SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
Amendment No. 1
Annual Report Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1994
Commission File No. 1-9874
CALIFORNIA ENERGY COMPANY, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-2213782 (State
or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10831 Old Mill Road, Omaha, NE 68154
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (402) 330-8900
Securities registered pursuant to Section 12(b) of the Act:
Name of exchange Title
of each class on which registered Common
Stock, $0.0675 New York Stock Exchange par
value ("Common Stock") Pacific Stock Exchange
London Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: N/A
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days:
Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Based on the closing sales price of Common Stock on the New
York Stock Exchange on March 13, 1995, the aggregate market value
of the Common Stock held by non-affiliates of the Company was
$660,189,676.
50,036,621 shares of Common Stock were outstanding on March 13,
1995.
DOCUMENTS INCORPORATED BY REFERENCE
Incorporated by reference into this Form 10-K, in response to Item
3 Part I, Items 6 through 8 of Part II, and Items 10 through 13 of
Part III, are the portions indicated herein of (i) the annual
report of California Energy Company, Inc. (the "Company") to
security holders for the fiscal year ended December 31, 1994 (the
"Annual Report"), and (ii) the Company's proxy statement dated
March 27, 1995 for the annual meeting of stockholders to be held on
May 11, 1995 (the "Proxy Statement").
The undersigned registrant hereby amends and supplements
Item 14 of its Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, by filing herewith an amended and restated
Exhibit Index which shall read as follows and by filing herewith
the following Exhibits noted by an asterisk (*):
Exhibit Index
3.1 The Company's Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.1 of the Company's Form 10-
K for the year ended December 31, 1992, File No. 1-9874 (the "1992
Form 10-K")).
3.2 Certificate of Amendment of the Company's Restated
Certificate of Incorporation, dated June 23, 1993 (incorporated by
reference to the Company's Form 8-A, dated July 28, 1993, File No.
1-9874 ("Form 8-A")).
3.3 Certificate of Amendment of the Company's Restated
Certificate of Incorporation dated, February 23, 1995.
3.4 The Company's Certificate of Designation with respect to
the Company's Series C Redeemable Convertible Exchangeable
Preferred Stock, dated November 20, 1991, including a form of the
9.5% Convertible Subordinated Debentures due 2003 (incorporated by
reference to Exhibit 3.1 of the Company's 1992 Form 10-K).
3.5 The Company's By-Laws as amended through February 24, 1995.
4.1 Specimen copy of form of Common Stock Certificate
(incorporated by reference to Exhibit 4.1 to the Company's Form 10-
K for the year ended December 31, 1993, File No. 1-9874 (the "1993
Form 10-K")).
4.2 Shareholders Rights Agreement between the Company and
Manufacturers Hanover Trust Company of California dated December 1,
1988 (incorporated by reference to Exhibit 1 to Company's Form 8-K
dated December 5, 1988, File No. 1-9874).
4.3 Amendment Number 1 to Shareholder Rights Agreement, dated
February 15, 1991 (incorporated by reference to Exhibit 4.2 to the
Company's 1992 Form 10-K).
4.4 Note Purchase Agreement between the Company and Principal
Mutual Life Insurance Company dated March 15, 1988 (incorporated by
reference to Exhibit 1 to Company's Form 8-K dated April 11, 1988).
4.5 Defeasance Agreement between Principal Mutual Life
Insurance Company and the Company dated March 24, 1994
(incorporated by reference to Exhibit 4.5 to the Company's 1993
Form 10-K).
4.6 Consent and Agreement between Principal Mutual Life
Insurance Company and the Company dated March 24, 1994
(incorporated by reference to Exhibit 4.6 to the Company's 1993
Form 10-K).
4.7 Escrow Deposit Agreement between Bank of American National
Trust and Savings Association and the Company dated March 3, 1994
(incorporated by reference to Exhibit 4.7 to the Company's 1993
Form 10-K).
10.1 Joint Venture Agreement for China Lake Joint Venture
between the Company and Caithness Geothermal 1980 Ltd., restated as
of January 1, 1984 (incorporated by reference to Exhibit 10.1 to
the Company's Registration Statement on Form S-1, 33-7770).
10.2 Amended Joint Venture Agreement for Coso Land Company
between the Company and Caithness Geothermal 1980 Ltd., dated as of
June 1, 1983 (incorporated by reference to Exhibit 10.3 to the
Company's Registration Statement on Form S-1, 33-7770).
10.3 Amended General Partnership Agreement for Coso Finance
Partners between China Lake Operating Company and ESCA I L.P. dated
July 13, 1988 (incorporated by reference to Exhibit 10.3 to the
Company's 1992 Form 10-K).
10.4 First Supplemental Amendment to the Amended and Restated
General Partnership Agreement for Coso Finance Partners between
China Lake Operating Company and ESCA L.P. (Undated) (incorporated
by reference to Exhibit 10.4 to the Company's 1992 Form 10-K).
10.5 Second Supplemental Amendment to the Amended and Restated
General Partnership Agreement for Coso Finance Partners between
China Lake Operating Company and ESCA L.P. dated as of July 13,
1988 (incorporated by reference to Exhibit 10.5 to the Company's
1992 Form 10-K).
10.6 Third Supplemental Amendment to the Amended and Restated
General Partnership Agreement for Coso Finance Partners between
China Lake Operating Company and ESCA L.P. dated as of December 16,
1992 (incorporated by reference to Exhibit 10.6 to the Company's
1992 Form 10-K).
10.7 General Partnership Agreement for Coso Finance Partners II
between China Lake Geothermal Management Company and ESCA II L.P.
dated July 7, 1987 (incorporated by reference to Exhibit 10.7 to
the Company's 1992 Form 10-K).
10.8 Restated General Partnership Agreement for Coso Energy
Developers between Coso Hotsprings Intermountain Power Inc. and
Caithness Coso Holdings L.P. dated as of March 31, 1988
(incorporated by reference to Exhibit 10.8 to the Company's 1992
Form 10-K).
10.9 First Amendment to the Restated General Partnership
Agreement for Coso Energy Developers between Coso Hotsprings
Intermountain Power, Inc. and Caithness Coso Holdings, L.P. dated
as of March 31, 1988 (incorporated by reference to Exhibit 10.9 to
the Company's 1992 Form 10-K).
10.10 Second Amendment to the Restated General
Partnership Agreement for Coso Energy Developers between Coso
Hotsprings Intermountain Power, Inc. and Caithness Coso Holdings
L.P. dated as of December 16, 1992 (incorporated by reference to
Exhibit 10.10 to the Company's 1992 Form 10-K).
10.11 Amended and Restated General Partnership Agreement
for Coso Power Developers between Coso Technology Corporation and
Caithness Navy II Group L.P. dated July 31, 1989 (incorporated by
reference to Exhibit 10.11 to the Company's 1992 Form 10-K).
10.12 First Amendment to the Amended and Restated General
Partnership for Coso Power Developers between Coso Technology
Corporation and Caithness Navy II Group L.P. dated as of March 19,
1991 (incorporated by reference to Exhibit 10.12 to the Company's
1992 Form 10-K).
10.13 Second Amendment to the Amended and Restated
General Partnership Agreement for Coso Power Developers between
Coso Technology Corporation and Caithness Navy II Group L.P. dated
as of December 16, 1992 (incorporated by reference to Exhibit 10.13
to the Company's 1992 Form 10-K).
10.14 Form of Amended and Restated Field Operation and
Maintenance Agreement between Coso Joint Ventures and the Company
dated as of December 16, 1992 (incorporated by reference to Exhibit
10.14 of the Company's 1992 Form 10-K).
10.15 Form of Amended and Restated Project Operation and
Maintenance Agreement between Coso Joint Venture and the Company
dated as of December 16, 1992 (incorporated by reference to Exhibit
10.15 to the Company's 1992 Form 10-K).
10.16 Trust Indenture between Coso Funding Corp. and Bank
of America National Trust and Savings Association dated as of
December 16 1992 (incorporated by reference to Exhibit 10.16 to the
Company's 1992 Form 10-K).
10.17 Form of Amended and Restated Credit Agreement
between Coso Funding Corp. and Coso Joint Ventures dated as of
December 16, 1992 (incorporated by reference to Exhibit 10.17 to
the Company's 1992 Form 10-K).
10.18 Form of Support Loan Agreement among Coso Joint
Ventures dated December 16, 1992 (incorporated by reference to
Exhibit 10.18 to the Company's 1992 Form 10-K).
10.19 Form of Project Loan Pledge Agreement between Coso
Joint Ventures and Bank of America National Trust and Savings dated
as of December 16, 1992 (incorporated by reference to Exhibit 10.19
to the Company's 1992 Form 10-K).
10.20 Power Purchase Contracts between Southern
California Edison Company and:
(a) China Lake Joint Venture, executed June 4, 1984
with a term of 24 years;
(b) China Lake Joint Venture, executed February 1, 1985
with a term of 23 years; and
(c) Coso Geothermal Company, executed February 1, 1985
with a term of 30 years (incorporated by reference to Exhibit 10.7
to the Company's Registration Statement on Form S-1, 33-7770).
10.21 Contract No. N62474-79-C-5382 between the United
States of America and China Lake Joint Venture, restated October
19, 1983 as "Modification P00004," including modifications through
"Modification P00026", dated December 16, 1992 (the "Navy
Contract")(incorporated by reference to Exhibit 10.21 to the
Company's 1992 Form 10-K).
10.22 Modification to Contract No. P00028, dated June 28,
1993, Modification to Contract No. P00029, dated October 4, 1994
and Modification to Contract No. P00031, dated December 19, 1994
all amending the Navy Contract.*
10.23 Lease between the BLM and Coso Land Company,
effective November 1, 1985 (with Designation of Geothermal
Operator) (incorporated by reference to Exhibit 10.8 to the
Company's Registration Statement on Form S-1, 33-7770).
10.24 Stock Purchase Agreement between the Company and
Kiewit Energy Company dated as of February 18, 1991, as amended as
of June 19, 1991 (incorporated by reference to Exhibit 1 to the
Company's Form 8-K dated February 26, 1991).
10.25 Amendment No. 2 to Stock Purchase Agreement between
Kiewit Energy Company and the Company dated as of January 8, 1992
(incorporated by reference to Exhibit 10.24 to the Company's 1992
Form 10-K).
10.26 Amendment No. 3 to Stock Purchase Agreement between
Kiewit Energy Company and the Company dated as of April 2, 1993
(incorporated by reference to Exhibit 10.25 to the Company's 1993
Form 10-K).
10.27 Shareholders Agreement between the Company and
Kiewit Energy Company dated as of February 18, 1991, as amended as
of June 19, 1991 and as of November 20, 1991 (incorporated by
reference to Exhibit 1 to the Company's Form 8-K dated February 26,
1991, Exhibit 1 to the Company's Form 8-K dated July 18, 1992, and
Exhibit 3 to the Company's Form 8-K dated November 23, 1991).
10.28 Amendment No. 3 to Shareholder's Agreement between
the Company and Kiewit Energy Company dated as of April 2, 1993
(incorporated by reference to Exhibit 14 to the Company's Form 8-
A).
10.29 Amendment No. 4 to Shareholder's Agreement between
the Company and Kiewit Energy Company dated as of July 20, 1993
(incorporated by reference to Exhibit 10.28 to the Company's 1993
Form 10-K).
10.30 Registration Rights Agreement between the Company
and Kiewit Energy Company dated as of February 18, 1991, as amended
as of June 19, 1991 (incorporated by reference to Exhibit 1 to the
Company's Form 8-K dated February 26, 1991, and Exhibit 1 to the
Company's Form 8-K dated July 18, 1992).
10.31 Registration Rights Agreement between the Company
and Kiewit Energy Company dated June 19, 1991, as amended November
20, 1991 (incorporated by reference to Exhibit 1 of the Company's
Form 8-K dated June 19, 1991 and Exhibit 4 to the Company's Form 8-
K dated November 21, 1991).
10.32 Stock Option Agreement between the Company and
Kiewit Energy Company dated as of February 18, 1991, as amended as
of June 19, 1991 (incorporated by reference to Exhibit 1 to the
Company's Form 8-K dated February 26, 1991, and Exhibit 1 to the
Company's Form 8-K dated July 18, 1992).
10.33 Amendment No. 2 to Stock Option Agreement between
the Company and Kiewit Energy Company dated as of May 12, 1994.*
10.34 Stock Option Agreement between the Company and
Kiewit Energy Company dated as of June 19, 1991 (incorporated by
reference to Exhibit 1 to the Company's Form 8-K dated July 18,
1991).
10.35 Securities Purchase Agreement between the Company
and Kiewit Energy Company dated as of November 20, 1991
(incorporated by reference to Exhibit 2 to the Company's Form 8-K
dated November 21, 1991).
10.36 Sublease between the Company and Kiewit Energy
Company dated March 15, 1991 (incorporated by reference to Exhibit
10.32 to the Company's 1992 Form 10-K).
10.37 Amended and Restated 1986 Stock Option Plan, as
amended (incorporated by reference to Exhibit 10.33 to the
Company's 1992 Form 10-K).
10.38 1994 Employee Stock Purchase Plan (incorporated by
reference to Exhibit A to the Company's 1994 Proxy Statement).
10.39 Indenture between the Company and The Chemical
Trust Company of California dated as of June 24, 1993 (incorporated
by reference to the Company's Form 8-K dated June 24, 1993, File
No. 1-9874).
10.40 Registration Rights Agreement among the Company,
Lehman Brothers, Inc. and Alex Brown & Sons Incorporated dated June
24, 1993 (incorporated by reference to the Company's Form 8-K dated
June 24, 1993, File No. 1-9874).
10.41 Indenture dated March 24, 1994 between the Company
and IBJ Schroder Bank and Trust Company (incorporated by reference
to Exhibit 3 to the Company's Form 8-K dated March 28, 1994).
10.42 Employment Agreement between the Company and David
L. Sokol dated as of April 2, 1993 (incorporated by reference to
Exhibit 10.40 to the Company's 1993 Form 10-K).
10.43 Amendment No. 1 to the Employment Agreement between
the Company and David L. Sokol dated as of January 21, 1995.*
10.44 Termination Agreement between the Company and
Richard R. Jaros dated as of December 9, 1993 (incorporated by
reference to Exhibit 10.41 to the Company's 1993 Form 10-K).
10.45 Employment Agreement between the Company and Thomas
R. Mason dated as of January 21, 1995.*
10.46 Standard Offer Number 2, Standard Offer for Power
Purchase with a Firm Capacity Qualifying Facility effective June
15, 1990 ("SO2") between San Diego Gas & Electric Company and
Bonneville Pacific Corporation (incorporated by reference to
Exhibit 10.42 to the Company's 1993 Form 10-K).
10.47 Amendment Number One to the SO2 dated September 25,
1990 (incorporated by reference to Exhibit 10.43 to the Company's
1993 Form 10-K).
10.48 Joint Venture Agreement among the Company, Kiewit
Diversified Group Inc. and Kiewit Construction Group Inc. dated
December 14, 1993 (incorporated by reference to Exhibit 10.44 to
the Company's 1993 Form 10-K).
10.49 Agreement and Plan of Merger between the Company,
CE Acquisition Company, Inc. and Magma dated December 5, 1994
(incorporated by reference to (c)(3) to Exhibit 99.1 to the
Company's Current Report on Form 8-K dated December 9, 1994).
10.50 Non-Recourse Credit Agreement dated February 24,
1995 by and among the Company, the Banks and other Financial
Institutions Parties thereto, and Credit Suisse, as Agent.*
10.51 Standard Offer No. 4 Power Purchase Agreement
(Elmore), dated June 15, 1984, between Southern California Edison
Company and Magma Electric Company including Amendments No. 1 and
No. 2 (incorporated by reference to Exhibit 10.14 to Magma Power
Company's Amendment No. 1 to Registration Statement Form S-4 dated
February 2, 1988, ("Magma 1988 Form S-4")).
10.52 Standard Offer No. 4 Power Purchase Agreement (Del
Ranch) dated February 22, 1984, between Southern California Edison
Company and Imperial Energy Corporation, including Amendments No.
1 and No. 2 (incorporated by reference to Exhibit 10.15 to the
Magma 1988 Form S-4).
10.53 Standard Offer No. 4 Power Purchase Agreement
(Vulcan), dated June 15, 1984, between Southern California Edison
Company and Magma Electric Company including Amendment No. 1
(incorporated by reference to Exhibit 10.16 to the Magma 1988 Form
S-4).
10.54 Standard Offer No. 4 Power Purchase Agreement
(River Ranch), dated April 16, 1985, between Southern California
Edison Company and Imperial Energy Corporation, including Amendment
No. 1 (incorporated by reference to Exhibit 10.20 to the Magma 1988
Form S-4).
10.55 Partnership Agreement dated August 30, 1985 between
Vulcan Power Company and BN Geothermal, Inc. (incorporated by
reference to Exhibit 10.88 to the Magma Power Company's Form 8
Amendment (dated December 18, 1990) to Magma Power Company's Form
10-K for the year ended December 31, 1989 ("Magma Form 8")).
10.56 Amended and Restated Limited Partnership Agreement
of Del Ranch, Ltd., a California Limited Partnership, dated March
14, 1988 by and among Red Hill Geothermal, Inc. and Conejo Energy
Company, as General Partners, and Magma Power Company and Conejo
Energy Company, as Original Limited Partners (incorporated by
reference to Exhibit 10.53 to the Magma Power Company Annual Report
on Form 10-K for the year ended December 31, 1987, File No. 0-10533
("1987 Magma Form 10-K")).
10.57 Limited Partnership Agreement of Leathers, L.P.,
dated August 15, 1988 by and among Red Hill Geothermal, Inc. and
San Felipe Energy Company, as General Partners, and Magma Power
Company and San Felipe Energy Company, as Limited Partners
(incorporated by reference to Exhibit 10.79 to the Magma Power
Company Annual Report on Form 10-K for the year ended December 31,
1988, File No. 0-10533 ("1988 Magma Form 10-K")).
10.58 Amended and Restated Limited Partnership Agreement
of Elmore, Ltd., a California Limited Partnership, dated March 14,
1988 by and among Red Hill Geothermal, Inc. and Niguel Energy
Company, as General Partners, and Magma Power Company and Niguel
Energy Company, as Original Limited Partners (incorporated by
reference to Exhibit 10.55 to the 1987 Magma Form 10-K).
10.59 Operating and Maintenance Agreement dated March 14,
1988 by and between Red Hill Geothermal, Inc. and Del Ranch, Ltd.,
a California Limited Partnership (incorporated by reference to
Exhibit 10.56 to the 1987 Magma Form 10-K).
10.60 First Amendment to Operating and Maintenance
Agreement dated as of April 14, 1989 between Red Hill Geothermal,
Inc. and Del Ranch L.P. and the Second Amendment to the Operating
and Maintenance Agreement dated April 18, 1990.*
10.61 Operating and Maintenance Agreement dated August
15, 1988 by and between Red Hill Geothermal, Inc. and Leathers,
L.P. (incorporated by reference to Exhibit 10.84 to the 1988 Magma
Form 10-K).
10.62 First Amendment to Operating and Maintenance
Agreement dated as of April 14, 1989 between Red Hill Geothermal,
Inc. and Leathers, L.P. and the Second Amendment to the Operating
and Maintenance Agreement dated April 18, 1990.*
10.63 Operating and Maintenance Agreement dated March 14,
1988 by and between Red Hill Geothermal, Inc. and Elmore, Ltd., a
California Limited Partnership (incorporated by reference to
Exhibit 10.57 to the 1987 Magma Form 10-K).
10.64 First Amendment to the Operating and Maintenance
Agreement dated as of April 14, 1988 between Red Hill Geothermal,
Inc. and Elmore, Ltd., a California Limited Partnership and the
Second Amendment to the Operating and Maintenance Agreement dated
April 18, 1990.*
10.65 Brine Sales Agreement dated August 30, 1985 between
Vulcan Power Company and Vulcan/BN Geothermal Power Company
(incorporated by reference to Exhibit 10.90 to the Magma Power
Company Form 8 Amendment (dated December 18, 1990) to the Magma
Power Company Form 10-K for the year ended December 31, 1989).
10.66 Easement Grant Deed and Agreement Regarding Rights
for Geothermal Development dated March 14, 1988 by and between
Magma Power Company and Del Ranch, Ltd., a California Limited
Partnership (incorporated by reference to Exhibit 10.58 to the 1987
Magma Form 10-K).
10.67 Easement Grant Deed and Agreement Regarding Rights
for Geothermal Development dated August 15, 1988 by and between
Magma Power Company and Leathers, L.P. (incorporated by reference
to the 1988 Magma Form 10-K).
10.68 Easement Grant Deed and Agreement Regarding Rights
for Geothermal Development dated March 14, 1988 by and between
Magma Power Company and Elmore, Ltd., a California Limited
Partnership (incorporated by reference to Exhibit 10.59 to the 1987
Magma Form 10-K).
10.69 Administrative Services Agreement dated March 14,
1988 by and between Red Hill Geothermal, Inc. and Del Ranch, Ltd.,
a California Limited Partnership (incorporated by reference to the
1987 Magma Form 10-K).
10.70 Administrative Services Agreement dated August 15,
1988 by and between Red Hill Geothermal, Inc. and Leathers, L.P.
(incorporated by reference to Exhibit 10.82 to the 1988 Magma Form
10-K).
10.71 Administrative Services Agreement dated March 14,
1988 by and between Red Hill Geothermal Inc. and Elmore, Ltd., a
California Limited Partnership (incorporated by reference to
Exhibit 10.63 to the 1987 Magma Form 10-K).
10.72 Amended and Restated Credit Agreement dated as of
April 18, 1990 among Del Ranch, Ltd. a California Limited
Partnership, the Banks Listed therein, and Morgan Guaranty Trust
Company of New York, as Agent.*
10.73 LOC Debt Facility Agreement dated as of April 18,
1990 among Del Ranch, Ltd., a California Limited Partnership, the
Banks listed therein, Morgan Guaranty Trust Company of New York as
the Agent and Fuji Bank, Limited, Los Angeles Agency, as Fronting
Bank.*
10.74 Security Agreement dated March 14, 1988 among Del
Ranch, Ltd., a California Limited Partnership, Morgan Guaranty
Trust Company of New York, as Agent for and on behalf of the Banks,
Morgan Guaranty Trust Company of New York, and Morgan Guaranty
Trust Company of New York, as Security Agent (incorporated by
reference to the 1987 Magma Form 10-K).
10.75 Amendment Number One to Security Agreement dated as
of April 14, 1989, and Amendment Number Two to the Security
Agreement dated April 18, 1990 among Del Ranch, Ltd., a California
Limited Partnership, Morgan Guaranty Trust Company of New York, as
Agent for and on behalf of the Banks, Morgan Guaranty Trust Company
of New York and Morgan Guaranty Trust Company of New York as
Security Agent.*
10.76 Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing Construction Deed of Trust dated as of
March 14, 1988 among Del Ranch, Ltd., a California Limited
Partnership, Ticor Title Insurance Company of California, and
Morgan Guaranty Trust Company of New York as Security Agent
(incorporated by reference to the 1987 Magma Form 10-K).
10.77 First Amendment to the Deed of Trust, dated April
18, 1990 between Del Ranch, Ltd. and Morgan Guaranty Trust Company
of New York.*
10.78 Amended and Restated Credit Agreement dated as of
April 18, 1990 among Elmore, Ltd., a California Limited
Partnership, the Banks Listed therein, and Morgan Guaranty Trust
Company of New York, as Agent.*
10.79 LOC Debt Facility Agreement dated as of April 18,
1990 among Elmore, Ltd., a California Limited Partnership, the
Banks listed therein, Morgan Guaranty Trust Company of New York as
Agent and Fuji Bank, Limited, Los Angeles Agency, as Fronting
Bank.*
10.80 Security Agreement dated March 14, 1988 among
Elmore, Ltd., a California Limited Partnership, Morgan Guaranty
Trust Company of New York, as Agent for and on behalf of the Banks,
Morgan Guaranty Trust Company of New York, and Morgan Guaranty
Trust Company of New York, as Security Agent (incorporated by
reference to Exhibit 10.71 to the 1987 Magma Form 10-K).
10.81 Amendment Number One to Security Agreement dated as
of April 14, 1989 among Elmore Ltd and Morgan Guaranty Trust
Company of New York and Amendment Number Two to Security Agreement
dated April 18, 1990 among Elmore, L.P., Morgan Guaranty Trust
Company of New York, as Agent, on behalf of the Banks.*
10.82 Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing Construction Deed of Trust dated as of
March 14, 1988 among Elmore, Ltd., a California Limited
Partnership, Ticor Title Insurance Company of California, and
Morgan Guaranty Trust Company of New York as Security Agent
(incorporated by reference to Exhibit 10.73 to the 1987 Magma Form
10-K).
10.83 First Amendment to Deed of Trust dated April 18,
1990 between Elmore, Ltd. and Morgan Guaranty Trust Company of New
York, as Security Agent.*
10.84 Amended and Restated Credit Agreement dated April
18, 1990 among Leathers L.P. and the Banks listed therein and
Morgan Guaranty Trust Company of New York as Agent.*
10.85 Security Agreement dated March 14, 1988 among
Leathers L.P., a California Limited Partnership, Morgan Guaranty
Trust Company of New York, as Agent for and on behalf of the Banks,
Morgan Guaranty Trust Company of New York, and Morgan Guaranty
Trust Company of New York, as Security Agent, Amendment Number One
to Security Agreement dated as of April 14, 1989 and Amendment
Number Two to Security Agreement dated as of April 18, 1990.*
10.86 Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing Construction Deed of Trust dated as of
March 14, 1988 among Leathers, L.P., a California Limited
Partnership, Ticor Title Insurance Company of California, and
Morgan Guaranty Trust Company of New York as Security Agent and
First Amendment to Deed of Trust dated April 18, 1990.*
10.87 LOC Debt Facility Agreement dated as of April 18,
1990 among Leathers, L.P., a California Limited Partnership, the
Banks listed therein, Morgan Guaranty Trust Company of New York as
Agent and Fuji Bank, Limited, Los Angeles Agency, as Fronting
Bank.*
10.88 Loan Agreement dated as of October 1, 1990 between
California Pollution Control Financing Authority and Desert Valley
Company, relating to the California Pollution Control Financing
Authority Pollution Control Revenue Bonds Small Business Series
1990-A (the "$4,000,000 Monofill Bond Financing") (incorporated by
reference to Exhibit 10.92 to the Magma Power Company Form 10-K for
the year ended December 31, 1990, File No. 0-10533 (the "1990 Magma
Form 10-K")).
10.89 Master Reimbursement Agreement dated as of October
1, 1990, by and among the California Pollution Control Financing
Authority, Desert Valley Company and the Sanwa Bank, Limited, Los
Angeles Branch, relating to the $4,000,000 Monofill Bond Financing
(incorporated by reference to Exhibit 10.93 to the 1990 Magma Form
10-K).
10.90 Sale and Purchase Agreement between Union Oil
Company of California and Magma Power Company effective as of
December 31, 1992 (incorporated by reference to Exhibit 10.97 to
the Magma Power Company Form 8 dated June 2, 1993).
10.91 Contract for the Purchase and Sale of Electric
Power (Unit 1) from the Salton Sea Geothermal Generating Facility
between Southern California Edison Company and Earth Energy, Inc.,
dated May 8, 1987, including Amendment No. 1 to such contract,
dated March 30, 1993 (incorporated by reference to Exhibit 10.101
to the Magma Power Company Form 10-K for the year ended December
31, 1993, File No. 0-10533, (the "1993 Magma Form 10-K")).
10.92 Power Purchase Contract (Unit 2) by and between
Southern California Edison Company and Westmoreland Geothermal
Associates, dated April 16, 1985, including Amendment No. 1 to such
contract, dated December 18, 1987 (incorporated by reference to
Exhibit 10.102 to the 1993 Magma Form 10-K).
10.93 Power Purchase Contract (Unit 3) between Southern
California Edison Company and Union Oil Company Salton Sea III,
dated April 16, 1985 (incorporated by reference to the 1993 Magma
Form 10-K).
10.94 Reserved
10.95 125 MW Power Plant - Upper Mahiao Agreement (the
"Upper Mahiao ECA") dated September 6, 1993 between PNOC-Energy
Development Corporation ("PNOC-EDC") and Ormat, Inc. as amended by
the First Amendment to 125 MW Power Plant Upper Mahiao Agreement
dated as of January 28, 1994, the Letter Agreement dated February
10, 1994, the Letter Agreement dated February 18, 1994 and the
Fourth Amendment to 125 MW Power Plant - Upper Mahiao Agreement
dated as of March 7, 1994.*
10.96 Credit Agreement dated April 8, 1994 among CE Cebu
Geothermal Power Company, Inc., the Banks thereto, Credit Suisse as
Agent.*
10.97 Credit Agreement dated as of April 8, 1994 between
CE Cebu Geothermal Power Company, Inc., Export-Import Bank of the
United States.*
10.98 Reserved
10.99 Overseas Private Investment Corporation Contract of
Insurance dated April 8, 1994 between the Overseas Private
Investment Corporation ("OPIC") and the Company through its
subsidiaries CE International Ltd., CE Philippines Ltd., and Ormat-
Cebu Ltd.*
10.100 180 MW Power Plant - Mahanagdong Agreement
("Mahanagdong ECA") dated September 18, 1993 between PNOC-EDC and
CE Philippines Ltd. and the Company, as amended by the First
Amendment to
Mahanagdong ECA dated June 22, 1994, the Letter Agreement dated
July 12, 1994, the Letter Agreement dated July 29, 1994, and the
Fourth Amendment to Mahanagdong ECA dated March 3, 1995.*
10.101 Credit Agreement dated as of June 30, 1994 among CE
Luzon Geothermal Power Company, Inc., American Pacific Finance
Company, the Lenders party thereto, and Bank of America National
Trust and Savings Association as Administrative Agent.*
10.102 Credit Agreement dated as of June 30, 1994 between
CE Luzon Geothermal Power Company, Inc. and Export-Import Bank of
the United States.*
10.103 Finance Agreement dated as of June 30, 1994 between
CE Luzon Geothermal Power Company, Inc. and Overseas Private
Investment Corporation.*
10.104 Reserved
10.105 Overseas Private Investment Corporation Contract of
Insurance dated July 29, 1994 between OPIC and the Company, CE
International Ltd., CE Mahanagdong Ltd. and American Pacific
Finance Company and Amendment No. 1 dated August 3, 1994.*
10.106 231 MW Power Plant - Malitbog Agreement ("Malitbog
ECA") dated September 10, 1993 between PNOC-EDC and Magma Power
Company and the First and Second Amendments thereto dated December
8, 1993 and March 10, 1994, respectively.*
10.107 Credit Agreement dated as of November 10, 1994
among Visayas Power Capital Corporation, the Banks parties thereto
and Credit Suisse as Bank Agent.*
10.108 Finance Agreement dated as of November 10, 1994
between Visayas Geothermal Power Company and Overseas Private
Investment Corporation.*
10.109 Reserved
10.110 Overseas Private Investment Corporation Contract of
Insurance dated December 21, 1994 between OPIC and Magma
Netherlands, B.V.*
10.111 Agreement as to Certain Common Representations,
Warranties, Covenants and Other Terms, dated November 10, 1994
between Visayas Geothermal Power Company, Visayas Power Capital
Corporation, Credit Suisse, as Bank Agent, OPIC and the Banks named
therein.*
10.112 Credit and Reimbursement Agreement (Term Loan
Facility and Working Capital Facility) dated as of February 28,
1994 among Salton Sea Power Generation, L.P., Salton Sea Brine
Processing, L.P., the Lenders listed therein, and Credit Suisse as
the Lead Agent.*
10.113 Assignment and Security Agreement dated as of
February 28, 1994 among Salton Sea Power Generation, L.P., a
California limited partnership, Salton Sea Brine Processing, L.P.,
a
California limited partnership, and Credit Suisse as Lead Agent.*
10.114 Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing dated as of February 28, 1994 among
Salton Sea Power Generation, L.P., a California limited
partnership, Salton Sea Brine Processing, L.P., a California
limited partnership, Chicago Title Company as Trustee and Credit
Suisse as Lead Agent for the Secured Parties.*
11.0 Calculation of Earnings Per Share in accordance with
Interpretive Release No. 34-9083.
13.0 The Company's 1994 Annual Report (only the portions thereof
specifically incorporated herein by reference are deemed filed
herewith).
21.0 Subsidiaries of Registrant.
23.0 Consent of Independent Auditors.
24.0 Power of Attorney.
27.0 Financial Data Schedule.
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this amendment to be signed on its behalf by the undersigned
thereunto duly authorized, in the City of Omaha, State of Nebraska,
on this 30th day of March, 1995.
CALIFORNIA ENERGY COMPANY, INC.
BY: /s/ Steven A. McArthur
Name: Steven A. McArthur
Title: Senior Vice President
Exhibit 10.22
MODIFICATION OF CONTRACT PAGE 1 OF 1
1. CONTRACTOR ID CODE
2. MODIFICATION NO. P00028
3. EFFECTIVE DATE: See Block 16C
4. REQUISITION/PURCHASE REQ. NO.
5. PROJECT NO. (if applicable)
6. ISSUED BY:
Commander
Western Division
North Facilities Engineering Command
900 Commodore Drive
San Bruno, CA 94066-2402
CODE 0221
7. ADMINISTERED BY (if other than Item 6)
8. NAME AND ADDRESS OF CONTRACTOR:
COSO FINANCE PARTNERS
10831 Old Mill Road
Omaha, Nebraska 68154
10A. MODIFICATION OF CONTRACT NO. N62474-79-C-5382
10B. DATE (See Item 13)
06 DEC 79
CODE FACILITY CODE
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
__The above numbered solicitation is amended as set forth in Item
14. The hour and date specified for receipt of Offers __ is
extended, __ is not extended.
Offers must acknowledge receipt of this amendment prior to the hour
and date specified in the solicitation or as amended, by one of the
following methods:
(a)By completing Items 8 and 15, and returning ____ copies of the
amendment; (b) By acknowledging receipt of this amendment on each
copy of the offer submitted; or (c) By separate letter or telegram
which includes a reference to the solicitation and amendment
numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE
PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND
DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue
of this amendment you desire to change an offer already submitted,
such change may be made by telegram or letter, provided each
telegram or letter makes reference to the solicitation and this
amendment, and is received prior to the opening hour and date
specified.
12. ACCOUNTING AND APPROPRIATION DATA (if required)
13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS, IT
MODIFIES THE CONTRACT NO. AS DESCRIBED IN ITEM 14.
THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE
CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN
ITEM 10A.
X B. THE ABOVE NUMBERED CONTRACT IS MODIFIED TO REFLECT THE
ADMINISTRATIVE CHANGES (such as changes in paying office,
appropriation date, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE
AUTHORITY OF FAR 43.103(b).
C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO
AUTHORITY OF:
D. OTHER (Specify type of modification and authority)
E. IMPORTANT: Contractor XX is not, __ is required to sign this
document and return ___ copies to the issuing office.
14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF
section headings, including solicitation/contract subject matter
where feasible.)
a. Contract Modification "P00025" to Contract N62474-79-C-5382
dated 25 June 1993 is corrected to read N62474-79-C-5382-P00027.
Except as provided herein, all terms and conditions of the document
referenced in Item 9A or 10A, as heretofore changed, remains
unchanged and in full force and effect.
15A. NAME AND TITLE OF SIGNER (type or print)
15B. CONTRACTOR/OFFEROR
______________________________
(Signature of person authorized to sign)
15C. DATE SIGNED
16A. NAME AND TITLE OF CONTRACTING OFFICER (type or print)
CATHERINE B. MORRIS, HEAD, SERVICE CONTRACTS BRANCH
16B. UNITED STATES OF AMERICA
/s/ Catherine B. Morris
(Signature of Contracting Officer)
16C. DATE SIGNED
28 JUNE 1993
NSN 7540-01-152-8070 30-105 STANDARD FORM 30 (Rev. 10-83)
PREVIOUS EDITION UNUSABLE Prescribrd by GSA
FAR (48 CFR) 53.243
AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT
1. CONTRACT ID CODE PAGE 1 OF PAGES 3
2. AMENDMENT/MODIFICATION NO. P00029 3. EFFECTIVE DATE: See
Block 16C
4. REQUISITION/PURCHASE REQ. NO. 5. PROJECT NO. (If applicable)
6. ISSUED BY:
COMMANDER (0221)
WESTERN DIVISION
NAVAL FACILITIES ENGINEERING COMMAND
900 COMMODORE DRIVE
SAN BRUNO, CA 94066-2402
CODE
7. ADMINISTERED BY (If other than Item 6) CODE
8. NAME AND ADDRESS OF CONTRACTOR:
CALIFORNIA ENERGY COMPANY, INC.
10831 Old Mill Road
Omaha, Nebraska 68154
9A. AMENDMENT OF SOLICITATION NO.
9B. DATED (SEE ITEM 11)
XX 10A. MODIFICATION OF CONTRACT/ORDER NO. N62474-79-C-5382 10B.
DATE (See Item 13)
06 DEC 79
CODE FACILITY CODE
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
__The above numbered solicitation is amended as set forth in Item
14. The hour and date specified for receipt of Offers __ is
extended, __ is not extended.
Offers must acknowledge receipt of this amendment prior to the hour
and date specified in the solicitation or as amended, by one of the
following methods:
(a)By completing Items 8 and 15, and returning ____ copies of the
amendment; (b) By acknowledging receipt of this amendment on each
copy of the offer submitted; or (c) By separate letter or telegram
which includes a reference to the solicitation and amendment
numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE
PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND
DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue
of this amendment you desire to change an offer already submitted,
such change may be made by telegram or letter, provided each
telegram or letter makes reference to the solicitation and this
amendment, and is received prior to the opening hour and date
specified.
12. ACCOUNTING AND APPROPRIATION DATA (if required) NOT
APPLICABLE
13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS,
IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.
X A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority)
THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO.
IN ITEM 10A.
B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE
ADMINISTRATIVE CHANGES (such as changes in paying office,
appropriation date, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE
AUTHORITY OF FAR 43.103(b).
C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO
AUTHORITY OF:
D. OTHER (Specify type of modification and authority)
E. IMPORTANT: Contractor __ is not, XX is required to sign this
document and return two copies to the issuing office.
14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF
section headings, including solicitation/contract subject matter
where feasible.)
SUBJ: GEOTHERMAL POWER DEVELOPMENT AT THE NAVAL AIR WEAPONS
STATION, CHINA LAKE, CALIFORNIA.
(Description of this Modification begins on Page 2)
Except as provided herein, all terms and conditions of the document
referenced in Item 9A or 10A, as heretofore changed, remains
unchanged and in full force and effect.
15A. NAME AND TITLE OF SIGNER (type or print) Thomas R. Mason
Senior Vice President
15B. CONTRACTOR/OFFEROR
/s/ Thomas R. Mason
(Signature of person authorized to sign)
15C. DATE SIGNED 9/26/94
16A. NAME AND TITLE OF CONTRACTING OFFICER (type or print)
CATHERINE B. MORRIS, HEAD, SERVICE CONTRACTS BRANCH
16B. UNITED STATES OF AMERICA
/s/ Catherine B. Morris
(Signature of Contracting Officer)
16C. DATE SIGNED
4 OCT 94
MODIFICATION OF CONTRACT PAGE 1 OF 4
1. CONTRACTOR ID CODE
2. MODIFICATION NO. P00030
3. EFFECTIVE DATE: See Block 16C
4. REQUISITION/PURCHASE REQ. NO.
5. PROJECT NO. (if applicable)
6. ISSUED BY:
Commanding Officer (0221)
Engineering Field Activity West
Naval Facilities Engineering Command
900 Commodore Drive
San Bruno, CA 94066-5006
CODE N62474
7. ADMINISTERED BY (if other than Item 6)
8. NAME AND ADDRESS OF CONTRACTOR:
CALIFORNIA ENERGY COMPANY, INC.
10831 Old Mill Road
Omaha, Nebraska 68154
9A. Amendment of Solicitation No.
9B. Dated (See Item 11)
10A. MODIFICATION OF CONTRACT NO. N62474-79-C-5382
10B. DATE (See Item 13)
06 DEC 79
CODE FACILITY CODE
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
__The above numbered solicitation is amended as set forth in Item
14. The hour and date specified for receipt of Offers __ is
extended, __ is not extended.
Offers must acknowledge receipt of this amendment prior to the hour
and date specified in the solicitation or as amended, by one of the
following methods:
(a)By completing Items 8 and 15, and returning ____ copies of the
amendment; (b) By acknowledging receipt of this amendment on each
copy of the offer submitted; or (c) By separate letter or telegram
which includes a reference to the solicitation and amendment
numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE
PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND
DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue
of this amendment you desire to change an offer already submitted,
such change may be made by telegram or letter, provided each
telegram or letter makes reference to the solicitation and this
amendment, and is received prior to the opening hour and date
specified.
12. ACCOUNTING AND APPROPRIATION DATA (if required): Not
Applicable
13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS,
IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.
A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority)
THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO.
IN ITEM 10A.
B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE
ADMINISTRATIVE CHANGES (such as changes in paying office,
appropriation date, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE
AUTHORITY OF FAR 43.103(b).
C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO
AUTHORITY OF:
D. OTHER (Specify type of modification and authority)
E. IMPORTANT: Contractor __ is not, XX is required to sign this
document and return TWO copies to the issuing office.
14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF
section headings, including solicitation/contract subject matter
where feasible.)
SUBJ: GEOTHERMAL POWER DEVELOPMENT AT THE NAVAL AIR WEAPONS
STATION, CHINA LAKE. CALIFORNIA
(Description of this Modification begins on Page 2)
Except as provided herein, all terms and conditions of the document
referenced in Item 9A or 10A, as heretofore changed, remains
unchanged and in full force and effect.
15A. NAME AND TITLE OF SIGNER (type or print): /s/ Thomas R.
Mason, Senior VP
15B. CONTRACTOR/OFFEROR:
/s/ Thomas R. Mason
(Signature of person authorized to sign)
15C. DATE SIGNED: 12/14/94
16A. NAME AND TITLE OF CONTRACTING OFFICER (type or print)
CATHERINE B. MORRIS, HEAD, SERVICE CONTRACTS BRANCH
16B. UNITED STATES OF AMERICA
/s/ Catherine B. Morris
(Signature of Contracting Officer)
16C. DATE SIGNED
19 Dec 1994
NSN 7540-01-152-8070 30-105 STANDARD FORM 30 (Rev. 10-83)
PREVIOUS EDITION UNUSABLE Prescribed by GSA
FAR (48 CFR) 53.243
ATTACHED TO AND MADE A PART OF CONTRACT
MODIFICATION N62474-79-C-5382-P00030
Page 2 of 4
The Navy herein consents to the exchange and transfer of steam
between the Navy and Bureau of Land Management (BLM) facilities
located at Coso subject to the following conditions:
1. Transfers will be of steam for production purposes of
generating electric power. Transfers of brine and/or condensate
will be for injection or prevention of scale.
2. All transfers shall be strictly monitored by the Navy and
California Energy Company, Inc. (CECI) by means of continuous flow
gauging and recording of flow through the gauge(s). Such gauging
shall be by means of mutually-agreed-upon devices which shall be
calibrated and certified prior to installation and operation. Each
gauge shall be re-calibrated at least once a year by using a
mutually-agreed-upon technique. The Navy may require that this re-
calibration be performed by an independent third-party, to be
approved by the Navy.
3. Gauging points for particular pipeline(s) to be used for steam,
brine, and/or condensate transfer between Navy contract lands and
BLM lease lands shall be agreed upon by the Navy, BLM,and CECI in
advance of installation and operation of such pipeline(s). Flow at
the gauging points shall be recorded daily in units of pounds of
mass and shall be reported to the Navy on a weekly basis as part of
routine reporting of geothermal fluid production and electric power
generation.
4. The Navy shall be compensated on the basis of Equivalent
Megawatt-Hours (MWh) for steam transferred to BLM power plants.
Determination of the MWh shall be made by first calculating the
Thermal Capacity (in BTU/lb-m) of steam transferred using a formula
that is mutually-agreed upon by the Navy, BLM and CECI. Using this
formula, the total Thermal Value (in BTU) of the steam that is
transferred shall be determined by multiplying the Thermal Capacity
by the total mass that passes by the gauge. Determination of the
Thermal Capacity of the steam shall take into account the
temperature, pressure, and amount of non-condensible gas that the
steam contains. This value shall be updated as necessary to ensure
accurate determination of Thermal Value, Thermal Value shall be
converted into MWh and shall be the basis for calculating revenue
due to the Navy. The MWh shall be based on the average efficiency
of the Navy turbines in converting steam to electricity.
5. Revenues due the Navy for steam transferred by CECI from
the Navy contract lands to power plants on BLM lands shall be
calculated by multiplying the MWh times the prevailing energy price
($/MWh) for the originating project. Prevailing energy price for
a given monthly billing period is defined as an amount equal to the
Total Current Energy Payment divided by the net MWh as shown on the
Southern California Edison Company - Statement of Energy Purchased.
This value shall then be multiplied by the average of the
prevailing revenue share rates for Navy I and Navy II to determine
the amount due the Navy.
In the event steam transferred from Navy to BLM during the
given month results in CECI's BLM power plants receiving capacity
payments, the Navy shall be compensated on a pro rata basis for
steam contributed toward earning those capacity payments. Such
capacity payments shall include "capacity", "bonus capacity", and
"as available capacity payments". The extent of the Navy
contribution, if any, toward reaching capacity payment thresholds
shall be based on the amount of MWh produced with Navy steam. The
Navy-produced portion of those payments will then be subject to
revenue sharing based on the average of the prevailing revenue
share rates for Navy I and Navy II.
6. The Navy shall also be compensated for steam transferred
from BLM leased lands to Navy Power plants in the same manner as
above with the following exception:
The Navy revenue share rate for MWh transferred from the BLM
lease lands to power plants on Navy contract lands shall be the
difference between:
a. the average of prevailing royalty rates for Navy I
and Navy II; and
b. the actual percentage of the gross value of the
transferred MWh, paid to the Minerals Management Service (MMS)
based on the netback calculation at the BLM project. CECI will
document this actual percentage by submitting to the Navy, each
month, a copy of the Southern California Edison Company "Statement
of Energy Purchased" and a copy of the "Report of Sales and Royalty
Remittance" (MMS-2014) for the BLM project.
7. Revenues due the Navy from the transfer of steam shall be
calculated and paid on a monthly basis along with the revenue from
sale of electricity at Navy I and Navy II. They shall, however, be
separately listed from the Navy electricity sales revenue amounts.
8. In the event it is determined that the transfer or
exchange of steam between facilities is materially detrimental* to
the Navy, the Navy reserves the right to suspend, terminate, or
withdraw its consent to such transfers at any time notwithstanding
any provision in other contract modifications or in this
modification to the contrary. CECI shall hold the Navy harmless
from any and all related monetary damages resulting from such
suspension, termination or withdrawal and agrees to indemnify the
Navy against all claims of itself, its partners, and any other
parties in this regard.
9. Such suspension, termination, or withdrawal shall be
effective no later than 15 days after delivery to the CECI of
written notice to cease such exchanges. The Navy may, in its
discretion, cancel its notice of suspension, termination, or
withdrawal prior to the notice taking effect.
10. Reservoir model simulations shall be run at least every
six (6) months, or more frequently, as needed, using up to date
production and monitoring information. The results of such
simulations shall be conveyed to the Geothermal Program Office
immediately upon completion.
*NOTE: For the purposes of this modification, materially
detrimental is defined as:
Any reservoir-related change in the overall production
enthalpy or steam rate within the Navy I and Navy II, or BLM
producing areas which is beyond one standard deviation from CECI's
simulation-based forecast of such values, using the most recent of
these forecasts prior to the observed change. The simulation-based
forecast shall be updated every six months, or more frequently, as
needed. The standard deviation is calculated on the differences
between monthly measurements and history-matched values in the
simulator for the period from the start of production to the time
of the forecast. The size of these historical differences is a
statistical measure of the quality of the simulation, and the
accuracy of the forecast based on the simulation is not expected to
be any better than the accuracy of the history-match. Observed
changes in enthalpy or steam rate may occur in a period of time as
short as one month, or they may be more protracted (such as over a
six-month period). Changes of this nature can be construed as
materially detrimental to the Navy or BLM to the extent that they
would impact the either the Navy's or BLM's ability to realize its
long-term goals for the geothermal resource at Coso.
AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT
1. CONTRACTOR ID CODE PAGE 1 OF PAGES 1
2. AMENDMENT/MODIFICATION NO. P00031
3. EFFECTIVE DATE: See Block 16C
4. REQUISITION/PURCHASE REQ. NO.
5. PROJECT NO. (If applicable)
6. ISSUED BY:
COMMANDING OFFICER CODE 0221
WESTERN DIVISION
ENGINEERING FIELD ACTIVITY WEST
NAVAL FACILITIES ENGINEERING COMMAND
900 COMMODORE DRIVE
SAN BRUNO, CA 94066-2402
7. ADMINISTERED BY (If other than Item 6) CODE
8. NAME AND ADDRESS OF CONTRACTOR:
COSO FINANCE PARTNERS
10831 Old Mill Road
Omaha, Nebraska 68154
9A. AMENDMENT OF SOLICITATION NO.
9B. DATED (SEE ITEM 11)
10A. MODIFICATION OF CONTRACT/ORDER NO. N62474-79-C-5382
10B. DATE (See Item 13)
06 DEC 79
CODE FACILITY CODE
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
__The above numbered solicitation is amended as set forth in Item
14. The hour and date specified for receipt of Offers __ is
extended, __ is not extended.
Offers must acknowledge receipt of this amendment prior to the hour
and date specified in the solicitation or as amended, by one of the
following methods:
(a)By completing Items 8 and 15, and returning ____ copies of the
amendment; (b) By acknowledging receipt of this amendment on each
copy of the offer submitted; or (c) By separate letter or telegram
which includes a reference to the solicitation and amendment
numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE
PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND
DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue
of this amendment you desire to change an offer already submitted,
such change may be made by telegram or letter, provided each
telegram or letter makes reference to the solicitation and this
amendment, and is received prior to the opening hour and date
specified.
12. ACCOUNTING AND APPROPRIATION DATA (if required) AA 97X4930
NH2F 000 77777 0 60530 2 F 2151N RCP #N60530-87RC26255
$60,000,000.00
13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS,
IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.
X A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority)
THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO.
IN ITEM 10A.
B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE
ADMINISTRATIVE CHANGES (such as changes in paying office,
appropriation date, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE
AUTHORITY OF FAR 43.103(b).
C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO
AUTHORITY OF:
D. OTHER (Specify type of modification and authority)
E. IMPORTANT: Contractor XX is not, __ is required to sign this
document and return ___ copies to the issuing office.
14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF
section headings, including solicitation/contract subject matter
where feasible.)
a. Modify the contract to incorporate the accounting data in Block
12 in order to increase the contract funding by $10,000,000.00 to
a new total of $60,000,000.00. The Contract funding is available
to reimburse, at the reduced contract price, the Contractor for the
Contractor's payment of Southern California Edison's bill for
electricity furnished to Naval Air Weapons Station, China Lake.
Except as provided herein, all terms and conditions of the document
referenced in Item 9A or 10A, as heretofore changed, remains
unchanged and in full force and effect.
15A. NAME AND TITLE OF SIGNER (type or print)
15B. CONTRACTOR/OFFEROR
______________________________
(Signature of person authorized to sign)
15C. DATE SIGNED
16A. NAME AND TITLE OF CONTRACTING OFFICER (type or print)
CATHERINE B. MORRIS, HEAD, SERVICE CONTRACTS BRANCH
16B. UNITED STATES OF AMERICA
/s/ Catherine B. Morris
(Signature of Contracting Officer)
16C. DATE SIGNED
19 DEC 94
NSN 7540-01-152-8070 30-105 STANDARD FORM 30 (Rev. 10-83)
PREVIOUS EDITION UNUSABLE Prescribrd by GSA
FAR (48 CFR) 53.243
Exhibit 10.33
AMENDMENT NO. 2 TO STOCK OPTION AGREEMENT
AMENDMENT NO. 2, dated as of May 12, 1994, to the Stock Option
Agreement dated as of February 18, 1991, as amended (the "Stock
Option Agreement"), between Kiewit Energy Company, a Delaware
corporation ("Kiewit"), and California Energy Company, Inc. a
Delaware corporation (the "Company").
WHEREAS, Kiewit and the Company desire to amend the Stock Option
Agreement in accordance with Section 13 of the Stock Option
Agreement in order to give effect to the intention of the parties
by clarifying the terms of and agreeing on the final and complete
amount of the antidilution adjustment to be made to the number of
Option Shares purchasable under the Second Option pursuant to
Section 8.1(g) of the Stock Option Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth in the Stock Option Agreement and this
Amendment, the parties hereby agree as follows:
1. Kiewit and the Company agree that the final and complete
antidilution adjustment to be made pursuant to Section 8.1(g) of
the Stock Option Agreement is as set forth on Exhibit A attached
hereto and results, from and after the date hereof, in an
additional 289,163 Option Shares being purchasable under the Second
Option, subject to all the terms and conditions thereof, including
payment in full of the Option Purchase Price in respect of such
Option Shares. Kiewit and the Company agree that this antidilution
adjustment is final and complete and that no subsequent adjustments
of any kind shall be made under Section 8.1(g) of the Stock Option
Agreement.
2. Each reference in the Stock Option Agreement to the term
"Agreement" or to the terms "herein," "hereof" or words of like
import referring to the Stock Option Agreement, shall be deemed to
refer to the Stock Option Agreement as amended hereby. All terms
used but not defined herein shall have the meanings assigned to
such terms in the Stock Option Agreement.
3. This Amendment shall be effective as of the date hereof and,
except as set forth herein, the Stock Option Agreement shall remain
in full force and effect and shall otherwise be unaffected hereby.
4. This Amendment may be executed in two or more counterparts,
each of which shall be deemed an original, all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed, all as of the day and year first above
written.
KIEWIT ENERGY COMPANY
By: /s/ Richard R. Jaros
Richard R. Jaros
Executive Vice President
CALIFORNIA ENERGY COMPANY, INC.
By: /s/ Steven A. McArthur
Steven A. McArthur
Senior Vice President
Exhibit 10.43
Amendment No. 1
to the
Employment Agreement
between
California Energy Company, Inc.
and
David L. Sokol
This Amendment No. 1 to the Employment Agreement between
California Energy Company, Inc. (the "Company") and David L. Sokol
("Executive") is made effective as of January 21, 1995.
WHEREAS, the Company and Executive are parties to an
Employment Agreement dated as of April 2, 1993 ("Agreement"), and
WHEREAS, Executive has been elected Chairman of the Board of
the Company and Thomas R. Mason has been elected President of the
Company.
NOW, THEREFORE, the Company and Executive agree as follows:
1. Section 2 of the Agreement is amended by deleting
subparagraph (a) thereof and inserting in its place the following:
"(a) The Company will employ the Executive as, and the
Executive will act as, the Chairman of the Board and Chief
Executive Officer of the Company upon the terms set forth in
this Agreement, for the Term of this Agreement."
2. Section 3 of the Agreement is amended by deleting
subparagraph (a) thereof and inserting in its place the following:
"(a) The Executive (i) will manage the business of the
Company and supervise and direct the other officers of the Company
and its employees, agents and representatives, and (ii) will
perform and discharge such other duties, and will have such other
authority, as are customary to his office. In performing such
duties, the Executive will report directly to the Board."
3. Except as otherwise amended as set forth above, all terms
and conditions of the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the Company and Executive have executed
this Amendment No. 1 as of January 21, 1995.
"Company"
CALIFORNIA ENERGY COMPANY, INC.
By: /s/ Steven A. McArthur
Steven A. McArthur,
Senior Vice President
"Executive"
/s/ David L. Sokol
David L. Sokol
Exhibit 10.45
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of January 21, 1995
by and between California Energy Company, Inc., a Delaware
corporation (the "Company"), and Thomas R. Mason (the "Executive").
RECITALS
The Company desires to employ the Executive as its President and
Chief Operating Officer on the terms set forth in this Agreement,
and the Executive desires to accept such employment.
Accordingly, the Company and the Executive agree as follows:
AGREEMENT
Section 1. Defined Terms. Terms used but not defined in this
Agreement will have the meanings ascribed to them in Exhibit A to
this Agreement.
Section 2. Employment.
(a) The Company will employ the Executive as, and the
Executive will act as, the President and Chief Operating Officer of
the Company upon the terms set forth in this Agreement, for the
Term of Employment.
(b) The Executive's primary place of employment will be
Omaha, Nebraska or such other place as is determined by the Company
to be in the best interest of the Company.
Section 3. Duties.
(a) Unless the Executive's duties are otherwise modified by
the Chairman of the Board and Chief Executive Officer (hereinafter
referred to as the "Chairman of the Board") which modifications may
be effected in the Chairman of the Board's sole discretion, the
Executive (i) will manage the operations and business of the
Company and supervise and direct the other officers of the Company
(except the Chairman of the Board) and its employees, agents and
representatives, and (ii) will perform and discharge such other
duties, and will have such other authority, as delegated to him by
the Chairman of the Board. In performing such duties, the
Executive will report directly to the Chairman of the Board and
will consult with and be subject to the direction of the Chairman
of the Board regarding all significant decisions and strategic
options for the Company.
(b) The Executive will act, without any compensation in
addition to the compensation payable pursuant to this Agreement, as
an officer of, or as a member of the board of directors of any
subsidiary of the Company if so appointed or elected.
(c) During the Term of Employment, the Executive (i) will
devote his entire time, attention and energies during normal
business hours to the business of the Company, and (ii) will not,
without the Consent of the Chairman of the Board, perform any
services for any other Person or engage in any other business or
professional activity, whether or not performed or engaged in for
profit.
(d) Notwithstanding subsection (c), the Executive, without
the Consent of the Chairman of the Board, may (i) purchase
securities issued by, or otherwise passively invest his personal or
family assets in, any other company or business within the
constraints imposed by the Policy of Business Conduct referred to
below, and (ii) engage in governmental, political, educational or
charitable activities, but only to the extent that those activities
(A) are not inconsistent with any direction of the Chairman of the
Board or any duties under this Agreement, and (B) do not interfere
with the devotion by the Executive of his entire time, attention
and energies during normal business hours to the business of the
Company.
Section 4. Compensation.
(a) During the Term of Employment, the Company will pay the
Executive a base salary at an annual rate of $200,000, in
substantially equal periodic payments in accordance with the
Company's practices for executive employees, as determined from
time to time by the Chairman of the Board.
(b) The Chairman of the Board will review the salary payable
to the Executive at least annually beginning in the fourth fiscal
quarter of 1995. The Chairman of the Board, in his discretion, may
increase the salary of the Executive from time to time, but may not
reduce the salary of the Executive below the amount set forth in
subsection (a).
(c) During the Term of Employment, the Executive shall be
eligible for consideration for an annual incentive merit bonus, for
the Executive's performance during the preceding fiscal year of the
Company in an amount determined by the Chairman of the Board in his
discretion, by reference to the accomplishment by the Executive of
goals established by the Chairman of the Board for the related
fiscal year.
(d) The Company will reimburse the Executive, subject to
compliance by the Executive with the Company's customary
reimbursement practices, for all reasonable and necessary out-of-
pocket expenses incurred by the Executive on behalf of the Company
in the course of its business.
(e) The Company may reduce any payments made to the
Executive under this Agreement by any required federal, state or
local government withholdings or deductions for taxes or similar
charges, or otherwise pursuant to law, regulation or order.
(f) The compensation payable to the Executive pursuant to
this Agreement will be in consideration for all services rendered
by the Executive under this Agreement, and the Executive will
receive no other compensation from the Company or any Affiliate.
(g) Any base salary payable to the Executive for any period
of employment of less than a year during the Term of Employment
will be reduced to reflect the actual number of days of employment
during the period except as provided in Section 8(b).
Section 5. Other Benefits.
(a) During the Term of Employment, the Executive and his
dependents may participate in and receive benefits under any
employee benefit plan which the Company makes generally available
to its employees and their families, including any pension, life
insurance, medical benefits, dental benefits or disability plan,
but only to the extent that the Executive or his dependents
otherwise satisfies the standards established for participation in
the plan. The terms of Executive's existing option agreements, as
amended, remain unaffected hereby, except as set forth in Section
8(b) hereof.
(b) The Executive may take up to four weeks of vacation
during each full calendar year during the Term of Employment at a
time mutually convenient to the Executive and the Company, without
loss of compensation or other benefits under this Agreement.
Section 6. Confidentiality and Post-Employment Restrictions.
(a) The Executive acknowledges that the Company and its
Affiliates have confidential information and trade secrets, whether
written or unwritten, with respect to carrying on their business,
including sensitive marketing, bidding, technological and
engineering information and data, names of past, present and
prospective customers or partners of and vendors or suppliers to
the Company and its Affiliates, working relationships with
government agencies and officials, methods of pricing contracts and
income and expenses associated therewith, the international
business strategy and relative ranking of opportunities in various
countries, negotiated prices and offers outstanding, credit terms
and status of accounts and the terms or circumstances of any
current or prospective business arrangements between the Company
and its Affiliates and any third parties ("Confidential Information
and Trade Secrets"). As used in this Agreement, the term
Confidential Information and Trade Secrets does not include (i)
information which becomes generally available to the public other
than as a result of a disclosure by the Executive, (ii) information
which becomes available to the Executive on a nonconfidential basis
from a source other than the Company, or (iii) information known to
the Executive prior to any disclosure to him by the Company. The
Executive further acknowledges that the Executive possesses a high
degree of knowledge of the independent energy industry and, in
particular, has committed to a long-standing relationship with the
Company and its Affiliates as employee, director and officer, which
has allowed, and will continue to allow, him access to the
Company's Confidential Information and Trade Secrets. Accordingly,
any employment by the Executive with another employer in the
independent energy industry or participation by him as a
substantial investor in any such industry may necessarily involve
disclosure of the Company's Confidential Information and Trade
Secrets. Consequently, the Executive agrees that, if he
voluntarily resigns his employment with the Company for any reason
other than a material breach of this Agreement by the Company, he
shall not at any time during the two-year period after such
resignation, directly or indirectly accept employment by or invest
in (except as a passive investor in a public corporation or in a
publicly issued partnership interest which, in either event, would
not exceed an ownership interest of 2% of the outstanding equity or
partnership interest) in any person, firm, corporation,
partnership, joint venture or business which is primarily engaged
in the production or marketing of steam or electrical energy and
further, the Executive agrees that to avoid the risk of disclosing
or improperly using Confidential Information or Trade Secrets, he
shall not directly or indirectly, provide consulting or advisory
services to any of such independent energy businesses.
