sabotage,
breakage or accident to machinery or equipment, electric system disturbance,
change in law or applicable regulation subsequent to the date hereof and action
or inaction by any federal, state or local legislative, executive,
administrative, military, or judicial agency or body which, in any of the
foregoing cases, by exercise of due foresight such Party could not reasonably
have been expected to avoid, and which, by the exercise of due diligence, is
unable to overcome, and which wholly or in substantial part prevents such Party
from performing its obligations under this Agreement. The settlement of strikes
and labor disturbances shall be wholly within the discretion of the Party
experiencing the event. Economic hardship of either Party shall not constitute a
Force Majeure under this Agreement.
(i) Generator Forced Outage - Shall have the meaning given that term in
the PJM Agreement.
(j) Generator Maintenance Outage - Shall have the meaning given that
term in the PJM Agreement.
(k) Generator Planned Outage - Shall have the meaning given that term
in the PJM Agreement.
(l) Good Utility Practice - (i) Any of those practices, methods and
acts engaged in or
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approved by a significant portion of the electric utility industry in North
America during the relevant time period, or any of the practices, methods and
acts which, in the exercise of reasonable judgment in light of the facts known
at the time the decision was made, could have been expected to accomplish the
desired result at a reasonable cost consistent with good business practices,
reliability, safety and expedition; and (ii) any of those practices, methods,
standards and equipment commonly used, from time to time, in electrical
engineering and operations to operate electrical equipment lawfully and with
safety, dependability and efficiency and in accordance with the National
Electrical Safety Code and the National Electrical Code and Standards of the
Institute of Electrical and Electronic Engineers, and standards established by
the National Electrical Manufacturers Association, the PJM OI, the Mid-Atlantic
Area Council ("MAAC"), the American National Standards Institute and any such
other standards practiced by the industry and electrical equipment manufacturers
in North America in a manner sufficient to provide safe and reliable service.
Good Utility Practice is not intended to be limited to the optimum practice,
method, or act to the exclusion of all others, but rather to be acceptable
practices, methods or acts generally accepted and consistently adhered to in the
MAAC region.
(m) Interconnection Facilities - The Company Interconnection Facilities
and the Power Producer Interconnection Facilities, together.
(n) Lenders - Those entities, including their successors and assigns
and any trustee or agent acting on their behalf, who have advanced or who will
advance to the Power Producer, directly or indirectly, the economic resources
(whether on a senior or unsubordinated basis) for the development and
construction of the Facility or the Interconnection Facilities. The Power
Producer shall notify the Company of the name and addresses of the Lenders for
the purposes of
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this Agreement.
(o) NERC - The North American Electric Reliability Council or any
successor thereto.
(p) PaPUC - The Pennsylvania Public Utility Commission or any successor
agency thereto.
(q) PJM Agreement - Shall mean the Amended and Restated Operating
Agreement of PJM Interconnection, L.L.C., dated as of June 2, 1997, and revised
as of December 31, 1997, January 30, 1998, and March 17, 1998, and as may be
further amended or superseded from time to time.
(r) PJM Control Area - The control area recognized by NERC as the PJM
Control Area.
(s) PJM Interconnection, L.L.C. - The entity formerly known as the PJM
Interconnection Association, converted into a limited liability company pursuant
to the Delaware Limited Liability Company Act, Title 6, Sections 18-101 et seq.
of the Delaware Code, by virtue of the filing of both the Certificate of
Formation and Certificate of Conversion with the Recording Office, effective as
of March 31, 1997. The L.L.C. operates in accordance with the FERC requirements
as an Independent System Operator, comprised of the PJM Board, the PJM OI, and
the PJM Members Committee.
(t) PJM OI - The Office of the Interconnection as supervised by the
Board of Managers of the PJM Interconnection, L.L.C., acting pursuant to the PJM
Agreement. The PJM OI has the responsibility for the continued operation of the
PJM Control Area and the administration of the PJM Tariff, subject to regulation
by the FERC.
(u) PJM Tariff - The PJM Open Access Transmission Tariff filed by the
PJM
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Interconnection L.L.C. with FERC on July 14, 1997, in Docket No.OA97-261-000 as
amended and effective April 1, 1998, and as may be further modified, amended or
superseded from time to time, under which transmission service is provided
within the PJM Control Area.
(v) Point of Interconnection - Each ownership point of demarcation on
the Transmission System where capacity, energy, and ancillary services each are
transferred between the Facility and the Transmission System. The Point of
Interconnection shall be located as shown on the schematic diagram attached
hereto as Appendix A.
(w) Power Producer Interconnection Facilities - All structures,
facilities, equipment, devices and apparatus owned or controlled by Power
Producer, as identified in Appendix B, and as may be amended from time to time.
(x) Protective Apparatus - All equipment and apparatus included in the
Interconnection Facilities, including but not limited to protective relays,
circuit breakers and the like, as set forth in Appendix B, necessary to isolate
the Facility from the Company's electrical system consistent with Good Utility
Practice.
(y) Revenue Meters - All MWh, MVARh meters, pulse isolation relays,
pulse conversion relays and transducers used by the PJM OI or the Company for
billing purposes, and associated totalizing equipment and appurtances (including
voltage transformers and current transformers) used to measure the transfer of
energy and the applicable ancillary services between the Parties.
(z) Transmission System - The electric transmission facilities owned,
controlled, or operated by the Company at or above 34.5 kV delta for purposes of
providing transmission service, including services under the PJM Tariff and the
PJM Agreement.
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1.2 Unless a different interpretation arises from the context: (a) the
reference to any article, section, paragraph or appendix is a reference to an
article, section, paragraph or appendix of this Agreement, (b) with respect to
the definitions set forth in Article 1, whenever applicable the singular shall
include the plural and vice-versa; and (c) the words "includes" or "including"
mean "including, but not limited to" and are not limiting. Any conflict between
an article or section of the Agreement and any provision of an appendix shall be
resolved by reference to the article or section of this Agreement.
ARTICLE 2
EFFECTIVE DATE AND TERM
2.1 This Agreement shall become effective on the effective date established
by the FERC, and shall continue in full force and effect until a mutually
agreeable termination date not to exceed the retirement date for the Facility,
unless terminated on an earlier date by mutual agreement of the Parties or
otherwise in accordance with the terms set forth in this Agreement.
2.2 The applicable provisions of this Agreement shall continue in effect
after cancellation or termination hereof to the extent necessary to provide for
final billings, billing adjustments, and the determination and enforcement of
liability and indemnification obligations arising from acts or events that
occurred while this Agreement was in effect.
2.3 In the event that the FERC (i) fails to accept this Agreement without
suspension or (ii) finds that this Agreement is not just and reasonable or
imposes conditions that are not acceptable to either Party, the Parties will use
commercially reasonable efforts to agree upon amendments or modifications of
this Agreement that would eliminate any such condition or result in a just and
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reasonable finding by the FERC. If the Parties are unable to mutually agree upon
such amendment or modification within a reasonable period of time, the Parties
agree to proceed pursuant to Article 19 in order to attempt to resolve any
impasse or dispute.
2.4 In the event that this Agreement is terminated the Power Producer
agrees that it will reimburse the Company for all unpaid costs and expenses
expended by the Company in the installation of the Company's Interconnection
Facilities, up to the date of termination, plus actual removal costs and less
actual salvage value.
2.5 In the event of a changing law or regulation or the issuance of an
order or other directive by a regulatory authority with jurisdiction over either
Party that affects or may reasonably be expected to affect either "Party's"
performance under this Agreement, the Parties will negotiate in good faith any
amendment or amendments to this Agreement necessary to adapt the terms of this
Agreement to such change, order, or directive provided that the Parties are not
obligated to agree to such amendment which may adversely affect their current
economic positions as of the effective date of this Agreement. In the event that
the Parties are unable to mutually agree to such an amendment within a
reasonable time period, the Parties agree to proceed pursuant to Article 19 in
order to attempt to resolve any impasse or dispute. Nothing in this Agreement
shall limit the rights of the parties or the FERC under Section 205 or 206 of
the Federal Power Act and FERC's Rules and Regulations thereunder.
ARTICLE 3
RESPONSIBILITIES OF THE COMPANY
3.1 The Company shall:
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(a) Install all Company Interconnection Facilities at the Power
Producer's sole cost and expense in accordance with the terms and conditions and
the schedule set forth in Appendix E which is attached hereto and made a part
hereof. Payment of such costs and expenses shall be in accordance with the
schedule set forth in Appendix E hereof. The Company shall use reasonable
efforts to install all Company Interconnection Facilities within the estimated
costs set forth in Appendix E and shall inform the Power Producer of the amount
and reason for any increase in such estimated cost promptly after Company learns
of such cost increase.
The Company and Power Producer shall conduct periodic information
meetings concerning the construction milestones set forth in Appendix E. If the
Company is materially delayed in meeting the milestone dates for any reason,
excluding an event of Force Majeure, the Company, following its receipt of the
Power Producer's demand for adequate assurance, shall promptly take all
reasonable steps necessary to rectify the delay condition.
(b) Own, maintain, and operate Company Interconnection Facilities. The
Power Producer shall reimburse the Company for all actual and verifiable costs
and expenses including, but not limited to, overheads and applicable taxes,
directly associated with the maintenance and operation of the Company
Interconnection Facilities.
(c) Operate and maintain all Company Interconnection Facilities and the
Transmission System as part of the single PJM Control Area in accordance with
the provisions of the PJM Agreement and PJM Tariff, using due diligence, in
accordance with Good Utility Practice.
(d) Provide to the Power Producer all design specifications and
equipment characteristics for the interconnection of the Facility with the
Transmission System.
(e) Maintain in full force and effect at the Power Producer's sole cost
and expense all
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permits, licenses, rights of way and other authorizations as may be required to
maintain and operate the Company Interconnection Facilities.
(f) Upon the expiration of the Agreement and retirement of the
Facility, remove all Company Interconnection Facilities at the Power Producer's
sole cost and expense less salvage value.
3.2 Unless otherwise required by law, regulation, or Good Utility Practice,
the Company shall not be required at any time, at its expense or otherwise, to
upgrade or otherwise modify the Transmission System in order to accommodate the
interconnection of the Facility with the Transmission System.
3.3 The Company does not guarantee the non-occurrence of, or warrant
against, and the Power Producer releases the Company from, any claims or damages
associated with: (a) any interruption in the availability of Company
Interconnection Facilities or the Transmission System; or (b) damage to the
Facility resulting from electrical transients including, without limitation,
short circuits (faults), solar magnetic disturbances, or events of Force
Majeure, except to the extent caused by the Company's gross negligence or
willful misconduct.
ARTICLE 4
RESPONSIBILITIES OF THE POWER PRODUCER
4.1 The Power Producer shall:
(a) Own, maintain and operate the Power Producer Interconnection
Facilities and Protective Apparatus at its sole cost and expense.
(b) Maintain in full force and effect at its sole cost and expense all
permits, licenses,
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rights of way and other authorizations as may be required to maintain and
operate the Power Producer Interconnection Facilities and Protective Apparatus
unless otherwise required by law or regulation.
(c) Install, at its sole cost and expense, any and all equipment in
order to maintain the reliability of the Facility and all Interconnection
Facilities.
(d) Subject to any right of the Power Producer, or any entity
purchasing the output of the Facility, to schedule and sell ancillary services
under the PJM Agreement or the PJM Tariff, operate the Facility in accordance
with the appropriate voltage schedules and/or reactive schedules developed as
specified in Appendix C. Subject to the foregoing, if the Power Producer fails
to operate the Facility in accordance with Appendix C, the Company will provide
written notice to the Power Producer of the Company's intent to remedy that
failure. If the Power Producer does not promptly commence appropriate action
after receiving such notice, the Company may then take necessary action at the
Power Producer's expense to remedy such failure, including the installation of
capacitor banks or other reactive compensation equipment necessary to ensure the
proper voltage or reactive supply at the Facility. The Company shall take, to
the extent feasible, reasonable efforts to minimize the impact of such action,
in accordance with Good Utility Practice on the operation of the Facility.
(e) Make or assure that all necessary arrangements have been made under
the applicable tariffs for transmission service (i.e., from the Point of
Interconnection to Power Producer's load serving or end use customers), losses,
and ancillary services associated with the delivery of the capacity and/or
energy produced by the Facility, which services shall not be provided under this
Agreement.
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(f) Obtain capacity and/or energy for the purpose of satisfying the
Facility station service requirements or for any other uses by the Power
Producer.
(g) Make or assure that all necessary arrangements have been made under
the applicable tariffs for transmission service, losses, and ancillary services
associated with the use of the Transmission System for the delivery of capacity
and/or energy to the Facility for the purpose of supplying generation station
service or for any other service which is available and/or required under the
PJM Tariff or any retail wheeling tariff, including any distribution service
tariff or contract, in each case as may be amended from time to time.
(h) Operate, install and maintain at its sole cost and expense all
equipment required to control the Facility in accordance with Section 6.1.
(i) Maintain or cause to be maintained such records relating to the
Power Producer Interconnection Facilities as may be required by Good Utility
Practice or applicable law.
4.2 The Power Producer acknowledges that this Agreement does not encompass
transmission service for the output of the Facility under the PJM Tariff and
that, to the extent the Company is required under the PJM Tariff or the PJM
Agreement, including any direction of the PJM OI pursuant thereto, to upgrade,
reinforce or otherwise modify its Transmission System (other than the
installation of the Company Interconnection Facilities) to provide such
transmission service on behalf of the Power Producer, the Power Producer will be
responsible for the costs of such upgrades, reinforcements or modifications in
accordance with the terms of the PJM Tariff, the PJM Agreement or any other
applicable PJM agreements.
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ARTICLE 5
MODIFICATIONS TO FACILITIES, INTERCONNECTIONS
5.1 In the event the Power Producer plans additions, modifications or
replacements to the Facility, Power Producer Interconnection Facilities or
Protective Apparatus that will increase the Capacity of the Facility, the Power
Producer shall submit to the Company any and all plans and specifications that
the Company may reasonably request related to such additions, modifications or
replacements. Such specifications and plans shall be submitted by the Power
Producer not later than eighteen (18) months prior to the respective commercial
operation date for additions, modifications, or replacements to the Facility,
except as otherwise agreed to by the Company. Any such additions, modifications,
or replacements shall comply with the criteria imposed by the PJM OI, the MAAC
Reliability Principles and Standards, Good Utility Practice, and the criteria
included in Appendix C and Appendix D.
5.2 If the Power Producer plans any additions, modifications or
replacements to the Facility, Power Producer Interconnection Facilities or
Protective Apparatus that in the Company's view will not increase the amount of
Capacity to be delivered to the Company's electrical system, but could
reasonably be expected to affect the Transmission System, the Company
Interconnection Facilities, the operation of the Facility, the availability of
Capacity and/or the delivery of electric energy and capacity from the Facility,
the Power Producer shall give the Company reasonable notice, but not less than
sixty (60) days prior written notice thereof; provided, however, that the Power
Producer shall provide the Company with at least nine (9) months prior written
notice, and shall submit to the Company any and all plans and specifications
which the Company may reasonably request related to such additions,
modifications or
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replacements which involves Power Producer Interconnection Facilities or which
the Power Producer anticipates will result in an outage of the Facility for
thirty (30) days or more. All such additions, modifications, or replacements
shall: (a) comply with the criteria imposed by the PJM OI, the PJM Agreement,
the MAAC Reliability Principles and Standards, Good Utility Practice, and the
criteria included in Appendix C and Appendix D; (b) be accompanied by
appropriate information and operating instructions; and (c) be subject to review
and approval of the Company, which review shall be based on Good Utility
Practice. Failure by the Company to object to any such proposed addition,
modification or replacement within thirty (30) days and, in the case of the
proviso to the first sentence of this Section, ninety (90) days following the
Company's receipt of notice thereof shall be deemed acceptance thereof by the
Company.
5.3 The Company shall inform the Power Producer of any additions,
modifications, or replacements to the Transmission System or the Company
Interconnection Facilities that are necessary as a result of the addition,
modification, or replacement to the Facility made pursuant to Sections 5.1 or
5.2. The Power Producer shall reimburse the Company for all costs incurred by
the Company associated with any modifications, additions, or replacements made
to the Company Interconnection Facilities or the Transmission System related to
any proposed additions, modifications, or replacements of the Facility to the
extent reasonably required by the Company including, but not limited to those
necessary to meet different voltage requirements of the Transmission System or
to enhance the Transmission System, regardless of whether the expanded Facility
enters into (or has entered into) service or is interconnected with the
Transmission System. The Company shall provide an estimate as early as
practicable.
5.4 The Company's acceptance of the Power Producer's interconnection plans
and
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specifications for any proposed additions, modifications, or replacement of the
Power Producer's Facility whether pursuant to this Agreement and the Company's
participation in interconnected operations with the Power Producer are not, and
shall not be construed as its: (a) confirmation or endorsement of the design of
the Facility, Power Producer Interconnection Facilities or Protective Apparatus;
(b) warranty of safety, durability or reliability of the Facility or equipment
appurtenant thereto; (c) assumption of responsibility for strength, details of
design, adequacy, or capability of the Facility, Power Producer Interconnection
Facilities or Protective Apparatus; or (d) endorsement or warranty.
5.5 The Power Producer shall modify, at its sole cost and expense (only to
the extent responsibility for such costs and expenses are not allocated to the
Company or a third party consistent with FERC policy), the Interconnection
Facilities and/or Protective Apparatus as may be reasonably required to conform
with changes to Good Utility Practice or to conform with additions,
modifications, or replacements required by PJM Interconnection L.L.C.
5.6 The Power Producer shall compensate the Company for all reasonable
costs and fees required to enable the Company to fulfill its obligations under
this Agreement including any tax liability, any costs of acquiring land
necessary for the Interconnection Facilities, the costs and fees of all permits,
licenses, franchises or regulatory or other approvals necessary for the
construction, maintenance and operation of any Interconnection Facilities.
5.7 The Company may undertake additions, modifications, or replacements of
its Transmission System or Company Interconnection Facilities. If such
additions, modifications, or replacements might reasonably be expected to affect
the Power Producer's operation of the Facility, the Company shall provide
written notice to the Power Producer in a manner consistent
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with FERC Order No. 889 prior to undertaking such additions, modifications, or
replacements. Any such additions, modifications, or replacements shall comply
with Good Utility Practice. The Company shall use reasonable efforts with
respect to such addition, modification, or replacement to minimize any adverse
impact on the Facility.
ARTICLE 6
OPERATION
6.1 The Facility, all Interconnection Facilities and Protective Apparatus
shall be operated and maintained in accordance with Good Utility Practice,
including, without limitation, those with regard to synchronization, voltage and
reactive power control, and in compliance with all permits, licenses, laws,
rules and regulations applicable thereto. Operation and maintenance of all
Interconnection Facilities shall at all times conform to applicable requirements
and guidelines adopted by the PJM OI and the Company as set forth in Appendix C
and Appendix D, and modified by the PJM OI and/or the Company respectively from
time to time.
6.2 The Power Producer shall be required to comply with the requests,
orders, and directives of the Company to the extent such requests, orders or
directives are (a) necessary to comply with Good Utility Practice, and (b) in
accordance with applicable tariffs and the PJM Agreement.
6.3 In the event the Power Producer believes that a request, order, or
directive of the Company exceeds the limitations in Section 6.2, it shall
nevertheless comply with the request, order, or directive of the Company pending
resolution of the dispute under Article 19. The Parties agree to cooperate in
good faith to expedite the resolution of any disputes arising under
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Sections 6.2 and 6.3.
6.4 If it appears to the Company at any time, in the reasonable exercise of
its judgment in accordance with Good Utility Practice, that the operation of the
Facility or any Interconnection Facility is adversely affecting or may adversely
affect the quality of service rendered by the Company (including transmission or
distribution services and services provided to end users), or is interfering or
may interfere with the safe and reliable operation of the Transmission System or
the regional transmission system, the Company may, upon such notice specified
below, disconnect the Facility from the Transmission System and/or curtail,
interrupt, or reduce energy deliveries from the Facility until the condition has
been corrected. In the event of an Emergency, the Company may immediately take
any and all steps it reasonably believes to be necessary to mitigate or cure the
Emergency condition including, without limitation, disconnecting the Facility
from the Transmission System. The Company shall use reasonable efforts to (i)
minimize, to the extent practicable under the circumstances, any such
disconnection, curtailment, interruption, or reduction, (ii) provide the Power
Producer with prior notification of any such disconnection, curtailment,
interruption, or reduction, to the extent practicable, (iii) resume acceptance
of electric energy as promptly as practicable following elimination of the
condition causing the disconnection, curtailment, interruption, or reduction,
and (iv) confer with the Power Producer regarding the interfering conditions
that gave rise to the disconnection, curtailment, or reduction.
ARTICLE 7
MAINTENANCE NOTIFICATION AND COORDINATION
7.1 The Power Producer shall maintain, at its own expense, the Power
Producer
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Interconnection Facilities and Protective Apparatus. The Company shall maintain
the Company Interconnection Facilities. The Power Producer shall reimburse the
Company for all actual and verifiable costs and expenses including, but not
limited to, overheads and applicable taxes directly associated with the
maintenance and operation of the Company Interconnection Facilities.
7.2 In accordance with Good Utility Practice, the Company may remove the
Interconnection Facilities from service as necessary, in the reasonable exercise
of the Company's judgment, to perform maintenance or testing or to install or
replace equipment on the Company Interconnection Facilities or the Transmission
System. Unless an Emergency exists or the risk of one in the Company's view is
imminent, the Company shall, if practical, give the Power Producer prior notice
of the removal. The Company shall use due diligence to restore the
Interconnection Facilities to service as promptly as practicable.
7.3 If the Company determines, in its sole judgment, that the Power
Producer is maintaining the Power Producer's Interconnection Facilities and
Protective Apparatus in a manner which may lead to an Emergency condition, the
Power Producer, within thirty (30) days of notification thereof from the
Company, shall take all reasonable steps to conform its maintenance practices to
the requirements of Good Utility Practice and this Agreement.
7.4 At any reasonable time upon advance notice, each Party shall permit the
representatives of the other Party access to the records for its interconnection
facilities in order to examine, inspect and test such records. In the event of
an Emergency, the Power Producer shall ensure that Company representatives have
immediate and unimpeded access to the Power Producer Interconnection Facilities
as necessary to address the Emergency in accordance with Good Utility Practice
working with the Power Producer. The Power Producer hereby grants to the Company
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the right to enter upon the Power Producer's property for such purposes.
ARTICLE 8
REVENUE METERING
8.1 The Company shall utilize Revenue Meters to measure the electrical
energy on an hour-by-hour basis, or such shorter intervals as may be agreed
upon, at the Point of Interconnection in order to determine the transfer of
energy between the Parties.