(b) Without the written consent of the Chairman of the Board,
the Executive will not, during and for two years after the Term of
Employment, (i) disclose any Confidential Information and Trade
Secrets of the Company or any Affiliate of the Company to any
Person (other than the Company, directors, officers or employees of
the Company, its Affiliates or duly authorized agents, attorneys or
other representatives thereof), or (ii) otherwise make use of any
Confidential Information and Trade Secrets other than in connection
with authorized dealings with or by the Company and its Affiliates.
(c) For a period of two years after the Term of Employment,
the Executive shall neither directly nor indirectly solicit, on
behalf of another employer, the employment of any person who is
then currently employed by the Company or an Affiliate thereof, or
otherwise induce, on behalf of another employer, such person to
leave the employment of the Company or an Affiliate thereof without
the prior written approval of the Chairman of the Board.
(d) The Executive will hold, on behalf of the Company and its
Affiliates and as the property of the Company and its
Affiliates, all memoranda, manuals, books, papers, letters,
documents, computer discs, data, software and other similar
property obtained during the course of his employment by the
Company and its Affiliates and relating to the Company's and its
Affiliate's business, and will return such property to the Company
and its Affiliates at any time upon demand by the Chairman of the
Board and, in any event, within five calendar days after the end of
the Term of Employment.
(e) During the Term of Employment and for a period of two
years thereafter, Executive agrees to comply in all respects with
CECI's Policy of Business Conduct attached hereto as Exhibit B and
delivers with the execution of this Agreement an executed
Certificate of Compliance thereto.
Section 7. Termination of Employment.
(a) The employment of the Executive under this Agreement will
terminate on the earliest of: (i) written notice by the Executive
of his resignation; (ii) the day the Company gives to the
Executive written notice of termination without cause; (iii) the
day the Company gives to the Executive written notice of
termination for cause; (iv) the Permanent Disability of the
Executive; or (v) the death of the Executive.
(b) If the employment of the Executive is terminated under
this Agreement for any reason whatsoever, the obligations of the
Executive under Section 6 will remain in full force and effect, and
the termination will not abrogate any rights or remedies of the
Company or the Executive with respect to any breach of the
Agreement, except as expressly provided in Sections 8.
Section 8. Payment Upon Termination.
(a) If the employment of the Executive is terminated
pursuant to subsections (i), (iii), (iv), or (v) of Section 7(a),
the Company will pay to the Executive, within 30 calendar days, any
base salary and reimbursable expenses pursuant to Section 4(a) and
4(d) which are accrued but unpaid through the Termination Date.
(b) If the employment of the Executive is terminated
pursuant to subsection (ii) of Section 7(a), the Company will pay
the Executive, subject to the Executive's compliance with his post-
termination obligations under Section 6, (i) within 30 calendar
days, any base salary and reimbursable expenses which are accrued
and unpaid through such date, (ii) commencing one month after the
month of his Termination Date, 24 monthly payments each equal to
1/24 of a sum equal to twice his annual base salary then in effect
pursuant to Section 4, and (iii) commencing one month after the
month of his Termination Date, 24 monthly payments each equal to
1/24 of a sum equal to twice the average of his prior two year's
incentive bonuses. In addition, subject to the Executive's
compliance with his post-termination obligations under Section 6,
the Company agrees that the CECI stock options previously granted
to Executive will continue to vest according to their terms within
such next 24 months (beginning with the month following the month
in which the Termination Date occurs, after which time the unvested
remainder will lapse) and such vested options may be exercised
within the remaining term of such options as provided in the
respective option agreements.
Section 9. Remedies.
(a) The Company will be entitled, if it elects, to enjoin any
breach or threatened breach of, or enforce the specific performance
of, the obligations of the Executive under Sections 3 or 6, without
showing any actual damage or that monetary damages would be
inadequate. Any such equitable remedy will not be the sole and
exclusive remedy for any such breach, and the Company may pursue
other remedies for such a breach.
(b) Any court proceeding to enforce this Agreement may be
commenced in the federal courts, or in the absence of federal
jurisdiction the state courts, located in Omaha, Nebraska. The
parties submit to the jurisdiction of such courts and waive any
objection which they may have to pursuit of any such proceeding in
any such court.
(c) Except to the extent that the Company elects to seek
injunctive relief in accordance with subsection (a), any
controversy or claim arising out of or relating to this Agreement
or the validity, interpretation, enforceability or breach of this
Agreement will be submitted to arbitration in Omaha, Nebraska, in
accordance with the then existing rules of the American Arbitration
Association, and judgement upon the award rendered in any such
arbitration may be entered in any court having jurisdiction.
Section 11. Assignment. Neither the Company nor the Executive
may sell, transfer or otherwise assign their rights, or delegate
their obligations, under this Agreement.
Section 12. Unfunded Benefits. All compensation and other
benefits payable to the Executive under this Agreement will be
unfunded, and neither the Company nor any Affiliate of the Company
will segregate any assets to satisfy any obligation of the Company
under this Agreement.
Section 13. Severability. Should any provision, paragraph,
clause or portion thereof of this Agreement be declared or be
determined by any court or arbitrator of competent jurisdiction to
be illegal, unenforceable or invalid, the validity or
enforceability of the remaining parts, terms or provisions shall
not be affected thereby and said illegal or invalid part, term or
provision shall be deemed not to be a part of this Agreement.
Alternatively, the court or arbitrator having jurisdiction shall
have the power to modify such illegal, unenforceable or invalid
provision so that it will be valid and enforceable, and, in any
case, the remaining provisions of this Agreement shall remain in
full force and effect.
Section 14. Miscellaneous.
(a) This Agreement may be amended or modified only by a
writing executed by the Executive and the Company.
(b) This Agreement will be governed by and construed in
accordance with the internal laws of the State of Nebraska.
(c) This Agreement constitutes the entire agreement of the
Company and the Executive with respect to the matters set forth in
this Agreement and supersedes any and all other agreements between
the Company and the Executive relating to those matters.
(d) Any notice required to be given pursuant to this
Agreement will be deemed given (i) when delivered in person or by
courier, or (ii) on the third calendar day after it is sent by
facsimile, with written confirmation of receipt, if to the Company
to: Chairman of the Board, California Energy Company, Inc. at
10831 Old Mill Road, Omaha, Nebraska, 68154, facsimile number (402)
334-3746 and if to the Executive at 5105 South 181st Plaza, Omaha,
Nebraska 68135, or to such other address as may be subsequently
designated by the Company or the Executive in writing to the other
party.
(e) A waiver by a party of a breach of this Agreement will
not constitute a waiver of any other breach, prior or subsequent,
of this Agreement.
IN WITNESS WHEREOF, the Company and the Executive have entered
into this Agreement as of January 21, 1995.
CALIFORNIA ENERGY COMPANY, INC.
BY: /s/ David L. Sokol
David L. Sokol
Chairman of the Board
EXECUTIVE:
BY: /s/ Thomas R. Mason
Thomas R. Mason
EXHIBIT A
Defined Terms
"Affiliate" means, with respect to a Person, (a) any Person
directly or indirectly owning, controlling, or holding power to
vote 10% or more of the outstanding voting securities of the
Person; (b) any Person 10% or more of whose outstanding voting
securities are directly or indirectly owned, controlled or held
with power to vote by the Person; (c) any Person directly or
indirectly controlling, controlled by or under common control with,
the Person and (d) any officer or director of the Person, or of any
Person directly or indirectly controlling the Person, controlled by
the Person or under common control with the Person. As used in
this definition, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person.
"Agreement" means this Employment Agreement dated as of January
21, 1995, by and between the Company and the Executive, as it may
be amended from time to time in accordance with its terms.
"Board" means the Board of Directors of the Company.
"Disability" means, with respect to the Executive, that the
Executive has become physically or mentally incapacitated or
disabled so that, in the reasonable judgement of the Chairman of
the Board, he is unable to perform his duties under this Agreement
and such other services as he performed on behalf of the Company
before incurring such incapacity or disability.
"Permanent Disability" means a Disability which has continued
for at least three consecutive calendar months.
"Person" means any natural person, general partnership, limited
partnership, corporation, joint venture, trust, business trust, or
other entity.
"Term of Employment" means the period of time beginning on
January 21, 1995 and ending on January 20, 1997 unless earlier
terminated pursuant to Section 7(a).
"Termination Date" means the date of termination of employment
of the Executive pursuant to Section 7 of this Agreement.
Exhibit 10.50
NON-RECOURSE CREDIT AGREEMENT
This NON-RECOURSE CREDIT AGREEMENT, dated as of February 24,
1995, is made by and among CALIFORNIA ENERGY COMPANY, INC., a
Delaware corporation ("Borrower"), THE BANKS AND OTHER FINANCIAL
INSTITUTIONS PARTIES HERETO ("Banks") and CREDIT SUISSE, NEW YORK
BRANCH, as agent for the Banks (in such capacity, "Agent").
The parties hereto agree as follows:
ARTICLE I
Definitions and Interpretation
Section 1.1 Defined Terms. As used in this Agreement:
Account Pledge Agreements" means the separate Account Pledge
Agreements each dated as of the Closing Date, by the Persons listed
on Schedule 1.7 in favor of Borrower substantially in the form of
Exhibit R.
Acquisition" means the acquisition by CE Acquisition of the Magma
Shares in connection with the Tender Offer.
"Affiliate" means, as to any Person, any other Person directly or
indirectly controlling or controlled by or under common control
with such Person. For the purpose of Section 5.2(f), the term
"Affiliate" shall include only the Kiewit Entities and any entity
owning directly or indirectly 10% or more of the capital stock or
other equity interest having the power to vote for the election of
directors (or persons fulfilling similar responsibilities) of any
of the Kiewit Entities or Borrower.
"Agency Office" means the office of Agent designated on the
Commitment Schedule, or such other office of Agent as Agent may
from time to time designate by notice to Borrower and the Banks.
"Agent" means Credit Suisse in its capacity as agent for the Banks
hereunder, and any successor thereto in such capacity.
"Alto Peak" means a prospective 72 (gross) megawatt Philippine
geothermal project of Magma.
"Alto Peak Pre-Funded Equity Amount" means the sum of $28,688,000
deposited with Agent representing funds to be available for
application, subject to Section 2.2(h), to Magma's equity
commitment for Alto Peak.
"Applicable Agent's Account" means the account of Agent maintained
at the Agency Office, or such other account of Agent as may be
hereafter from time to time designated by Agent upon notice to the
Borrower and the Banks, as the account through which the Banks are
to make Loans and the Borrower is to repay Loans and to pay the
other sums due under this Agreement.
"Applicable Lending Office" means with respect to each Bank the
office of such Bank designated on the Commitment Schedule, or in
the Assignment and Acceptance Agreement pursuant to which it became
a Bank, or such other office of such Bank as such Bank may from
time to time designate by notice to Borrower and the Agent.
"Applicable Margin" means (a) with respect to any Base Rate Loan
that is made under the Tranche A Commitments, 150 basis points
(1.50%) per annum, (b) with respect to any Base Rate Loan that is
made under the Tranche B Commitments, 250 basis points (2.50%) per
annum, (c) with respect to any Base Rate Loan that is made under
the Tranche C Commitments, 250 basis points (2.50%) per annum, (d)
with respect to any Eurodollar Rate Loan that is made under the
Tranche A Commitments, 250 basis points (2.50%) per annum, (e) with
respect to any Eurodollar Rate Loan that is made under the Tranche
B Commitments, 350 basis points (3.50%) per annum and (f) with
respect to any Eurodollar Rate Loan that is made under the Tranche
C Commitments, 350 basis points (3.50%) per annum.
"Asset Disposition" means the disposition of the following, whether
by sale, lease, transfer, loss, damage, destruction, condemnation
or otherwise: (a) any of the stock or equity interest owned
directly or indirectly by Magma in any of its Subsidiaries or (b)
any or all of the assets of Magma or any of its Subsidiaries, but
excluding Ordinary Course Lease and Royalty Restructuring
Transactions.
"Assignee" has the meaning ascribed thereto in Section 8.11.
"Assignment and Acceptance Agreement" means an assignment and
acceptance agreement, in compliance with Section 8.11 and
substantially in the form of Exhibit A hereto.
"Available Amounts" means, at any date of determination, on a
cumulative basis measured from the Closing Date through the date of
determination, (x) all Retained Cash Flow Amounts, minus (y) all
amounts expended by Magma pursuant to the provisions of clauses (i)
through (v) of Section 2.11 and minus (z) any loss recognized on
the sale or other disposition of the securities listed in Schedule
1.11.
"Banks" means the banks and other financial institutions signatory
hereto in their capacity as Banks, and any Assignees hereafter
added as Banks under one or more Assignment and Acceptance
Agreements pursuant to Section 8.11.
"Banking Day" means (a) a day on which banks are not required or
authorized to close in the city in which the Agency Office or any
Applicable Lending Office is located, and, in matters relating to
the determination of a Eurodollar Rate or Interest Period, a day on
which the London interbank market deals in Dollar deposits, and (b)
with respect to a day on which a Notice of Borrowing is to be given
to Agent at the Agency Office or on which notifications or other
documents are to be received by, or an action is required of Agent
at the Agency Office pursuant to the provisions of this Agreement,
a day on which banks are not required or authorized to close in the
city in which the Agency Office is located.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy," as amended from time to time, or any successor
statute.
"Base Rate" means a fluctuating rate per annum which is at all
times equal to the higher of (a) the rate per annum announced by
Credit Suisse (New York Branch) from time to time as its base
lending rate for commercial loans in Dollars in the United States
or (b) the rate quoted by Credit Suisse (New York Branch), at
approximately 11:00 a.m. New York City time, to dealers in the New
York federal funds market for overnight offering of Dollars by
Credit Suisse (New York Branch) for deposit, plus a margin of 0.50
percentage points, the Base Rate to change as and when such rates
change. The base lending rate is not necessarily the lowest rate
of interest charged by Credit Suisse in connection with extensions
of credit.
"Base Rate Loan" means any Loan bearing interest as provided in
Section 2.3(a).
"Blocked Account Agreements" means the separate Blocked Account
Agreements each dated as of the Closing Date, by the Persons listed
on Schedule 1.8 in favor of Borrower substantially in the form of
Exhibit S.
"BN Geothermal" means BN Geothermal, Inc., a Delaware corporation.
"Borrower Common Stock" means the Common Stock, par value $0.0675,
of Borrower.
"Borrower Meeting" means the special meeting of stockholders of
Borrower held on February 10, 1995 for the purpose of considering
and taking all actions necessary to consummate the Merger.
"Borrower Pledge Agreement" means the Pledge and Security Agreement
dated as of the Closing Date by Borrower in favor of Agent
substantially in the form of Exhibit B hereto.
"BRPU Award" means the order of the CPUC dated June 22, 1994
(confirmed on December 21, 1994), pursuant to which Magma was
awarded an aggregate of 163 megawatts for sale to Southern
California Edison Company and San Diego Gas & Electric Company,
with in-service dates in 1997 and 1998.
"BRPU Distributions" means (i) dividends and distributions made to
Magma by any BRPU Subsidiary in respect of the revenues and cash
flows from the BRPU Project and (ii) all other distributions in
respect of the BRPU Award or the BRPU Project other than (x) the
net proceeds of the sale of the BRPU Award or any payments received
upon any termination of the BRPU Award, in each case to the extent
such proceeds or payments are in excess of the amount of funds
advanced by the Borrower or one of its other Subsidiaries (other
than Magma and its Subsidiaries) in connection with the development
of the BRPU Project ("Advanced Amounts") or (y) an amount equal to
the net equity value of such BRPU Subsidiary over the Advanced
Amounts in connection with the distribution of the proceeds of any
sale of the BRPU Project.
"BRPU Project" means any Project developed in connection with the
BRPU Award.
"BRPU Subsidiary" shall mean any indirect wholly-owned Subsidiary
of Magma which is formed to develop, own, construct and/or operate
a BRPU Project and in respect of which (or the obligations of
which) neither Magma nor any other Subsidiary of Magma has any
obligations or liability (direct, indirect or contingent), all the
equity of which is advanced by Borrower (or one of its
Subsidiaries, other than Magma or any Subsidiary of Magma), and
none of the obligations of which are recourse to Magma or any other
Magma Subsidiary (other than another BRPU Subsidiary) or any of
their respective properties (other than the property and assets of
any BRPU Subsidiary).
"Capital Expenditures" means, without duplication, for any period,
the aggregate of all expenditures on a consolidated basis including
deposits (whether paid in cash or property or accrued as
liabilities and including the aggregate amount of all principal
payments due for the entire term of all capital leases which are
required to be capitalized on the balance sheet) made by Magma and
its Subsidiaries that, in conformity with GAAP, are required to be
included in the property, plant, or equipment, or similar fixed
asset account. Notwithstanding the foregoing, Capital Expenditures
shall not include expenditures funded from the following: (a) the
Alto Peak Pre-Funded Equity Amount, (b) the Fish Lake Pre-Funded
Equity Amount, (c) the Malitbog Pre-Funded Equity Amount, (d) the
pH Modification Expenditure Amount and (e) any Net Proceeds of
Asset Dispositions reinvested pursuant to Section 2.2(d).
"Casecnan Project" means a prospective 140 (gross) megawatt
Philippine hydroelectric project of Borrower.
"Cash Balance" means, for any date of determination, the amount of
unrestricted and uncommitted cash and Cash Equivalents on deposit
in the Concentration Account.
"Cash Equivalents" means any of the following: (i) securities
issued or directly and fully guaranteed or insured by the United
States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States of
America is pledged in support thereof) with a maturity date not
more than one year from the date of acquisition, (ii) time deposits
and certificates of deposit of any commercial bank organized in the
United States of America having capital and surplus in excess of
$500,000,000 or any commercial bank organized under the laws of any
other country having total assets in excess of $500,000,000 with a
maturity date not more than one year from the date of acquisition,
(iii) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clauses (i) or
(iv) that were entered into with any bank meeting the
qualifications set forth in clause (ii) or another financial
institution of national reputation acceptable to Agent, (iv)
commercial paper issued by (a) the parent corporation of any
commercial bank organized in the United States of America having
capital and surplus in excess of $500,000,000 or any commercial
bank organized under the laws of any other country having total
assets in excess of $500,000,000, and (b) others having one of the
two highest ratings obtainable from either S&P or Moody's (or, if
at any time neither S&P nor Moody's may be rating such obligations,
then from another nationally recognized rating service acceptable
to Agent) and in each case maturing within 270 days from the date
of acquisition, (v) overnight bank deposits and bankers'
acceptances at any commercial bank organized in the United States
of America having capital and surplus in excess of $500,000,000 or
any commercial bank organized under the laws of any other country
having total assets in excess of $500,000,000, (vi) deposits
available for withdrawal on demand with any commercial bank
organized in the United States of America having capital and
surplus in excess of $500,000,000 or any commercial bank organized
under the laws of any other country having total assets in excess
of $500,000,000, (vii) investments in money market funds
substantially all of whose assets comprise securities of the types
described in clauses (i) through (v), (viii) money market preferred
stock having one of the two highest ratings obtainable from either
S&P or Moody's (or, if at any time neither S&P nor Moody's may be
rating such obligations, then from another nationally recognized
rating service acceptable to Agent) and (ix) the securities set
forth on Schedule 1.11.
"Cash Flow Available for Loan Debt Service" means, for any period,
the sum of the following: (a) all amounts deposited in the
Concentration Account during such period derived from the ordinary
course operations (including net interest income) of Magma and its
Subsidiaries and from earnings realized from investment of funds
held in the Concentration Account; provided, however, that the
foregoing shall not include revenues received in respect of
operating and maintenance payments made or to be made for the Magma
Projects, and revenues received in respect of brine fees or other
land use payments to the extent of payments required to be made as
royalty or lease payments to third parties, plus (b) gains on the
sale or other disposition of securities and other investments held
n the Concentration Account, minus (c) losses recognized on the
sale or other disposition of securities and other investments held
in the Concentration Account, minus (d) all operating expenses of
Magma and its Subsidiaries (other than Project Owners) for such
period; provided, however, that the foregoing shall not include
operating and maintenance payments made or to be made for the Magma
Projects, and brine fees and other land use payments made as
royalty or lease payments to third parties, to the extent that
revenues in respect thereof were excluded from the calculation of
amounts under clause (a) above pursuant to the proviso thereto,
minus (e) total Capital Expenditures of Magma and its Subsidiaries
(other than Project Owners) excluding (A) Capital Expenditures made
pursuant to Section 2.11 and (B) Capital Expenditures to the extent
financed by third parties other than Magma and its Subsidiaries,
for such period on a consolidated basis; and minus (f) debt
service during such period on Debt of Magma (other than the Loans
and any refinancing thereof). "Cash Management Agreement" means
that certain Cash Management Agreement dated as of the Closing Date
among Magma and certain of its Subsidiaries, in form and substance
satisfactory to Agent.
"CE Acquisition" means CE Acquisition Company, Inc., a Delaware
corporation and a wholly-owned subsidiary of Borrower.
"CE Acquisition Credit Agreement" means that certain Credit
Agreement dated as of the Closing Date between Borrower and CE
Acquisition in form and substance satisfactory to Agent, with the
obligation of CE Acquisition thereunder to be assumed by Magma
after the Merger by an instrument of assumption in form and
substance satisfactory to Agent.
"CE Acquisition Credit Documents" means the CE Acquisition Credit
Agreement, the CE Acquisition Secured Term Note, the Security
Documents and any certificates, opinions, warranties and
representations and other documents required to be delivered
thereunder.
"CE Acquisition Secured Term Note" means, collectively, the Secured
Term Notes made by CE Acquisition in favor of Borrower and in an
aggregate principal amount equal to the aggregate amount of the
Loans made on the Closing Date, substantially in the form of
Exhibit C hereto, which Secured Term Note shall be assumed by Magma
after the Merger by an instrument of assumption in form and
substance satisfactory to Agent.
"CECI Undertaking Agreement" means the Undertaking Agreement dated
as of the Closing Date by and among Borrower, Magma and Agent (for
itself and for the benefit of the Banks), in form and substance
satisfactory to Agent.
"Change of Control" means that (a) a Person (together with any
affiliates of such Person or Persons otherwise associated with such
person) or a "group" within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934 (the "1934 Act") is or becomes the
beneficial owner (as defined under Rule 13(d) of the 1934 Act),
directly or indirectly, of shares of stock of Borrower entitling
such person to exercise 35% or more of the total voting power of
all classes of stock of Borrower entitled to vote in the election
of directors (a "35% Control Interest"), other than any of the
Kiewit Entities, (b) in circumstances where clause (a) is not
applicable, both (i) a Person (together with any affiliates of such
Person or Persons otherwise associated with such person) or a
"group" within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934 (the "1934 Act") is or becomes the beneficial
owner (as defined under Rule 13(d) of the 1934 Act), directly or
indirectly, of shares of stock of Borrower entitling such person to
exercise 25% or more of the total voting power of all classes of
stock of Borrower entitled to vote in election of directors (a "25%
Control Interest"), other than any Person or group which on the
date hereof holds a 25% Control Interest and (ii) the Kiewit
Entities do not own an equal or greater percentage of the total
voting power of all classes of stock of Borrower entitled to vote
in the election of directors owned by such Person, (c) Borrower
ceases to own, at any time after the Merger, 100% of the
outstanding capital stock of Magma or (d) Magma shall cease to own
the ownership interest percentage it currently owns, directly or
indirectly, in each of the Project Owners.
"Closing Date" means the date on which the first Loan under any
Commitment is made.
"Collateral" means, collectively: (a) the Magma Shares, (b) the
CE Acquisition Secured Term Note, (c) all capital stock and other
property pledged pursuant to the Security Documents; (d) all
"collateral" as defined in the Security Documents; (e) all real
property mortgaged pursuant to the Security Documents; and (f) any
property or interest provided in addition to or in substitution for
any of the foregoing.
"Commitment" means, as to any Bank, the amounts set forth opposite
such Bank's name as its Tranche A Commitment, Tranche B Commitment
or Tranche C Commitment on the Commitment Schedule, subject to
adjustment for the effect of any one or more Assignment and
Acceptance Agreements to which such Bank may be a party.
"Commitment Schedule" means the schedule attached as Schedule 1.1
hereto.
"Compliance Certificate" means a certificate of, and duly executed
by, a Responsible Officer of Borrower in the form of Exhibit D
hereto.
"Concentration Account" means the special depository account
maintained by Magma at Credit Suisse, New York, New York (Account
No. 368725-01) into which, among other things, distributions to
Magma or any of its Subsidiaries from each Project Owner shall be
deposited in accordance with the Cash Management Agreement.
"Contingent Obligations", as applied to any Person, means any
direct or indirect liability, contingent or otherwise, of that
Person with respect to (i) any direct or indirect guaranty,
endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse
or sale with recourse by such Person of the obligation of another
Person, (ii) any obligation to make take-or-pay or similar payments
if required regardless of nonperformance by any other party or
parties to an agreement, and (iii) any liability of such Person for
the obligations of another Person through any agreement to
purchase, repurchase or otherwise acquire such obligation or any
property constituting security therefor, to provide funds for the
payment or discharge of such obligation or to maintain the
solvency, financial condition or any balance sheet item or level of
income of another Person (but excluding in any such case surety,
bid, operating and performance guaranties or similar instruments or
obligations incurred in the ordinary course of business). The
amount of any Contingent Obligation shall be equal to the amount of
the obligation so guaranteed or otherwise supported or, if not a
fixed and determined amount, the maximum amount so guaranteed.
"Control" (including the terms "controlling," "controlled by" and
"under common control with") means the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a Person whether through the ownership
of voting securities, by contract, or otherwise.
"CPUC" means the California Public Utilities Commission or any
successor thereto.
"Credit Documents" means this Agreement, the Notes, the instrument
pursuant to which Magma assumes the obligations of CE Acquisition
under the CE Acquisition Credit Documents, any Assignment and
Acceptance Agreements, the Security Documents, the CECI Undertaking
Agreement and any certificates, opinions, warranties and
representations and other documents required to be delivered
pursuant to Section 3.1 or 5.1(h) or delivered pursuant to or in
connection with any one or more of the foregoing and expressly
designated by Agent as a "Credit Document" at the time of delivery
hereunder.
"Debt" means (i) indebtedness for borrowed money, (ii)
obligations to pay the deferred purchase price of property or
services, (iii) obligations as lessee under leases which shall
have been or are required to be, in accordance with GAAP, recorded
as capital leases, (iv) obligations evidenced by bonds,
debentures, notes, or equivalent instruments, (v) reimbursement
obligations in respect of drawings made or available under letters
of credit, (vi) obligations under direct or indirect guaranties in
respect of, and obligations (contingent or otherwise) to purchase
or otherwise acquire, or otherwise to assure a creditor against
loss in respect of, obligations of others of the kinds referred to
in clauses (i) through (v) above (but excluding surety, bid,
operating and performance guarantees or similar instruments or
obligations incurred in the ordinary course of business), (vii)
withdrawal liability incurred by Borrower or any ERISA Affiliate
under ERISA to any Multiemployer Plan which is required to be
reserved for, reflected or disclosed in financial statements
prepared in accordance with GAAP and (viii) without duplication of
any of the foregoing, the items listed in the definition of "Debt"
in Section 101 of the Indenture.
"Debt Service Coverage Ratio" means, for any period, Cash Flow
Available for Loan Debt Service divided by Loan Debt Service. A
sample calculation of the Debt Service Coverage Ratio is contained
in Schedule 1.3.
"Default" means any event, occurrence, condition, act or omission
which with the giving of notice, the passage of time or both would
constitute an Event of Default.
"Directive" means any Law, and any directive, guideline or
requirement of any governmental authority (whether or not having
the force of law).
"Dollar" and "$" means the lawful currency of the United States of
America (and references to dollar amounts in Articles IV, V and VI
shall also include the equivalent thereof in any foreign currency).
"EBITDA" means, without duplication, for any period, the following,
each calculated for such period: (a) Net Income, plus (b) any
provision for income and franchise taxes included in the
determination of Net Income, minus (c) any benefit from income and
franchise taxes included in the determination of Net Income, plus
(d) Interest Expense deducted in the determination of Net Income,
plus (e) amortization and depreciation deducted in determining Net
Income, plus (f) extraordinary losses included in Net Income,
minus (g) extraordinary gains included in Net Income, and plus (h)
other non-operating charges deducted in determining Net Income.
"Effective Time" means the later of the time of (i) filing of the
Merger Agreement or a Certificate of Merger relating to the Merger
with the Secretary of State of Delaware, in such form as required
by, and executed in accordance with the relevant provisions of, the
General Corporation Law of Delaware and (ii) filing of the Merger
Agreement or a Certificate of Merger relating to the Merger with
the Secretary of State of Nevada, in such form as required by, and
executed in accordance with the relevant provisions of, the General
Corporation Law of Nevada.
"Elmore" means the 38 (gross) megawatt California geothermal
project owned by Elmore, L.P., a California limited partnership.
"Employee Benefit Plan" means any employee benefit plan (other than
a Multiemployer Plan) within the meaning of Section 3(3) of ERISA
which (i) is maintained for, or on behalf of, its current or
former employees, officers or directors by Borrower or any ERISA
Affiliate or (ii) has at any time within the preceding six years
been maintained for, or on behalf of, its current or former
employees, officers or directors by Borrower or any current or
former ERISA Affiliate.
"Environmental Laws" means any Law imposing liability or standards
of conduct concerning, or otherwise relating to, pollution, waste
disposal, industrial hygiene, occupational health and safety, the
manufacture, use, handling or release of Hazardous Materials or the
protection of human health, plant life or animal life, natural
resources or the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Affiliate" means, as applied to Borrower, any Person who is
a member of a group which is under common control with Borrower,
who together with Borrower is treated as a single employer within
the meaning of Section 414(b), (c), (m) or (o) of the IRC or
Section 4001(b) of ERISA.
"Eurocurrencv Liabilities" has the meaning specified in Regulation
D promulgated by the Board of Governors of the Federal Reserve
System, as in effect from time to time.
"Eurodollar Rate" means, for each Interest Period for each
Eurodollar Rate Loan, the rate of interest per annum (based on a
year of 360 days and calculated on actual days elapsed) equal at
all times during such Interest Period to the quotient (rounded
upward, if necessary, to the nearest one-sixteenth of one percent
(0.0625%)) of (i) the rate of interest determined by Agent to be
the arithmetic average (rounded upward, if necessary, to the next
higher 1/100 of 1%) of the rates at which deposits in Dollars are
offered by Reference Banks to prime banks in the London interbank
market at 11:00 a.m. (London time) two Banking Days before the
first day of such Interest Period for a period equal to such
Interest Period and in an amount as to each Reference Bank
substantially equal to the Eurodollar Rate Loan of such Reference
Bank divided by (ii) a percentage equal to 100% minus the
Eurodollar Rate Reserve Percentage for such Interest Period.
"Eurodollar Rate Loan" means any Loan bearing interest as provided
in Section 2.3(b).
"Eurodollar Rate Reserve Percentage" for each Interest Period for
each Eurodollar Rate Loan means the highest reserve percentage
applicable during such Interest Period under regulations issued
from time to time by the Board of Governors of the Federal Reserve
System or any successor for determining the maximum reserve
requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement), with respect
to liabilities or assets consisting of or including Eurocurrency
Liabilities having a term equal to such Interest Period.
"Event of Default" has the meaning specified in Section 6.1.
"EWG" has the meaning ascribed thereto in Section 4.1(bb).
"Excess Cash Flow" means, for any period, Cash Flow Available for
Loan Debt Service for such period, plus, losses recognized on the
sale or other disposition of the securities listed on Schedule 1.1
for such period, minus Loan Debt Service for such period and minus
revenues from Special Transactions to the extent included in Cash
Flow Available for Loan Debt Service for such period. A sample
calculation of Excess Cash Flow is contained in Schedule 1.6.
"Excess Cash Flow Debt Service Coverage Ratio" means, with respect
to the following periods, the ratio set forth opposite such period
which is determined by dividing the Cash Flow Available for Loan
Debt Service for such period by Loan Debt Service for such period:
Fiscal YearRatio
1995 1.30 to 1
1996 1.30 to 1
1997 1.30 to 1
1998 1.30 to 1
1999 1.35 to 1
2000 and each fiscal 1.40 to 1
year thereafter
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest one-hundredth
(1/100th) of one percent (1%)), equal to the weighted average of
the rates of 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 Banking Day, for
the next preceding Banking Day) by the Federal Reserve Bank of New
York, or if such rate is not so published for any day which is a
Banking Day, the average of the quotations for such day on such
transactions received by Agent from three (3) federal funds brokers
of recognized standing selected by Agent.
"Fees" has the meaning ascribed thereto in Section 2.5.
"FERC" means the Federal Energy Regulatory Commission or any
successor thereto.
"Final Maturity Date" means October 31, 2002; provided, however,
that if the outstanding principal amount of the Loans, interest
thereon and other amounts payable hereunder shall be due and
payable sooner pursuant to Section 6.1 or otherwise, then the Final
Maturity Date shall be such earlier date that such amounts are due
and payable.
"Financed Magma Projects" means Malitbog, Salton Sea I, Salton Sea
II, Salton Sea III, Elmore, Leathers and Hoch and Alto Peak and
Fish Lake, if the construction thereof is financed.
"Financial Closing" means, as to any Project, the date on which all
funding (debt and equity) necessary to complete such Project has
been committed by reliable sources, and actual funding from such
sources has commenced.
"Fish Lake" means the capacity expansion of 36 megawatts at Magma's
Salton Sea project in connection with a 16 megawatt Interim
Standard Offer No. 4 contract originally assigned to Magma's
geothermal resources at Fish Lake, Nevada, and in connection with
a 20 megawatt expansion option under a negotiated contract that was
acquired as part of Magma's acquisition of Union Oil Company of
California's Salton Sea geothermal assets in March 1993.
"Fish Lake Pre-Funded Equity Amount" means the sum of $6,941,000
deposited with Agent representing funds to be available, subject to
Section 2.2(h), for application to Magma's equity commitment for
Fish Lake.
"FPA" has the meaning ascribed thereto in Section 4.1(bb).
"Funded Debt" means, for any period, the balance of all Debt (other
than trade payables) of Magma and its Subsidiaries outstanding on
the last day of such period.
"GAAP" means United States generally accepted accounting
principles.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranty Agreements" means the Guaranty Agreements, each dated as
of the Closing Date, by the Persons listed on Schedule 1.10 in
favor of Borrower substantially in the form of Exhibit I.
"Hazardous Materials" means any asbestos, flammables, volatile
hydrocarbons, industrial solvents, explosive or radioactive
materials, hazardous wastes, toxic substances or related materials
including, without limitation, substances defined as "hazardous
substances," "hazardous materials," "contaminants," "pollutants,"
"hazardous wastes" or "toxic substances" (A) in (i) the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act, 42 U.S.C. Section 9601 et seq., (ii) the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et
seq., (iii) the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq., (iv) the Federal Water Pollution Control
Act, as amended, 33 U.S.C. Section 1251 et seq., (v) the Clean Air
Act, 33 U.S.C. Section 7401 et seq., (vi) the Toxic Substances
Control Act, 15 U.S.C. Section 2601 et seq., (vii) the Safe
Drinking Water Act, 42 U.S.C. Section 300f et seq., (viii)
applicable foreign, state or local law, or (ix) the rules, orders
or regulations adopted or proposed or in the publications
promulgated pursuant to said laws; or (B) in any reported decision
of a foreign, state or federal court.
"Hoch" means the 38 (gross) megawatt California geothermal project
owned by Del Ranch, L.P., a California limited partnership.
"Indenture" means the Indenture dated as of March 24, 1994 between
Borrower and IBJ Schroder Bank & Trust Company, relating to
Borrower's 10-1/4% Senior Discount Notes due 2004 in the aggregate
amount of $529,640,000, as in effect on the date hereof, a copy of
which is attached hereto as Exhibit E.
"Information Statement" means the joint prospectus/information
statement of Magma and Borrower mailed on February 1, 1995, to the
stockholders of Magma and Borrower in connection with the Merger.
"Interest Coverage Ratio" means, for any period, (a) EBITDA,
divided by (b) Interest Expense. A sample calculation of the
Interest Coverage Ratio is contained in Section 1.4.
"Interest Expense" means, without duplication, for any period, the
aggregate of all interest expenses of Magma and its Subsidiaries to
the extent included in the calculation of Net Income for such
period as determined in accordance with GAAP.
"Interest Period" means, for each Loan, the period commencing on
the date of such Loan and ending on the last day of the period
selected by Borrower with respect to Loans made to it pursuant to
the provisions of Section 2.1. The duration of each such Interest
Period shall be (i) in the case of a Eurodollar Rate Loan, 1, 2, 3
or 6 months (or such other period as may be requested by Borrower
and which Agent reasonably determines is available), and (ii) in
the case of a Base Rate Loan, any period that does not extend
beyond the Final Maturity Date; provided, however, that:
(i) Borrower may not select any Interest Period which ends after
the then existing Final Maturity Date;
(ii) whenever the last day of any Interest Period would otherwise
occur on a day other than a Banking Day, the last day of such
Interest Period shall be extended to occur on the next succeeding
Banking Day; provided, however, that if such extension would cause
the last day of such Interest Period to occur in the next following
month, the last day of such Interest Period shall occur on the next
preceding Banking Day; and
(iii) whenever the first day of any Interest Period occurs on a
day of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of
months in such Interest Period, such Interest Period shall end on
the last Banking Day of such succeeding calendar month.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or
other similar agreement or arrangement designed to protect Borrower
or any of its Subsidiaries against fluctuations in interest rates.
"Investment" in any Person means (i) any loan or advance to such
Person, (ii) any purchase or other acquisition of any capital
stock, warrants, rights, options, obligations or other securities
of such Person, (iii) any capital contribution to such Person, (iv)
any other investment in such Person or (v) without duplication
ofany of the foregoing, any of the items listed in the definition
of "Investment" in Section 101 of the Indenture.
"IRC" means the Internal Revenue Code of 1986, as amended from time
to time.
"Kiewit Entities" means Kiewit Energy Company, a Delaware
corporation, and any other Subsidiary or Affiliate of Peter Kiewit
Sons' Inc., a Delaware corporation, Kiewit Construction Group Inc.,
a Delaware corporation, or Kiewit Diversified Group, Inc., a
Delaware corporation.
"Laws" means all federal, state, local or foreign laws, rules,
regulations and treaties, all judgments, awards, orders, writs,
injunctions or decrees issued by any federal, state, local or
foreign authority, court, tribunal, agency or other governmental
authority, or by any arbitrator, all permits, licenses, approvals,
franchises, notices, authorizations and similar filings, by or with
any federal, state, local or foreign governmental authority and all
consent decrees or regulatory agreements with any federal, state,
local or foreign governmental authority.
"Leathers" means the 38 (gross) megawatt California geothermal
project owned by Leathers, L.P., a California limited partnership.
"Leverage Ratio" means, as of any date of determination, Funded
Debt, divided by EBITDA for the twelve month period ending on the
date of determination. A sample calculation of the Leverage Ratio
is contained in Schedule 1.7.
"Leyte" means Leyte Power Capital Corporation, a Delaware
corporation.
"Leyte General Partner Pledge Agreement" means the General Partner
Pledge Agreement to be delivered pursuant to Section 2.8(b)
substantially in the form of Exhibit H.
"Liens" means any lien, mortgage, security interest, pledge,
encumbrance, charge, conditional sale or other title retention
arrangement, or any undertaking or arrangement with respect to
property or rights (including a "negative pledge") which has the
practical effect of preventing the grant of a security interest or
lien securing the Obligations.
"Loan" means a Tranche A Loan, a Tranche B Loan or a Tranche C
Loan.
"Loan Debt Service" means, for any period, the sum of (a) Interest
Expense on the Loans, plus (b) regularly scheduled principal
payments on the Loans (as adjusted after taking into account any
mandatory or voluntary prepayments of the Loans).
"Magma" means Magma Power Company, a Nevada corporation and, after
giving effect to the Merger, the corporation that survives the
Merger.
"Magma Limited Partner Pledge Agreement" means the Limited Partner
Pledge Agreement dated as of the Closing Date between Magma and
Borrower substantially in the form of Exhibit F.
"Magma Netherlands" means Magma Netherlands, B.V., a Netherlands
corporation.
"Magma Pledge Agreement" means the Pledge Agreement dated as of the
Closing Date by Magma in favor of CECI substantially in the form of
Exhibit G.
"Magma Project Credit Agreements" means the financing documents set
forth on Schedule 1.2.
"Magma Project Documents" means any Project Document relating to
any of the Magma Projects in effect on the date hereof (or as
amended in accordance with the provisions of this Agreement) or, in
the case of Fish Lake and Alto Peak, approved by Agent.
"Magma Projects" means Hoch, Elmore, Leathers, Vulcan, Salton Sea
I, Salton Sea II, Salton Sea III, Malitbog, Alto Peak and Fish
Lake.
"Magma Shares" means the Common Stock, par value $0.10 per share,
of Magma.
"Majority Banks" means:
(a) As of any time before the Closing Date, Banks holding
Commitments which collectively constitute more than 50% of the
aggregate amount of all Commitments; and
(b) As of any time on or after the Closing Date, Banks whose total
outstanding Loans exceed 50% of the total outstanding Loans of all
Banks.
"Malitbog" means the 231 (gross) megawatt Philippine geothermal
project of Magma currently under construction.
"Malitbog Pre-Funded Equity Amount" means the sum of $30,396,808
deposited with Agent representing funds to be available for
application to Magma's equity commitment for Malitbog.
"Material Adverse Effect" means (a) subject to the proviso to this
definition, any change or effect, when taken together with all
other adverse changes and effects relating to Borrower and its
Subsidiaries, that is materially adverse to the business,
operations, properties, condition (financial or otherwise), assets
or liabilities (including, without limitation, contingent
liabilities) of Borrower and its Subsidiaries, taken as a whole, or
(b) subject to the proviso to this definition, any change or
effect, when taken together with all other adverse changes and
effects relating to CE Acquisition and its Subsidiaries, that is
materially adverse to the business, operations, properties,
condition (financial or otherwise), assets or liabilities
(including, without limitation, contingent liabilities) of CE
Acquisition and its Subsidiaries, taken as a whole, or (c) the
material impairment of the ability of Borrower to perform its
obligations under any Credit Document to which it is a party or the
material impairment of the ability of Agent or any Bank to enforce
or collect any of the Obligations, or (d) the material impairment
of the ability of CE Acquisition to perform its obligations under
the CE Acquisition Secured Term Note, or (e) the impairment of the
perfection of the security interest in, or the ability of the Agent
to realize upon, any part of the Collateral; provided, however,
that solely for the purpose of determining whether Borrower has
satisfied the conditions set forth in Section 3.1, the occurrence
of any or all of the following shall not constitute a "Material
Adverse Effect" under clause (a) or (b) of this definition: (i) a
failure to receive any contract or award for which Magma or any of
its Subsidiaries has submitted or will submit a competitive bid,
(ii) the loss of any contract or arrangement (whether by
revocation, lapse or invalidity) with respect to a project that
Magma or any of its Subsidiaries has under development, other than
any such loss related to Malitbog, Fish Lake or Alto Peak and other
than any such loss resulting from a breach by Magma of the
representations and warranties set forth in Sections 4.22 and 4.23
of the Merger Agreement, (iii) an unfavorable ruling by the
California Public Utilities Commission with respect to Magma's
California plants under the pending Biennial Resource Plan Update,
(iv) a loss of, or unfavorable ruling in, Magma's litigation
against Southern California Edison Company pending as of December
5, 1994, but only insofar as such litigation seeks to increase the
energy price payable for deliveries over nameplate capacity and not
insofar as any unfavorable ruling affects the validity or
enforceability of any contract subject thereto or the
enforceability of any material term thereof, (v) a failure to close
any public or private financing of any project in which Magma or
any of its Subsidiaries owns a direct or indirect interest (other
than as a result of a loss with respect to Malitbog or Fish Lake or
as a result of a breach by Magma of the representations and
warranties set forth in Section 4.22 or 4.23 of the Merger
Agreement) or (vi) the termination of the employment of any
employee, officer, director or consultant of Magma or any of its
Subsidiaries.
"Material Subsidiary" means (i) Magma, (ii) CE Acquisition, (iii)
each Subsidiary of Magma that owns an equity interest in a Project
Owner, (iv) each Project Owner and (v) with respect to Borrower,
any Person which is (x) a Subsidiary of Borrower which holds any
material amount of capital stock of Borrower, or (y) a Subsidiary
of Borrower which is a "significant subsidiary", with respect to
Borrower as defined in Section 1-02(v) of Regulation S-X of the
Securities and Exchange Commission (17 C.F.R. U 210.1-02(v)) as the
same may be from time to time amended or the equivalent definition
under any successor or replacement regulation of the Securities and
Exchange Commission; provided, however, that no Person which has at
any time been a Material Subsidiary by reason of the foregoing
shall cease to be such a Material Subsidiary for the purposes
hereof unless Borrower has theretofore given Agent notice of such
change in status.
"Maturity Date" means with respect to each Eurodollar Rate Loan,
the last day of the Interest Period applicable to such Eurodollar
Rate Loan.
"Merger" means the merger between CE Acquisition and Magma pursuant
to the Merger Agreement.
"Merger Agreement" means the Merger Agreement dated as of December
5, 1994 among Borrower, CE Acquisition and Magma.
"Merger Documents" means the Merger Agreement and any certificates,
opinions, warranties and representations, assignments, guaranties,
and other documents heretofore, now or hereafter delivered pursuant
to or in connection with any one or more of the foregoing.
"Mission Entity" means (i) with respect to Leathers, San Felipe
Energy Company, a California corporation, (ii) with respect to
Hoch, Conejo Energy Company, a California corporation, (iii) with
respect to Elmore, Niguel Energy Company, a California corporation
and (iv) with respect to Vulcan, BN Geothermal.
"MLC" means Magma Land Company I, a Nevada corporation.
"MOC" means Magma Operating Company, a Nevada corporation.
"Moody's" means Moody's Investors Services, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which Borrower or any ERISA
Affiliate is making, or is obligated to make, contributions or has
made, or has been obligated to make, contributions within the
preceding six years.
"Net Income" means, for any period, the net income (or loss) of
Magma and its Subsidiaries on a consolidated basis after provision
for or benefit from income and franchise taxes determined in
accordance with GAAP, but excluding: (a) the income (or loss) of
any Person (other than Subsidiaries of Magma) in which Magma or any
of its Subsidiaries has an ownership interest unless received by
Magma or its Subsidiary in a cash distribution; and (b) the income
(or loss) of any Person accrued prior to the date it became a
Subsidiary of Magma or is merged into or consolidated with Magma or
that Person's assets are acquired by Magma or any of its
Subsidiaries.
"Net Proceeds" means proceeds received by Borrower or Magma,
including any proceeds derived directly or indirectly from any
Subsidiary of Magma (other than a BRPU Subsidiary so long as no
Default or Event of Default has occurred and is continuing), in
cash from any Asset Disposition (including payments under notes or
other debt securities received in connection with any Asset
Disposition and insurance proceeds and awards of compensation)
outside the ordinary course of business (excluding proceeds
permitted pursuant to Section 2.2(d) to be used for replacement
assets), net of (a) the costs of such sale, lease, transfer or
other disposition and (b) amounts applied to the repayment of Debt
(other than the Obligations) secured by a lien, security interest,
claim or encumbrance on, or which is otherwise required, pursuant
to the terms of any Magma Project Document, to be paid out of the
proceeds of the sale of, the asset or property disposed; provided
that notwithstanding the foregoing, in the case of any Project
Owner or any Magma Project that is not directly or indirectly
wholly-owned by Magma, the Net Proceeds received by Magma, such
Project Owner or such Magma Project in connection with an Asset
Disposition shall be an amount equal to the amount thereof which is
then currently available for distribution to Magma.
"Net Worth" means stockholders' equity as it would appear on a
consolidated balance sheet at such time for Magma and its
Subsidiaries prepared in accordance with GAAP. All non-cash
adjustments in the carrying value of Magma's or any of its
Subsidiaries' assets, liabilities or equity accounts resulting from
the application of purchase accounting principles (A.P.B. 16 and/or
17 and EITF 88-16 and FASB 109) by reason of the Merger made during
the first 12 months after the Closing Date shall be excluded from
the calculation of Net Worth to determine whether Borrower has
complied with Section 5.3(c) but nothing herein is intended to
restrict the adjustments to assets and liabilities, on a net
aggregate basis, set forth in the Pro Forma Balance Sheet delivered
pursuant to Section 3.1(bb).
"Non-Financed Magma Project" means at any time and from time to
time any Magma Project that, at such time, is not, or whose Project
Owner is not, party to or subject to any credit, loan or similar
financing document or arrangement (including any refinancings,
restructurings, extensions, amendments or renewals thereof)
pursuant to which such Project is financed by a third party that is
not an Affiliate of Borrower or Magma for a material amount and
pursuant to which covenants and events of default customary to
project financings apply.
"Note" shall mean any promissory notes issued by Borrower pursuant
to Section 2.4(i) hereof, substantially in the form annexed as
Exhibit J hereto, appropriately completed in conformity herewith.
"Notice of Borrowing" means a request by Borrower for Loans on the
Closing Date pursuant to Section 2.1 and in the form of Exhibit K
hereto.
"Notice of Conversion or Continuation" means a request by Borrower
for the conversion of one Type of Loan to another Type of Loan or
the continuation of a Eurodollar Rate Loan pursuant to Section
2.1(g) and in the form of Exhibit L hereto.
"Obligations" means any and all obligations, indebtedness and
liability of Borrower of every kind and character, owed to Agent or
the Banks, arising directly or indirectly out of or in connection
with the Credit Documents (including any modifications, amendments,
extensions, restatements or renewals of, supplements to, or
substitutions or replacements for, any one or more of the Credit
Documents), and including all such obligations, indebtedness and
liability, whether for principal, interest (including interest
that, but for the filing of a petition in bankruptcy with respect
to Borrower, would have accrued on the Obligations), reimbursement
obligations, fees, costs, expenses, premiums, charges, attorneys'
fees, indemnity, whether heretofore, now, or hereafter made,
incurred or created, whether voluntarily or involuntarily and
however arising, whether or not due, whether absolute or
contingent, liquidated or unliquidated, or determined or
undetermined, and whether Borrower may be liable individually or
jointly with others.
"Offer to Purchase" means the Offer to Purchase of Borrower and CE
Acquisition dated December 9, 1994 relating to the Acquisition.
"Ordinary Course Lease and Royalty Restructuring Transactions"
means transactions in the ordinary course of business (consistent
with past practices) involving lease and royalty interest
restructurings with respect to MLC's leasehold interests, mineral
rights and other real estate interests which are of a type
permitted by the Magma Project Documents relating to Salton Sea I,
Salton Sea II or Salton Sea III and, if applicable, as hereinafter
approved by the existing project finance lenders to the Project
Owner of Salton Sea I, Salton Sea II and Salton Sea III.
"Pension Plan" means any Employee Benefit Plan which is subject to
the provisions of Title IV of ERISA or Section 412 of the IRC and
which (a) is maintained for employees of Borrower or any of its
ERISA Affiliates or (b) has at any time within the preceding six
years been maintained for the employees of Borrower or any of its
current or former ERISA Affiliates.
"Permitted Liens" means any Liens that (i) do not in any way affect
or relate to the Collateral or the Agent's security interest in the
Collateral and (ii) are:
(a) Liens for taxes, or other governmental levies and assessments
that (x) do not arise under ERISA or Environmental Laws and (y) are
not yet due or which are being contested in good faith and by
appropriate proceedings if adequate reserves with respect thereto
are available to Magma and reasonably acceptable to Agent or are
maintained on the books of Magma or any of its Subsidiaries in
accordance with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 60 days or
which are being contested in good faith and by appropriate
proceedings;
(c) pledges or deposits in connection with workmen's compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of
a like nature incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions (including landmarking
and zoning restrictions), royalties, leasehold and fee interest
covenants and other similar encumbrances incurred or imposed in the
ordinary course of business which are not of the nature of a Lien
for security purposes and which do not in any case materially
detract from the value of the property subject thereto or interfere
with the ordinary conduct of the business of Magma or any of its
Subsidiaries;
(f) Liens incidental to the conduct of its business or the
ownership of its property and assets which do not relate to Debt,
do not arise under ERISA, the IRC or Environmental Laws and which
do not materially detract from the value of its property or its
assets or materially impair the use thereof in the operation of its
business;
(g) zoning and landmarking restrictions;
(h) Liens arising under the Security Documents;
(i) Liens arising from judgments, provided that (1) the execution
or other enforcement of such Lien is effectively stayed, (2) the
judgment secured thereby is being actively appealed in good faith
and by appropriate proceedings, (3) adequate book reserves shall
have been established and maintained and shall exist with respect
thereto, (4) such Lien shall have been in existence no more than
sixty days from the date of its creation, and (5) the aggregate
amount so secured shall not at any time exceed $10,000,000;
(j) Purchase Money Liens, if, after giving effect thereto and any
concurrent transactions: (1) each such Purchase Money Lien secures
Debt in an amount not exceeding the lesser of (x) the cost of
acquisition or construction of the property subject to such Lien or
(y) the fair market value of such property at the time of
acquisition or construction, and (2) no Default or Event of Default
would exist as a result of incurring the Debt secured by such
Purchase Money Lien;
(k) Liens existing on property of an entity at the time such
property is acquired by the Borrower or a Subsidiary, or at the
time such entity becomes a Subsidiary, provided such Liens (x) are
not created, incurred or assumed in contemplation of such
acquisition or of such entity becoming a Subsidiary and (y) do not
extend to any other property of Borrower or any of its
Subsidiaries;
(l) Liens created in the ordinary course of business of Magma and
its Subsidiaries in connection with the development, construction,
operation, financing or refinancing of a Permitted Facility (as
defined in the Indenture) and which are consistent with Section
1012(iii)(B), (vii), (viii), (ix)(D) or (ix)(E) of the Indenture;
(m) Liens in effect on the date hereof on the assets of any
Subsidiary of Magma pursuant to any Magma Project Document, and any
refinancing, restructuring, extension or renewal thereof;
(n) Liens on the assets of Alto Peak or Fish Lake pursuant to any
Magma Project Document entered into in connection with the
financing, operation, construction or development of Alto Peak and
Fish Lake, respectively, in the case of Alto Peak and Fish Lake to
the extent that such activities are otherwise permitted by this
Agreement; and
(o) Liens on the assets of any BRPU Project granted in connection
with the financing, construction, operation or development of such
BRPU Project.
"Permitted Payments" means payments by Magma and its Subsidiaries
in respect of (i) the Support Services Agreement and (ii) dividends
to Borrower from BRPU Distributions so long as no Default or Event
of Default shall have occurred and is continuing.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"Person" means an individual, partnership, corporation (including
a business trust), joint stock company, trust, unincorporated
association, joint venture or other entity, or a government or any
political subdivision or agency thereof.
"pH Modification Expenditure Amount" means $4,500,000 to fund the
construction of pH modification improvements at Salton Sea I and
Salton Sea III.
"Plants" has the meaning ascribed thereto in Section 4.1(bb).
"Pro Forma Balance Sheets" means the unaudited consolidated balance
sheet of Borrower and the unaudited consolidated balance sheet of
Magma as of the Pro Forma Date after giving effect to the Merger
and the transactions contemplated hereby, prepared on a pro forma
basis by the chief financial officer of Borrower and Magma, as
appropriate, and shall be in form and substance satisfactory to
Agent.
"Pro Forma Date" means September 30, 1994 in the case of the Pro
Forma Balance Sheets required to be delivered pursuant to Section
3.1(bb) and means the Closing Date in the case of the Pro Forma
Balance Sheets required to be delivered pursuant to Section 5.1(s).
"Project" means (i) an electric power or thermal energy generation
or cogeneration facility or related facilities (including residual
waste management and facilities that use thermal energy from a
cogeneration facility), and its or their related electric power
transmission, fuel supply and fuel transportation facilities,
together with its or their related power supply, thermal energy and
fuel contracts and other facilities, services or goods that are
ancillary, incidental, necessary or reasonably related to the
marketing, development, construction, management, servicing,
ownership or operation of the foregoing, owned by a utility or
otherwise, as well as other contractual arrangements with
customers, suppliers and contractors or (ii) any infrastructure
facilities related to (A) the treatment of water for municipal and
other uses, (B) the treatment and/or management of waste water, (C)
the treatment, management and/or remediation of waste, pollution
and/or potential pollutants and (D) any other process or
environmental purpose.
"Project Documents" means any credit or loan agreements, Interest
Rate Agreements, equity contribution agreements, security
agreements, guaranties, letters of credit, mortgages, pledge
agreements, other financing and security agreements and documents,
energy conversion agreements, performance undertakings, accession
undertakings, construction contracts, power purchase agreements,
turnkey contracts, ground leases, transportation agreements,
management agreements, partnership agreements, supply contracts,
performance bonds, insurance policies, consent agreements,
governmental approvals and any other document or agreement relating
to any Projects.
"Project Owners" means, collectively, (i) Del Ranch, Ltd., a
California limited partnership, (ii) Elmore, L.P., a California
limited partnership, (iii) Leathers, L.P., a California limited
partnership, (iv) Vulcan/BN Geothermal Power Company, a Nevada
general partnership, (v) Salton Sea Brine Processing L.P., a
California limited partnership, (vi) Salton Sea Power Generation
L.P., a California limited partnership, (vii) Visayas Geothermal
Power Company, a Philippines general partnership, (viii) the Person
that owns and operates Alto Peak, (ix) the Person that owns and
operates Fish Lake and (xi) any successor or permitted assigns of
any of the foregoing.
"Projections" means the projections of the financial performance of
Magma and the Magma Projects setting forth, among other things, the
projected revenues, debt service and other expenses of Magma and
the Magma Projects for the fiscal years 1995 through 2002 and
delivered to Agent pursuant to Section 3.1(bb), such projections to
be satisfactory to Agent in its sole discretion.
"PUHCA" means the Public Utility Holding Company Act of 1935, as
amended.
"Purchase Money Lien" means any Lien on property acquired or
constructed by Magma or any of its Subsidiaries after the Closing
Date, which Lien secures all or a portion of the related purchase
price or construction costs of such property, provided that such
Lien (1) is created within 180 days of such acquisition or
construction, (2) encumbers only property purchased or constructed
after the Closing Date and acquired or constructed with the
proceeds of the Debt secured thereby, and (3) such Lien does not
extend to any other property.
"QF" has the meaning ascribed thereto in Section 4.1(bb).
"Reference Banks" means, initially, the New York City office of
Credit Suisse and, at the request of Agent, shall include up to two
other Banks that deal in Dollar deposits in the London interbank
market that may be selected from time to time by the Agent with
Borrower's written consent (which consent shall not be unreasonably
withheld) or any substitute Reference Bank for the foregoing (or
any of them) from time to time selected by Agent with Borrower's
written consent (which consent shall not be unreasonably withheld).
"Registration Statement" means collectively (i) the registration
statement filed with the SEC by Borrower on Form S-4 under the
Securities Act for the purpose of registering the shares of
Borrower Common Stock to be issued in connection with the Merger
and (ii) the registration statement filed with the SEC by Borrower
on Form S-3 under the Securities Act for the purpose of registering
shares of Borrower Common Stock to be issued to the public in
connection with the Merger.
"Reportable Event" has the meaning assigned to that term in Title
IV of ERISA.
"Requirement of Law" means as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation,
or any award, order, judgment or determination of an arbitrator or
a court or other Governmental Authority, in each case applicable to
or binding upon such Person or any of its property or to which such
Person or any of its property is subject.
"Responsible Officer" means, as to any Person, the president, chief
executive officer, chief operating officer, chief financial
officer, vice president, chief corporate officer, treasurer, or
controller of such Person.
"Restricted Junior Payment" means: (a) any dividend or other
distribution, direct or indirect, on account of any shares of any
class of stock of Magma or any of its Subsidiaries now or hereafter
outstanding, except a dividend payable solely in shares of that
class of stock to the holders of that class which is pledged to
Agent on behalf of the Banks; (b) any redemption, conversion,
exchange, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of
any class of stock of Magma or any of its Subsidiaries now or
hereafter outstanding; (c) any voluntary prepayment of principal
of, premium, if any, or interest on (however so affected, including
by way of redemption conversion, exchange, purchase, retirement,
defeasance, sinking fund or similar payment with respect to), any
subordinated Debt of Magma or any of its Subsidiaries; and (d) any
payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of
any class of stock of Magma or any of its Subsidiaries now or
hereafter outstanding.
"Retained Cash Flow Amounts" means, at any date of determination,
all amounts received and retained by Magma after the date of this
Agreement in respect of (i) 25% of Excess Cash Flow pursuant to the
provisions of Section 2.2(e) and (ii) 25% of proceeds of Special
Transactions pursuant to the provisions of Section 2.2(j).
"S&P" means Standard & Poor's Corporation.
"Salton Sea I" means the 10 (gross) megawatt California geothermal
project directly and indirectly owned by Magma.
"Salton Sea II" means the 20 (gross) megawatt California geothermal
project directly and indirectly owned by Magma.
"Salton Sea III" means the 50 (gross) megawatt California
geothermal project directly and indirectly owned by Magma.
"Scheduled Installment" means, with respect to each scheduled
repayment date for the Tranche A Loans, the Tranche B Loans and the
Tranche C Loans set forth in Section 2.2(a), the amount set forth
opposite such date.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Security Agreements" means the separate Security Agreements each
dated as of the Closing Date by Magma and the Subsidiaries of Magma
listed on Schedule 1.9 in favor of Borrower substantially in the
form of Exhibit Q or Exhibit Q-1, as applicable.
"Security Documents" means the Borrower Pledge Agreement, the Magma
Pledge Agreement, the Guaranty Agreements, the Leyte General
Partner Pledge Agreement (subject to execution and delivery in
accordance with Section 2.8(b)), the Vulcan General Partner Pledge
Agreement (subject to execution and delivery in accordance with
Section 2.8(b)), the Magma Limited Partner Pledge Agreement
(subject to execution and delivery in accordance with Section
2.8(b)), the Security Agreements, the Blocked Account Agreements,
the Account Pledge Agreements, the Cash Management Agreement and
all financing statements, certificates, guaranties, assignments,
security agreements, mortgages, deeds of trusts, instruments and
agreements executed by or on behalf of Magma or any of its
Subsidiaries to guaranty or provide collateral security with
respect to the Obligations including, without limitation, any
security agreement or pledge agreement, any guaranty of the
Obligations, any mortgage, and all instruments, documents and
agreements executed pursuant to the terms of the foregoing.