8.2 All Revenue Meters shall be of advanced meter design that have an
internal recorder and a communications capability that the Company can utilize
to retrieve diagnostic messages, the recorded transfer of energy between the
Parties, and any other information deemed necessary by the Company. The Power
Producer may, at its sole cost and expense, install telemetering or other
communications equipment to retrieve such information as is deemed necessary by
the Power Producer.
8.3 The Parties shall agree that, if the Revenue Meters and analog
equipment and the Point of Interconnection are not at the same location
electrically, the metering data shall be adjusted, or the Revenue Meters shall
be compensated, as the Company shall deem appropriate, to record delivery of
electricity in a manner that accounts for the total (load plus no-load)
electrical energy losses occurring between the metering point and the Point of
Interconnection, both when the Power Producer is delivering energy to the
Company and when the Company is delivering station service energy to the
Facility, or for any other use.
8.4 In the event that the Company's Revenue Meters at any time fail to
register, or should their registration be so erratic so as to be meaningless,
the hourly energy transferred between the
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Parties shall be determined from the best information available, including, but
not limited to, the Power Producer's meters, operator's logs and real-time
communications data of the meter results.
8.5 If at any time, any Revenue Meters and analog equipment is found to be
inaccurate by a margin greater than that allowed under the applicable criteria,
rules, and standards, the Company shall cause the Revenue Meters and analog
equipment to be made accurate or replaced at the Power Producer's expense. Meter
readings for the period of inaccuracy shall be adjusted insofar as the extent of
the inaccuracy can be reasonably ascertained; provided, however, no adjustment
shall be made for meter readings made prior to the point in time halfway between
the time of the last test that showed the Revenue Meters and analog equipment in
question to be functioning accurately and the time the subsequent inaccuracy is
corrected, except by agreement of the Parties.
8.6 The Company shall read and report Revenue Meter data to the Power
Producer. The Power Producer shall have the right to read the Revenue Meters
upon reasonable notice to the Company.
8.7 The Parties shall each keep and maintain accurate and detailed records
relating to the Revenue Meters for a period of not less than seven (7) years.
Such records shall be made available for inspection by either Party or any
governmental agency having jurisdiction with respect thereto during normal
business hours upon reasonable notice.
8.8 The Company shall at the Power Producer's expense (i) install, own,
maintain, and repair and have the right to change the location of all Revenue
Meters, instrument transformers and appurtenances associated with the Revenue
Meters, and analog equipment (transducers and telemetry) and (ii) install, own,
maintain, and repair all additional or updated metering and
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associated equipment, as mutually agreed upon by the Parties, needed to update
its metering facilities, in accordance with Good Utility Practice.
8.9 The Company shall, at the Power Producer's expense, test all Revenue
Meters and analog equipment at such time as Company deems reasonably necessary
in accordance with all applicable regulatory requirements or standards. However,
all Revenue Meters and analog equipment shall be tested at least once every two
(2) years.
8.10 Upon written request by the Power Producer, the Company shall test
designated Revenue Meters and analog equipment more frequently than once every
two (2) years. In the event a test requested by the Power Producer establishes
such Revenue Meters to be registering inaccurately by more than one (1%) percent
of full scale, the cost of said test shall be borne by the Company. In all other
instances, the cost of any such test, regardless of which Party requests it or
the results thereof, shall be paid by the Power Producer.
8.11 The Company shall give reasonable notice to the Power Producer of the
time when any Revenue Meters and analog equipment test shall take place, and the
Power Producer may have representatives present at said test. Any Revenue Meters
found to be inaccurate by more than one (1%) percent of full scale or defective
shall be adjusted, repaired or replaced, at the sole cost and expense of the
Power Producer.
8.12 The Company shall install, own, and maintain, at the Power Producer's
expense, equipment, except for associated telephone link(s) which shall be the
sole responsibility of the Power Producer, for real-time communications,
real-time reactive power, hourly MWh information, interval revenue data and such
other information as the Company or the PJM OI may require. The Power Producer
shall install, operate, maintain and repair, at its own expense, an
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operating telephone link(s) to provide information deemed necessary by the
Company or the PJM OI, or as reasonably deemed necessary by the Company, to
integrate operation of the Facility with the Transmission System.
ARTICLE 9
LAND RIGHTS AND ACCESS
9.1 The Power Producer hereby grants, or confirms its prior grant to the
Company, for nominal consideration, all necessary rights of way, easements, and
licenses as the Company may require to install, operate, maintain, replace and
remove the Company's metering equipment and other Company Interconnection
Facilities, including adequate and continuing access rights to the Power
Producer's property for any purpose reasonably related to this Agreement. The
Power Producer hereby agrees to execute such grants, deeds, licenses,
instruments and other documents as the Company may require to enable it to
record such rights of way, easements and licenses.
ARTICLE 10
INSURANCE
10.1 The Power Producer shall keep the Facility continuously insured against
loss or damage in amounts and for risks that property of similar character is
usually so insured by entities owning and operating like properties.
10.2 The Power Producer, the operator of the Facility, and their respective
successors and assigns shall procure or cause to be procured and shall maintain
in effect continuously during the term of the Agreement the following minimum
insurance coverages:
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Type of Coverage Liability Limits
- ---------------- ----------------
Worker's Compensation Statutory
Employer's Liability $500,000 per occurrence/injury
Comprehensive/General $1,000,000 combined single limit,
Liability including: each occurrence
$2,000,000 aggregate limit
applicable for the Facility
Bodily Injury
Property Damage
Blanket Contractual
Underground Explosion and Collapse Hazard
Products and Completed Operations Hazard
Broad Form Property Damage
Personal Injury
Automobile Liability
(Owned, Hired, Non-Owned)
Bodily Injury $1,000,000 combined single limit
Property Damage
Commercial Umbrella Liability $9,000,000 per occurrence
following form of
Commercial General Liability,
Automobile Liability and
Employers Liability
10.3 In order to meet changed circumstances or changes in industry practice
in a manner consistent with the requirements of Section 10.1, the Company may
notify the Power Producer of a proposed change to the types of coverage or the
liability limits set forth in Section 10.2. The Parties agree to negotiate in
good faith to revise the provisions of Section 10.2 within ninety (90) days of
such notice or such other time period as the Parties agree upon for such
negotiations.
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10.4 All insurance policies identified in Section 10.2, except Worker's
Compensation Insurance, shall name the Company as an additional insured.
10.5 The Power Producer's liability insurance (other than its Worker's
Compensation Insurance) shall include provisions or endorsements (i) stating
that such insurance is primary insurance with respect to the interest of the
Company and that any insurance maintained by the Company is excess and not
contributory insurance with the insurance required hereunder, and (ii) providing
that such policies shall not be canceled or their limits of liability reduced
except upon thirty (30) days prior written notice to the Company.
10.6 The Power Producer shall provide and shall continue to provide to the
Company during the term the Agreement (including any extensions), by delivering
to its corporate office at 2800 Pottsville Pike, P.O. Box 16001, Reading,
Pennsylvania 19640-0001, Attention: Manager - Transmission Investment Planning,
properly executed and current certificates of insurance relative to insurance
policies. Certificates of insurance shall provide the following information:
(i) Name of insurance company, policy number and expiration date.
(ii) The coverage required and the limits on each, including the amount
of deductibles or self-insured retentions, which shall be for the
account of the Power Producer.
(iii) A statement indicating that the Company shall receive at least
thirty (30) days prior written notice of cancellation or reduction of
liability limits with respect to said insurance policies, and
(iv) To the extent applicable, a statement indicating that the Company
has been named as an additional insured.
10.7 A copy of each insurance policy, certified as a true copy by an
authorized
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representative of the issuing insurance company, or in lieu thereof or in
addition thereto, at the Company's discretion, a certificate in form
satisfactory to the Company certifying to the issuance of such insurance, shall
be furnished to the Company not less than ten (10) days prior to the
interconnection of the Facility and fifteen (15) days prior to the expiration
date of each such policy and/or certificate.
10.8 The Company shall have the right to inspect the original policies of
insurance applicable to this Agreement at the Power Producer's place of business
during regular business hours.
ARTICLE 11
PERFORMANCE
11.1 If at any time the Power Producer fails to operate, maintain,
administer, or insure the Facility, the Power Producer Interconnection
Facilities or Protective Apparatus, the Company may, following prior written
notice and the right of the Power Producer to cure such condition within thirty
(30) days after the Power Producer's receipt of notice, immediately disconnect
the Facility from the Transmission System or otherwise refuse to accept electric
energy and capacity for delivery.
11.2 If, in the sole judgment of the Company exercised in accordance with
Good Utility Practice, operation of the Facility, the Power Producer
Interconnection Facilities or Protective Apparatus endangers the safety of the
Company's personnel or the safe operation of the Company's electrical system or
the electrical systems of others to which the Company's electrical system is
directly or indirectly interconnected, the Company may immediately disconnect
the Facility from the Transmission System or otherwise refuse to accept electric
energy and capacity for delivery therefrom until such condition has been
corrected to the Company's satisfaction in a
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manner consistent with Good Utility Practice.
11.3 The Power Producer shall be solely responsible for correcting any
condition necessitating such disconnection. If the condition is corrected in
accordance herewith, the Company shall use reasonable efforts to promptly
reconnect the Facility.
11.4 The Parties shall use due diligence to perform their respective
obligations under this Agreement. However, in the event that either Party is
delayed in or prevented from performing or carrying out its obligations under
this Agreement by reason of Force Majeure as defined herein, such Party shall
not be liable to the other Party for or on account of any loss, damage, injury
or expense resulting from or arising out of such delay or prevention; provided,
however, that the Party encountering such delay or prevention shall use due
diligence to remove the cause or causes thereof.
ARTICLE 12
LIABILITY AND DEDICATION
12.1 Nothing in this Agreement shall be construed to create any duty to,
standard of care with respect to, or any liability to any person not a Party to
this Agreement.
12.2 Neither the Company nor the Power Producer, nor their respective
officers, directors, partners, agents, employees, or Affiliates, shall be liable
to the other Party or its Affiliates, officers, directors, partners, agents,
employees, successors or assigns, for claims for incidental, special, indirect
or consequential damages of any nature connected with or resulting from
performance or non-performance of this Agreement, including without limitation,
claims in the nature of lost revenues, income or profits or losses, damages or
liabilities under any financing,
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lending, construction, or maintenance contracts, agreements or arrangements to
which the Power Producer may be party irrespective of whether such claims are
based upon warranty, negligence, strict liability, contract, operation of law or
otherwise. The provisions of this section 12.2 shall survive the termination,
cancellation, suspension, completion or expiration of this Agreement.
12.3 No undertaking by either Party under any provision of this Agreement
shall constitute the dedication of that Party's electrical system, equipment or
facilities, or any portion thereof, to the other Party or to the public, nor
affect the status of the Company as a public utility corporation.
12.4 The Company does not, by acceptance of the Power Producer's
interconnection plans and specifications or by engaging in interconnected
operations with the Power Producer, assume any responsibility or liability for
damage or physical injury to (a) Company property or electrical equipment; (b)
the real or personal property of third persons or corporations not a party to
this Agreement; (c) the Facility, real property, equipment and/or facilities
and/or any appurtenances thereto of the Power Producer; and (d) any persons who
may come into contact with or upon the Facility, real property, equipment and/or
facilities(electric or gas) and/or any appurtenances thereto.
ARTICLE 13
INDEMNIFICATION
13.1 The Power Producer shall indemnify, hold harmless and defend the
Company, and its Affiliates, as the case may be, and their respective officers,
directors, employees, agents, partners, subcontractors, invitees and successors,
from and against any and all claims, liabilities, costs,
28
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damages, losses, and expenses (including, without limitation, reasonable
attorney and expert fees, and disbursements incurred by the Company in any
action or proceeding between the Company and a third party, the Power Producer,
or any other party) for damage to property, injury to or death of any persons,
including the Company's employees or any third parties (collectively, "Company's
Damages"), to the extent caused wholly or in part by any act and/or omission,
negligent or otherwise, relating to the design, construction, ownership,
operation, or maintenance of the Facility, Power Producer Interconnection
Facilities and Protective Apparatus used in connection with this Agreement and
provided, however; that Power Producer, or its respective Affiliates, and
successors, and their respective officers, agents, directors, partners or
employees shall not be liable to the Company, its Affiliates, and successors,
and their respective agents, officers, directors, partners or employees for
incidental, special indirect or consequential damages of any nature connected
with or resulting from performance or non-performance of this Agreement. Company
hereto will furnish the Power Producer with written notification after the
Company becomes aware of any event or circumstances, or the threat thereof (but
in no event later than ten (10) days prior to the time any response is required
by law), which might give rise to such indemnification. At the Company's
request, the Power Producer shall defend (with counsel reasonably acceptable to
the Company) any suit asserting a claim covered by this indemnity and shall pay
all costs and expenses (including the cost of investigation and attorney's fees
and expenses) that may be incurred in enforcing this indemnity. The Company may,
at its own expense, retain separate counsel and participate in the defense of
any such suit or action.
13.2 The indemnity in Section 13.1 shall apply to all claims against the
Company including, but not limited to, all claims made or threatened by, or in
the name of or on behalf of the
29
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Company's employees for personal injuries (including death) which arise in the
course of their employment; provided, however that said indemnity shall not
apply to any liability ultimately determined to be based upon the negligence of
the Company. The Power Producer hereby waives any defense it may otherwise have
under applicable workers' compensation laws.
13.3 In addition to Sections 13.1 and 13.2 above, the Power Producer shall
indemnify, hold harmless and defend the Company from and against any and all
liability, loss, cost, damage and expense, associated with any and all Federal,
State and/or local tax liability, arising out of, resulting from or in
connection with Power Producer's payment (or failure to pay) to the Company, of
the costs associated with the purchase and installation of any portion of the
Company's Interconnection Facilities, Protective Apparatus and/or any and all
associated and/or related structures, equipment, facilities and devices in
performance of, pursuant to or in connection with this Agreement, including any
expense resulting from such payment being deemed to be a Contribution In Aid of
Construction ("CIAC") pursuant to U.S. Internal Revenue Service Notices 88-129
and 90-60 (and any future applicable U.S. Internal Revenue Service notices),
which Notices are incorporated by reference herein. The foregoing
indemnification obligations of the Power Producer shall not, however, apply with
respect to any of the equipment or facilities referred to immediately above
which the Company has included in its rate base and is collecting revenues from
its customers. The Parties expressly acknowledge and agree that Sections 13.1,
13.2 and 13.3 shall survive the termination or expiration of this Agreement.
13.4 Power Producer shall provide the Company with an Independent
Engineering Certification (i.e., the professional engineer's seal shall be
affixed), as specified in IRS Notice 88-129, attesting that the anticipated
power flows through the Interconnection Facilities to the Power
30
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Producer for the first ten years commencing with the taxable year in which the
Interconnection Facilities are placed in service, (or alternatively, for the
first nine years ignoring the year such facilities are placed in service) will
comprise no more than 5% of the projected total power flows over the
Interconnection Facilities. This engineering certification will be provided to
the Company within forty-five days of the execution of this Agreement. In the
event this certification is not provided to the Company, the Company retains the
right to include the tax gross-up in the final billing for the actual costs of
the Interconnection Facilities. In the event the 5% test, as specified in IRS
Notice 88-129, is exceeded during any measuring period, described in section
4(A) of Notice 88-129 (a "disqualifying event"), Power Producer agrees to make
the Company whole for any increase in the Company's Federal and State income tax
liabilities arising from this condition. This increase in the Company's Federal
and State income tax liabilities will be determined in accordance with the
requirements of IRS Notice 90-60, as amended or supplemented.
ARTICLE 14
REPRESENTATIONS, WARRANTIES AND COVENANTS
14.1 The Power Producer hereby represents and warrants as follows:
(a) The Power Producer is a limited liability company duly organized
validly existing and in good standing under the laws of the State of Delaware
and is duly registered and authorized to do business and in good standing in the
Commonwealth of Pennsylvania;
(b) The Power Producer has all requisite power and authority to carry
on the business to be conducted by it and to enter into and perform its
obligations under this Agreement;
31
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(c) The execution and delivery of this Agreement and the Power
Producer's performance of its obligations hereunder have been duly authorized by
all necessary action on the part of the Power Producer and do not and will not
conflict with or result in a breach of the Power Producer's charter documents or
by-laws or any indenture, mortgage, other agreement or instrument subject to
receipt of all necessary regulatory approval, or any statute or rule,
regulation, order, judgment or decree of any judicial or administrative body to
which the Power Producer is a party or by which the Power Producer or any of its
properties is bound or subject.
14.2 The Company hereby represents and warrants as follows:
(a) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the Commonwealth of Pennsylvania.
(b) The Company has the corporate power and authority to own its
properties, carry on its electric utility business as now being conducted, enter
into this Agreement and the transactions contemplated hereby, and perform and
carry out all covenants and obligations on its part to be performed under and
pursuant to this Agreement.
(c) The execution and delivery of this Agreement by the Company and the
performance of its obligations hereunder have been duly authorized by all
necessary corporate action on the part of the Company.
(d) This Agreement is the valid and binding obligation of the Company,
enforceable with its terms except that, in the Company's view, (i) such
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws from time to time in effect that affect creditors' rights generally or by
general principles of equity, and (ii) contracts entered into by the Company may
be subject to the power and authority of state and/or federal regulatory
agencies.
32
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ARTICLE 15
EVENTS OF DEFAULT
15.1 Any one of the following shall constitute an event of default under
this Agreement:
(a) A breach of any material term or condition of this Agreement,
including but not limited to any material breach of a representation, warranty
or covenant made in this Agreement, including the Appendices. Failure by a Party
to provide any required schedule, report or notice hereunder may constitute a
material breach hereof if such failure is not cured within sixty (60) days after
notice to the defaulting Party.
(b) The failure or refusal of a Party to permit the representatives of
the other Party access to the maintenance records, or its Interconnection
Facilities or Protective Apparatus in order to examine, inspect and test such
records.
(c) A receiver or liquidator or trustee of either Party or of any of
its property shall be appointed by a court of competent jurisdiction, and such
receiver, liquidator or trustee shall not have been discharged within sixty (60)
days; or by decree of such a court, a Party shall be adjudicated bankrupt or
insolvent or any substantial part of its property shall have been sequestered,
and such decree shall have continued undischarged and unstayed for a period of
sixty (60) days after the entry thereof; or a petition to declare bankruptcy or
to reorganize a Party pursuant to any of the provisions of the Federal
Bankruptcy Code, as now in effect or as it may hereafter be amended, or pursuant
to any other similar state statute as now or hereafter in effect, shall be filed
against a Party and shall not be dismissed within (60) days after such filing;
or
(d) A Party shall file a voluntary petition in bankruptcy under any
provision of any federal or state bankruptcy law or shall consent to the filing
of any bankruptcy or reorganization
33
<PAGE>
petition against it under any similar law; or, without limiting the generality
of the forgoing, a Party shall file a petition or answer or consent seeking
relief or assisting in seeking relief in a bankruptcy under any provision of any
federal or state bankruptcy law or shall consent to the filing of any bankruptcy
or reorganization petition against it under any similar law; or, without
limiting the generality of the foregoing, a Party shall file a petition or
answer or consent seeking relief or assisting in seeking relief in a proceeding
under any of the provisions of the Federal Bankruptcy Code, as now in effect or
as it may hereafter be amended, or pursuant to any other similar state statute
as now or hereafter in effect, or an answer admitting the material allegations
of a petition filed against if in such a proceeding; or a Party shall make an
assignment for the benefit of its creditors; or a Party shall admit in writing
its inability to pay its debts generally as they become due; or a Party shall
consent to the appointment of a receiver, trustee, or liquidator of it or of all
or any part of its property.
(e) The failure of either Party to provide the other Party reasonable
written assurance of its ability to perform fully and completely any of its
material duties and responsibilities under this Agreement within sixty (60) days
of any reasonable request for such assurances by a Party hereto.
15.2 (a) Upon the occurrence of an event of default, the Party not in
default may give written notice of the default to the defaulting Party. Such
notice shall set forth, in reasonable detail, the nature of the default and,
where known and applicable, the steps necessary to cure such default. The
defaulting Party shall have sixty (60) days following receipt of such notice
either to (i) cure such default or (ii) commence in good faith all such steps as
are appropriate to cure such default in the event such default cannot, in the
reasonable judgment of such non-defaulting Party,
34
<PAGE>
be completely cured within such sixty (60) day period.
(b) If the defaulting Party fails to cure such default or take such
steps as provided under subparagraph (a) above, this Agreement may be terminated
by written notice to the Party in default hereof. This Agreement shall thereupon
terminate and the non-defaulting Party may exercise all such rights and remedies
as may be available to it to recover damages caused by such default.
(c) Notwithstanding the foregoing, upon the occurrence of any such
event of default, the non-defaulting Party shall be entitled (i) to commence an
action to require the defaulting Party to remedy such default and specifically
perform its duties and obligations hereunder in accordance with the terms and
conditions hereof and (ii) to exercise such other rights and remedies as it may
have at equity or at law subject however to the provisions of Article 12 .
15.3 The Company shall be entitled to operate and/or purchase from the Power
Producer such DC power systems, protection and metering circuit components,
Supervisory Control and Data Acquisition ("SCADA") equipment, transformers,
secondary systems, communications equipment, building facilities, software,
documentation, structural components; and other facilities and appurtenances
that are necessary for the Company to operate and maintain the Transmission
System if: (a) the Power Producer shall commence any case under federal
bankruptcy laws or other proceeding under any similar law or any jurisdiction
for
35
<PAGE>
the relief of debtors, or shall petition or apply for the appointment of a
trustee or other custodian, liquidator, or receiver for the Power Producer or
for any substantial part of the Power Producer's Facilities; (b) a decree or
order for relief shall be entered in respect of the Power Producer in an
involuntary case under federal bankruptcy laws or in any other proceeding under
any similar law of any jurisdiction for the relief of debtors or a decree or
order shall be entered appointing a trustee or other custodian, liquidator, or
receiver for the Power Producer or for any substantial part of the Power
Producer's Facilities and such a decree or order is not dismissed within sixty
(60) days after it is entered; or (c) the Power Producer shall cease its
operations for more than thirty (30) consecutive days without having an
assignee, successor, or transferee in place.
Upon the occurrence of any of the foregoing events, the Company shall
give the Power Producer or the Power Producer's assignee, successor or
transferee written notice, pursuant to Article 17, of its intent to implement
its rights under this Section 15.3, which notice shall specify the actual or
alleged failure of the Power Producer to comply with its obligations or duties.
If the failure endangers life or property, or impairs or creates a significant
risk to the safety, reliability, stability, or integrity of the Transmission
System, the Company may implement this Section 15.3 without such prior notice as
necessary in its judgment to avert such condition.