"Small Power QF" has the meaning ascribed thereto in Section
4.1(bb).
"Special Transactions" means the receipt by Magma or any of its
Subsidiaries of non-operational cash flows from non-recurring
transactions (exclusive of any transaction contemplated by Sections
2.2(d) and 2.2(f) and any transaction involving a BRPU
Distribution).
"Solvent" and "Solvency" mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the
property of such Person is greater than the total amount of
liabilities, including, without limitation, contingent liabilities,
of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person does not intend to,
and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities
mature and (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute an
unreasonably small capital.
"Subsidiary" means as to any Person, any now existing or hereafter
organized corporation, partnership, limited liability company,
unincorporated association, joint venture or other organization in
which such Person, directly or indirectly, owns beneficially or of
record equity securities (or securities currently convertible into
equity securities) which give such Person directly or indirectly,
upon conversion, exercise or otherwise, an interest of 50 percent
or more of any of the profits, losses, capital or property of, or
ordinary voting power in respect of, such corporation, partnership,
joint venture or other organization.
"Subsidiary Guaranty Agreements" means the separate Guaranty
Agreements each dated as of the Closing Date, by the Subsidiaries
of Magma listed on Schedule 1.10 in favor of Borrower substantially
in the form of Exhibit I.
"Support Services Agreement" means the Support Services Agreement
dated as of the Closing Date between Borrower and Magma relating to
the provision of certain services by Borrower to Magma and Magma's
Subsidiaries, in form and substance satisfactory to the Agent.
"Tax Indemnity Agreement" means the Tax Indemnity Agreement dated
as of the Closing Date among Borrower, Magma and Magma's
Subsidiaries substantially in the form of Exhibit M.
"Tender Offer" means the offer by CE Acquisition to acquire
12,400,000 Magma Shares as described in the Offer to Purchase.
"Tender Offer Conditions" means the conditions to the Acquisition
as set forth in the Offer to Purchase.
"Tender Offer Credit Facility" means the $245,600,000 credit
facility provided to Borrower to consummate the Acquisition
pursuant to that certain Credit Agreement dated as of December 21,
1994 by and among Borrower, the banks and other financial
institutions parties thereto and Credit Suisse, New York Branch, as
Agent.
"Tender Offer Documents" means the Offer to Purchase and all other
documents filed by or on behalf of Borrower or its Affiliates with
the Securities and Exchange Commission with respect to the Tender
Offer.
"Termination Date" means September 30, 1995.
"Termination Event" means: (a) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder other
than those events as to which the 30-day notice requirement has
been waived under subsections 13, 14, 18, 19 or 20 of PBGC
Regulation U 2615 and the regulations issued thereunder; or (b) the
withdrawal of Borrower or any ERISA Affiliate from a Pension Plan
during a plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA; or (c) the termination of
a Pension Plan, the filing of a notice of intent to terminate a
Pension Plan or the treatment of a Pension Plan amendment as a
termination under Section 4041 of ERISA; or (d) the institution of
proceedings to terminate, or the appointment of a trustee with
respect to, any Pension Plan by the PBGC; or (e) any other event or
condition which would constitute grounds under Section 4042(a)(1),
(2) or (3) of ERISA, and any other event or condition which has
been identified to Borrower or any ERISA Affiliate by notice from
the PBGC which would constitute grounds under Section 4042(a)(4) of
ERISA, for the termination of, or the appointment of a trustee to
administer, any Pension Plan; or (f) the partial or complete
withdrawal of Borrower or any ERISA Affiliate from a Multiemployer
Plan; or (g) the imposition of a Lien pursuant to Section 412 of
the IRC or Section 302 of ERISA; or (h) any event or condition
which results in the reorganization or insolvency of a
Multiemployer Plan under Sections 4241 or 4245 of ERISA; or (i) any
event or condition which results in the termination of a
Multiemployer Plan under Section 4041A of ERISA or the institution
by the PBGC of proceedings to terminate a Multiemployer Plan under
Section 4042 of ERISA.
"Total Exposed Debt" has the meaning ascribed thereto in Section
5.1(o).
"Tranche A Commitment" means, with respect to each Bank, the
Commitment of such Bank to make Tranche A Loans set forth on the
Commitment Schedule.
"Tranche A Loan" means any loan made pursuant to Section 2.1(a) and
designated by Borrower as a Tranche A Loan in a Notice of Borrowing
or any loan made pursuant to Section 2.1(a) and deemed a Tranche A
Loan pursuant to Section 2.1(b).
"Tranche B Commitment" means, with respect to each Bank, the
Commitment of such Bank to make Tranche B Loans set forth on the
Commitment Schedule.
"Tranche B Loan" means any loan made pursuant to Section 2.1(a) and
designated by Borrower as a Tranche B Loan in a Notice of Borrowing
or any loan made pursuant to Section 2.1(a) and deemed a Tranche B
Loan pursuant to Section 2.1(b).
"Tranche C Commitment" means, with respect to the applicable Banks,
the Commitment of such Bank to make Tranche C Loans set forth on
the Commitment Schedule.
"Tranche C Loan" means any loan made pursuant to Section 2.1(a) and
designated by Borrower as a Tranche C Loan in a Notice of Borrowing
or any loan made pursuant to Section 2.1(a) and deemed a Tranche C
Loan pursuant to Section 2.1(b).
"Type" means, with respect to any Loan, a Base Rate Loan or a
Eurodollar Rate Loan.
"UCC" means the Uniform Commercial Code of the State of New York,
as in effect from time to time.
"Vulcan" means the 34(gross) megawatt California geothermal project
owned by Vulcan/BN Geothermal Power Company, a Nevada general
partnership.
"Vulcan General Partner Pledge Agreement" means the General Partner
Pledge Agreement dated as of the Closing Date between Vulcan Power
and Borrower substantially in the form of Exhibit H .
"Vulcan Power" means Vulcan Power Company, a Nevada corporation.
Section 1.2 Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including" and the
words "to" and "until" mean "to but excluding".
Section 1.3 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
GAAP. Notwithstanding anything herein to the contrary, in
connection with determining whether Borrower is in compliance with
the financial covenants set forth in Section 5.3, no BRPU
Subsidiary or its assets, revenues or liabilities shall be included
in such determination or the calculations in connection therewith.
Section 1.4 No Presumption Against Any Party. Neither this
Agreement nor any uncertainty or ambiguity herein shall be
construed or resolved against any Bank or Borrower, whether under
any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by each of the parties and their
counsel and shall be construed and interpreted according to the
ordinary meaning of the words used so as to fairly accomplish the
purposes and intentions of all parties hereto.
Section 1.5 Use of Certain Terms. Unless the context of this
Agreement requires otherwise, the plural includes the singular, the
singular includes the plural, the part includes the whole,
"including" is not limiting, and "or" has the inclusive meaning of
the phrase "and/or." The words "hereof," "herein," "hereby,"
"hereunder," and other similar terms of this Agreement refer to
this Agreement as a whole and not exclusively to any particular
provision of this Agreement.
Section 1.6 Headings and References. Section and other headings
are for reference only, and shall not affect the interpretation or
meaning of any provision of this Agreement. Unless otherwise
provided, references to Articles, Sections, Schedules, and Exhibits
shall be deemed references to Articles, Sections, Schedules and
Exhibits of this Agreement. References to this Agreement and any
other Credit Document include this Agreement and other Credit
Documents as the same may be modified, amended, restated or
supplemented from time to time pursuant to the provisions hereof or
thereof. A reference to a Person includes the successors and
assigns of such Person, but such successors and assigns shall have
rights under this Agreement only to the extent permitted hereby.
Section 1.7 Independence of Provisions. All agreements and
covenants hereunder and under the other Credit Documents shall be
given independent effect such that if a particular action or
condition is prohibited by the terms of any such agreement or
covenant, the fact that such action or condition would be permitted
within the limitations of another agreement or covenant shall not
be construed as allowing such action to be taken or condition to
exist.
ARTICLE II
Amounts and Terms of the Loans
Section 2.1 The Loans.
(a) The Loan Commitments. Each Bank severally agrees on the terms
and conditions set forth in this Agreement (including those of
Article III hereof), to make Tranche A Loans, Tranche B Loans and
Tranche C Loans on the Closing Date at the Applicable Lending
Office in an amount equal to its Tranche A Commitment, Tranche B
Commitment and Tranche C Commitment, respectively; provided that
each Bank's commitment to make such Tranche A Loans, Tranche B
Loans and Tranche C Loans shall expire on the Termination Date
unless the Closing Date shall have occurred prior to such date.
Each Tranche A Loan, Tranche B Loan and Tranche C Loan shall be
made by the Banks ratably according to each Bank's Tranche A
Commitment, Tranche B Commitment and Tranche C Commitment,
respectively. All Loans shall be funded in one drawing on the
Closing Date and shall be made available to Borrower at the Agency
Office. The Loans and any amount repaid may not be reborrowed.
(b) Borrowing Mechanics. Each Eurodollar Rate Loan made on the
Closing Date shall be in an aggregate minimum amount of $10,000,000
and integral multiples of $1,000,000 in excess of such amount. The
Loans shall be made on a Notice of Borrowing, given not later than
11:00 a.m. (local time in the city where the Agency Office is
situated) on the third Banking Day prior to the date of the
proposed Loans by Borrower to Agent at the Agency Office, and Agent
shall give to each Bank prompt notice thereof by telex, cable or
telefacsimile, but in any event, such notice shall be received by
each Bank prior to 1:00 p.m. New York City time on the date Agent
receives such Notice of Borrowing in compliance with this Section
2.1(b). Such Notice of Borrowing shall be by telex, cable,
telefacsimile, or telephone confirmed promptly in writing, but in
no event shall such written confirmation be received by Agent later
than 11:00 a.m. (local time in the city where the Agency Office is
situated) on the Banking Day prior to the date the Loans are to be
made. Such Notice of Borrowing shall specify (i) the date of the
Loans, (ii) the amount of each Loan, (iii) whether the Loans are
Tranche A Loans, Tranche B Loans or Tranche C Loans, (iv) the
requested interest rate option under Section 2.3(a) or (b) and (v)
the Interest Period in the case of Eurodollar Rate Loans. In the
event Borrower fails to specify an Interest Period for any
Eurodollar Rate Loan, such Interest Period shall be for one month.
In the event Borrower fails to specify the interest rate option for
any Loan, such Loan shall be deemed a Base Rate Loan. Each Bank
shall, before 2:00 p.m. (local time in the city the Agency Office
is situated) on the date the Loans are to be made, make available
to Agent at the Agency Office in same day funds in Dollars for
credit to the Applicable Agent's Account, such Bank's ratable
portion of the Loans and, unless Agent has been notified by a Bank
that the applicable conditions set forth in Article III have not
been fulfilled, Agent will make such funds available to Borrower at
the Agency Office on such date; provided, however, in no event
shall a Bank be required to make funds available to Agent prior to
11:00 a.m. New York City time on the date the Loans are to be made.
(c) Notice of Borrowing Irrevocable. A Notice of Borrowing shall
be irrevocable and binding on Borrower. Borrower shall indemnify
each Bank against any loss, cost or expense incurred by such Bank
as a result of any failure to fulfill on or before the date
specified in the Notice of Borrowing, the applicable conditions set
forth in Article III, including, without limitation, any loss
(including loss of anticipated profits), cost or expense incurred
by reason of the liquidation or reemployment of deposits or other
funds acquired by such Bank to fund the Loans to be made by such
Bank when the Loans, as a result of such failure, are not made on
such date.
(d) Agent's Reliance on Bank Loans. Unless Agent shall have
received notice from a Bank prior to the date of the Loans, that
such Bank will not make available to Agent such Bank's ratable
portion of the Loans, Agent may assume that such Bank has made such
portion available to Agent on the date of the Loans in accordance
with this Section 2.1, and Agent may, in reliance upon such
assumption, make available to Borrower on such date a corresponding
amount. If and to the extent that such Bank shall not have so made
such ratable portion available to Agent, such Bank and Borrower
severally agree to repay to Agent forthwith on demand such
corresponding amount advanced to Borrower, together with interest
thereon, for each day from the date such amount is made available
to Borrower until the date such amount is repaid to Agent, at (i)
in the case of Borrower, the interest rate applicable at the time
to the Loans and (ii) in the case of such Bank, the Federal Funds
Rate. If such Bank shall repay such amount to Agent, such
repayment shall constitute such Bank's ratable portion of the Loans
for purposes of this Agreement.
(e) Failure to Make Loan. The failure of any Bank to make the
Loans to be made by it shall not relieve any other Bank of its
obligation, if any, hereunder to make its Loan, on the date of the
Loans, but no Bank shall be responsible for the failure of any
other Bank to make the Loans to be made by such other Bank on the
date of the Loans.
(f) Notice of Interest Rate and Interest Period. Agent shall give
prompt notice to Borrower and the Banks of the applicable interest
rate for such Loan determined by Agent pursuant to Section 2.3
hereof as soon as reasonably practicable after such rate is
determined by Agent and in no event later than three Banking Days
prior to making such Loan in the case of any Eurodollar Rate Loan.
Such notice shall also provide the Interest Period for any
Eurodollar Rate Loan.
(g) Voluntary Conversion or Continuation of Loans. (i) Subject
to the provisions of Sections 2.03(d) and (e), Borrower shall have
the option to (1) convert at any time all or any part of Base Rate
Loans equal to $10,000,000 and integral multiples of $1,000,000 in
excess of that amount to Eurodollar Rate Loans, (2) convert at any
time all or any part of Eurodollar Rate Loans to Base Rate Loans
(so long as in the case of a partial conversion the remaining
amount of the Eurodollar Rate Loan is in an aggregate minimum
amount of $10,000,000 and integral multiples of $1,000,000 in
excess of such amount), or (3) upon the expiration of any Interest
Period applicable to a Eurodollar Rate Loan, to continue all or any
portion of such Eurodollar Rate Loan equal to $10,000,000 and
integral multiples of $1,000,000 in excess of that amount as a
Eurodollar Rate Loan and the succeeding Interest Period(s) of such
continued Eurodollar Rate Loan shall commence on the Maturity Date
of the Eurodollar Rate Loan to be continued; provided that no
outstanding Eurodollar Rate Loan may be continued or be converted
when any Event of Default has occurred and is continuing or when
there is an occurrence of any condition or event which, with notice
or lapse of time or both, would constitute an Event of Default.
(ii) Borrower shall deliver a Notice of Conversion/Continuation to
the Agent no later than 1:00 p.m. (New York City time) at least
three (3) Banking Days in advance of the proposed
conversion/continuation date. A notice of Conversion/Continuation
shall specify: (1) the proposed conversion/continuation date
(which shall be a Banking Day); (2) the Type and amount of the Loan
to be converted or continued; and (3) in the case of a conversion
to, or a continuation of, a Eurodollar Rate Loan, the requested
Interest Period.
(iii) A Notice of Conversion/Continuation, requesting a conversion
to or continuation of a Eurodollar Rate Loan shall be irrevocable
once given, and Borrower shall be bound to convert or continue, as
applicable, in accordance therewith.
Section 2.2 Repayment.
(a) Scheduled Repayments. Borrower shall repay the principal
amount of the Tranche A Loans, the Tranche B Loans and the Tranche
C Loans on the dates and in the amounts set forth below:
Tranche A Loans
Tranche B Loans
Tranche C Loans
Date
Repayment
Amount
Date
Repayment
Amount
Date
Repayment
Amount
April 30, 1995 $8,000,000
April 30, 2001 $37,500,000
April 30, 2002 $37,500,000
October 31, 1995 $8,000,000
October 31, 2001 $37,500,000
October 31, 2002 $37,500,000
April 30, 1996 $11,000,000
October 31, 1996 $11,000,000
April 30, 1997 $27,500,000
October 31, 1997 $27,500,000
April 30, 1998 $46,500,000
October 31, 1998 $46,500,000
April 30, 1999 $41,500,000
October 31, 1999 $41,500,000
April 30, 2000 $40,500,000
October 31, 2000 $40,500,000
(b) Voluntary Prepayments. Upon at least one Banking Day's notice
to Agent by Borrower with respect to Base Rate Loans, and three
Banking Days' notice to Agent by Borrower with respect to
Eurodollar Rate Loans, stating the proposed date and aggregate
principal amount of the prepayment, Borrower may, and if such
notice is given Borrower shall, prepay in whole or in part the
outstanding principal amount of the Loans, together with all
accrued and unpaid interest on the principal amount being prepaid
through the date of prepayment, and any additional amounts owed by
Borrower pursuant to Section 2.3(c), provided that each partial
prepayment shall be in a minimum amount of $1,000,000. If such
prepayment is a partial prepayment of the outstanding amount of the
Loans, such prepayment shall be applied in accordance with Section
2.4(e), and if such prepayment is a prepayment of the entire
outstanding amount of the Loans, such prepayment shall be
accompanied by the prepayment of all other Obligations.
(c) Mandatory Prepayments from Dividends, Etc. The Loans shall be
prepaid by Borrower, together with all accrued and unpaid interest
through the date of prepayment and any additional amounts owed by
Borrower pursuant to Section 2.3(c), immediately upon the receipt
by Borrower from Magma of any dividends, loans, advances or other
distributions (other than Permitted Payments), or (without
duplication of other payments or prepayments required hereunder)
any principal payments to Borrower under the CE Acquisition Secured
Term Note (other than regularly scheduled payments of principal
consistent with the schedule of payments set forth in Section
2.2(a)), in an amount equal to 100% of the amount of such
dividends, loans, advances or other distributions or principal
payment under the CE Acquisition Secured Term Note, together with
accrued and unpaid interest on the principal amount being prepaid
through the date of prepayment and any additional amounts owed by
Borrower pursuant to Section 2.3(c). If such prepayment is a
partial prepayment of the outstanding amount of the Loans, such
prepayments shall be applied in accordance with Section 2.4(e), and
if such prepayment is a prepayment of the entire outstanding amount
of the Loans, such prepayment shall be accompanied by the
prepayment of all other Obligations.
(d) Prepayments from Asset Dispositions. Immediately upon receipt
by Borrower or any of its Subsidiaries of proceeds of any Asset
Disposition which are not covered by Section 2.2(j) or which are
not required to be paid to any Person or reinvested pursuant to any
Magma Project Document in effect on the date hereof, Borrower shall
prepay the Loans in an amount equal to the Net Proceeds of such
Asset Dispositions, together with all accrued and unpaid interest
on the principal amount being prepaid through the date of
prepayment and any additional amounts owed by Borrower pursuant to
Section 2.3(c). If such prepayment is a partial prepayment of the
outstanding amount of the Loans, such prepayments shall be applied
in accordance with Section 2.4(e), and if such prepayment is a
prepayment of the entire outstanding amount of the Loans, such
prepayment shall be accompanied by the prepayment of all other
Obligations. Notwithstanding the foregoing, in the event Borrower
has an accrued tax liability with respect to an Asset Disposition
or reasonably expects the proceeds of such Asset Disposition to be
reinvested within 180 days in productive assets then used or usable
in the business of Magma or any of Magma's Subsidiaries which used
the asset which was the subject of such Asset Disposition, then
Borrower shall deliver such proceeds to Agent to be held by Agent
in a cash collateral account bearing interest payable to Borrower.
Upon Borrower's request and after Agent has received sufficient
evidence of the application of such Net Proceeds, Agent shall
release such Net Proceeds to Borrower for payment of the accrued
tax liability or for reinvestment as described above. In the event
Borrower is not required to pay all or any portion of the accrued
tax liability or fails to reinvest such proceeds within 180 days,
Borrower authorizes and directs Agent to apply such amount as a
prepayment of the Loans in accordance with this Section 2.2(d).
Notwithstanding anything to the contrary herein contained, no
reinvestment of Net Proceeds derived from Special Transactions
required to be applied to the prepayment of the Loans shall be
permitted. Nothing contained in this Section 2.2(d) is intended to
supersede the other provisions of this Agreement pertaining to the
sale or acquisition of assets.
(e) Prepayments from Excess Cash Flow. No later than April 30,
1996, and no later than April 30 of each fiscal year of Borrower
thereafter, Borrower shall prepay the Loans, together with all
accrued and unpaid interest on the principal amount being prepaid
through the date of prepayment and any additional amounts owed by
Borrower pursuant to Section 2.3(c), in an amount equal to 75% of
Excess Cash Flow for the immediately preceding fiscal year
calculated on the basis of the audited financial statements for
such fiscal year delivered to Agent pursuant to Section 5.1(h)(ii).
The remaining 25% of Excess Cash Flow for such period shall be
retained by Magma and may be applied by Magma in accordance with
Section 2.11. If such prepayment is a partial prepayment of the
outstanding amount of the Loans, such prepayments shall be applied
in accordance with Section 2.4(e), and if such prepayment is a
prepayment of the entire outstanding amount of the Loans, such
prepayment shall be accompanied by the prepayment of all other
Obligations.
(f) Prepayments from Equity Offerings. Subject to the proviso to
this sentence, in the event that Magma issues capital stock or
other equity interests, no later than the third Banking Day
following the date of receipt of the proceeds from any sale of such
stock, Borrower shall prepay the Loans in an amount equal to such
proceeds, net of underwriting discounts and commissions and other
reasonable costs associated therewith, together with all accrued
and unpaid interest on the principal amount being prepaid through
the date of prepayment and any additional amounts owed by Borrower
pursuant to Section 2.3(c); provided that notwithstanding the
foregoing, Magma may not issue any capital stock except to
Borrower, which capital stock or other equity interest shall be
pledged to Agent as collateral securing the Obligations. If such
prepayment is a partial prepayment of the outstanding amount of the
Loans, such prepayments shall be applied in accordance with Section
2.4(e), and if such prepayment is a prepayment of the entire
outstanding amount of the Loans, any other Obligations then due and
payable.
(g) Prepayments from Refinancings of Debt of Magma and its
Subsidiaries. Immediately upon receipt by Magma or any of its
Subsidiaries of unrestricted and uncommitted proceeds from the
refinancing of any of its Debt (other than the Loans), Borrower
shall cause such proceeds (net of expenses) to be applied to the
prepayment of the Loans, together with all accrued and unpaid
interest on the principal amount being prepaid through the date of
prepayment and any additional amounts owed by Borrower pursuant to
Section 2.3(c). If such prepayment is a partial prepayment of the
outstanding amount of the Loans, such prepayment shall be applied
in accordance with Section 2.4(e), and if such prepayment is a
prepayment of the entire outstanding amount of the Loans, such
prepayment shall be accompanied by the payment of all other
Obligations.
(h) Prepayment from Pre-Funded Equity.
(i) If the Financial Closing for Fish Lake does not occur on or
before December 31, 1997, then no later than January 2, 1998
Borrower shall prepay the Loans in an amount equal to the Fish Lake
Pre-Funded Equity Amount, together with all accrued and unpaid
interest on the principal amount being prepaid through the date of
prepayment and any additional amounts owed by Borrower pursuant to
Section 2.3(c). If the Financial Closing for Alto Peak does not
occur on or before December 31, 1998, then no later than January 4,
1999 Borrower shall prepay the Loans in an amount equal to the Alto
Peak Pre-Funded Equity Amount, together with all accrued and unpaid
interest on the principal amount being prepaid through the date of
prepayment and any additional amounts owed by Borrower pursuant to
Section 2.3(c). If any of the foregoing prepayments is a partial
prepayment of the outstanding amount of the Loans, such prepayment
shall be applied in accordance with Section 2.4(e), and if such
prepayment is a prepayment of the entire outstanding amount of the
Loans, such prepayment shall be accompanied by the prepayment of
all other Obligations.
(ii) If Borrower or Magma decides prior to December 31, 1997 not to
develop Fish Lake, Borrower shall, promptly upon making such
decision, send Agent written notice thereof, and shall prepay the
Loans in an amount equal to the Fish Lake Pre-Funded Equity Amount
on the next regularly scheduled principal payment date, together
with all accrued and unpaid interest on the principal amount being
prepaid through the date of prepayment and any additional amounts
owed by Borrower pursuant to Section 2.3(c). If Borrower or Magma
decides prior to December 31, 1998 not to develop Alto Peak,
Borrower shall send Agent written notice thereof, and shall prepay
the Loans in an amount equal to the Alto Peak Pre-Funded Equity
Amount on the next regularly scheduled principal payment date,
together with all accrued and unpaid interest through the date of
prepayment and any additional amounts owed by Borrower pursuant to
Section 2.3(c). If any of the foregoing prepayments is a partial
prepayment of the outstanding amount of the Loans, such prepayment
shall be applied in accordance with Section 2.4(e), and if such
prepayment is a prepayment of the entire outstanding amount of the
Loans, such prepayment shall be accompanied by the prepayment of
all other Obligations.
(iii) If the amount of equity required to complete the construction
of Alto Peak or Fish lake is less than the Alto Peak Pre-Funded
Equity Amount or the Fish Lake Pre-Funded Equity Amount,
respectively, then upon the completion of the construction of Alto
Peak and Fish Lake, as applicable, Borrower shall prepay the Loans
in an amount equal to the excess of (x) the Alto Peak Pre-Funded
Equity Amount or the Fish Lake Pre-Funded Equity Amount, as the
case may be, over (y) the amount of equity actually required to
complete the construction of Alto Peak and Fish Lake, respectively,
together with all accrued and unpaid interest on the principal
amount being prepaid through the date of prepayment and any
additional amounts owed by Borrower pursuant to Section 2.3(c). If
any of the foregoing prepayment is a partial prepayment of the
outstanding amount of the Loans, such prepayment shall be applied
in accordance with Section 2.4(e), and if such prepayment is a
prepayment of the entire outstanding amount of the Loans, such
prepayment shall be accompanied by the prepayment of all other
Obligations.
(i) Prepayments from Refinancing of Tranche B and Tranche C Loans.
Borrower may refinance all or a portion of the Tranche B Loans and
Tranche C Loans provided that (i) the terms and conditions of such
refinancing shall be acceptable to the Banks holding the Tranche A
Loans, (ii) Borrower shall prepay the Tranche B Loans and Tranche
C Loans in an amount equal to the proceeds of any such refinancing
and (iii) the parties refinancing the Tranche B Loans and the
Tranche C Loans shall share ratably in the Collateral securing the
Obligations, and the terms thereof shall be satisfactory to the
Banks holding the Tranche A Loans and the parties refinancing the
Tranche B Loans and the Tranche C Loans. At the time of such
repayment, Borrower shall also pay accrued and unpaid interest on
the Tranche B Loans and Tranche C Loans through the date of
repayment and any additional amounts owned by Borrower to the
holders of the Tranche B Loans and Tranche C Loans pursuant to
Section 2.3(c). If such refinancing is a refinancing of the entire
outstanding amount of the Tranche B Loans and the Tranche C Loans,
Borrower shall also pay all other Obligations owed to the holders
of the Tranche B Loans and Tranche C Loans other than any amount
owed in respect of the Tranche A Loans held by such Persons.
(j) Prepayments from Special Transactions. Promptly upon receipt
by Borrower or Magma or any of its Subsidiaries of proceeds of any
Special Transactions (and if such proceeds are not currently
available for distribution to Magma in the case of receipt of such
proceeds by a Project Owner, promptly after such proceeds are so
available for distribution to Magma), Borrower shall prepay the
Loans in an amount equal to 75% of the amount of such proceeds,
together with all accrued and unpaid interest on the principal
amount being prepaid through the date of prepayment and any
additional amounts owed by Borrower pursuant to Section 2.3(c), and
the remaining 25% of such amount shall be retained by Magma and may
be applied by Magma in accordance with Section 2.11. If any such
prepayment is a partial prepayment of the outstanding amount of the
Loans, such prepayments shall be applied in accordance with Section
2.4(e), and if such prepayment is a prepayment of the entire
outstanding amount of the Loans, such prepayment shall be
accompanied by the prepayment of all other Obligations.
Section 2.3 Interest on Loans.
(a) Base Rate Loans. (i) Except to the extent that Borrower
shall have elected in the applicable Notice of Borrowing to pay
interest on any Loan for an Interest Period pursuant to Section
2.3(b), or (ii) to the extent that Eurodollar Rate Loans shall have
become unavailable or unlawful pursuant to Section 2.3(d) or (e),
and, (iii) in any case, from and after the Maturity Date of each
Eurodollar Rate Loan that has not been continued pursuant to
Section 2.1(g), Borrower shall pay interest on the unpaid principal
amount of each Loan made to Borrower, from the date of such Loan
until such principal amount is paid in full, at a fluctuating
interest rate per annum equal to the Base Rate plus the Applicable
Margin, together with, in each case, any additional interest rate
margin as shall be applicable under Section 2.3(f).
(b) Eurodollar Rate Loans. Borrower may, if no Event of Default
has occurred and is continuing and subject to the provisions of
this Section 2.3 (as of the date the Notice of Borrowing is
required to be given pursuant to Section 2.1(b) or as of the date
a Loan may be converted to or continued as a Eurodollar Rate Loan
pursuant to Section 2.1(g)), elect to pay interest on each Loan
made to Borrower during the Interest Period selected therefor in
the Notice of Borrowing or Notice of Conversion or Continuation at
a rate per annum equal to the sum of the Eurodollar Rate for such
Interest Period plus the Applicable Margin, by selecting the same
in the Notice of Borrowing or the Notice of Conversion or
Continuation, as applicable, together with, in each case, any
additional interest rate margin as shall be applicable under
Section 2.3(f); provided that at no time shall there be more than
six Interest Periods outstanding for all Eurodollar Rate Loans.
From and after the Maturity Date of each Interest Period for any
Eurodollar Rate Loan and until repaid, the unpaid principal balance
thereof shall automatically become, and bear interest as, a Base
Rate Loan (together with any additional interest rate margin as
shall be applicable under Section 2.3(f)) unless such Eurodollar
Rate Loan is continued pursuant to Section 2.1(g).
(c) Breakage Expenses.
(i) Subject to clause (ii) of this Section 2.3(c), if for any
reason and at any time or from time to time, including without
limitation voluntary or mandatory prepayment of principal or
payment of principal at any accelerated maturity, the outstanding
principal balance of any Eurodollar Rate Loan is reduced in whole
or in part prior to the Maturity Date of the applicable Interest
Period by reason of the reduction of any Loan, then, in addition to
accrued interest thereon, Borrower shall pay to the Applicable
Agent's Account for credit to each Bank for the account of the
Applicable Lending Office, on demand by such Bank, (x) the amount
by which the interest which would have accrued on the amount of
such principal reduction subject to such Interest Period until such
Maturity Date had such principal reduction not been made, exceeds
the interest obtained by such Bank in the reemployment of such
principal reduction for the balance of such Interest Period and (y)
any cancellation or similar fees incurred by or allocated to
lenders of funds borrowed by such Bank to carry the unpaid
principal sum thereof at the applicable Eurodollar Rate, and a
certificate as to such excess and fees submitted by such Bank to
Borrower shall, absent manifest error, be final and conclusive.
(ii) If Borrower elects to prepay a Eurodollar Rate Loan on a
day other than on the Maturity Date of such Eurodollar Rate Loan,
Borrower shall not be obligated for any amounts referred to in this
Section 2.3(c) relating to such Eurodollar Rate Loan if (x)
Borrower irrevocably deposits with Agent cash or securities issued
by the United States or a combination thereof in amounts (including
interest, but without consideration of any reinvestment of such
interest) and with maturities sufficient to pay and discharge on
such Maturity Date the principal of and interest on such Eurodollar
Rate Loan, (y) Borrower delivers to Agent a certificate from a
nationally recognized firm of independent accountants expressing
its opinion that such deposited cash and/or securities will provide
cash at such times and in such amounts as will be sufficient to pay
the principal of and interest on such Eurodollar Rate Loan due on
such Maturity Date, and (z) on such Maturity Date such cash and/or
securities have a value sufficient to pay in full the principal of
and interest on such Eurodollar Rate Loan.
(d) Eurodollar Rate Loans Not Available. In the event that prior
to the commencement of any Interest Period for any Eurodollar Rate
Loan, (x) Agent notifies Borrower and each Bank that (1) adequate
and fair means do not exist for Agent to ascertain the relevant
Eurodollar Rate, or (2) in the case of a Eurodollar Rate Loan, one
or more of the Reference Banks or Agent, as applicable, is not
offering deposits in Dollars in the relevant interbank market in
the amount, at the time, or for the Interest Period necessary
fairly and adequately to determine the relevant Eurodollar Rate, or
(y) Banks whose Loans will exceed 50% of all Loans at the
commencement of such Interest Period, notify Agent (and Agent shall
promptly notify all other Banks and Borrower) that the relevant
Eurodollar Rate will not adequately reflect the cost to the Banks
giving such notification of making or maintaining their Eurodollar
Rate Loans for such Interest Period, then, and in each such event,
(i) the obligation of the Banks to make such Eurodollar Rate Loans
shall be suspended, and (ii) all Loans made on or after notice of
such an event shall be Base Rate Loans for the balance of the
applicable Interest Period, and, until Agent shall notify Borrower
and the Banks that the circumstances specified in clause (x) or (y)
above no longer continue, further Loans must be Base Rate Loans;
provided that Agent shall make a good faith effort (and Borrower
agrees to reimburse Agent for all expenses incurred in connection
therewith) to identify possible assignees of any Bank described in
clause (y) above, and Borrower shall have the right to designate
such an assignee (which may be an Affiliate of Borrower) subject to
the consent of Agent, which consent shall not be unreasonably
withheld.
(e) Eurodollar Loans Unlawful. In the event that any Bank shall
have determined (which determination, absent manifest error, shall
be final and conclusive) that the continuation of any interest rate
based on the Eurodollar Rate, has become unlawful (or impracticable
by compliance by such Bank in good faith with any Directive) with
respect to a Commitment of such Bank, then, and in any such event,
effective upon notice by such Bank to Agent and Borrower and until
such notice is rescinded, no such Type of Loan shall be available
under such Commitment with respect to future Loans made by such
Bank and any such existing Eurodollar Rate Loan shall from and
after such notice, become a Base Rate Loan for the balance of the
Interest Period, and Borrower shall pay to such Bank, upon demand,
all amounts necessary to compensate such Bank in making such change
in interest rates, including any interest (without duplication) or
fees payable by such Bank to lenders of funds obtained by it in
order to make or maintain such Loan, and a certificate of such Bank
as to such interest, fees and other amounts to be conclusive absent
manifest error; provided, however, that (i) to the extent it may
lawfully do so without incurring any penalty or increased costs,
such Bank shall continue the existing Eurodollar Rate Loan until
the Maturity Date of the relevant Interest Period, and (ii) before
such termination, such Bank shall use reasonable efforts
(consistent with internal policies and applicable Directives) to
designate a different Applicable Lending Office if the making of
such designation would avoid such illegality and would not, in the
sole judgment of such Bank, be otherwise to its disadvantage in any
material respect; provided, further, that Agent shall make a good
faith effort (and Borrower agrees to reimburse Agent for all
expenses incurred in connection therewith) to identify possible
assignees of any Bank prevented from making Eurodollar Rate Loans
due to the foregoing provisions, and Borrower shall have the right
to designate such an assignee (which may be an Affiliate of
Borrower) subject to the consent of Agent, which consent shall not
be unreasonably withheld.
(f) Default Interest Rate. If an Event of Default has occurred,
then from and after the date of occurrence of such Event of
Default, and so long as such Event of Default continues, the rate
or rates of interest applicable to the then and any subsequent
outstanding Loans shall in all cases be increased to (x) for Base
Rate Loans, the Base Rate, plus the Applicable Margin, plus 200
basis points (2.0%) per annum, and (y) for Eurodollar Rate Loans,
the rate of interest in effect thereon at the time of the Event of
Default plus 200 basis points (2.0%) per annum until the end of the
then current Interest Period therefor and thereafter the Base Rate,
plus the Applicable Margin, plus 200 basis points (2.0%) per annum.
Other amounts payable by the Borrower hereunder that are not paid
when due (whether at stated maturity, by acceleration or otherwise)
shall accrue interest at a rate per annum during the period
commencing on the date due until such other amounts are paid in
full equal to the Base Rate, plus the Applicable Margin, plus 200
basis points (2.0%) per annum.
(g) Interest Payment Dates. Borrower shall pay accrued interest on
each Loan (without duplication), determined and calculated as
herein provided, as follows: interest accruing on each Loan is
payable on (i) the Maturity Date for an Interest Period for
Eurodollar Rate Loans, (ii) the last Banking Day of each March,
June, September and December, commencing with the first such
Banking Day following the making of any Loan, in the case of any
Base Rate Loan or Eurodollar Rate Loan, (iii) the date such Loan is
Converted pursuant to Section 2.1(g), or (iv) the Final Maturity
Date, if earlier; provided that interest accruing on and after the
Final Maturity Date shall be due daily.
Section 2.4 Payments and Computations.
(a) Payments to Applicable Agent's Account. Except as provided in
Section 2.7, Borrower shall pay all amounts due to Agent and Banks
hereunder and under any other Credit Document to which it is a
party, without condition or deduction for any counterclaim,
defense, recoupment or setoff, in Dollars and in same day funds
delivered to Agent not later than (i) 1:00 p.m. (local time in the
city where the Agency Office is situated) on the day when due by
deposit of such funds to the Applicable Agent's Account. Agent
will promptly thereafter cause to be distributed like funds
relating to the payment of principal, interest, or fees ratably
(other than amounts subject to Taxes pursuant to Section 2.7) to
the Banks for the account of their respective Applicable Lending
Offices, and like funds relating to the payment of any other amount
payable to any Bank to such Bank for the account of its Applicable
Lending Office to be applied in accordance with, and subject to,
the terms of this Agreement. Upon an Assignment and Acceptance
Agreement becoming effective as provided in Section 8.11 and
recording by Agent of the information contained therein in the
register maintained for purposes of this Agreement by Agent at its
Agency Office, from and after the effective date specified in such
Assignment and Acceptance Agreement, Agent shall make all payments
hereunder and under any other Credit Document in respect of the
interest assigned thereby to the Assignee thereunder, and the
parties to such Assignment and Acceptance Agreement shall make all
appropriate adjustments in such payments for periods prior to such
effective date directly between themselves.
(b) Setoff. Subject to the provisions of Section 2.9, Borrower
hereby authorizes each Bank, if and to the extent payment owing to
such Bank from Borrower is not made when due hereunder, to charge
from time to time against any or all of Borrower's accounts with
such Bank any amount so due.
(c) Interest Computations. (i) Computations of interest for the
Eurodollar Rate, and the Federal Funds Rate, shall be made by Agent
on the basis of a year of 360 days, (ii) computations of interest
for the Base Rate and computation of Fees shall be made by Agent on
the basis of a year of 365 or 366 days, as appropriate to reflect
the actual number of days in such year, and (iii) all computations
in every case shall be 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 determination by
Agent of an interest rate hereunder shall be conclusive and binding
for all purposes, absent manifest error.
(d) Agent's Reliance on Borrower Payments. Unless Agent shall have
received notice from Borrower prior to the date on which any
payment is due to a Bank hereunder that Borrower will not make such
payment in full, Agent may assume that Borrower has made such
payment in full to Agent on such date and Agent may, in reliance
upon such assumption, cause to be distributed to the Banks on such
due date an amount equal to the amount then due to such Banks. If
and to the extent Borrower shall not have so made such payment in
full to Agent, each Bank shall repay to 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 such Bank repays such amount to Agent, at
the Federal Funds Rate.
(e) Application of Payments. Subject to Section 2.2(i), amounts
received by Agent for application to the principal of any Loans
shall be applied to the pro rata payment of the remaining Scheduled
Installments of the Tranche A Loans, Tranche B Loans and Tranche C
Loans (except that prepayments pursuant to Section 2.2(e) and
Section 2.2(j) shall be applied as follows: until the Tranche A
Loans are paid in full, 70% of such amounts shall be applied to the
pro rata payment of the Tranche A Loans and 30% of such amounts
shall be applied to the pro rata payment of the Tranche B Loans and
the Tranche C Loans, and thereafter all such amounts shall be
applied to the pro rata payment of the Tranche B Loans and the
Tranche C Loans) (i) if received on or before the Final Maturity
Date (if not specified by Borrower or if received after the
occurrence and continuance of an Event of Default) first, to the
ratable payment of the outstanding Base Rate Loans, second, subject
to Section 2.3(c), to the payment of the outstanding Eurodollar
Rate Loans (applied to the Eurodollar Rate Loans designated by
Borrower), and (ii) if received after the Final Maturity Date to
the ratable payment of all the outstanding Loans, subject to
Section 2.3(c); provided, that if Borrower fails to designate which
Eurodollar Rate Loans to which payments are to be applied, Agent
shall apply such payment ratably to all outstanding Eurodollar Rate
Loans. In connection with prepayments pursuant to Section 2.2(d),
(e), (f), (g), (h) or (i), in lieu of immediately repaying the
Loans and the other amounts due as described therein, Borrower may
irrevocably deposit with Agent the proceeds of such prepayments,
and Agent shall apply such proceeds to the repayment of the Loans
and the other amounts due as described therein on the immediately
succeeding date on which interest on the Loans is due and payable,
and until such application, interest shall continue to accrue on
the amount to be repaid.
(f) Payments on Non-Banking Days. Whenever any payment hereunder
shall be stated to be due on a day other than a Banking Day, such
payment shall be made on the next succeeding Banking Day (except as
otherwise provided with respect to the determination of Interest
Periods), 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.
(g) Adjustments. If any Bank shall obtain any payment whether
voluntary, involuntary, through the exercise of any right of
setoff, or otherwise with respect to principal, interest, or fees
due under the Credit Documents, in excess of its ratable share of
payments on account of principal, interest, or such fees, as the
case may be, then due and owing to all Banks under the Credit
Documents, such Bank shall forthwith purchase from such other Banks
such participations in the principal, interest or such fees, as the
case may be, owing to them as shall be necessary to cause such
purchasing Bank to share the excess payment ratably with each of
the Banks; provided, however, that if all or any portion of such
excess payment is thereafter recovered from such Bank, such
purchase from such other Banks shall be rescinded and each such
other Bank shall repay to the purchasing Bank the purchase price to
the extent of such recovery, without interest. Borrower agrees
that any Bank purchasing a participation from another Bank pursuant
to this Section may, to the fullest extent permitted by law, and
subject to the provisions of Section 2.9, exercise all its rights
of payment (including the right of setoff) with respect to such
participation as fully as if such Bank were the direct creditor of
Borrower in the amount of such participation.
(h) Loan Register. The indebtedness of Borrower resulting from all
Loans hereunder shall be evidenced by the entries made in a
register maintained by Agent at the Agency Office; such register
shall record (i) the date of and amount of each Loan, the Type of
each Loan and the Interest Period applicable thereto from time to
time, (ii) the terms of each Assignment and Acceptance Agreement
delivered to and accepted by it, (iii) the amount of any principal
or interest due and payable or to become due and payable from
Borrower to each Bank, (iv) the amount of any sum received by Agent
from Borrower under any Credit Document and each Bank's share
thereof, and (v) the interest rate for such Loan. The entries made
in such register shall be conclusive and binding for all purposes,
absent manifest error.
(i) The Notes. The obligation of Borrower to repay the aggregate
unpaid principal amount of the Loans shall be evidenced by notes
(the "Notes") in the form of Exhibit J annexed hereto,
appropriately completed in conformity herewith, payable to the
order of each Bank, duly executed and delivered by Borrower to each
Bank and bearing interest and maturing as provided herein.
Section 2.5 Fees. Borrower shall pay the fees (the "Fees") set
forth in the fee letter dated October 25, 1994, as the same may be
amended from time to time, between Borrower, CE Acquisition and
Credit Suisse in accordance with the terms thereof.
Section 2.6 Increased Costs and Capital Requirements. In the
event that at any time or from time to time after the date of this
Agreement, any Directive, or a change in any existing or future
Directive (including any change resulting from the operation of any
transitional or phase-in requirements), or in the interpretation or
application thereof by any governmental or judicial authority, or
any action pursuant thereto, or compliance by Agent or any Bank
with any request or Directive imposed or modified by any central
bank or by any other financial, monetary or other governmental
authority:
(a) shall (i) impose, increase, modify or apply any reserve
(including basic, supplemental, marginal and emergency reserves,
but excluding reserve requirements which are expressly included in
the determination of any interest rate pursuant to the provisions
hereof), special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities with or
for the account of, or credit extended by, or any other acquisition
of funds by, any office of Agent or any Bank; or (ii) impose on
Agent or any Bank any fee, charge, tax (other than "Taxes," "Other
Taxes," and "Excluded Taxes" subject to the provisions of Section
2.7), or condition with respect to this Agreement, any Commitment
or any part thereof, or any sums outstanding or payable hereunder
or thereunder; and the result of any of the foregoing is to
increase the cost to Agent or any Bank of making or maintaining
such Commitment, or any Loan or to reduce the amount of any sum
received or receivable by Agent or such Bank, with respect to such
Commitment, any Loan or any interest, fees or other sums payable
hereunder,
then, subject to the last sentence of this Section 2.6, upon demand
by Agent or such Bank, Borrower shall pay with respect to any
affected Commitment (including Loans thereunder), promptly for the
account of Agent or such Bank, such additional amount or amounts as
Agent or such Bank, in good faith, certifies in writing to Borrower
shall compensate Agent or such Bank for the amount of such
increased cost or reduced amount receivable, such certification to
be conclusive and binding for all purposes hereof absent manifest
error; or
(b) shall impose, modify or deem applicable any capital adequacy or
similar requirement (including without limitation a request or
requirement which affects the manner in which any Bank allocates
capital resources to its commitments, including its obligations
hereunder) and as a result thereof, in the sole opinion of such
Bank, the rate of return on such Bank's capital as a consequence of
its obligations hereunder is or will be reduced to a level below
that which such Bank could have achieved but for such
circumstances,
then and in each such case upon notice to Borrower through Agent,
Borrower shall, subject to the last sentence of this Section 2.6,
pay to such Bank such additional amount or amounts as shall
compensate such Bank for such reduction in rate of return for (i)
any Loans outstanding under any Interest Period commencing after
such notification, (ii) any Loans bearing interest at the Base Rate
with respect to the period after the end of the calendar month in
which such notification was given and (iii) any portion of the
affected Bank's Commitment outstanding with respect to the period
after the end of the calendar month in which such notification was
given. If a Bank determines that it may be entitled to claim any
additional amounts pursuant to this Section during the next
succeeding Interest Period or month, as the case may be, it shall
promptly notify, through Agent, Borrower and each other Bank of the
event by reason of which it has become so entitled. A certificate
as to any such additional amount or amounts submitted by a Bank,
through Agent, to Borrower and the other Banks shall certify that
similar demands have been made to other customers of such Bank
which are subject to similar provisions and shall, in the absence
of manifest error, be final and conclusive. In determining such
amount, a Bank may use any reasonable averaging and attribution
methods. Notwithstanding the foregoing, Borrower shall only be
obligated to compensate any Bank or Agent for any amount described
in this Section 2.6 arising or occurring during (i) any time period
commencing not more than 90 days prior to the date on which such
Bank notifies Agent and Borrower that such Bank or Agent proposes
to demand such compensation and (ii) any time period during which,
because of the unannounced retroactive application of such statute,
regulation or other bases, such Bank could not have known that such
amount might arise or accrue. Agent shall make a good faith effort
(and Borrower agrees to reimburse Agent for all expenses incurred
in connection therewith) to identify possible assignees of any Bank
entitled to any additional amounts pursuant to this Section, and
Borrower shall have the right to designate such an assignee (which
may be an Affiliate of Borrower) subject to the consent of Agent,
which consent shall not be unreasonably withheld.
Section 2.7 Taxes.
(a) Payments Free of Taxes. Any and all payments or
reimbursements made hereunder or under any other Credit Document
shall be made free and clear of and without deduction for any and
all present and future taxes, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto
("Charges"), excluding (i)cin the case of payments to each Bank (a)
Charges imposed on, or measured by, its income or receipts (other
than Charges imposed by the United States by means of withholding
taxes), and franchise taxes imposed on it, by the jurisdiction
under the laws of which such Bank is organized (or any political
subdivision thereof), or by the jurisdiction of such Bank's
Applicable Lending Office (or any political subdivision thereof)
and (b) Charges imposed by the United States by means of
withholding taxes if and to the extent that such withholding taxes
shall be in effect and shall be applicable under current laws and
regulations (including judicial and administrative interpretations
thereof) to payments to be made for the account of such Bank's
Applicable Lending Office on the Closing Date, or, in the case of
an Assignee, on the effective date of the Assignment and Acceptance
Agreement pursuant to which it became a Bank, or on the date the
Bank changes its Applicable Lending Office, or, if such withholding
taxes result therefrom, changes any other office from which such
Bank makes or maintains any other extension of credit under this
Agreement (other than any change pursuant to Section 2.7(e)); and
(ii) in the case of payments to Agent, (a) Charges imposed on, or
measured by, its income or receipts (other than Charges imposed by
the United States by means of withholding taxes), and franchise
taxes imposed on it, by the jurisdiction under the laws of which it
is organized (or any political subdivision thereof) or by any
jurisdiction in which Agent is doing business (other than where
such circumstances would not exist but for a connection arising in
respect of this Agreement) and (b) Charges imposed by the United
States by means of withholding taxes if and to the extent that such
withholding taxes shall be in effect and shall be applicable under
current laws and regulations (including judicial and administrative
interpretations thereof) to payments to Agent under any Credit
Document on the Closing Date (all Charges described in clauses (i)
and (ii) being referred to as "Excluded Taxes" and all Charges not
described in clauses (i) and (ii) being hereinafter referred to as
"Taxes"). Subject to Section 2.7(h), if Borrower shall be required
by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any other Credit Document to any Bank or Agent,
(i) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions
applicable to additional sums payable under this Section) such Bank
or Agent receives an amount equal to the sum it would have received
had not such deductions been made, (ii) Borrower shall make such
deductions, and (iii) Borrower shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance
with applicable law (and shall be entitled to any "Tax Credit" with
respect to such payment pursuant to Section 2.7(g)).
(b) Other Taxes. In addition, Borrower agrees to pay any present
or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies (but not any tax on any
transfer or assignment of, or any participation in, the Loans or
this Agreement) which arise from any payment made hereunder or
under any other Credit Document or from the execution, delivery or
registration or filing or recording of, or otherwise with respect
to, this Agreement or any other Credit Document or document
delivered hereunder or under any other Credit Document (hereinafter
referred to as "Other Taxes").
(c) Tax Indemnity. Borrower will indemnify each Bank and Agent
for the full amount of Taxes (but not any tax on any transfer or
assignment of, or any participation in, the Loans or this
Agreement) or Other Taxes (including, without limitation, any Taxes
or Other Taxes imposed by any jurisdiction on amounts payable under
this Section) paid by such Bank or Agent (as the case may be) and
any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or
Other Taxes were correctly or legally asserted. This
indemnification payment shall be made within 30 days from the date
such Bank or Agent (as the case may be) makes written demand
therefor.
(d) Evidence of Tax Payments. Within 30 days after the date of any
payment of Taxes with respect to any Bank or Agent, Borrower will
(as to Taxes paid by it) furnish to Agent, at the Agency Office,
the original or a certified copy of a receipt or other evidence
reasonably satisfactory to Agent of payment thereof.
(e) Change of Applicable Lending Office. Any Bank claiming any
additional amounts payable pursuant to this Section shall use its
reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions) to change the jurisdiction of its
Applicable Lending Office or any other office from which such Bank
makes or maintains any extension of credit under this Agreement, if
the making of such a change would avoid the need for or reduce the
amount of, any such additional amounts which may thereafter accrue
and would not, in the sole judgment of such Bank, be otherwise
disadvantageous to such Bank.
(f) Survival. Without prejudice to the survival of any other
agreement of Borrower hereunder, the agreement and obligations of
Borrower contained in this Section 2.7 shall survive the payment in
full of the Obligations hereunder for a period expiring
concurrently with the expiration of the statute of limitations
applicable to claims made by the taxing authorities to collect
Taxes or Other Taxes.
(g) Tax Credits. If any Bank or Agent shall receive a credit or
refund from a taxing authority with respect to, and actually
resulting from, an amount of Taxes or Other Taxes actually paid to
or on behalf of such Bank or Agent by Borrower, which credit or
refund would not arise but for such Taxes or Other Taxes (a "Tax
Credit"), such Bank or Agent shall promptly notify Borrower of such
Tax Credit. If such Tax Credit is received by such Bank or Agent
in the form of cash, such Bank or Agent shall promptly pay to
Borrower the amount so received with respect to the Tax Credit. If
such Tax Credit is not received by such Bank or Agent in the form
of cash, such Bank or Agent shall pay the amount of such Tax Credit
not later than the time prescribed by applicable law for filing the
return (including extensions of time) for such Bank's or Agent's
taxable period which includes the period in which such Bank or
Agent receives the economic benefit of such Tax Credit. In any
event, the amount of any Tax Credit payable by a Bank or Agent to
Borrower pursuant to this Section 2.7(g) shall not exceed the
actual amount of cash refunded to, or credits received and usable
by, such Bank or Agent from a taxing authority. In determining the
amount of any Tax Credit, a Bank or Agent shall use such
apportionment and attribution rules as such Bank or Agent
customarily employs in allocating taxes among its various
operations and income sources and such determination shall be
conclusive absent manifest error. Borrower further agrees promptly
to return to a Bank or Agent the amount paid to Borrower with
respect to a Tax Credit by such Bank or Agent if such Bank or Agent
is required to repay, or is determined to be ineligible for, a Tax
Credit for such amount.
(h) Foreign Banks. Each Bank organized under the laws of a
jurisdiction outside the United States (a "Foreign Bank") as to
which payments to be made under any Credit Document are exempt from
(or are subject to a reduced rate of) United States withholding tax
under an applicable statute or tax treaty shall provide to Borrower
and Agent (1) a properly completed and executed Internal Revenue
Service Form 4224 or Form 1001 or other applicable form,
certificate or document prescribed by the Internal Revenue Service
of the United States certifying as to such Foreign Bank's
entitlement to such exemption (or reduced rate) with respect to
payments to be made to such Foreign Bank under any Credit Document
(a "Certificate of Exemption") or (2) a letter from any such
Foreign Bank stating that it is not entitled to any such exemption
(or reduced rate) (a "Letter of Non-Exemption"). Prior to becoming
a Bank under this Agreement and within fifteen (15) days after a
reasonable written request of Borrower or Agent from time to time
thereafter, each Foreign Bank that becomes a Bank under this
Agreement shall provide a Certificate of Exemption or a Letter of
Non-Exemption to Borrower and Agent. If a Foreign Bank is entitled
to an exemption (or reduced rate) with respect to payments to be
made to such Foreign Bank under any Credit Document and does not
provide a Certificate of Exemption to Borrower and Agent within the
time periods set forth in the preceding sentence, Borrower shall
withhold taxes from payments to such Foreign Bank at the applicable
statutory rates and Borrower shall not be required to pay any
additional amounts as a result of such withholding; provided,
however, that all such withholding shall cease (or be reduced, as
appropriate) upon delivery by such Foreign Bank of a Certificate of
Exemption to Borrower and Agent.
Section 2.8 Collateral Security. As collateral security for the
Obligations:
(a) On the Closing Date, Borrower shall (i) execute and
deliver the Borrower Pledge Agreement to Agent for the benefit of
the Banks, (ii) cause Magma and Magma's Subsidiaries to, execute
and deliver, as applicable the Magma Pledge Agreement, the Cash
Management Agreement, the Guaranty Agreements, the Security
Agreements, the Account Pledge Agreements and the Blocked Account
Agreements and (iii) assign to the Agent for the benefit of the
Banks its interests in each of such Security Documents made by
Magma and Magma's Subsidiaries.
(b) Within 60 days after the Closing Date, Borrower
shall (i) cause MOC to transfer, subject to the receipt of any
necessary third party consents, which Borrower shall use reasonable
and diligent efforts to obtain, all of its right, title and
interest in and to Hoch, Elmore and Leathers to Leyte, (ii) cause
Leyte, subject to the receipt of the consent of the Mission Entity,
which Borrower shall use reasonable and diligent efforts to obtain,
to pledge to Borrower and grant a security interest in, all of its
right, title and interest in and to the Project Owner of Hoch
pursuant to a Leyte General Partner Pledge Agreement, (iii) cause
Leyte, subject to the receipt of the consent of the Mission Entity,
which Borrower shall use reasonable and diligent efforts to obtain,
to pledge to Borrower and grant a security interest in all of its
right, title and interest in and to the Project Owner of Elmore
pursuant to a Leyte General Partner Pledge Agreement, (iv) cause
Leyte, subject to the receipt of the consent of the Mission Entity,
which Borrower shall use reasonable and diligent efforts to obtain,
to pledge to Borrower and grant a security interest in all of its
right, title and interest in and to the Project Owner of Leathers
pursuant to a Leyte General Partner Pledge Agreement, (v) cause
Vulcan Power, subject to the receipt of the consent of the Mission
Entity, which Borrower shall use reasonable and diligent efforts to
obtain, to pledge to Borrower and grant a security interest in all
of its right, title and interest in and to the Project Owner of
Vulcan pursuant to the Vulcan General Partner Pledge Agreement,
(vi) cause Magma, subject to the receipt of the consent of the
Mission Entity, which Borrower shall use reasonable and diligent
efforts to obtain, to pledge to Borrower and grant a security
interest in all of its right, title and interest in and to the
Project Owner of Hoch pursuant to a Magma Limited Partner Pledge
Agreement, (vii) cause Magma, subject to the receipt of the consent
of the Mission Entity, which Borrower shall use reasonable and
diligent efforts to obtain, to pledge to Borrower and grant a
security interest in all of its right, title and interest in and to
the Project Owner of Elmore pursuant to a Magma Limited Partner
Pledge Agreement, (viii) cause Magma, subject to the receipt of the
consent of the Mission Entity, which Borrower shall use reasonable
and diligent efforts to obtain, to pledge to Borrower and grant a
security interest in all of its right, title and interest in all of
its right, title and interest in and to the Project Owner of
Leathers pursuant to a Magma Limited Partner Pledge Agreement and
(ix) assign its rights under the Security Documents referred to in
clauses (ii) through (viii), inclusive, to Agent for the benefit of
the Banks.
(c) Borrower shall, and shall cause Magma and Magma's
Subsidiaries to, execute and deliver all such other Security
Documents as may be required pursuant to Sections 5.1(t) and 5.1(u)
of this Agreement.
(d) Subject to compliance with Section 5.1(p), if the
construction of Alto Peak or Fish Lake, as applicable, is financed
and any of the Security Documents conflicts with the terms of such
financing, Agent and the Banks agree to reasonably cooperate with
such lenders to achieve a resolution of any such conflicts
including, where required by such lenders, the release on behalf of
the Banks by the Agent of the Liens in favor of the Banks on assets
or other interests related to such projects without the requirement
of any consent of the Banks; provided, however, that except to the
extent waived by Majority Banks after giving effect to such release
the Loans will be collateralized with respect to the assets or
other interests pertaining to such projects at least to the same
extent as the Loans are collateralized with respect to assets or
other interests related to similarly situated Magma Projects. Any
such restructuring shall be without cost or expense to Agent or any
Bank and shall not require the payment of any additional
consideration by Borrower, Magma or any of their Subsidiaries.
Upon and in connection with a sale of the stock of Peak Power
Corporation, Agent and the Banks agree to release all Liens granted
in connection with the Security Documents or hereunder on the stock
and assets of Peak Power Corporation.
Section 2.9 Limited Liability. Agent and each Bank agrees that,
subject to the proviso of this sentence, the Loans made hereunder
are being made on a non-recourse basis and that any claim against
Borrower for the repayment of any of the Obligations shall be made
only against and shall be limited to the Collateral, and that no
judgment, proceeding, whether legal or equitable, with respect to
any of the Obligations shall be obtained or enforced against
Borrower's assets (other than the Collateral) for the purpose of
obtaining payment of any of the Obligations; provided that the
foregoing provisions shall not apply to any claim by Agent or any
Bank for (a) the payment of (i) the fees due Agent or such Bank on
or prior to the Closing Date, (ii) any amounts due pursuant to
Section 8.4 and (iii) any amounts payable by Borrower pursuant to
Sections 10(d) and 10(e) of the Borrower Pledge Agreement and (b)
the satisfaction of Borrower's obligation set forth in Section
5.1(w); and provided, further, that it is understood and agreed
that in no event shall Borrower be personally liable for the
repayment of the principal amount of, or interest on, the Loans
whether directly or indirectly through the application of the
indemnification provisions of any of the Credit Documents. It is
expressly agreed and understood that no recourse may be had to any
officer, director, employee, agent, partner, joint venturer or
stockholder of Borrower acting solely in such capacity for Borrower
with respect to, and no such person shall have any liability with
respect to, the obligations and liabilities of Borrower under any
of the Credit Documents.
Section 2.10 Election Under Section 1111(b) of the Bankruptcy
Code. Agent and each Bank hereby irrevocably agree, to the maximum
extent permitted by law, that, in any case in which Borrower is the
debtor or one of the debtors under the Bankruptcy Code, each of
Agent and the Banks shall be deemed to have made a timely election
pursuant to Section 1111(b)(1)(A)(i) of the Bankruptcy Code (or any
substantially comparable provision which is the successor thereto)
as to any claim for the payment of the principal amount of, or
interest on, the Loans and (ii) if (A) Borrower becomes a debtor
subject to the reorganization provisions of the Bankruptcy Code or
any successor provisions or any other applicable bankruptcy or
insolvency statutes, (B) pursuant to such provisions, Borrower is
held to have recourse liability to Agent or the Banks directly or
indirectly on account of any amount payable in respect of the
principal amount of, or interest on, the Loans and (C) Agent or any
Bank actually receives any payment which reflects any payment by
Borrower on account of the matters referred to in clause (ii)(B) of
this sentence, then Agent or such Bank, as the case may be, shall
promptly refund to Borrower the Recourse Amount (as defined below).
For purposes of this Section 2.10, "Recourse Amount" means the
amount by which the portion of such payment by Borrower on account
of the matters referred to in clause (ii)(B) of the preceding
sentence actually received by Agent or such Bank, as the case may
be, exceeds the amount which would have been received by Agent or
such Bank, as the case may be, if Borrower had not become subject
to the recourse liability referred to in such clause (ii)(B) of the
preceding sentence; provided, however, that Agent and each Bank
shall be allowed to receive and retain all payments required
pursuant to Section 1129(b) of the Bankruptcy Code (or any
substantially comparable provision which is the successor thereto)
as a result of having made the election pursuant to Section
1111(b)(1)(A)(i).
Section 2.11 Available Amounts. Magma may at any time use
Available Amounts (an "Expenditure") for the purpose of (i)
prepaying the Loans, (ii) making Capital Expenditures, (iii) paying
amounts which constitute Magma Obligations as defined in the CECI
Undertaking Agreement, (iv) reimbursement of Borrower for advances
made to Magma to fund Capital Expenditures for any Magma Project,
or (v) reimbursement of Borrower for expenditures made by Borrower
in performing its obligations under the CECI Undertaking Agreement;
provided, that Borrower shall not permit Magma to make any such
Expenditure unless (x) Magma was in compliance with the Excess Cash
Flow Debt Service Coverage Ratio for the prior fiscal year, (y) at
the time of such Expenditure, Borrower was in compliance with the
provisions of Section 5.3(d) on the immediately preceding April 30
or October 31, as the case may be (without regard to any funds
deposited by the Borrower in the Concentration Account to effect
such compliance on that date), and (z) not less than three Banking
Days before such an Expenditure, Borrower shall have delivered to
Agent a certificate of a Responsible Officer describing in
reasonable detail the nature and amount of such Expenditure and the
total of Available Amounts after giving effect to such Expenditure
(which shall be at least $1.00), and certifying that no Default or
Event of Default exists, or will exist after giving effect to such
Expenditure.
ARTICLE III
Conditions of Commitments
Section 3.1 Conditions Precedent to the Making of the Loans. The
obligations of each Bank to make its ratable share of the Loans on
the Closing Date is subject to the conditions precedent that Agent
shall have received on or before the Closing Date, in form and
substance satisfactory to Agent in its sole discretion:
(a) Certificate of Incorporation or Organizational Documents. A
copy of the certificate of incorporation or other organizational
documents of Borrower, CE Acquisition, Magma and each of Magma's
Subsidiaries, and each amendment thereto, certified by the
Secretary of State of its incorporation or other appropriate
governmental authority as being a true and correct copy thereof,
such certificate or document to be dated a recent date prior to the
Closing Date.
(b) Certificate of Good Standing. For Borrower, CE Acquisition,
Magma and each of Magma's Subsidiaries, a certificate or other
appropriate document from the Secretary of State of its
incorporation or other governmental authority, listing the
certificate of incorporation or other organizational documents and
each amendment thereto on file in his office and, if available,
certifying that (i) such amendments are the only amendments to each
such certificate of incorporation or other organizational documents
on file in his office, (ii) each of Borrower, CE Acquisition, Magma
and each of Magma's Subsidiaries has paid all franchise taxes to
the date of such certificate and (iii) each of the Borrower, CE
Acquisition, Magma and each of Magma's Subsidiaries as appropriate,
is duly incorporated and in good standing under the laws of such
jurisdiction, such certificates to be dated a recent date prior to
the Closing Date.
(c) Certificate of Qualification. Certificates or equivalent
documents from all states in which the laws thereof require
Borrower, CE Acquisition, Magma and each of Magma's Subsidiaries,
to be qualified and/or licensed to do business, certifying that
Borrower, CE Acquisition, Magma or such Subsidiary of Magma, as
applicable, has duly qualified to do business in such jurisdiction
as a foreign corporation and is in good standing under such
qualification, such certificates or equivalent documents to be
dated a recent date prior to the Closing Date.
(d) By-Laws and Resolutions. For each of Borrower, CE Acquisition,
Magma and each of Magma's Subsidiaries, copies of its by-laws or
other equivalent organizational documents, the resolutions of its
Board of Directors approving each Credit Document and each Merger
Document to which it is a party, and of all documents evidencing
other necessary corporate action and governmental approvals, if
any, with respect to each such Credit Document and Merger Document,
certified as of the Closing Date as true and correct in each case
by a Responsible Officer of Borrower, CE Acquisition or Magma or
such Subsidiary of Magma, as applicable.
(e) Incumbency Certificate. A certificate of a Responsible Officer
of each of Borrower, CE Acquisition, Magma and each of Magma's
Subsidiaries dated as of the Closing Date certifying the names and
true signatures of the officers of each of Borrower, CE
Acquisition, Magma and each of Magma's Subsidiaries authorized to
sign each Credit Document and Merger Document to which it is a
party and the other documents to be delivered by it pursuant to any
Credit Document or any Merger Document.
(f) Opinions of Counsel. A favorable opinion of (a) Willkie Farr
& Gallagher, as counsel to Borrower, CE Acquisition and Magma and
its Subsidiaries, substantially in the form of Exhibit N hereto,
and as to such other matters as Agent or Majority Banks may
reasonably request, (b) Steven A. McArthur, as counsel to Borrower
and CE Acquisition, substantially in the form of Exhibit O hereto,
and to such other matters as Agent or Majority Banks may reasonably
request, (c) Lionel, Sawyer & Collins, Nevada counsel to Borrower,
Magma and its Subsidiaries, substantially in the form of Exhibit P
hereto, and (d) Stibbe Simont Monahan Duhot, Netherlands counsel to
Magma Netherlands, B.V., substantially in the form of Exhibit P-1
hereto, and to such other matters as Agent or Majority Banks may
reasonably request, in each case dated the Closing Date; and copies
of all opinions delivered under the Merger Agreement, in each case
addressed to the Agents and the Banks and in form and substance
satisfactory to Agent.
(g) Fees. Payment in full by Borrower of all fees and expenses
which are to be paid on or before the Closing Date.
(h) Security Documents. Fully executed counterparts of all
Security Documents requested by Agent, signed by all parties
thereto (other than Agent), and UCC Financing Statements in a form
satisfactory to Agent signed by Borrower.
(i) Magma Shares. Stock certificates representing 100% of the
issued and outstanding Magma Shares after the Merger registered in
the name of Borrower, together with irrevocable undated stock
powers duly endorsed in blank (being delivered concurrently with
the making of the Loans).
(j) Notes. Fully executed Notes completed, issued and delivered
in conformity with this Agreement.
(k) Capital Contribution. Evidence satisfactory to Agent that not
less than the amount set forth on Schedule 3.1(k) has been
contributed, in cash, in the form of equity, to the capital of CE
Acquisition by Borrower, and evidence that funds sufficient to pay
the consideration required to consummate the Merger have been
deposited into a depository account or made available in a manner
satisfactory to Agent.
(l) Security Interest. Evidence satisfactory to Agent that it
has, for the benefit of the Banks, a valid and perfected priority
security interest in the Collateral on the Closing Date (subject
only to Permitted Liens).
(m) CE Acquisition Secured Term Note and CE Acquisition Credit
Agreement. The original CE Acquisition Secured Term Note, endorsed
by Borrower to Agent, and an executed copy of the CE Acquisition
Credit Agreement, together with a duly executed instrument of
assumption, in form and substance satisfactory to Agent, pursuant
to which Magma assumes the obligations of CE Acquisition under the
CE Acquisition Secured Term Note and the CE Acquisition Credit
Agreement.
(n) Notice of Borrowing. A Notice of Borrowing in accordance with
Section 2.1(b).
(o) Officer's Certificate. A certificate executed by a
Responsible Officer of Borrower, stating that: (a) on such date,
and after giving effect to the funding of the Loans and the
consummation of the Merger, no Default or Event of Default has
occurred and is continuing; (b) no Material Adverse Effect has
occurred since December 31, 1993; (c) the representations and
warranties set forth in Article IV are true and correct in all
material respects on and as of such date with the same effect as
though made on and as of such date; (d) Borrower on such date is in
compliance with all the terms and provisions set forth in this
Agreement on its part to be observed and performed; (e) neither
Borrower nor any of its Subsidiaries is in material default under
any material agreement, indenture, credit agreement or other
document to which it is a party; (f) concurrently with the making
of the Loans, the Merger has been consummated in accordance with
the terms of the Merger Agreement without any conditions to the
consummation thereof having been waived; (g) no event of default
exists or, with the giving of notice, the passage of time or both,
would exist, or would arise as a result of the consummation of the
transactions contemplated hereby, under any of the material Magma
Project Documents; (h) no Default or Event of Default exists under
the Tender Offer Credit Facility (as such terms are defined
therein).
(p) Confirmation of Agent for Service. Confirmation from CT
Corporation System of its acceptance of its appointment as agent
for service of process required under Section 8.13.
(q) Financial Statements. A copy of each of Borrower's and
Magma's annual audited financial statements for the fiscal year
ended December 31, 1993 and Borrower's and Magma's unaudited
interim financial statements for the nine month period ended
September 30, 1994.
(r) Performance of Agreements. Borrower, CE Acquisition and
Magma, as applicable, shall have performed all agreements which
this Agreement, the Credit Documents and the Merger Documents
provide shall be performed on or before the Closing Date.
(s) Government Approvals and Litigation. Evidence satisfactory to
Agent that (a) all governmental approvals and filings and consents
from third parties required in connection with the consummation of
the Merger and the transactions contemplated hereby have been
obtained and (b) there is no litigation arising from or relating to
the transactions contemplated hereby or in connection with the
Merger. There shall not have occurred any development in any
action, charge, claim, demand, suit, proceeding, petition,
governmental investigation or arbitration to which Borrower or any
of its Subsidiaries is a party that, in the opinion of Agent, could
reasonably be expected to have a Material Adverse Effect.
(t) Merger. Concurrently with the making of the Loans, the Merger
shall have been consummated in accordance with the terms of the
Merger Agreement.
(u) Alto Peak, Fish Lake and Malitbog. Evidence satisfactory to
Agent that upon the consummation of the Merger, Magma will have
available the Alto Peak Pre-Funded Equity Amount, the Fish Lake
Pre-Funded Equity Amount and the Malitbog Pre-Funded Equity Amount.
(v) Merger Agreement. The Merger Agreement shall not have been
amended of modified without the prior written consent of Agent.
(w) Ownership of Alto Peak and Malitbog. Evidence satisfactory to
Agent that Magma directly or indirectly owns not less than 99% of
the record equity interest of Alto Peak and Malitbog and 100% of
the beneficial equity interest of Alto Peak and Malitbog.
(x) Material Adverse Effect. There shall not have occurred any
event that causes or could reasonably be expected to cause a
Material Adverse Effect since December 31, 1993.
(y) Tax Indemnity Agreement. Agent shall receive an executed copy
of the Tax Indemnity Agreement in form and substance satisfactory
to Agent.
(z) CECI Undertaking Agreement. Agent shall receive an executed
copy of the CECI Undertaking Agreement.
(aa) Support Services Agreement. Agent shall have received an
executed copy of the Support Services Agreement in form and
substance satisfactory to Agent.
(bb) Pro Forma and Projections. Agent shall have received the Pro
Forma Balance Sheets and, at least five Banking Days prior to the
Closing Date, the Projections, in each case demonstrating
compliance with the financial covenants set forth in Section 5.3.
(cc) Certificates Relating to the Magma Projects. Agent shall
have received from Magma a certificate executed by a Responsible
Officer certifying that no event of default exists or with the
giving of notice, the passage of time or both would exist under any
of the material Magma Project Documents and that each of the
material Magma Project Documents is in full force and effect.
(dd) Satisfaction of Obligations Under the Tender Offer Credit
Facility and the CE Acquisition Secured Term Note. Evidence
satisfactory to Agent that concurrently with the making of the
Loans hereunder Borrower's obligations under the Tender Offer
Credit Facility and CE Acquisition's obligations under the CE
Acquisition Secured Term Note issued in the principal amount of
$245,600,000 in connection with the Tender Offer Credit Facility
have been satisfied in full.
(ee) Business Plan. Agent shall have received at least five
Banking Days prior to the Closing Date a final business plan for
operating Magma in form and substance satisfactory to Agent in its
sole discretion.
(ff) Cash Balances. Evidence satisfactory to Agent that after
giving effect to the Merger and the transactions contemplated
hereby, the Cash Balances set forth in the Projections are
available to Magma without restriction or delay in the receipt
thereof, evidence that such Cash Balances shall exceed the sum of
the Alto Peak Pre-Funded Equity Amount, plus the Fish Lake Pre-
Funded Equity Amount, plus the Malitbog Pre-Funded Equity Amount,
plus the pH Modification Expenditure Amount, and evidence that the
receivables and accrued rights to distributions from Project Owners
of Magma and its Subsidiaries (other than Project Owners) exceeds
current payables of Magma and its Subsidiaries (other than Project
Owners). For purposes hereof, in computing Cash Balances, the
securities listed on Schedule 1.11 shall be marked to market as of
the close of business on February 22, 1995.
(gg) Other Matters. Such other agreements, certificates,
opinions, approvals, consents, instruments or documents as Agent or
the Majority Banks may reasonably request, and all matters and
proceedings shall be satisfactory to Agent, each Bank and counsel
for Agent and each Bank.
ARTICLE IV
Representations and Warranties
Section 4.1 Representations and Warranties. In order to induce
Agent and each Bank to enter into this Agreement and to induce each
Bank to make the Loans hereunder, Borrower represents and warrants
to Agent and each Bank that the following statements are and, after
giving effect to the Merger, will be true, correct and complete:
(a) Organization. Borrower and each of its Subsidiaries, are duly
organized and validly existing under the Laws of the jurisdiction
of its formation, and is properly qualified to do business and in
good standing in every jurisdiction where the failure to maintain
such qualification or good standing could reasonably be expected to
have a Material Adverse Effect.
(b) Authorization of Credit Documents and the Merger Documents.
The execution, delivery and performance of each of the Credit
Documents and each Merger Document to which Borrower, Magma, CE
Acquisition or any of their respective Subsidiaries is a party are
within its respective corporate powers and have been duly
authorized. Each of the Credit Documents and the Merger Documents
to which Borrower, Magma, CE Acquisition or any of their respective
Subsidiaries is a party has been validly executed and delivered by
Borrower, Magma, CE Acquisition or such Subsidiary, as applicable.
(c) Consents. The execution, delivery and performance of each of
the Credit Documents and the Merger Documents to which Borrower,
Magma, CE Acquisition or any of their respective Subsidiaries is a
party and the consummation of the Merger do not and will not
require any registration with, consent or approval of, or notice
to, or other action to, with or by, any governmental authority,
regulatory body or any other Person, except for filings required by
federal or state securities laws (which filings have been made and
true and complete copies of which have been delivered to Agent) and
other filings, authorizations, consents and approvals, all of which
have been made or obtained or the absence of which would not have
a Material Adverse Effect.
(d) No Conflicts. The execution, delivery and performance of the
Credit Documents and the Merger Documents and the consummation of
the Merger will not (i) violate (A) the certificate of
incorporation or by-laws (or comparable documents) of Borrower or
any of its Subsidiaries, (B) any Law or (C) any provision of any
material contract, agreement, indenture or instrument to which
Borrower or any of its Subsidiaries is a party or by which any of
its respective properties is bound or (ii) be in conflict with, or
result in a breach of or constitute a default under, any contract,
agreement, indenture or instrument referred to in (d)(i)(C) above
or (iii) result in the creation or imposition of any Lien, except
Permitted Liens or (iv) give to any Person rights to cancel,
terminate or suspend performance of their obligations to Borrower
or any of its Subsidiaries under, or accelerate payments of amounts
owed by Borrower or any of its Subsidiaries to others under, any of
the foregoing.
(e) Enforceability of Credit Documents and Merger Documents. Each
Credit Document and Merger Document to which Borrower, Magma, CE
Acquisition or any of their respective Subsidiaries is a party is
a legal, valid and binding agreement of Borrower, Magma, CE
Acquisition or such Subsidiary, as applicable, enforceable against
Borrower, Magma or CE Acquisition, as applicable, in accordance
with their respective terms, except for bankruptcy and similar laws
affecting the enforcement of creditors' rights generally and for
the application of general equitable principles.
(f) Title to Property; Sufficiency of Assets. Borrower and each
of its Subsidiaries have good, valid and sufficient title to their
material properties and assets free and clear of all Liens, except
for Permitted Liens. To the best of Borrower's knowledge, the
services to be performed, the materials to be supplied and the
easements, licenses and other rights granted or to be granted to
each Project Owner pursuant to the terms of the applicable Project
Documents provide or will provide such Project Owner with all
rights and property interests required to enable such Project Owner
(other than the Project Owners of Alto Peak and Fish Lake) to
obtain all services, materials or rights (including access)
required for the design, construction, start-up, operation and
maintenance of the applicable Magma Project Document, including
such Project Owner's full and prompt performance of its
obligations, and full and timely satisfaction of all conditions
precedent to the performance by others of their obligations, under
the applicable Magma Project Documents, other than those services,
materials or rights that reasonably can be expected to be
obtainable in the ordinary course of business without material
additional expense or material delay. Borrower has no reason to
believe that the Project Owners of Alto Peak and Fish Lake will not
be able to enter into Project Documents, on commercially reasonable
terms, that will enable such Project Owner to obtain all services,
materials or rights (including access) required for the design,
construction, start-up, operation and maintenance of Alto Peak or
Fish Lake, as applicable, on commercially reasonable terms. (g)
Compliance with Law. Borrower and each of its Subsidiaries are in
compliance with all applicable Laws, except where the failure to
maintain such compliance could not reasonably be expected to have
a Material Adverse Effect.
(h) No Litigation. There are no actions, suits, proceedings,
claims or disputes pending or threatened, against or affecting
Borrower or any of its Subsidiaries or any of their respective
properties or assets before any court or governmental department,
commission, board, bureau, agency or instrumentality domestic or
foreign, except for any thereof which would not, in the aggregate,
have a Material Adverse Effect. There is no injunction, writ,
preliminary restraining order or any order of any nature issued by
an arbitrator, court or other governmental authority directing that
any material aspect of the transactions provided for in any of the
Credit Documents not be consummated as herein or therein provided.
(i) Events of Default. No event has occurred or would result from
the incurring of obligations under any Credit Document or the
consummation of the Merger which is, or upon the lapse of time or
notice or both would become, an Event of Default.
(j) Material Subsidiaries. All Material Subsidiaries of Borrower
and the nature and extent of its ownership interest therein have
been heretofore disclosed in writing to Agent and the Banks.
(k) Financial Condition.
(i) The consolidated balance sheet of Borrower and its
Subsidiaries as at December 31, 1992 and December 31, 1993 and the
related consolidated statements of operations and retained earnings
and changes in financial position for the fiscal years ended on
such dates, certified by Deloitte & Touche, copies of which have
heretofore been furnished to Agent, with sufficient copies for each
Bank, are complete and correct and present fairly the consolidated
financial condition of Borrower and the Borrower Subsidiaries as at
such dates, and the consolidated results of their operations and
changes in financial position for the fiscal years then ended.
Such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by
such accountants and as disclosed therein). The consolidated
balance sheet of Magma and its Subsidiaries as at December 31, 1992
and December 31, 1993 and the related consolidated statements of
operations and retained earnings and changes in financial position
for the fiscal years ended on such dates, certified by Coopers &
Lybrand, copies of which have heretofore been furnished to Agent,
with sufficient copies for each Bank, are complete and correct and
present fairly the consolidated financial condition of Magma and
its Subsidiaries as at such dates, and the consolidated results of
their operations and changes in financial position for the fiscal
years then ended. Such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with
GAAP applied consistently throughout the periods involved (except
as approved by such accountants and as disclosed therein).
Borrower and its Subsidiaries, taken as a whole, are (and after
giving effect to the transactions contemplated by the Credit
Documents and the Merger Documents will be) Solvent.
(ii) Except as fully reflected in the financial statements
referred to above and agreements entered into in the ordinary
course of business which are not required to be reflected in such
financial statements in accordance with GAAP, there are no
liabilities or obligations with respect to Magma and its
Subsidiaries of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) for the period to
which such financial statements relate which, either individually
or in the aggregate, exceed $2,000,000. Borrower does not know of
any reasonable basis for the assertion against Magma or any of its
Subsidiaries of any liability or obligation of any nature
whatsoever for such relevant period that is not fully reflected in
the financial statements referred to above except for agreements
entered into in the ordinary course of business which are not
required to be reflected in such financial statements in accordance
with GAAP which, either individually or in the aggregate, exceed
$2,000,000.
(l) No Material Adverse Effect. Since December 31, 1993, there
has been no Material Adverse Effect.
(m) Collateral. Borrower has good and marketable title to the
Magma Shares and the CE Acquisition Secured Term Note free and
clear of all Liens or rights of others, except for Liens in favor
of Agent under the Security Documents. Upon delivery of the CE
Acquisition Secured Term Note and the Magma Shares to Agent in
accordance with the Security Documents, Agent will have, for the
ratable benefit of the Banks, a valid, fully perfected,
first-priority security interest in the CE Acquisition Secured Term
Note and the Magma Shares. Schedule 1 of the Borrower Pledge
Agreement is a complete and accurate description of the CE
Acquisition Secured Term Note and the Magma Shares.
(n) No Default. Neither Borrower nor any of its Subsidiaries is
in default under or with respect to any contractual obligation in
any respect which could have a Material Adverse Effect. Neither
Borrower nor any of its Subsidiaries is in default under any
material order, award or decree of any court, arbitrator or
Governmental Authority binding upon or affecting it or by which any
of its properties or assets is bound or affected. No event of
force majeure has occurred which could reasonably be expected to
have a Material Adverse Effect.
(o) No Burdensome Restrictions. No contractual obligation of
Borrower or any of its Subsidiaries and no Requirement of Law has,
or is reasonably expected to have, in light of all facts and
circumstances of which Borrower has actual knowledge, a Material
Adverse Effect, it being understood that the mere existence of
traditional project finance contractual provisions which provide
lenders with security interests and restrictive covenants,
including the ability to restrict cash distributions, would not
constitute a burdensome restriction hereunder.
(p) Taxes. Borrower and each of its Subsidiaries have filed or
caused to be filed all tax returns which are required to be filed,
and have paid all taxes shown to be due and payable on said returns
or on any assessments made against it or any of its property and
all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than those the amount
or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of Borrower or
its applicable Subsidiary, as the case may be); and no tax Liens
have been filed and, to the knowledge of Borrower, no claims are
being asserted with respect to any such taxes, fees or other
charges which are material either as to amount or potentially
adverse effect when considered with respect to the financial and
business condition of Borrower and its Subsidiaries taken as a
whole.
(q) ERISA and IRC Compliance and Liability. Borrower
and each ERISA Affiliate is in compliance with all applicable
provisions of ERISA and the regulations and published
interpretations thereunder with respect to all Employee Benefit
Plans and, to the extent that such compliance is required of
Borrower or such ERISA Affiliate, with respect to all Multiemployer
Plans except where failure to comply would not be expected to have
a Material Adverse Effect and except for any required amendments
for which the remedial amendment period as defined in Section
401(b) of the IRC has not yet expired. Each Employee Benefit Plan
and Multiemployer Plan that is intended to be qualified under
Section 401(a) of the IRC has been determined by the Internal
Revenue Service to be so qualified, and each trust related to such
plan has been determined to be exempt under Section 501(a) of the
IRC or an application for determination letter confirming such
qualification and exemption is pending or will be filed prior to
the expiration of the applicable remedial amendment period as
defined in Section 401(b) of the IRC. No material liability has
been incurred by Borrower or any ERISA Affiliate which remains
unsatisfied for any taxes or penalties with respect to any Employee
Benefit Plan or any Multiemployer Plan.
(r) Funding. No Pension Plan has been terminated, nor
has any accumulated funding deficiency (as defined in Section 412
of the IRC) been incurred (without regard to any waiver granted
under Section 412 of the IRC), nor has any funding waiver from the
IRS been received or requested with respect to any Pension Plan,
nor has Borrower or any ERISA Affiliate failed to make any
contributions or to pay any amounts due and owing as required by
Section 412 of the IRC, Section 302 of ERISA or the terms of any
Pension Plan prior to the due dates of such contributions under
Section 412 of the IRC or Section 302 of ERISA, nor has there been
any event requiring any disclosure under Section 4041(c)(3)(C) or
4063(a) of ERISA with respect to any Pension Plan.
(s) Prohibited Transactions and Payments. Neither the Borrower or
any of its Subsidiaries nor, in the case of clauses (2) through (4)
hereof, any ERISA Affiliate has: (1) engaged in a nonexempt
prohibited transaction described in Section 406 of ERISA or Section
4975 of the IRC; (2) incurred any liability to the PBGC which
remains outstanding other than the payment of premiums and there
are no premium payments which are due and unpaid; (3) failed to
make a required contribution or payment to a Multiemployer Plan; or
(4) failed to make a required installment or other required payment
under Section 412 of the IRC, which in any such case in clauses (1)
through (4), the occurrence of which results in or could reasonably
be expected to result in a Material Adverse Effect.
(t) No Termination Event. No Termination Event has
occurred or is reasonably expected to occur which has or could
reasonably be expected to have a Material Adverse Effect.
(u) ERISA Litigation. No proceeding, claim, lawsuit
and/or investigation is existing or, to the knowledge of Borrower,
threatened concerning or involving any (1) employee welfare benefit
plan (as defined in Section 3(1) of ERISA) currently maintained or
contributed to by Borrower or any of its Subsidiaries or any ERISA
Affiliate to which Borrower or any of its Subsidiaries may have
liability, (2) Pension Plan or (3), to the knowledge of Borrower,
Multiemployer Plan which could reasonably be expected to have a
Material Adverse Effect.
(v) No Other Obligations. Except as set forth on
Schedule 4.1(v), neither Borrower nor any of its Subsidiaries has
any obligation to provide post-retirement welfare benefits under
any Employee Benefit Plan or other plan or agreement, except for
benefits due (i) under employee pension benefit plans (as defined
in Section 3(2) of ERISA), (ii) to its disabled employees, (iii)
under 4980B of the IRC or Section 601 et seq. of ERISA, or (iv) as
otherwise required by law.
(w) Margin Regulations. Borrower is not engaged in the business
of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation G, T, U, or X of the
Board of Governors of the Federal Reserve System) and no proceeds
of any Loan will be used in a manner which would violate, or result
in a violation of, such Regulation G, T, U, or X.
(x) Investment Company Act. Neither Borrower nor any of its
Subsidiaries is an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended. Neither Borrower nor any of its
Subsidiaries is a "holding company" or a "subsidiary company" of a
"public utility holding company" as defined in PUHCA.
(y) Environmental Matters. (i) There are no claims, liabilities,
investigations, litigation, administrative proceedings, judgments
or orders, whether asserted, pending or threatened, relating to any
liability under or to compliance with any applicable Environmental
Law, against Borrower or any of its Subsidiaries or relating to any
real property currently or formerly owned, leased or operated by
Borrower or any of its Subsidiaries that could reasonably be
expected to have a Material Adverse Effect.
(ii) Neither Borrower nor any of its Subsidiaries has received any
notices of violations or liabilities under any applicable
Environmental Law that could be reasonably expected to have a
Material Adverse Effect.
(iii) No Hazardous Materials have been or are being spilled,
discharged or released on or from real property currently or
formerly owned, leased or operated by Borrower or any of its
Subsidiaries in any quantity or manner violating or resulting in
liability under any applicable Environmental Law that could be
reasonably expected to have a Material Adverse Effect.
(z) Disclosure. No representation or warranty of Borrower, Magma
or CE Acquisition contained in any Credit Document or Merger
Document, or any other document, certificate or written statement
furnished to Agent or any Bank by or on behalf of any such Person
for use in connection with the Credit Documents, the Merger
Documents or the Merger contains any untrue statement of a material
fact or omitted, omits or will omit to state a material fact
necessary in order to make the statements contained herein or
therein, when taken as a whole, not misleading in any material
respect in light of the circumstances in which the same were made.
There is no fact, event or condition known to Borrower that has had
or can reasonably be expected to have a Material Adverse Effect and
that has not been disclosed herein or in such other documents,
certificates and statements furnished to Agent or each Bank for use
in connection with the transactions contemplated hereby.
(aa) Insurance. Schedule 4.1(aa) hereto sets forth a complete and
accurate description of all material policies of insurance that
will be in effect as of the Closing Date for Borrower and each of
its Subsidiaries. Such policies are with responsible and reputable
insurance companies or associations, and the coverages provided by
such policies are in amounts and covers such risks as is usually
carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which Borrower or
any of its Subsidiaries operates.
(bb) Energy Regulatory Status.
(i) Each of the operational electric generation facilities
("Plants") owned in whole or part, directly or indirectly by (A)
Borrower or Magma or (B) any legal entity in which Borrower or
Magma directly or indirectly owns more than 5% of the voting stock
or other equity interest, including any partnership in which
Borrower or Magma has an interest, is located in the United States
of America and is a "qualifying cogeneration facility" ("QF") or a
"qualifying small power production facility" ("Small Power QF"), as
such terms are defined under the Federal Power Act, as amended
("FPA"), and the regulations thereunder, and has continuously been
in compliance with the requirements for being a QF or Small Power
QF since it commenced sales of electricity.
(ii) The owner or operator of each of the Plants under development
by Borrower or any of its Subsidiaries or Magma or any of its
Subsidiaries and located in the United States of America will, no
later than the date operations commence, either qualify as a QF,
Small Power QF or an "exempt wholesale generator" ("EWG"), as such
terms are defined under the FPA, PUHCA and the regulations
thereunder, and if an EWG, the rates for service therefrom will be
on file with FERC.
(iii) The owner or operator of each of the Plants under
development by Borrower or any of its Subsidiaries or Magma or any
of its Subsidiaries and located outside the United States of
America will, no later than the date operations commence, either
(A) qualify as an EWG or (B) qualify as a "foreign utility
company," as such term is defined under PUHCA and the regulations
thereunder.
(iv) None of the entities identified in clause (A) or (B) of
subparagraph (i) above owns or operates any electric distribution
facilities or any electric transmission facilities other than
electric transmission facilities that are part of a QF or Small
Power QF.
(v) None of the entities identified in clause (A) or (B) of
subparagraph (i) above is a "public utility holding company" or a
"subsidiary company" of a "public utility holding company," as
those terms are defined under PUHCA.
(vi) Each of the Plants obtained any necessary certificates or
permits from state regulatory authorities for construction of each
of the operational Plants and associated transmission equipment
owned by the owners of the Plant, and each other entity
constructing, owning or operating any of the foregoing has obtained
each required certificate or permit.
(cc) Information Disclosure Documents. None of the information
with respect to Borrower or its Subsidiaries or Magma or its
Subsidiaries included or incorporated by reference in the
Information Statement or the Registration Statement contained, in
the case of the Information Statement or any amendments or
supplements thereto, at the time of the mailing of the Information
Statement and any amendments or supplements thereto, and at the
time of the Borrower Meeting to be held in connection with the
Merger, or, in the case of the Registration Statement, at the time
it became effective and at the Effective Time, any untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made,
not misleading. The Information Statement complies as to form in
all material respects with the provisions of the Exchange Act and
the rules and regulations thereunder. The Registration Statement
complies as to form in all material respects with the provisions of
the Securities Act, and the rules and regulations promulgated
thereunder. No representation or warranty made by Borrower or
Magma in the Information Statement or Registration Statement and no
statement contained in any certificate, list, exhibit or other
instrument specified therein, contains any untrue statement of a
material fact or omits a material fact necessary to make the
statements contained therein, in light of the circumstances under
which they were made, not misleading.
(dd) SEC Filings of Magma. Magma has filed all forms, reports and
documents required to be filed with the SEC since January 1, 1992,
and Borrower has heretofore delivered to Agent, in the form filed
with the SEC, Magma's (i) Annual Reports on Form 10-K for the
fiscal years ended December 31, 1993 and December 31, 1992,
respectively, (ii) all proxy statements relating to Magma's
meetings of stockholders (whether annual or special) held since
January 1, 1992, and (iii) all other reports or registration
statements (other than Quarterly Reports on Form 10-Q) filed by
Magma with the SEC since January 1, 1992 (collectively, the "Magma
SEC Reports"). The Magma SEC Reports (i) were prepared in all
material respects in accordance with the requirements of the
Securities Act, or the Exchange Act, as the case may be, and (ii)
did not at the time they were filed contain any untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. No Subsidiary of Magma is required to file
any statements or reports with the SEC pursuant to Sections 13(a)
or 15(d) of the Exchange Act.
(ee) SEC Filings of Borrower. Borrower has filed all forms,
reports and documents required to be filed with the SEC since
January 1, 1992, and has heretofore delivered to Agent, in the form
filed with the SEC, its (i) Annual Reports on Form 10-K for the
fiscal years ended December 31, 1993 and December 31, 1992,
respectively, (ii) all proxy statements relating to Borrower's
meetings of stockholders (whether annual or special) held since
January 1, 1992, and (iii) all other reports or registration
statements (other than Quarterly Reports on Form 10-Q) filed by
Borrower with the SEC since January 1, 1992 (collectively, the
"Borrower SEC Reports"). The Borrower SEC Reports (i) were
prepared in all material respects in accordance with the
requirements of the Securities Act or the Exchange Act, as the case
may be, and (ii) did not at the time they were filed contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading. No Subsidiary of Borrower
(other than Magma) is required to file any statements or reports
with the SEC pursuant to Section 13(a) or 15(d) of the Exchange
Act.
(ff) CE Acquisition. CE Acquisition was organized on September
22, 1994 for the purposes of (i) making the Tender Offer, (ii)
acquiring and holding the shares of Magma acquired in connection
therewith and (iii) entering into the Merger, and since such date
has not carried on any activities other than those incident to its
formation, the commencement and making of the Tender Offer and the
consummation of the Merger.
(gg) Labor Matters. There are no strikes or other labor disputes
or grievances or charges or complaints with respect to any employee
or group of employees pending or threatened against Borrower or any
Material Subsidiary which could reasonably be expected to have a
Material Adverse Effect.
(hh) Additional Representations and Warranties. All
representations and warranties of Borrower, CE Acquisition and
Magma set forth in Articles III and IV of the Merger Agreement are
incorporated herein by reference as if fully stated herein and
shall survive the termination of the Merger Agreement for as long
as any of the Obligations remain unpaid or unperformed, and such
representations and warranties are true and correct as though made
as of the date hereof.
(ii) Transactions With Affiliates. Set forth on Schedule 4.1(ii)
is a true, accurate and complete description of all transactions
between Magma or any of its Subsidiaries and any Affiliate of Magma
or any of its Subsidiaries (other than Magma or any Subsidiary of
Magma) which since December 31, 1993 required or which will require
the payment by Magma or any of its Subsidiaries of an amount equal
to or greater than $100,000 during any twelve-month period.
(jj) Bid Bonds, Guarantees, Etc. Set forth on Schedule 4.1(jj) is
a true, accurate and complete description of all surety, bid,
operating and performance bonds, performance guaranties and other
similar instruments or obligations with respect to Magma and its
Subsidiaries.
(kk) Projections. The Projections have been prepared by Borrower
in light of the past operations of the business of Magma, and on
the basis of assumptions which are set forth therein, and (i) the
assumptions related thereto have been made in good faith with due
care, (ii) the Projections, taken as a whole, fairly present, and
will fairly present, to the best of Borrower's knowledge,
expectations as to the matters covered thereby as of their date and
on the Closing Date, (iii) the Projections are based on reasonable
assumptions as to all factual and legal matters material to the
estimates therein (including interest rates and costs), (iv) the
Projections are in all material respects consistent with, and will
be in all material respects consistent with, the material
provisions of the Magma Project Documents, and (v) the Projections
reflect all significant aspects of the business plan referred to in
Section 3.1(gg) and the transactions contemplated by the Credit
Documents, the Support Services Agreement and the Tax Indemnity
Agreement. Borrower has no reason to believe that Magma will be
unable to achieve the results set forth in the Projections.
(ll) Solvency. Each of Borrower and Magma is Solvent.
(mm) Patents, Licenses, Franchises and Formulas. No patents,
trademarks, service marks, trade names, copyrights, licenses,
franchises, formulas or agreements with respect to the usage of
technology or other permits are necessary for the construction,
ownership, operation or maintenance of any Magma Project (other
than Alto Peak and Fish Lake), or, to the best of Borrower's
knowledge, will be necessary for the construction, ownership,
operation or maintenance of Alto Peak and Fish Lake, except for the
patents, trademarks, service marks, trade names, copyrights,
licenses, franchises, formulas, agreements or permits which the
respective Project Owner owns, or will own in the case of Alto Peak
and Fish Lake, and has, and will have in the case of Alto Peak and
Fish Lake, good title to, free and clear of all Liens (other than
Permitted Liens), or which the respective Project Owner has, or
will have in the case of Alto Peak and Fish Lake, the right to use
to the extent necessary to permit the construction, ownership,
operation and maintenance of the applicable Magma Project in the
manner contemplated by the applicable Magma Project Documents.
(nn) Capitalization. The authorized capital stock or other equity
interests of Magma and each of its Subsidiaries, before and after
giving effect to the Merger, is as set forth on Schedule 4.1(nn).
All issued and outstanding shares of capital stock of Magma and
each of its corporate Subsidiaries are duly authorized and validly
issued, fully paid, nonassessable, free and clear of all Liens
other than those granted under the Security Documents, and such
shares were issued in compliance with all applicable state, federal
and foreign Laws concerning the issuance of securities. The
capital stock or other equity interests of Magma and each of its
Subsidiaries is owned by the stockholders of Magma and such
Subsidiaries, as applicable, and in the amounts set forth on
Schedule 4.1(nn). No shares of the capital stock of or other
equity interests of Magma or any of its Subsidiaries, other than
those described above, are issued and outstanding. Except on
Schedule 4.1(nn), there are no preemptive or other outstanding
rights, options, warrants, conversion rights or similar agreements
or understandings for the purchase or acquisition from Magma or any
of its Subsidiaries of any shares of capital stock or other
securities or other equity interests of any such entity.
(oo) Governmental Approvals. All governmental approvals necessary
under Law in connection with the grant by Borrower, Magma and
Magma's Subsidiaries of the Liens created by the Security Documents
and the validity, enforceability and perfection thereof and the
exercise by the Agent or any Bank, as the case may be, of its
rights and remedies thereunder, have been obtained. All
governmental approvals necessary under Law in connection with the
due execution and delivery of, and performance by Magma and its
Subsidiaries of its obligations and the exercise of its rights
under, the Magma Project Documents in effect or required to be in
effect as of the date hereof, and the construction, operation,
maintenance and ownership of each Magma Project as contemplated by
the Magma Project Documents, all to the extent necessary to avoid
a Material Adverse Effect, have been obtained. Each of such
governmental approvals is validly issued, is in full force and
effect, is not subject to appeal and is free from conditions or
requirements compliance with which is reasonably likely to have a
Material Adverse Effect. There is no proceeding pending or, to the
best knowledge of Borrower, threatened which is reasonably likely
to result in the recision, revocation, material modification,
suspension or determination of invalidity or limitation of
effectiveness of any such governmental approval. The information
set forth in each application and other written material submitted
by or on behalf of Magma or any of its Subsidiaries to the
applicable Governmental Authority in connection with each such
governmental approval is accurate and complete in all material
respects. Borrower has no reason to believe that any governmental
approval that has not been obtained, but which will be required in
the future, for each Magma Project will not be granted in due
course, on or prior to the date when required and free from any
condition or requirement compliance with which is reasonably likely
to have a Material Adverse Effect or which Borrower does not
reasonably expect to be able to satisfy. The Magma Projects that
have been constructed do, and the Magma Projects that have not been
constructed, if constructed in accordance with the applicable
Project Documents relating to such Magma Project will, conform to
and comply in all material respects with all covenants, conditions,
restrictions and reservations in the governmental approvals
relating to such Magma Project and the Magma Project Documents
applicable thereto and all Laws all to the extent necessary to
avoid a Material Adverse Effect.
(pp) Bank Accounts. Schedule 4.1(pp) sets forth the account
numbers and location of all bank accounts of Magma and each of its
Subsidiaries.
ARTICLE V
Covenants of Borrower
Section 5.1 Affirmative Covenants. So long as any Obligations
shall remain outstanding or any of the Commitments shall remain
available hereunder, Borrower will, unless Majority Banks shall
otherwise consent in writing:
(a) Payment of Taxes, Etc. Pay and discharge, and cause each of
its Subsidiaries to pay and discharge, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges or
levies imposed upon it or upon its property, and (ii) all lawful
claims which, if unpaid, might by Law become a Lien upon its
property; provided, however, that neither Borrower nor any of its
Subsidiaries shall be required to pay or discharge any such tax,
assessment, charge or claim which is being contested in good faith
and by proper proceedings and as to which adequate reserves have
been established.
(b) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, or cause to be maintained for each of its
Subsidiaries, with responsible and reputable insurance companies or
associations, insurance in such amounts and covering such risks
(including, but not limited to, catastrophe perils insurance (i.e.,
hurricane, earthquake, flood, and storm) and business interruption
insurance) as is usually carried by companies engaged in similar
businesses and owning similar properties in the same general areas
in which Borrower or any of its Subsidiaries operates (the
"Industry Standard"), and, subject to the following provisos, in
any event the insurance coverages shall not be less than the
insurance coverages set forth on Schedule 4.1(aa); provided that if
the Industry Standard is such that the insurance coverages then
being maintained by Borrower and its Subsidiaries is below the
Industry Standard, Borrower shall use its best efforts to obtain
the necessary insurance coverages such that its and its
Subsidiaries' insurance coverages equals or is greater than the
Industry Standard; provided, further, that if the Industry Standard
is such that the insurance coverages then being maintained by
Borrower and its Subsidiaries is in excess of the Industry
Standard, then Borrower may conform its or its Subsidiaries'
insurance coverages to the Industry Standard unless Agent
determines that maintaining the Industry Standard would not be
reasonable under the circumstances (and in making such
determination Agent shall take into account the availability of
such insurance coverages on commercially reasonable terms).
(c) Preservation of Corporate Existence, Etc. Preserve and
maintain, and cause each Material Subsidiary to preserve and
maintain and keep in full force and effect, its corporate
existence, rights (charter and statutory) and franchises.
(d) Compliance with Laws and Magma Project Documents. Comply, and
cause each of its Subsidiaries to comply, with the requirements of
all applicable Laws (including the maintenance of government
approvals described in Section 4.1(oo) in full force and effect)
noncompliance with which could have a Material Adverse Effect and
cause each Project Owner to comply with each Magma Project Document
to which it is a party.
(e) Inspection Rights. At any reasonable time and from time to
time upon reasonable notice, permit Agent or any agents or
representatives thereof, to examine (at the location where normally
kept) and make abstracts from the records and books of account of,
and visit the properties of Borrower and its Subsidiaries and to,
upon reasonable notice to Borrower, discuss the affairs, finances
and accounts of Borrower and its Subsidiaries with any of their
respective officers and discuss the affairs, finances and accounts
of Borrower and its Subsidiaries with its independent certified
public accountants (at which discussion, if Borrower so requests,
a representative of Borrower shall be permitted to be present) and
permit such accountants to disclose to Agent any and all financial
statements and other reasonably requested information of any kind
that they may have with respect to Borrower and its Subsidiaries.
(f) Keeping of Books. Keep, and cause each of its Subsidiaries to
keep, proper books of record and account, in which full and correct
entries shall be made of all financial transactions and the assets
and business of Borrower and its Subsidiaries in a form, in the
case of Borrower, such that Borrower may readily produce no less
frequently than at the end of each of its fiscal quarters,
financial statements in accordance with GAAP consistently applied.
(g) Maintenance of Properties, Etc. Cause Magma and each of
Magma's Subsidiaries (including the Project Owners) to maintain all
of its properties which are used or useful in the conduct of its
business in good working order and condition, ordinary wear and
tear excepted.
(h) Reporting Requirements. Furnish to Agent with sufficient
copies for each Bank (as designated by Agent):
(i) Quarterly Financial Statements of Borrower and Magma. As soon
as available to any Person outside of Borrower and in any event
within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of Borrower and Magma, consolidated
balance sheets of Borrower and its Subsidiaries and consolidated
and consolidating balance sheets of Magma and its Subsidiaries as
of the end of such quarter and consolidated statements of
operations, stockholders' equity and cash flows of Borrower and its
Subsidiaries and consolidated and consolidating statements of
operations, stockholders' equity and cash flows of Magma and its
Subsidiaries for the period commencing at the beginning of such
fiscal year and ending with the end of such quarter, all in
reasonable detail and duly certified (subject to year-end audit
adjustments) by a Responsible Officer of Borrower or Magma, as
applicable, as having been prepared in accordance with GAAP
consistently applied, together with a Compliance Certificate as of
the end of such fiscal quarter;
(ii) Annual Financial Statements of Borrower and Magma. As soon
as available to any other Person and in any event within 90 days
after the end of each fiscal year of Borrower and Magma, the
consolidated balance sheets of Borrower and its Subsidiaries and
the consolidated and consolidating balance sheets of Magma and its
Subsidiaries as of the end of such fiscal year and the consolidated
statements of operations, stockholders' equity and cash flows of
Borrower and its Subsidiaries and the consolidated and
consolidating statements of operations, stockholders' equity and
cash flows of Magma and its Subsidiaries for such fiscal year, in
the case of such consolidated financial statements, certified,
without material qualifications or limitations as to scope of the
audit (except as provided in the proviso set forth below) by
independent public accountants of recognized standing, as having
been prepared in accordance with GAAP, consistently applied,
together with a Compliance Certificate as of the end of such fiscal
year for Borrower and Magma provided that with respect to the
consolidated financial statements of Magma and its Subsidiaries,
the independent public accountants of Borrower may rely on the
financial statements audited by another independent public
accountant;
(iii) Accountants' Reports. Promptly upon receipt thereof,
Borrower or Magma, as applicable, will deliver copies of all
significant reports submitted to Borrower or Magma, as applicable,
by independent public accountants in connection with each annual,
interim or special audit of the financial statements of Borrower or
Magma, as applicable, made by such accountants;
(iv) Notice of Defaults. As soon as possible and in any event
within five days after the occurrence of each Event of Default and
each event which, with the giving of notice or lapse of time, or
both, would constitute an Event of Default, continuing on the date
of such statement, a statement of a Responsible Officer of Borrower
setting forth details of such Event of Default or event and the
action which Borrower has taken and proposes to take with respect
thereto;
(v) PBGC Notices. Promptly and in any event within ten Banking
Days after receipt thereof by Borrower or any ERISA Affiliate from
the Pension Benefit Guaranty Corporation, copies of each notice
received by Borrower or any such ERISA Affiliate of the intention
of the PBGC to terminate any Pension Plan or to have a trustee
appointed to administer any Pension Plan;
(vi) Litigation. (i) Promptly after the commencement thereof,
notice of all actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency, or
instrumentality domestic or foreign affecting Borrower, any of its
Subsidiaries (other than Magma and its Subsidiaries) or any of
their respective assets or properties which could have a Material
Adverse Effect, and promptly after the occurrence thereof, notice
of any material development in any such actions, suits or
proceedings; and (ii) promptly after the commencement thereof,
notice of all material actions, suits and proceedings before any
court or governmental department, commission, board, bureau,
agency, or instrumentality domestic or foreign affecting Magma, any
of Magma's Subsidiaries or any of their respective assets or
properties, and promptly after the occurrence thereof, notice of
any material development in any such actions, suits or proceedings;
(vii) Quarterly Officer's Certificate. Together with the
financial statements referred to in Section 5.1(h)(i), a
certificate signed by a Responsible Officer of Borrower, in form
and substance reasonably satisfactory to Agent, (x) certifying (i)
compliance with Section 5.3 and (ii) the absence of a Material
Adverse Effect and (y) setting forth a list, if applicable, of any
and all uncured and unwaived payment defaults by Borrower or any of
its Subsidiaries aggregating more than $1,000,000 on any Debt as of
the last day of the prior fiscal quarter;
(viii) SEC Filings and Press Releases. Promptly upon their
becoming available, Borrower will deliver copies of: (1) all
financial statements, reports, notices and proxy statements sent or
made available by Borrower or any of its Subsidiaries to its
respective public security holders; (2) all regular and periodic
reports and all registration statements and prospectuses, if any,
filed by Borrower or any of its Subsidiaries with any securities
exchange or with the Securities and Exchange Commission; and (3)
all press releases and other statements made available by Borrower
or any of its Subsidiaries to the public concerning developments in
the business of any such Person, other than any such press releases
or statements issued in the ordinary course of business;
(ix) Employee Benefit Plans. With reasonable promptness, and in
any event within thirty (30) days, Borrower will give notice of
and/or deliver to Agent and each Bank copies of: (1)(a) the
establishment of any new Pension Plan or Multiemployer Plan, (b)
the commencement of contributions to any Pension Plan or
Multiemployer Plan to which Borrower or any of its ERISA Affiliates
was not previously contributing or becomes obligated to contribute
or (c) any material increase in the benefits of any existing
Pension Plan or Multiemployer Plan or (d) the establishment or
amendment of any Employee Benefit Plan or other plan or agreement
which creates or increases liability of Borrower or any of its
Affiliates with respect to health or welfare benefits to retirees;
(2) each funding waiver request filed with respect to any Employee
Benefit Plan and all communications received or sent by Borrower or
any ERISA Affiliate with respect to such request; and (3) the
failure of Borrower or any ERISA Affiliate to make a required
installment or payment under Section 302 of ERISA or Section 412 of
the IRC by the due date; provided that such notice shall be
required (I) with respect to Magma or any of its Subsidiaries or
any Pension Plan, Multiemployer Plan or Employee Benefit Plan
applicable thereto and (II) with respect to any increase in
benefits under any Multiemployer Plan only after Borrower has
obtained knowledge or reason to know of the event described in (1),
(2) or (3) hereof;
(x) Termination Events. Promptly and in any event within ten (10)
days of becoming aware of the occurrence of or forthcoming
occurrence of any (1) Termination Event or (2) "prohibited
transaction," as such term is defined in Section 406 of ERISA or
Section 4975 of the IRC, in connection with any Pension Plan or any
trust created thereunder, Borrower will deliver to Agent and each
Bank a notice specifying the nature thereof, what action the
applicable Borrower or ERISA Affiliate has taken, is taking or
proposes to take with respect thereto and, when known, any action
taken or threatened by the Internal Revenue Service, the Department
of Labor or the PBGC with respect thereto;
(xi) ERISA Notices. With reasonable promptness but in any event
within ten (10) days for purposes of clauses (1), (2) and (3),
Borrower will deliver to Agent and each Bank copies of: (1) any
favorable or unfavorable determination letter from the Internal
Revenue Service regarding the qualification of an Employee Benefit
Plan or Multiemployer Plan under Section 401(a) of the IRC; (2) all
notices received by Borrower or any ERISA Affiliate of the PBGC's
intent to terminate any Pension Plan or to have a trustee appointed
to administer any Pension Plan; (3) each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) filed by
Borrower or any ERISA Affiliate with the Internal Revenue Service
with respect to each Pension Plan; and (4) all notices received by
Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor
concerning the imposition or amount of withdrawal liability
pursuant to Section 4202 of ERISA; provided that such notice shall
be required for the event described in clause (1) above with
respect to Multiemployer Plans only after Borrower has obtained
knowledge or has reason to know of such event. Borrower will
notify Agent and each Bank in writing within two (2) Banking Days
of Borrower or any of its Subsidiaries obtaining knowledge or
reason to know that Borrower or any ERISA Affiliate has filed or
intends to file a notice of intent to terminate any Pension Plan
under a distress termination within the meaning of Section 4041(c)
of ERISA;
(xii) Transactions With Affiliates. Within 10 days after the end
of each fiscal quarter of Magma, Borrower will deliver to Agent a
description of any transaction that occurred during such fiscal
quarter between Magma or any of its Subsidiaries and any Affiliate
of Magma or any of its Subsidiaries requiring payments by Magma or
any of Magma's Subsidiaries in excess of $100,000 for any 12-month
period;
(xiii) Annual Projections; Annual Budget. Within 30 days prior to
the commencement of each fiscal year of Magma, Borrower will
deliver to Agent (with sufficient copies for each Bank) (A)
consolidated and consolidating projections of the operations of
Magma and its Subsidiaries for the immediately succeeding fiscal
year and each fiscal year thereafter through and including the
fiscal year ending immediately after the Final Maturity Date, such
projections to contain the types of information set forth on the
Projections and (B) an annual operating budget for Magma and its
Subsidiaries (including the Project Owners) on a consolidated basis
which shall establish that Magma and its Subsidiaries will be in
compliance, on a pro forma projected basis, with the financial
covenants contained in Section 5.3, such projections and budgets to
be accompanied by the certificate set forth in paragraph (xiv)
below, such budget to be satisfactory to Agent;
(xiv) Projections and Budget Certificate. Together with the
projections and budgets to be delivered pursuant to paragraph
(xiii) above, a certificate executed by the chief financial officer
of Borrower certifying that (i) the assumptions related thereto
have been made in good faith with due care, (ii) the projections or
budgets as applicable, taken as a whole, fairly present, and will
fairly present, to the best of Borrower's knowledge, expectations
as to the matters covered thereby as of their date, (iii) the
projections or budgets as applicable, are based on reasonable
assumptions as to all factual and legal matters material to the
estimates therein (including interest rates and costs) and (iv) the
projections or budgets as applicable, are in all material respects
consistent with, and will be in all material respects consistent
with, the material provisions of the Magma Project Documents;
(xv) Debt Service Coverage Ratio Compliance Certificate. No later
than 90 days after each fiscal year of Magma, Borrower shall
deliver to Agent (with sufficient copies for the Banks) a
certificate, executed by a Responsible Officer of Borrower,
demonstrating that, based on the annual budget of Magma and its
Subsidiaries for the then current fiscal year, Borrower will be in
compliance, on a pro forma projected basis, with the financial
covenant contained in Section 5.3(f) for such fiscal year, such
certificate to be in form and substance satisfactory to Agent. No
later than August 15th of each fiscal year of Magma, Borrower shall
deliver to Agent (with sufficient copies for the Banks) a
certificate, executed by a Responsible Officer of Borrower, stating
that no event has occurred and Borrower has no reason to believe
that any event will occur which would cause Borrower not to be in
compliance with Section 5.3(f) for the then current fiscal year,
such certificate to be in form and substance satisfactory to Agent;
(xvi) Project Information. Without duplication of any of the
foregoing:
(A)as soon as is available to any other Person and in any
event within 45 days after the end of each of the first three
fiscal quarters of each fiscal year of each Project Owner balance
sheet of such Project Owner as of the end of such quarter and
statements of operations, partners' or stockholders', as
applicable, equity and cash flows of such Project Owner for the
period commencing at the beginning of such fiscal year and ending
with the end of such quarter, all in reasonable detail and duly
certified (subject to year-end audit adjustments) by a Responsible
Officer of such Project Owner, as having been prepared in
accordance with GAAP consistently applied, together with a
certificate as of the end of such fiscal quarter executed by a
Responsible Officer of such Project Owner certifying that no event
of default has occurred or would occur with the giving of notice,
the passage of time or both under any Project Document to which it
is a party;
(B) as soon as available to any other Person, and in any event
within 90 days after the end of such fiscal year of each Project
Owner, the balance sheet of such Project Owner as of the end of
such fiscal year and the statements of operations, partners' or
stockholders', as applicable, equity and cash flows of such Project
Owner for such fiscal year, in the case of such financial
statements, certified, without material qualifications or
limitations as to scope of the audit, by independent public
accountants of recognized standing, as having been prepared in
accordance with GAAP, consistently applied, together with a
certificate as of the end of such fiscal year executed by a
Responsible Officer of such Project Owner certifying that no event
of default has occurred or with the giving of notice, the passage
of time or both would constitute an event of default under any
Project Document to which it is a party;
(C) as soon as available and in any event within 30 days prior
to the commencement of each Project Owner's fiscal year, an annual
operating budget of such Project Owner accompanied by a statement
of the chief financial officer of such Project Owner that, to the
best of his or her knowledge, the budget is a reasonable estimate
for the period covered thereby;
(D) as soon as available and in any event within 30 days
prior to the commencement of each Project Owner's fiscal year, such
Project Owner's forecasted consolidated and consolidating balance
sheets, profit and loss statements, cash flow statements and
capitalization statements for the immediately succeeding 3 fiscal
years, together with (i) a certificate from the chief financial
officer of Borrower certifying that such forecasted financial
statements are consistent with such Project Owner's historical
financial statements and (ii) a statement of the underlying
assumptions;
(E) simultaneously with the delivery to the lenders under the
Magma Project Credit Agreements, all documents and information
required to be delivered to such lenders (and not covered by the
foregoing) for each of the Financed Magma Projects; and
(F) as soon as available and in any event within five Banking
Days after Borrower has knowledge thereof, written notice of:
(1) any information, development or knowledge of any adverse
change in the business, prospects, properties, condition (financial
or otherwise) or operations, present or prospective, of any party
to any of the Magma Project Documents which are material to such
party's ability to perform thereunder or which has had or may
reasonably be expected to have a Material Adverse Effect and of any
other event which has had, or may reasonably be expected to have,
a Material Adverse Effect;
(2) (x) any material dispute involving any Project Owner or any
other party to any of the related Magma Project Documents and
relating to any of the transactions contemplated by any such
document (and promptly upon any decision relating to any such
dispute having been made, a copy of such decision), and (y) any
litigation, investigation, proceeding, material claim or material
controversy (a) involving or affecting any Project Owner or any of
its properties, revenues or assets, or the related Magma Project,
(b) involving or affecting any partner of such Project Owner, or
any of their properties, revenues or assets, in each case which
relate to the applicable related Magma Project and as to which
there is a reasonable possibility of a Material Adverse Effect, (c)
involving or affecting any other party to any of the related Magma
Project Documents or any of their properties, revenues or assets
and as to which there is a reasonable possibility of a Material
Adverse Effect, (d) which could cause a Default or an Event of
Default, or (e) for the purpose of revoking, terminating,
withdrawing, suspending, modifying or withholding and governmental
approvals necessary for the performance by any party to any of the
related Magma Project Documents of their respective obligations, or
the exercise of their respective rights, under such Magma Project
Documents, or for the construction, operation or maintenance of the
applicable Magma Project in the manner contemplated by the related
Magma Project Documents;
(3)any proposal by any governmental authority to acquire
compulsorily any Project Owner or a substantial part of such
Project Owner's business or assets;
(4) any fire or other casualty affecting a Magma Project in any
material respect;
(5) any substantial dispute between any Project Owner, any partner
of such Project Owner or Magma and any governmental authority
relating to the related Magma Project;
(6) any actual or proposed termination, rescission, discharge
(otherwise than by performance), amendment or waiver or indulgence
under, any material provision of any Magma Project Document;
(7) any material notice or correspondence received or initiated by
any Project Owner relating to a governmental approval or other
license or authorization necessary for the performance by it of its
obligations under the related Magma Project Documents;
(8) any Lien (other than a Permitted Lien) becoming enforceable
over any of a Project Owner's assets; and
(9) any proposed material change in the nature or scope of any
Magma Project or the business or operations of any Project Owner
and any one or more events, conditions or circumstances that exist
or have occurred which are reasonably likely to have a Material
Adverse Effect;
(xvii) Additional Information. Such other information respecting
the condition or operations, financial or otherwise, of Borrower or
its Subsidiaries as any Bank through Agent may from time to time
reasonably request; and
(xviii) Significant Events. Promptly upon Borrower's knowledge
thereof, a written statement from a Responsible Officer of Borrower
describing the details of:
(A) any substantial dispute which may exist between Borrower
or any of its Subsidiaries and any governmental regulatory body or
law enforcement authority that could reasonably be expected to have
a Material Adverse Effect;
(B) any labor controversy resulting in or reasonably likely
to result in a strike or work stoppage or slowdown against Borrower
or any of its Subsidiaries that could reasonably be expected to
have a Material Adverse Effect;
(C) Magma or any of its Subsidiaries that are Material
Subsidiaries ceasing to be a Material Subsidiary and the reasons
for such change in status;
(D) any Person becoming a Material Subsidiary of Magma and
the reasons why such Person has become a Material Subsidiary;
(E) any proposal by any public authority to condemn or
acquire any material assets or business of Borrower or any Material
Subsidiary;
(F) any event or occurrence with respect to Magma or any of
its Subsidiaries or any of its respective businesses, assets or
properties which gives rise to a claim in excess of $5,000,000
under any insurance policy insuring Magma or any of its
Subsidiaries or any of its respective businesses, assets or
properties;
(G) any change of any Law, the introduction of legislation
which is reported out of committee or as to which public hearings
have been scheduled or held that, if enacted, would result in such
change of Law, or any other proposed change of Law which Borrower
reasonably believes may become effective, which change or proposed
change is reasonably likely to have a Material Adverse Effect; and
(H) any matter which has or might reasonably be expected to
have a Material Adverse Effect.
(i) Use of Proceeds. Use the proceeds of the Loans solely to fund
the loan to CE Acquisition by Borrower under the CE Acquisition
Credit Agreement and cause CE Acquisition to apply such proceeds to
the payment of the cash portion of the consideration to be paid by
CE Acquisition under the Merger Agreement.
(j) Permit Distributions. To the extent possible, cause the
Project Owners and the other Subsidiaries of Magma to distribute
available and unrestricted funds to Magma in amounts that are, in
the aggregate, sufficient to make all payments due under the CE
Acquisition Secured Term Note (including, without limitation, both
regularly scheduled payments and mandatory prepayments).
(k) Maintenance of Concentration Account. Borrower shall cause
Magma to maintain with Agent the Concentration Account and shall
cause Magma and its Subsidiaries to comply with the terms of the
Cash Management Agreement.
(l) Separate Businesses. Borrower shall, except as set forth on
Schedule 5.1(l), cause Magma and its Subsidiaries to publicly
conduct its business as an entity distinct from Borrower and its
Subsidiaries (other than Magma and its Subsidiaries), including,
without limitation, (A) paying its own expenses from its own
funds, (B) maintaining separate books, records and bank accounts,
(C) maintaining and issuing its own financial statements, (D)
maintaining separate assets and liabilities, (E) maintaining
adequate capitalization financing and working capital, (F) engaging
in its business activities separate and distinct from the conduct
of its business by Borrower and its Subsidiaries (other than Magma
and its Subsidiaries), (G) observing corporate formalities, (H) not
commingling funds or assets with Borrower or any of its
Subsidiaries (other than Magma and its Subsidiaries and (I)
separately entering into and performing contracts.