ARTICLE 16
ASSIGNMENT
16.1 No Party may assign, transfer or otherwise encumber or dispose of this
Agreement or any rights, duties, interests or obligations hereunder without the
prior written consent of the other Party; provided, however, that the Company
may at any time and without the consent of the Power Producer, assign this
Agreement together with its rights, interests, duties or obligations hereunder
to any Affiliate of the Company or any successor entity; provided, further, that
in any event the assignee shall agree to be bound by all of the terms and
conditions hereof to the same extent as the Company. Notwithstanding the
foregoing, the Power Producer may assign and
36
<PAGE>
encumber its respective rights under this Agreement in favor of the Lenders
without the consent of the Company. The Lenders may further assign this
Agreement to other persons following the prior consent of the Company which
shall not be unreasonably withheld. Provided, further, that in any event the
assignee shall agree to be bound by all of the terms and conditions hereof to
the same extent as the Power Producer. Each Party shall give its consent to
assignments made in accordance with this Article in the form reasonably
requested by the interested Party. In the event of an assignment without consent
as set forth above, the assigning Party agrees to provide the other Party with
prompt notice of such assignment.
16.2 In the event of any sale, transfer, assignment, lease or any other
disposition of the Facility or any substantial portion thereof by the Power
Producer, or upon termination of the Agreement, or termination of any operation
at the Facility, the Power Producer hereby agrees to indemnify and hold harmless
the Company for any and all costs, expenses, liabilities and damages (including
reasonable attorneys' fees) for which the Company may be obligated in order to
comply with any applicable requirements of the federal, state, or local
regulations.
ARTICLE 17
NOTICES
17.1 All notices required or permitted under this Agreement shall be in
writing and shall be personally delivered or sent by certified United States
mail, postage prepaid, telex, facsimile transmission, or overnight express mail
or courier service addressed as follows:
37
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If to the Power Producer to: Patricia Rollin
Vice President
AES Ironwood, L.L.C.
1001 North 19th Street
Arlington, VA 22209
If to the Company to: Bradley J. Breidinger
Manager - Transmission Investment Planning
GPU Energy
2800 Pottsville Pike
Post Office Box 16001
Reading, PA 19640-0001
and
GPU Energy
Legal Department
2800 Pottsville Pike
Post Office Box 16001
Reading, PA 19640-0001
or to such other person at such other address as a Party shall designate by like
notice to the other Party.
17.2 Unless otherwise provided herein, all notices hereunder shall be deemed
to be given when sent pursuant to Section 17.1 mailed or personally delivered.
ARTICLE 18
AMENDMENT AND MODIFICATION
18.1 This Agreement may not be amended or modified except by a written
instrument signed by each of the Parties hereto.
18.2 Nothing contained in this Agreement shall be construed as affecting in
any way the right of the Company to unilaterally make application to FERC for a
change in rates, terms and conditions, charges, classification of service, rule
or regulation under Section 205 of the Federal Power Act or applicable laws and
requirements.
38
<PAGE>
18.3 Nothing contained in this Agreement shall be construed as affecting in
any way the ability of the Power Producer to exercise its rights under the
applicable rules and requirements of the Federal Power Act and pursuant to
FERC's rules and regulations promulgated thereunder.
ARTICLE 19
DISPUTES
19.1 Any claim or dispute, which either Party may have against the other,
arising out of the Agreement shall be submitted in writing to the other Party
not later than thirty (30) days after the circumstances which gave rise to the
claim or dispute have taken place. The submission of any claim or dispute shall
include a concise statement of the question or issue in dispute, together with
relevant facts and documentation to fully support the claim.
19.2 If any such claim or dispute arises, the parties shall attempt to
resolve the claim or dispute, initially through good faith negotiations or upon
the failure of such negotiations, through Alternative Dispute Resolution ("ADR")
techniques in accordance with the Model Procedure for Mediation of Business
Disputes as published by the Center for Public Resources; however, either Party
may terminate its participation in ADR during any stage of ADR and proceed under
section 19.3.
19.3 If any claim or dispute arising hereunder is not resolved pursuant to
section 19.2, either Party may, upon giving the other Party at least ten (10)
days prior written notice, initiate litigation to submit such claim or dispute
for decision by a court of competent jurisdiction of the Commonwealth of
Pennsylvania in accordance with the laws of the Commonwealth of Pennsylvania.
39
<PAGE>
19.4 Nothing in this Article 19 shall restrict the rights of any Party to
file a complaint with FERC under relevant provisions of the Federal Power Act.
ARTICLE 20
MISCELLANEOUS
20.1 Except as may be otherwise provided herein, the duties, obligations and
liabilities of the Parties hereto are intended to be several and not joint or
collective. Nothing contained in this Agreement shall ever be construed to
create an association, trust, partnership, or joint venture or impose a trust or
partnership duty, obligation or liability or agency relationship on or with
regard to either Party. Each Party shall be individually and severally liable
for its own obligations under this Agreement.
20.2 Any waiver at any time by either Party of its rights with respect to a
default under this Agreement, or with respect to any other matters arising in
connection with this Agreement, shall not be deemed a waiver with respect to any
subsequent default or any other matter.
20.3 All indexes, titles, subject headings, section titles and similar items
are provided for the purpose of reference and convenience only and are not
intended to be inclusive, definitive or to affect the meaning of the contents or
scope of this Agreement.
20.4 The Company shall prohibit its employees from using their official
position for personal financial gain, or from accepting any personal advantage
from anyone under circumstances which might reasonably be interpreted as an
attempt to influence the recipients in the conduct of their official duties. The
Power Producer and its employees and representatives shall not, under
circumstances which might reasonably be interpreted as an attempt to influence
the recipients in
40
<PAGE>
the conduct of their duties, extend any gratuity or special favor to employees
of the Company.
20.5 This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania applicable to contracts made and to
be performed in that State, irrespective of the application of any conflicts of
laws provisions.
20.6 This Agreement supersedes any and all oral or written agreements and
understanding heretofore made relating to the subject matter hereof.
20.7 (a) Upon the Power Producer's written request, the Company shall
maintain and not disclose to any Party, except Authorized Parties, as defined
below, Confidential Information, as defined below, which is disclosed to the
Company by the Power Producer hereunder.
(b) For purposes hereof, "Confidential Information" means contracts,
insurance policies, documents, plans, drawings, specifications and other
information which the Power Producer maintains as confidential and which is
clearly so marked or identified when it is disclosed to the Company, except that
Confidential Information shall not include information which (i) is available to
the public, (ii) becomes available to the public other than as a result of a
breach by the Company of its obligations hereunder, (iii) was known to the
Company prior to its disclosure to the Company by the Power Producer, or (iv) is
required to be disclosed pursuant to statute, rule, regulation or order or any
court, governmental authority or regulatory body.
(c) For purposes hereof, "Authorized Party" means any officer,
employee, representative, agent or attorney of the Company or any officer,
employee, representative, agent or attorney of any Affiliate of the Company
whose duties include the negotiation, evaluation, approval, performance or
administration of this Agreement and who needs to know the Confidential
Information in order to perform his duties.
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20.8 No information relating to this Agreement may be published or released
for publication by the Power Producer without the prior written approval of the
Company, which shall not be unreasonably withheld; provided, however, that the
foregoing shall not restrict the Power Producer from making any filing or public
disclosure with respect to this Agreement which may be required by applicable
law.
20.9 This Agreement may be executed in any number of counterparts, and all
such counterparts executed and delivered, each as an original, shall constitute
but one and the same instrument.
20.10 Should any provision of this Agreement be held invalid or
unenforceable, such provisions shall be invalid or unenforceable only to the
extent of such invalidity or unenforceability without invalidating or rendering
unenforceable any other provision hereof.
20.11 The Company shall furnish such information, certificates, opinions of
counsel, consents to assignment or pledge and other documents and assistance as
may be reasonably requested by the Lenders in connection with the financing of
the Facility. The Company agrees to negotiate in good faith concerning any
reasonable amendment or addition to this Agreement required by any Lender in
connection with the financing of the Facility. The Power Producer shall
reimburse the Company for any and all costs associated with furnishing such
information including reasonable attorneys fees.
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IN WITNESS WHEREOF, the Parties by their authorized representatives
have executed this Agreement as of the day and year first set forth above.
ATTEST: AES IRONWOOD, L.L.C.
/s/ Alicia Slinn By: /s/ Patricia L. Rollin
- ---------------------------- ----------------------------
ATTEST: METROPOLITAN EDISON COMPANY
d/b/a GPU ENERGY
/s/ William C. Matthews By: /s/ R. S. Zechman
- ---------------------------- ----------------------------
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APPENDIX A
Description of Facility
1. Written Description of the Facility to include the location, type, size
and capacity of the Facility
2. Topographical Map to locate the facility
3. One-Line Interconnection Diagram that includes a description of the
Company and Power Producer Interconnection Facilities
A1
<PAGE>
IRONWOOD FACILITY DESCRIPTION
Net Facility Capacity at 92F = 655MW +/- 10%
Expected Capacity at ISO conditions (59F) = 705MW +/- 10%
The Site is located off Prescott Road, in South Lebanon Township, PA. The Site
elevation is 507 feet above sea level. With the exception of the twin flue stack
and the HRSG drums, all buildings and structures comprising the Facility are not
more than 75 feet tall.
The Facility main power block consists of two Westinghouse 501G combustion
turbine-generators with their associated heat recovery steam generators and
ancillary plant, and a single 240MW steam turbine generator with side
condensers. The three turbine generators are arranged in the turbine building,
which is connected to the control building. The heat recovery steam generators
are located outside, to the east of the turbine house. Other plant buildings and
structures outside of the main power block include the following:
Water Treatment plant
Zero liquid discharge facility
Cooling towers
Fuel oil storage tank (No 1 GT fuel or similar)
Fuel oil unloading facilities
Gas metering station
Gas compressor building
Administration building
Workshop and store
The turbine generators will be nominally rated at 288MVA, 0.9 power factor
lagging and can operate at approximately 0.95 power factor leading (measured at
the generator), 16kV at 60Hz., 0.53 short circuit ratio, and 60 psi rated
hydrogen pressure.
The Facility will be capable of operation with a voltage range of +/- 5% on the
230kV system.
The Facility will be supplied with three generator start up transformers rated
at 300MVA, 16% impedance, with off line tap changing, and two auxiliary
transformers.
Interconnection with the GPU system will be via a 230kV single bus, single
breaker out door substation with two transmission lines.
The Facility has no black start capability.
A2
<PAGE>
TOPOGRAPHICAL MAP
AES IRONWOOD
[LOCATION MAP GRAPHIC OMITTED]
A3
<PAGE>
INTERCONNECTION ONE LINE DIAGRAM
AES IRONWOOD
[TOTAL GENERATING CAPACITY GRAPHIC OMITTED]
A4
<PAGE>
APPENDIX B
Interconnection Facilities
The following information is included in Appendix B:
1. Detailed one-line diagram
2. List of equipment
3. Design characteristics
It is understood by the Parties that the information contained in Appendix B is
preliminary and included to show the general concepts of the Interconnection
Facilities. Additional items for interconnection and reinforcement may be
identified, the interconnection configuration may change, and specific material
items and quantities may change.
B1
<PAGE>
INTERCONNECTION ONE LINE DIAGRAM
AES IRONWOOD
[ASSET STRATEGY GRAPHIC OMITTED]
B2
<PAGE>
EQUIPMENT TO BE PROVIDED BY THE POWER PRODUCER
230kV Switchyard including but not limited to the following
Three 300MVA Generator Step Up Transformers
Two Station Auxiliary Tranformers
Power Circuit Breakers
Disconnect Switches
Surge Arrestors
Instrument Transformers
Control and Protective Relay Panels
Switchyard Storage Battery
Switchyard Battery Charger
Low Voltage switchboard
Miscellaneous Switchyard Equipment
Switchyard Equipment Installation
Design and Fabrication of Substation structures
Cast in Place concrete for substation structures
Excavation and Fill
Aggregate surfacing
Chain link Fencing
Revenue Metering System
Back up metering system
Voice and Data telephone circuits
SCADA system
Protective Relaying as required by Appendix D to this Agreement
EQUIPMENT TO BE PROVIDED BY THE COMPANY
Item 1 - 230 kV Line Tap on Existing North-South Transmission Line West of
Project Site
Quantity Description
1 Steel Pole Tap Structure
Insulators and Hardware
Item 2 - Ironwood Substation, 230 kV Switch Yard
Quantity Description
1 230 kV 2000A Circuit Breaker (40 kA)
4 230 kV 2000A Disc Switch
2 M.O. Mechanism-230 kV
B3
<PAGE>
4 230 kV Line Termination
4 230 kV Switch Stand
12 230 kV 1Ph Bus&Stand
2 230kV CCVT, w/Carrier Acc., 1200/2000:1, 0.003 mfd
2 230kV CCVT Stand, 6'0" (Steel)
2 230 kV Wave Trap
6 Chain Link Fence - 100 ft
10 Grading Fill-1000 Cu Yd
1 Grdg-4/0 Per 1000Sq Ft
20 Conduit 100ft
1 Building, 28x36, +Installation, w/Heat Pump
1 125 Vdc Charger (12A)
1 125 Vdc Battery, Rack (60 Cells, 100 Ah)
2 AC Panel and DC Panel
1 RTUs and Telecommunications Equipment
1 Miscellaneous Purchases
Relays at Substation:
2 Bitronics Multicomm
2 Bitronics Analog Output Converter
4 ABB FT-1 Test Switch (6 Cur)
2 SEL-321
2 ABB FT-1 Test Switch (10 V)
4 ABB FT-19R (6 CUR, 10 V)
2 GE DLP System
4 Cutler-Hammer Toggle Switch w/Guard
2 GE SBM Switch
2 EMAX RAW-1D
2 Eletroswitch LOR Lockout Relay
2 SEL-501
2 SEL-279
2 GE E150
2 RFL Powerline Carrier System
2 GE Carrier System
1 GE CT51 Receiver
Misc.- fuses, lights, wires, etc.
2 Relay Panel
Item 3 - Tie 1071 Line to 1001 Line
Quantity Description
5 Poles
Polymer Dead End Insulators
B4
<PAGE>
Polymer Post Insulators
Guys
Feet of 1590 Conductor
Lot Misc. Materials
Item 4 - Replace 76-1 Line Drop Loops at Fifth & Green (0.84 miles of 69kV)
New Conductor
New Poles, Crossarms, Insulators, etc. as required
Item 5 - S. Lebanon Sub 230 kV Breaker, Terminals & Relaying
Quantity Description
1 230 kV 2000A Circuit Breaker (50 kA)
1 230 kV 2000 A Disconnect Switch
1 230kV CCVT, w/Carrier Acc., 1200/2000:1, 0.003 mfd
1 230kV CCVT Stand, 6'0" (Steel) + shipping
1 230 kV Wave Trap
4 Conduit 100ft
20 Control Cable (per 100 FT)
1 Miscellaneous Purchases
Relaying at Substation:
1 Bitronics Multicomm
1 Bitronics Analog Output Converter
6 ABB FT-1 Test Switch (6 Cur)
3 SEL-321
3 ABB FT-1 Test Switch (10 V)
6 ABB FT-19R (6 CUR, 10 V)
1 GE DLP System
6 Cutler-Hammer Toggle Switch w/Guard
3 GE SBM Switch
3 EMAX RAW-1D
3 Eletroswitch LOR Lockout Relay
1 SEL-501
1 SEL-279
3 GE E150
3 RFL Powerline Carrier System
1 GE Carrier System
Misc.- fuses, lights, wires, etc.
3 Relay Panel
B5
<PAGE>
Item 6 - North Hershey Sub Relaying
Quantity Description
1 Bitronics Multicomm
1 Bitronics Analog Output Converter
2 ABB FT-1 Test Switch (6 Cur)
1 SEL-321
1 ABB FT-1 Test Switch (10 V)
2 ABB FT-19R (6 CUR, 10 V)
1 GE DLP System
2 Cutler-Hammer Toggle Switch w/Guard
1 GE SBM Switch
1 EMAX RAW-1D
1 Eletroswitch LOR Lockout Relay
1 SEL-501
1 SEL-279
1 GE E150
1 RFL Powerline Carrier System
1 GE Carrier System
1 GE CT51 Receiver
Misc.- fuses, lights, wires, etc.
1 Relay Panel
Item 7 - Lyons Sub 230 kV Breaker and Relaying
Quantity Description
1 230 kV 2000A Circuit Breaker (50 kA)
1 230 kV 2000A Disconnect Switch
2 230 kV Wave Trap, 2000A, 100.0-300.0 kHz Blocking
2 230 kV Wave Trap Stand
2 230kV CCVT, w/Carrier Acc., 1200/2000:1, 0.003 mfd
2 230kV CCVT Stand, 6'0" (Steel) + shipping
1 230 kV Wave Trap
5 Conduit 100ft
15 Control Cable (per 100 FT)
1 Lot Conductors
1 High Voltage Relay Panel
1 Miscellaneous Purchases
Relaying at Substation:
2 Bitronics Multicomm
2 Bitronics Analog Output Converter
4 ABB FT-1 Test Switch (6 Cur)
B6
<PAGE>
2 SEL-321
2 ABB FT-1 Test Switch (10 V)
4 ABB FT-19R (6 CUR, 10 V)
2 GE DLP System
4 Cutler-Hammer Toggle Switch w/Guard
2 GE SBM Switch
2 EMAX RAW-1D
2 Eletroswitch LOR Lockout Relay
2 SEL-501
2 SEL-279
2 GE E150
2 RFL Powerline Carrier System
1 GE Carrier System
1 GE CT51 Receiver
Misc.- fuses, lights, wires, etc.
2 Relay Panel
Item 8 - Middletown Jct. Sub Relaying
Quantity Description
2 ABB FT-1 Test Switch (6 Cur)
1 SEL-321
1 ABB FT-1 Test Switch (10 V)
2 ABB FT-19R (6 CUR, 10 V)
1 GE DLP System
2 Cutler-Hammer Toggle Switch w/Guard
1 GE SBM Switch
1 EMAX RAW-1D
1 Eletroswitch LOR Lockout Relay
1 SEL-501
1 SEL-279
1 GE E150
1 RFL Powerline Carrier System
Misc.- fuses, lights, wires, etc.
1 Relay Panel
Item 9 - S. Reading Sub Relaying
Quantity Description
2 ABB FT-1 Test Switch (6 Cur)
1 SEL-321
1 ABB FT-1 Test Switch (10 V)
2 ABB FT-19R (6 CUR, 10 V)
B7
<PAGE>
1 GE DLP System
2 Cutler-Hammer Toggle Switch w/Guard
1 GE SBM Switch
1 EMAX RAW-1D
1 Eletroswitch LOR Lockout Relay
1 SEL-501
1 SEL-279
1 GE E150
1 RFL Powerline Carrier System
Misc.- fuses, lights, wires, etc.
1 Relay Panel
RELAY MODIFICATIONS BY SUBSTATION
The following relay requirements are based on high-speed clearing for stability
reasons up to two (2) busses away from the Ironwood site. In addition to the
items listed below, the normal complement of relay communications equipment and
miscellaneous equipment will be required.
1. Middletown Junction Substation
a. Middletown Junction to South Lebanon Circuit (1004) Install
new primary carrier blocking scheme with new carrier set. This
scheme does not replace the existing set, but will function as
a second high-speed scheme.
2. South Lebanon Substation
a. South Lebanon to Middletown Junction Circuit (1004) Install
new primary carrier blocking scheme with new carrier set. This
scheme does not replace the existing set, but will function as
a second high-speed scheme.
b. South Lebanon to South Reading Circuit (1074) - Install new
primary carrier blocking scheme with new carrier set. This
scheme does not replace the existing set, but will function as
a second high-speed scheme.
c. South Lebanon to AES Circuit - Install dual high-speed carrier
blocking schemes. Primary relay SEL-321, back up relay GE DLP,
with stuck breaker and reclosing relays.
3. AES Substation
a. AES to South Lebanon - Install dual high-speed carrier
blocking schemes. Primary relay SEL-321, back up relay GE DLP,
with stuck breaker and reclosing relays.
b. AES to North Hershey to Lyons (Alburtis) - Install dual
high-speed carrier blocking schemes. Primary relay SEL-321,
back up relay GE DLP, with stuck
B8
<PAGE>
breaker and reclosing relays. Install DTR equipment to trip on
a signal from Lyons substation.
4. North Hershey Substation
a. North Hershey to AES to Lyons Circuit - Install dual
high-speed carrier blocking schemes. Primary relay SEL-321,
back up relay GE DLP, with stuck breaker and reclosing relays.
Install DTR equipment to trip on a signal from Lyons
substation.
5. Lyons Substation
a. Lyons to North Hershey to AES - Install dual high-speed
carrier blocking schemes. Primary relay SEL-321, back up relay
GE DLP, with stuck breaker and reclosing relays. Install DTT
equipment to send trip signal to North Hershey and AES.
b. Lyons to Alburtis - Install dual high-speed carrier blocking
schemes. Primary relay SEL-321, back up relay GE DLP, with
stuck breaker and reclosing relays. Change DTT equipment to
send trip signal to Alburtis.
B9
<PAGE>
APPENDIX C
Transmission Operation
Interconnection Requirements
C1
<PAGE>
GPU Energy's
Transmission Operation
Interconnection Requirements
For Generation Facilities
I. DEFINITIONS
The definitions set forth in the Generation Facility Transmission
Interconnection Agreement are incorporated herein by reference. In
addition, the following definitions apply:
PJM Manuals - The instructions, rules, procedures and guidelines
established by the PJM OI for the operation, planning, and accounting
requirements of the PJM Control Area and PJM interchange energy market.
Supervisory Control and Data Acquisition (SCADA) - A system of remote
control and real-time communications used to monitor and control the
Transmission System.
Transmission Operator - The Company person(s), who coordinates the
day-to-day interconnection and operation of the Facility with the
Transmission System.
II. POLICY
Every Facility which is interconnected with and synchronized to the
Transmission System shall at all times coordinate its operation with
the assigned Company control center and provide all necessary and
requested information and equipment to assure that the Company can
operate its electrical system in a safe and reliable manner. Continuous
cooperation and communication between the Power Producer and the
Company are essential to assure that the Transmission System is
operated in a safe and reliable manner.
The Power Producer shall develop the operating principles and
procedures which shall be coordinated with the Company's requirements,
provide the necessary training for all employees, and provide for the
necessary communication of information between the Power Producer and
the Company. This includes the following:
(a) Provide the following information necessary to ensure the safe
and reliable operation of the Company's electrical system: (i)
a copy of the Power Producer's switching procedures; (ii) a
completed Generator Data Form (Attachment 1) for each
generating unit, unit step-up transformer and auxiliary
transformer.
(b) Implement Facility practices and procedures which are
consistent with the Company and PJM OI transmission
requirements as defined in the PJM Manuals and/or herein.