(m) Resistance of Regulatory Change. If any litigation,
investigation or proceeding is commenced which causes, or may
cause, or any Governmental Authority shall issue (or propose to
issue) any order, judgment, regulation, decision or interpretation
the effect of which is, or may cause (i) a Material Adverse Effect
or (ii) a rescission, termination, repeal, invalidation,
suspension, injunction, or a material amendment or modification of
any license, permit, authorization or Magma Project Document, or
any part thereof, with respect to Magma or any Magma Project, and,
if in the opinion of Borrower, there is a reasonable likelihood
that such litigation, investigation or proceeding or action by any
Governmental Authority could have a Material Adverse Effect,
Borrower shall cause Magma to use commercially reasonable efforts,
in light of the circumstances at the time, to (A) contest and
resist any such litigation, investigation or proceeding or such
action by any Governmental Authority, (B) pursue all remedies and
appeals as reasonably necessary in connection therewith and (C)
take such other lawful action, in each case as Borrower shall
determine to be reasonably necessary or desirable, in light of all
relevant circumstances, to prevent such litigation, investigation
or proceeding or such action by any Governmental Authority from
becoming final and nonappealable or otherwise irrevocable, to
attempt to postpone the effectiveness of such litigation,
investigation or proceeding or such action by any Governmental
Authority, and to cause such litigation, investigation or
proceeding or such action by any Governmental Authority to be
terminated, revoked, amended or modified so as to eliminate the
reasonable likelihood of such effect.
(n) Energy Regulatory Status.
(i) Cause the owner or operator of each of the Plants under
development by Borrower or any of its Subsidiaries or Magma or any
of its Subsidiaries and located in the United States of America to,
no later than the date operations commence, either self certify or
secure a FERC certification that the Plant is a QF or Small Power
QF or secure a determination by FERC that the Plant is an EWG, and
if an EWG, ensure that the rates for service therefrom are on file
with FERC.
(ii) Cause the owner or operator of each of the Plants under
development by Borrower or any of its Subsidiaries or Magma or any
of its Subsidiaries and located outside the United States of
America to, no later than the date operations commence, either
secure a determination by FERC that the Plant is an EWG or qualify
and have filed the requisite notice as a "foreign utility company,"
as such term is defined under PUHCA and the regulations thereunder.
(o) Interest Rate Agreement.
(i) Within 30 days after the Closing Date, Borrower will enter
into an Interest Rate Agreement, in form and substance satisfactory
to Agent, pursuant to which (a) interest rates on a notional amount
of $200,000,000 of the Loans is protected against increases in the
Eurodollar Rate above 8.5% per annum, for a period of 3 years from
the Closing Date and (b) interest rates on an additional notional
amount of $200,000,000 of the Loans and/or project financing Debt
of Magma or its Subsidiaries is protected against increases in the
Eurodollar Rate above 9.0% per annum, for a period of 3 years from
the Closing Date.
(ii) If, on any principal payment date (a "Hypothetical Rate
Determination Date") hereunder after the second anniversary of the
Closing Date, a 100 basis point (1.0%) per annum increase in each
rate of interest then in effect on each component of the Total
Exposed Debt (each interest rate as so increased being referred to
herein as the "Applicable Hypothetical Rate") would result in (a)
an increase of more than $4,000,000 in the total interest payments
due on the Total Exposed Debt (as defined below) for the 12-month
period immediately succeeding such Hypothetical Rate Determination
Date and (b) the Debt Service Coverage Ratio for such 12-month
period, on a pro forma projected basis, to be less than the minimum
Debt Service Coverage Ratio required for such period under Section
5.3(f), Borrower shall, or shall cause the Subsidiary of Magma that
is subject to the applicable Total Exposed Debt to, enter into an
Interest Rate Agreement(s), in form and substance satisfactory to
Agent, pursuant to which interest rates on a notional amount equal
to 50% of the Total Exposed Debt shall be protected against
increases in the interest rates applicable thereto above such rates
and for such period or periods as may be agreed to by Borrower and
Agent. In the event that Borrower and Agent fail to agree on a
rate and period within 30 days of the Applicable Hypothetical Rate
Determination Date, the rates under the Interest Rate Agreement(s)
shall be set at 200 basis points (2.0%) above the rates then in
effect on the applicable Total Exposed Debt and for a period equal
to the lesser of three years and the remaining scheduled term of
the Loans (including any refinancing of the Tranche B Loans and the
Tranche C Loans in the capital markets). In calculating the effect
of the Applicable Hypothetical Rates under clauses (a) and (b)
above, the actual interest rates and the Applicable Hypothetical
Rates shall be applied to the weighted average daily balance of the
applicable Total Exposed Debt for the relevant 12-month period,
taking into account scheduled amortization during such period, but
not prepayments of any type.
(iii) The term "Total Exposed Debt" means (unless such Debt is
subject to fixed rate interest charges, to be approved by Agent if
such rate is in excess of 11% per annum) (i) the Loans, (ii) the
Salton Sea Project credit facility, (iii) the Leathers Project
credit facility, (iv) the Hoch Project credit facility, (v) the
Elmore Project credit facility and (vi) the Fish Lake Project
credit facility; provided that the principal amount outstanding
under the Fish Lake Project credit facility shall be included in
the definition of Total Exposed Debt only if the interest rate
thereunder is in excess of 10.5% during construction of the Fish
Lake Project and 11% during operation of the Fish Lake Project, and
shall include any refinancing, restructuring, extensions or
renewals of the Debt described in clauses (i) through (vi) above.
(p) Alto Peak and Fish Lake Development Certificates. At least 10
Banking Days prior to the Financial Closing of each of Alto Peak
and Fish Lake (the "10 Day Period"), deliver to Agent (i) a
description of the financing terms, construction budget,
engineering report and other information relating to the
construction, financing and development of Alto Peak or Fish Lake,
as applicable, as Agent may request, such information to be in form
and substance satisfactory to Agent and (ii) a certificate
certifying that the relevant Project pro forma cash flows, taken as
a whole, materially conform to the Projections, such certificate to
be in form and substance satisfactory to Agent. Neither Borrower
nor Magma shall use or apply the Alto Peak Pre-Funded Equity Amount
or the Fish Lake Pre-Funded Equity Amount in connection with the
construction, financing or development of Alto Peak or Fish Lake,
respectively, if, after the information relating thereto has been
delivered to Agent, the Majority Banks notify Borrower in writing
during the 10 Day Period that the terms of construction, financing
or development (including, but not limited to, the applicable
budgets) are not acceptable to them.
(q) Bank Accounts. Cause Magma and, if required by Agent, cause
Magma's Subsidiaries to maintain all of its or their bank accounts
with Agent other than bank accounts that Magma or any of its
Subsidiaries is required to maintain with another Person pursuant
to the terms of any Magma Project Document.
(r) Syndication Efforts. Make itself reasonably available to
assist Agent in syndicating the Commitments and the Loans. Without
limiting the generality of the foregoing, Borrower shall, at the
request of Agent, assist Agent and otherwise cooperate with Agent
in the preparation of an information memorandum (which assistance
may include reviewing and commenting on drafts of such information
memorandum and drafting portions thereof) to facilitate the
preparation and printing of such information memorandum and shall
make its chief financial officer available to attend a bank group
meeting among prospective banks to be held during the week of March
6, 1995. To ensure an orderly and effective syndication of the
Loans, Borrower agrees that from the date of this Agreement until
the termination of the syndication (as determined by Agent), but
not later than June 9, 1995 after a bank group meeting among
prospective banks, Agent and representatives of Borrower, Borrower
will not, and will not permit any of its Subsidiaries to, syndicate
or issue, attempt to syndicate or issue, announce or authorize the
announcement of the syndication or issuance of, any debt facility
or debt security (other than the $50,000,000 credit facility
currently being negotiated with Bank of America National Trust &
Savings Association, the project financing for the Casecnan
Project, the project financing for Malitbog and the project
financing for Fish Lake if the financing for Fish Lake is to be
provided or syndicated by Credit Suisse) in the commercial bank
market.
(s) Pro Forma Balance Sheets. Within 45 days after the Closing
Date, Borrower will deliver Pro Forma Balance Sheets to the Agent
(with sufficient copies for the Banks).
(t) Additional Documents; Filings and Recordings. Execute and
deliver, and cause each of its Subsidiaries to execute and deliver,
from time to time as reasonably requested by Agent, at Borrower's
expense, such other documents as shall be necessary or advisable or
that Agent, may reasonably request in connection with the rights
and remedies of Agent and the Banks granted or provided for by the
Credit Documents, as applicable, and to consummate the transactions
contemplated herein and therein; take, and cause its Subsidies to
take, all reasonable actions that have been or shall be requested
by Agent, or that Borrower knows are necessary to establish,
maintain, protect, perfect and continue the perfection of the first
priority security interests of the Banks created by the Security
Documents and shall furnish timely notice of the necessity of any
such action, together with such instruments, in execution form, and
such other information as may be required to enable Agent or the
Banks to effect any such action. Without limiting the generality
of the foregoing, Borrower shall, and cause its Subsidies to (a)
execute or cause to be executed and shall file or cause to be filed
such financing statements, continuation statements, fixture filings
and mortgages or deeds of trust in all places necessary or
advisable (in the opinion of counsel for Agent) to establish,
maintain and perfect such security interests and in all other
places that Agent shall reasonably request and (b) do everything
necessary in the reasonable judgment of Agent to (i) create and
perfect its first-priority security interest in the Collateral,
(ii) maintain such security interest in full force and effect at
all times and (iii) preserve and protect the Collateral and protect
and enforce its rights and tile and the rights and title of the
Banks to the Collateral.
(u) Grant of Security Interest. If at any time any of Salton Sea
I, Salton Sea II, Salton Sea III, Malitbog, Fish Lake or Alto Peak
is a Non-Financed Magma Project, Borrower agrees to cause Magma or
the appropriate Subsidiaries of Magma or Project Owner to grant to
Borrower, which Borrower shall simultaneously assign to Agent, for
the benefit of the Banks, to the extent not then already part of
the Collateral, a security interest (subject only to Permitted
Liens) in the assets of such Project and in any Subsidiary of Magma
which is a direct or indirect owner of the applicable Project
Owner, or in the assets acquired, and to execute and deliver, at
Borrower's expense, all documents necessary to evidence, maintain,
protect, perfect and continue such security interest, including,
but not limited to, guaranty agreements, security agreements and
pledge agreements; provided that nothing in this Section 5.1(u)
shall restrict or prohibit Magma or any of its Subsidiaries from
granting, from time to time, to Agent and the Banks a security
interest in unencumbered assets of Magma or its subsidiaries
pursuant to any Security Document or otherwise.
(v) Solvency. Remain Solvent and, subject to Section 2.9, cause
Magma to so do.
(w) Deposits into Concentration Account. On the Closing Date,
will, or will cause Magma to, deposit into the Concentration
Account the amounts set forth on Schedule 3.1(k).
(x) Amendment to the Articles of Association of Magma Netherlands.
Within 90 days of the Closing Date, deliver to Agent copies of (a)
the resolutions of the shareholders of Magma Netherlands approving
the amendment to the articles of association of Magma Netherlands
which amendment permits Magma Netherlands to issue "up-stream"
guaranties, (b) the Ministry of Justice of the Netherlands' consent
to such amendment and (c) an executed notarial deed incorporating
such amendment into the articles of association of Magma
Netherlands, in each case in form and substance satisfactory to
Agent.
Section 5.2 Negative Covenants. So long as any Obligations shall
remain outstanding or any of the Commitments shall remain available
hereunder, Borrower will not, without the written consent of
Majority Banks:
(a) Negative Pledge and Liens. Sell, assign, transfer, pledge or
otherwise encumber or dispose of any shares of capital stock or
other equity securities in Magma or any of Magma's Subsidiaries,
except pursuant to or as contemplated by the Security Documents or
this Agreement, or create, incur, assume or suffer to exist any
Lien, except Permitted Liens, upon or with respect to any assets or
property of Magma or any Subsidiary of Magma, or permit any of its
Subsidiaries so to do.
(b) Fundamental Changes. Permit Magma or any of its Subsidiaries
to: (i) enter into any transaction of consolidation or merger with
or into any other Person; (ii) wind up, liquidate or dissolve its
affairs; (iii) sell, lease, transfer or otherwise dispose of
directly or indirectly (or agree to any of the foregoing at any
future time), assets with a fair market value in excess of
$1,000,000, but not more than $5,000,000 (individually or in the
aggregate during any fiscal year of Magma), unless Agent shall have
consented to such sale, lease, transfer or other disposition, or in
excess of $5,000,000 (individually or in the aggregate during any
fiscal year of Magma), unless the Banks shall have consented to
such sale, lease or transfer or other disposition, or any of the
Collateral; or (iv) purchase or otherwise acquire (in one or a
series of related transactions) any material portion of the
property or assets of any Person out of the ordinary course of
business; provided that notwithstanding the foregoing, (A) MLC may
not sell, lease, transfer or otherwise dispose of any of its assets
except as provided in Section 5.2(p), (B) no Project Owner may
sell, lease, transfer, dispose of or otherwise encumber its Magma
Project or its interest therein except for encumbrances currently
on such Project pursuant to a Magma Project Document or
encumbrances pursuant to any refinancing, extensions,
restructurings or renewals of indebtedness under any Magma Project
Document and (C) any BRPU Subsidiary and its assets may be
transferred to Borrower so long as Agent and the Banks are granted
a security interest in Borrower's residual equity interest therein,
the granting of such security interest and the documentation
relating thereto to be in form and substance acceptable to Agent.
(c) Nature of Business. (i) Engage in, or permit any of its
Subsidiaries (other than Magma and its Subsidiaries) to engage in
any business activity, except (A) the ownership, design,
engineering, procurement, construction, development, acquisition,
operation, servicing, management or disposition of Permitted
Facilities (as defined in the Indenture), (B) the ownership,
creation, development, acquisition, servicing, management or
disposition of Restricted Subsidiaries (as defined in the
Indenture) and Joint Ventures (as defined in the Indenture) that
own, construct, develop, design, engineer, procure, acquire,
operate, service, manage or dispose of Permitted Facilities, (C)
obtaining, arranging or providing financing incident to any of the
foregoing and (D) other related activities incident to any of the
foregoing; or (ii) permit Magma or any of Magma's Subsidiaries to
engage in any business activity other than as set forth on Schedule
5.2(c) and except as contemplated by the Merger.
(d) Fiscal Year. Change its fiscal year.
(e) Bankruptcy. Commence, or join with or solicit any other
Person in commencing, any case or other proceeding seeking
liquidation, reorganization or other relief with respect to
Borrower or any Material Subsidiary 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 Borrower or any
Material Subsidiary, or permit any of its Subsidiaries so to do.
(f) Transactions with Affiliates. Permit Magma or any of its
Subsidiaries to enter into any transaction, including, without
limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate of Borrower or with
any director, officer or employee of Borrower or any of its
Subsidiaries, except (i) under the Support Services Agreement and
(ii) other transactions in the ordinary course of and pursuant to
the reasonable requirements of Borrower's or any of its
Subsidiaries' business and upon fair and reasonable terms no less
favorable to Borrower or such Subsidiary than would be obtained in
an comparable arm's length transaction with a Person not an
Affiliate of Borrower.
(g) Restricted Junior Payments. Permit Magma or any of Magma's
Subsidiaries to make any Restricted Junior Payment, except that (i)
Subsidiaries of Magma may make Restricted Junior Payments, and (ii)
Magma may make Restricted Junior Payments so long as Borrower
receives 100% of the amount distributed by Magma in connection with
any such Restricted Junior Payments.
(h) Limitation on Debt and Contingent Obligations. Create, incur,
assume or otherwise become or remain directly or indirectly liable
with respect to any Debt, except as set forth in Section 1008 of
the Indenture and except in connection with the refinancing of the
Tranche B Loans and the Tranche C Loans pursuant to Section 2.2(i),
or permit Magma or any of Magma's Subsidiaries (other than a BRPU
Subsidiary) to so do, except as contemplated by the Credit
Documents, the Magma Project Documents and except as described and
permitted in clauses (iii), (iv), (v), (vi) and (vii) of Section
1009 of the Indenture. Permit any other Subsidiary to create,
incur, assume or otherwise become or remain directly or indirectly
liable with respect to any Debt, except as permitted by Section
1009 of the Indenture; permit Magma or any of its Subsidiaries
(other than a BRPU Subsidiary) to incur any Contingent Obligations
except any Contingent Obligations set forth in any Magma Project
Document as in effect on the date hereof (exclusive of the
obligations assumed by Borrower pursuant to the CECI Undertaking
Agreement) and any similar obligations (in amount and effect) in
connection with any amendment or refinancing under any of the Magma
Project Documents.
(i) Investments. Make any Investments, or permit any of its
Subsidiaries (other than Magma and Magma's Subsidiaries) so to do,
except pursuant to Section 1010 of the Indenture, or permit Magma
or any of its Subsidiaries to make any Investments, except
Investments in Cash Equivalents and Investments in Alto Peak, Fish
Lake and Malitbog but not to exceed the Alto Peak Pre-Funded Equity
Amount, the Fish Lake Pre-Funded Equity Amount and the Malitbog
Pre-Funded Equity Amount, respectively, and as may be otherwise
permitted by Section 2.11.
(j) Changes to CE Acquisition Secured Term Note, CE Acquisition
Pledge Agreement and Merger Agreement. Change or amend the terms
of the CE Acquisition Secured Term Note, the CE Acquisition Credit
Agreement, or the Merger Agreement, or permit any of its
Subsidiaries so to do.
(k) Changes to Support Services Agreement and Tax
Indemnity Agreement. Change or amend the terms of the Support
Services Agreement or the Tax Indemnity Agreement or permit any of
its Subsidiaries so to do.
(l) Magma Project Documents. Permit Magma or any of its
Subsidiaries to change or amend any Magma Project Document,
including, without limitation, in connection with any refinancing
thereof, if such change or amendment could reasonably be expected
to have a Material Adverse Effect.
(m) New Projects. Permit Magma or any of its
Subsidiaries to enter into any document or agreement relating to
the development of any new Projects other than Malitbog, Alto Peak,
Fish Lake and, subject to the limitations contained in this
Agreement, a BRPU Project.
(n) Compliance with ERISA.
(i) Permit the occurrence of any Termination Event; or
(ii) Permit the present value of all benefit liabilities (based on
the then most recent actuarial assumptions) under all Pension Plans
to exceed the current value of the assets of such Pension Plans; or
(iii) Permit any accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the IRC) with respect to
any Pension Plan, whether or not waived; or
(iv) Fail to make any contribution or payment to any Multiemployer
Plan which Borrower or ERISA Affiliate may be required to make
under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto; or
(v) Engage, or permit any ERISA Affiliate to engage, in any
prohibited transaction under Section 406 of ERISA or Section 4975
of the IRC for which a civil penalty pursuant to Section 502(i) of
ERISA or a tax pursuant to Section 4975 of the IRC is imposed; or
(vi) Permit the establishment of any Employee Benefit Plan or
other plan or agreement providing post-retirement welfare benefits,
except as may be required pursuant to Section 4980B of the IRC or
Section 601 et seq. of ERISA or as otherwise required by law or
establish or amend any Employee Benefit Plan which establishment or
amendment could result in liability to Borrower or any of its
Subsidiaries or increase the obligation of Borrower or any of its
Subsidiaries, whether directly or indirectly through an ERISA
Affiliate, to a Multiemployer Plan which liability or increase, is
material to Borrower or any of its Subsidiaries; or
(vii) Fail to establish, maintain and operate each Employee
Benefit Plan or permit any ERISA affiliate to fail to establish,
maintain and operate each Pension Plan in compliance in all
material respects with the provisions of ERISA, the IRC and all
other applicable laws and the regulations and interpretations
thereof;
which in any such case in (i) through (vii) results in or could
reasonably be expected to result in a Material Adverse Effect.
(o) No Restrictions on Distributions. Except as provided herein
or in the Magma Project Documents, directly or indirectly create or
otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction of any kind on the ability of
Magma or any of its Subsidiaries to (i) pay dividends or make any
other distribution on any of its capital stock or other equity
interests directly or indirectly owned by Borrower, (ii) pay any
indebtedness owed to Borrower or any other Subsidiary of Magma, or
(iii) transfer any of its property or assets to Borrower or any
other Subsidiary of Magma, or permit any of its Subsidiaries so to
do.
(p) Restrictions on MLC. Permit MLC to sell, lease, transfer or
dispose of, or permit any other Person to use or develop any of,
the geothermal resources owned or leased by MLC, except as such
resources are currently leased to, used or developed by, MLC or
another Person as of the date hereof and except in connection with
an Ordinary Course Lease and Royalty Restructuring Transaction and
transactions approved by Agent or the Banks, as applicable,
pursuant to Section 5.2(b).
(q) Other Transactions. Permit Magma or any of its Subsidiaries
to enter into any partnership, profit-sharing, or royalty agreement
or other similar arrangement whereby Magma's or any of its
Subsidiaries' income or profits are, or might be, shared with any
other Person, or enter into any management contract or similar
arrangement whereby its business or operations are managed by any
other Person, except as set forth on Schedule 5.2(q).
(r) Abandonment. Permit Magma, or any of Magma's Subsidiaries to
abandon or agree to abandon any Magma Project or place it or agree
to place it on a "care and maintenance basis" for more than 14 days
in any calendar year, provided, however, that (i) nothing in this
Section 5.2(t) shall prevent any Magma Project from shut-downs
necessary for repairs and maintenance or from putting such Magma
Project on a "care and maintenance basis" during any force majeure
not within the control of Magma or the relevant Project Owner,
which force majeure prevents such Project Owner from developing,
constructing or operating the relevant Magma Project, and (ii)
nothing in this Section 5.2(t) shall be deemed to waive or limit in
any way the right of any of the Banks or Agent to declare an Event
of Default.
(s) Improper Use. Permit Magma or any of its Subsidiaries to use,
maintain, operate or occupy, or allow the use, maintenance,
operation or occupancy of, any portion of any Magma Project for any
purpose (to the extent that the same could reasonably be expected
to have a Material Adverse Effect):
(i) which may be dangerous, unless safeguarded as required by Law
(provided, however, that this clause (a) shall not be deemed to
prohibit any Project Owner from carrying out the applicable Magma
Project in accordance with the terms of any Magma Project Document
in a reasonable and prudent manner);
(ii) which violates any Law;
(iii) which may constitute a public or private nuisance;
(iv) which may make void, voidable, or cancelable or increase the
premium of, any insurance then in force with respect to any Magma
Project or any part thereof unless, in the case of an increase in
premium, the applicable Project Owner gives proof of payment of
such increase; or
(v) otherwise than for the intended purpose thereof in the
construction, operation and maintenance of any Magma Project.
(t) Restrictions on Transactions with Affiliates by Magma and its
Subsidiaries. Permit Magma or any of Magma's Subsidiaries to enter
into any transactions with any of their respective Affiliates
requiring any payments by Magma or any of its Subsidiaries except
(i) Permitted Payments, (ii) any payments under any existing Magma
Project Document and (iii) as permitted under Section 2.11.
(u) Optional Prepayments. Permit Magma or any of its Subsidiaries
or any Project Owner to make any optional prepayment of any
indebtedness under any of the Magma Project Credit Agreements
(except in connection with a refinancing, extension or renewal of
such indebtedness in a transaction permitted under Section 5.2(b)
and 5.2(h)).
(v) BRPU. Notwithstanding any restrictions contained in this
Section 5.2, any BRPU Project may be developed as an indirect
Subsidiary of Magma so long as (A) all funds necessary (including,
without limitation, the funds for any equity obligations) are
provided by Borrower and neither Magma nor any of Magma's
Subsidiaries (other than a BRPU Subsidiary) shall have any
obligations, contingent or otherwise, in connection therewith and
(B) the BRPU Project's capital structure has an equity component of
not less than 15% of total invested capital (debt and equity)
provided exclusively by Borrower and such capital structure may
include a debt component, which debt may be provided by Borrower or
another Person (other than Magma and its Subsidiaries), with
reasonable commercial terms.
Section 5.3 Financial Covenants. So long as any Obligations shall
remain outstanding or any of the Commitments shall remain available
hereunder, Borrower agrees that the financial covenants set forth
below under this Section 5.3 shall be applicable:
(a) Leverage Ratio. Subject to Section 2.9, the Leverage Ratio
for Magma and its Subsidiaries measured as of June 30 and December
31 of each fiscal year shall not exceed the amounts set forth below
at the corresponding dates.
Fiscal Period Ending Ratio
June 30, 1996 6.25 to 1
December 31, 1996 6.25 to 1
June 30, 1997 4.5 to 1
December 31, 1997 4.5 to 1
June 30, 1998 3.0 to 1
December 31, 1998 3.0 to 1
June 30, 1999 3.0 to 1
December 31, 1999 3.0 to 1
June 30, 2000 3.0 to 1
December 31, 2000 3.0 to 1
June 30, 2001 2.5 to 1
December 31, 2001 2.5 to 1
June 30, 2002 2.0 to 1
December 31, 2002 and
each June 30 and
December 31 thereafter 2.0 to 1
(b) Interest Coverage Ratio. Subject to Section 2.9, the Interest
Coverage Ratio for Magma and its Subsidiaries for the periods (i)
from the Closing Date through June 30, 1995, (ii) from the Closing
Date through December 31, 1995, and (iii) thereafter for each
twelve (12) month period ending on each June 30 and December 31 of
each fiscal year (measured as of the last day of each such period)
shall not be less than the amounts set forth below during the
corresponding periods.
Fiscal Period Ending Ratio
June 30, 1995 1.8 to 1
December 31, 1995 1.8 to 1
June 30, 1996 2.0 to 1
December 31, 1996 2.0 to 1
June 30, 1997 2.5 to 1
December 31, 1997 2.5 to 1
June 30, 1998 3.0 to 1
December 31, 1998 3.0 to 1
June 30, 1999 3.0 to 1
December 31, 1999 3.0 to 1
June 30, 2000 3.0 to 1
December 31, 2000 3.0 to 1
June 30, 2001 4.0 to 1
December 31, 2001 4.0 to 1
June 30, 2002 4.0 to 1
December 31, 2002
and each June 30
and December 31 thereafter 4.0 to 1
(c) Net Worth. Subject to Section 2.9, the Net Worth of Magma and
its Subsidiaries determined, as of the last day of each fiscal
year, shall be an amount not less than $450,000,000 plus, for each
fiscal year ending on or after December 31, 1996, the Additional
Amount. The "Additional Amount" as of any date of determination
means an amount calculated by adding the net income (calculated in
accordance with GAAP) of Magma and its Subsidiaries for each fiscal
year (x) ending after the Closing Date and prior to the date of
determination and (y) in respect of which fiscal year net income is
a positive amount, and multiplying the result thereof by 75%.
(d) Minimum Cash Balances. Subject to Section 2.9, the Cash
Balances on May 1 and November 1 of each fiscal year shall not be
less than $25,000,000.
(e) Capital Expenditure Limits. Subject to Section 2.9, the
aggregate amount of all Capital Expenditures of Magma and its
Subsidiaries (other than Project Owners) for the twelve month
period ending December 31 of each fiscal year shall not exceed
$2,000,000, except as permitted by Section 2.11.
(f) Debt Service Coverage Ratio. Subject to Section 2.9, the Debt
Service Coverage Ratio for Magma and its Subsidiaries for the
periods (i) from the Closing Date through December 31, 1995 and
(ii) thereafter for each twelve (12) month period ending on each
June 30 and December 31 of each fiscal year, shall not be less than
1.2 to 1.
ARTICLE VI
Events of Default
Section 6.1 Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) Payments. Borrower shall fail to pay any principal of, or
interest on, any of the Loans when the same becomes due and
payable, or Borrower shall fail to pay any other sum due under this
Agreement or any other Credit Documents within five Banking Days of
the date when the same becomes due and payable; or
(b) Representations and Warranties. Any representation or
warranty made or deemed to be made by Borrower or any of its
Subsidiaries under or in connection with any Credit Document or
Merger Document shall have been incorrect or misleading in any
material respect when made or deemed to be made; or
(c) Particular Covenant Defaults. Borrower or any of its
Subsidiaries shall fail to perform or observe any covenant
contained in Sections 5.1(b) and (h) and Sections 5.2 and 5.3; or
(d) Taxes and Compliance with Laws Covenants. Borrower or any of
its Subsidiaries shall fail to perform or observe any covenant
contained in Sections 5.1(a) and (d) and such failure shall remain
unremedied for five Banking Days after the earlier of (i) such
failure shall first become known to Borrower, (ii) Borrower could
reasonably have been expected to have known of such failure or
(iii) a written notice thereof shall have been given to Borrower by
Agent or any Bank; or
(e) Other Covenants. Borrower or any of its Subsidiaries shall
fail to perform or observe any term, covenant or agreement
contained herein or in any other Credit Document or in any Merger
Document on its part to be performed or observed (other than those
referred to in Sections 6.1(a), (c) and (d) above and Section
6.1(h) below) and any such failure shall remain unremedied for 15
Banking Days after the earlier of (i) such failure shall first
become known to Borrower, (ii) Borrower could reasonably have been
expected to have known of such failure or (iii) a written notice
thereof shall have been given to Borrower by Agent or any Bank; or
(f) Other Debts. Borrower shall fail to make any payment of
$100,000 or more on any Debt (individually or in the aggregate)
(other than the Loans, the CE Acquisition Secured Note or any
refinancing, renewals, extensions or restructurings thereof) having
an outstanding principal amount of $50,000,000 or more in the
aggregate, or any interest or premium thereon, when due (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the applicable
notice and grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other default under any
agreement or instrument relating to any such Debt, or any other
event, shall occur, if the effect of such default or event is to
accelerate the maturity of such Debt; or any such Debt shall be
declared to be due and payable prior to the stated maturity
thereof; or
(g) Magma Debts. Magma or any of its Subsidiaries shall fail to
make any payment of $10,000,000 or more on any Debt (other than the
Loans, the CE Acquisition Secured Term Note or any refinancing,
renewals, extensions or restructurings thereof) when due (whether
by scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the applicable
notice and grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other default under any
agreement or instrument relating to any such Debt, or any other
event, shall occur and shall continue after the applicable notice
and grace period, if any, specified in such agreement or
instrument, if the effect of such default or event is to accelerate
the maturity of such Debt; or any such Debt shall be declared to be
due and payable prior to the stated maturity thereof; provided,
however, that the occurrence of one or more of the events described
in this Section 6.1(g) shall not be deemed an Event of Default
unless in the reasonable judgment of Agent the occurrence of such
event could reasonably be expected to have a Material Adverse
Effect; or
(h) Default Under the CE Acquisition Secured Term Note or the CE
Acquisition Credit Agreement. Magma, as successor to CE
Acquisition, fails to pay when due any amounts under the CE
Acquisition Secured Term Note or the CE Acquisition Credit
Agreement; or
(i) Judgments and Orders. Any judgment or order for the payment
of money in excess of $10,000,000 shall be rendered against
Borrower or any Material Subsidiary and either (i) enforcement
proceedings shall have been commenced by any creditor upon such
judgment or order or (ii) there shall be any period of 30
consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect; or
(j) Insolvency or Voluntary Proceedings. Borrower or any Material
Subsidiary is generally not paying or admits in writing its
inability to pay its debts as such debts become due, or files any
petition or action for relief under any bankruptcy, reorganization,
insolvency, or moratorium Law or any other Law for the relief of,
or relating to, debtors, now or hereafter in effect, or makes any
assignment for the benefit of creditors, liquidates or dissolves,
or takes any action in furtherance of any of the foregoing; or
(k) Involuntary Proceedings. An involuntary petition is filed
against Borrower or any Material Subsidiary under any bankruptcy,
reorganization, insolvency, or moratorium Law now or hereafter in
effect, or a custodian, receiver, trustee, assignee for the benefit
of creditors (or other similar official) is appointed to take
possession, custody or control of any property of Borrower or any
Material Subsidiary, and (i) such petition or appointment is not
set aside or withdrawn or otherwise ceases to be in effect within
60 days from the date of said filing or appointment, or (ii) an
order for relief is entered against Borrower or any Material
Subsidiary with respect thereto, or (iii) Borrower or any Material
Subsidiary shall take any action indicating its consent to,
approval of, or acquiescence in, any such petition or appointment;
or
(l) Collateral Impairment. Agent's Lien on the Collateral shall
cease for any reason (other than the Agent's consent or release of
Collateral in accordance with the terms of the Borrower Pledge
Agreement) to be a fully perfected, first priority security
interest in all such Collateral; any Lien is filed pursuant to
Section 6321 of the IRC or any other applicable Law affecting the
Collateral; or Borrower (or any trustee, receiver, custodian or
other Person asserting rights on behalf of or derived from or
through Borrower) shall so state in writing; or
(m) ERISA Pension Plans. (1) Borrower or any ERISA Affiliate
fails to make full payment when due of all amounts which, under the
provisions of any Pension Plan or Section 412 of the IRC, Borrower
or any ERISA Affiliate is required to pay as contributions thereto
and such failure results in or could reasonably be expected to
result in a Material Adverse Effect; or (2) an accumulated funding
deficiency occurs or exists, whether or not waived, with respect to
any Pension Plan which results in, or could reasonably be expected
to result in, a Material Adverse Effect; or (3) a Termination Event
occurs which results in or could reasonably be expected to result
in a Material Adverse Effect; or
(n)ERISA - Multiemployer Plans. Borrower or any ERISA Affiliate as
employers under one or more Multiemployer Plans makes a complete or
partial withdrawal from such Multiemployer Plans and the plan
sponsor of such Multiemployer Plans notifies such withdrawing
employer that such employer has incurred a withdrawal liability
requiring payments in an amount which results in or could
reasonably be expected to result in a Material Adverse Effect; or
(o)ERISA - General Liability. Borrower or any of its Subsidiaries
incurs liability under or relating to any Employee Benefit Plan or
Multiemployer Plan resulting from a violation of ERISA, the IRC
and/or any other applicable federal, state or local law which
results in, or could reasonably be expected to result in, a
Material Adverse Effect; or
(p) Credit Documents. Any provision of any Credit Document shall
for any reason cease to be valid and binding on Borrower, or
Borrower or any Governmental Authority shall so state in writing,
and such is reasonably expected to have a Material Adverse Effect;
or
(q) Change of Control. A Change of Control shall occur; or
(r) Defaults Relating to Non-Financed Magma Projects. The
occurrence of any of the events set forth on Schedule 6.1(r) with
respect to any Non-Financed Magma Project and the occurrence of
such event could reasonably be expected to have a Material Adverse
Effect;
then, (i) automatically upon the occurrence of any event specified
in clauses (g) or (h) of this Section 6.1 and at the option of
Majority Banks, by notice from Agent to Borrower, in any other
event, (A) the obligation of each Bank hereunder or under any other
Credit Documents to make any Loans, shall be immediately
terminated, and (B) the total outstanding principal amount of all
Loans, all interest thereon and all other amounts payable under
this Agreement or under any other Credit Document shall be
forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly
waived by Borrower, and (ii) Agent shall upon the request, or may
with the consent, of Majority Banks take such actions under and
exercise such rights and remedies pursuant to the Credit Documents,
or any of them, as Agent may deem appropriate.
ARTICLE VII
Relationship of Agent and Banks
Section 7.1 Authorization and Action. Each Bank hereby appoints
and authorizes Agent, as agent on behalf of such Bank, to take such
action and to exercise such powers under the Credit Documents as
are delegated to Agent by the terms thereof, together with such
powers as are reasonably incidental thereto. As to any (x) matters
requiring or permitting an approval, consent, waiver, election or
other action by Majority Banks, (y) matters as to which,
notwithstanding any delegation of authority to Agent, Agent has
requested instructions from Majority Banks, and (z) matters not
expressly provided for by the Credit Documents, Agent shall not be
required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting only (and shall be
fully protected in so acting or refraining from acting) upon the
instructions of Majority Banks, and such instructions shall be
binding upon all Banks; provided, however, that Agent shall not be
required to take any action which exposes Agent to personal
liability or which is contrary to any Credit Document or applicable
Law. Agent agrees to give to each Bank prompt notice of each
notice given to it by Borrower pursuant to the terms of any Credit
Document.
Section 7.2 Agent's Reliance, Etc. Neither Agent nor any of its
directors, officers, agents, attorneys 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, except for its or their own
gross negligence or willful misconduct. Without limiting the
generality of the foregoing, Agent: (i) may treat each Bank as the
holder of the right to payment of its outstanding Loans until Agent
receives and accepts (together with any required transfer fee) an
Assignment and Acceptance Agreement signed by such Bank and its
Assignee in form satisfactory to the Agent and otherwise in
accordance with the provisions of this Agreement; (ii) may consult
with legal counsel (including counsel for Borrower), 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 if such counsel, accountants or other experts are selected
without gross negligence or willful misconduct on the part of the
Agent; (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; (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 on the part of Borrower or to
inspect the property (including the books and records) of Borrower;
(v) shall not be responsible to any Bank for the due execution,
legality, validity, enforceability, genuineness, sufficiency or
value of any Credit Document or any other instrument or document
furnished pursuant thereto; and (vi) shall incur no liability under
or in respect of any Credit Document by acting upon any notice,
consent, certificate or other instrument or writing (which may be
by telegram, cable or telex) believed by it to be genuine and
signed or sent by the proper party or parties unless such action by
the Agent constitutes gross negligence or willful misconduct on its
part.
Section 7.3 Agent and Affiliates. With respect to its
Commitments, the Loans made by it and the obligations of Borrower
owed to it under the Credit Documents as a Bank thereunder, Agent
shall have the same rights and powers under the Credit Documents as
any other Bank and may exercise the same as though it were not the
Agent; and the term "Bank" or "Banks" shall, unless otherwise
expressly indicated, include Agent in its individual capacity.
Agent and its Affiliates may accept deposits from, lend money to,
act as trustee under indentures of, and generally engage in any
kind of business with, Borrower, any of its Affiliates and any
Person who may do business with or own securities of Borrower or
any such Affiliates, all as if Agent were not Agent and without any
duty to account therefor to Banks.
Section 7.4Bank Credit Decision. Each Bank acknowledges that (a)it
has, independently and without reliance upon Agent 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, (b) it will, independently and without
reliance upon Agent or any other Bank and based on such documents
and information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action
under this Agreement and the other Credit Documents, and (c) Agent
has no duty or responsibility, either initially or on a continuing
basis, to provide any Bank with any credit or other information
(other than obtained under the provisions of this Agreement) with
respect thereto, whether coming into its possession before the date
hereof or at any time thereafter.
Section 7.5 Indemnification. Each Bank agrees to indemnify Agent
(to the extent not reimbursed by Borrower), ratably according to
the ratio of such Bank's Commitments to the Commitments of all
Banks, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by, or asserted against Agent in any
way relating to or arising out of the Credit Documents, or any of
them, or any action taken or omitted by Agent under the Credit
Documents, or any of them, provided that no Bank shall be liable
for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent's gross negligence or willful
misconduct. Without limiting the foregoing, each Bank agrees to
reimburse Agent promptly upon demand for such Bank's ratable share
(based on the proportion of all Commitments held by such Bank) of
any out-of-pocket expenses (including counsel fees and allocated
costs of in-house legal services) incurred by Agent in connection
with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice
in respect of rights or responsibilities under, the Credit
Documents, or any of them, to the extent that Agent is not
reimbursed for such expenses by Borrower.
Section 7.6 Successor Agent. Agent may resign at any time as
Agent under the Credit Documents by giving 30 days' prior written
notice thereof to Banks and Borrower and may be removed as Agent
under the Credit Documents at any time with or without cause upon
written notice to Agent and Borrower signed by Majority Banks.
Upon any such resignation or removal, Majority Banks shall have the
right to appoint a successor Agent thereunder. If no successor
Agent shall have been so appointed by Majority Banks, and shall
have accepted such appointment, within 30 days after the retiring
Agent's giving of notice of resignation or Majority Bank's removal
of the retiring Agent, then the retiring Agent may, on behalf of
the Banks, appoint a successor Agent, which shall be a commercial
bank organized under the laws of the United States of America or of
a state thereof and having a combined capital and surplus of at
least $200,000,000. Unless and until a successor Agent shall have
been appointed as above provided, the retiring Agent shall serve as
a caretaker Agent unless dismissed by Majority Banks. Upon the
acceptance of any appointment as Agent under the Credit Documents
by a successor Agent, such successor Agent shall thereupon succeed
to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be
discharged from all duties and obligations of the Agent arising
thereafter under the Credit Documents. After any retiring Agent's
resignation or removal as Agent under the Credit Documents, the
provisions of this Article VII shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under
the Credit Documents.
ARTICLE VIII
Miscellaneous
Section 8.1 Notices. Except as provided in Article II with
respect to the matters therein specified, all notices, demands,
instructions, requests, and other communications required or
permitted to be given to, or made upon, any party hereto shall be
in writing and (except for financial statements and other related
informational documents to be furnished pursuant hereto which may
be sent by first-class mail, postage prepaid) shall be personally
delivered or sent by registered or certified mail, postage prepaid,
return receipt requested, or by prepaid telex, TWX, telecopy, or
telegram (with messenger delivery specified) and shall be deemed to
be given for purposes of this Agreement on the day that such
writing is received by the Person to whom it is to be sent pursuant
to the provisions of this Agreement. Unless otherwise specified in
a notice sent or delivered in accordance with the foregoing
provisions of this Section, notices, demands, requests,
instructions, and other communications in writing shall be given to
or made upon each party hereto at the address (or its telex, TWX,
or telecopier numbers, if any) set forth for such party on the
signature pages hereof or, in the case of any Assignee, set forth
in the relevant Assignment and Acceptance Agreement.
Section 8.2 Successors and Assigns. This Agreement shall bind and
inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that (a) Borrower shall
not assign this Agreement or any of the rights of Borrower
hereunder without the prior written consent of all Banks and Agent
(the giving of such consent to be in each Bank's and Agent's sole
and absolute discretion), and any such purported assignment without
such consent shall be absolutely void, and (b) no Bank shall assign
this Agreement or any of the rights of such Bank hereunder except
in accordance with Section 8.11.
Section 8.3 Amendments and Related Matters. No amendment or
waiver of any provision of any Credit Document, nor consent to any
departure by Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed by Majority Banks
and Borrower 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 no amendment, waiver or
consent with respect to any Credit Document shall, unless in
writing and signed by all Banks, do any of the following: (a)
waive, or have the effect of waiving, any of the conditions
specified in Section 3.1, (b) increase the Commitments of any Banks
or subject the Banks to any additional obligations, (c) reduce the
principal of, or interest on, the Loans or fees or other amounts
payable to Banks hereunder or under any other Credit Document, (d)
postpone any date fixed for any payment of principal of, or
interest on, the Loans or any fees or other amounts payable to
Banks hereunder or under any other Credit Document, (e) change the
relative percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans, or the number of Banks required for
Banks or any of them to take any action hereunder, (f) release any
guaranty of all or any part of the Obligations, (g) release any
Collateral except in accordance with the terms of the Security
Documents, (h) change the several nature of the obligations of the
Banks hereunder or under the other Credit Documents, or (i) amend
Section 2.6, 8.2, this Section 8.3 or Section 8.4(b); and provided,
further, that no amendment, waiver or consent with respect to any
Credit Document shall, unless in writing and signed by Agent in
addition to the Banks required above to take such action, affect
the rights or duties of Agent under this Agreement or any other
Credit Document.
Section 8.4 Costs and Expenses; Indemnification.
(a) Expenses. Borrower agrees to pay on demand, subject to the
proviso set forth below, (i) all costs and expenses of Agent in
connection with the syndication by Agent of the credit facility
provided hereunder and in connection with the preparation,
execution, delivery, administration, modification and amendment of
the Credit Documents and the other documents to be delivered under
the Credit Documents, including, without limitation, the reasonable
fees and expenses of counsel (excluding allocated costs for in-
house legal services) for Agent with respect thereto and with
respect to advising Agent as to its rights and responsibilities
under the Credit Documents, and (ii) all costs and expenses of
Agent and each of the Banks, if any (including, without limitation,
reasonable counsel fees and expenses, but limited to costs and
expenses of one counsel and any one local counsel who shall act for
Agent and the Banks (excluding allocated costs for in-house legal
services)), in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise), restructuring
(whether or not in the nature of a "work-out"), and the
administration of the Credit Documents and the other documents to
be delivered under the Credit Documents; provided that Borrower
shall only be liable for costs or expenses incurred in connection
with the initial syndication of the credit facility provided
hereunder to any Bank that is or becomes party to this Agreement on
or prior to the Closing Date or within 90 days thereafter.
(b) Indemnification. Borrower agrees to indemnify Agent, each
Bank and each officer, director, Affiliate, employee, agent or
representative of Agent or Bank ("Bank Indemnitees") and hold each
Bank Indemnitee harmless from and against any and all liabilities,
losses, damages, costs, and expenses of any kind (including the
reasonable fees and disbursements of counsel for any Bank
Indemnitee (excluding allocated costs of in-house counsel)) in
connection with any investigative, administrative, or judicial
proceeding, whether or not such Bank Indemnitee shall be designated
a party thereto (but if not a party thereto, then only with respect
to such proceedings where such Bank Indemnitee (i) is subject to
legal process (whether by subpoena or otherwise) or other
compulsion of law, (ii) believes in good faith that it may be so
subject, or (iii) believes in good faith that it is necessary or
appropriate for it to resist any legal process or other compulsion
of law which is purported to be asserted against it), which may be
incurred by any Bank Indemnitee, relating to or arising out of this
Agreement or any of the other Credit Documents, any of the
transactions contemplated hereby or thereby, or any actual or
proposed use of proceeds of Loans hereunder; provided, however,
that no Bank Indemnitee shall have the right to be indemnified
hereunder for its own gross negligence or willful misconduct.
Section 8.5 Oral Communications. Agent may, but is not required
(except as provided in Section 2.1(b)) to, accept and act upon oral
communications from Borrower. Any oral communication from Borrower
to Agent (including telephone communications) hereunder shall be
immediately confirmed in writing by Borrower, but in the event of
any conflict between any such oral communication and the written
confirmation thereof, such oral communication shall control if
Agent has acted thereon prior to actual receipt of written
confirmation. Borrower shall indemnify Agent and hold Agent
harmless from and against any and all liabilities, obligations,
losses, damages, penalties, claims, actions, judgments, suits,
costs, expenses and disbursements of any kind or nature whatsoever
(including attorneys' fees and allocated costs for in-house legal
services) which arise out of or are incurred in connection with the
making of Loans or taking other action in reliance upon oral
communications, except that Agent shall not be indemnified against
its own gross negligence or willful misconduct.
Section 8.6 Entire Agreement. This Agreement and the other Credit
Documents are intended by the parties hereto to be a final and
complete expression of all terms and conditions of their agreement
with respect to the subject matter thereof and supersede all oral
negotiations and prior writings in respect to the subject matter
hereof.
Section 8.7 Governing Law. THIS AGREEMENT AND EACH OTHER CREDIT
DOCUMENT (EXCEPT TO THE EXTENT THE LAW OF ANOTHER JURISDICTION IS
EXPRESSLY CHOSEN THEREIN) SHALL BE GOVERNED BY AND CONSTRUED UNDER
THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
Section 8.8 Severability. The illegality or unenforceability of
any provision of this Agreement or any other Credit Document shall
not in any way affect or impair the legality or enforceability of
the remaining provisions of this Agreement or such Credit Document.
Section 8.9 Counterparts. This Agreement may be executed in as
many counterparts as may be deemed necessary or convenient, and by
the different parties hereto on separate counterparts, each of
which, when so executed, shall be deemed an original but all such
counterparts shall constitute but one and the same agreement.
Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a
manually executed counterpart of this Agreement.
Section 8.10 Confidentiality. Unless otherwise required by any
Directive, Agent and each Bank agree not to voluntarily disclose to
any third party information which Borrower designates in writing as
"Confidential" and which is provided to it pursuant to this
Agreement or the other Credit Documents, except that there shall be
no obligation of confidentiality in respect of (i) any information
which may be generally available to the public or becomes available
to the public through no fault of Agent or such Bank; (ii)
communications with actual or prospective participants or Assignees
which undertake in writing to be bound by this Section 8.10 which
are banks or other financial institutions; (iii) disclosures to
Agent's or any Bank's directors, officers, employees and other
representatives and agents, and directors, officers, employees and
other representatives and agents of its Affiliates which are banks
or other financial institutions, legal counsel, auditors and
internal bank examiners, and to the extent necessary or advisable
in its judgment, independent engineering consultants and other
experts or consultants retained by it, if in the case of a person
or entity other than a director, officer, employee, legal counsel,
auditor or internal bank examiner, Agent or such Bank obtains from
such person or entity an undertaking in writing as to
confidentiality substantially identical to this undertaking and if,
as to all other Persons, Agent or such Bank informs them of the
obligations under this Section 8.10 and is responsible for any
breach thereof, or (iv) disclosures made after an Event of Default
in connection with the sale or attempted sale of Magma.
Section 8.11 Assignments and Participations.
(a) Assignments. Each Bank may, upon at least five Banking Days'
notice to Agent and Borrower, assign to one or more financial
institutions (as "Assignee") all or a portion of its rights and
obligations under this Agreement (including, without limitation,
all or a portion of its Commitments, and the Loans); provided,
however, that (i) each such assignment shall be of a constant, and
not a varying, percentage of the assigning Bank's rights and
obligations under this Agreement being assigned, and any assignment
of such Bank's Commitment and Loans shall cover the same percentage
of such Bank's Commitment and Loans, (ii) unless Agent and Borrower
otherwise consent, the amount of the Commitment (such amount to be
determined without reduction for utilization) of the assigning Bank
being assigned pursuant to each such assignment (determined as of
the date of the Assignment and Acceptance Agreement with respect to
such assignment) shall not be less than $5,000,000 or shall be an
integral multiple of $1,000,000 in excess thereof, and, unless such
assigning Bank is assigning its entire Commitment, shall not reduce
the amount of the Commitment retained by such Bank to less than
$5,000,000, (iii) each such assignment shall be to an
institutional lender, (iv) the parties to each such assignment
shall execute and deliver to Agent for recording an Assignment and
Acceptance Agreement, together with a processing and recordation
fee of $3,500, and (v) Borrower and Agent shall consent to such
assignment, which consent shall not be unreasonably withheld. Upon
such execution, delivery, approval, acceptance and recording, from
and after the effective date specified in each Assignment and
Acceptance Agreement, (x) the Assignee thereunder shall be a party
hereto as a Bank and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and
Acceptance Agreement, have the rights and obligations of a Bank
hereunder and under the other Credit Documents and (y) the Bank
assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance Agreement, relinquish its rights and be
released from its obligations under this Agreement and under the
other Credit Documents (and, in the case of an Assignment and
Acceptance Agreement, covering all or the remaining portion of an
assigning Bank's rights and obligations under this Agreement and
under the other Credit Documents, such Bank shall cease to be a
party hereto).
(b) Effect of Assignment. By executing and delivering an
Assignment and Acceptance Agreement, a Bank assignor thereunder and
the Assignee thereunder confirm to and agree with each other and
the other parties hereto as follows: (i) other than as expressly
provided in such Assignment and Acceptance Agreement, such
assigning Bank makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with any Credit Document
or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of any Credit Document or any other instrument
or document furnished pursuant to any Credit Document; (ii) such
assigning Bank makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrower
or the performance or observance by Borrower of any of its
obligations under any Credit Document or any other instrument or
document furnished pursuant to any Credit Document or with respect
to the taxability of payments to be made hereunder or under the
other Credit Documents; (iii) such assignee confirms that it has
received a copy of the Credit Documents, together with copies of
the financial statements referred to in 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 such
Assignment and Acceptance Agreement; (iv) such Assignee will,
independently and without reliance upon Agent, such assigning Bank
or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under any Credit Document;
(v) such Assignee appoints and authorizes Agent to take such action
as agent on its behalf and to exercise such powers under the Credit
Documents as are delegated to Agent by the terms thereof, together
with such powers as are reasonably incidental thereto; and (vi)
such Assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of any Credit
Document are required to be performed by it as a Bank.
(c) Assignment Register. Agent shall maintain at its Agency
Office a copy of each Assignment and Acceptance Agreement delivered
to it and a register for the recordation of the names and addresses
of the Banks and the Commitments of, and principal amount of the
Loans owing to, each Bank from time to time. The entries in such
register shall be conclusive and binding for all purposes, absent
manifest error, and Borrower and Agent and Banks may treat each
Person whose name is recorded in the register as a Bank hereunder
for all purposes of this Agreement. The register shall be
available for inspection by Borrower or any Bank at any reasonable
time and from time to time upon reasonable prior notice.
(d) Assignments Recorded. Upon its receipt of an Assignment and
Acceptance Agreement executed by an assigning Bank and an Assignee,
Agent shall, if such Assignment and Acceptance Agreement has been
properly completed, and subject to Borrower's consent as above
provided (i) record the information contained therein in the
register maintained by Agent for this purpose and (ii) give prompt
notice thereof to Borrower.
(e) Participations. Each Bank may sell participations to one or
more Persons in all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a
portion of its Commitments, and the Loans owing to it); provided,
however, that (i) such Bank's obligations under this Agreement
(including, without limitation, its Commitments to Borrower
hereunder) shall remain unchanged, (ii) such Bank shall remain
solely responsible to the other parties hereto for the performance
of such obligations, (iii) such Bank shall remain the owner of such
Loans for all purposes of this Agreement, and (iv) Borrower, Agent,
and Banks shall continue to deal solely and directly with such Bank
in connection with such Bank's rights and obligations under this
Agreement; provided, further, to the extent of any such
participation (unless otherwise stated therein and subject to the
preceding provison, the assignee or purchaser of such participation
shall, to the fullest extent permitted by law, have the same rights
and benefits hereunder as it would have if it were a Bank
hereunder; and provided, further, that each such participation
shall be granted pursuant to an agreement providing that the
purchaser thereof shall not have the right to consent or object to
any action by the selling Bank (who shall retain such right) other
than an action which would (i) reduce principal of or interest on
any Loan or any fees due under any Credit Document in which such
purchaser has an interest, or (ii) postpone any date fixed for
payment of principal of or interest on any such Loan or such fees;
provided, further, that notwithstanding anything to the contrary in
this Section 8.11(e), the provisions of Sections 2.6, 2.7 and 2.9
shall apply to the purchasers of participations as if they were
Banks, provided that no such purchaser shall be entitled to receive
any greater amount pursuant to any such Sections than the Bank
selling such participation would have been entitled to receive in
respect of the participation transferred had no such transfer
occurred.
(f) Assignment to Affiliates and Federal Reserve Bank. Anything
herein to the contrary notwithstanding, each Bank shall have the
right to assign or pledge from time to time any or all of its
Commitments, Loans or other rights hereunder or under any of the
other Credit Documents to any of its Affiliates or to any Federal
Reserve Bank without the prior consent of Borrower.
Section 8.12 Waiver of Trial by Jury. BORROWER, BANKS, AND AGENT,
TO THE MAXIMUM EXTENT THEY MAY LEGALLY DO SO, HEREBY EXPRESSLY
WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION,
CAUSE OF ACTION, OR PROCEEDING ARISING UNDER OR WITH RESPECT TO
THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS, OR IN ANY WAY CONNECTED
WITH, OR RELATED TO, OR INCIDENTAL TO, THE DEALINGS OF THE PARTIES
HERETO WITH RESPECT TO THIS AGREEMENT, OR THE OTHER CREDIT
DOCUMENTS, THE NEGOTIATION, ADMINISTRATION, PERFORMANCE, OR
ENFORCEMENT HEREOF OR THEREOF, OR THE TRANSACTIONS RELATED HERETO
OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING,
AND IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE. TO THE EXTENT THEY MAY LEGALLY DO SO, BORROWER, BANKS
AND AGENT HEREBY AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE
OF ACTION, OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT
A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART
OR A COPY OF THIS SECTION 8.12 WITH ANY COURT AS WRITTEN EVIDENCE
OF THE CONSENT OF THE OTHER PARTY OR PARTIES HERETO TO WAIVER OF
ITS OR THEIR RIGHT TO TRIAL BY JURY.
Section 8.13 Choice of Forum and Service of Process. To the
maximum extent permitted by Law, Borrower agrees that all actions
or proceedings arising in connection with the Credit Documents
shall be tried and determined only in the state and federal courts
located in the City of New York, State of New York, or, at the sole
option of Agent, in any other court in which Agent shall initiate
legal or equitable proceedings and which has subject matter
jurisdiction over the matter in controversy. Borrower waives any
right it may have to assert the doctrine of forum non conveniens or
to object to venue to the extent any proceeding is brought in
accordance with this section. Borrower hereby irrevocably and
unconditionally designates and appoints (a) CT Corporation System
and (b) such other Person as may be selected by Borrower and
irrevocably agreeing in writing to so serve, as its agent to
receive on its behalf service of all process in any proceedings in
any such court, such service being hereby acknowledged by Borrower
to be effective and binding service in every respect. A copy of
any such process so served shall be mailed by registered mail to
Borrower; provided, however, that unless otherwise provided by
mandatory provisions of applicable law, any failure to mail such
copy shall not affect the validity of service of process. If any
agent appointed by Borrower refuses to accept service, Borrower
hereby agrees that service upon it by mail shall constitute
sufficient notice. Nothing herein shall affect the right to serve
process in any other manner permitted by law.
Section 8.14 Remedies. The remedies provided to Agent and Banks
in the Credit Documents are cumulative and are in addition to, and
not in lieu of, any remedies provided by law. To the maximum
extent permitted by law, remedies may be exercised by Agent or any
Bank successively or concurrently, and the failure to exercise any
remedy shall not constitute a waiver thereof, nor shall the single
or partial exercise of any remedy preclude any other or further
exercise of such remedy or any other right or remedy.
Section 8.15 Right of Set-Off. Subject to the provisions of
Section 2.9, upon the occurrence and during the continuance of any
Event of Default, each Bank is hereby authorized, after receipt of
written consent of Agent, at any time and from time to time, to the
fullest extent permitted by Law, to set-off and apply any and all
deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such
Bank to or for the credit or the account of Borrower against an
equivalent amount of the Obligations, irrespective of whether or
not such Bank shall have made any demand under this Agreement and
although such obligations may be unmatured. Each Bank agrees
promptly to notify Borrower and Agent after any such set-off and
application is made by such Bank, provided that the failure to give
such notice shall not affect the validity of such set-off and
application. The rights of each Bank under this Section are in
addition to other rights and remedies (including, without
limitation, other rights of set-off) which such Bank may have.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
CALIFORNIA ENERGY COMPANY, INC.
By: /s/ John G. Sylvia
Title: Senior Vice President
Address for Notices:
10831 Old Mill Road
Omaha, Nebraska 68154
Attn: Chief Financial Officer
Telecopier: (402) 334-3759
with a copy to
10831 Old Mill Road
Omaha, Nebraska 68154
Attn: General Counsel
Telecopier: (402) 334-3746
CREDIT SUISSE, as Agent and Bank
By: /s/ Peter Nardin
Title: Member of Senior Management
By: /s/ Bryon McGregor
Title: Member of Senior Management
Address for Notices:
Tower 49
12 East 49th Street
New York, New York 10017
Attn: Steven Dowe
Telecopier: (212) 238-5461
Exhibit 10.60
FIRST AMENDMENT TO OPERATING AND MAINTENANCE AGREEMENT
PREAMBLE
THIS FIRST AMENDMENT TO OPERATING AND MAINTENANCE AGREEMENT (the
"Amendment") is made as of April 14, 1989, by and between RED HILL
GEOTHERMAL, INC., a Delaware corporation ("Operator"), and DEL
RANCH, L.P., a limited partnership organized under the laws of the
State of California ("Owner").
A. Operator and Owner are parties to that certain Operating and
Maintenance Agreement dated as of August 15, 1988 (the
"Agreement").
B. Operator and Owner desire to amend the Agreement as provided
herein.
NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual covenants and agreements set forth herein, the parties
hereto agree as follows:
AGREEMENT
1. Definitions
1.1 Unless the context shall otherwise require, capitalized terms
used and not otherwise defined herein shall have the respective
meanings assigned thereto in Schedule Z to the Agreement and in
Article II of the Limited Partnership Agreement, both of which
shall be incorporated by reference herein.
2. Critical Parts and Equipment.
2.1 Section 8.3 of the Agreement is amended in its entirety to
read as follows:
"8.3. Operator shall have the right, on behalf of Owner, to lease
the Critical Parts and Equipment, or any of them, to the owner of
any other power production facility located in the SSKGRA of which
(i) both Magma and Mission Energy Company (or their respective
affiliates) are owners, directly or indirectly, or (ii) subject to
the consent of Owner, of which Magma or Operator is a shareholder,
partner or otherwise owns, directly or indirectly, an equity
interest or (iii) subject to the consent of Owner, of which Magma
or Operator is the operator, in each case on a day-to-day basis, to
the extent such Critical Parts and Equipment are not necessary to
the current operation of the Del Ranch Facility, provided that
Operator shall retain the right to terminate and shall immediately
terminate any such lease, on behalf of Owner, in the event that any
of the Critical Parts and Equipment so leased become necessary to
the operation of the Del Ranch Facility. The amount to be charged
as daily rental under any lease described in this Section 8.3 shall
be an amount equal to the fair market rental value of the Critical
Parts and Equipment as leased, as determined in the reasonable
discretion of Operator. All such amounts shall be collected by
Operator on behalf of, and shall be the property of, Owner."
2.2. Section 8.4 of the Agreement is amended in its entirety
to read as follows:
8.4. In consideration for the storage and maintenance of
Critical Parts and Equipment at the Warehouse and the leasing to
other power production facilities of Critical Parts and Equipment
as provided in Section 8.3, and any other services incidental
thereto, Owner shall pay to Operator an amount determined in the
reasonable discretion of Operator which enables Operator to (a)
recoup the actual costs and expenses incurred by Operator plus (b)
earn a reasonable profit including, without limitation, a
reasonable rate of return on Operator's invested capital used in
connection with the services to be provided pursuant to this
Section 8. As used in this Section 8.4, "actual costs and expenses
incurred by Operator" includes, without limitation, (a) the actual
cost to Operator of goods and materials used by Operator in
providing the services specified in this Section 8 and (b) the pro
rata cost to Operator of personnel providing labor or services
pursuant to this Section 8.
3. Working Capital Requirement. The last sentence of Section
12.2 of the Agreement is amended in its entirety to read as
follows:
Notwithstanding any provision contained herein to the contrary,
Operator shall not make any of the payments set forth in Section
12.2(ix) through 12.2(xv) hereof unless, at the time such payment
is to be made, Owner shall have Working Capital in an amount equal
to or greater than the Working Capital Requirement.
4. Continued Effectiveness. Except as specifically provided in
this Amendment, the Agreement shall remain in full force and effect
in accordance with its original terms and conditions, except that
the term "Agreement" as used in the Agreement shall hereafter mean
the Agreement as amended hereby.
5. Counterparts. This Amendment may be executed simultaneously
in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute a single
original instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be signed by their duly authorized officers as of the
day and year first above written.