(c) Implement operating principles and procedures which shall be
coordinated with
C2
<PAGE>
the Company's and the PJM OI's requirements for normal
operating conditions as defined in the PJM Manuals and/or
herein.
(d) Implement operating principles and procedures which shall be
coordinated with the Company's and the PJM OI's requirements
for emergency operating conditions as defined in the PJM
Manuals and/or herein.
(e) Provide data to the Company regarding the operation and
maintenance of the Facility in accordance with the Operating
Agreement of PJM Interconnection, L.L.C.
III. SYSTEM REQUIREMENTS
A. Reliability
The Power Producer shall deliver the electric energy generated
by the Facility to the Company at the point(s) of
interconnection in the form of 3 phase, 60 Hertz alternating
current at the nominal system voltage at the point of
interconnection.
At no time shall the operation of the Facility, including the
associated generators or any of their auxiliary devices,
result in an electrical output in which individual harmonic
distortion exceeds 1% of the Company's voltage wave form or
the sum of all harmonics exceeds 1.5% of the Company's wave
form, as measured at the point of interconnection.
The Facility shall be operated with all of the Power
Producer's Protective Apparatus in service whenever the
Facility is connected to or operating in parallel with the
Company's electric system.
B. Switching
The Power Producer shall be responsible for switching all
equipment it owns, operates or controls. A specified device(s)
to isolate the Facility from the Transmission System shall be
switched by the Power Producer whenever requested by the
Company, and locked and tagged by the Company to provide
safety clearance.
The Power Producer's switching procedures shall at all times
be followed precisely by the Power Producer and be closely
coordinated between the Power Producer and the Transmission
Operator. The Company shall provide a copy of its written
switching procedures to the Power Producer upon request.
If requested by the Power Producer, specified Company devices
shall be operated and tagged by the Company according to the
Company's switching and tagging practices and safety rules.
Company switching and tagging practices and safety rules shall
apply to (i) all situations involving the Company and (ii) any
Power Producer personnel involved with Company switching and
tagging.
C3
<PAGE>
C. Relaying
The Facility relaying systems shall be consistent with the PJM
OI and Company relaying practices as defined in the PJM
Manuals and Appendix D of the Generation Facility Transmission
Interconnection Agreement. Any changes to the design and/or
setting of the protective relay system shall be subject to the
prior review and acceptance by the Company.
The relaying system for the Facility shall be sufficient to
prevent or limit equipment damage for contingencies (i) within
the facility and (ii) external to the Facility and on the
Company system.
D. Real-Time Communications
The Power Producer shall provide data via a SCADA system and
an associated, dedicated communications channel to the
Company's Energy Management System computer. Data shall
include, but is not limited to: MW; MVAR; MWh; voltage; 3
phase amps; and equipment status (i.e., open/close, on/off,
etc.).
SCADA system and metering shall be consistent with the
Company's practices, and compatible with the Company's
computer and communication systems. In addition, the Company
may require the ability to disconnect the Facility from the
Company's system via the SCADA system.
It is required that data shall be sent to the Company
automatically. In the event that the data is not automatically
received by the Company on a temporary basis, the Power
Producer shall call the Company with the operating data at
intervals specified by the Company. The Power Producer shall
correct any problems associated with the failure of equipment
within a reasonable time.
E. Communications of Information
The Power Producer and Transmission Operator shall promptly
exchange all information relating to all conditions which
affect (or could affect) the operations of the Facility and/or
the Company's electrical system and facilities.
The Power Producer shall provide adequate and reliable
telephone communication channels, manned by responsible
personnel, to integrate the Facility operation with the system
under both normal and emergency conditions.
The Power Producer shall communicate the outage of any
electrical equipment connecting the Facility to the Company's
system in accordance with the following requirements:
a. Each Facility will be assigned one of the Company
operations centers as its primary contact. This
assignment is based upon the voltage level of the
connection to the Transmission System and the
geographic location of the Facility.
C4
<PAGE>
b. All planned and maintenance outages of electrical
equipment requiring Company personnel involvement
must be requested by the Power Producer, providing
the appropriate information in a format as defined by
the Company and shown on Attachment 2.
c. Advance notifications of planned and maintenance
outages shall conform to the requirements as defined
in the PJM Manuals.
The Power Producer shall keep and maintain accurate and
complete records for Power Producer Interconnection Facilities
containing such information regarding the operation and
maintenance of all equipment as is appropriate and consistent
with industry practice and as may be necessary for the Company
to comply with its applicable requirements. The Company will
advise the Power Producer of such requirements as in effect
from time to time. The Power Producer shall make such records
available to the Company for inspection and copying from time
to time as the Company may reasonably request.
IV. NORMAL OPERATION REQUIREMENTS
A. Generator Governor Control
For any Facility engaged in parallel operation with the
Company, the Facility shall:
1. Operate on automatic governor control, except for the
periods immediately before generating equipment is
being removed from service and immediately after it
has been placed in service, and
2. Minimize governor outages during periods of
operation.
B. Synchronization and Disconnection Procedures
When synchronizing the Facility to or disconnecting the
Facility from the Company's electrical system:
1. The Power Producer shall obtain the Transmission
Operator's prior approval (i.e., at least 30
minutes), except that equipment may be disconnected
from the system without Company approval to prevent
injury to personnel or equipment damage. If for any
reason the disconnection occurs without prior Company
approval, the Power Producer shall immediately notify
the Transmission Operator as to the energy reduction
and the expected return time.
2. In order to support the Transmission Operator's
responsibility to plan and operate the normal and
emergency operations of the transmission system, the
Power Producer shall keep the Transmission Operator
informed at all times of the Facility's availability
or any change(s) to its status.
C5
<PAGE>
C. Voltage and Reactive Control Procedures
1. The Power Producer shall operate the Facility with
automatic voltage regulation equipment in service at
all times, except for outages of the regulator for
maintenance or equipment failure. Such operation will
normally involve a prescribed voltage limited to +/-
1% of schedule. The Power Producer, at the option of
the Company, shall operate the Facility either (i)
according to a predefined voltage schedule provided
by the Company or (ii) according to a reactive power
schedule as provided by the Company, consistent with
the Facility's generation capability and the
Company's electrical system. From time to time, the
Company may request alternate schedules consistent
with the Facility's generation capability and the
Company's electrical system.
2. The Power Producer shall notify the Transmission
Operator prior to performing all voltage regulator
maintenance. The Power Producer shall notify the
Company of the outage with as much lead time as
possible. The Power Producer shall minimize the
duration of regulator equipment outages. The Power
Producer shall notify the Transmission Operator at
least 30 minutes prior to removing the voltage
regulator from service, or returning the voltage
regulator to service.
3. The Power Producer may be requested by the Company to
deviate from prescribed voltage or reactive power
schedules if, in the Company's sole judgment,
conditions warrant such changes including, without
limitation, operating the Facility in the leading,
lagging, or unity power factor mode, but within the
capability of the machine.
4. The Power Producer shall operate automatic voltage
regulation to a tolerance of +/- 1% of scheduled
voltage, except for regulator maintenance outages or
equipment failures, or conditions prevailing on the
system and/or the Power System which necessitate
other voltage levels.
5. The Power Producer shall provide manual voltage
regulation to maintain the prescribed voltage
schedule or reactive power schedule during voltage
regulator equipment outages.
6. Momentary voltage fluctuations shall be permitted,
provided that they neither disturb service provided
by the Company or the Power Producer on their
respective systems nor hinder the Company from
maintaining proper voltage conditions on their
respective systems.
D. Maintenance Scheduling
1. The Power Producer shall provide the Company with at
least thirty (30) days prior written notice of its
intent to take a Generator Planned Outage
C6
<PAGE>
or Generator Maintenance Outage of the Facility,
including turbine, generator, and boiler overhauls or
inspections, testing, and nuclear refueling.
2. The Power Producer shall provide the Company with at
least thirty (30) days prior written notice of its
intent to test Protective Apparatus associated with
Power Producer Interconnection Facilities, including
circuit breakers, relays and auxiliary equipment.
Company personnel may observe such testing.
3. The Power Producer shall notify the Transmission
Operator of its intent to remove electrical equipment
from service by 10:00 a.m. five (5) working days
prior to, and again 30 minutes before the Generator
Planned Outage or Generator Maintenance Outage
begins. The Transmission Operator may request the
Power Producer to delay or reschedule the Generator
Planned Outage or Generator Maintenance Outage if
system reliability conditions warrant.
To the extent practical, the Company shall provide to the
Power Producer not less than one week advance notice of its
intention to perform planned maintenance on its facilities
that may affect the Facility's operations. The Company shall
notify the Power Producer when any changes occur.
E. Power Producer Generator Forced Outages
The Power Producer may remove any of its equipment from
service without prior notification to the Transmission
Operator due to a Generator Forced Outage. However, if the
Power Producer has advance knowledge of a Generator Forced
Outage, the Power Producer shall notify the Transmission
Operator with as much lead time as practical. For reliability
reasons the Power Producer shall notify the Transmission
Operator as soon as reasonably possible of the following:
- the starting time of the Generator Forced Outage
- the energy reduction resulting (or expected to
result) from the Generator Forced Outage
- the estimated time the equipment incurring the
Generator Forced Outage is expected to return to
service
- the time the Power Producer equipment is actually
returned to service.
F. Facility Equipment and Contract Data
In order to ensure that all Company personnel responsible for
the design and operation of the Company's system affected by
the Facility are familiar with its equipment configurations,
capabilities and operating parameters, the Company may from
time to time request, and the Power Producer shall provide in
a timely manner to the Company, detailed information about the
type, nature, and operating characteristics of the Facility
and all related equipment.
C7
<PAGE>
V. EMERGENCY OPERATION REQUIREMENTS
The Power Producer and Company shall maintain communications and
contact during all Company or PJM emergency operations.
A. System Emergency Conditions
During an Emergency, as determined/declared by the Company or
the PJM OI, the Power Producer shall respond as promptly as
possible to all directives from the Transmission Operator with
respect to all matters affecting the operation of the Facility
including, without limitation, the following:
a. Thermal overload of electrical circuits (actual or
contingency)
b. High or low voltage conditions (actual or
contingency)
The Transmission Operator may also direct the Power Producer
to (i) adjust (increase or decrease) the Facility energy
and/or reactive output (ii) connect or disconnect the Facility
from the Company's electrical system and/or (iii) deviate from
the prescribed voltage or reactive schedules. If safety or
system reliability conditions warrant, the Transmission
Operator may isolate the Facility from the Company's
electrical system without prior notice to the Power Producer
or upon such notice as is possible under the circumstances.
The Transmission Operator shall advise the Power Producer as
soon as possible of any forced outages of the Company's
electrical system which affect the Facility's operations.
When the Transmission Operator has determined that the
emergency conditions have been alleviated, he/she shall inform
the Power Producer and allow the Facility to return to normal
operations consistent with Good Utility Practice.
In order to safely and rapidly restore the Transmission System
following an outage of any or all of that system, a Facility
that has been isolated from the Company's electrical system
shall be allowed to reconnect only under the direction of the
Transmission Operator. In all cases, the Facility shall be
made ready to return to service and provide energy to the
Company as soon as possible.
Unless the Company requests a manual adjustment, the Power
Producer shall maintain the Facility automatic voltage
regulator in service during an Emergency.
The Power Producer shall participate in any voltage reduction
declared by the Company at any time, and operate the Facility
at the voltage level then requested by the Transmission
Operator.
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<PAGE>
Appendix C
Attachment 1
Generator Data Form
-------------------
Station Name ________________________ Unit No. __________
Generator ____________________ Rated Capacity __________ MVA
Operating Limits: Minimum KV _________ Maximum KV _________
Alarm Limits: Minimum KV _________ Maximum KV _______
Alarm Action: Minimum: ___________________________
Maximum: ___________________________
Max. Output (Installed Capacity) ________ MW
Max. Gross Output ________ MW
Capability LAG Curve Breakpoint __________ MW __________ MVAR
Rated Stator Voltage _______ Rated Stator Current _______ Amps
Generator Terminal Voltage - High Limit ______ Low Limit ______
Rated Field Current _________ Amps D.C. @ _________ Volts D.C.
Rated Hydrogen Pressure _______ PSIG Power Factor _________
Field Current High Limits: Rated ________ Amps D.C.
Field Voltage High Limits:
Rated ________ Volts D.C. Maximum: _______ Volts
Field Limit Alarms: Volts _______ Amps _______ Temp. _______
Alarm Action: Volts _______________________________________
Amps _______________________________________
Temperature _______________________________________
Line Drop Compensation: Type ________________________________
Setting _______________________________
Generator Stator Current High Limit _________
C9
<PAGE>
System Voltage: Nominal KV _______ Min. _______ Max. _______
Alarm Limits: Minimum _____________ Maximum ________________
Alarm Action: Minimum _______________________________________
Maximum _______________________________________
Other Limitations ___________________________________________________
Misc. Important Information ________________________________________
________________________________________________________________________________
Generator Unit Step-Up Transformer Data
---------------------------------------
Station Name ________________________ Unit No. __________
Unit Step-Up Transformer __________________________
Phase ________________ Connection _____________ __________
Class ________________
Rated Capacity ________ MVA at __________ C Rise
________ MVA at __________ C Rise
Rated Winding Voltage: (Primary) _________ KV
(Secondary) _________ KV
Available Taps/Impedance (Xt at Rated MVA)
------------------------------------------
Position Primary KV Secondary KV Impedance % Max. Amps
- -------- ---------- ------------ ----------- ---------
________ __________ ____________ ___________ _________
________ __________ ____________ ___________ _________
________ __________ ____________ ___________ _________
________ __________ ____________ ___________ _________
________ __________ ____________ ___________ _________
________ __________ ____________ ___________ _________
________ __________ ____________ ___________ _________
________ __________ ____________ ___________ _________
________ __________ ____________ ___________ _________
________ __________ ____________ ___________ _________
C10
<PAGE>
Alarm Limits: KV _______________________
Amps _______________________
MVA _______________________
Temperature _______________________
Primary Tap Setting ___________
Secondary Tap Setting ___________
Voltage Limits (if applicable) Primary ____________
Secondary ____________
Loading Limitations (if any)
________________________________________________________________________________
________________________________________________________________________________
__________
Auxiliary Transformer Data
--------------------------
Station Name __________________________ Unit No. __________
Auxiliary Transformer ________________ Connection _______ _______
Class ________________
Rated Capacity _______ MVA at __________ C Rise
_______ MVA at __________ C Rise
Rated Winding Voltage: (Primary) _________ KV
(Secondary) _________ KV
Available Taps/Impedance (Xt at Rated MVA)
Position Primary KV Secondary KV Impedance % Max. Amps
- -------- ---------- ------------ ----------- ---------
________ __________ ____________ ___________ _________
________ __________ ____________ ___________ _________
________ __________ ____________ ___________ _________
________ __________ ____________ ___________ _________
________ __________ ____________ ___________ _________
________ __________ ____________ ___________ _________
________ __________ ____________ ___________ _________
________ __________ ____________ ___________ _________
________ __________ ____________ ___________ _________
________ __________ ____________ ___________ _________
C11
<PAGE>
Alarm Limits: KV _______________________
Amps _______________________
MVA _______________________
Temperature _______________________
Primary Tap Setting ___________
Secondary Tap Setting ___________
Automatic Tap Changer Range ______________ to _____________
Volts
Raise Positions _____________
Lower Positions _____________
Voltage Limits (if applicable) Primary High ____________
Low ____________
Secondary High ____________
Low ____________
Load at Max. Generation _________ MW _________ Amps (Avg)
_________ MVAR _________ Volts
Load at Min. Generation _________ MW _________ Amps (Avg)
_________ MVAR _________ Volts
Loading Limitations (if any)
________________________________________
_____________________________________________________________________
____
C12
<PAGE>
Miscellaneous Information Required
----------------------------------
1. A copy of the Generator Reactive Capability Curve
2. A copy of the Generator VEE Curve
3. A copy of the Generator Saturation Curve
4. A report of any special Operating Restrictions
- such as vibration or field problems
5. A report of any Environmental Restrictions
- such as SO2 emissions or river flow or temperature
6. A report of any known limiting facilities
C13
<PAGE>
APPENDIX C
ATTACHMENT 2
APPLICATION FOR PROTECTIVE TAGGING ON LINES OR EQUIPMENT
Date Submitted _________ W.O. No. ______________ Application No.___________
APPLICANT:
- ----------
Switch-Hours_____ Date____ Day_____ Finish-Hours A_______ Date______ Day ____
Start-Hours_____ Date____ Day_____ Finish-Hours A_______ Date______ Day ____
Apparatus/Line Requested:____________________________________________________
Location:____________________________________________________________________
_____________________________________________________________________________
Work to be done:_____________________________________________________________
_____________________________________________________________________________
Switches Required:___________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
Remarks:_____________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
Emergency Clearance Time ___________________ Truck or Phone No. _____________
Tags Placed For ____________________________ Signed__________________________
Can Do The Required Switching? Yes No Counter Signed________________
Out of Service Overnight? Yes No
________________________________________________________________________________
SYSTEM OPERATOR:
- ----------------
Switches to be Tagged:_______________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
System Operator Approval (1) ____________________ (2) _______________________
________________________________________________________________________________
Date _______ Clearance @ _______ By __________ Clear @ __________ By ________
Date _______ Clearance @ _______ By __________ Clear @ __________ By ________
Date _______ Clearance @ _______ By __________ Clear @ __________ By ________
Date _______ Clearance @ _______ By __________ Clear @ __________ By ________
Date _______ Clearance @ _______ By __________ Clear @ __________ By ________
Application Completed @ ___________ Date _______
Date _______ Time ________ Party Notified _________ By ______ Remarks _______
Date _______ Time ________ Party Notified _________ By ______ Remarks _______
Date _______ Time ________ Party Notified _________ By ______ Remarks _______
Date _______ Time ________ Party Notified _________ By ______ Remarks _______
C14
<PAGE>
APPENDIX D
System Protection and Control
Interconnection Requirements
D1
<PAGE>
GPU ENERGY'S
SYSTEM PROTECTION AND CONTROL
INTERCONNECTION REQUIREMENTS
Revised: November 17, 1997
A. Definitions
GPU Energy - The trade name used individually and collectively by the
three operating electric utilities in the GPU System (i.e., Jersey
Central Power and Light Company, Metropolitan Edison Company, and
Pennsylvania Electric Company).
GPU System - The transmission and distribution facilities owned by GPU
Energy.
Generation Facility - A facility for generating electricity which is
connected to the GPU system.
Generation - The electrical energy being produced by: rotating
generators driven by steam turbines, internal combustion engines,
hydraulic turbines, windmills, etc; fuel cells, photovoltaic or battery
arrays with a DC or AC inverter; or any other electric generating
device.
Power Producer - The owner or operator of the Generation Facility.
B. Objectives
This document was prepared to assist GPU Energy engineers and Power
Producers when planning protection and control requirements for
interconnection between GPU Energy and the Generation Facility.
To ensure all proposed installations are handled uniformly and to
minimize the possibility of misinterpreting GPU Energy / /s
requirements, this document outlines the minimum protection
requirements for the safe and effective operation of this
interconnection, and provides technical and administrative guidelines.
C. General Policy
The minimum protection requirements stated in this document are
intended to achieve the following goals:
- Insure the safety of the general public and GPU Energy
personnel.
- Minimize the possible damage to the property of the general
public, GPU Energy , GPU Energy customers, and neighboring
utility systems.
- Minimize adverse conditions on the GPU System.
- Permit the Power Producer to operate its generating equipment
in parallel with the GPU System in a safe and reliable manner.
D2
<PAGE>
In order to achieve these goals, certain protective devices (relays,
circuit breakers, etc.) must be installed to promptly disconnect the
Generating Facilities from the GPU System whenever a fault or
abnormality occurs. The determination of what type of protective
devices are required depends primarily on three (3) major factors:
1) The type and size of the Generation Facility.
2) The location of the Generation Facility on the GPU System.
3) The manner in which the installation will operate.
In addition to the protective devices, certain modifications and/or
additions may be required to be made to the GPU System due to the
addition and/or modification of the Generation Facility. Each request
will be handled individually, and the final determination of the
protective devices, modifications, and/or additions required will be
made by GPU Energy. Any modifications to the GPU Energy distribution or
transmission systems necessitated by these changes to the Generation
Facility will be specified, purchased, and installed by GPU Energy at
the expense of the Power Producer.
GPU Energy will work with the Power Producer to achieve an installation
which meets the requirements of both the Power Producer and GPU Energy.
GPU Energy cannot assume any responsibility for protection of the
Generation Facility's generating equipment, or any portion of the
Generation Facility's equipment. The Power Producer is solely
responsible for protecting its equipment in such a manner that faults,
imbalances or other disturbances on the GPU System do not cause damage
to the Generation Facility's equipment.
It is the responsibility of the Power Producer to comply with all
applicable Federal, State, and Local Regulatory Agencies and all
electrical and safety codes. Further, the Power Producer may be
required, in GPU Energy?s sole and exclusive judgement, to retrofit its
interconnection protection systems due to obsolescence, operational
problems, enhancements in microprocessor/solid state technology leading
to improved sensitivity, modifications to the GPU system or the
Generation Facility, and in accordance with the most recently published
industry standards and practices.
Any interconnection of a Generation Facility to the GPU System must not
impair the quality and quantity of transmission or distribution service
available to its customers, create reliability problems, or interfere
with the operation and economic dispatch of power sources in which GPU
Energy has entitlement or with GPU Energy?s ability to carry out its
obligations under pre-existing agreements.
A Generation Facility will not be permitted to be connected to the GPU
Energy low voltage (< 1 kV) looped network system.
A GPU Energy controlled disconnecting device is required on the GPU
Energy side of all Generation Facility interties.
A Generation Facility's disconnecting device used to isolate the
facility's generation from the GPU System shall be blocked from closing
in on a de-energized utility circuit.
The Power Producer is responsible for properly synchronizing its
generation with the GPU System.
D. Review Process
In order to process all Power Producer requests in an efficient and
con-sistent manner, the following Review Process for Protection
Requirements must be followed.
1. Preliminary Protection Requirements Review
The GPU Energy System Relay and Control Engineering Department
will have primary responsibility for
D3
<PAGE>
the review and comment of all required protection design and
associated settings.
The following information shall be supplied to GPU Energy :
a) Detailed One-Line Diagram of entire Generation
Facility system.
b) A potential schematic of Generation Facility.
c) A current schematic of Generation Facility.
d) A control schematic of Generation Facility.
e) A connection diagram indicating all external
connections to individual components of the
protective scheme.
f) A three-line diagram of Generation Facility.
g) Instruction manuals for all protective equipment.
Component specifications and internal wiring diagrams
shall be included if not provided in manuals.
h) All protective equipment ratings.
i) Generator data, complete Attachment 2.
j) Equipment specifications and details of transformers,
circuit breakers, current transformers, voltage
transformers, and any other major equipment or
special items.
k) Specific setting information on all the Generation
Facility's protective relays associated with the
generator protection and generator step-up
transformer protection or auxiliary transformer
protection.
One set of all the above information is required. GPU Energy may in its
discretion require that meeting(s) be held between GPU System Relay and
Control Engineering personnel and the Power Producer's Consulting
Engineer, Contractor, etc. during this process.
Upon completion of the Preliminary Protection Requirements Review
process, the Power Producer's representative will be notified of any
modifications and/or additions, required to the GPU System or to the
Generation Facility. The Power Producer's representative shall also be
notified by GPU Energy that the Preliminary Protection Requirements
Review process is to be accomplished in a timely manner and that it
must represent an as accurate as possible determination of protection
requirements, however the Power Producer's representative shall be
notified that the information submitted will be subject to change
modification and/or addition by GPU Energy, in its sole and exclusive
discretion.
2. Final Protection Requirements Review
The Final Protection Requirements Review process will proceed in the
same manner as the Preliminary Protection Requirements Review process
outlined in Section D-1 above.
The information identified in Section D-1, including any modifications
and/or additions made by GPU Energy during the Preliminary Protection
Requirements Review process, will be required in triplicate. The
Instruction manuals for all protective equipment required pursuant to
Section D.1.(g) must contain at least one vendor original copy. All
information supplied for this review process shall be Final\As-Built
submittal information.
Upon GPU Energy's completion of its initial review of the Power
Producer's final submittal, the Power Producer's representative will be
notified of any final modifications and/or additions required to the
GPU System or to the Generation Facility. Upon the Generation
Facility's satisfactory completion, as determined by GPU Energy in its
sole and exclusive judgement, of any required final modifications
and/or additions, GPU Energy will notify the Power Producer's
representative that the Final Protection Requirements Review process
has been completed.
D4
<PAGE>
E. Design Consideration
1. Automatic Reclosing
The need for automatic reclosing modifications is directed
towards protection of the GPU System and the equipment of GPU
Energy customers from potential damage. It is the Power
Producer's responsibility to evaluate the potential effect of
GPU Energy's reclosing practices on its generator and to
provide suitable protection.
GPU Energy normally provides automatic multiple shot reclosing
with no intentional time delay on the first shot on all
distribution line circuit breakers. Additionally, automatic
sectionalizing for faults is provided on the distribution
system with electronic and hydraulic reclosers that reclose in
approximately 2 seconds following a trip operation. To protect
both GPU Energy and GPU Energy customers' equipment from
possible damage due to out-of-phase reclosing, the substation
distribution line circuit breaker and the line reclosers may
have to be modified, at the expense of the Power Producer,
with voltage check relays unless the size and characteristics
of the generator indicate that immediate reclosing would not
be hazardous to the GPU System. These relays will block
reclosing until the parallel generation on a line or line
section is de-energized.
Lines operated at 34.5 kV Delta and above also utilize
multi-shot automatic reclosing with the first shot delayed
approximately 20 cycles. Reclosing logic for these lines must
be modified, at the expense of the Power Producer, to include
synchronism checking.
2. Protection Requirements
Typical protection is illustrated in Appendix A Figures 1 and
2 inclusive.
The design of the Isolation and Fault Protection shall be
based upon a single failure philosophy, i.e., the failure of
any single component shall not render the protection
inoperative.
Isolation and fault protective relays shall be purchased,
installed and owned by the Power Producer. The required fault
and isolation protection shall be utility grade and conform to
the most recent ANSI Standard C37.90. Only solid
state/microprocessor based relay models are acceptable.
Isolation Protection
All relay settings associated with the Isolation Protection
shall be specified by GPU Energy.
GPU Energy shall have exclusive control and access to the
Isolation Protection.
a) Undervoltage (27) with Time Delay (62). Relay to be
set at approximately 90% of nominal voltage (108
secondary volts on a 120 volt base). Time delay to be
set at approximately 2.0 seconds in order to provide
coordination with motor starting and system faults.
b) Overvoltage (59) with Time Delay (62). Relay to be
set at approximately 110% of nominal voltage (132
secondary volts on a 120 volt base). Time delay to be
set at approximately 2.0 seconds to over-ride relay
response to transients and external fault clearing
which may cause nuisance operations.
c) Overfrequency (81O). Relay to be set at 60.5 Hertz
with no intentional time delay in its operation.
D5
<PAGE>
d) Underfrequency (81U) with Time Delay (62). Relay to
be set at 57.5 Hertz with a 5.0 second time delay.
This setting is necessary in order to coordinate with
GPU Energy 's system loadshedding underfrequency
relaying. GPU Energy , as a member of the
Pennsylvania- New Jersey-Maryland Interconnection
(PJM) agreement, has agreed to trip generators
connected to its system at a frequency of 57.5 Hertz
after a delay of 5.0 seconds. Therefore, the Power
Producer must also comply with this agreement. The
Power Producer is responsible to insure that setting
is compatible with all equipment purchased, installed
and operated at the Generation Facility.
Fault Protection
Generation Facility's fault protection shall coordinate with
GPU System protective devices for faults. All fault protection
settings are to be specified by the Power Producer and
approved by GPU Energy for coordination purposes only.
e) Out-of-Step Relaying (21 ZOS). Relays maybe required
to isolate the generator from the GPU System during
unstable conditions. The need for out-of-step
relaying will be based on the results of stability
studies. The Power Producer will be responsible for
providing the appropriate relay and settings.
f) Synchronism Check (25). A synchronism check relay
will be required on all breakers that may be used to
synchronize the generator to the system. The
synchronism check relay shall be capable of being set
for an angular difference of 10-60 degrees and have
an internal timer function allowing a time delay
setting between 0.5-5 seconds. The relay chosen must
also have an optional hot-bus dead-line; dead-bus
hot-line accessory.
g) Non-directional phase overcurrent (50/51),
non-directional ground overcurrent (50/51G), and
non-directional neutral overcurrent (51N) relays.
Where high-side of transformer (GPU System side) is
connected to the GPU System via a device other than a
fuse, the above mentioned protective relays are
required. Current transformers for the 50/51 and
50/51G relays shall be located on the high-side of
the transformers protective device (breaker, circuit
switcher, etc.) If high-side grounding of the
transformer is provided, the 51N relay shall be
connected to a current transformer installed in the
neutral connection of the transformer.
h) Voltage controlled time overcurrent relays (51V). In
applications where the Generation Facility is
interconnected to GPU Energy's distribution system
(34.5 kV Wye and below), voltage - controlled time
overcurrent relays must be provided. These relays
shall be connected to current transformers located on
the generator or its associated breaker. These relays
shall receive potential from the generator voltage
transformers.
i) System backup impedance (21) relay(s). In
applications where the Generation Facility is
interconnected to GPU Energy's transmission system
(34.5 kV Delta and above), an impedance relay must be
provided as a backup function to clear faults on the
GPU Energy System. This relay(s) shall be connected
to current transformers located on the generator or
its associated breaker. These relays shall receive
potential from the generator voltage transformers. An
external timer (0.1 - 5.0 sec) must be provided if
not provided internal to the impedance relay design.
Time delay will be typically set between 1.0 and 2.0
seconds.
F. CONTROL SYSTEMS
The Power Producer has the option to use either an AC or DC control
system, as described below.
1. AC SYSTEM
D6
<PAGE>
The AC control system supply must use 60 Hz power derived from
the GPU Energy line. The system must be designed to be
fail-safe and the failure of any single component must result
in a trip of the generator breaker.
NOTE: In AC powered schemes, the generator breaker will
probably be a contactor. In such cases, a latching contactor
is not acceptable. The AC System shall use continuously
energized auxiliary relays with contacts arranged to trip the
generator circuit breaker whenever the relays drop out. If a
molded case circuit breaker (or equal) is used, it must be
equipped with an undervoltage trip option.
All installations must isolate (trip) the generator in such a
manner that:
a manual operation
or
a time-delayed automatic synchro-check or voltage
check supervised operation
is required to close the generator or point-of-contact breaker
(contactor) after the GPU Energy source has returned to
normal.
Under no circumstances is the generator contactor (breaker) to
close immediately upon restoration of the GPU Energy source.
A white lamp should be provided to monitor the AC source and
shall have a nameplate.
2. DC SYSTEM
This system must use a battery of 48 or 125 VDC to supply
tripping energy to the generator circuit breaker.
All such installations must isolate (trip) the generator in
such a manner that:
a manual operation
or
a time-delayed automatic synchro-check or voltage
check supervised operation
is required to close the generator or point-of-contact breaker
(contactor) after the GPU Energy source has returned to
normal.
Under no circumstances is the generator contactor (breaker) to
close immediately upon restoration of the GPU Energy source.
An amber or yellow lamp shall provided to monitor the DC
source and shall have a nameplate.
G. TARGETS
All protective relays shall be equipped with targets that indicate
operation. These targets are to be arranged in the
D7
<PAGE>
control circuit to operate only when the associated relays trip the
generator or point-of-contact circuit breaker.
H. REMOTE TERMINAL UNIT (RTU)
For all Generation Facility installations, a Remote Terminal Unit (RTU)
will be purchased and installed by GPU Energy at the expense of the
Power Producer. This RTU will utilize the CDC II protocol and provide
the necessary point counts required by the Energy Management System
(EMS) of GPU Energy to operate and monitor the generation and
interconnection facilites at the Generation Facility site. Point count
will include, but not be limited to, analog, MWH, control, and status.
The Power Producer will provide an indoor weather controlled location
to mount an RTU and supply a four (4) wire data telephone circuit in
order for the RTU to communicate with the GPU Energy EMS. Furthermore,
a telephone and telephone circuit must be provided in the location of
the RTU in order that GPU Energy personnel may communicate with the
distribution or transmission operator for installation and maintenance
purposes.
If necessary, provisions shall be made at the bottom of each enclosure
to allow all cables to be wired to the RTU. The Power Producer must
also supply the power necessary for the RTU. The supply power can be,
but not limited to, 125 VDC, 120 VAC, and 48 VDC.
I. GROUNDING
Neutral and ground are not to be confused. All current and potential
neutrals are to be isolated from all other circuits. Each neutral is to
be grounded at one point only. The preferred grounding location will be
at the protective relay cabinet, on the internal side of the States
links.
J. WIRING
All wiring must agree exactly with schematics and wiring drawings.
All wires must be anchored to the cabinet or bundled when running
between devices. Bundling is permitted but all wiring must be
traceable. Wiring must be installed so that it can be visually traced
and checked. Use of conduit, or equal, wire trough is generally
acceptable but must be verified with GPU Energy.
Wiring shall be installed so as to avoid damage to the cable and its
insulation. Movement of the hinged panel shall not damage the cable or
its insulation or cause stress to the termination points on the panel
or on the door.
Wiring and device location shall not prevent the removal of any
equipment, block access to equipment for inspection and maintenance,
nor block spare space in the cabinet.
All equipment shall be mounted and wired in such a manner that no
energized terminals or connections are exposed or accessible to
personnel with the hinged relay panel in a closed position.
Any protective relay not equipped with internal isolation device must
be connected through an external test device (i.e., ABB FT-1 or sliding
link terminal blocks as determined and approved by GPU Energy .)
All incoming and outgoing cables/conductors will terminate on sliding
link terminal blocks located in the protective relay cabinet.
D8
<PAGE>
Terminal blocks shall be the States Company Type NT or equivalent.
The incoming side shall have one (1) nut, for mounting incoming cables.
The internal panel side shall have double nuts for mounting of internal
wires and marker tags. Marker tags should carry wire or cable conductor
identification.
Terminal blocks shall be mounted such that the connections and lines
are accessible and not blocked by projecting equipment.
Terminal blocks shall be mounted a minimum of 6" from side walls and
adjacent equipment and a minimum of 4" above the bottom of the housing.
Terminal blocks shall be mounted such that the sliding link:
Falls closed when loosened, if mounted in horizontal rows;
Moves toward the front of the cabinet when opened, if mounted
in vertical rows on side panels;
Moves away from the panel centerline when opened, if mounted
on the rear panel.
There shall be a minimum of 10% or 2, whichever is greater, spare
terminals included in the cabinet for modifications.
Pressure type connections with insulated sleeves shall be used.
Ring tongue lugs which completely encircle the screw or the stud shall
be used.
The crimping tool must be one approved by the Manufacturer for use on
the connector.
No soldered terminals or connections shall be used.
K. DRAWINGS CONTENT
1. One-Line Diagram
This drawing shows the functional arrangement, using single
line and standard symbol notations (per ANSI 432.2-1970,
41.1-1972) for the following equipment and accompanying
information:
a) Equipment Names and/or Numerical Designations for all
circuit breakers, contactors, switches, transformers,
generators, transmission lines, etc., associated with
the generation as required by GPU Energy to
facilitate switching.
b) Power Transformers - Name or designation, nominal
KVA, nominal primary, secondary, tertiary
D9
<PAGE>
voltages, vector diagram, impedance and tap settings.
c) Station Service/Operating Transformers - Designate
phase(s) connected to, and estimated KVA load.
d) Instrument Transformers - Voltage and current, used
to supply the Protective Relay cabinet and phase
connections.
e) Lightning Arresters/Spill Gaps/Surge Capacitors -
Ratings.
f) Capacitor Banks - kvar rating.
g) Switches - Indicate status normally open with a
(N.O.) and type of operation manual or motor.
h) Safety Switch - Continuous ampere and interrupting
ratings.
I) Circuit Breakers and/or Contactors - Interrupting
rating, continuous rating, operating times.
j) Generator(s) - Include type, connection, KVA,
voltage, current, rpm, PF, etc.
k) Point of interconnection to the GPU System and phase
identification.
l) Fuses - Size, type location.
m) Grounding.
n) Relay Nomenclature - A "1" outside a relay function
shall indicate a single phase relay and a "3" shall
indicate a three phase relay or three individual
relays.
2. Control Schematic
Control schematics are to be functionally complete schematics.
They shall be as simple and uncluttered as possible, and shall
contain the following information:
a) Terminal designation of all devices - relay coils and
contacts, switches, transducers, etc. If a device is
not supplied with terminal numbers, the cabinet
supplier shall number the device terminals clearly
and use those numbers on all drawings.
b) Relay functional designation - per latest ANSI
Standard. The same functional designation shall be
used on all drawings showing the relay.
c) Complete relay type, manufacturer, style number, and
relay range.
d) Numbers or wire designations for all cable
connections.
D10
<PAGE>
e) Switch contacts shall be referenced to the switch
development if development is shown on a separate
drawing.
f) Switch developments and escutcheons shall be shown on
the drawing where the majority of contacts are used.
Where contacts of a switch are used on a separate
drawing, that drawing shall be referenced adjacent to
the contacts in the switch development. Any contacts
not used shall be referenced as spare. All switch
developments shall include the manufacturer name,
complete style number and notations indicating spring
return to normal operation, when appropriate.
g) All switch contacts are to be shown open with each
labeled to indicate the positions in which the
contact will be closed.
h) Explanatory notes defining switch coordination and
adjustment where misadjustment could result in
equipment failure or safety hazard.
i) Auxiliary relay contacts shall be referenced to the
coil location drawing if coil is shown on a separate
drawing. All contacts of auxiliary relays must be
shown and the appropriate drawing referenced adjacent
to the respective contacts.
j) Device auxiliary switches (circuit breakers,
contactor) must be referenced to the drawing where
they are used.
k) Any interlocks electromechanical, key, etc.,
associated with the generation.
l) Ranges of all timers, and setting if dictated by
control logic.
m) All target ratings (on dual ratings underline the
appropriate tap setting).
n) Complete internal for all protective relays.
Solid-state relays may be shown as a "black box" but
manufacturers instruction book number shall be
referenced, and terminal connections shown.
o) Isolation points (States links or FT-1 blocks)
including terminal identification.
p) All circuit elements and components, with device
designation, rating and setting where applicable.
Coil voltage is shown only if different from nominal
control voltage.
q) Size, type, rating and designation of all fuses.
3. Current Schematic
NOTE: This drawing is a primary three line and shall contain
the following information:
a) Relay functional designation per latest ANSI
Standard. The same functional designation shall be
used on all drawings showing the relay.
D11
<PAGE>
b) Terminal designations of all devices - relay coils
and contacts, switches, transducers, etc.
c) Numbers or wire designations for all cable
connections.
d) Phases shall be designated as A, B, C, N and rotation
(sequence) indicated as ABC or CBA.
e) Switch developments and escutcheons shall be shown on
the drawing where the majority of contacts are used.
Where contacts of a switch are used on a separate
drawing, that drawing shall be referenced adjacent to
the contacts in the switch development. Any contacts
not used shall be referenced as spare. All switch
developments shall include the manufacturer name,
complete style number and notations indicating spring
return to normal operation, where appropriate.
f) Auxiliary relay contacts shall be referenced to the
coil location drawing if coil is shown on a separate
drawing. Switch contacts shall be referenced to the
switch development drawing if development is shown on
a separate drawing.
g) Current transformers (CT) - polarity marks, rating,
tap, ratio and connection.
h) Auxiliary CT ratios, connection, winding current
rating and arrows to indicate assumed current flow.
I) Grounding of cables, CT's, etc.
j) Isolating points (States links, test switches, etc.).
k) Complete relay type, manufacturer, style number and
relay range.
l) All circuit elements and components, with device
designation, size, rating and setting where
applicable.
4. Potential Schematic
This drawing is a primary three line schematic with only
switching devices shown and shall contain the following
information:
a) Terminal designations of all devices - relay coils
and contacts, switches, transducers, etc.
b) Relay functional designation - per latest ANSI
Standard. The same functional designation shall be
used on all drawings showing the relay.
c) Complete relay type, manufacturer, style number and
relay range.
d) Numbers or wires designations for all cable
connections.
e) Phases shall be designated as A, B, C, N and rotation
(sequence) indicated as ABC or CBA.
D12
<PAGE>
f) Auxiliary relay contacts shall be referenced to the
coil location drawing if coil is shown on a separate
drawing. All contacts of auxiliary relays shall be
shown with each referenced to the appropriate
drawing.
g) Switch developments and escutcheons shall be shown on
the drawing where the majority of contacts are used.
Where contacts of a switch are used on a separate
drawing, that drawing must be referenced adjacent to
the contacts in the switch development. Any contacts
not used shall be referenced as spare. All switch
developments shall include the manufacturer name,
complete style number and notations indicating spring
return to normal operation, when appropriate.
h) Switch contacts shall be referenced to the switch
development drawing if development is shown on a
separate drawing.
I) All switch contacts are to be shown in the open
position, and labeled to indicate closed position(s).
j) Explanatory notes defining switch coordination and
adjustment where misadjustment could result in
equipment failure.
k) Ranges of all timers, and setting if dictated by
control logic.
l) Isolating points (States links, test switches, etc.).
m) Grounding of cables, VTs, etc.
n) Potential transformers (PTs, VTs), nameplate ratio,
polarity marks, rating, primary and secondary
connections.
o) All circuit elements and components, with device
designation, rating and setting where applicable.
Coil voltage is shown for all auxiliary relays.
p) Size, type, designations of all fuses.
5. Panel Wiring Drawing
NOTE: Wiring diagrams shall follow the physical equipment
layout. The following equipment must be identified on
this drawing.
a) Front view sketch with functional designation and
device type for all components and nameplates.
b) External cables, wire designations (number,
destination and drawing number). Each wire
designation shall be unique.
c) Terminal block location and number.
d) Equipment identification - functional designation and
device wiring designation (ratings shall appear
D13
<PAGE>
by components only when required for specific
identification and clarity).
e) Reference to relay internals, schematic, and
Instruction Book(s).
f) Current transformer tap ratio tables where
applicable.
g) Ground bus and connections.
h) Current circuits must be identified with asterisks.
i) Reference to switch developments.
j) Complete panel wiring details for all equipment
included on panel.
k) When external devices are connected to the protective
relaying cabinet, wiring drawings must be supplied
for those devices.
6. Three-Line Diagram
This drawing must include all the equipment shown on the one
line diagram and all information necessary for correct
phasing.
a) Phases shall be designated as A, B, C, N and rotation
(sequence) indicated as ABC or CBA.
b) Both GPU Energy and Generation Facility phase
designations, rotation (sequence), as well as
necessary interconnections shall be designated.
c) Terminal numbers shall be identified for all primary
equipment (i.e., breakers, transformers, generators,
etc.) shown on the one-line diagram.
d) Bushing designations shall be identified for all
circuit breakers and transformers.
L. PROTECTIVE RELAY TEST REQUIREMENTS
1. Commissioning as well as periodic and functional testing of
required fault protection (21 ZOS, 25, 50/51, 50/51G, 51N,
51V, 21, 62, 27, 59, 81, etc.) shall be performed and
documented by the Power Producer at intervals specified by GPU
Energy and to specifications established by the manufacturer.
All required testing of the fault protection shall be
performed and certified by a qualified testing organization
acceptable to GPU Energy. See Attachment 3.
A maintenance and test log will be developed and maintained by
the Power Producer. This log will detail all maintenance
information recommended by the manufacturers and then
instruction manuals. This log will contain specific
information pertinent to the equipment maintained, e.g.
location, manufacturer, year, type, serial number, date and
type of test (functional trip test calibration test results,
etc.) and any corrective
D14
<PAGE>
action taken due to test/maintenance findings. This log shall
be available for inspection by GPU Energy at any reasonable
time. Each year, a letter indicating that all required testing
and maintenance has been completed with acceptable results
shall be submitted to GPU Energy. GPU Energy has the right
upon request to inspect all required protective equipment
associated with the Generation Facility's interconnection(s).
2. GPU Energy shall reserve the right to specify settings of all
isolation devices which are part of the Generation Facility's
system.
3. GPU Energy shall require initial inspection and testing as
well as subsequent inspection and testing of the Generating
Facilty's isolation and fault protection systems (27-62,
59-62, 81o, 81u-62, etc.) at the Generation Facility's expense
on an annual basis. All required testing shall be performed
and certified by a qualified testing organization acceptable
to GPU Energy (Attachment 3). GPU Energy reserves the right to
observe any tests performed. Maintenance of these systems must
be performed and documented by the Power Producer at specified
intervals to the satisfaction of GPU Energy. GPU Energy shall
reserve the right to disconnect the Generation Facility and/or
the cogeneration equipment from the GPU system for failure to
comply with these inspections, testing and maintenance
requirements.
M. FINAL INTERCONNECTION APPROVAL
Final interconnection approval will be given upon:
1. Positive engineering review of the Generation Facility's
Electrical Plans (See Section C2).
2. Receipt of all information required in Section C1 in
triplicate.