OWNER:
DEL RANCH, L.P., a limited
partnership organized under the laws
of the State of California
By: RED HILL GEOTHERMAL, INC., a
Delaware corporation, a General
Partner
By: /s/ Jonathan S. Fish
Its: Vice President
By: /s/ Jon R. Peele
Its: Vice President
OPERATOR:
RED HILL GEOTHERMAL, INC., a Delaware
corporation
By: /s/ Jon R. Peele
Its: Vice President
By: /s/ Jonathan S. Fish
Its: Vice President
ACCEPTED AND AGREED:
MAGMA POWER COMPANY,
a Nevada corporation
By: /s/ Jon R. Peele
Its: Secretary & Vice President
By: /s/ Wallace C. Dieckmann
Its: Vice President
Exhibit 10.62
FIRST AMENDMENT TO OPERATING AND MAINTENANCE AGREEMENT
PREAMBLE
THIS FIRST AMENDMENT TO OPERATING AND MAINTENANCE AGREEMENT (the
"Amendment") is made as of April 14, 1989, by and between RED HILL
GEOTHERMAL, INC., a Delaware corporation ("Operator"), and
LEATHERS, L.P., a limited partnership organized under the laws of
the State of California ("Owner").
A. Operator and Owner are parties to that certain Operating and
Maintenance Agreement dated as of August 15, 1988 (the
"Agreement").
B. Operator and Owner desire to amend the Agreement as provided
herein.
NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual covenants and agreements set forth herein, the parties
hereto agree as follows:
AGREEMENT
1. Definitions
1.1 Unless the context shall otherwise require, capitalized terms
used and not otherwise defined herein shall have the respective
meanings assigned thereto in Schedule Z to the Agreement and in
Article II of the Limited Partnership Agreement, both of which
shall be incorporated by reference herein.
2. Critical Parts and Equipment.
2.1 Section 8.3 of the Agreement is amended in its entirety to
read as follows:
"8.3. Operator shall have the right, on behalf of Owner, to lease
the Critical Parts and Equipment, or any of them, to the owner of
any other power production facility located in the SSKGRA of which
(i) both Magma and Mission Energy Company (or their respective
affiliates) are owners, directly or indirectly, or (ii) subject to
the consent of Owner, of which Magma or Operator is a shareholder,
partner or otherwise owns, directly or indirectly, an equity
interest or (iii) subject to the consent of Owner, of which Magma
or Operator is the operator, in each case on a day-to-day basis, to
the extent such Critical Parts and Equipment are not necessary to
the current operation of the Leathers Facility, provided that
Operator shall retain the right to terminate and shall immediately
terminate any such lease, on behalf of Owner, in the event that any
of the Critical Parts and Equipment so leased become necessary to
the operation of the Leathers Facility. The amount to be charged
as daily rental under any lease described in this Section 8.3 shall
be an amount equal to the fair market rental value of the Critical
Parts and Equipment as leased, as determined in the reasonable
discretion of Operator. All such amounts shall be collected by
Operator on behalf of, and shall be the property of, Owner."
2.2. Section 8.4 of the Agreement is amended in its entirety
to read as follows:
8.4. In consideration for the storage and maintenance of
Critical Parts and Equipment at the Warehouse and the leasing to
other power production facilities of Critical Parts and Equipment
as provided in Section 8.3, and any other services incidental
thereto, Owner shall pay to Operator an amount determined in the
reasonable discretion of Operator which enables Operator to (a)
recoup the actual costs and expenses incurred by Operator plus (b)
earn a reasonable profit including, without limitation, a
reasonable rate of return on Operator's invested capital used in
connection with the services to be provided pursuant to this
Section 8. As used in this Section 8.4, "actual costs and expenses
incurred by Operator" includes, without limitation, (a) the actual
cost to Operator of goods and materials used by Operator in
providing the services specified in this Section 8 and (b) the pro
rata cost to Operator of personnel providing labor or services
pursuant to this Section 8.
3. Working Capital Requirement. The last sentence of Section
12.2 of the Agreement is amended in its entirety to read as
follows:
Notwithstanding any provision contained herein to the contrary,
Operator shall not make any of the payments set forth in Section
12.2(ix) through 12.2(xv) hereof unless, at the time such payment
is to be made, Owner shall have Working Capital in an amount equal
to or greater than the Working Capital Requirement.
4. Continued Effectiveness. Except as specifically provided in
this Amendment, the Agreement shall remain in full force and effect
in accordance with its original terms and conditions, except that
the term "Agreement" as used in the Agreement shall hereafter mean
the Agreement as amended hereby.
5. Counterparts. This Amendment may be executed simultaneously
in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute a single
original instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be signed by their duly authorized officers as of the
day and year first above written.
OWNER:
LEATHERS, L.P., a limited partnership
organized under the laws of the State
of California
By: RED HILL GEOTHERMAL, INC., a
Delaware corporation, a General
Partner
By: /s/ Jonathan S. Fish
Its: Vice President
By: /s/ Jon R. Peele
Its: Vice President
OPERATOR:
RED HILL GEOTHERMAL, INC., a Delaware
corporation
By: /s/ Jonathan S. Fish
Its: Vice President
By: Jon R. Peele
Its: Vice President
ACCEPTED AND AGREED:
MAGMA POWER COMPANY,
a Nevada corporation
By: Jon R. Peele
Its: Secretary & Vice President
By: Wallace C. Dieckmann
Its: Vice President
Exhibit 10.64
FIRST AMENDMENT TO OPERATING AND MAINTENANCE AGREEMENT
PREAMBLE
THIS FIRST AMENDMENT TO OPERATING AND MAINTENANCE AGREEMENT (the
"Amendment") is made as of April 14, 1989, by and between RED HILL
GEOTHERMAL, INC., a Delaware corporation ("Operator"), and ELMORE,
L.P., a limited partnership organized under the laws of the State
of California ("Owner").
A. Operator and Owner are parties to that certain Operating and
Maintenance Agreement dated as of March 14, 1988 (the "Agreement").
B. Operator and Owner desire to amend the Agreement as provided
herein.
NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual covenants and agreements set forth herein, the parties
hereto agree as follows:
AGREEMENT
1. Definitions
1.1 Unless the context shall otherwise require, capitalized terms
used and not otherwise defined herein shall have the respective
meanings assigned thereto in Schedule Z to the Agreement and in
Article II of the Limited Partnership Agreement, both of which
shall be incorporated by reference herein.
2. Critical Parts and Equipment.
2.1 Section 8.3 of the Agreement is amended in its entirety to
read as follows:
"8.3. Operator shall have the right, on behalf of Owner, to lease
the Critical Parts and Equipment, or any of them, to the owner of
any other power production facility located in the SSKGRA of which
(i) both Magma and Mission Energy Company (or their respective
affiliates) are owners, directly or indirectly, or (ii) subject to
the consent of Owner, of which Magma or Operator is a shareholder,
partner or otherwise owns, directly or indirectly, an equity
interest or (iii) subject to the consent of Owner, of which Magma
or Operator is the operator, in each case on a day-to-day basis, to
the extent such Critical Parts and Equipment are not necessary to
the current operation of the Elmore Facility, provided that
Operator shall retain the right to terminate and shall immediately
terminate any such lease, on behalf of Owner, in the event that any
of the Critical Parts and Equipment so leased become necessary to
the operation of the Elmore Facility. The amount to be charged as
daily rental under any lease described in this Section 8.3 shall be
an amount equal to the fair market rental value of the Critical
Parts and Equipment as leased, as determined in the reasonable
discretion of Operator. All such amounts shall be collected by
Operator on behalf of, and shall be the property of, Owner."
2.2. Section 8.4 of the Agreement is amended in its entirety
to read as follows:
8.4. In consideration for the storage and maintenance of
Critical Parts and Equipment at the Warehouse and the leasing to
other power production facilities of Critical Parts and Equipment
as provided in Section 8.3, and any other services incidental
thereto, Owner shall pay to Operator an amount determined in the
reasonable discretion of Operator which enables Operator to (a)
recoup the actual costs and expenses incurred by Operator plus (b)
earn a reasonable profit including, without limitation, a
reasonable rate of return on Operator's invested capital used in
connection with the services to be provided pursuant to this
Section 8. As used in this Section 8.4, "actual costs and expenses
incurred by Operator" includes, without limitation, (a) the actual
cost to Operator of goods and materials used by Operator in
providing the services specified in this Section 8 and (b) the pro
rata cost to Operator of personnel providing labor or services
pursuant to this Section 8.
3. Working Capital Requirement. The last sentence of Section
12.2 of the Agreement is amended in its entirety to read as
follows:
Notwithstanding any provision contained herein to the contrary,
Operator shall not make any of the payments set forth in Section
12.2(ix) through 12.2(xv) hereof unless, at the time such payment
is to be made, Owner shall have Working Capital in an amount equal
to or greater than the Working Capital Requirement.
4. Continued Effectiveness. Except as specifically provided in
this Amendment, the Agreement shall remain in full force and effect
in accordance with its original terms and conditions, except that
the term "Agreement" as used in the Agreement shall hereafter mean
the Agreement as amended hereby.
5. Counterparts. This Amendment may be executed simultaneously
in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute a single
original instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be signed by their duly authorized officers as of the
day and year first above written.
OWNER:
ELMORE, L.P., a limited partnership
organized under the laws of the State
of California
By: RED HILL GEOTHERMAL, INC., a
Delaware corporation, a General
Partner
By: /s/ Jonathan S. Fish
Its: Vice President
By: /s/ Wallace C. Dieckmann
Its: Assistant Secretary
OPERATOR:
RED HILL GEOTHERMAL, INC., a Delaware
corporation
By: /s/ Jonathan S. Fish
Its: Vice President
By: /s/ Wallace C. Dieckmann
Its: Assistant Secretary
ACCEPTED AND AGREED:
MAGMA POWER COMPANY,
a Nevada corporation
By: /s/ Jon R. Peele
Its: Vice President & Secretary
By: /s/ Wallace C. Dieckmann
Its: Vice President
Exhibit 10.72
AMENDED AND RESTATED
SECURED CREDIT AGREEMENT
AMENDED AND RESTATED SECURED CREDIT AGREEMENT dated as of
April 18, 1990 among DEL RANCH, L.P. (the "Borrower"), the BANKS
listed on the signature pages hereof (the "Banks"), THE FUJI BANK,
LIMITED, LOS ANGELES AGENCY, as Fronting Bank, and MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, as Agent, amending and restating the
Secured Credit Agreement dated as of March 14, 1988 (the "Original
Agreement", the Original Agreement as amended and restated hereby
is referred to herein as the "Agreement"), among the Borrower, the
banks listed on the signature pages thereof (the "Original Banks")
and Morgan Guaranty Trust Company of New York, as Agent.
WHEREAS, the Borrower, the Original Banks and the Agent
entered into the Original Agreement in order to finance the
construction of the Del Ranch Facility (as defined below);
WHEREAS, on May 23, 1988 and April 14, 1989 the Borrower, the
Original Banks and the Agent amended the Original Agreement; and
WHEREAS, the Borrower, the Banks, the Fronting Bank and the
Agent now wish to further amend the Original Agreement to provide
for the issuance of LOC Debt supported by LOCs of the Fronting
Bank, all as set forth in this Amended and Restated Secured Credit
Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used
herein, have the following meanings:
"Additional Cure Period" means an additional 60 day period
granted to the Borrower to cure any Default pursuant to
paragraphs (c), (g) or (t) of Section 7.01, as the case may be.
"Additional Cure Period Request" means a written request of
the Borrower for an Additional Cure Period, including a description
of the Default, the corrective action taken to date and further
proposed corrective action pursuant to paragraphs (c), (g) or (t)
of Section 7.01, as the case may be.
"Adjusted CD Rate" has the meaning set forth in Section
3.05(b).
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section 3.05(c).
"Affiliate" means, when used with reference to a specified
Person, (a) any Person who directly or indirectly controls, is
controlled by or is under common control with the specified Person,
(b) any Person who is an officer, partner or trustee of, or serves
in a similar capacity with respect to, the specified Person, or for
which the specified Person is an officer, partner or trustee or
serves in a similar capacity, provided that Persons who are
partners of the same partnership will not be considered to be
partners of each other, (c) any Person who, directly or indirectly,
is the beneficial owner of 10% or more of any class of equity
securities of the specified Person, or of which the specified
Person, directly or indirectly, is the owner of 10% or more of any
class of equity securities, and (d) any relative of the specified
Person.
"Agent" means Morgan Guaranty Trust Company of New York in its
capacity as agent for the Banks hereunder, and its successors in
such capacity.
"Assessment Rate" has the meaning set forth in Section
3.05(b).
"Bank" means each bank or financial institution listed as a
"Bank" on the signature pages hereof, and its successors and
assigns.
"Borrower" means Del Ranch, L.P., a limited partnership
organized under the laws of the State of California, the general
partners of which as of the date hereof are Red Hill and Conejo,
and the limited partners of which are Magma and Conejo.
"Borrowing" means a borrowing hereunder consisting of (i) a
Loan made to the Borrower by the Fronting Bank with participations
by the Banks pursuant to Article II and Section 3.14 or (ii) Loans
made to the Borrower at the same time by the Banks pursuant to
Article III. A Borrowing is a "Domestic Borrowing" if such Loans
are Domestic Loans or a "Euro-Dollar Borrowing" if such Loans are
Euro-Dollar Loans. A Domestic Borrowing is a "CD Borrowing" if
such Domestic Loans are CD Loans or a "Prime Borrowing" if such
Domestic Loans are Prime Loans.
"BTU Energy" means the heat value in British Thermal Units
which can be extracted from Geothermal Brine.
"Capital Contribution" means a Scheduled Capital Contribution
as defined in Section 3.4.1 of the Limited Partnership Agreement.
"CD Base Rate" has the meaning set forth in Section 3.05(b).
"CD Loan" means a Loan to be made as a CD Loan pursuant to the
applicable Notice of Borrowing.
"CD Margin" has the meaning set forth in Section 3.05(b).
"CD Reference Banks" means The Fuji Bank, Limited, Union Bank
of Switzerland and Morgan Guaranty Trust Company of New York, and
each such other bank as may be appointed pursuant to Section
10.07(d).
"CEC" means the California Energy Commission, and its
successors.
"CEC Event" means a determination by the CEC that the Del
Ranch Facility is and shall be subject to its jurisdiction, which
determination is likely, in the reasonable opinion of the Required
Banks, to have a material adverse effect on the Borrower or on the
completion or operation of the Del Ranch Facility as contemplated
by this Agreement and the Project Agreements.
"Code" means the Internal Revenue Code of 1986, as amended, or
any successor statute.
"Collateral" means, collectively, Collateral as defined in the
Security Agreement and Mortgaged Property as defined in the Deed of
Trust.
"Collateral Documents" means, collectively, the Security
Agreement, the Deed of Trust and all financing statements delivered
or to be delivered to the Security Agent pursuant to the foregoing
or this Agreement, in each case as amended from time to time.
"Collateralized LOC" has the meaning set forth in the LOC Debt
Facility Agreement.
"Commercial Paper Notes" has the meaning set forth in the LOC
Debt Facility Agreement.
"Commitment" means (except as provided in the definitions of
"Tranche A" and "Tranche B"), with respect to each Bank, the amount
set forth opposite the name of such Bank on Schedule I as its Total
Commitment, as such amount may be reduced from time to time
pursuant to Sections 3.08 and 3.09.
"Commitment Reduction Date" means each September 15 and March
15 subsequent to the Conversion Date (but no earlier than September
15, 1989) to and including the twenty-fifth Commitment Reduction
Date subsequent to the Conversion Date.
"Completion Date" means the date the Completion Tests are
completed.
"Completion Tests" means those tests for completion of the Del
Ranch Facility described in Schedule II hereto.
"Conejo" means Conejo Energy Company, a California
corporation.
"Construction Management Agreement" means the Construction
Management and Asset Transfer Agreement dated as of March 14, 1988,
between the Construction Manager and the Borrower, as amended from
time to time.
"Construction Manager" means Magma.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414 of the
Code.
"Conversion Date" means the date forty-five calendar days
after the date on which the Completion Tests are completed.
"CP Dealer" has the meaning set forth in the LOC Debt Facility
Agreement.
"CP Dealer Agreement" has the meaning set forth in the LOC
Debt Facility Agreement.
"Credit Event" means the making of any Loan or the issuance of
any LOC which, after application of the proceeds therefrom, results
in a net increase in the Utilization of any Bank.
"Credit Facility Borrowing" means a Borrowing made pursuant to
Article III.
"Credit Periods" means, collectively, the Tranche A Credit
Period and the Tranche B Credit Period.
"Date of Issuance" has the meaning set forth in the LOC Debt
Facility Agreement.
"DCC" means The Dow Chemical Company, a Delaware corporation.
"Dealer" has the meaning set forth in the LOC Debt Facility
Agreement.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person to
pay the deferred purchase price of property or services, except
trade accounts payable arising in the ordinary course of business,
(iv) all obligations of such Person as lessee under capital leases,
(v) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, (vi)
all Debt of others Guaranteed by such Person, (vii) all obligations
of such Person to purchase securities (or other property) which
arise out of or in connection with the sale of the same or
substantially similar securities or property, and (viii) all non-
contingent obligations of such Person to reimburse any bank or
other Person in respect of amounts paid under a letter of credit or
similar instrument.
"Debt Service Reserve Account" means the reserve account
established and maintained pursuant to Section 11.1 of the
Operating and Maintenance Agreement.
"DEC" means Dow Engineering Company, a Delaware corporation.
"Deed of Trust" means the first lien Deed of Trust, Assignment
of Rents, Security Agreement and Fixture Filing dated as of March
14, 1988, among the Borrower, the Security Agent and Ticor Title
Insurance Company of California, as trustee, covering the Del Ranch
Facility, the leasehold estate created by the Ground Lease, and the
easement granted by the Easement Agreement, as amended by First
Amendment to Deed of Trust dated as of April 18, 1990 and as
further amended from time to time.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of
time or both would, unless cured or waived, become an Event of
Default.
"Defeasance Date" has the meaning set forth in the LOC Debt
Facility Agreement.
"Defeased Note" has the meaning set forth in the LOC Debt
Facility Agreement.
"Del Ranch Facility" means that certain geothermal electrical
generating facility being constructed pursuant to the Plans and
Specifications and any "as-built" plans on the Del Ranch Property
which, when completed, will have the capacity to convert BTU Energy
from Geothermal Brine into electrical energy, together with the
Supporting Equipment.
"Del Ranch Facility Brine Requirement" means that amount of
Geothermal Brine which, when Processed by the Del Ranch Facility,
will yield the amount of BTU Energy required to generate
332,880,000 kilowatt hours per year of "Energy", as that term is
defined in the Del Ranch Power Purchase Contract.
"Del Ranch Facility Projected Project Cost" means the total
projected cost of completing development and construction of the
Del Ranch Facility as reflected on Exhibit I to the Construction
Management Agreement.
"Del Ranch Power Purchase Contract" means that certain Power
Purchase Contract dated February 22, 1984 by and between Magma and
SCE, as the same may be amended from time to time.
"Del Ranch Property" means the parcel of real property, more
particularly described on Exhibit "A" to the Ground Lease, as that
description may be modified from time to time pursuant to Section
3.3 of the Ground Lease.
"Del Ranch Property Preliminary Title Report" means that
certain Preliminary Title Report No. 105342, dated February 16,
1988.
"Depositary" has the meaning set forth in the LOC Debt
Facility Agreement.
"Depositary Agreement" has the meaning set forth in the LOC
Debt Facility Agreement.
"Development of the Del Ranch Facility" means the design,
engineering, construction, testing and start-up of the Del Ranch
Facility.
"Distributable Cash" means, with respect to any period between
Distribution Dates, the amount of cash or property delivered by Red
Hill in its capacity as Operator under the Operating and
Maintenance Agreement to the general partners of the Borrower
pursuant to Section 12.2(xvi) of the Operating and Maintenance
Agreement.
"Distribution Dates" means each March 31 and September 30.
"Dollars" or "$" shall mean lawful money of the United States
of America.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in New York City,
Chicago, Illinois, or Los Angeles, California are authorized by law
to close.
"Domestic Lending Office" means, as to each Bank, its office
located at its address set forth on the signature pages hereof (or
identified on the signature pages hereof as its Domestic Lending
Office) or such other office as such Bank may hereafter designate
as its Domestic Lending Office by notice to the Borrower and the
Agent; provided that any Bank may from time to time by notice to
the Borrower and the Agent designate separate Domestic Lending
Offices for its Prime Loans, on the one hand, and its CD Loans, on
the other hand, in which case all references herein to the Domestic
Lending Office of such Bank shall be deemed to refer to either or
both of such offices, as the context may require.
"Domestic Loans" means CD Loans or Prime Loans or both.
"Domestic Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing the
obligation of the Borrower to repay the Domestic Loans.
"Domestic Reserve Percentage" has the meaning set forth in
Section 3.05(b).
"Dow Undertaking" means the undertaking of DCC, substantially
in the form of Exhibit G hereto.
"Easement Agreement" means the Easement Grant Deed and
Agreement Regarding Rights for Geothermal Development, dated as of
March 14, 1988, by and between Magma and the Borrower, as amended
from time to time.
"Engineer" means R.W. Beck and Associates, or their successors
in the capacity of engineers and consultants with respect to the
Development of the Del Ranch Facility and operation of the Del
Ranch Facility.
"Engineer's Report" means the report of the Engineer in form
and substance satisfactory to the Agent and Banks.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business
(including dealings in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its
office, branch or affiliate located at its address set forth on the
signature pages hereof (or identified on the signature pages hereof
as its Euro-Dollar Lending Office) or such other office, branch or
affiliate of such Bank as it may hereafter designate as its Euro-
Dollar Lending Office by notice to the Borrower and the Agent.
"Euro-Dollar Loan" means a Loan to be made as a Euro-Dollar
Loan pursuant to the applicable Notice of Borrowing.
"Euro-Dollar Margin" has the meaning set forth in Section
3.05(c).
"Euro-Dollar Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit B hereto, evidencing the
obligation of the Borrower to repay the Euro-Dollar Loans.
"Euro-Dollar Reference Banks" means the principal London
offices of The Fuji Bank, Limited, Union Bank of Switzerland and
Morgan Guaranty Trust Company of New York and each such other bank
as may be appointed pursuant to Section 10.07(d).
"Euro-Dollar Reserve Percentage" has the meaning set forth in
Section 3.05(c).
"Event of Default" has the meaning set forth in Section 7.01.
"Face Amount" means (i) with respect to any LOC Debt, the LOC
Debt Principal Amount of such LOC Debt plus the LOC Debt Interest
Amount of such LOC Debt and (ii) with respect to any LOC, the Face
Amount of the LOC Debt to which such LOC relates.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100th of 1%) equal
to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal
Reserve Bank of New York on the Domestic Business Day next
succeeding such day, provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Domestic
Business Day as so published on the next succeeding Domestic
Business Day, and (ii) if no such rate is so published on such next
succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Morgan Guaranty Trust
Company of New York on such day on such transactions as determined
by the Agent.
"Federal Power Act" means the Federal Power Act, excluding
Sections 1-18, 21-30, 202(c), 210, 211, 212, 305(c) and any
necessary enforcement provisions of Part III of the Act with regard
to the foregoing sections.
"Financing" has the meaning given to the term Financing in the
Limited Partnership Agreement.
"Firm Operation Date" means the first date on which Firm
Operation (as defined in the Del Ranch Power Purchase Contract)
occurs under the Del Ranch Power Purchase Contract.
"Fixed CD Rate" has the meaning set forth in Section 3.05(b).
"Fixed Rate Borrowing" means a CD Borrowing or a Euro-Dollar
Borrowing.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or
both.
"Fronting Bank" means The Fuji Bank, Limited, Los Angeles
Agency, in its capacity hereunder as issuer of LOCs and any
successor thereto or replacement thereof as provided herein.
"Funding and Construction Agreement" means the Funding and
Construction Agreement dated June 29, 1987 among the Imperial
Irrigation District and the Participants listed on the signature
pages thereof, as amended from time to time.
"General Partner" means Red Hill, as a general partner of the
Borrower, or its successor under the Limited Partnership Agreement.
"Geothermal Brine" shall mean the total amount of geothermal
brine contained in the Vulcan Geothermal Lease Unit.
"Geothermal Lease Rights Properties Preliminary Title Report"
means, collectively, Geothermal Lease Right Preliminary Title
Report Numbers 105340 (Severe), 105341 (Del Ranch, Inc.), 105348
(Future Energy), 105344 (Ruchti/24 leases), 105343 (Woolsey),
105345 (McKelvey), 105346 (Wiest) and 105347 (J.F. Baretta), each
dated February 16, 1988, copies of which are attached as Exhibit C
to the Easement Agreement.
"Geothermal Leases" means the geothermal leases identified in
Exhibit B to the Easement Agreement.
"GeothermEx" means GeothermEx, Inc., a California corporation.
"Ground Lease" means the ground lease dated as of March 14,
1988, between Magma and the Borrower, as amended from time to time.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any
Debt or other obligation of any other Person and, without limiting
the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase
or pay (or advance or supply funds for the purchase or payment of)
such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise) or (ii)
entered into for the purpose of assuring in any other manner the
obligee of such Debt or other obligation of the payment thereof or
to protect such obligee against loss in respect thereof (in whole
or in part), provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding
meaning.
"IID" means the Imperial Irrigation District, organized under
the Water Code of the State of California.
"IID Agreements" means, collectively, (i) the Funding and
Construction Agreement, (ii) the Joint Funding Agreement dated June
29, 1987, among the Participants listed on the signature pages
thereof and (iii) any "IID-Transmission Service Agreement For
Alternative Resources" (the "Transmission Agreements") which may be
entered into between IID and the Borrower, copies of which are
attached as Exhibit G to the Construction Management Agreement, in
each case as amended from time to time.
"Interest" means the entire ownership interest of a partner in
the Borrower at any particular time, including the right of such
partner to any and all benefits to which a partner may be entitled
as provided in the Limited Partnership Agreement, together with the
obligations of such partner to comply with all of the terms and
provisions of the Limited Partnership Agreement.
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and
ending one, two, three or six months thereafter, or for a longer
period if available, as the Borrower may elect in the applicable
Notice of Borrowing; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Euro-Dollar
Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
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, subject to clauses (c) and (d) below,
end on the last Euro-Dollar Business Day of a calendar month;
(c) any Interest Period which begins before the first
Commitment Reduction Date and would otherwise end after the
first Commitment Reduction Date shall end on the first Commitment
Reduction Date; and
(d) if any Interest Period includes a date on which a payment
of principal of the Loans is required to be made under Section
3.09 but does not end on such date, then (i) the principal amount
(if any) of each Euro-Dollar Loan required to be repaid on such
date shall have an Interest Period ending on such date and (ii) the
remainder (if any) of each such Euro-Dollar Loan shall have an
Interest Period determined as set forth above.
(2) with respect to each CD Borrowing, the period commencing on the
date of such Borrowing and ending thirty, sixty, ninety or one
hundred eighty days thereafter, as the Borrower may elect in the
applicable Notice of Borrowing; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (c)(i) below) which would otherwise
end on a day which is not a Euro-Dollar Business Day shall be
extended to the next succeeding Euro-Dollar Business Day;
(b) any Interest Period which begins before the first
Commitment Reduction Date and would otherwise end after the
first Commitment Reduction Date shall end on the first Commitment
Reduction Date; and
(c) if any Interest Period includes a date on which a payment
of principal of the Loans is required to be made under Section 3.09
but does not end on such date, then (i) the principal amount (if
any) of each CD Loan required to be repaid on such date shall have
an Interest Period ending on such date and (ii) the remainder (if
any) of each such CD Loan shall have an Interest Period determined
as set forth above.
(3) with respect to each Prime Borrowing, the period commencing on
the date of such Borrowing and (x) in the case of Borrowings made
pursuant to Section 2.06, ending seven Euro-Dollar Business Days
thereafter, (y) in the case of Borrowings (other than Borrowings
covered by the preceding clause (x)) made pursuant to Section
3.01(c)(iii), (A) if no Prime Loans shall then be outstanding,
ending 30 days thereafter or (B) if Prime Loans shall then be
outstanding, ending on the date on which such outstanding Prime
Loans shall mature, or (z) in all other cases, ending 30 days
thereafter, unless the Agent and the Borrower shall have otherwise
agreed; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (c)(i) below) which would
otherwise end on a day which is not a Euro-Dollar Business Day
shall be extended to the next succeeding Euro-Dollar Business
Day;
(b) any Interest Period which begins before the first
Commitment Reduction Date and would otherwise end after the
first Commitment Reduction Date shall end on the first Commitment
Reduction Date; and
(c) if any Interest Period includes a date on which a payment
of principal of the Loans is required to be made under Section 3.09
but does not end on such date, then (i) the principal amount (if
any) of each Prime Loan required to be repaid on such date shall
have an Interest Period ending on such date and (ii) the remainder
(if any) of each such Prime Loan shall have an Interest Period
determined as set forth above.
"Investment" means any investment in any Person, whether by
means of share purchase, capital contribution, loan, time deposit
or otherwise.
"Issuance Agreements" means, collectively, each CP Dealer
Agreement, the Depositary Agreement, the LOC Debt Facility
Agreement and each MTN Distribution Agreement.
"Late Participation Penalty" means the amount, if any, by
which (i) the rate of interest publicly announced by the Fronting
Bank from time to time as its prime rate, plus 100 basis points,
exceeds (ii) the rate of interest applicable to Prime Loans from
time to time pursuant to Section 3.05(a).
"Lending Office" means as to any Bank its Domestic Lending
Office or its Euro-Dollar Lending Office, as the context may
require.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in
respect of such asset. For the purposes of this Agreement, the
Borrower shall be deemed to own subject to a Lien any asset which
it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
"Limited Partnership Agreement" means the Limited Partnership
Agreement of the Borrower, dated as of February 5, 1988, as amended
and restated as of March 14, 1988 and as amended from time to time.
"Loan Utilization" of a Bank means, at any time, the aggregate
unpaid principal amount of such Bank's Loans at such time.
"Loans" means (i) the loans of any Bank made (subject, as
appropriate, to any adjustment required by the last sentence of
Section 3.14), or deemed under Section 3.14 to be made, from time
to time pursuant to Section 2.06(b), (ii) the loans of any Bank
made from time to time pursuant to Section 3.01 and (iii) if any
unreimbursed LOC Disbursement by the Fronting Bank is not converted
into a Loan as provided in Section 2.06(b), such unreimbursed LOC
Disbursement. The term "Loan" may refer to a Domestic Loan or a
Euro-Dollar Loan and the term "Loans" may refer to Domestic Loans
or Euro-Dollar Loans.
"LOC" means a direct-pay letter of credit (a) issued by the
Fronting Bank for the account of the Borrower in accordance with
and as contemplated by Section 2.01, (b) supporting payment
obligations under LOC Debt and (c) that is not a Collateralized
LOC.
"LOC Commitment" means $66,000,000 or such lesser amount to
which the commitment of the Fronting Bank to issue LOCs hereunder
may be reduced from time to time as provided in Section 3.17.
"LOC Commitment Percentage" of a Bank means (a) at any time
when Section 9.02(b) is applicable to any Bank (other than such
Bank), the percentage that the Commitment of such Bank bears to the
aggregate Commitments of all Banks not subject to such Section, (b)
at any time such Section is applicable to such Bank, zero and (c)
at all other times, the percentage that the Commitment of such Bank
bears to the aggregate Commitments of all the Banks.
"LOC Debt" means Commercial Paper Notes and Medium-Term Notes
(a) with a maturity date not later than August 31, 2001, (b) the
proceeds of which are used for the purposes set forth in Section
6.20 or to repay Loans and (c) that are supported by LOCs.
"LOC Debt Facility Agreement" means that certain LOC Debt
Facility Agreement dated as of April 18, 1990, by and among the
Borrower, the Banks, the Fronting Bank and the Agent, as amended
from time to time.
"LOC Debt Interest Amount" means (a) with respect to any LOC
Debt that consists of Medium-Term Notes issued on an interest-
bearing basis, up to but not exceeding 217 days' interest payable
by the Borrower on such Medium-Term Notes, (b) with respect to LOC
Debt that consists of Commercial Paper Notes issued on an interest-
bearing basis, up to but not exceeding 270 days' interest payable
by the Borrower on such Commercial Paper Notes and (c) with respect
to any Commercial Paper Notes issued on a discounted basis, the
amount payable by the Borrower on the maturity thereof in respect
of the discounted portion of such Commercial Paper Notes.
"LOC Debt Principal Amount" means (a) with respect to any LOC
Debt issued on a discounted basis, the face or principal amount
thereof less the amount of such discount and (b) with respect to
any LOC Debt not issued on a discounted basis, the face or
principal amount thereof.
"LOC Disbursement" means any payment made by the Fronting Bank
pursuant to a drawing under an LOC.
"LOC Utilization" of a Bank means, at any time, the amount of
such Bank's ratable share of the aggregate Face Amount of all
Outstanding LOC Debt at such time based upon its LOC Commitment
Percentage at the respective times such Outstanding LOC Debt was
issued.
"London Interbank Offered Rate" has the meaning set forth in
Section 3.05(c).
"Magma" means Magma Power Company, a Nevada corporation.
"Magma Undertaking" means the undertaking of Magma,
substantially in the form of Exhibit F hereto.
"Major Capital Expenditure Reserve Account" means the reserve
account established and maintained pursuant to Section 11.2 of the
Operating and Maintenance Agreement.
"Maturity Date" has the meaning set forth in the Depositary
Agreement.
"McKelvey Lease" means that certain lease described in
Preliminary Title Report No. 105345, affecting the north half of
the northwest quarter of Section 34 of Township 11 South Range 13
East, SBM, Imperial County, California.
"Medium-Term Notes" has the meaning set forth in the LOC Debt
Facility Agreement.
"MTN Dealer" has the meaning set forth in the LOC Debt
Facility Agreement.
"MTN Distribution Agreement" has the meaning set forth in the
LOC Debt Facility Agreement.
"Mission" means Mission Energy Company, a California
corporation.
"Note" means a Domestic Note or a Euro-Dollar Note, and
"Notes" means the Domestic Notes or the Euro-Dollar Notes or both.
"Note Proceeds Account" has the meaning set forth in the
Depositary Agreement.
"Notice of Borrowing" has the meaning set forth in Section
3.02.
"Notice of Issuance" has the meaning set forth in Section
2.04.
"Officer" means, with respect to the General Partner, the
Chairman of its Board of Directors, its President or any of its
Vice Presidents.
"Officer's Certificate" means a certificate of the General
Partner, duly executed by any Officer.
"Operating and Maintenance Agreement" means the Operating and
Maintenance Agreement dated as of March 14, 1988 between the
Borrower and Red Hill, as amended from time to time.
"Original Coverage" has the meaning set forth in Section
6.13(g).
"Outstanding LOC Debt" at any time means all LOC Debt
theretofore authenticated and delivered to a Dealer (whether or not
payment of the purchase price thereof has been received by the
Depositary and deposited in the Note Proceeds Account) other than
(i) LOC Debt which has matured and been paid in full by the
Depositary with funds withdrawn from the Special Payment Account,
(ii) LOC Debt which has matured and funds for payment of which are
on deposit in the Special Payment Account, (iii) LOC Debt whose
purchase price has not been paid and which has been returned (but
not presented for payment) to the Depositary for cancellation and
(iv) Defeased Notes.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including
a government or political subdivision or an agency or
instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
which is covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code and is either (i)
maintained by a member of the Controlled Group for employees of a
member of the Controlled Group or (ii) maintained pursuant to a
collective bargaining agreement or any other arrangement under
which more than one employer makes contributions and to which a
member of the Controlled Group is then making or accruing an
obligation to make contributions or has within the preceding five
plan years made contributions.
"Plans and Specifications" means the plans and specifications
for the construction of the Del Ranch Facility, copies of which are
referenced in Exhibit H to the Construction Management Agreement.
"Prime Loan" means a Loan to be made as a Prime Loan pursuant
to Section 2.06, Section 3.02 or Article IX.
"Prime Rate" means the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York in New York City from
time to time as its Prime Rate.
"Principal Payment Amount" has the meaning set forth in
Section 3.14.
"Process" means the process by which BTU Energy is extracted
from the Geothermal Brine.
"Project Agreements" means the agreements listed in Schedule
I to the Security Agreement, and all other agreements to which the
Borrower is a party now in effect or hereafter entered into in
connection with the Development of the Del Ranch Facility or the
operation of the Del Ranch Facility.
"Project Contingency Costs" means that item in any budget or
statement of anticipated Project Costs that represents an open item
or reserve for unexpected expenses that may arise due to unforeseen
circumstances.
"Project Cost Overruns" means such Project Costs as, when
aggregated with all Project Costs previously incurred, are in
excess of $93,846,154.00.
"Project Costs" has the meaning set forth for such term in the
Limited Partnership Agreement, including, without limitation, the
funding of Working Capital in an amount equal to the Working
Capital Requirement.
"Project Debt" means any Loan or LOC Debt.
"Red Hill" means Red Hill Geothermal, Inc., a Delaware
corporation, a general partner of the Borrower.
"Reference Banks" means the CD Reference Banks or the
Euro-Dollar Reference Banks, as the context may require, and
"Reference Bank" means any one of such Reference Banks.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Reimbursement Obligation" has the meaning set forth in the
Security Agreement.
"Required Banks" means at any time Banks having at least 66
2/3% of the aggregate amount of the Commitments or, if the
Commitments shall have been terminated, holding Notes evidencing at
least 66 2/3% of the aggregate unpaid principal amount of the
Loans.
"Resource Engineer" means GeothermEx, or its successors in the
capacity as resource engineer.
"Resource Engineer's Report" means the report of the Resource
Engineer in form and substance satisfactory to the Banks.
"Restricted Payment" means (i) any distribution of
Distributable Cash pursuant to Article IV of the Limited
Partnership Agreement or other distribution of assets of the
Borrower (other than tax benefits) on any Interest, or (ii) any
payment to any Affiliate of the Borrower other than pursuant to the
Project Agreements.
"Sale" has the meaning given to the term Sale in the Limited
Partnership Agreement.
"Sale or Financing Proceeds" means the aggregate amount of
cash, readily marketable cash equivalents or other consideration
received by the Borrower at any time or from time to time in
respect of any Sale or Financing minus the reasonable costs and
expenses (including, without limitation, fees and commissions,
costs of discontinuance and taxes), incurred in connection with
such Sale or Financing and not payable to the Borrower or any
Affiliate of the Borrower; provided that such aggregate amount
shall not include the aggregate of any insurance proceeds released
to the Borrower pursuant to Section 6.13 and any proceeds from any
sale of LOC Debt.
"SCE" means Southern California Edison Company, a California
corporation.
"Security Agent" means Morgan Guaranty Trust Company of New
York, as Security Agent under the Security Agreement.
"Security Agreement" means the Security Agreement dated as of
March 14, 1988 among the Borrower, Morgan Guaranty Trust Company of
New York, as Agent hereunder for and on behalf of the Banks and the
Fronting Bank, Morgan Guaranty Trust Company of New York, and
Morgan Guaranty Trust Company of New York, as Security Agent
(collectively, the "Security Agreement Parties"), as amended by
Amendment Number One to Security Agreement dated as of April 14,
1989 among the Security Agreement Parties and Amendment Number Two
to Security Agreement dated as of April 18, 1990 among the Security
Agreement Parties and as further amended from time to time.
"Security Interests" means the security interests granted to
the Security Agent for the benefit of the Secured Parties (as
defined in the Security Agreement) under the Security Agreement and
the Deed of Trust.
"Special Payment Account" has the meaning set forth in the
Depositary Agreement.
"Subsidiary" means, with respect to any Person, any
corporation or other entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions
are at the time directly or indirectly owned by such Person.
"Supporting Equipment" means all items described in Section
2.2.2 of the Easement Agreement, including all such items located
on the Del Ranch Property, and any real property interest
associated therewith.
"Technical Consultant" means the Engineer or the Resource
Engineer or any other engineering or technical consultant to the
Banks that may be selected by the Required Banks from time to time
to advise the Banks as to technical aspects of the Development of
the Del Ranch Facility or operation of the Del Ranch Facility.
"Temporary Cash Investment" means any Investment in (i) direct
obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof,
(ii) commercial paper rated in the highest grade by a nationally
recognized credit rating agency, (iii) deposits with, including
certificates of deposit issued by, any office located in the United
States of any Bank or any other bank or trust company which is
organized under the laws of the United States or any state thereof
and the certificates of deposit of which are rated in one of the
two highest grades by a nationally recognized credit rating agency,
(iv) bankers' acceptances issued by (A) any Bank or (B) any trust
company organized under the laws of Japan that has certificates of
deposits rated in one of the two highest grades by a nationally
recognized credit rating agency in the United States and (v)
certificates of deposit, commonly known as "Euro-CDs", that are
issued by any office located in London of any bank or trust company
and that are rated in one of the two highest grades by a nationally
recognized credit rating agency in the United States; provided that
in each case such Investment matures within one year from the date
of acquisition thereof by the Borrower.
"Title Insurance Policy" shall mean a title insurance policy
issued by Ticor Title Insurance Company of California, insuring the
validity and first priority of the lien of the Deed of Trust in the
Del Ranch Facility ("Parcel A"), the leasehold estate created by
the Ground Lease ("Parcel B") and the easement created by the
Easement Agreement ("Parcel C"). The Title Insurance Policy shall
be in the form of an American Land Title Association Standard Loan
Policy-Form 1970 (L.P. 10), with ALTA Endorsement Form 1 coverage,
and shall satisfy the following requirements:
(a) The Title Insurance Policy shall provide coverage in an
amount equal to 115% of the aggregate amount of the Tranche A
Commitments and Tranche B Commitments;
(b) The Title Insurance Policy shall contain with respect to
Parcel A and Parcel B, CLTA Endorsements Nos. 100 (modified) and
116.1, and such other endorsements as the Required Banks may
reasonably require;
(c) Except as approved by the Required Banks in writing prior
to the date of the first Borrowing, the Title Insurance Policy
shall not contain any exceptions to coverage other than the
exceptions contained in the Del Ranch Property Preliminary Title
Report and the Geothermal Lease Rights Properties Preliminary
Title Report, it being acknowledged by the parties hereto that,
with respect to Parcel C, the Title Insurance Policy shall
contain the standard California Land Title Association
exceptions to coverage; and
(d) The Title Insurance Policy shall contain such direct
access reinsurance agreements as the Required Banks may require.
"Tranche A" or "Tranche B" means, when used with respect to
(i) a Bank's Commitment, the portion of such Bank's Commitment
identified with respect to such Tranche on Schedule I hereto, as
such portion of the Commitment may be reduced pursuant to Section
3.08 or 3.09, (ii) a Borrowing, a Borrowing made by the Borrower
under such Tranche, as identified in the Notice of Borrowing with
respect thereto, (iii) a Loan, a Loan made as part of a Borrowing
under such Tranche, (iv) a Note, a Note evidencing the obligation
of the Borrower to pay Loans outstanding under such Tranche, (v) a
Bank's Utilization, the Utilization of such Bank attributable to
such Tranche, (vi) LOC Debt, the LOC Debt that is attributable to
such Tranche and (vii) LOCs, a LOC that has been issued in respect
of such Tranche's LOC Debt.
"Tranche A Credit Period" means the period from the date of
the Original Agreement to and including the Conversion Date;
provided that if the Tranche A Credit Period would otherwise end on
a day which is not a Domestic Business Day, the Tranche A Credit
Period shall end on the next preceding Domestic Business Day.
"Tranche B Credit Period" means the period from the date
during the Tranche A Credit Period on which the Borrower has
Tranche A Loans outstanding in the aggregate amount of the Tranche
A Commitments to and including the Conversion Date; provided that
if the Tranche B Credit Period would otherwise end on a day which
is not a Domestic Business Day, the Tranche B Credit Period shall
end on the next preceding Domestic Business Day.
"Transmission Agreement" has the meaning set forth in the
definition of "IID Agreements" in this Section 1.01.
"Unfunded Vested Liabilities" means, with respect to any Plan
at any time, the amount (if any) by which (i) the present value of
all vested nonforfeitable benefits under such Plan exceeds (ii) the
fair market value of all Plan assets allocable to such benefits,
all determined as of the then most recent valuation date for such
Plan, but only to the extent that such excess represents a
potential liability of a member of the Controlled Group to the PBGC
or the Plan under Title IV of ERISA.
"Unused Commitment" of a Bank means such Bank's Commitment
less its Loan Utilization.
"Utilization" of a Bank means, at any time, an amount equal to
the sum of (a) such Bank's LOC Utilization at such time and (b) its
Loan Utilization at such time.
"Vulcan Geothermal Lease Unit" means the combination, pursuant
to the Declaration and Notice of Creation of Unit and Pooling of
Lands Under Leases dated January 10, 1985, as amended by that
certain First Amendment to Declaration and Notice of Creation of
Unit and Pooling of Lands Under Leases dated as of January 18,
1988, of the Geothermal Leases identified as Exhibit B to the
Easement Agreement.
"Wiest Lease" means that certain lease described in
Preliminary Title Report Number 105346, affecting the south half of
the northwest quarter of Section 34 of Township 11 South Range 13
East, SBM, Imperial County, California.
"Working Capital" means, at any time, the difference between
(i) the sum of the Borrower's cash, cash equivalents and accounts
receivable, less any amounts in the Debt Service Reserve Account or
the Major Capital Expenditure Reserve Account established pursuant
to Section 11 of the Operating and Maintenance Agreement, and (ii)
the Borrower's accounts payable.
"Working Capital Requirement" means: (i) from the Conversion
Date to but excluding the first anniversary of the Conversion Date,
$1,000,000; (ii) from the first anniversary of the Conversion Date
to but excluding the second anniversary of the Conversion Date,
$1,400,000; (iii) from the second anniversary of the Conversion
Date to but excluding the third anniversary of the Conversion Date,
$1,800,000; (iv) from the third anniversary of the Conversion Date
to but excluding the fourth anniversary of the Conversion Date,
$2,200,000; (v) from the fourth anniversary of the Conversion Date
to but excluding the fifth anniversary of the Conversion Date,
$2,600,000; and (vi) after the fifth anniversary of the Conversion
Date, $3,000,000.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall
be interpreted, all accounting determinations hereunder shall be
made, and all financial statements required to be delivered
hereunder shall be prepared in accordance with generally accepted
accounting principles as in effect from time to time, applied on a
basis consistent (except for changes concurred in by the Borrower's
independent public accountants) (i) with financial statements of
Magma until audited financial statements of the Borrower are
available (and to the extent relevant), and (ii) thereafter with
the most recent audited financial statements of the Borrower
delivered to the Banks.
ARTICLE II
THE LETTER OF CREDIT FACILITY
SECTION 2.01. LOC Commitment. Upon the terms and subject to
the conditions hereinafter set forth, the Fronting Bank (i) agrees
to issue and deliver LOCs from time to time during the availability
of the LOC Commitment and (ii) consents to the issuance and sale of
LOC Debt entitled to the benefits of the LOCs. LOC Debt may be
issued in accordance with this Agreement and the Depositary
Agreement on the instructions of the Borrower to the Depositary on
any Domestic Business Day prior to the Conversion Date on which
there are unused LOC Commitments and on any Domestic Business Day
thereafter in an aggregate Face Amount (1) on the maturity date of
any LOC Debt, up to the aggregate Face Amount of such maturing LOC
Debt, (2) on any day on which the principal of any Loans is prepaid
or scheduled to be repaid, up to the aggregate amount of such
principal (subject to compliance with Section 3.10 hereof), (3) on
any day on which Medium-Term Notes become Defeased Notes pursuant
to Section 4.01 of the LOC Debt Facility Agreement, up to the
aggregate Face Amount of such Defeased Notes and (4) on any day on
which any LOC Debt is returned to the Depositary for cancellation,
without the purchase price therefor having been paid and without
having been presented to the Depositary for payment, up to the Face
Amount of the LOC Debt so returned; provided that (a) on any one
day LOC Debt may be issued under more than one of the foregoing
circumstances if applicable, and (b) LOC Debt shall be issued from
time to time hereunder and under the Depositary Agreement with such
maturities that LOC Debt with an aggregate Face Amount of no more
than $25,000,000 shall mature on any one day. The LOC Commitment
shall become available upon the execution and delivery by the
appropriate parties of the Issuance Agreements and satisfaction of
the conditions precedent to issuance of LOC Debt set forth therein
and herein.
SECTION 2.02. LOCs. Each LOC shall (a) be denominated in
Dollars, (b) be dated the date of issuance of the LOC Debt
supported thereby, (c) expire 15 days after the maturity date of
such LOC Debt (or if such fifteenth day is not a Domestic Business
Day, on the next succeeding Domestic Business Day) and (d) be in an
amount equal to the Face Amount of such LOC Debt.
SECTION 2.03. Forms of LOCs. Each LOC with respect to
Commercial Paper Notes shall be initially in the form of Exhibit
A-2 to the Depositary Agreement and thereafter any other form of
letter of credit acceptable to the Fronting Bank, the Agent and the
Borrower. Each LOC with respect to Medium-Term Notes shall be
initially in the form of Exhibit B-2 to the Depositary Agreement
and thereafter any other form of letter of credit acceptable to the
Fronting Bank, the Agent and the Borrower.
SECTION 2.04. Notice of Issuance. The Borrower shall, not
later than three Domestic Business Days prior to the proposed date
of issuance of any LOC Debt and related LOC, if such issuance is a
Credit Event, provide a written notice of such issuance (a "Notice
of Issuance") to the Fronting Bank and the Agent, specifying the
aggregate Face Amount of LOC Debt expected to be issued, the
expected maturity dates thereof and the Tranche to which such LOC
Debt is attributable.
SECTION 2.05. Issuance of LOCs and LOC Debt. (a) General.
The issuance, authentication, marketing, sale and delivery of LOC
Debt and the LOCs related thereto, the making of payments in
respect thereof and the appointment by the Borrower, the Fronting
Bank and the Banks of authenticating, selling and paying agents,
the Depositary and other representatives in connection with the
foregoing shall be subject to the terms and conditions of this
Agreement (including, without limitation, the terms and conditions
set forth in subsection (b) below) and the applicable Issuance
Agreements.
(b) Conditions Precedent to Issuances of LOC Debt. Each
issuance of LOC Debt and the LOCs related thereto shall be subject
to the satisfaction of the applicable conditions precedent set
forth in Article III of the LOC Debt Facility Agreement.
(c) Notice of Actual Issuances. Promptly after each issuance
of LOC Debt, the Fronting Bank shall provide the Agent and the
Banks with a written notice setting forth the terms thereof,
including the Tranche attributable thereto.
SECTION 2.06. Agreement to Reimburse LOC Disbursements and
Automatic Conversion to Loans. (a) The Borrower hereby agrees to
reimburse the Fronting Bank, for its own account, for each LOC
Disbursement made by the Fronting Bank without demand or notice of
any kind, on the date that such LOC Disbursement is made, in an
amount equal to the amount of such LOC Disbursement.
(b) The Borrower or any Dealer shall notify the Depositary
and the Fronting Bank by telephone (which notification shall
promptly be confirmed by telex or facsimile transmission) not later
than 12:30 P.M. (New York City time), on any day an LOC
Disbursement is made, of the amount, if any, of such LOC
Disbursement to be reimbursed and the anticipated source of such
reimbursement on such day. If the Borrower or any Dealer timely
delivers such notice, any such reimbursement made in the amount so
notified by the close of business in New York City on such day
shall be credited on such day. Any LOC Disbursement not fully
reimbursed by the close of business in New York City on the day
when made shall, to the extent not so reimbursed, automatically and
without further act or notice, be converted at such close of
business into a Prime Loan of the Fronting Bank unless the LOC
Commitment has been terminated pursuant to Section 7.01. If the
Borrower or any Dealer shall fail to notify the Depositary prior to
12:30 P.M. (New York City time) that an LOC Disbursement is to be
reimbursed on such day, (i) payments made prior to 12:30 P.M. (New
York City time) on such day shall nevertheless be accepted by the
Fronting Bank and credited as a reimbursement made on such date and
(ii) any payments made after 12:30 P.M. (New York City time) on
such day shall be deemed to have been received on the next
succeeding Domestic Business Day and all or any portion of such LOC
Disbursement not reimbursed pursuant to clause (i) above shall be
converted into a Prime Loan of the Fronting Bank, as of the close
of business on such day.
(c) If by 12:30 P.M. (New York City time) on any day on which
an LOC Disbursement has been made and the Fronting Bank has not
received either a notice under subsection (b) of this Section that
reimbursement of such LOC Disbursement will be made in full on such
day or funds in reimbursement in full of such LOC Disbursement,
then the Fronting Bank shall promptly (and in any event by 1:30
P.M., New York City time) notify the Agent, the Borrower and each
Bank of the date and amount of such LOC Disbursement to be
converted into a Prime Loan and the ratable share of each Bank in
such Prime Loan. If (i) at the close of business (New York City
time) on any day any LOC Disbursement made on such day has not been
reimbursed in full despite previous notice under subsection (b) of
this Section of such expected reimbursement, (ii) such LOC
Disbursement has been converted into a Prime Loan of the Fronting
Bank pursuant to subsection (b) of this Section and (iii) such
Prime Loan is not repaid in full by 10:30 A.M. (New York City time)
on the next succeeding Domestic Business Day, then the Fronting
Bank shall promptly (and in any event by 1:30 P.M., New York City
time) provide the notice required by this subsection on such next
succeeding Domestic Business Day. The failure of the Fronting Bank
to provide any notice on the day required by this subsection shall
not constitute a default of the Fronting Bank for purposes of
Section 3.16.
(d) The Borrower's obligation to reimburse the Fronting Bank
for the amount of all LOC Disbursements and to repay the Prime
Loans, if any, into which LOC Disbursements have been converted in
accordance with Section 2.06(b) shall be unconditional and absolute
under any and all circumstances; provided that the Borrower shall
not be obligated to reimburse the Fronting Bank for any wrongful
LOC Disbursement made as a result of the gross negligence or
willful misconduct of the Fronting Bank (or to repay any Prime Loan
into which any such LOC Disbursement has been converted) to the
extent of any damages which the Borrower proves were suffered by it
directly as a result thereof.
SECTION 2.07. Participations of the Banks. (a) By the
issuance of an LOC, the Fronting Bank hereby grants to each other
Bank, and each other Bank hereby absolutely and unconditionally
agrees to acquire from the Fronting Bank, a participation in such
LOC, each LOC Disbursement made thereunder and each Prime Loan into
which such LOC Disbursement is converted hereunder and to pay to
the Fronting Bank in accordance with Section 3.14 an amount equal
to such Bank's LOC Commitment Percentage (as determined at the time
of the issuance of each LOC to which an unreimbursed LOC
Disbursement relates) (i) of each Prime Loan into which an
unreimbursed LOC Disbursement is converted pursuant to Section
2.06(b) and 3.14 or (ii) of each unreimbursed LOC Disbursement, if
such unreimbursed LOC Disbursement is not (contrary to the
agreement and intention herein set forth, other than the rights of
the Banks to terminate the LOC Commitment pursuant to Section 7.01
hereof) for any reason (including, without limitation, a
termination of the LOC Commitment by the Banks pursuant to Section
7.01 hereof) converted into a Prime Loan pursuant to Section
2.06(b), promptly upon receiving notice from the Fronting Bank of
such non-conversion; provided that the Fronting Bank has not made
a wrongful LOC Disbursement for the reasons set forth in Section
2.06(d) hereof.
(b) Except as otherwise expressly stated herein, each Bank
acknowledges and agrees that its obligation pursuant to this
Section 2.07 (i) to acquire a participation in each LOC, each LOC
Disbursement and each Prime Loan into which an unreimbursed LOC
Disbursement is converted and (ii) to make the payments specified
in Sections 2.07 and 3.14, and the right of the Fronting Bank to
receive the same in the manner specified herein, is unconditional
and absolute and shall not be affected by any circumstances
whatsoever (other than the termination of such obligation upon (x)
the cash collateralization of such LOC pursuant to Section 4.01 of
the LOC Debt Facility Agreement, and (y) the reimbursement of the
Fronting Bank of such LOC Disbursements prior to such Bank funding
such participation), including the occurrence of any Event of
Default, and that each such payment shall be made without any
offset, counterclaim, abatement, withholding or reduction
whatsoever.
(c) Notwithstanding the termination of the obligations of the
Banks to participate in Collateralized LOCs, the Borrower shall
remain obligated to reimburse the Fronting Bank in full for the
disbursements under such Collateralized LOCs whether from funds on
deposit in the Defeasance Accounts or otherwise.
SECTION 2.08. Election to Reduce LOC Utilization. (a) The
Borrower may, upon three Domestic Business Days' written notice
before an intended Domestic Borrowing and upon five Euro-Dollar
Business Days' written notice before an intended Euro-Dollar
Borrowing to the Fronting Bank and the Agent (which shall promptly
transmit such notice to the Banks), elect to reduce its utilization
of LOC Debt and increase its utilization of Loans by not issuing
LOC Debt on the next Maturity Date of LOC Debt or on the next
Defeasance Date and instead giving a Notice of Borrowing pursuant
to Section 3.02 with respect to such Maturity Date or Defeasance
Date, as the case may be. Any such election need not be permanent
and may be reversed in whole or in part pursuant to an election
under Section 3.15 hereof.
(b) For purposes of any election by the Borrower pursuant to
this Section 2.08, the Borrower shall specify in its written notice
of such election which Tranche is involved.
SECTION 2.09. Limited Liability of the Banks. The Borrower
assumes all risk of liability of the Banks and the Fronting Bank
arising from the acts or omissions of each holder or beneficiary of
an LOC with respect to its use of such LOC. Neither the Fronting
Bank nor any other Bank nor any of their respective officers or
directors shall be liable or responsible for: (a) the use which
may be made of any LOC or for any acts or omissions of any holder
or beneficiary of any LOC in connection therewith; (b) the
validity, sufficiency or genuineness of any LOC or LOC Debt
instrument or any documents offered in support of a claim with
respect to any lost, stolen or mutilated LOC or LOC Debt instrument
or to or in respect of any endorsement thereon, even if such LOC or
LOC Debt instrument or such documents should in fact prove to be in
any or all respects invalid, insufficient, fraudulent or forged;
(c) payment by or on behalf of the Fronting Bank against
presentation of documents which do not comply with the terms of any
LOC, including failure of any documents to bear reference or
adequate reference to such LOC; or (d) any other circumstances
whatsoever in making or failing to make payment under any LOC;
provided that the Borrower shall have a claim against the Fronting
Bank, and the Fronting Bank shall be liable to the Borrower, to the
extent of any damages suffered by the Borrower which the Borrower
proves were caused by (i) the gross negligence of the Fronting Bank
in determining whether documents presented under any LOC complied
with the terms of such LOC or (ii) the willful failure of the
Fronting Bank to pay under any LOC after the timely and proper
presentation to it by the holder or beneficiary of any LOC of all
requisite documents strictly complying with the terms and
conditions of such LOC. In furtherance and not in limitation of
the foregoing, documents that appear on their face to be in order
may be accepted by the Fronting Bank.
SECTION 2.10. Indemnity. The Borrower agrees to indemnify
the Fronting Bank, the Agent and each Bank, and their respective
officers, directors, employees, agents, attorneys-in-fact and
Affiliates, and hold each such indemnified party harmless from and
against any and all claims, damages, losses, liabilities, costs or
expenses whatsoever (exclusive of ordinary operating costs of the
Fronting Bank or any Bank) which such indemnified party may incur
or suffer by reason of or in connection with payment under any LOC
except only if and to the extent that any such claims, damages,
losses, liabilities, costs or expenses shall be caused by the
willful misconduct or gross negligence of such indemnified party in
performing its obligations, if any, under this Agreement or in
making payment under any LOC which does not comply with the terms
thereof. Each indemnified party shall provide to the Borrower a
certificate, signed by an officer of such indemnified party setting
forth the amount of any such loss or expense of such indemnified
party, which statement shall be final, conclusive and binding as to
the amount due in the absence of manifest error. The Borrower,
upon demand by any indemnified party at any time, shall promptly
reimburse such indemnified party for any reasonable legal or other
expenses incurred in connection with investigating or defending
against any of the foregoing except if the same is due to such
indemnified party's gross negligence or willful misconduct. If any
action, suit or proceeding arising from any of the foregoing is
brought against any indemnified party, the Borrower will resist and
defend such action, suit or proceeding or cause the same to be
resisted and defended by counsel designated by the Borrower and
satisfactory to such indemnified party. The indemnities contained
herein shall survive the termination of this Agreement for the
applicable statute of limitations.
ARTICLE III
THE CREDIT FACILITY
SECTION 3.01. Commitments to Lend.
(a) Tranche A. In addition to the Commitments of each Bank
to lend pursuant to Article II hereof, during the Tranche A Credit
Period each Bank severally agrees, on the terms and conditions set
forth in this Agreement, to lend to the Borrower from time to time
Tranche A Loans up to the amount, if any, equal to the excess of
(i) the Tranche A Commitment of such Bank over (ii) the Tranche A
Utilization of such Bank, immediately prior to the time of making
such Tranche A Loans. Each Borrowing under this subsection (a)
shall be in an aggregate principal amount of $2,500,000 or any
larger multiple of $500,000 (except that any such Borrowing may be
in the aggregate amount of the unused Tranche A Commitments), shall
be made no more frequently than once a month and shall be made from
the several Banks ratably in proportion to their respective Tranche
A Commitments. Within the foregoing limits, the Borrower may
borrow under this subsection (a), repay, or to the extent permitted
by Section 3.10, prepay Loans and reborrow at any time during the
Tranche A Credit Period under this subsection (a).
(b) Tranche B. In addition to the Commitments of each Bank
to lend pursuant to Article II hereof, during the Tranche B Credit
Period each Bank severally agrees, on the terms and conditions set
forth in this Agreement, to lend to the Borrower from time to time
Tranche B Loans up to the amount, if any, equal to the excess of
(i) the Tranche B Commitment of such Bank over (ii) the Tranche B
Utilization of such Bank, immediately prior to the time of making
such Tranche B Loans. Each Borrowing under this subsection (b)
shall be in an aggregate principal amount of $1,000,000 or any
larger multiple of $500,000 (except that any such Borrowing may be
in the aggregate amount of the unused Tranche B Commitments), shall
be made no more frequently than once a month and shall be made from
the several Banks ratably in proportion to their respective Tranche
B Commitments. Within the foregoing limits, the Borrower may
borrow under this subsection (b), repay, or to the extent permitted
by Section 3.10, prepay Loans and reborrow at any time during the
Tranche B Credit Period under this subsection (b).