3. Written certification from an approved relay testing
organization (Attachment 3) that all fault protection relays
have been successfully acceptance tested, commissioned, set,
and functionally trip tested.
4. Settings, acceptance testing, commissioning and functional
trip testing of all Isolation Protection Relays shall have
been successfully completed by the relay testing organization
and approved by GPU Energy.
D15
<PAGE>
Attachment 1
PROTECTION REQUIREMENTS
Figure
1 Generation Connected to System Voltages 34.5 kV Wye and Below
2 Generation Connected to System Voltages 34.5 kV Delta and Above with Wye-Wye
and Delta-Wye Transformer Connections
3 Generation Connected to System Voltages 34.5 kv Delta and Above with
Wye-Delta and Delta-Delta Transformer Connections
D16
<PAGE>
GENERATION CONNECTED TO SYSTEM VOLTAGES
[FIGURE 1 GRAPHIC OMITTED]
D17
<PAGE>
GENERATION CONNECTED TO SYSTEM VOLTAGES
[FIGURE 2 GRAPHIC OMITTED]
D18
<PAGE>
GENERATION CONNECTED TO SYSTEM VOLTAGES
[FIGURE 3 GRAPHIC OMITTED]
D19
<PAGE>
Attachment 2
GENERATOR DATA
FOR STABILITY CALCULATIONS
Machine MVA base for each machine: ____________
____________
____________
Step-up transformer percent impedance and MVA base
__________ % R + J __________ % X ____________ MVA
__________ % R + J __________ % X ____________ MVA
<TABLE>
<S> <C>
| Value* | Description (for each machine)
|________|________________________________________________________________________________________________________
| |
|________| T'do (sec. 0)
| |
|________| T'do (sec. 0)
| |
|________| T'qo (sec. 0)
| |
|________| T"qo (sec. 0)
| |
|________| Inertia H Total Shaft Inertia (Turbine, exciter, generator)
| |
|________| Speed Damping D If unavailable, program defaults to 0.0
| |
|________| Xd |-----------------------------------------|
| | | Excitation System |
|________| Xq | ----------------- |
| | | |
|________| X'd | Brand Name_______________________ |
| | | |
|________| X'q | |
| | | Type______________________________ |
|________| X"d = X"q | |
| | ------------------------------------------
|________| X1 If unavailable, program defaults to 0.05Xd
| |
|________| S(1.0) Saturation values 1.0 p.u. voltage; if unavailable, program defaults to 0.11
| |
|________| S(1.2) Saturation values 1.2 p.u. voltage; if unavailable, program defaults to 0.48
| |
|________|
* Xd, Xq, X'd, X'q, X"d, X"q, X1, H, and D are in p.u. machine base.
X"q must be equal to X"d.
</TABLE>
D20
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Attachment 3
ACCEPTED RELAY TESTING ORGANIZATIONS
GPU Energy
ABB Power T&D Company
One Bala Plaza
Bala Cynwyd, Pennsylvania 10994
Doble Engineering Company
85 Walnut Street
Watertown, Massachusetts 02172
General Electric Company
205 Great Valley Parkway
Malvern, Pennsylvania 19355
GPU Energy Company
2800 Pottsville Pike
Post Office Box 16001
Reading, PA 19640-0001
MET Electrical Testing Company, Inc.
916 W. Patapsco Avenue
Baltimore, Maryland 21230
Multi-Amp Corporation
4271 Bronze Way
Dallas, Texas 75237
Addresses identified above are GPU Energy's regional contacts for relay testing
services. Other regional contacts may be more appropriate for the consulting
engineer.
D21
<PAGE>
REFERENCES
1. Guide for Interconnection Requirements and Parallel Operation of
Customer-Owned Generation Georgia Power Company - Electric Operations
Bulletin No. 51
2. Protection Requirements for Parallel Operation of Non-Utility
Generation, Pennsylvania Power & Light Company - Revision #5 dated June
20, 1988
D22
<PAGE>
APPENDIX E
INTERCONNECTION INSTALLATION AGREEMENT
BETWEEN
METROPOLITAN EDISON COMPANY
d/b/a GPU ENERGY
AND
AES IRONWOOD, L.L.C.
<PAGE>
TABLE OF CONTENTS
ARTICLE TITLE OF ARTICLE PAGE NO.
------- ---------------- --------
I Scope of Work E2
II Schedule of Work E2
III Payment E2
IV Bonus/Liquidated Damages E3
V General Provisions E5
VI Notices E5
VII Authorization for Changes and Approvals E5
VIII Entire Agreement E6
Attachment I Scope of Work
Attachment II Schedule of Work
Attachment III General Provisions
<PAGE>
INTERCONNECTION INSTALLATION AGREEMENT
THIS AGREEMENT ("Installation Agreement"), entered into the ______ day
of ____________, 19_____, between Metropolitan Edison Company d/b/a GPU Energy,
(hereinafter referred to as the "Company") and AES Ironwood, L.L.C.,
(hereinafter referred to as "Power Producer"), collectively "Parties".
RECITALS
WHEREAS, Power Producer desires to build the Ironwood power plant and
interconnect with the Transmission System; and
WHEREAS, the Company is willing to design, furnish, install and own
certain facilities required to interconnect Power Producer's Facility with the
Transmission System, as more fully defined and described in the Generation
Facility Transmission Interconnection Agreement between the Parties ("Company
Interconnection Facilities").
WHEREAS, Power Producer has placed a high priority on the Schedule of
Work and desires that the Company accept Bonus/Liquidated Damages provisions
relating to this Installation Agreement.
WHEREAS, the Company is willing to accept Bonus/Liquidated Damages
provisions relating to this Installation Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
covenants, promises and agreements hereinafter set forth, the Parties hereto,
intending to be legally bound, hereby covenant and agree as follows:
E1
<PAGE>
ARTICLE I - SCOPE OF WORK
The Company shall, in accordance with the provisions set forth herein,
provide all labor, supervision, materials and equipment necessary to perform the
interconnection installation as more fully described in Attachment I, attached
hereto and made a part hereof, entitled "Scope of Work".
ARTICLE II - SCHEDULE OF WORK
The Company shall use reasonable efforts to perform the Scope of Work
on a timely basis in accordance with the schedule set forth in Attachment II,
which is attached hereto and made a part hereof, entitled "Schedule of Work".
ARTICLE III - PAYMENT
Power Producer shall pay the Company for the actual costs of all
services performed by the Company, as specified in Attachment I - Scope of Work.
Costs shall include, but not be limited to, all labor charges, expenses,
materials and equipment charges, subcontractor costs, overheads and all
applicable permits, fees and sales, use or any other taxes.
Power Producer shall provide an advanced payment of $1,500,000.00 at
the time this Installation Agreement is executed. This amount shall be used by
the Company during the execution of the work first to offset AFUDC charges, then
to offset the final invoiced costs.
The Company shall submit monthly invoices for work performed. Each
invoice shall include supporting documentation and shall state the dates of
performance covered by the
E2
<PAGE>
invoice. Invoices in the final stages of the project will be adjusted to credit
for the application of advance payment.
Terms of payment shall be Net 30 days from the date of invoice
issuance. Interest shall be assessed on payments received after their due date
at the interest rate applied to prime commercial loans then in effect at the
main office of Citibank N.A., located in New York, N.Y. or its successor,
calculated from the due date to the date of payment.
Power Producer may, at any time, assign its payment obligations
hereunder to the purchaser of the output of the Ironwood facility. Power
Producer shall provide the Company with such notice of such assignment,
identifying the assignee. Following receipt of such notice, the Company shall
direct its invoices under this Installation Agreement to the assignee with a
copy to Power Producer. No such assignment, however, shall release or in any way
discharge Power Producer from the performance of its obligations (including any
or all payment obligations) under this Installation Agreement.
ARTICLE IV - BONUS/LIQUIDATED DAMAGES
If the actual completion date for Phase 1 varies from the date shown in
the Schedule of Work Attachment II, the following provisions shall apply:
1. If the actual completion date is later than the scheduled completion
date, the Company will pay Power Producer Liquidated Damages in the amount of
$5,000.00 per day for each day by which the Phase 1 work is not complete for up
to and including 42 days delay (August 11, 2000).
2. If the actual completion date is earlier than the scheduled
completion date, Power Producer will pay the Company a Bonus for early
completion in the amount of $5,000.00 per day for each day by which the Phase 1
work is completed early, for up to and including 30 days early
E3
<PAGE>
(May 31, 2000). It is understood by the Parties that the Company will utilize
overtime from time to time during the installation of the Interconnection
Facilities for the purpose of properly scheduling the work. Examples of this are
the use of overtime when working in active substations as required to minimize
the duration of substation outages or to complete work activities which are
better completed in one day rather than extending the work into a second day. It
is also understood by the parties that overtime is not intended to be used
purely for the benefit of accelerating schedule to achieve the Bonus. If
overtime is used for this purpose, the premium portion of overtime cost will be
deducted from the Bonus amount.
If it becomes apparent at any time that the Company will not complete
the Phase 1 work within 42 days after the scheduled completion date, and the
Company cannot within 30 days (of the delay becoming known) propose a recovery
plan reasonably acceptable to Power Producer, then Power Producer shall have
step in rights to complete the work in accordance with Company's specifications
and pursuant to Good Utility Practice, provided that Power Producer can
demonstrate that they could complete more quickly than the Company.
In further consideration of agreement to the Bonus/Liquidated Damages
provisions above and to an earlier agreement that the Company would proceed with
engineering before execution of the Installation Agreement and set the
completion date for Phase 1 work at June 30, 2000, Power Producer will pay the
Company for the work undertaken by the Company prior to December 17, 1998 in the
amount of $40,000. This payment shall be due within 30 days of signing this
Installation Agreement.
E4
<PAGE>
ARTICLE V - GENERAL PROVISIONS
The terms and conditions contained in Attachment III, attached hereto
and made part hereof, entitled "General Provisions", dated March 18, 1999 shall
apply to all services performed under this Installation Agreement.
ARTICLE VI - NOTICES
Any notice required under this Installation Agreement shall be deemed
to have been given at the time it is received in writing by the party being
notified. The designees authorized to give and receive such notices are as
follows:
1. The Company designees authorized to give and receive such notices are
as follows:
Bradley J. Breidinger
Manager - Transmission Investment Planning
2800 Pottsville Pike
Reading, PA 19605
Or Post Office Box 16001
Reading, PA 19604-0001
2. The Power Producer designees authorized to give and receive such
notices are as follows:
Patricia Rollin
Vice President
AES Ironwood, L.L.C.
1001 North 19th Street
Arlington, VA 22209
ARTICLE VII - AUTHORIZATION FOR CHANGES AND APPROVALS
A. This Installation Agreement may not be amended or modified except by
a written instrument signed by each of the Parties hereto.
E5
<PAGE>
B. The Company designated representatives listed below are the only
persons authorized to bind the Company under this Installation Agreement,
including any written direction or amendment hereto:
Robert S. Zechman
VP - Engineering & Operations
ARTICLE VIII - ENTIRE AGREEMENT
This Installation Agreement, together with that certain Generation
Facility Transmission Interconnection Agreement between the Parties of even date
herewith, constitute the entire agreement between the Company and the Power
Producer with respect to the performance by the Parties of the interconnection
installation described herein. They supersede all prior or contemporaneous
communications, representations, or agreements, representations, statements, or
agreements other than those herein expressed, whether oral or written, with
respect to the subject matter hereof and has been induced by no representations,
statements, or agreements other than those herein expressed.
E6
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement by
the undersigned thereunto duly authorized as of the date first written above.
METROPOLITAN EDISON COMPANY
WITNESS: d/b/a GPU ENERGY
By: /s/ William C. Matthews By: /s/ R. S. Zechman
----------------------------- -----------------------------
Title: Title: Vice-President
-------------------------- ---------------------------
Date: Date: March 23, 1999
--------------------------- ----------------------------
WITNESS: AES Ironwood, Inc.
By: /s/ Alicia Slinn By: /s/ Patricia L. Rollin
----------------------------- -----------------------------
Title: Administrative Assistant Title: Vice President
-------------------------- ---------------------------
Date: March 23, 1999 Date: March 23, 1999
--------------------------- ----------------------------
E7
<PAGE>
Attachment I
Page 1
INTERCONNECTION INSTALLATION AGREEMENT
SCOPE OF WORK
Services to be performed by the Company:
The Company will provide all labor, supervision, materials, equipment and tools
needed to design, furnish and install the Company Interconnection Facilities for
the AES Ironwood project. It is understood by the Parties, additional items for
interconnection and reinforcement may be identified, the interconnection
configuration may change, and the actual costs will differ from the estimated
costs shown below. In addition, it is understood by the Parties that the Power
Producer will pay for all actual costs incurred by the Company under this
Installation Agreement.
Estimated Amount
Item Project Description Reimbursable by AES
- ---- ------------------- -------------------
1 230kV Line Tap & In/Out $150,000
2 GPU Bus at AES $1,791,000
3 Tap of 1071 to 1001 $36,000
4 Replace 76-1 Line Drop Loops at Fifth & Green
(0.84 miles of 69kV) $400,000
5 S. Lebanon Sub 230kV Breaker, Terminals & Relaying $499,000
6 N. Hershey Sub Relaying $84,000
7 Lyons Sub 230 kV Breaker and Relaying $619,000
8 Middletown Jct. Sub Relaying $62,000
9 S. Reading Sub Relaying $62,000
Sub Total $3,703,000
Return (8.69% of Items 1 through 9) $322,000
Total $4,025,000
<PAGE>
Attachment II
Page 1
INTERCONNECTION INSTALLATION AGREEMENT
SCHEDULE OF WORK
<TABLE>
<S> <C>
Power Producer Commitments:
Provide the area for the GPU Substation in a final
subgrade condition ready for the start of construction plus
provide an easement and continuous access to that area and the
area over which the transmission line travels to the edge of
the existing GPU right-of-way.
July 1, 1999
Note: Any delay in meeting the above date will delay
the Company in meeting their commitment dates on a
day-for-day basis.
GPU Energy Commitments:
Phase 1:
Provide those Company Interconnection Facilities
necessary to permit the Power Producer to energize the
switchyard and commence commissioning of
the Facility. June 30, 2000
Phase 2:
Complete all remaining Company Interconnection
Facilities necessary to interconnect Power Producer with
the Transmission System. August 31, 2000
</TABLE>
<PAGE>
Attachment III
Page 1
Dated March 18, 1999
INTERCONNECTION INSTALLATION AGREEMENT
GENERAL PROVISIONS
INSURANCE
The Company shall, at its sole expense, obtain and maintain in effect
at all times on and after the date hereof the insurance described
below, with insurers reasonably acceptable to Power Producer, and shall
provide Power Producer with evidence of such insurance upon request.
All insurance policies identified herein, except Worker's Compensation
Insurance, shall name the Power Producer as an additional insured:
(a) workers' compensation insurance in forms and within statutory
limits and employer's liability with limits of not less than
$1,000,000;
(b) comprehensive general liability insurance (excluding automobile
liability) covering personal injury and property damage to third
parties and having a limit of not less than $1,000,000 per occurrence
and $1,000,000 in the aggregate; and
(c) automobile liability insurance covering owned and leased vehicles
used in the performance of services pursuant to this Installation
Agreement, covering personal injury and property damage to third
parties, with a limit of not less than $1,000,000 per occurrence.
LIMITATION OF LIABILITY
A. Notwithstanding any other provisions of this Installation Agreement, in
no event shall the Company nor its respective officers, directors,
partners, agents, employees or Affiliates, be liable to the Power
Producer or its Affiliates, officers, directors, partners, agents,
employees, successors or assigns, for claims for incidental, special,
indirect or consequential damages of any nature connected with or
resulting from performance or non-performance of this Installation
Agreement, including without limitation, claims in the nature of lost
revenues, income or profits or losses, damages or liabilities under any
financing, lending, construction, or maintenance contracts, agreements
or arrangements to which the Power Producer may be party irrespective
of whether such claims are based on warranty, negligence, strict
liability, contract, or operational loss or otherwise. Provisions of
this Section A shall survive the termination, cancellation, suspension
or completion or expiration of this Installation Agreement.
B. The total liability of the Company under this Installation Agreement
for all claims of any kind, whether based on contract, indemnity,
warranty, tort (including negligence), strict liability, duty to warn,
or otherwise, for all damages or losses relating to or resulting from
the performance of services by the Company pursuant to this
Installation Agreement, or the performance of or failure to perform the
services described more fully under the Scope of
<PAGE>
Attachment III
Page 2
Work within this Installation Agreement is limited to the amount of
money paid to the date of the claim. For purposes of this Installation
Agreement the Company includes Metropolitan Edison Company, its parent
and affiliates and officers, directors, employees, representatives,
associates, agents, successors and assigns of all such companies. Also,
the remedies expressed in this Installation Agreement are the only
remedies for any claims made in connection with this Installation
Agreement.
C. The provisions of this paragraph and any other provisions of this
Installation Agreement providing for limitation of or protection
against liability shall apply to the full extent permitted by law.
D. The provisions of this paragraph and any other provisions of this
Installation Agreement providing for limitation of or protection
against liabilities between the Parties hereto shall survive
termination of this agreement or completion of the work as described
herein.
GRATUITIES
The Company prohibits their employees from using their official
position for personal financial gain, or from accepting any personal
advantage from anyone under circumstances which might reasonably be
interpreted as an attempt to influence the recipients in the conduct of
their official duties. Power Producer or its employees shall not, under
circumstances which might reasonably be interpreted as an attempt to
influence the recipients in the conduct of their duties, extend any
gratuity or special favor to employees of the Company.
CLAIMS/DISPUTES/GOVERNING LAWS
A. Any claim or dispute which either party may have against the other
party, arising out of this Installation Agreement or the Scope of Work,
shall be presented by the claimant in writing to the other party no
later than Thirty (30) Days after circumstances which give rise to the
claim or dispute have taken place. The claim or dispute shall contain a
concise statement of the question or dispute, together with relevant
facts and data to fully support the claims.
B. In the event of any such claim or dispute, the Parties shall use their
best effort to resolve the claim or dispute, initially, through good
faith negotiations or upon the failure of such negotiations, through
Alternative Dispute Resolution (ADR) techniques in accordance with the
Model Procedure for Mediation of Business Disputes as published by the
Center for Public Resources; provided however, that nothing therein
contained shall prohibit either party from terminating its
participation in ADR during any stage of ADR or if either party
believes that the dispute is not suitable for ADR techniques or if such
techniques do not produce results satisfactory to the Parties from
proceeding in accordance with Paragraph C hereof.
<PAGE>
Attachment III
Page 3
C. If any claim or dispute arising hereunder is not resolved in accordance
with Paragraph B above, either party may, upon giving the other party
at least ten (10) days prior written notice, initiate litigation to
submit such claims or disputes for decision by a court of competent
jurisdiction of the Commonwealth of Pennsylvania in accordance with and
governed by the laws of Pennsylvania.
ACCESS
The Power Producer will allow access to any premises under the Power
Producer's immediate control and obtain appropriate permission to allow
the Company's employees or subcontractor's access to premises not under
the Power Producer's control that the Company finds necessary to access
in order to perform the services more fully described herein.
WORKMANSHIP
A. The Company represents to the Power Producer that it will perform the
services as described in this agreement, in a good and workmanlike
manner and in accordance with all applicable laws, rules, regulations,
orders and policies.
B. POWER PRODUCER ACKNOWLEDGES THAT THERE ARE NO IMPLIED WARRANTIES FROM
THE COMPANY AND/OR WAIVES ANY WARRANTIES THAT MAY ARISE BY OPERATION OF
LAW, CUSTOM, USAGE, INCLUDING AMONG OTHER THINGS, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
C. Damages resulting from any and all causes whatsoever, including but not
limited to, breach of contract, breach of warranty, negligence, or
strict product liability, will be exclusively limited to this paragraph
and the Limitation of Liability paragraph contained herein.
<PAGE>
Exhibit 23.1
[Graphic Omitted]
Stone & Webster
Founded 1889
October 29, 1999
AES Ironwood, L.L.C.
829 Cumberland Street
Lebanon, PA 17042
Lehman Brothers Inc.
3 World Financial Center
New York, NY 10285
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Dresdner Kleinwort Benson
North America LLC
75 Wall Street
New York, NY 10005
Re: AES Ironwood Project
Dear Sirs:
Stone & Webster Management Consultants, Inc. hereby submits our Independent
Technical Review of the AES Ironwood Project (the "Project"), dated June 18,
1999 (the "Report"). We understand that our Report will be used by (i)
purchasers of AES Ironwood L.L.C.'s 8.857% Exchange Senior Secured Bonds due
2025 (the "Bonds") and (ii) subsequent purchasers of the Bonds, in evaluating
the technical, operating, and economic aspects of the Project, and that it will
be included, in reliance upon our experience in the review of the design,
construction, and operation of electric generating facilities, as an appendix to
the Prospectus included in a Registration Statement on Form S-4 which will be
filed with the Securities and Exchange Commission by AES Ironwood, L.L.C. in
connection with the exchange of outstanding 8.857% Senior Secured Bonds due 2025
for the Bonds. We hereby consent to such inclusion and to the reference to us as
experts under the heading "Experts" in the Prospectus.
Very truly yours,
/s/ K.H. Applewhite, Jr.
- ------------------------------
K.H. Applewhite, Jr.
Vice President
Stone & Webster Management Consultants, Inc.
1430 Enclave Parkway
Houston, Texas 77077-2023
Phone: 281.368.4460
Fax: 281.368.4488
281.368.4491
www.stoneweb.com
<PAGE>
Exhibit 23.2
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
Hagler Bailly
- --------------------------------------------------------------------------------
PHB Hagler Bailly, Inc. Alan L. Madian
1776 Eye Street, NW Senior Vice President
Washington, DC 20006-3700
Tel 202-828-3928
Fax 202-296-3858
E-mail [email protected]
October 28, 1999
AES Ironwood, L.L.C.
829 Cumberland Street
Lebanon, PA 17042
Lehman Brothers Inc.
3 World Financial Center
New York, NY 10285
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Dresdner Kleinwort Benson
North America LLC
75 Wall Street
New York, NY 10005
Re: AES Ironwood Project
Dear Sirs:
PHB Hagler Bailly, Inc. hereby submits our Report on Projected
Competitiveness of the AES Ironwood Project in the PJM Market, dated June 1,
1999 (the "Report"). We hereby consent to the inclusion of the Report as an
appendix to the Prospectus included in a Registration Statement on Form S-4
which will be filed with the Securities and Exchange Commission by AES Ironwood,
L.L.C. (the "Company") in connection with the exchange of the Company's
outstanding 8.857% Senior Secured Bonds due 2025 for the Company's 8.857%
Exchange Senior Secured Bonds due 2025 and to the reference to us as experts
under the heading "Experts" in the Prospectus, as long as the material included
(and any summaries or discussions of the material) includes the points noted in
the Foreward of the Report.