(c) After Credit Periods. In addition to the Commitments of
each Bank to lend pursuant to Article II hereof, after the end of
each of the Tranche A and Tranche B Credit Periods, (A) the Tranche
B Commitment of each Bank shall be added to such Bank's Tranche A
Commitment and the Tranche B Commitment shall thereupon terminate,
(B) the Tranche B Loans of each Bank shall be deemed to be Tranche
A Loans of such Bank and all subsequent Loans by the Banks shall be
Tranche A Loans, and (C) each Bank severally agrees, on the terms
and conditions set forth in this Agreement, to make new Tranche A
Loans to the Borrower upon (i) any repayment of outstanding Tranche
A Loans pursuant to Section 3.04, (ii) any optional prepayment of
outstanding Tranche A Loans pursuant to Section 3.10 and (iii) any
election to increase utilization of Loans pursuant to Section 2.08;
provided that the principal amount of such Bank's new Loan shall
not exceed the principal amount of its outstanding Loan or Loans
being repaid or prepaid (or, in the case of an election under
Section 2.08, the aggregate Face Amount of the LOC Debt maturing or
being defeased and not being replaced with LOC Debt); and provided
further that the aggregate principal amount of such Bank's
outstanding Tranche A Utilization shall not, immediately after a
Borrowing, exceed its Tranche A Commitment. Each Borrowing under
this subsection (c) shall be made from the several Banks ratably in
proportion to their respective Commitments. Amounts required to be
repaid pursuant to Section 3.09(f) shall not be reborrowed, and
amounts repaid pursuant to Section 9.02 shall not be reborrowed
except as provided therein.
(d) Consolidation of Outstanding Loans. On the first
Commitment Reduction Date each Bank's outstanding Tranche A Loans
shall be consolidated into a single Loan and thereafter no Bank
shall have more than three Loans outstanding hereunder at any time
with the Prime Loans arising under Section 2.06 counted as a single
Loan for this purpose. If any combination of CD Loans, Prime Loans
and Euro-Dollar Loans are outstanding within a Tranche immediately
prior to the first Commitment Reduction Date, the Borrower shall
borrow new Loans of not more than three types on such date to the
extent required to refund its outstanding Loans of any other type.
SECTION 3.02. Method of Borrowing. (a) Except for Prime
Loans arising under Section 2.06, the Borrower shall give the Agent
notice (a "Notice of Borrowing") by 11:00 A.M. (New York City time)
at least three Domestic Business Days before each Domestic
Borrowing and at least five Euro-Dollar Business Days before each
Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Domestic Borrowing or a
Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are to be
CD Loans, Prime Loans or Euro-Dollar Loans,
(iv) whether such Borrowing is a Tranche A Borrowing or a
Tranche B Borrowing, and
(v) in the case of a Fixed Rate Borrowing, the duration of
the Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing (or deemed Notice
of Borrowing pursuant to subsection (d) hereof), the Agent shall
promptly notify each Bank of the contents thereof and of such
Bank's ratable share of such Borrowing and such Notice of Borrowing
shall not thereafter be revocable by the Borrower.
(c) Not later than 1:00 P.M. (New York City time) on the date
of each Borrowing, each Bank shall (except as provided in
subsection (e) of this Section) make available its ratable share of
such Borrowing, in Federal or other funds immediately available in
New York City, to the Agent at its address specified in or pursuant
to Section 10.01. Unless the Agent determines that any applicable
condition specified in Article IV has not been satisfied, the Agent
will make the funds so received from the Banks available to the
Borrower at the Agent's aforesaid address.
(d) If the Agent does not receive a timely Notice of
Borrowing prior to the expiration of any Interest Period applicable
to any outstanding CD Borrowing, Prime Borrowing or Euro-Dollar
Borrowing, as the case may be, unless the Borrower repays such CD
Borrowing, Prime Borrowing or Euro-Dollar Borrowing in accordance
with the provisions of this Agreement, the Borrower shall be deemed
to have given the Agent a Notice of Borrowing to make a Prime
Borrowing upon the expiration of such Interest Period, in an
aggregate amount equal to the sum of the aggregate principal amount
of such CD Borrowing, Prime Borrowing or Euro-Dollar Borrowing
outstanding at the expiration of such Interest Period; provided
that the Banks shall not be obligated to make Loans in an aggregate
amount in excess of the aggregate Commitments.
(e) If any Bank makes a new Loan hereunder on a day on which
the Borrower is to repay all or any part of an outstanding Loan
from such Bank, such Bank shall apply the proceeds of its new Loan
to make such repayment and only an amount equal to the difference
(if any) between the amount being borrowed and the amount being
repaid shall be made available by such Bank to the Agent as
provided in subsection (c) of this Section, or remitted by the
Borrower to the Agent as provided in Section 3.11, as the case may
be.
SECTION 3.03. Notes. (a) The Tranche A Domestic Loans and
the Tranche B Domestic Loans of each Bank are evidenced by a single
Tranche A Domestic Note and a single Tranche B Domestic Note,
respectively, payable to the order of such Bank for the account of
its Domestic Lending Office in an amount equal to the aggregate
unpaid principal amount of such Bank's Tranche A Domestic Loans and
Tranche B Domestic Loans, respectively. Such Notes were delivered
by the Borrower to the Banks prior to the first Borrowing under the
Original Agreement.
(b) The Tranche A Euro-Dollar Loans and Tranche B Euro-Dollar
Loans of each Bank are evidenced by a single Tranche A Euro-Dollar
Note and a single Tranche B Euro-Dollar Note, respectively, payable
to the order of such Bank for the account of its Euro-Dollar
Lending Office in an amount equal to the aggregate unpaid principal
amount of such Bank's Tranche A Euro-Dollar Loans and Tranche B
Euro-Dollar Loans. Such Notes were delivered by the Borrower to
the Banks prior to the first Borrowing under the Original
Agreement.
(c) The Banks had the option prior to the first Borrowing
under the Original Agreement to request that their Prime Loans and
CD Loans in either or both Tranches be evidenced by separate Prime
and CD Notes payable to the order of such Banks for the account of
their Domestic Lending Office in an amount equal to the aggregate
unpaid principal amount of such Banks' Prime Loans and CD Loans,
respectively, within the affected Tranche. Each such Note that was
delivered pursuant to such a request was in substantially the form
of Exhibit A hereto with appropriate modifications to reflect the
fact that it evidences solely Prime Loans or CD Loans, as the case
may be. Each reference in this Agreement to the "Notes" or
"Domestic Note" shall be deemed to refer to and include either or
both of such Notes within a specified Tranche, as the context may
require.
(d) Each Bank shall record, and prior to any transfer of its
Notes shall endorse on the schedules forming a part thereof
appropriate notations to evidence, the date, amount and maturity of
each Loan made by it and the date and amount of each payment of
principal made by the Borrower with respect thereto; provided that
the failure of any Bank to make any such recordation or endorsement
shall not affect the obligations of the Borrower hereunder or under
the Notes. Each Bank is hereby irrevocably authorized by the
Borrower to endorse its Notes and to attach to and make a part of
any Note a continuation of any such schedule as and when required.
SECTION 3.04. Maturity of Loans. Each Loan included in any
Borrowing shall mature, and the principal amount thereof shall be
due and payable, on the last day of the Interest Period applicable
to such Borrowing.
SECTION 3.05. Interest Rates. (a) Each Prime Loan shall
bear interest on the outstanding principal amount thereof, for each
day from the date such Loan is made until it becomes due, at a rate
per annum equal to (w) 3/8% plus the Prime Rate for such day, if
such day falls prior to the Conversion Date; (x) 1/8 of 1% plus the
Prime Rate for such day, if such day falls on or after the
Conversion Date and prior to the fourth anniversary of the
Conversion Date; (y) 1/4 of 1% plus the Prime Rate for such day, if
such day falls on or after the fourth anniversary of the Conversion
Date and prior to the eighth anniversary of the Conversion Date;
and (z) 1/2 of 1% plus the Prime Rate for such day, if such day
falls on or after the eighth anniversary of the Conversion Date.
Such interest shall be payable for each Interest Period on the last
day thereof. Any overdue principal of and, to the extent permitted
by law, overdue interest on any Prime Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum
equal to the sum of 1% plus the otherwise applicable rate for such
day.
(b) Each CD Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable
thereto, at a rate per annum equal to the applicable Fixed CD Rate;
provided that if any CD Loan or any portion thereof shall, as a
result of clause (2)(b) or (2)(c)(i) of the definition of Interest
Period, have an Interest Period of less than 30 days, such portion
shall bear interest during such Interest Period at the rate
applicable to Prime Loans during such period. Such interest shall
be payable for each Interest Period on the last day thereof and, if
such Interest Period is longer than 90 days, at intervals of 90
days after the first day thereof. Any overdue principal of and, to
the extent permitted by law, overdue interest on any CD Loan shall
bear interest, payable on demand, for each day until paid at a rate
per annum equal to the sum of 1% plus the higher of (i) the Fixed
CD Rate applicable to such Loan and (ii) the rate applicable to
Prime Loans for such day.
The "Fixed CD Rate" applicable to any CD Loan for any Interest
Period means a rate per annum equal to the sum of the CD Margin
plus the applicable Adjusted CD Rate.
"CD Margin" means (w) 7/8 of 1% prior to the Conversion Date;
(x) 5/8 of 1% on and after the Conversion Date and prior to the
fourth anniversary of the Conversion Date; (y) 3/4 of 1% on and
after the fourth anniversary of the Conversion Date and prior to
the eighth anniversary of the Conversion Date; and (z) 7/8 of 1% on
or after the eighth anniversary of the Conversion Date.
The "Adjusted CD Rate" applicable to any Interest Period means
a rate per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
__________
* The amount in brackets being rounded upwards, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period is the
rate of interest determined by the Agent to be the arithmetic
average (rounded upward, if necessary, to the next higher 1/100 of
1%) of the prevailing rates per annum bid at 10:00 A.M. (New York
City time) (or as soon thereafter as practicable) on the first day
of such Interest Period by two or more New York certificate of
deposit dealers of recognized standing for the purchase at face
value from each CD Reference Bank of its certificates of deposit in
an amount comparable to the unpaid principal amount of the CD Loan
of such CD Reference Bank to which such Interest Period applies and
having a maturity comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day,
as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement (including without limitation any basic, supplemental
or emergency reserves) for a member bank of the Federal Reserve
System in New York City with deposits exceeding five billion
dollars in respect of new non-personal time deposits in dollars in
New York City having a maturity comparable to the related Interest
Period and in an amount of $100,000 or more. The Fixed CD Rate
shall be adjusted automatically on and as of the effective date of
any change in the Domestic Reserve Percentage.
"Assessment Rate" means for any Interest Period the net annual
assessment rate (rounded upwards, if necessary, to the next higher
1/100 of 1%) actually incurred by Morgan Guaranty Trust Company of
New York to the Federal Deposit Insurance Corporation (or any
successor) for such Corporation's (or such successor's) insuring
time deposits at offices of Morgan Guaranty Trust Company of New
York in the United States during the most recent period for which
such rate has been determined prior to the commencement of such
Interest Period.
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the
Euro-Dollar Margin plus the applicable Adjusted London Interbank
Offered Rate. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is
longer than three months, at intervals of three months after the
first day thereof.
"Euro-Dollar Margin" means (w) 3/4 of 1% prior to the
Conversion Date; (x) 1/2 of 1% on and after the Conversion Date and
prior to the fourth anniversary of the Conversion Date; (y) 5/8 of
1% on and after the fourth anniversary of the Conversion Date and
prior to the eighth anniversary of the Conversion Date; and (z) 3/4
of 1% on and after the eighth anniversary of Conversion Date.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient
obtained (rounded upwards, if necessary, to the next higher 1/100
of 1%) by dividing (i) the applicable London Interbank Offered Rate
by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest
Period means the average (rounded upward, if necessary, to the next
higher 1/16 of 1%) of the respective rates per annum at which
deposits in dollars are offered to each of the Euro-Dollar
Reference Banks in the London interbank market at approximately
11:00 A.M. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately equal
to the principal amount of the Euro-Dollar Loan of such Euro-Dollar
Reference Bank to which such Interest Period is to apply and for a
period of time comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day,
as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement for a member bank of the Federal Reserve System in New
York City with deposits exceeding five billion dollars in respect
of "Eurocurrency liabilities" (or in respect of any other category
of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of
extensions of credit or other assets which includes loans by a non-
United States office of any Bank to United States residents). The
Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the
Euro-Dollar Reserve Percentage.
(d) Any overdue principal of and, to the extent permitted by
law, overdue interest on any Euro-Dollar Loan shall bear interest,
payable on demand, for each day from and including the date payment
thereof was due to but excluding the date of actual payment, at a
rate per annum equal to the sum of 1% plus the Euro-Dollar Margin
plus the quotient obtained (rounded upwards, if necessary, to the
next higher 1/100 of 1%) by dividing (i) the rate per annum at
which one day (or, if such amount due remains unpaid more than
three Euro-Dollar Business Days, then for such other period of time
not longer than six months as the Agent may elect) deposits in
dollars in an amount approximately equal to such overdue payment
due to each of the Euro-Dollar Reference Banks are offered to such
Euro-Dollar Reference Bank in the London interbank market for the
applicable period determined as provided above by (ii) 1.00 minus
the Euro-Dollar Reserve Percentage (or, if the circumstances
described in clause (a) or (b) of Section 9.01 shall exist, at a
rate per annum equal to the sum of 1% plus the rate applicable to
Prime Loans for such day).
(e) The Agent shall determine each interest rate applicable
to the Loans hereunder. The Agent shall give prompt notice to the
Borrower and the Banks by telex or cable of each rate of interest
so determined, and its determination thereof shall be conclusive in
the absence of manifest error.
(f) Each Reference Bank agrees to use its best efforts to
furnish quotations to Agent as contemplated hereby. If any
Reference Bank does not furnish timely quotations, the Agent shall
determine the relevant interest rate on the basis of the quotation
or quotations furnished by the remaining Reference Bank or Banks
or, if none of such quotations is available on timely basis, the
provisions of Section 9.01 shall apply.
SECTION 3.06. Commitment Fees; Participation Fees. (a) The
Borrower shall pay to the Agent for the account of the Banks pro-
rata a commitment fee (i) during the Credit Periods, at the rate of
3/8 of 1% per annum on the average aggregate amount of Unused
Commitments less the average of the LOC Utilization and (ii) both
during and after the Credit Periods, at the rate per annum equal to
the applicable Euro-Dollar Margin on the average amount of the LOC
Utilization.
(b) Fees under this Section 3.06 shall accrue from and
including March 3, 1988 and shall be payable on June 15, 1988 and
thereafter quarterly in arrears on each March 15, June 15,
September 15 and December 15 and on the date on which there shall
be no outstanding Loans or Commitments hereunder.
SECTION 3.07. Agency and Fronting Bank Fee. (a) The Borrower
shall pay to the Agent for its own account as compensation for its
services hereunder an annual fee in an amount agreed upon by the
Agent and the Borrower, payable on the date of the first Borrowing
under the Original Agreement and on each anniversary of such date
until the termination of the Banks' Commitments hereunder and on
the date of such termination.
(b) The Borrower shall pay to the Fronting Bank as
compensation for its services hereunder fees in such amounts and at
such times as heretofore agreed upon by the Fronting Bank and the
Borrower.
SECTION 3.08. Optional Termination or Reduction of
Commitments. (a) The Borrower may, upon at least three Domestic
Business Days' notice to the Agent and the Fronting Bank, terminate
at any time, or proportionately reduce from time to time by an
aggregate amount of $5,000,000 or any larger multiple of
$1,000,000, the unused portions of the Tranche A Commitments. If
the Tranche A Commitments are terminated in their entirety, all
accrued fees shall be payable on the effective date of such
termination.
(b) From the date of the Original Agreement to the Conversion
Date, the Borrower may, upon at least three Domestic Business Days'
notice to the Agent and the Fronting Bank, terminate at any time,
or proportionately reduce from time to time by an aggregate amount
of $1,000,000 or any larger multiple of $500,000, the unused
portions of the Tranche B Commitments. If the Tranche B
Commitments are terminated in their entirety, all accrued fees
shall be payable on the effective date of such termination.
SECTION 3.09. Mandatory Termination or Reduction of
Commitments. (a) The Tranche A and Tranche B Commitments shall
terminate on September 15, 2001, and any Loans then outstanding
(together with accrued interest thereon) shall be due and payable
on such date.
(b) On any date on or after the last day of the Credit
Periods on which the Commitments with respect to either Tranche A
or Tranche B shall be greater than the Utilization within the
applicable Tranche on such date (after giving effect to any
repayment, prepayment and borrowing on such date), the Commitments
with respect to such Tranche shall be automatically proportionately
reduced to an amount equal to such Utilization.
(c) The Tranche A Commitment of each Bank shall be further
reduced on each Commitment Reduction Date by an amount equal to a
percentage of such Bank's Tranche A Commitment in effect on the
last day of the Tranche A Credit Period (after giving effect to any
reduction pursuant to subsection (b) on such date), with such
percentages being 2.500% on the first Commitment Reduction Date,
3.078% on the next four Commitment Reduction Dates, 5.227% on the
next eight Commitment Reduction Dates, 5.478% on the next six
Commitment Reduction Dates, 1.750% on the remaining six Commitment
Reduction Dates.
(d) The Tranche A Commitments and Tranche B Commitments shall
be further proportionately reduced by the amount of Sale or
Financing Proceeds on each day any such proceeds are received by
the Borrower.
(e) The Tranche B Commitment of each Bank shall be further
reduced on each Commitment Reduction Date by an amount equal to a
percentage of such Bank's Tranche B Commitment in effect on the
last day of the Tranche B Credit Period (after giving effect to any
reduction pursuant to subsection (b) on such date), with such
percentages being 2.500% on the first Commitment Reduction Date,
3.078% on the next four Commitment Reduction Dates, 5.227% on the
next eight Commitment Reduction Dates, 5.478% on the next six
Commitment Reduction Dates, 1.750% on the remaining six Commitment
Reduction Dates.
(f) On each Commitment Reduction Date and on each date on
which there is a reduction of Commitments pursuant to paragraph (d)
of this Section 3.09, (i) the Borrower shall repay such principal
amount (together with accrued interest thereon) of the outstanding
Tranche A Loans, if any, as may be necessary so that after such
repayment, the Tranche A Utilization does not exceed the amount of
the Tranche A Commitments as then reduced and (ii) the Borrower
shall repay such principal amount (together with accrued interest
thereon) of the outstanding Tranche B Loans, if any, as may be
necessary so that after such repayment, the unpaid principal amount
of the outstanding Tranche B Utilization does not exceed the amount
of the Tranche B Commitments as then reduced.
SECTION 3.10. Optional Prepayments. (a) The Borrower may,
upon at least three Domestic Business Days' notice to the Agent,
prepay any Prime Borrowing in whole at any time, or from time to
time in part in amounts aggregating $5,000,000 or any larger
multiple of $1,000,000, in the case of a Tranche A Loan and
$1,000,000 or any larger multiple of $500,000 in the case of a
Tranche B Loan, in either case by paying the principal amount to be
prepaid together with accrued interest thereon to the date of
prepayment; provided that in the case of Prime Borrowings made
pursuant to Section 2.06 due to a failure to deliver conforming
Commercial Paper Notes or Medium-Term Notes on a timely basis, the
Borrower may without notice prepay such Prime Borrowing in whole
irrespective of the amount of such prepayment with the proceeds of
LOC Debt issued on the next day and otherwise upon one Domestic
Business Day's notice. Each such optional prepayment shall be
applied to prepay ratably the Prime Loans of the several Banks
included in such Borrowing.
(b) Except as provided in Section 9.02, the Borrower may not
prepay all or any portion of the principal amount of any Fixed Rate
Loan prior to the maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to this
Section, the Agent shall promptly notify each Bank of the contents
thereof and of such Bank's ratable share of such prepayment and
such notice shall not thereafter be revocable by the Borrower.
SECTION 3.11. General Provisions as to Payments. The
Borrower shall make each payment of principal of, and interest on,
the Loans and of fees hereunder, not later than 1:00 P.M. (New York
City time) on the date when due, in Federal or other funds
immediately available in New York City, to the Agent at its address
specified in or pursuant to Section 10.01. The Agent will promptly
distribute to each Bank its ratable share of each such payment
received by the Agent for the account of the Banks. Whenever any
payment of principal of, or interest on, the Domestic Loans or of
commitment fees shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended to the
next succeeding Domestic Business Day. Whenever any payment of
principal of, or interest on, the Euro-Dollar Loans shall be due on
a day which is not a Euro-Dollar Business Day, the date for payment
thereof shall be extended to the next succeeding Euro-Dollar
Business Day unless such Euro-Dollar Business Day falls in another
calendar month, in which case the date for payment thereof shall be
the next preceding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
SECTION 3.12. Funding Losses. If the Borrower makes any
payment of principal with respect to any Fixed Rate Loan (pursuant
to Article III, VII or IX or otherwise) on any day other than the
last day of the Interest Period applicable thereto, or the end of
an applicable period fixed pursuant to Section 3.05(d), or if the
Borrower fails to borrow any Fixed Rate Loans after notice has been
given to any Bank in accordance with Section 3.02(b), the Borrower
shall reimburse each Bank on demand for any resulting loss or
expense incurred by it (or by any existing or prospective
participant in the related Loan), including (without limitation)
any loss incurred in obtaining, liquidating or employing deposits
from third parties, but excluding loss of margin for the period
after any such payment or failure to borrow; provided that such
Bank shall have delivered to the Borrower a certificate as to the
amount of such loss or expense, the rate of such Fixed Rate Loan at
the time it was borrowed and the rate which a loan of similar
interest period could have been borrowed at the time of such
payment or failure to borrow hereunder, which certificate shall be
presumptive evidence in the absence of manifest error.
SECTION 3.13. Computation of Interest and Fees. Interest on
Domestic Loans based on the Prime Rate and the fee payable pursuant
to Section 3.06(a)(i) shall be computed on the basis of a year of
365 days (or 366 days in a leap year) and paid for the actual
number of days elapsed (including the first day but excluding the
last day). Interest on Domestic Loans based on the Adjusted CD
Rate and interest on Euro-Dollar Loans and fees hereunder (other
than the fee payable pursuant to Section 3.06(a)(i)) shall be
computed on the basis of a year of 360 days and paid for the actual
number of days elapsed, calculated as to each Interest Period or
period fixed pursuant to Section 3.05(d) from and including the
first day thereof to but excluding the last day thereof.
SECTION 3.14. Procedure for Bank Participation in Certain
Loans. Pursuant to Section 2.06(c), the Fronting Bank shall give
the other Banks prompt notice of any unreimbursed LOC Disbursement
made by the Fronting Bank to be converted or converted in whole or
in part into a Prime Loan of the Fronting Bank. Any such notice
shall specify the date on which all or any part of such
unreimbursed LOC Disbursement is to be or was converted into a
Prime Loan and the amount of such Prime Loan. As promptly as
possible, and in any case by the close of business on the date of
receipt of such notice if such notice is received not later than
1:30 P.M. (New York City time) on such date, each other Bank shall,
pursuant to Section 2.07, pay to the Fronting Bank for its account,
in immediately available funds, an amount equal to such Bank's LOC
Commitment Percentage (as determined at the time of and with
respect to the issuance of the LOC to which such unreimbursed LOC
Disbursement relates) of such Prime Loan (the "Principal Payment
Amount") plus, if such payment is received by the Fronting Bank
after the date of such unreimbursed LOC Disbursement, interest (i)
for the period from the day of such unreimbursed LOC Disbursement
to but excluding the Domestic Business Day next succeeding the date
of such unreimbursed LOC Disbursement at a rate per annum equal to
the rate of interest applicable to Prime Loans from time to time
pursuant to Section 3.05(a) and (ii) for the period from and
including the Domestic Business Day next succeeding the date of
such unreimbursed LOC Disbursement to the date such payment is
received by the Fronting Bank at a rate per annum equal to the rate
of interest applicable to Prime Loans from time to time pursuant to
Section 3.05(a) plus the Late Participation Penalty. At the time
of, and by virtue of, such payment, such Bank shall be deemed to
have purchased, and the Fronting Bank to have sold, a portion,
equal to the LOC Commitment Percentage of such Bank, of all of the
right, title and interest of the Fronting Bank under and with
respect to the Prime Loan of the Fronting Bank into which such
unreimbursed LOC Disbursement was converted, together with an equal
portion of any and all Collateral serving as security therefor.
For all purposes of this Agreement, such Bank shall, thereupon, be
deemed to have made a separate Prime Loan to the Borrower on and as
of the date of the related Prime Loan of the Fronting Bank in a
principal amount equal to such Bank's Principal Payment Amount, and
the Borrower hereby expressly consents to such participations being
treated as separate Prime Loans for all purposes hereunder, and the
principal amount of such Prime Loan of the Fronting Bank shall, on
and as of such date, be deemed reduced by an equal amount; provided
that the Fronting Bank shall reimburse each Bank for payment of any
Principal Payment Amount made by such Bank to the Fronting Bank,
immediately upon a final determination that the LOC Disbursement
(with respect to which such payment of such Principal Payment
Amount was made) was wrongfully made for the reasons set forth in
Section 2.06(d) hereof, in an amount equal to the sum of (i) such
Principal Payment Amount plus (ii) any interest originally paid
thereon by such Bank to the Fronting Bank pursuant to this Section
plus (iii) interest on the foregoing amounts in clauses (i) and
(ii) at the Federal Funds Rate from but not including the date of
such payment to the Fronting Bank to and including the date the
Fronting Bank makes such reimbursement in full.
SECTION 3.15. Election to Reduce Loan Utilization. Subject
to the provisions of Section 3.10 hereof, the Borrower may, upon at
least three Domestic Business Days' notice to the Fronting Bank and
the Agent (and the Agent shall promptly transmit such notice to the
Banks), elect to reduce its utilization of the Loans and increase
its utilization of LOC Debt by (i) repaying or, subject to Section
3.10 hereof, prepaying the outstanding amount of the Loans made as
part of a Borrowing in whole or ratably in part, with accrued
interest to the date of such repayment on the amount repaid, and
(ii) contemporaneously with such prepayment and after giving the
appropriate Notice of Issuance and satisfying the conditions
precedent, issue LOC Debt in an aggregate Face Amount equal to the
aggregate principal amount of the Loans so repaid or prepaid;
provided that, after conversion of an unreimbursed LOC Disbursement
to a Prime Loan upon a failure of the Depositary to deliver
conforming Commercial Paper Notes or Medium-Term Notes to a Dealer,
the Borrower may re-issue such Notes on the next succeeding
Domestic Business Day after the day of such failure and use the
proceeds therefrom to prepay such Prime Loan without prior notice.
SECTION 3.16. Replacement Fronting Bank. (a) If the
Fronting Bank defaults in making any required LOC Disbursement
hereunder, the Fronting Bank shall, upon substitution of a
replacement financial institution, cease to act as a Bank hereunder
and, upon substitution of a replacement Fronting Bank, cease to act
as Fronting Bank under this Agreement. In such instance, the
Borrower and the Banks agree to use their best efforts to
substitute a financial institution for the Fronting Bank as a Bank
hereunder which is satisfactory to the Banks and to the Borrower
(which financial institution may be one of the Banks); provided
that such substituted financial institution and each party hereto
(other than the defaulting Fronting Bank as a Bank) shall execute
and deliver an appropriate novation to this Agreement, in form and
substance satisfactory to all parties thereto, whereby such
substituted institution (i) shall agree to assume the remaining
Commitment and obligations of the Fronting Bank (in its capacity as
a Bank) hereunder and (ii) shall agree to be bound by all of the
terms hereof and to undertake all of the obligations contained
herein of the Fronting Bank as a Bank hereunder. The Borrower and
the Banks further agree to use their best efforts to substitute
another bank as Fronting Bank hereunder, satisfactory to the Banks
and to the Borrower the LOCs of which will result in the LOC Debt
supported thereby being an exempt security pursuant to Section
3(a)(2) of the Securities Act of 1933 (which may be one of the
Banks); provided, that such substitution shall be conditioned on
the execution and delivery of appropriate novations to this
Agreement and each Issuance Agreement, in form and substance
reasonably satisfactory to all parties (other than the defaulting
Fronting Bank as such) hereto and thereto; provided further that
the Fronting Bank shall not be deemed to be released from any of
its obligations for actions taken or failed to be taken by it prior
to the date of such substitution to the extent such actions taken
or failed to be taken constitute gross negligence or willful
misconduct of the Fronting Bank.
(b) If the rating assigned to the Fronting Bank by either
Moody's Investors Services Inc. or Standard & Poor's Corporation is
reduced, the Fronting Bank shall notify the Agent, the Borrower and
each Bank thereof and, upon substitution of a replacement Fronting
Bank, shall cease to act as Fronting Bank under this Agreement. In
such instance, the Borrower and the Banks agree to use their best
efforts to substitute another bank as Fronting Bank hereunder,
satisfactory to the Banks and to the Borrower, the LOCs of which
will result in the LOC Debt supported thereby being an exempt
security pursuant to Section 3(a)(2) of the Securities Act of 1933
(which bank may be one of the Banks); provided, that such
substitution shall be conditioned on the execution and delivery of
appropriate novations to this Agreement and each Issuance
Agreement, in form and substance reasonably satisfactory to all
parties hereto and thereto; provided further that the downgraded
Fronting Bank shall not be deemed to be released from any of its
obligations for actions taken or failed to be taken by it prior to
the date of such substitution to the extent such actions taken or
failed to be taken constitute gross negligence or willful
misconduct of the downgraded Fronting Bank.
SECTION 3.17. Reduction of LOC Commitment. At the time of
any reduction of the Commitments pursuant to this Article III, the
LOC Commitment shall be reduced by an amount equal to the aggregate
amount by which the Commitments of the Banks are reduced, provided
that the LOC Commitment shall not be reduced below an amount equal
to the then Outstanding LOC Debt.
ARTICLE IV
CONDITIONS
The obligation of each Bank to make a Loan on the occasion of
each Credit Facility Borrowing and the obligation of the Fronting
Bank to issue LOCs during the Credit Period are subject to the
satisfaction of the following conditions:
SECTION 4.01. All Credit Facility Borrowings. In the case of
each Credit Facility Borrowing:
(a) receipt by the Agent of notice of such Borrowing as
required by Section 3.02;
(b) the fact that, immediately after such Borrowing, no
Default shall have occurred and be continuing; and
(c) the fact that the representations and warranties of the
Borrower contained in this Agreement (except, in the case of a
Borrowing that is not a Credit Event, the representations and
warranties set forth in Sections 5.04(a) and 5.07 and Section
5.12 as to any material adverse change) shall be true on and as
of the date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of such Borrowing as to the
facts specified in clauses (b) and (c) of this Section.
SECTION 4.02. Certain Borrowings and LOC Debt Issuances. In
the case of each Credit Facility Borrowing or issuance of LOC Debt
that is a Credit Event:
(a) in the case of a Tranche A Borrowing or issuance of LOC
Debt attributable to Tranche A, immediately after such Borrowing
or such LOC Debt issuance, the Borrower's ratio of Debt to
Capital Contributions shall be no greater than 1.85714:1;
(b) receipt by the Banks of a CLTA Indorsement 122 of the
Title Insurance Policy;
(c) receipt by the Banks of a certificate of the Engineer,
dated no earlier than 10 days preceding the Borrowing,
substantially in the form of Exhibit J hereto and which is
favorable in all material respects, except as otherwise approved
by the Required Banks;
(d) receipt by the Agent (and, in the case of LOC Debt
issuances, the Fronting Bank), with sufficient copies for the
Banks, of an Officer's Certificate to the effect that (i) true
and correct copies of all Project Agreements then in effect have
been delivered to the Banks, (ii) each of the Del Ranch Power
Purchase Contract, the IID Agreements (other than the
Transmission Agreements) is in full force and effect and has not
been amended or modified, (iii) the Borrower has no reason to
believe that SCE is dissatisfied with, or will be making
recommendations or requesting modifications with respect to, the
design of or construction schedule for the Del Ranch Facility,
(iv) to the best of the Borrower's knowledge, no postponement is
considered or planned for Completion of the Transmission
Project, no Participant is in default under the IID Agreements
and the Borrower has not agreed to and is not aware of any
increase of the Borrower's Project Contribution above $6,622,546
(terms used in this clause (iv) not otherwise defined in this
Agreement having the meanings given to them in the Funding and
Construction Agreement) and (v) the conditions set forth in
clauses (b) and (c) of Section 4.01 and clause (a) of this
Section 4.02 are met with respect to this Borrowing;
(e) receipt by the Agent (and, in the case of LOC Debt
issuances, the Fronting Bank), with sufficient copies for the
Banks, of a certificate of an officer of the Construction
Manager or the General Partner stating (i) the amount of Project
Costs paid (or liability for which has been accrued in such
manner as is not disapproved by the Required Banks) since the
immediately preceding Borrowing and stating the general nature
and amount of such Project Costs, (ii) that the amount of the
Borrowing is equal to the sum of (x) actual Project Costs
incurred to the date of such Borrowing and not covered by
Capital Contributions as of the date of such Borrowing and funds
from any previous Borrowing hereunder, and (y) the total amount
of Project Costs (including a reasonable amount included for
Project Contingency Costs) anticipated to be incurred within
four weeks of the date of such Borrowing, and (iii) that to the
best of the Construction Manager's or the General Partner's
knowledge and belief, as applicable, there has occurred no event
or circumstance that materially adversely affects the feasibility
of the Del Ranch Facility or the economic viability of the Del
Ranch Facility; together with a certificate of an engineer employed
by the Construction Manager, the General Partner or DEC reporting
on the progress of the Development of the Del Ranch Facility and
stating that the Development of the Del Ranch Facility as a whole
is no more than two weeks behind schedule for the Firm Operation
Date specified in the most recent written schedule submitted to the
Banks; and
(f) receipt by the Banks of a certificate of the Resource
Engineer, dated no earlier than 90 days preceding such Borrowing,
substantially in the form of Exhibit K hereto and which is
favorable in all material respects, except as otherwise approved by
the Required Banks; provided that no such certificate shall be
required after the Resource Engineer has certified that existing
wells can provide a satisfactory quantity and quality of Geothermal
Brine for Firm Operation (as defined in the Del Ranch Power
Purchase Contract) of the Del Ranch Facility.
The documents and opinions referred to in this Section shall be
delivered to the Agent or the Banks, as the case may be, no later
than four Euro-Dollar Business Days prior to the date of such
Borrowing or issuance of LOC Debt, and shall in all cases be in
form and substance satisfactory to the Agent or approved by the
Required Banks, as the case may be. In the case of LOC Debt
issuances, all documents and opinions to be delivered to the Agent
shall also be delivered to the Fronting Bank at the same time.
SECTION 4.03. After Completion Date. In the case of each
Borrowing after the Completion Date that is a Credit Event or an
issuance of LOC Debt after the Completion Date that is a Credit
Event:
(a) all of the conditions set forth in Section 4.02 shall be
satisfied in full; and
(b) the Agent (and, in the case of LOC Debt issuances, the
Fronting Bank) shall receive an Officer's Certificate not less
than five days prior to the Borrowing or LOC Debt issuance (x)
itemizing what the funds borrowed shall be applied to; (y)
stating that the Banks had received a written list of such
proposed expenditures not less than 10 days prior to the
proposed Borrowing or LOC Debt issuance; and (z) stating that
the Required Banks had not disapproved of any of the proposed
expenditures.
SECTION 4.04. Conditions to Effectiveness. This Agreement
shall become effective as of the date hereof, subject to the
satisfaction of the following conditions, and, as of the date
hereof, the Original Agreement is amended and restated in its
entirety to read as set forth herein:
(a) receipt by the Agent on or prior to the date of this
Agreement of counterparts hereof signed by all the parties
hereto;
(b) receipt by the Agent of a certificate of the Borrower,
signed by an authorized financial officer of the Borrower and
dated on or prior to the date of this Agreement, to the effect
that (i) no Default under this Agreement has occurred and is
continuing as of the date hereof, (ii) the representations and
warranties of the Borrower contained in this Agreement are true
as of the date hereof and (iii) all necessary governmental,
third party and other approvals necessary in connection with the
transactions contemplated by this Agreement and the Issuance
Agreements have been obtained and remain in effect;
(c) receipt by the Agent on behalf of the Banks of the
opinions of Latham & Watkins, special counsel to the Borrower,
substantially in the form of Exhibits C-1 and C-2 hereto and
covering such additional matters relating to the transactions
contemplated hereby as the Agent shall reasonably request;
(d) receipt by the Agent on behalf of the Banks of an opinion
of Orrick, Herrington & Sutcliffe, special California counsel to
the Banks and the Agent, substantially in the form of Exhibit D
hereto and covering such additional matters relating to the
transactions contemplated hereby as the Agent shall reasonably
request;
(e) receipt by the Agent on behalf of the Banks of an opinion
of Davis Polk & Wardwell, special New York counsel to the Banks
and the Agent, substantially in the form of Exhibit E hereto and
covering such additional matters relating to the transactions
contemplated hereby as the Agent shall reasonably request;
(f) receipt by the Agent on behalf of the Banks of an opinion
of Jones, Day, Reavis & Pogue, special counsel to the Fronting
Bank, substantially in the form of Exhibit M hereto and covering
such additional matters relating to the transactions
contemplated hereby as the Agent shall reasonably request;
(g) receipt by the Agent on behalf of the Banks of an opinion
of Logan, Okamoto & Takashima, special Japanese counsel to the
Fronting Bank, substantially in the form of Exhibit N hereto and
covering such additional matters relating to the transactions
contemplated hereby as the Agent shall reasonably request;
(h) receipt by the Agent of a copy of such Endorsements to
the Title Insurance Policy as the Agent shall reasonably request;
(i) receipt by the Agent of an executed copy of the First
Amendment to Deed of Trust;
(j) receipt by the Agent of an executed copy of Amendment
Number Two to Security Agreement;
(k) receipt by the Agent of executed copies of the Issuance
Agreements; and
(l) receipt by the Agent of an executed copy of the Second
Amendment to Operating and Maintenance Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 5.01. Existence and Power. The Limited Partnership
Agreement is in full force and effect, and is a valid and binding
agreement of all the parties thereto. The Borrower is a limited
partnership duly formed, validly existing and in good standing
under the laws of the state of California, and has all powers under
the Limited Partnership Agreement and the laws of the State of
California and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now
conducted and proposed to be conducted.
SECTION 5.02. Authorization; Contravention. The execution,
delivery and performance by the Borrower of this Agreement, the
Notes, the Security Agreement, the Deed of Trust, the Issuance
Agreements and the Project Agreements are within the powers of the
Borrower, have been duly authorized by all necessary actions,
require no action by or in respect of, or filing with, any
governmental body, agency or official other than such actions as
have already been taken, and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of
the Limited Partnership Agreement or of any agreement, judgment,
injunction, order, decree or other instrument (including any
Geothermal Leases) binding upon the Borrower or result in the
creation or imposition of any Lien (other than the Security
Interests) on any asset of the Borrower.
SECTION 5.03. Binding Effect. This Agreement, the Deed of
Trust and the Security Agreement constitute valid and binding
agreements of the Borrower; the Notes, when executed and delivered
in accordance with this Agreement, will constitute valid and
binding obligations of the Borrower.
SECTION 5.04. Litigation. There is no action, suit or
proceeding pending against, or to the knowledge of the Borrower,
threatened against or affecting the Borrower before any court or
arbitrator or any governmental body, agency or official in which
there is a reasonable possibility of an adverse decision (a) which
could materially adversely affect the business, financial position
or results of operations of the Borrower or (b) which in any manner
draws into question the validity of this Agreement, the Notes, the
Security Agreement, the Deed of Trust, the Issuance Agreements or
any material Project Agreement.
SECTION 5.05. Compliance with ERISA. Each member of the
Controlled Group has fulfilled its obligations under the minimum
funding standards of ERISA and the Code with respect to each Plan
and is in compliance in all material respects with the presently
applicable provisions of ERISA and the Code, and has not incurred
any liability to the PBGC or a Plan under Title IV of ERISA other
than a liability to the PBGC for premiums under Section 4007 of
ERISA.
SECTION 5.06. Taxes. The Borrower has filed all United
States Federal income tax returns and all income tax returns of the
State of California which are required to be filed by it. The
charges, accruals and reserves on the books of the Borrower in
respect of taxes or other governmental charges are, in the opinion
of the Borrower, adequate to cover the Borrower's liability with
respect to such taxes and charges.
SECTION 5.07. Hazardous Waste. To the best of the Borrower's
knowledge after inquiry and physical inspection, the Del Ranch
Property does not contain hazardous wastes, hazardous substances,
hazardous materials, toxic wastes, toxic substances or toxic
pollutants in violation of the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response Compensation and
Liability Act, the Hazardous Materials Transportation Act, the
Toxic Substances Control Act, the Clean Air Act, the Clean Water
Act, the California Hazardous Waste Control Act, the California
Hazardous Substance Act, the Porter-Cologne Water Quality Control
Act, any regulations promulgated pursuant thereto, or any other
applicable law, ordinance, rule or regulation, nor does it contain
any other substance, waste or material considered toxic or
hazardous in amounts in violation of any applicable federal, state
or local law, ordinance, rule or regulation.
SECTION 5.08. CEC. The Del Ranch Facility is not subject to
the jurisdiction of the CEC on the date of this Agreement, and no
CEC Event has occurred since the date of the Original Agreement.
SECTION 5.09. Compliance with Laws. (a) The Borrower is in
compliance in all material respects with all applicable laws,
ordinances, rules, regulations and requirements of governmental
authorities (including, without limitation, the Geothermal Steam
Act of 1970, those laws identified in Section 5.07 above, any other
laws relating to the protection of the environment, ERISA, all
relevant California state and local laws, and all rules and
regulations promulgated thereunder).
(b) The Borrower has obtained (or has applied for as
necessary to timely obtain) all material permits and authorizations
of any governmental body, agency or official necessary for the
Development of the Del Ranch Facility, operation of the Del Ranch
Facility or required for the Borrower to sell electricity to SCE
under the Del Ranch Power Purchase Contract and all of such permits
and authorizations obtained by the Borrower remain in full force
and effect.
(c) The Borrower has filed an application to be certified as
a "qualifying facility" under 18 C.F.R. Section 292.203, as
amended.
SECTION 5.10. Properties and Arrangements; Project Costs and
Schedule. (a) Subject to the exceptions identified in the Del
Ranch Property Preliminary Report and the Geothermal Lease Rights
Properties Preliminary Title Report, all properties and rights and
all contractual arrangements (including, without limitation, rights
and title to land and geothermal properties, electricity
transmission and interconnection facilities, rights to use patents
and other proprietary processes, designs and information, and
contracts for process design, engineering and construction
services) necessary in connection with the Development of the Del
Ranch Facility, the operation of the Del Ranch Facility on the Del
Ranch Property and the sale of electricity to SCE under the Del
Ranch Power Purchase Contract (i) if properties or rights, have
been obtained and are held by the Borrower subject to no Liens
(other than the Liens created by the Deed of Trust and the Security
Agreement) and no adverse claims that might, if proven to be
correct, individually or in the aggregate, have a material negative
impact on the feasibility of the Del Ranch Facility or the business
prospects of the Borrower and (ii) if contractual arrangements, are
in full force and effect, with the relevant benefits thereunder
accruing to the Borrower, and constitute valid and binding
agreements of the parties thereto, except, for those services,
materials and rights that can reasonably be expected to be
commercially available at the site of the Del Ranch Facility or are
granted to the Borrower under the Ground Lease or Easement
Agreement. Such contractual arrangements are all identified as
Project Agreements.
(b) The budget set forth on Exhibit I to the Construction
Management Agreement for Del Ranch Projected Project Costs and
schedule for completion of the Del Ranch Facility previously
delivered to the Agent, as the same may be amended from time to
time with the approval of the Required Banks, are correct and
complete based on all available information and represent the
Borrower's present best estimates of Del Ranch Projected Project
Costs and the schedule for completion of the Del Ranch Facility,
and the budget for Del Ranch Projected Project Costs includes a
reasonable amount for Project Contingency Costs and includes all
costs to the Borrower associated with the properties and rights and
the contractual arrangements referred to in subsection (a) above.
SECTION 5.11. Security Agreement and Deed of Trust
Representations and Warranties. The representations and warranties
of the Borrower contained in the Security Agreement and the Deed of
Trust are true and correct in all material respects.
SECTION 5.12. Material Adverse Change. Since September 30,
1987, there has been no material adverse change in the business,
financial position, results of operations or prospects of Magma and
its Consolidated Subsidiaries, considered as a whole, or of the
Borrower or of the General Partner.
SECTION 5.13. Offering of Interests. Neither the Borrower
nor any agent or other Person acting on its behalf, has offered,
directly or indirectly, any of the Interests or any similar
security of the Borrower for sale to or solicited offers to buy any
thereof from, or otherwise approached or negotiated with respect
thereto with, any person in a manner that would subject the
offering of the Interests to the registration requirements of the
Securities Act of 1933, as amended.
SECTION 5.14. Not an Investment Company. The Borrower is not
an "investment company" within the meaning of the Investment
Company Act of 1940, as amended and neither the Borrower nor any of
its Affiliates (other than SCE) is subject to the Federal Power Act
or Public Utility Holding Company Act of 1935, except as such Acts
apply to "qualifying facilities" under 18 C.F.R. Section 292.203.
SECTION 5.15. Governmental Regulation. Neither the Borrower,
nor the Banks, nor the Agent, nor any Affiliate of any of them
(other than SCE or any of its Affiliates, except Mission and its
Subsidiaries) will, as a result of the construction, ownership,
leasing or operation of the Del Ranch Facility, the sale of
electricity therefrom or the entering into any Project Agreement or
any transaction contemplated hereby or thereby, be subject to
regulation under the Federal Power Act or the Public Utility
Holding Company Act of 1935 or under state laws and regulations
respecting the rates or the financial or organizational regulation
of electric utilities.
SECTION 5.16. Geothermal Lease Amendments. All Geothermal
Leases encumbering property upon which production and reinjection
wells for the Del Ranch Facility are located have been amended in
a form approved by the Agent so as to provide lender cure rights to
the Banks.
ARTICLE VI
COVENANTS
The Borrower agrees that, so long as any Bank has any
Commitment hereunder or any amount payable under any Note remains
unpaid:
SECTION 6.01. Information. The Borrower will deliver to
each of the Banks:
(a) as soon as available and in any event within 105 days
after the end of each fiscal year of the Borrower, a balance
sheet of the Borrower as of the end of such fiscal year and
related statements of operations and changes in financial
position for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all
reported on as to the fairness of the presentation, generally
accepted accounting principles and consistency in a manner
acceptable to Coopers & Lybrand or other independent public
accountants of nationally recognized standing;
(b) as soon as available and in any event within 55 days
after the end of each of the first three quarters of each fiscal
year of the Borrower, a balance sheet of the Borrower as of the
end of such quarter and related statements of operations and
changes in financial position for such quarter and for the
portion of the Borrower's fiscal year ended at the end of such
quarter, setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding
portion of the Borrower's previous fiscal year, all certified
(subject to normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles and
consistency in presentation with prior statements by the chief
financial officer or the chief accounting officer of the General
Partner;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, an
Officer's Certificate (i) setting forth in reasonable detail the
information or calculations required to establish whether the
Borrower was in compliance with the requirements of Sections
6.07, 6.08, 6.16 and 6.21 on the date of such financial
statements, (ii) stating that the representations and warranties
of the Borrower contained in this Agreement (except the
representations and warranties set forth in Sections 5.04(a) and
5.07 and Section 5.12 as to any material adverse change) are
true on and as of the date of such certificate and (iii) stating
whether any Default exists on the date of such certificate and
the information and calculations used as the basis for such
conclusion and, if any Default then exists, setting forth the
details thereof and the action which the Borrower is taking or
proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the
firm of independent public accountants which reported on such
statements (i) whether anything has come to their attention in the
course of their review to cause them to believe that any Default
existed on the date of such statements and (ii) confirming the
information set forth in the Officer's Certificate delivered
simultaneously therewith pursuant to clause (c)(i) above;
(e) forthwith upon the occurrence of any Default, an
Officer's Certificate setting forth the details thereof and the
action which the Borrower is taking or proposes to take with
respect thereto;
(f) if and when any member of the Controlled Group (i) gives
or is required to give notice to the PBGC of any "reportable
event" (as defined in Section 4043 of ERISA) with respect to any
Plan which might constitute grounds for a termination of such
Plan under Title IV of ERISA, or knows that the plan administrator
of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event
given or required to be given to the PBGC; (ii) receives notice of
complete or partial withdrawal liability under Title IV of ERISA,
a copy of such notice; or (iii) receives notice from the PBGC under
Title IV of ERISA of an intent to terminate or appoint a trustee to
administer any Plan, a copy of such notice; and
(g) from time to time such additional information regarding
the financial position, business or operations of the Borrower
as the Agent, at the request of any Bank, may reasonably
request.
SECTION 6.02. Payment of Obligations. The Borrower will pay
and discharge at or before maturity all of its respective material
obligations and liabilities, including, without limitation, tax
liabilities, except where the same may be contested in good faith
by appropriate proceedings, and will maintain, in accordance with
generally accepted accounting principles, appropriate reserves for
the accrual of any of the same.
SECTION 6.03. Maintenance of Property. The Borrower will
keep all property useful and necessary in its business in good
working order and condition, ordinary wear and tear excepted.
SECTION 6.04. Conduct of Business and Maintenance of
Existence. The Borrower will continue to engage in business now
conducted and proposed to be conducted by the Borrower, and will
preserve, renew and keep in full force and effect its existence and
its rights, privileges and franchises necessary or desirable in the
normal conduct of such business.
SECTION 6.05. Compliance with Laws. The Borrower will
comply in all material respects with all applicable laws,
ordinances, rules, regulations and requirements of governmental
authorities (including, without limitation, ERISA and the rules and
regulations thereunder) except where the necessity of compliance
therewith is contested in good faith by appropriate proceedings.
SECTION 6.06. Inspection of Property, Books and Records. The
Borrower will keep proper books of record and account in which
full, true and correct entries shall be made of all dealings and
transactions in relation to its business and activities; and will
permit representatives of any Bank at such Bank's expense to visit
and inspect any of its properties, to examine and make abstracts
from any of its books and records and to discuss its affairs,
finances and accounts with its respective officers, employees and
independent public accountants, all at such reasonable times and as
often as may reasonably be desired.
SECTION 6.07. Restricted Payments. The Borrower shall make
no Restricted Payment (i) prior to the Conversion Date, (ii) after
the Conversion Date, when a Default exists and is continuing or
(iii) after the Conversion Date, when the Debt Service Reserve
Account and Major Capital Expenditure Reserve Account are not
funded to the extent required by Section 11 of the Operating and
Maintenance Agreement; provided that the Borrower may make
distributions pursuant to Sections 3.6 and 4.1 of the Limited
Partnership Agreement at any time so long as no Default shall have
occurred and be continuing.
SECTION 6.08. Debt. The Borrower shall not incur or suffer
to exist Debt other than (i) Debt under this Agreement, the Notes
and the Magma Undertaking, (ii) Debt that may exist from time to
time in the ordinary course of the Borrower's business, but in no
event shall such Debt be in an aggregate amount in excess of
$1,000,000, (iii) Debt arising under the Project Agreements, (iv)
LOC Debt, (v) Debt under the IID Agreements, (vi) Debt under
obligations relating to interest rate hedging permitted pursuant to
Section 6.19, (vii) any obligations of the Borrower under the
Reimbursement Obligation, and (viii) the Collateralized LOCs and
the Defeased Notes.
SECTION 6.09. Investments. The Borrower will not make or
acquire any Investment in any Person other than Temporary Cash
Investments.
SECTION 6.10. Consolidations, Mergers and Sales of Assets.
The Borrower will not (i) consolidate or merge with or into any
other Person or (ii) sell, lease or otherwise transfer all or any
substantial part of its assets to any other Person.
SECTION 6.11. Project Agreements; Project Rights. (a) The
Borrower will not amend or modify any material provision of any
material Project Agreement (including any technical or design
specifications under the Dow Engineering Agreement) or terminate or
agree to termination of any material Project Agreement or waive any
material right thereunder without the prior written consent of the
Required Banks, it being understood that any amendment or
modification by the Borrower of any provision of any of the Project
Agreements or waiver of any right thereunder which is permitted by
this Section 6.11 shall not constitute a breach of, or a default
under, any collateral assignment delivered by the Borrower pursuant
to Section 3 of the Security Agreement or any consent thereto.
(b) The Borrower will not enter into any material Project
Agreement in the future without first (i) having obtained the prior
written consent of the Required Banks (which consent will not be
unreasonably withheld) and (ii) taking any and all steps necessary
to create and perfect the Banks' Security Interest therein,
including, without limitation, the updating of Schedule I to the
Security Agreement to include such Project Agreement.
(c) The Borrower shall comply with the terms of each material
Project Agreement, shall enforce the terms of each material Project
Agreement against the other party or parties thereto, and shall
promptly advise the Agent of any material default under any Project
Agreement and the steps proposed to be taken in connection
therewith.
(d) In addition to any other relevant provisions hereof or of
the Security Agreement or the Deed of Trust, the Borrower agrees
that all properties and rights of the type referred to in Section
5.10 shall be obtained or renewed, all contractual arrangements of
the type referred to in Section 5.10 shall be entered into, and all
such properties and rights and contractual arrangements shall be
maintained in full force and effect, in each case as necessary from
time to time in connection with the Development of the Del Ranch
Facility, the operation of the Del Ranch Facility and the sale of
electricity to SCE under the Del Ranch Power Purchase Contract.
SECTION 6.12. Covenants Under the Security Agreement and the
Deed of Trust. The Borrower will observe and perform its covenants
and agreements under the Security Agreement and the Deed of Trust.
SECTION 6.13. Insurance. (a) The Borrower, at its own cost
and expense, will cause to be maintained, with insurance companies
rated at least B+ by A.M. Best Company or such other insurance
companies as may be acceptable to the Required Banks, (i) during
the course of construction, builders' risk insurance on an all-risk
basis, including but not limited to extended coverage, coverage for
flood, earthquake (to the extent possible) and collapse and all
other risks and perils normally covered in "all-risk" policies, for
full replacement value on a completed-value basis of all hard costs
incurred (excluding the cost of the transmission lines, wells and
brine pipelines), plus coverage for the Banks' construction period
interest and fees on the Tranche A and Tranche B Loans; (ii) at all
times after completion of construction, insurance on the Del Ranch
Facility against all risks of physical loss or damage, including
flood, earthquake (to the extent possible) and collapse and all
other risks and perils normally covered in "all risk" policies, for
the full cost of repair or replacement (excluding the costs of the
transmission lines, wells and brine pipelines); (iii) as soon as
possible in the course of construction of the Del Ranch Facility
and at all times after completion of construction of the Del Ranch
Facility, boiler and machinery insurance written on a comprehensive
form for the full repair and replacement value of Del Ranch
Facility equipment; (iv) at all times, comprehensive general
liability insurance with a limit of no less than $1,000,000,
combined single limit, bodily injury and property damage, for each
occurrence; (v) at all times, excess public liability insurance in
the form of an umbrella policy which umbrella policy shall afford
coverage of not less than $10 million per occurrence over and above
the coverage provided by the policies described above; (vi) on and
after the Firm Operation Date, business interruption insurance
covering, for an annual term, only amounts due (including, without
limitation, interest, principal repayment and any other fees and
expenses) on the Banks' Loans; and (vii) as soon as practicable
after the Agent shall request, such other insurance with respect to
the Del Ranch Facility in such amounts equal to the greater of, and
against such insurable hazards, (x) as Magma maintains with respect
to other facilities similar to the Del Ranch Facility, which it
owns or operates, (y) as is usually carried by corporations of
established reputation operating similar properties or (z) as the
Agent may from time to time reasonably request.
(b) Each insurance policy required under subsection (a) of
this Section 6.13 (i) shall (except for the liability insurance
referred to in subsection (a)(iv) above, which shall name the Banks
as an additional insured) insure the Banks' interests as
beneficiary under the Deed of Trust and shall provide that all
insurance proceeds payable under such policy shall, until notice
from the Agent to the contrary, be paid over directly to the Agent
for the benefit of the Banks, (ii) shall provide that it cannot be
cancelled or terminated without thirty days' prior written notice
to the Agent, (iii) shall include waivers by the insurer of all
claims for the payments by the Banks and the Agent of insurance
premiums, (iv) shall (except for the liability insurance referred
to in subsection (a)(iv) above) provide for losses to be payable to
the Banks notwithstanding (x) any act or failure to act by the
insured or violation by the insured of warranties, declarations or
conditions contained in the policy, (y) any foreclosure or sale or
other proceeding relating to the Del Ranch Facility or construction
work in progress or (z) any change in the title to or ownership of
the Del Ranch Facility or construction work in progress, (v) shall
(except for the liability insurance referred to in subsection
(a)(v) above, which shall have no deductible) provide for
deductibles for (x) "all risk" coverage of no greater than $500,000
per occurrence and (y) business interruption coverage of no greater
than 60 days, and (vi) shall be in all other respects satisfactory
to the Required Banks. On or before the date of the first
Borrowing under this Agreement, the Borrower will provide the
Agent, with sufficient copies for the Banks, with certified copies
of the insurance policies providing coverage as then required
hereunder together with evidence that such policies are in effect
or, if certified copies are not available on or prior to the first
Borrowing, certificates of insurance executed by the insurer or its
authorized agent shall be acceptable in lieu of the certified
copies until such certified copies are available.
(c) (i) Unless a Default shall have occurred and be
continuing, to the extent that insurance proceeds received under
the insurance referred to in subsections (a)(i), (ii) and (iii)
above with respect to any one incident or any series of incidents
occurring within a twelve-month period, (x) do not exceed
$1,000,000, such proceeds shall be released by the Banks to the
Borrower for repair and/or replacement of damaged portions of the
Del Ranch Facility or construction work in progress with respect to
which such insurance proceeds have been received and (y) exceed
$1,000,000, such proceeds shall be released by the Banks to the
Borrower for such repair and/or replacement only upon receipt by
the Banks of a certificate from its Technical Consultant to the
effect that there has occurred no event or circumstance (including
the event or circumstance with respect to which such proceeds are
payable) since the date of the Original Agreement that materially
adversely affects the feasibility of the Development of the Del
Ranch Facility or the rebuilding of the Del Ranch Facility, the
economic viability of the Del Ranch Facility or the business
prospects of the Borrower.
(ii) Unless a Default shall have occurred and be continuing,
insurance proceeds received under the insurance referred to in
subsection (a)(v) above shall be released by the Banks to the
Borrower for application for the purposes specified for Tranche A
Loans in Section 6.20 hereof and for the rebuilding of the Del
Ranch Facility.
(d) As soon as practicable after the end of each fiscal year
of the Borrower commencing with the current fiscal year, and in any
event within 90 days thereafter, the Borrower shall deliver to the
Agent (i) an Officer's Certificate setting forth the insurance
obtained by the Borrower pursuant to this Section 6.13 as then in
effect, and stating whether, in the opinion of such Officer, such
insurance policies comply with the requirements of this Section
6.13, and that all premiums then due thereon have been paid and the
same are in full force and effect and (ii) a report by an
independent insurance broker or independent insurance consultant
reasonably satisfactory to the Agent, reviewing the most recent
report delivered pursuant to the preceding sentence and setting
forth recommendations of such independent insurance broker or
independent insurance consultant as to additional insurance, if
any, reasonably required for the protection of the respective
interests of the Banks in the light of available insurance coverage
and practice of corporations of established reputation operating
similar businesses and properties in the same general region.
(e) The Borrower shall instruct the insurers with which it
maintains insurance to advise the Banks in writing promptly of any
act or omission on the part of the Borrower of which any such
insurer has knowledge which may invalidate or render unenforceable,
in whole or in part, any such insurance. The Borrower's obligation
under this Section 6.13(e) shall be satisfied if the applicable
insurance policy or policies or certificate or certificates of
insurance shall so obligate such insurer or insurers.
(f) The foregoing requirements as to insurance are in
addition to any statutory requirements, including, without
limitation, any requirements for employer's liability and workmen's
compensation insurance.
(g) If at any time the Borrower believes that any insurance
coverage required by this Section 6.13 is unavailable or is not
available on reasonable terms (an "Original Coverage"), the
Borrower shall provide written notice to the Agent, with sufficient
copies for the Banks, detailing the difficulties of obtaining such
Original Coverage and proposing alternative insurance coverage.
The Agent, with the consent of the Required Banks, shall notify the
Borrower within 30 days if such proposed alternative is
satisfactory to it, in which event such alternative coverage shall
be deemed to be substituted for the relevant requirements of this
Section 6.13. If at any time thereafter any Original Coverage for
which there has been a substitution shall become available on
reasonable terms: (i) the Borrower shall immediately so notify the
Agent in writing, (ii) the Borrower shall obtain such Original
Coverage as soon as practicable and (iii) the alternative insurance
requirements in force pursuant to this Section 6.13(g) shall cease
to be effective and the relevant Original Coverage requirements set
forth in paragraphs (a) or (b) of this Section 6.13 shall become
effective again.
SECTION 6.14. Additional Facilities. The Borrower will take
no action under Section 2.3.4 of the Easement Agreement or Section
2.2 of the Ground Lease unless those actions are taken in strict
compliance with the terms of those provisions of the Easement
Agreement and the Ground Lease, respectively.
SECTION 6.15. Notices. The Borrower shall promptly deliver,
or cause to be delivered, to the Agent, with sufficient copies for
the Banks, all notices, reports and other information delivered to
the limited partners pursuant to the Limited Partnership Agreement,
notice of any reimbursement of the Construction Manager under
Section 3 of the Construction Management Agreement, copies of all
written information delivered to the Borrower pursuant to Section
6.1.7 of the Construction Management Agreement, and all notices,
reports and certificates delivered under Sections 2.04 or 5.05 of
the Funding and Construction Agreement.