Very truly yours,
/s/ Alan L. Madian
- ------------------------
Alan L. Madian
Senior Vice President
Professional Services Worldwide
<PAGE>
Exhibit 23.4
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of AES Ironwood L.L.C. on
Form S-4 of our report dated November 12, 1999, appearing in the Prospectus,
which is part of this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ DELOITTE & TOUCHE LLP
McLean, VA
November 12, 1999
<PAGE>
Exhibit 25
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
---------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
---------------
AES IRONWOOD, L.L.C.
(Exact name of obligor as specified in its charter)
Delaware 54-145-7537
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
829 Cumberland Street
Lebanon, PA 17042
(Address of principal executive offices) (Zip code)
-------------
8.857% Exchange Senior Secured Bonds due 2025
(Title of the indenture securities)
========================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of 2 Rector Street, New York,
the State of New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of 33 Liberty Plaza, New York,
New York N.Y. 10045
Federal Deposit Insurance Washington, D.C. 20429
Corporation
New York Clearing House New York, New York 10005
Association
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-2-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 10th day of November, 1999.
THE BANK OF NEW YORK
By: /s/ MARY LAGUMINA
----------------------------------
Name: MARY LAGUMINA
Title: ASSISTANT VICE PRESIDENT
<PAGE>
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 1999,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS In Thousands
- ------ --------------
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin ............. $ 5,597,807
Interest-bearing balances ...................................... 4,075,775
Securities:
Held-to-maturity securities .................................... 785,167
Available-for-sale securities .................................. 4,159,891
Federal funds sold and Securities purchased
under agreements to resell ..................................... 2,476,963
Loans and lease financing receivables:
Loans and leases, net of unearned
income .........................38,028,772
LESS: Allowance for loan and
lease losses ................... 568,617
LESS: Allocated transfer risk
reserve ........................ 16,352
Loans and leases, net of unearned income,
allowance, and reserve ....................................... 37,443,803
Trading Assets .................................................... 1,563,671
Premises and fixed assets (including
capitalized leases) ............................................ 683,587
Other real estate owned ........................................... 10,995
Investments in unconsolidated subsidiaries and
associated companies ........................................... 184,661
Customers' liability to this bank on acceptances
outstanding .................................................. 812,015
Intangible assets ................................................. 1,135,572
Other assets ...................................................... 5,607,019
-----------
Total assets ...................................................... $64,536,926
===========
-i-
<PAGE>
LIABILITIES
Deposits:
In domestic offices ............................................ $26,488,980
Noninterest-bearing .................. 10,626,811
Interest-bearing ..................... 15,862,169
In foreign offices, Edge and Agreement
subsidiaries, and IBFs ....................................... 20,655,414
Noninterest-bearing .................. 156,471
Interest-bearing ..................... 20,498,943
Federal funds purchased and Securities sold under
agreements to repurchase ....................................... 3,729,439
Demand notes issued to the U.S.Treasury ........................... 257,860
Trading liabilities ............................................... 1,987,450
Other borrowed money:
With remaining maturity of one year or less .................... 496,235
With remaining maturity of more than one year
through three years ......................................... 465
With remaining maturity of more than three years ............... 31,080
Bank's liability on acceptances executed and outstanding .......... 822,455
Subordinated notes and debentures ................................. 1,308,000
Other liabilities ................................................. 2,846,649
-----------
Total liabilities ................................................. 58,624,027
===========
EQUITY CAPITAL
Common stock ...................................................... 1,135,284
Surplus ........................................................... 815,314
Undivided profits and capital reserves ............................ 4,001,767
Net unrealized holding gains (losses) on
available-for-sale securities ................................. (7,956)
Cumulative foreign currency translation adjustments ............... (31,510)
-----------
Total equity capital .............................................. 5,912,899
-----------
Total liabilities and equity capital .............................. $64,536,926
===========
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the
-ii-
<PAGE>
instructions issued by the Board of Governors of the Federal Reserve System and
is true to the best of my knowledge and belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
---
Thomas A. Reyni | Directors
Alan R. Griffith |
Gerald L. Hassell |
---
-iii-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of the company for the three months ended September 30,
1999 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JUN-25-1999
<PERIOD-END> SEP-30-1999
<CASH> 573
<SECURITIES> 99,975
<RECEIVABLES> 0
<ALLOWANCES> 492
<INVENTORY> 0
<CURRENT-ASSETS> 1,065
<PP&E> 216,667
<DEPRECIATION> 0
<TOTAL-ASSETS> 319,997
<CURRENT-LIABILITIES> 4,124
<BONDS> 308,500
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 319,997
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 162
<LOSS-PROVISION> (1,858)
<INTEREST-EXPENSE> 3,695
<INCOME-PRETAX> (1,858)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,858)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,858)
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
<PAGE>
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 5:00 P.M., NEW YORK CITY TIME, ON __________, 2000,
UNLESS EXTENDED.
AES Ironwood, L.L.C.
LETTER OF TRANSMITTAL
Offer To Exchange Its 8.857% Senior Secured Bonds due 2025
Which Have Been Registered Under The Securities Act of 1933
For Any And All Of Its Outstanding 8.857% Senior Secured Bonds due 2025
Pursuant To The Prospectus Dated ___________, 2000
The exchange agent for the exchange offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C>
By Facsimile: By Mail or Hand (9:00 a.m. to 5:00 p.m., local time):
(212) 815-6339 The Bank of New York
Attention: Terence Rawlings 101 Barclay Street, 7E
Confirm by Telephone to: (212) 815-5988 New York, New York 10286
Attention: Terence Rawlins
</TABLE>
Delivery of this Letter of Transmittal to an address other than as set forth
above or transmission of this Letter of Transmittal via facsimile to a number
other than as set forth above does not constitute a valid delivery. The
instructions contained herein should be read carefully before this Letter of
Transmittal is completed.
This Letter of Transmittal is to be completed by holders of old bonds
(as defined below) if either (i) old bonds are to be forwarded herewith, or (ii)
tenders of old bonds are to be made by book-entry transfer to an account
maintained by The Bank of New York (the "exchange agent") at The Depository
Trust Company ("DTC") pursuant to the procedures set forth in "The Exchange
Offer - Procedures for Tendering" in the prospectus. An "agent's message" (as
defined below) may also be used in lieu of physically completing, executing and
delivering to the exchange agent this Letter of Transmittal, if delivery of the
old bonds is to be made through the DTC's automated tender offer program. The
"agent's message" means a message, transmitted by the DTC and received by the
exchange agent and forming part of the confirmation of book-entry ("book-entry
confirmation"), which states that the DTC has received an express acknowledgment
from a participant tendering old bonds which are the subject of such book-entry
confirmation and that such participant has received and agrees to be bound by
the terms of the Letter of Transmittal and that the agreement may be enforced
against such participant. For additional information regarding DTC's automated
tender offer program, please refer to "The Exchange Offer - Procedures for
Tendering - Tendering Through the DTC's Automated Tender Offer Program" section
of the prospectus.
Holders of old bonds whose certificates for such old bonds are not
immediately available or who cannot deliver their certificates, this Letter of
Transmittal and all other required documents to the
<PAGE>
exchange agent on or prior to the expiration date or who cannot complete the
procedures for book-entry transfer on a timely basis, may tender their old bonds
according to the guaranteed delivery procedures set forth in "The Exchange
Offer--Procedures for Tendering" in the prospectus.
Delivery of documents to DTC does not constitute delivery to the
exchange agent.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
List below the old bonds of which you are a holder. If the space
provided below is inadequate, list the certificate numbers and principal amount
on a separate signed schedule and attach that schedule to this Letter of
Transmittal. See Instruction 3.
ALL TENDERING HOLDERS COMPLETE THIS BOX:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Description of Old Bonds Tendered
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name(s) and Address(es) of Registered Holder(s) Old Bonds Tendered
(Fill in, if blank)
- ------------------------------------------------------------------------------------------------------------------------
| Certificate |
| Number(s)* Principal Principal |
| (Attach Amount (Attach Amount |
| additional list additional list Tendered (if |
| if necessary) if necessary) less than all)** |
<S> | <C> <C> <C> |
| --------------- $ ------------- $ ------------ |
| |
| --------------- $ ------------- $ ------------ |
| |
| --------------- $ ------------- $ ------------ |
| |
| --------------- $ ------------- $ ------------ |
| |
| |
Total Amount Tendered: | --------------- $ ------------- $ ------------ |
| |
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
o Check here if any additional lists are attached.
* Need not be completed by book-entry holders. Such holders should check the
appropriate box below and provide the requested information.
** Need not be completed if tendering for exchange all old bonds held. Old
bonds may be tendered in whole or in part in integral multiples of $1,000
principal amount. All old bonds held shall be deemed tendered unless a
lesser number is specified in this column. See Instruction 4.
(Boxes Below To Be Checked By Eligible Institutions Only. See Instruction 1.)
o Check here if tendered old bonds are enclosed herewith.
2
<PAGE>
o Check here if tendered old bonds are being delivered by book-entry transfer
made to the account maintained by the exchange agent at DTC and complete
the following:
Name of Tendering Institution:
--------------------------------------------------
DTC Account Number:
-------------------------------------------------------------
Transaction Code Number:
--------------------------------------------------------
o Check here and enclose a photocopy of the Notice of Guaranteed Delivery if
tendered old bonds are being delivered pursuant to a Notice of Guaranteed
Delivery previously sent to the exchange agent and complete the following:
Name(s) of Registered Holder(s):
------------------------------------------------
Window Ticket Number (if any):
--------------------------------------------------
Date of Notice of Guaranteed Delivery:
------------------------------------------
Institution Which Guaranteed Delivery:
------------------------------------------
If Guaranteed Delivery is to be made by book-entry transfer:
--------------------
Name of Tendering Institution:
--------------------------------------------------
DTC Account Number:
-------------------------------------------------------------
Transaction Code Number:
--------------------------------------------------------
o Check here if you are a broker-dealer who acquired old bonds for your own
account as a result of market-making activities or other trading activities
(a "Participating Broker-Dealer") and wish to receive 10 additional copies
of the prospectus and 10 copies of any amendments or supplements thereto.
Name:
---------------------------------------------------------------------------
Address:
------------------------------------------------------------------------
------------------------------------------------------------------------
Telephone Number and Contact Person:
--------------------------------------------
3
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to AES Ironwood, L.L.C., a Delaware
limited liability company ("AES Ironwood" or the "Company"), the above described
principal amount of AES Ironwood's 8.857% Senior Secured Bonds due 2025 (the
"old bonds") in exchange for a like principal amount of AES Ironwood's 8.857%
Senior Secured Bonds due 2025 (the "new bonds"), which have been registered
under the Securities Act of 1933 (the "Securities Act"), upon the terms and
subject to the conditions set forth in the prospectus dated ___________, 2000
(as the same may be amended or supplemented from time to time, the
"prospectus"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, together with the prospectus, constitute the "exchange
offer").
Subject to and effective upon the acceptance for exchange of the old
bonds tendered herewith, the undersigned hereby sells, assigns and transfers to
or upon the order of AES Ironwood all right, title and interest in and to such
old bonds as are being tendered herewith. The undersigned hereby irrevocably
constitutes and appoints the exchange agent as its agent and attorney-in-fact
(with full knowledge that the exchange agent is also acting as agent of AES
Ironwood in connection with the exchange offer and as trustee under the
indenture for the old bonds and the new bonds) with respect to the tendered old
bonds, with full power of substitution (such power of attorney being an
irrevocable power coupled with an interest), subject only to the right of
withdrawal described in the prospectus, to: (i) deliver such old bonds to AES
Ironwood together with all accompanying evidences of transfer and authenticity
to, or upon the order of, AES Ironwood upon receipt by the exchange agent, as
the undersigned's agent, of the new bonds to be issued in exchange for such old
bonds; (ii) present certificates for such old bonds for transfer, and to
transfer such old bonds on the account books maintained by DTC; and (iii)
receive for the account of AES Ironwood all benefits and otherwise exercise all
rights of beneficial ownership of such old bonds, all in accordance with the
terms and conditions of the exchange offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, sell, assign and transfer the old
bonds tendered hereby and that, when the same are accepted for exchange, AES
Ironwood will acquire good, marketable and unencumbered title thereto, free and
clear of all liens, restrictions, charges and encumbrances, and that the old
bonds tendered hereby are not subject to any adverse claims or proxies. The
undersigned will, upon request, execute and deliver any additional documents
deemed by AES Ironwood or the exchange agent to be necessary or desirable to
complete the exchange, sale, assignment and transfer of the old bonds tendered
hereby. The undersigned has read and agrees to all of the terms of the exchange
offer.
The name(s) and address(es) of the registered holder(s) of the old
bonds tendered hereby should be printed above, if they are not already set forth
above, as they appear on the certificates representing such old bonds. The
certificate number(s) and the old bonds that the undersigned wishes to tender
should be indicated in the appropriate boxes above.
If any tendered old bonds are not exchanged pursuant to the exchange
offer for any reason, or if certificates are submitted for more old bonds than
are tendered or accepted for exchange, certificates for such nonexchanged or
nontendered old bonds will be returned (or, in the case of old bonds tendered by
book-entry transfer, such old bonds will be credited to an account maintained at
DTC), without expense to the tendering holder promptly following the expiration
or termination of the exchange offer.
The undersigned understands that tenders of old bonds pursuant to any
one of the procedures described in "The Exchange Offer - Procedures for
Tendering" in the prospectus and in the instructions herein will, upon AES
Ironwood's acceptance for exchange of such tendered old bonds, constitute a
4
<PAGE>
binding agreement between the undersigned and AES Ironwood upon the terms and
subject to the conditions of the exchange offer. The undersigned recognizes
that, under certain circumstances set forth in the prospectus, AES Ironwood may
not be required to accept for exchange any of the old bonds tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the new bonds be issued
in the name(s) of the undersigned or, in the case of a book-entry transfer of
old bonds, that such new bonds be credited to the account indicated above
maintained at DTC. If applicable, substitute certificates representing old bonds
not exchanged or not accepted for exchange will be issued to the undersigned or,
in the case of a book-entry transfer of old bonds, will be credited to the
account indicated above maintained at DTC. Similarly, unless otherwise indicated
under "Special Delivery Instructions," please deliver new bonds to the
undersigned at the address shown below the undersigned's signature.
By tendering old bonds and executing this Letter of Transmittal, the
undersigned hereby represents and agrees that:
(i) The undersigned is not an "affiliate" of AES Ironwood (within
the meaning of Rule 405 under the Securities Act), or if the
undersigned is an affiliate, the undersigned will comply with
the registration and prospectus delivery requirements of the
Securities Act to the extent applicable;
(ii) Any new bonds to be received by the undersigned are being
acquired in the ordinary course of its business; and
(iii) The undersigned has no arrangement or understanding with any
person to participate in a distribution (within the meaning of
the Securities Act) of new bonds to be received in the
exchange offer.
If the undersigned is not a broker-dealer, by tendering old bonds and
executing this Letter of Transmittal, the undersigned represents and agrees that
it is not engaged in, and does not intend to engage in, a distribution of new
bonds. If the undersigned is a broker-dealer that will receive new bonds for its
own account in exchange for old bonds pursuant to the exchange offer, by
tendering old bonds and executing this Letter of Transmittal, the undersigned
represents and agrees that such old bonds were acquired by such broker-dealer
for its own account as a result of market-making activities or other trading
activities and it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of new bonds (provided that, by so
acknowledging and by delivering a prospectus, such broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act). AES Ironwood has agreed that starting on the expiration date and ending on
the close of business on the first anniversary of the expiration date, it will
make the prospectus available to any participating broker-dealer in connection
with any such resale.
All authority herein conferred or agreed to be conferred in this Letter
of Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the prospectus and in the instructions contained in this Letter of
Transmittal, this tender is irrevocable.
5
<PAGE>
<TABLE>
<S> <C>
PLEASE SIGN HERE PLEASE SIGN HERE
- ----------------------------------------------- -----------------------------------------------
Authorized Signature Authorized Signature
Name: Name:
------------------------------------------ ------------------------------------------
Title: Title:
----------------------------------------- -----------------------------------------
Address: Address:
--------------------------------------- ---------------------------------------
Telephone Number: Telephone Number:
------------------------------ ------------------------------
Dated: Dated:
----------------------------------------- -----------------------------------------
- ----------------------------------------------- -----------------------------------------------
Taxpayer Identification or Taxpayer Identification or
Social Security Number Social Security Number
</TABLE>
(NOTE: Signature(s) must be guaranteed if required by Instructions 2
and 5. This Letter of Transmittal must be signed by the registered holder(s)
exactly as the name(s) appear(s) on certificate(s) for the old bonds hereby
tendered or on a security position listing, or by any person(s) authorized to
become the registered holder(s) by endorsements and documents transmitted
herewith, including such opinions of counsel, certifications and other
information as may be required by AES Ironwood or the trustee for the old bonds
to comply with the restrictions on transfer applicable to the old bonds. If
signature is by an attorney-in-fact, executor, administrator, trustee, guardian,
officer of a corporation or another acting in a fiduciary capacity or
representative capacity, please set forth the signer's full title. See
Instructions 2 and 5. Please complete substitute Form W-9 below.)
6
<PAGE>
Guarantee of Signature(s)
(If required--see Instructions 2 and 5)
<TABLE>
<S> <C>
Signature(s) Guaranteed by
an Eligible Institution: Date:
---------------------------- --------------------------------------------------
Authorized Signature
<CAPTION>
<S> <C>
Name of Eligible Institution
Guaranteeing Signature:
------------------------------------------------------------------------------------------
<CAPTION>
<S> <C>
Address:
Capacity (full title): -------------------------------------------------
------------------------------ -------------------------------------------------
Telephone Number: -------------------------------------------------
-------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS (See SPECIAL DELIVERY INSTRUCTIONS (See
Instructions 2, 5 and 6) Instructions 2, 5 and 6)
To be completed ONLY if the new bonds or any old To be completed ONLY if new bonds or any old
bonds that are not tendered are to be issued in the bonds that are not tendered are to be sent to
name of someone other than the registered holder(s) someone other than the registered holder(s) of the
of the old bonds whose name(s) appear(s) above. old bonds whose name(s) appear(s) above, or to
such registered holder(s) at an address other than
that shown above.
Issue: Mail:
o Old bonds not tendered, to: o Old bonds not tendered, to:
o New bonds, to: o New bonds, to:
Name(s) Name(s)
--------------------------------------------- ---------------------------------------------
Address Address
--------------------------------------------- ---------------------------------------------
--------------------------------------------- ---------------------------------------------
Telephone Number Telephone Number
- ---------------------------------------------------- ----------------------------------------------------
(Tax Identification or (Tax Identification or
Social Security Number) Social Security Number)
</TABLE>
7
<PAGE>
INSTRUCTIONS
(Forming part of the terms and conditions of the exchange offer)
1. Delivery of Letter of Transmittal and Certificates; Guaranteed
Delivery Procedures. This Letter of Transmittal is to be completed either if (a)
certificates are to be forwarded herewith or (b) tenders are to be made pursuant
to the procedures for tender by book-entry transfer set forth in "The Exchange
Offer Procedures for Tendering" in the prospectus. Certificates, or timely
confirmation of a book-entry transfer of such old bonds into the exchange
agent's account at DTC, as well as this Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees and any other documents required by this Letter of Transmittal (or if
applicable, an "agents message" (as defined above)), must be received by the
exchange agent at its address set forth herein on or prior to the expiration
date. The term "book-entry confirmation" means a timely confirmation of
book-entry transfer of old bonds into the exchange agent's account at DTC. Old
bonds may be tendered in whole or in part in integral multiples of $1,000
principal amount. The minimum denomination of new bonds issued will be $100,000
with integral multiples of $1,000 in excess thereof.
Holders who wish to tender their old bonds and: (i) whose certificates
for such old bonds are not immediately available; (ii) who cannot deliver their
certificates, this Letter of Transmittal and all other required documents to the
exchange agent prior to the expiration date; or (iii) who cannot complete the
procedures for delivery by book-entry transfer on a timely basis, may tender
their old bonds by properly completing and duly executing a Notice of Guaranteed
Delivery pursuant to the guaranteed delivery procedures set forth in "The
Exchange Offer - Procedures for Tendering" in the prospectus. Pursuant to such
procedures: (i) such tender must be made by or through an Eligible Institution
(as defined below); (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form accompanying this Letter of
Transmittal, must be received by the exchange agent prior to the expiration
date; and (iii) the certificates (or a book-entry confirmation) representing all
tendered old bonds, in proper form for transfer, together with a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other documents required by this
Letter of Transmittal, must be received by the exchange agent within three New
York Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided in "The Exchange Offer - Procedures for
Tendering" in the prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by facsimile or mail to the exchange agent and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery. For old bonds to be properly tendered pursuant to the
guaranteed delivery procedure, the exchange agent must receive a Notice of
Guaranteed Delivery prior to the expiration date. As used herein and in the
prospectus, "Eligible Institution" means a firm or other entity identified in
Rule 17Ad-15 under the Exchange Act as "an eligible guarantor institution,"
including (as such terms are defined therein): (i) a bank; (ii) a broker,
dealer, municipal securities broker or dealer or government securities broker or
dealer; (iii) a credit union; (iv) a national securities exchange, registered
securities association or clearing agency; or (v) a savings association that is
a participant in a Securities Transfer Association.
The method of delivery of old bonds, this Letter of Transmittal and all
other required documents is at the option and sole risk of the tendering holder,
and delivery will be deemed made only when actually received by the exchange
agent. Instead of delivery by mail, it is recommended that holders use an
overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure timely delivery and proper insurance should be obtained. No
Letter of Transmittal or old
8
<PAGE>
bonds should be sent to AES Ironwood. Holders may request their respective
brokers, dealers, commercial banks, trust companies or nominees to effect these
transactions for such holders.
AES Ironwood will not accept any alternative, conditional or contingent
tenders. Each tendering holder, by execution of a Letter of Transmittal (or
facsimile thereof), waives any right to receive any notice of the acceptance of
such tender.
2. Guarantee of Signatures. No signature guarantee on this Letter of
Transmittal is required if: (i) this Letter of Transmittal is signed by the
registered holder (which shall include any participant in DTC whose name appears
on a security position listing as the owner of the old bonds) of old bonds
tendered herewith, unless such holder has completed either the box entitled
"Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" above; or (ii) such old bonds are tendered for the account of a
firm that is an Eligible Institution. In all other cases, an Eligible
Institution must guarantee the signature(s) on this Letter of Transmittal. See
Instruction 5.
3. Inadequate Space. If the space provided in the box captioned
"Description of Old Bonds Tendered" is inadequate, the certificate number(s)
and/or the principal amount of old bonds and any other required information
should be listed on a separate signed schedule and attached to this Letter of
Transmittal.
4. Partial Tenders and Withdrawal Rights. Tenders of old bonds will be
accepted only in integral multiples of $1,000 principal amount. If less than all
the old bonds evidenced by any certificate submitted are to be tendered, fill in
the principal amount of old bonds which are to be tendered in the box entitled
"Principal Amount Tendered (if less than all)." In such case, new certificate(s)
for the remainder of the old bonds that were evidenced by the old certificate(s)
will be sent to the tendering holder, unless the appropriate boxes on this
Letter of Transmittal are completed, promptly after the expiration date. All old
bonds represented by certificates delivered to the exchange agent will be deemed
to have been tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of old bonds may be
withdrawn at any time prior to the expiration date. In order for a withdrawal to
be effective, a written, telegraphic or facsimile transmission of such notice of
withdrawal must be timely received by the exchange agent at its address set
forth above prior to the expiration date. Any such notice of withdrawal must
specify the name of the person who tendered the old bonds to be withdrawn, the
aggregate principal amount of old bonds to be withdrawn, and (if certificates
for such old bonds have been tendered) the name of the registered holder of the
old bonds as set forth on the certificate(s), if different from that of the
person who tendered such old bonds. If certificates for old bonds have been
delivered or otherwise identified to the exchange agent, the notice of
withdrawal must specify the serial numbers on the particular certificates for
the old bonds to be withdrawn and the signature on the notice of withdrawal must
be guaranteed by an Eligible Institution, except in the case of old bonds
tendered for the account of an Eligible Institution. If old bonds have been
tendered pursuant to the procedures for book-entry transfer set forth in "The
Exchange Offer - Procedures for Tendering," the notice of withdrawal must
specify the name and number of the account at DTC to be credited with the
withdrawal of old bonds and must otherwise comply with the procedures of DTC.
Withdrawals of tenders of old bonds may not be rescinded. Old bonds properly
withdrawn will not be deemed validly tendered for purposes of the exchange
offer, but may be retendered at any subsequent time prior to the expiration date
by following any of the procedures described in the prospectus under "The
Exchange Offer - Procedures for Tendering."
9
<PAGE>
All questions as to the validity, form and eligibility (including time
of receipt) of such withdrawal notices will be determined by AES Ironwood, in
its sole discretion, which determination shall be final and binding on all
parties. None of AES Ironwood, any affiliates of AES Ironwood, the exchange
agent or any other person shall be under any duty to give any notification of
any defects or irregularities in any notice of withdrawal or incur any liability
for failure to give any such notification. Any old bonds which have been
tendered but which are withdrawn will be returned to the holder thereof promptly
after withdrawal.
5. Signatures on Letter of Transmittal, Assignments and Endorsements.
If this Letter of Transmittal is signed by the registered holder(s) of the old
bonds tendered hereby, the signature(s) must correspond exactly with the name(s)
as written on the face of the certificate(s) or on a security position listing,
without alteration, enlargement or any change whatsoever.
If any of the old bonds tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal. If any
tendered old bonds are registered in different names on several certificates, it
will be necessary to complete, sign and submit as many separate Letters of
Transmittal (or facsimiles thereof) as there are names in which certificates are
registered.
If this Letter of Transmittal or any certificates or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and must submit proper
evidence satisfactory to AES Ironwood, in its sole discretion, of such persons'
authority to so act.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the old bonds listed and transmitted hereby, the
certificate(s) must be endorsed or accompanied by appropriate bond power(s),
signed exactly as the name(s) of the registered owner appear(s) on the
certificate(s), and also must be accompanied by such opinions of counsel,
certifications and other information as AES Ironwood or the trustee for the old
bonds may require in accordance with the restrictions on transfer applicable to
the old bonds. Signature(s) on such certificate(s) or bond power(s) must be
guaranteed by an Eligible Institution.
6. Special Issuance and Delivery Instructions. If new bonds or
certificates for old bonds not exchanged are to be issued in the name of a
person other than the signer of this Letter of Transmittal, or are to be sent to
someone other than the signer of this Letter of Transmittal or to an address
other than that shown above, the appropriate boxes on this Letter of Transmittal
should be completed. In the case of issuance in a different name, the taxpayer
identification number of the person named must also be indicated. Holders
tendering old bonds by book-entry transfer may request that old bonds not
exchanged be credited to such account maintained at DTC as such holder may
designate. If no such instructions are given, old bonds not exchanged will be
returned by mail or, if tendered by book-entry transfer, by crediting the
account indicated above maintained at DTC.
7. Irregularities. AES Ironwood will determine, in its sole discretion,
all questions as to the form of documents, validity, eligibility (including time
of receipt) and acceptance for exchange of any tender of old bonds, which
determination shall be final and binding on all parties. AES Ironwood reserves
the absolute right, in its sole and absolute discretion, to reject any and all
tenders determined by it not to be in proper form or the acceptance for exchange
of which may, in the view of counsel to AES Ironwood, be unlawful. AES Ironwood
also reserves the right, exercising reasonable discretion and subject to
applicable law, to waive any of the conditions of the exchange offer set forth
in the prospectus under "The Exchange Offer--Conditions to the Exchange Offer"
or any defect or irregularity in any
10
<PAGE>
tender of old bonds of any particular holder whether or not similar defects or
irregularities are waived in the case of other holders. AES Ironwood's
interpretation of the terms and conditions of the exchange offer (including this
Letter of Transmittal and the instructions hereto) will be final and binding. No
tender of old bonds will be deemed to have been validly made until all defects
or irregularities with respect to such tender have been cured or waived. None of
AES Ironwood, any affiliates of AES Ironwood, the exchange agent, or any other
person shall be under any duty to give any notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification.
8. Questions, Requests for Assistance and Additional Copies. Questions
and requests for assistance may be directed to the exchange agent at its address
and telephone number set forth above. Additional copies of the prospectus, the
Notice of Guaranteed Delivery and the Letter of Transmittal may be obtained from
the exchange agent or from your broker, dealer, commercial bank, trust company
or other nominee.
9. Backup Withholding; Substitute Form W-9. Under U.S. federal income
tax law, a holder whose tendered old bonds are accepted for exchange is required
to provide the exchange agent with such holder's correct taxpayer identification
number ("TIN") on Substitute Form W-9 below. If the exchange agent is not
provided with the correct TIN, the Internal Revenue Service (the "IRS") may
subject the holder or other payee to a $50 penalty. In addition, payments to
such holders or other payees with respect to old bonds exchanged pursuant to the
exchange offer may be subject to 31% backup withholding.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering holder has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Part 3 is checked, the
holder or other payee must also complete the certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the exchange agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the exchange agent. The exchange agent will retain such amounts
withheld during the 60 day period following the date of the Substitute Form W-9.
If the holder furnishes the exchange agent with its TIN within 60 days after the
date of the Substitute Form W-9, the amounts retained during the 60 day period
will be remitted to the holder and no further amounts shall be retained or
withheld from payments made to the holder thereafter. If, however, the holder
has not provided the exchange agent with its TIN within such 60 day period,
amounts withheld will be remitted to the IRS as backup withholding. In addition,
31% of all payments made thereafter will be withheld and remitted to the IRS
until a correct TIN is provided.
The holder is required to give the exchange agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the old bonds or of the last transferee appearing on the transfers attached to,
or endorsed on, the old bonds. If the old bonds are registered in more than one
name or are not in the name of the actual owner, consult the Instructions to
Form W-9 (Request for Identification Number and Certification) for additional
guidance on which number to report.
Certain holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to these backup
withholding and reporting requirements. Such holders should nevertheless
complete the attached Substitute Form W-9 below, and write "exempt" on the face
thereof, to avoid possible erroneous backup withholding. A foreign person may
qualify as an exempt recipient by submitting a properly completed IRS Form W-8,
signed under penalties of perjury, attesting to that holder's exempt status.
Please consult the Instructions to Form W-9 (Request for Identification
11
<PAGE>
Number and Certification) for additional guidance on which holders are exempt
from backup withholding.
Backup withholding is not an additional U.S. federal income tax.
Rather, the U.S. federal income tax liability of a person subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained.
10. Mutilated, Lost, Destroyed or Stolen Certificates. If any
certificate representing old bonds has been mutilated, lost, destroyed or
stolen, the holder should promptly notify the exchange agent. The holder will
then be instructed as to the steps that must be taken in order to replace the
certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing mutilated, lost, destroyed or
stolen certificates have been followed.
11. Security Transfer Taxes. Holders who tender their old bonds for
exchange will not be obligated to pay any transfer taxes in connection
therewith, except that if new bonds are to be delivered to, or are to be issued
in the name of, any person other than the registered holder of the old bonds
tendered, or if a transfer tax is imposed for any reason other than the exchange
of old bonds in connection with the exchange offer, then the amount of any such
transfer tax (whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory evidence of payment of
such transfer tax or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer tax will be billed directly to such
tendering holder.
Important: This Letter of Transmittal (or a facsimile thereof),
together with certificates representing tendered old bonds or a book entry
confirmation and all other required documents, must be received by the exchange
agent prior to the expiration date.
12
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS (See Instruction 9)
PAYER'S NAME: THE BANK OF NEW YORK
<TABLE>
<S> <C>
SUBSTITUTE PART I-PLEASE PROVIDE YOUR Social Security Number OR
Form W-9 TIN ON THE LINE AT RIGHT AND Employer Identification Number
CERTIFY BY SIGNING AND
DATING BELOW ------------------------------------
Department of the PART II-CERTIFICATION-Under penalties of perjury, I certify that:
Treasury Internal (1) The number shown on this form is my correct taxpayer identification number
Revenue Service (or I am waiting for a number to be issued to me);
Payer's Request for (2) I am not subject to backup withholding either because: (a) I am exempt from
Taxpayer Identification backup withholding; (b) I have not been notified by the Internal Revenue Service
Number (TIN) ("IRS") that I am subject to backup withholding as a result of a failure to report
all interest or dividends; or (c) the IRS has notified me that I am no longer subject
to backup withholding; and
(3) Any other information provided on this form is true and correct.
Certification Instructions-You must cross out item (2) above if you have been notified
by the IRS that you are subject to backup withholding because of underreporting interest
or dividends on your tax return and you have not been notified by the IRS that you are no
longer subject to backup withholding.
SIGNATURE
------------------------------------------------------------------------------------
PRINTED NAME
---------------------------------------------------------------------------------
DATE
-----------------------------------------------------------------------------------------
PART III--Awaiting TIN o
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN CERTAIN CIRCUMSTANCES
RESULT IN BACKUP WITHHOLDING OF 31% OF ANY AMOUNTS PAID TO YOU PURSUANT TO THE
EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
payments made to me on account of the New bonds shall be retained until I
provide a taxpayer identification number to the Exchange Agent and that, if I do
not provide my taxpayer identification number within 60 days, such retained
amounts shall be remitted to the Internal Revenue Service as backup withholding
and 31% of all reportable payments made to me thereafter will be withheld and
remitted to the Internal Revenue Service until I provide a taxpayer
identification number.
SIGNATURE: DATE:
------------------------------------- --------------------
<PAGE>
EXHIBIT 99.2
AES Ironwood, L.L.C.
Offer to Exchange its
8.857% Senior Secured Bonds due 2025
Which Have Been Registered Under the Securities Act of 1933
For Any and All of its Outstanding
8.857% Senior Secured Bonds due 2025
TO OUR CLIENTS:
Enclosed for your consideration is a prospectus, dated ___________,
2000 (the "prospectus"), and a form of Letter of Transmittal (the "Letter of
Transmittal"), relating to the offer (the "exchange offer") of AES Ironwood,
L.L.C. ("AES Ironwood") to exchange its 8.857% Senior Secured Bonds due 2025,
which have been registered under the Securities Act of 1933 (the "new bonds"),
for any and all of its outstanding 8.857% Senior Secured Bonds due 2025 (the
"old bonds"), upon the terms and subject to the conditions described in the
prospectus and the Letter of Transmittal. The exchange offer is being made in
order to satisfy certain of AES Ironwood's obligations contained in the
Registration Rights Agreement dated as of May 12, 1999, among AES Ironwood,
Lehman Brothers, Morgan Stanley Dean Witter and Dresdner Kleinwort Benson North
America LLC.
This material is being forwarded to you as the beneficial owner of the
old bonds carried by us in your account but not registered in your name. A
tender of such old bonds may only be made by us as the holder of record and
pursuant to your instructions.
Accordingly, we request instructions as to whether you wish us to
tender on your behalf the old bonds held by us for your account, pursuant to the
terms and conditions set forth in the enclosed prospectus and Letter of
Transmittal.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the old bonds on your behalf in accordance with the
provisions of the exchange offer. The exchange offer will expire at 5:00 p.m.,
New York City time, on __________, 2000, unless extended by AES Ironwood (the
"expiration date"). Any old bonds tendered pursuant to the exchange offer may be
withdrawn, subject to the procedures described in the prospectus and the Letter
of Transmittal, at any time prior to the expiration date.
If you wish to have us tender your old bonds, please so instruct us by
completing, executing and returning to us the instruction form included with
this letter.
The Letter of Transmittal is furnished to you for information only and
may not be used directly by you to tender old bonds.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein, including the prospectus and the accompanying form
of Letter of Transmittal, relating to the exchange offer made by AES Ironwood,
L.L.C. with respect to its old bonds.
This will instruct you as to the action to be taken by you relating to
the exchange offer with respect to the old bonds held by you for the account of
the undersigned, upon and subject to the terms and conditions set forth in the
prospectus and the Letter of Transmittal.
The aggregate principal amount of the old bonds held by you for the
account of the undersigned is (fill in amount):
$ _________________ of the 8.857% Senior Secured Bonds due 2025
With respect to the exchange offer, the undersigned hereby instructs you (check
appropriate box):
o To TENDER the following old bonds held by you for the account of the
undersigned (insert aggregate principal amount at maturity of old bonds to be
tendered, in integral multiples of $1,000):
$ ___________________ of the 8.857% Senior Secured Bonds due 2025
o NOT to tender any old bonds held by you for the account of the
undersigned.
If the undersigned instructs you to tender the old bonds held by you
for the account of the undersigned, it is understood that you are authorized to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representations, warranties and agreements contained
in the Letter of Transmittal that are to be made with respect to the undersigned
as beneficial owner.
SIGN HERE
Name of beneficial owner(s):
---------------------------------------------------
Signature(s):
------------------------------------------------------------------
Name(s) (please print):
--------------------------------------------------------
Address:
-----------------------------------------------------------------------
Telephone Number:
--------------------------------------------------------------
Taxpayer Identification or Social Security Number(s):
--------------------------
Date:
--------------------------------------------------------------------------
None of the old bonds held by us for your account will be tendered
unless we receive written instructions from you to do so. Unless a specific
contrary instruction is given in the space provided, your signature(s) hereon
shall constitute an instruction to us to tender all the old bonds held by us for
your account.
2
<PAGE>
EXHIBIT 99.3
AES Ironwood, L.L.C.
Offer to Exchange its
8.857% Senior Secured Bonds due 2025
Which Have Been Registered Under
the Securities Act of 1933
For Any and All of its Outstanding
8.857% Senior Secured Bonds due 2025
Pursuant to the Prospectus Dated ___________, 2000
TO: REGISTERED HOLDERS AND DEPOSITORY TRUST COMPANY PARTICIPANTS:
AES Ironwood, L.L.C. ("AES Ironwood") is offering to exchange, upon and
subject to the terms and conditions set forth in the enclosed prospectus, dated
___________, 2000 (the "prospectus"), and the enclosed Letter of Transmittal
(the "Letter of Transmittal"), its 8.857% Senior Secured Bonds due 2025, which
have been registered under the Securities Act of 1933 (the "new bonds"), for any
and all of its outstanding 8.857% Senior Secured Bonds due 2025 (the "old
bonds"). The exchange offer is being made in order to satisfy certain of AES
Ironwood's obligations contained in the Registration Rights Agreement dated as
of May 12, 1999, among AES Ironwood, Lehman Brothers, Morgan Stanley Dean Witter
and Dresdner Kleinwort Benson North America LLC.
In connection with the exchange offer, we are requesting that you
contact your clients for whom you hold old bonds registered in your name or in
the name of your nominee, or who hold old bonds registered in their own names.
AES Ironwood, Lehman Brothers, Morgan Stanley Dean Witter and Dresdner Kleinwort
Benson North America LLC will not pay any fees or commissions to any broker,
dealer or other person in connection with the solicitation of tenders pursuant
to the exchange offer. However, you will, upon request, be reimbursed for
reasonable out-of-pocket expenses incurred in connection with soliciting
acceptances of the exchange offer. AES Ironwood, Lehman Brothers, Morgan Stanley
Dean Witter and Dresdner Kleinwort Benson North America LLC will pay or cause to
be paid all transfer taxes applicable to the exchange of old bonds pursuant to
the exchange offer, except as set forth in the prospectus and the Letter of
Transmittal.
For your information and for forwarding to your clients, we are
enclosing the following documents:
1. Prospectus dated ___________, 2000;
2. A Letter of Transmittal for your use and for the information of your
clients;
3. A form of Notice of Guaranteed Delivery; and
<PAGE>
4. A form of letter which may be sent to your clients for whose account
you hold old bonds registered in your name or the name of your nominee,
with space provided for obtaining such clients' instructions with
regard to the exchange offer.
Your prompt action is requested. The exchange offer will expire at 5:00
p.m., New York City time, on __________, 2000 (the "expiration date"), unless
extended by AES Ironwood (in which case the term "expiration date" shall mean
the latest date and time to which the exchange offer is extended). The old bonds
tendered pursuant to the exchange offer may be withdrawn, subject to the
procedures described in the prospectus and the Letter of Transmittal, at any
time prior to the expiration date.
To participate in the exchange offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
exchange agent and certificates representing the old bonds should be delivered
to the exchange agent, all in accordance with the instructions set forth in the
prospectus and the Letter of Transmittal.
If holders of old bonds wish to tender, but it is impracticable for
them to forward their certificates for old bonds prior to the expiration of the
exchange offer or to comply with the book-entry transfer procedures on a timely
basis, a tender may be effected by following the guaranteed delivery procedures
described in the prospectus and the Letter of Transmittal.
Any inquiries you may have with respect to the exchange offer, or
requests for additional copies of the enclosed materials, should be directed to
the exchange agent for the old bonds, at its address and telephone number set
forth on the front of the Letter of Transmittal.
Very truly yours,
AES IRONWOOD, L.L.C.
Nothing herein or in the enclosed documents shall constitute you or any
other person as an agent of AES Ironwood or the exchange agent, or authorize you
or any other person to use any document or make any statements on behalf of
either of them with respect to the exchange offer, except for statements
expressly made in the prospectus or the Letter of Transmittal.
<PAGE>
EXHIBIT 99.4
NOTICE OF GUARANTEED DELIVERY
for Tender of
8.857% Senior Secured Bonds due 2025
(the "old bonds")
of
AES Ironwood, L.L.C.
This Notice of Guaranteed Delivery, or one substantially equivalent
to this form, must be used to tender old bonds pursuant to the exchange offer
described in the prospectus dated ___________, 2000 (as the same may be amended
or supplemented from time to time, the "prospectus") of AES Ironwood, L.L.C., a
Delaware limited liability company ("AES Ironwood"), if certificates for the old
bonds are not immediately available, or time will not permit the old bonds, the
Letter of Transmittal and all other required documents to be delivered to The
Bank of New York (the "exchange agent") prior to 5:00 p.m., New York City time,
on __________, 2000 or such later date and time to which the exchange offer may
be extended (the "expiration date"), or the procedures for delivery by
book-entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery, or one substantially equivalent to this form, must be
delivered by hand or sent by facsimile transmission or mail to the exchange
agent, and must be received by the exchange agent prior to the expiration date.
See "The Exchange Offer -- Procedures for Tendering" in the prospectus.
Capitalized terms used but not defined herein shall have the same meaning given
them in the prospectus.
The exchange agent for the exchange offer is:
THE BANK OF NEW YORK
By Facsimile: By Mail or Hand Delivery:
(212) 815-6339 The Bank of New York
Attention: Terence Rawlins 101 Barclay Street, 7E
Confirm by Telephone to: New York, New York 10286
(212) 815-5988 Attention: Terence Rawlins
Delivery of this Notice of Guaranteed Delivery to an address other
than as set forth above or transmission of this Notice of Guaranteed Delivery
via facsimile other than as set forth above does not constitute a valid
delivery.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to AES Ironwood, upon the terms and subject to
the conditions set forth in the prospectus and the related Letter of
Transmittal, the old bonds indicated below pursuant to the guaranteed delivery
procedures set forth in the prospectus under the caption "The Exchange Offer -
Procedures for Tendering."
Name(s) of Registered Holder(s):
------------------------------------------------
(Please Print or Type)
Signature(s):
-------------------------------------------------------------------
Address(es):
--------------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code(s) and Telephone Number(s):
-------------------------------------------
Account Number:
-----------------------------------------------------------------
Date:
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
Certificate No(s). Principal Amount of Old Bonds Tendered *
(if available)
<S> <C>
- ----------------------------------------- -----------------------------------------
- ----------------------------------------- -----------------------------------------
- ----------------------------------------- -----------------------------------------
- ----------------------------------------- -----------------------------------------
- ----------------------------------------- -----------------------------------------
- ----------------------------------------- -----------------------------------------
</TABLE>
* Must be in integral multiples of $1,000 principal amount.
2
<PAGE>
GUARANTEE OF DELIVERY
(Not to be used for signature guarantee)
The undersigned, a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or a correspondent in the
United States or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended, hereby guarantees
that the undersigned will deliver to the exchange agent the certificates
representing the old bonds being tendered hereby in proper form for transfer (or
a confirmation of book-entry transfer of such old bonds, into the exchange
agent's account at the book-entry transfer facility of The Depository Trust
Company ("DTC")) with delivery of a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), with any required signature guarantees
and any other required documents, all within three New York Stock Exchange
trading days after the date of execution of the Notice of Guaranteed Delivery.
<TABLE>
<S> <C>
Name of Firm:
--------------------------------- ------------------------------------------
Authorized Signature
Address: Name:
-------------------------------------- -------------------------------------
Please Print or Type
Title:
- ---------------------------------------------- ------------------------------------
Telephone Number: Dated:
----------------------------- ------------------------------------
</TABLE>
The institution that completes this form must communicate the guarantee to the
exchange agent and must deliver the certificates representing any old bonds (or
a confirmation of book-entry transfer of such old bonds into the exchange
agent's account at DTC) and the Letter of Transmittal to the exchange agent
within the time period shown herein. Failure to do so could result in a
financial loss to such institution.
3