SECTION 6.16. Negative Pledge. The Borrower will not create,
assume or suffer to exist any Lien on any asset now owned or
hereafter acquired by it, except:
(a) Liens created by the Security Agreement and the Deed of
Trust;
(b) Liens for taxes, assessments, or governmental charges (i)
not yet past due or (ii) that are being contested in good faith
by appropriate proceedings and as long as the Borrower has
established and maintains adequate reserves for the payment of
the same in conformity with generally accepted accounting
principles;
(c) Liens imposed by statutory or common law, such as
carrier's, warehousemen's, mechanics, materialmen's and other
similar liens, arising in the ordinary course of business in
respect of obligations that (i) are not overdue or (ii) are
being contested in good faith by appropriate proceedings, and
for which the Borrower establishes and maintains adequate reserves
for the payment of the same in conformity with generally accepted
accounting principles;
(d) Liens incurred in the ordinary course of business to
secure surety, stay, appeal or customs bonds, or pledges or
deposits for purposes of like nature which do not exceed in the
aggregate $500,000;
(e) Zoning restrictions, covenants, conditions, easements,
rights-of-way, or other restrictions or encumbrances on the use
of real property or minor irregularities in the title thereto
which do not in the aggregate materially detract from the value
of its assets or materially impair the use thereof in the
operation of its business; and
(f) Liens created by any litigation or legal proceeding that
is currently being contested by the Borrower in good faith or
arising from any judgment, provided that the judgment does not
constitute an Event of Default under Section 7.01(m) and such
Liens do not in the aggregate exceed $200,000.
SECTION 6.17. Business. The Borrower will not engage in any
business or activities, other than the Development of the Del Ranch
Facility, operation of the Del Ranch Facility and sale of
electricity to SCE under the Del Ranch Power Purchase Contract and
any activities incidental to any of the foregoing, and shall not
abandon the Development of the Del Ranch Facility or the Del Ranch
Facility, without, in each case, the prior written consent of the
Required Banks.
SECTION 6.18. Qualifying Facility. Neither the General
Partner nor the Borrower shall engage in any activity or activities
which would result in the Del Ranch Facility's inability to satisfy
the criteria required to be satisfied in order to be a "qualifying
facility" under 18 C.F.R. Section 292.203, as amended. If the Del
Ranch Facility has not been certified as a "qualifying facility"
prior to July 15, 1988, the Borrower will take all action necessary
so that the Del Ranch Facility is in a position to "self-certify"
as a "qualifying facility" and has done so prior to August 15,
1988.
SECTION 6.19. Interest Rate Hedging. The Borrower shall not
enter into or obtain interest rate swaps, interest rate cap
agreements or any such other instrument which results in
effectively fixing or capping the interest costs to the Borrower of
funds borrowed under this Agreement with any Person whose senior
debt obligations are rated less than one of the two highest rating
categories by either Moody's Investors Service, Inc. or Standard &
Poor's Corporation, or if such services shall no longer exist, such
other nationally recognized statistical rating organization as
shall be specified by the Required Banks.
SECTION 6.20. Use of Proceeds. The proceeds of the Loans
made under Tranche A of this Agreement and Tranche A LOC Debt will
be used by the Borrower for the direct or indirect financing of
Project Costs and the direct or indirect financing of Project
Contributions (as that term is defined in the Funding and
Construction Agreement). The proceeds of the Loans made under
Tranche B of this Agreement and Tranche B LOC Debt will be used by
the Borrower for direct or indirect financing of Project Cost
Overruns. None of such proceeds will be used, directly or
indirectly, for the purpose, whether immediate, incidental or
ultimate, of (x) purchasing or carrying any "margin stock" within
the meaning of Regulation U, or (y) financing any distribution of
cash or securities or property to the partners of the Borrower.
SECTION 6.21. Working Capital. The Borrower shall at the end
of each fiscal quarter and immediately after each distribution to
any of its partners, have Working Capital in an amount equal to or
greater than the Working Capital Requirement.
SECTION 6.22. Construction of Del Ranch Facility. The
Borrower will use its best efforts to complete, or cause to be
completed, the Development of the Del Ranch Facility substantially
on schedule and in accordance with the Plans and Specifications
described on Exhibit H to the Construction Management Agreement and
will obtain the necessary Capital Contributions to permit
Borrowings under Section 4.02(a) for such purpose.
SECTION 6.23. Accounts. All accounts of the Borrower shall
at all times be maintained at banks or trust companies that have
certificates of deposit rated in one of the two highest grades by
a nationally recognized rating agency; provided that the Borrower
may keep an aggregate of $100,000 in accounts at banks or trust
companies that do not meet the foregoing rating requirement.
SECTION 6.24. Issuance Agreements. The Borrower will not
modify any provision of any Issuance Agreement, other than a
provision relating to the fees payable by the Borrower under such
Issuance Agreements, without the written consent of the Agent, such
consent not to be unreasonably withheld.
ARTICLE VII
DEFAULTS
SECTION 7.01. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be
continuing:
(a) the Borrower shall fail to pay when due any principal
of or interest on any Loan, any fees or any other amount payable
hereunder;
(b) the Borrower shall fail to observe or perform any
covenant contained in Sections 6.07, 6.08, 6.09, 6.10, 6.11(a),
6.11(b), 6.13, 6.14, 6.16, 6.20 or 6.21 of this Agreement or in
Section 7 of the Security Agreement;
(c) the Borrower shall fail to observe or perform any of
its covenants or agreements contained in this Agreement, the
Security Agreement or the Deed of Trust (other than those
covered by clauses (a) or (b) above) for 10 days after written
notice thereof has been given to the Borrower by the Agent;
provided that if any such failure cannot be cured within 10
days, such failure shall not constitute an Event of Default if
such failure can be corrected, corrective action has been taken by
the Borrower or a general partner of the Borrower within the 10 day
period and is being diligently pursued and such failure is
corrected within 60 days of the end of the 10 day period; provided
further that if at the end of such 60 day period such failure is
not cured, such failure shall not constitute an Event of Default if
(i) such failure can be corrected, (ii) corrective action has been
diligently pursued by the Borrower, (iii) the Borrower shall have
provided the Banks, at least 10 Domestic Business Days prior to the
end of such 60 day period (or prior to the end of an Additional
Cure Period permitted pursuant to this proviso), with an Additional
Cure Period Request, (iv) the Agent shall have notified the
Borrower that the Required Banks have not, within seven Domestic
Business Days of receipt of such Additional Cure Period Request,
in their reasonable judgment, denied such Additional Cure Period
Request and (v) such failure is corrected within such Additional
Cure Period, unless the conditions of this proviso shall have again
been satisfied;
(d) Magma shall fail to observe or perform any of its
financial obligations, covenants or agreements contained in the
Magma Undertaking;
(e) a Dissolution or Liquidation shall occur pursuant to
Article X of the Limited Partnership Agreement;
(f) any representation, warranty, certification or statement
made by the Borrower in this Agreement, the Security Agreement or
the Deed of Trust or in any certificate, financial statement or
other document delivered pursuant to this Agreement, the Deed of
Trust or the Security Agreement shall prove to have been incorrect
in any material respect when made (or deemed made);
(g) a material default under any material Project Agreement
by any party to the Project Agreements shall have occurred and be
continuing; provided that if any such default by the Borrower
cannot be cured within any applicable grace period, such default
shall not constitute an Event of Default if such default can be
corrected and does not relate to a monetary obligation, corrective
action has been taken by the Borrower or a general partner of the
Borrower within the applicable grace period and is being diligently
pursued and such default is corrected within 60 days of the end of
the applicable grace period; provided further that if at the end of
such 60 day period such failure is not cured, such failure shall
not constitute an Event of Default if (i) such failure can be
corrected, (ii) corrective action has been diligently pursued by
the Borrower, (iii) the Borrower shall have provided the Banks, at
least 10 Domestic Business Days prior to the end of such 60 day
period (or prior to the end of an Additional Cure Period permitted
pursuant to this proviso) with an Additional Cure Period request,
(iv) the Agent shall have notified the Borrower that the Required
Banks have not, within seven Domestic Business Days of receipt of
such Additional Cure Period Request, in their reasonable judgment,
denied such Additional Cure Period Request and (v) such failure is
corrected within such Additional Cure Period, unless the conditions
of this proviso shall have again been satisfied;
(h) any event or condition shall occur which results in the
acceleration of the maturity of any Debt of the Borrower, Debt
of Magma which has a principal amount in excess of $2,000,000,
or Debt of the General Partner which has a principal amount in
excess of $500,000, or which enables (or, with the giving of
notice or lapse of time or both, would enable) the holder of any
such Debt or any Person acting on such holder's behalf to
accelerate the maturity thereof, provided that, in the case of
any such event or condition relating to Debt of Magma, such
event or condition shall not have been cured (by payment of the
amount due upon acceleration or otherwise) within 10 days after
receipt by Mission of notice thereof from Magma, the Agent or any
Bank;
(i) the Borrower, the General Partner or Magma 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 it or any substantial part of its
property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing;
(j) an involuntary case or other proceeding shall be
commenced against the Borrower, the General Partner or Magma
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 and unstayed for
a period of 60 days; or an order for relief shall be entered
against the Borrower, the General Partner or Magma under the
federal bankruptcy laws as now or hereafter in effect;
(k) any member of the Controlled Group shall fail to pay
when due an amount or amounts aggregating in excess of $500,000
which it shall have become liable to pay to the PBGC or to a Plan
under Title IV of ERISA; or notice of intent to terminate a Plan or
Plans having aggregate Unfunded Vested Liabilities in excess of
$2,500,000 (collectively, a "Material Plan") shall be filed under
Title IV of ERISA by any member of the Controlled Group, any plan
administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate or
to cause a trustee to be appointed to administer any Material Plan
or a proceeding shall be instituted by a fiduciary of any Material
Plan against any member of the Controlled Group to enforce Section
515 or 4219(c)(5) of ERISA and such proceeding shall not have been
dismissed within 30 days thereafter; or a condition shall exist by
reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated;
(l) at any time after August 15, 1988, the Del Ranch Facility
(x) shall fail to satisfy the criteria required to be satisfied in
order to be a "qualifying facility" under 18 C.F.R. Section
292.203, as amended, or (y) shall not have been so certified by the
Federal Energy Regulatory Commission or shall not have so "self-
certified";
(m) a judgment or order for the payment of money in excess of
$500,000 shall be rendered against the Borrower or the General
Partner and such judgment or order shall continue unsatisfied,
unstayed or unappealed for a period of 20 days;
(n) the Del Ranch Power Purchase Contract shall cease to be
in full force and effect or shall cease to be the valid and binding
obligation of SCE;
(o) there shall be a judgment or order of any court or
arbitrator or any governmental body, agency or official which
renders the Del Ranch Power Purchase Contract invalid or
unenforceable or requires a material modification of such contract,
which judgment or order continues unstayed or unappealed for a
period in excess of 20 days;
(p) the Del Ranch Facility or construction work in progress
shall be totally destroyed or shall be damaged to the extent
that it is a total or constructive loss, or insurance proceeds
payable in respect of loss of or damage to the Del Ranch Facility
or construction work in progress shall exceed $10,000,000 with
respect to any one incident or any series of incidents occurring
within a twelve month period; or the Del Ranch Facility or
construction work in progress or the real property and real
property interests (including geothermal rights) associated with
the Del Ranch Facility or necessary for Development of the Del
Ranch Facility shall be condemned or shall become subject to
eminent domain proceedings affecting substantially all thereof, or
condemnation awards or amounts payable in connection with eminent
domain proceedings with respect to any of such properties shall
exceed, in any twelve month period, $10,000,000;
(q) the Completion Date shall not occur on or before June
30, 1989;
(r) the Firm Operation Date shall not occur on or prior to
February 22, 1989;
(s) the Borrower, any Bank, the Agent or the General
Partner shall, solely by reason of the transactions contemplated by
the Project Agreements, become subject to regulation under the
Federal Power Act or the Public Utility Holding Company Act of 1935
or under state laws or regulations respecting the rates or the
financial or organizational regulation of electric utilities;
(t) a material default shall have occurred and be continuing
under any of the Geothermal Leases, any Geothermal Lease shall
cease to be in full force and effect or shall cease to be a valid
and binding obligation of the parties thereto; provided, that if
any such default cannot be cured within any applicable grace
period, such default shall not constitute an Event of Default if
such default can be corrected and does not relate to a monetary
obligation, corrective action has been taken by the Borrower or a
general partner of the Borrower within the applicable grace period
and is being diligently pursued and such default is corrected
within 60 days of the end of the applicable grace period; provided
further that if at the end of such 60 day period such failure is
not cured, such failure shall not constitute an Event of Default if
(i) such failure can be corrected, (ii) corrective action has been
diligently pursued by the Borrower, (iii) the Borrower shall have
provided the Banks, at least 10 Domestic Business Days prior to the
end of such 60 day period (or prior to the end of an Additional
Cure Period permitted pursuant to this proviso), with an Additional
Cure Period Request, (iv) the Agent shall have notified the
Borrower that the Required Banks have not, within seven Domestic
Business Days of receipt of such Additional Cure Period Request, in
their reasonable judgment, denied such Additional Cure Period
Request and (v) such failure is corrected within such Additional
Cure Period, unless the conditions of this proviso shall have again
been satisfied;
(u) a CEC Event shall have occurred; or
(v) Red Hill shall have been removed or replaced as General
Partner or shall cease to be a wholly-owned subsidiary of Magma
(otherwise than by merger with or into Magma), or any general
partner of the Borrower shall have been removed or replaced prior
to the Conversion Date unless, in each case, the consent of the
Required Banks shall have been obtained, provided that no such
consent shall be necessary for any conversion of Conejo's interest
as a general partner into a limited partner interest pursuant to
Section 13.2 of the Limited Partnership Agreement;
then, and in every such event (unless specifically waived as
provided in Section 10.06 hereof), the Agent shall:
(i) if requested by Banks having more than 50% in aggregate
amount of the Tranche A Commitments and Tranche B Commitments, (A)
by notice to the Borrower terminate the Commitments and the LOC
Commitment whereupon the Commitments and the LOC Commitment shall
terminate (which termination of the LOC Commitment shall not,
however, affect the obligations to make disbursements with respect
to outstanding LOCs and Collateralized LOCs or the several
obligations of the Banks to purchase participations in LOCs and
Loans as set forth in Articles II and III), without demand or
further notice of any kind, all of which are expressly waived
hereby, anything contained herein or in the Depositary Agreement or
the LOCs to the contrary notwithstanding, and (B) instruct the
Fronting Bank not to issue LOCs and the Depositary not to issue or
release for delivery any LOC Debt after such instructions have
been given (a copy of such notice shall be provided to the MTN
Dealers, but failure to provide a copy of such notice shall not
affect the validity of such notice); and
(ii) if requested by Banks holding Notes evidencing more
than 50% in aggregate principal amount of the Loans, (A) by
notice to the Borrower (a copy of which notice shall be provided to
the Depositary) declare the Notes (together with accrued interest
thereon) to be, and the Notes shall thereupon become, immediately
due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower,
and (B) deliver a demand to the Borrower to provide, and the
Borrower shall immediately provide, the Security Agent with cash
collateral in an amount equal to the aggregate Face Amount of all
Outstanding LOC Debt;
provided that in the case of any of the Events of Default
specified in clauses (i) or (j) above with respect to the
Borrower, without any notice to the Borrower or any other act by
the Agent or the Banks, the Commitments shall thereupon terminate
and the Notes (together with accrued interest thereon) shall become
immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the
Borrower, and provided further that the existence of an Event of
Default will not affect the obligations of the Banks to participate
in LOCs outstanding at such time.
SECTION 7.02. Notice of Default. The Agent shall give notice
to the Borrower under Section 7.01(c) promptly upon being requested
to do so by any Bank and shall thereupon notify all the Banks
thereof.
ARTICLE VIII
THE AGENT
SECTION 8.01. Appointment and Authorization. Each Bank
irrevocably appoints and authorizes the Agent to take such action
as agent on its behalf and to exercise such powers under this
Agreement and the Notes as are delegated to the Agent by the terms
hereof or thereof, together with all such powers as are reasonably
incidental thereto. Each Bank also irrevocably authorizes the
Agent, as part of its function as Agent hereunder, to enter into
the Collateral Documents as Security Agent on behalf of the Banks,
and to take such action and to exercise such powers under the
Collateral Documents as are delegated to the Security Agent by the
terms thereof, together with all such powers as are reasonably
incidental thereto.
SECTION 8.02. Agent and Affiliates. Morgan Guaranty Trust
Company of New York shall have the same rights and powers under
this Agreement and the Collateral Documents as any other Bank and
may exercise or refrain from exercising the same as though it were
not the Agent, and Morgan Guaranty Trust Company of New York and
its affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Borrower or any
Affiliate of the Borrower as if it were not the Agent hereunder or
the Security Agent in connection with the Collateral
Documents.
SECTION 8.03. Action by Agent. The obligations of the Agent
hereunder are only those expressly set forth herein and in the
Collateral Documents. Without limiting the generality of the
foregoing, the Agent shall not be required to take any action with
respect to any Default, except as expressly provided in Article VII
and in the Collateral Documents.
SECTION 8.04. Consultation with Experts. The Agent may
consult with legal counsel (who may be counsel for the Borrower),
independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by
it in good faith in accordance with the advice of such counsel,
accountants or experts.
SECTION 8.05. Liability of Agent. Neither the Agent nor any
of its directors, officers, agents, or employees shall be liable
for any action taken or not taken by it in connection herewith or
under the Collateral Documents, (i) with the consent or at the
request of the Required Banks or (ii) in the absence of its own
gross negligence or willful misconduct. Neither the Agent nor any
of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or
verify (i) any statement, warranty or representation made in
connection with this Agreement, the Collateral Documents or any
borrowing hereunder; (ii) the performance or observance of any of
the covenants or agreements of the Borrower; (iii) the satisfaction
of any condition specified in Article IV, except receipt of items
required to be delivered to the Agent; or (iv) the validity,
effectiveness or genuineness of this Agreement, the Collateral
Documents, the Notes or any other instrument or
writing furnished in connection herewith. The Agent shall not
incur any liability by acting in reliance upon any notice,
consent, certificate, statement, or other writing (which may be a
bank wire, telex, telecopy or similar writing) believed by it to be
genuine or to be signed by the proper party or parties. The Agent
shall be permitted to assume that the Banks have, pursuant to
Section 3.14, purchased participations in Loans made by the
Fronting Bank pursuant to Section 2.06 as of the date such Loans
were made by the Fronting Bank, except to the extent the Fronting
Bank has provided written notice to the Agent to the contrary. The
Agent has no responsibility to assist the Fronting Bank in
collecting funds owed to the Fronting Bank pursuant to Section
3.14.
SECTION 8.06. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent (to the extent
not reimbursed by the Borrower) against any cost, expense
(including counsel fees and disbursements), claim, demand,
action, loss or liability (except such as result from the Agent's
gross negligence or willful misconduct) that the Agent may suffer
or incur in connection with this Agreement or under the
Collateral Documents or any action taken or omitted by the Agent
hereunder or under the Collateral Documents.
SECTION 8.07. Credit Decision. Each Bank acknowledges that
it has, independently and without reliance upon the Agent 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 acknowledges that it
will, independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
decisions in taking or not taking any action under this Agreement.
SECTION 8.08. Successor Agent. The Agent may resign at any
time by giving at least three Domestic Business Days' written
notice thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a
successor Agent. If no successor Agent shall have been so
appointed by the Required Banks, and shall have accepted such
appointment, within 30 days after the retiring Agent's giving of
notice of resignation, then the retiring Agent may, on behalf of
the Banks, appoint a successor Agent, which 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 $50,000,000. Upon the acceptance of its appointment as Agent
hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights and
duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder and under the
Collateral Documents. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article shall inure to
its benefit as to any actions taken or omitted to be taken by it
while it was Agent.
SECTION 8.09. Certain Duties of Agent. The Agent will
transmit to the Banks all material information it receives from the
Borrower pursuant to this Agreement concerning the financial
position, business or operations of the Borrower. The Agent will
consult with the Banks (but shall not be bound by their advice) in
making its interest rate determination pursuant to Section 11.1(iv)
of the Operating and Maintenance Agreement. Whenever the Agent is
authorized under the Security Agreement or the Deed of Trust to
take any action to cure defaults, the Agent
undertakes to take any action that it shall be requested to take by
the Required Banks, provided that the Banks making such
request shall bear the costs of any such action and indemnify the
Agent in a manner satisfactory to the Agent against any losses,
damages, liabilities or expenses that the Agent may suffer or incur
as a result of taking such action.
ARTICLE IX
CHANGE IN CIRCUMSTANCES
SECTION 9.01. Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of any
Interest Period:
(a) the Agent is advised by the Reference Banks that
deposits in dollars (in the applicable amounts) are not being
offered to the Reference Banks in the relevant market for such
Interest Period, or
(b) Banks having 50% or more of the aggregate amount of
the Commitments advise the Agent that the Adjusted CD Rate or
the Adjusted London Interbank Offered Rate, as the case may be, as
determined by the Agent will not adequately and fairly reflect the
cost to such Banks of funding their Fixed Rate Loans for such
Interest Period, the Agent shall forthwith give notice thereof to
the Borrower and the Banks, whereupon until the Agent notifies the
Borrower that the circumstances giving rise to such suspension no
longer exist, the obligations of the Banks to make CD Loans or
Euro-Dollar Loans, as the case may be, shall be suspended. Unless
the Borrower notifies the Agent at least two Domestic Business Days
before the date of any Fixed Rate Borrowing for which a Notice of
Borrowing has previously been given that it elects not to borrow on
such date, such Borrowing shall instead be made as a Prime
Borrowing.
SECTION 9.02. Illegality. (a) If, after the date of this
Agreement, the adoption of any applicable law, rule or
regulation, 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 any Bank
(or its Euro-Dollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or
impossible for any Bank (or its Euro-Dollar Lending Office) to
make, maintain or fund its Euro-Dollar Loans and such Bank shall so
notify the Agent, the Agent shall forthwith give notice thereof to
the other Banks and the Borrower, whereupon until such Bank
notifies the Borrower and the Agent that the circumstances giving
rise to such suspension no longer exist, the obligation of such
Bank to make Euro-Dollar Loans shall be suspended. Before giving
any notice to the Agent pursuant to this Section, such Bank shall
designate a different Euro-Dollar Lending Office if such
designation will avoid the need for giving such notice and will
not, in the judgment of such Bank, be otherwise disadvantageous to
such Bank. If such Bank shall determine that it may not lawfully
continue to maintain and fund any of its outstanding Euro-Dollar
Loans to maturity and shall so specify in such notice, the Borrower
shall immediately prepay in full the then outstanding principal
amount of each such Euro-Dollar Loan, together with accrued
interest thereon. Concurrently with prepaying each such Euro-
Dollar Loan, the Borrower shall borrow a Prime Loan in an equal
principal amount from such Bank (on which interest and principal
shall be payable contemporaneously with the related Euro-Dollar
Loans of the other Banks), and such Bank shall make such a Prime
Loan.
(b) If, after the date of this Agreement, the adoption of any
applicable law, rule or regulation, 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
any Bank or the Fronting Bank with any request or directive
(whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or
impossible for any Bank or the Fronting Bank to participate in or
issue, as the case may be, LOCs and such Bank or Fronting Bank, as
the case may be, shall so notify the Agent, the Agent shall
forthwith give notice thereof to the other Banks and the
Borrower, whereupon until such Bank or Fronting Bank notifies the
Borrower and the Agent that the circumstances giving rise to such
suspension no longer exist, the obligation of such Bank or
Fronting Bank to participate as provided in Section 2.07 in LOCs
issued thereafter, or, in the case of the Fronting Bank, to issues
LOCs thereafter, shall be suspended forthwith and the LOC
Commitment shall be proportionately suspended in whole or in part
accordingly, subject in each case to restoration if such
unlawfulness or impossibility ceases to exist. The terms of any
other provision of this Agreement notwithstanding, no such
suspension pursuant to this Section 9.02 shall affect the
obligations of such Bank to participate in accordance with
Section 3.14 in any outstanding LOCs with respect to LOC Debt
theretofore issued and delivered prior to such suspension and
otherwise entitled to the benefits of any LOC or shall affect the
obligations of the Fronting Bank under any outstanding LOC. If the
Commitment of a Bank to incur liability under or participate in
LOCs issued or to be issued pursuant hereto shall have been
suspended in accordance with the foregoing provisions of this
Section 9.02(b), then, upon the incurrence by the other Banks of
any further LOC Utilization under or in respect of any such LOC
pursuant hereto, such Bank shall make a Loan to the Borrower in an
amount such that the respective Utilizations of all the Banks will
remain in the proportions specified in Section 3.01, and the
Borrower agrees to utilize the Commitment of such Bank
accordingly.
SECTION 9.03. Increased Cost and Reduced Return. (a) If
after the date hereof, the adoption of any applicable law, rule or
regulation, 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 any Bank
(or its Lending Office) with any request or directive (whether or
not having the force of law) of any such authority, any central
bank or comparable agency:
(i) shall subject any Bank (or its Lending Office) to any
tax, duty or other charge with respect to its Fixed Rate Loans, its
Notes or its obligation to make Fixed Rate Loans, or shall change
the basis of taxation of payments to any Bank (or its Lending
Office) of the principal of or interest on its Fixed Rate Loans or
any other amounts due under this Agreement in respect of its Fixed
Rate Loans or its obligation to make Fixed Rate Loans (except for
changes in the rate of tax on the overall net income of such Bank
or its Lending Office imposed by the jurisdiction in which such
Bank's principal executive office or Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without
limitation, any such requirement imposed by the Board of Governors
of the Federal Reserve System, but excluding (A) with respect to
any CD Loan any such requirement included in an applicable Domestic
Reserve Percentage and (B) with respect to any Euro-Dollar Loan any
such requirement included in an applicable Euro-Dollar Reserve
Percentage) against assets of, deposits with or for the account of,
or credit extended by, any Bank (or its Lending Office) or shall
impose on any Bank (or its Lending Office) or on the United States
market for certificates of deposit or the London interbank market
any other condition affecting its Fixed Rate Loans, its Notes or
its obligation to make Fixed Rate Loans;
and the result of any of the foregoing is to increase the cost to
such Bank (or its Lending Office) of making or maintaining any
Fixed Rate Loan, or to reduce the amount of any sum received or
receivable by such Bank (or its Lending Office) under this
Agreement or under its Notes with respect thereto, by an amount
deemed by such Bank to be material, then, within 15 days after
demand by such Bank (with a copy to the Agent), the Borrower shall
pay to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction.
(b) If after the date hereof, any Bank shall have
determined that the adoption of any applicable law, rule or
regulation 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 compliance by
any Bank (or its Lending Office) with 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 such Bank's
capital as a consequence of its obligations hereunder to a level
below that which such Bank could have achieved but for such
adoption, change or compliance (taking into consideration such
Bank's policies with respect to capital adequacy) by an amount
deemed by such Bank to be material, then from time to time, within
15 days after demand by such Bank (with a copy to the Agent), the
Borrower shall pay to such Bank such additional amount or amounts
as will compensate such Bank for such reduction; provided that if
(x) the event giving rise to any such demand relates to one or
more, but less than all, of the Banks, or (y) there are
circumstances unique to one or more, but less than all, of the
Banks that result in a demand by such Bank for payment of an amount
that is materially greater than the amount demanded by other Banks,
the Borrower shall have the right to replace any Bank making such
demand with another bank satisfactory to the Agent that agrees to
assume and be bound by all of such replaced Bank's obligations
hereunder.
(c) Each Bank will promptly notify the Borrower and the Agent
of any event of which it has knowledge, occurring after the date
hereof, which will entitle 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 judgment of such Bank, be
otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error. In determining such
amount, such Bank may use any reasonable averaging and attribution
methods.
SECTION 9.04. Prime Loans Substituted for Affected Fixed Rate
Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans
has been suspended pursuant to Section 9.02 or (ii) any Bank has
demanded compensation under Section 9.03(a) and the Borrower shall,
by at least five Euro-Dollar Business Days' prior notice to such
Bank through the Agent, have elected that the provisions of this
Section shall apply to such Bank, then, unless and until such Bank
notifies the Borrower that the circumstances giving rise to such
suspension or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by such Bank as
CD Loans or Euro-Dollar Loans, as the case may be, shall be made
instead as Prime Loans (on which interest and principal shall be
payable contemporaneously with the related Fixed Rate Loans of the
other Banks), and
(b) after each of its CD Loans or Euro-Dollar Loans, as the
case may be, has been repaid, all payments of principal which could
otherwise be applied to repay such Fixed Rate Loans shall be
applied to repay its Prime Loans instead.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing
(including bank wire, telex, telecopy or similar writing) and shall
be given to such party at its address, telex number or telecopy
number set forth on the signature pages hereof or such other
address, telex number or telecopy number as such party may
hereafter specify for the purpose by notice to the Agent and the
Borrower. Each such notice, request or other communication shall
be effective (i) if given by telex, when such telex is transmitted
to the telex number specified in this Section and the appropriate
answerback is received, (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid or (iii) if given by any other
means, when delivered at the address specified in this Section;
provided that notices to the Agent under Article II, Article III or
Article IX shall not be effective until received.
SECTION 10.02. No Waivers. No failure or delay by the Agent
or any Bank in exercising any right, power or privilege hereunder
or under any Note shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by
law.
SECTION 10.03. Expenses; Documentary Taxes. (a) The
Borrower shall pay (i) all out-of-pocket expenses of the Agent
incurred in connection with the Development of the Del Ranch
Facility and the preparation and administration of this
Agreement, the Notes, the Security Agreement and the Deed of Trust,
any waiver or consent hereunder or thereunder or any amendment
hereof or thereof or any Default or alleged Default hereunder,
including fees and disbursements of New York and California counsel
for the Agent and the Banks, travel expenses, computer expenses,
consulting fees for engineering reports, surveys and other
technical analyses, publicity costs and costs of monitoring
construction, testing and start-up of the Del Ranch Facility and
(ii) if a Default occurs, all out-of-pocket expenses incurred by
the Banks, including fees and disbursements of counsel, in
connection with such Default and collection and other enforcement
proceedings resulting therefrom. The Borrower shall indemnify the
Agent and the Banks against any transfer taxes, documentary taxes,
assessments or charges made by any governmental authority by reason
of the execution and delivery of this Agreement, the Security
Agreement, the Deed of Trust, the Notes or any Issuance Agreement.
(b) Notwithstanding the provisions of Section 10.12, the
Borrower and the General Partner agree to indemnify each Bank and
hold each Bank harmless from and against any and all liabilities,
losses, damages, costs and expenses of any kind (including, without
limitation, the reasonable fees and disbursements of counsel for
any Bank in connection with any investigative, administrative or
judicial proceeding, whether or not such Bank shall be designated
a party thereto) which may be incurred by any Bank (or by the Agent
in connection with its actions as Agent hereunder), relating to or
arising out of the generation, transportation, storage, disposal or
clean-up of hazardous wastes in connection with the Development of
the Del Ranch Facility and Del Ranch Facility; provided that no
Bank shall have the right to be indemnified hereunder for its own
gross negligence or willful misconduct as determined by a court of
competent jurisdiction.
SECTION 10.04. Confidentiality; Safety Rules. (a) The Agent
and the Banks agree that they shall use their best efforts to
maintain confidential and not disclose to others any proprietary
business or technical information disclosed by Magma or the
Borrower hereunder and identified as proprietary information at the
time of disclosure, provided (i) that any such information (x)
which was in the Banks' possession prior to its disclosure
hereunder, or (y) is or becomes part of the public domain through
no fault of the Agent or the Banks, or (z) which comes into the
Agent's or Banks' possession from a third party which the Agent or
Banks had reason to believe had the right to disclose such
information, shall not be subject to these restrictions; (ii) such
information may be provided by the Agent to the Technical
Consultants and to successors or assigns, if any (or potential
participants), as contemplated by Section 10.07 for the purposes of
this Agreement and subject to conditions similar to those of this
Section 10.04(a) and, upon enforcement by the Security Agent of the
Security Interests, to any transferee or proposed transferee of the
Collateral; and (iii) such information may be disclosed by the
Agent as required by law or a governmental agency or pursuant to
legal process.
(b) The Agent and the Banks agree that any on-site
inspections made by them or their representatives hereunder shall
be made in compliance with applicable safety rules and insurance
requirements of which it has been advised.
SECTION 10.05. Sharing of Set-Offs. Each Bank agrees it
shall exercise a right of set-off or counterclaim only with the
written consent of the Banks. If a Bank shall, by exercising any
right of set-off or counterclaim or otherwise, receive payment of
a proportion of the aggregate amount of principal and interest due
with respect to any Note held by it which is greater than the
proportion received by any other Bank in respect of the aggregate
amount of principal and interest due with respect to any Note held
by such other Bank, the Bank receiving such proportionately greater
payment shall purchase such participations in the Notes held by the
other Banks, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest with
respect to the Notes held by the Banks shall be shared by the Banks
pro rata; provided that nothing in this Section shall impair the
right of any Bank to exercise any right of set-off or counterclaim
it may have and to apply the amount subject to such exercise to the
payment of indebtedness of the Borrower other than its indebtedness
under the Notes. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a
participation in a Note, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of set-off or
counterclaim and other rights with respect to such participation as
fully as if such holder of a participation were a direct creditor
of the Borrower in the amount of such participation.
SECTION 10.06. Amendments and Waivers. Any provision of this
Agreement or the Notes may be amended or waived if, but only if,
such amendment or waiver is in writing and is signed by the
Borrower and the Required Banks (and, if the rights or duties of
the Agent are affected thereby, by the Agent and, if the rights and
duties of the Fronting Bank are affected thereby, the Fronting
Bank); provided that no such amendment or waiver shall, unless
signed by all the Banks, (i) increase or decrease the Commitment of
any Bank or subject any Bank to any additional obligation, (ii)
reduce the principal of or rate of interest on any Loan or any fees
hereunder, (iii) postpone the date fixed for any payment of
principal of or interest on any Loan or any fees hereunder, (iv)
release any Collateral, except as otherwise permitted by the
Security Agreement, or (v) change the percentage of the Commitments
or of the aggregate unpaid principal amount of the Notes, or the
number of Banks, which shall be required for the Banks or any of
them to take any action under this Section or any other provision
of this Agreement.
SECTION 10.07. Successors and Assigns. (a) The provisions
of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns,
except that the Borrower may not assign or otherwise transfer any
of its rights under this Agreement.
(b) The Agent and the Borrower may, for all purposes of this
Agreement, treat any Bank as the holder of any Note drawn to its
order (and owner of the Loans evidenced thereby).
(c) No assignee, participant or other transferee of any
Bank's rights shall be entitled to receive any greater payment
under Section 9.03 than such Bank would have been entitled to
receive with respect to the rights transferred, unless such
transfer is made with the Borrower's prior written consent or by
reason of the provisions of Section 9.02 or 9.03 requiring such
Bank to designate a different Lending Office under certain
circumstances or at a time when the circumstances giving rise to
such greater payment did not exist.
(d) If any Reference Bank assigns its Notes to an
unaffiliated institution, the Agent shall, in consultation with the
Borrower and with the consent of Required Banks, appoint another
bank to act as a Reference Bank hereunder.
SECTION 10.08. Collateral. Each of the Banks represents to
the Agent and each of the other Banks that it in good faith is not
relying upon any "margin stock" (as defined in Regulation U) as
collateral in the extension or maintenance of the credit provided
for in this Agreement.
SECTION 10.09. New York Law. This Agreement and each Note
shall be construed in accordance with and governed by the law of
the State of New York.
SECTION 10.10. Counterparts; Integration; Effectiveness.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This
Agreement constitutes the entire agreement and understanding among
the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter
hereof.
SECTION 10.11. Involvement of Magma and Mission.
Notwithstanding anything contained in this Agreement to the
contrary, the Borrower and the Banks acknowledge and agree that
neither Magma nor Mission shall be deemed a guarantor of any of the
Borrower's obligations hereunder including, without limitation, the
Borrower's obligation to repay the Loans. In this regard, except
for Magma's financial obligations with respect solely to the Magma
Undertaking and the Indemnity Agreement dated as of March 14, 1988
between Magma and the Agent on behalf of the Banks, the
creditworthiness of Magma and Mission are not relevant to the Banks
entering into this Agreement. In delivering the certificates
specified in Section 4.02(e) hereof, Magma makes no warranty of the
feasibility or economic viability of the Del Ranch Facility.
SECTION 10.12. Debt Without Recourse. All amounts payable
pursuant to this Agreement, the Security Agreement, the Deed of
Trust and the Notes shall be paid only from the income of and the
proceeds from the Del Ranch Facility and the Collateral. The Banks
agree that they will look solely to the income of and the proceeds
from the Del Ranch Facility and the Collateral as provided herein,
in the Security Agreement and in the Deed of Trust, and none of
Magma, Mission, Red Hill, Conejo or any other partner of the
Borrower shall be personally liable to the Banks for any amounts
payable under this Agreement, the Security Agreement, the Deed of
Trust and the Notes or, except for fraud, subject to any liability
under this Agreement; provided that the foregoing shall not relieve
Magma, Mission, Red Hill, Conejo or any other partner of the
Borrower from any obligation it may have to return to the Borrower
any amounts distributed to it in violation of this Agreement or the
Limited Partnership Agreement or as otherwise required by the laws
of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
DEL RANCH, L.P., a limited
partnership organized under the
laws of the State of California
By: RED HILL GEOTHERMAL, INC.,
a Delaware corporation, a
general partner
By: /s/ Wallace C. Dieckmann
Its: Vice President
11770 Bernardo Plaza Court
Suite 366
San Diego, CA 92128
Telex number:
By: CONEJO ENERGY COMPANY, a
California corporation, a
general partner
By: /s/ Scott B.T. Sinclair
Its: Vice President and
Treasurer
18872 MacArthur Boulevard
Suite 400
Irvine, CA 92715
Attention: Treasurer
FRONTING BANK
THE FUJI BANK, LIMITED,
LOS ANGELES AGENCY,
as Fronting Bank
By: /s/ Kenichiro Tanaka
Name:
Title: Joint General Manager
333 South Grand Avenue
25th Floor
Los Angeles, California 90071
Attn: Project Finance Group
Telephone number:(213) 680-9855
Telecopy number: (213) 626-0475
(213) 625-0189
Telex: 67-3336
Attention: Project Finance Group
BANKS
THE FUJI BANK, LIMITED,
LOS ANGELES AGENCY
By: /s/ Kenichiro Tanaka
Name:
Title: Joint General Manager
333 South Grand Avenue
25th Floor
Los Angeles, California 90071
Attn: Project Finance Group
Telephone number:(213) 680-9855
Telecopy number: (213) 626-0475
(213) 625-0189
Telex: 67-3336
Attention: Project Finance Group
THE LONG-TERM CREDIT BANK
OF JAPAN, LTD.
By: /s/ Yutaka Hotta
Name:
Title: Deputy General Manager
444 South Flower Street
Suite 3700
Los Angeles, California 90071
Attn: Project Finance Group
Telephone number: (213) 629-5777
Telecopy number: (213) 622-6908
Telex: 67-3558
Attention: Takeshi Sugai
THE SUMITOMO BANK, LIMITED
By: /s/ Toshiyuki Kashima
Name:
Title: Joint General Manager
Chicago Branch
233 South Wacker Drive
Suite 7117
Chicago, Illinois 60606
Telephone number: (312) 876-0525
Telecopy number: (312) 876-6436
Telex: 253734, answerback SUMITCGO
Attention: Marketing/Loan Administration
UNION BANK OF SWITZERLAND,
LOS ANGELES BRANCH
By: /s/ Paul E. Barbian
Name:
Title: Vice President
By: /s/ Paul G. Naumann
Name:
Title: Vice President
Domestic Lending Office
444 South Flower Street
Los Angeles, California 90071
Telephone number: (213) 489-0600
Telecopy number: (213) 489-0637
Telex: 4720453, answerback UBSLA
Attention: Corporate Banking Department
With a copy to
EuroDollar Lending Office
Union Bank of Switzerland
Cayman Island Branch
c/o Union Bank of Switzerland
299 Park Avenue
New York, NY 10171
Telephone number: (212) 715-3000
Telecopy number: (212) 715-3459
Telex: 0620317, answerback UBSUW
Attention: Project Finance Department
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ George L. Brown
Name:
Title: Vice President
Domestic Lending Office
Morgan Guaranty Trust Company
of New York
60 Wall Street
New York, New York 10260
Telex number: 177615
TOKYO LEASING (U.S.A.) INC.
By: /s/ Minoru Okada
Name:
Title: President
Two Soundview Drive
Greenwich, Connecticut 06830
Telephone number: (203) 661-2322
Telecopy number: (203) 661-2389
Telex: None
Attention: Manager
THE MITSUBISHI BANK, LIMITED,
NEW YORK BRANCH
By: /s/ Robert J. Munczinski
Name:
Title: Senior Vice President and
Chief Manager
225 Liberty Street
Two World Financial Center
New York, NY 10281
Telephone number: (212) 667-2670
Telecopy number: (212) 667-3550
Telex: 232328, Answerback MITUR
Attention: Manager, Planning and
Administration Department
THE AGENT
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By: /s/ George L. Brown
Name:
Title: Vice President
60 Wall Street
New York, New York 10260
Attention: Mult-Option Desk-Loan
Department
Telex number: 177615
Exhibit 10.73
LOC DEBT FACILITY AGREEMENT, dated as of April 18, 1990, among
DEL RANCH, L.P., a limited partnership organized under the laws of
California (the "Borrower"), the BANKS listed on the signature
pages hereof (the "Banks"), MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as Agent under the Credit Agreement (as defined below) (the
"Agent") and THE FUJI BANK, LIMITED, LOS ANGELES AGENCY, as
Fronting Bank (the "Fronting Bank").
The parties hereto, intending to be legally bound and in
consideration of the premises and mutual covenants herein
contained, hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.01 Definitions. For all purposes of this
Agreement, the following terms shall have the following meanings:
"Bank" means each bank or financial institution listed on the
signature pages hereof, and its successors and assigns.
"Collateralized LOCs" has the meaning set forth in Section
4.01.
"Commercial Paper Notes" shall mean the short-term
promissory notes to be issued payable to bearer or to a named payee
in the form of Exhibit A-1 to the Depositary Agreement (or any
variation thereof agreed to by the CP Dealers, the Agent, the
Fronting Bank, the Banks, the Borrower and the Depositary),
constituting LOC Debt of the Borrower, having a Face Amount of at
least $100,000, having a term not greater than 270 days and not
being subject to extension, automatic renewal or roll-over.
"CP Dealer" shall mean Merrill Lynch Money Markets Inc. and/or
Smith Barney, Harris Upham & Co. Inc. or any other Person appointed
as a CP Dealer in a CP Dealer Agreement with the prior written
consents of the Fronting Bank and the Agent, which
consents shall not be unreasonably withheld.
"CP Dealer Agreement" shall mean each Commercial Paper Dealer
Agreement between the Borrower and a CP Dealer,
substantially in the form attached to this Facility Agreement as
Annex I, with only such changes therein as are permitted by Section
5.07 hereof.
"Credit Agreement" shall mean the Amended and Restated Secured
Credit Agreement, dated as of April 18, 1990 among the Borrower,
the Banks, The Fuji Bank, Limited, Los Angeles Agency, as Fronting
Bank and Morgan Guaranty Trust Company of New York, as Agent, as
amended from time to time.
"Date of Issuance" shall mean the date on which any LOC Debt
is issued hereunder and under the Depositary Agreement.
"Dealer" shall mean any CP Dealer or MTN Dealer.
"Defeasance Account" has the meaning set forth in Section
4.01.
"Defeasance Date" has the meaning set forth in Section 4.01.
"Defeased Note" has the meaning set forth in Section 4.01.
"Depositary" shall mean The Fuji Bank and Trust Company or any
successor thereto as such pursuant to the Depositary
Agreement.
"Depositary Agreement" shall mean a Depositary Agreement among
the Borrower, the Fronting Bank, the Agent and the
Depositary, concerning the issuance by the Borrower of LOC Debt,
substantially in the form attached to this Facility Agreement as
Annex III.
"Facility Agreement" shall mean this LOC Debt Facility
Agreement.
"Medium-Term Notes" shall mean the interest-bearing notes to
be issued payable to the order of a named payee, in the form of
Exhibit B-1 to the Depositary Agreement (or any variation thereof
agreed to by the MTN Dealers, the Agent, the Fronting Bank, the
Banks, the Borrower and the Depositary), constituting LOC Debt of
the Borrower and having a term ending not earlier than 270 days
from the date of issuance and not later than August 31, 2001.
"MTN Dealer" shall mean Merrill Lynch Capital Markets, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Smith Barney, Harris
Upham & Co. Incorporated and The First Boston Corporation or any
other Person appointed as an MTN Dealer in an MTN
Distribution Agreement with the prior written consents of the
Fronting Bank and the Agent, which consents shall not be
unreasonably withheld.
"MTN Distribution Agreement" shall mean each Medium-Term Note
Distribution Agreement between the Borrower and an MTN Dealer,
substantially in the form attached to this Facility Agreement as
Annex II, with only such changes therein as are permitted by
Section 5.08 hereof.
"Net Sales Price" shall mean with respect to any Note the
initial purchase price of such Note minus the compensation
payable to the relevant Dealer in connection with the sale of such
Note.
"Notes" has the meaning assigned to such term in the
Depositary Agreement.
"Notice of Defeasance" has the meaning set forth in Section
4.01.
"Offering Material" shall have the meaning set forth in
Section 3.02(v).
SECTION 1.02. Interpretation. Unless otherwise defined
herein, capitalized terms used herein shall have the meanings
assigned to such terms in Article I of the Credit Agreement.
SECTION 1.03. Construction. This Facility Agreement is
supplemental to the Credit Agreement and shall be interpreted and
applied in all respects as though it were a part thereof.
SECTION 1.04. Issuance Agreements. The parties hereto hereby
approve each of this Facility Agreement, the Depositary Agreement,
the CP Dealer Agreement, and the MTN Distribution Agreement, each
of which shall constitute an Issuance Agreement for purposes of the
Credit Agreement regardless of when executed and delivered. Each
of the Banks authorizes and directs the Agent to execute and
deliver this Facility Agreement and the Depositary Agreement and to
perform its obligations hereunder and thereunder as Agent for the
Banks.
ARTICLE II
LOCs SUPPORTING LOC DEBT
SECTION 2.01. Issuance of LOCs and Related LOC Debt. (a)
Commitment. Upon the terms and subject to the conditions set forth
herein, in the Depositary Agreement and in the Credit Agreement,
and relying upon the representations and warranties set forth in
clause (iv) of Section 3.02 hereof, the Fronting Bank agrees to
issue LOCs in support of LOC Debt.
(b) Description of LOCs and Related LOC Debt. Each LOC
issued pursuant hereto shall (i) be printed on, or together with
and attached to, a Commercial Paper Note or a Medium-Term Note and
bear the same identifying number as such Commercial Paper Note or
Medium-Term Note, respectively, and (ii) comply with Sections 2.02
and 2.03 of the Credit Agreement. Each Commercial Paper Note and
related LOC or Medium-Term Note and related LOC shall be in the
form required by, and duly completed, executed and authenticated in
accordance with, the Depositary Agreement.
SECTION 2.02. Issuance of Commercial Paper Notes. (a)
Depositary Agreement; CP Dealer Agreement. As of the date hereof,
(i) the Borrower, by entering into the Depositary Agreement, has
authorized and directed the Depositary to act as depositary for
safekeeping of the Commercial Paper Notes and as the agent of the
Borrower for the authentication, issuance and delivery of
Commercial Paper Notes on the terms and conditions set forth herein
and therein and (ii) the Borrower, by entering into the CP Dealer
Agreement, has made arrangements for the sale of Commercial Paper
Notes.
(b) Instructions not to Issue Commercial Paper Notes. If at
any time the Agent determines, or is instructed by the
Required Banks, that the Borrower is not entitled to issue
Commercial Paper Notes under this Facility Agreement, the Credit
Agreement or the Depositary Agreement, the Agent shall instruct the
Borrower and the Depositary not to issue or release for delivery,
and the CP Dealer not to sell, Commercial Paper Notes. When so
instructed, the Depositary shall not issue or release for delivery
any Commercial Paper Notes until such instructions are revoked.
Any pending contracts to purchase Commercial Paper Notes from the
Borrower shall not be consummated after the time of receipt by the
CP Dealer of the stop notice. Any instructions given pursuant to
this Section 2.02(b) not to issue, release for delivery or sell
Commercial Paper Notes (x) shall specify the reason therefor,
including reference to the applicable provisions of the relevant
Issuance Agreement, (y) shall be promptly
confirmed in writing if not initially given in writing and (z) may
be superseded, revised or revoked only by the Agent in
writing. In no event shall the Agent, the Fronting Bank or the
Depositary be liable to any party for any losses or claims
arising out of any actions taken in accordance with this Section
2.02(b) absent gross negligence or willful misconduct of the Agent,
the Fronting Bank or the Depositary.
SECTION 2.03. Issuance of Medium-Term Notes. (a) Depositary
Agreement; MTN Distribution Agreement. As of the date hereof, (i)
the Borrower, by entering into the Depositary Agreement, has
authorized and directed the Depositary to act as depositary for
safekeeping of the Medium-Term Notes and as the agent of the
Borrower for the authentication, issuance and delivery of Medium-
Term Notes on the terms and conditions set forth herein and therein
and (ii) the Borrower, by entering into the MTN Distribution
Agreement, has made arrangements for the sale of such Medium-Term
Notes.
(b) Instructions not to Issue Medium-Term Notes. If at any
time the Agent determines, or is instructed by the Required Banks,
that the Borrower is not entitled to issue Medium-Term Notes under
this Facility Agreement, the Credit Agreement or the Depositary
Agreement, the Agent shall instruct the Borrower and the Depositary
not to issue or release for delivery, and the MTN Dealers not to
consummate the sale of, Medium-Term Notes. When so instructed, the
Depositary shall not issue or release for delivery any Medium-Term
Notes notwithstanding the prior
agreement by the MTN Dealers to sell such Medium-Term Notes. Any
instructions given pursuant to this Section 2.03(b) not to issue,
release for delivery or consummate the sale of Medium-Term Notes
(i) shall specify the reason therefor, including reference to the
applicable provisions of the relevant Issuance Agreement, (ii)
shall be promptly confirmed in writing if not initially given in
writing and (iii) may be superseded, revised or revoked only by the
Agent in writing. In no event shall the Agent, the Fronting Bank
or the Depositary be liable to any party for any losses or claims
arising out of actions taken in accordance with this Section
2.03(b) absent gross negligence or willful misconduct of the Agent,
the Fronting Bank or the Depositary.
SECTION 2.04. Payment from Fronting Bank's Funds. The
Fronting Bank agrees that (a) all LOC Disbursements and
disbursements with respect to Collateralized LOCs shall be paid
only out of the general funds of the Fronting Bank, (b) no LOC
Disbursements or disbursements with respect to Collateralized LOCs
shall be contingent upon or directly or indirectly drawn from
amounts on deposit in the Note Proceeds Account (as defined in the
Depositary Agreement) or amounts on deposit in any account
maintained by the Borrower with the Fronting Bank, (c)
reimbursement for any LOC Disbursements will be sought and
effected only after such LOC Disbursements have been made in
accordance with the foregoing, whether by deposit of funds in the
Special Payment Account (as defined in the Depositary Agreement) or
otherwise, and (d) disbursements with respect to Collateralized
LOCs shall be reimbursed first, pursuant to the Security Agreement
from the Collateral in the Defeasance Accounts to the extent of
such Collateral and second, directly from the Borrower.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Conditions to First Issuance. The obligation
of the Fronting Bank to issue the initial LOCs shall be subject to
the satisfaction of the following conditions precedent (in addition
to the conditions precedent set forth in Section 3.02 hereof and in
Article IV of the Credit Agreement) on the first Date of Issuance
with respect to the Commercial Paper Notes or Medium-Term Notes to
be issued on such first Date of Issuance:
(i) the LOC Debt (x) if Commercial Paper Notes, shall have
received the highest short-term rating from at least one of the
nationally recognized rating agencies; provided that if the
Commercial Paper Notes shall not have received such rating
because of the credit rating of the Fronting Bank, the Borrower may
waive this requirement by written notice to the Fronting Bank and
(y) if Medium-Term Notes, shall have received the highest long-term
rating for long-term debt securities from at least one of the
nationally recognized rating agencies; provided that if the Medium-
Term Notes shall not have received such rating because of the
credit rating of the Fronting Bank, the Borrower may waive this
requirement by written notice to the Fronting Bank;
(ii) the Fronting Bank and the Agent shall have received
the following:
(A) executed counterparts of the Depositary Agreement,
the CP Dealer Agreement and the MTN Distribution Agreement; and
(B) such other documents as the Fronting Bank or the
Agent may reasonably request; and
(iii) the Borrower and the CP Dealer shall each have
received an executed letter agreement in the form of Exhibit B to
the CP Dealer Agreement from the Fronting Bank and the Borrower and
the MTN Dealer shall each have received an executed letter
agreement in the form of Exhibit C to the MTN Distribution
Agreement from the Fronting Bank.
SECTION 3.02. Conditions to Each Issuance. The obligation of
the Fronting Bank to issue LOCs shall be subject to the
satisfaction of the following conditions precedent (in addition to
the applicable conditions precedent set forth in Article IV of the
Credit Agreement) to the satisfaction of the Agent on each proposed
Date of Issuance:
(i) the Depositary shall have received appropriate
instructions in accordance with Section 3 of the Depositary
Agreement and, if required, the Fronting Bank and the Agent shall
have received in a timely manner the requisite Notice of Issuance
provided for in Section 2.04 of the Credit Agreement;
(ii) the LOC Debt proposed to be issued shall not be
subject to the registration requirements of the Securities Act of
1933 or any registration or qualification requirements under the
securities or blue sky laws of any State unless the Agent and the
Fronting Bank shall otherwise agree in writing prior to any such
issuance;
(iii) the Borrower shall be either (A) not an "investment
company" and not a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940 or (B)
exempt under an order of the Securities and Exchange Commission
from the provisions of such Act, which order shall be in full force
and effect and a copy of which shall have been delivered to the
Agent and the Fronting Bank;
(iv) on the Date of Issuance of such LOC Debt (and after
giving effect to such issuance), the representations and warranties
set forth in Section 3(c) of the Depositary Agreement shall be true
and correct, with the same force and effect as though such
representations and warranties had been made on and as of such
date;
(v) (A) each information statement, offering memorandum or
other offering material (collectively, the "Offering Material") to
be used in connection with any offer, issuance, sale or delivery of
such LOC Debt shall have been delivered to the Fronting Bank, (B)
the Offering Material shall not contain any untrue statement of a
material fact or fail to state a material fact about the Borrower
necessary in order to make the statements therein not misleading,
and (C) the Offering Material shall be in form and substance
satisfactory to the Fronting Bank;
(vi) immediately after such issuance, no Default shall have
occurred and be continuing;
(vii) there shall not have been any restrictions imposed
upon the Fronting Bank or the Borrower by any law or regulation of
the United States or any State thereof or other governmental
authority (including without limitation any legal lending limits
imposed by law or regulations of the United States or any State
thereof) which would prevent the Fronting Bank from issuing LOCs or
which would prevent the issuance or sale of LOC Debt entitled to
the benefits of LOCs;
(viii) the Depositary Agreement and either a CP Dealer
Agreement, in the case of an issuance of Commercial Paper Notes, or
an MTN Distribution Agreement, in the case of an issuance of
Medium-Term Notes, shall be in full force and effect and the
Borrower shall not be in default under either of the Depositary
Agreement, the MTN Distribution Agreement or the CP Dealer
Agreement, as the case may be;
(ix) the sum of
(A) the aggregate Face Amount of all Outstanding LOC Debt
on such Date of Issuance (excluding all LOC Debt maturing on
such day or becoming Defeased Notes on such day and including
all LOC Debt being issued on such day) plus
(B) the aggregate principal amount of all Loans outstanding
on such Date of Issuance (excluding all Loans being repaid on such
day and including all Loans being made on such day)
shall not exceed the aggregate Commitments of the Banks in effect
on the Date of Issuance (after giving effect to any reduction
thereof on such date);
(x) if the maturity date of any LOC Debt being issued on
such Date of Issuance will occur after any Commitment Reduction
Date, the sum of the principal amount of Loans plus the Face Amount
of Outstanding LOC Debt after such issuance and scheduled to mature
after such Commitment Reduction Date will not exceed the aggregate
Commitments of the Banks on such Commitment Reduction Date after
giving effect to the scheduled reduction on such date of such
Commitments;
(xi) the aggregate Face Amount of Notes maturing on a
single day shall not exceed $25,000,000;
(xii) all fees due and payable to the Fronting Bank and the
Depositary shall have been paid; and
(xiii) each Note shall be identified as belonging to either
Tranche A or Tranche B under the Credit Agreement and, to the
extent practicable, the aggregate Loans and Notes attributable to
a particular Tranche shall not exceed the aggregate Commitments
with respect to such Tranche.
Each Notice of Issuance and each instruction of the Borrower
given pursuant to Section 3 of the Depositary Agreement to the
Depositary to issue LOC Debt shall be deemed to be a representation
and warranty by the Borrower to the Banks on the date thereof as to
the facts set forth in clauses (ii), (iii), (iv), (v), (vi), (vii)
(to the extent applicable to the Borrower), (viii) and (ix) of the
preceding paragraph; provided that in the case of clause (v), such
representation and warranty shall be deemed to exclude any
information about the Fronting Bank or information not approved by
the Borrower expressly for use therein.
ARTICLE IV
COLLATERALIZED LOCS
SECTION 4.01. Defeased Notes. (a) If no Default has
occurred and is continuing, the Borrower may, upon three Domestic
Business Days' written notice to the Fronting Bank and the Agent (a
"Notice of Defeasance"), at any time cash collateralize in full its
reimbursement obligations with respect to LOCs (the "Collateralized
LOCs") attached to any then-outstanding Medium-Term Notes (the
"Defeased Notes"). Each Notice of Defeasance shall specify the
serial number of, the face amount of, the interest rate on, and the
interest payment dates of, each Defeased Note and the date of such
collateralization (the "Defeasance Date").
(b) On or prior to the Defeasance Date, the Borrower shall
establish, pursuant to the Depositary Agreement, a Defeasance
Account into which the Borrower shall irrevocably deposit cash or
Temporary Cash Investments in an amount which a firm of independent
certified public accountants satisfactory to the Agent and the
Fronting Bank shall reasonably determine to be sufficient to
provide for reimbursing in full the Fronting Bank for disbursements
made in respect of the Collateralized LOCs with respect to the
principal of and interest on the Defeased Notes in the amounts and
at the times provided in each Defeased Note. Each Defeasance
Account, and all moneys and securities therein (including interest
thereon), shall be in the name of the Security Agent, shall be for
the sole and exclusive benefit of the Fronting Bank and the Banks
and shall constitute part of the Collateral under the Security
Agreement. The Security Agent shall have the sole and exclusive
right to effect any withdrawal or distribution from each Defeasance
Account. The Borrower shall not have any legal or equitable right,
title or interest in any Defeasance Account.
(c) The Security Agent shall, prior to an Event of Default,
apply the cash and Temporary Cash Investments on deposit in each
Defeasance Account to reimburse the Fronting Bank for disbursements
made from time to time in respect of Collateralized LOCs with
respect to the interest on and principal of the Defeased Notes to
which such Defeasance Account relates. After an Event of Default,
the Security Agent shall apply the cash and Temporary Cash
Investments on deposit in each Defeasance Account as provided in
the Security Agreement.
SECTION 4.02. Termination of Participations in
Collateralized LOCs. The participations of the Banks in the
Collateralized LOC in respect of each Defeased Note shall
terminate at 5:00 P.M. (New York City time) on the Defeasance Date
of such Defeased Note, and such Collateralized LOC shall thereupon
cease to be an LOC for purposes of the Issuance
Agreements, the Credit Agreement and the Security Agreement.
Notwithstanding the termination of the obligations of the Banks to
participate in Collateralized LOCs, the Borrower shall remain
obligated to reimburse the Fronting Bank in full for LOC
Disbursements under such Collateralized LOCs, whether from funds on
deposit in the Defeasance Accounts or otherwise.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Notices, etc. Except as otherwise provided
herein, all notices, demands, instructions and other
communications required or permitted to be given to or made upon
any party hereto or any other Person shall be given or made, as the
case may be, as provided in Section 10.01 of the Credit Agreement.
SECTION 5.02. Binding Effect; Assignment. This Facility
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns;
provided that no party may assign any of its rights or
obligations hereunder without the consent of the other parties
hereto.
SECTION 5.03. Governing Law. This Facility Agreement shall
be governed by and construed in accordance with the laws of the
State of New York applicable to contracts made and performed within
the State of New York.
SECTION 5.04. Execution in Counterparts. This Facility
Agreement may be executed in any number of counterparts. Each
counterpart, when so executed and delivered, shall be deemed to be
an original, and all of such counterparts, taken together, shall
constitute one and the same Facility Agreement.
SECTION 5.05. Headings. Section headings used in this
Facility Agreement are for convenience of reference only and shall
not define or limit any of the terms or provisions hereof.
SECTION 5.06. Survival of Facility Agreement. All
covenants, agreements, representations and warranties made herein
shall survive the issuance of LOCs by the Fronting Bank and shall
continue in full force and effect as long as any LOC is
outstanding or any amount is owing to the Fronting Bank or any Bank
in respect of any LOCs.
SECTION 5.07. CP Dealer Agreement. Notwithstanding any
provision in the Credit Agreement to the contrary, on five days'
prior written notice to the Fronting Bank, the CP Dealer, the Agent
and the Depositary, the Borrower may terminate any CP Dealer
Agreement so long as at least one CP Dealer Agreement remains in
effect. The Borrower may not amend, supplement, modify or waive
the provisions of any CP Dealer Agreement in any respect materially
adverse to the Fronting Bank, the Agent, the Banks or the
Depositary without the prior written authorization of the Fronting
Bank, the Agent (acting for the Banks) and the Depositary. The
Borrower may enter into additional CP Dealer Agreements without
further written authorization so long as (i) each such additional
CP Dealer Agreement shall be substantially in the form attached to
this Facility Agreement as Annex I, subject only to such
amendments, supplements and modifications permitted by this Section
5.07 and (ii) such agreements are with CP Dealers previously
approved by the Fronting Bank and the Agent in writing.
SECTION 5.08. MTN Distribution Agreement. Notwithstanding
any provision of the Credit Agreement to the contrary, on five
days' prior written notice to the Fronting Bank, the MTN Dealer,
the Agent and the Depositary, the Borrower may terminate any MTN
Distribution Agreement so long as at least one MTN Distribution
Agreement remains in effect. The Borrower may not amend,
supplement, modify or waive the provisions of any MTN
Distribution Agreement in any respect materially adverse to the
Fronting Bank, the Agent, the Banks or the Depositary without the
prior written authorization of the Fronting Bank, the Agent (acting
for the Banks) and the Depositary. The Borrower may enter into
additional MTN Distribution Agreements without further written
authorization so long as (i) each such additional MTN Distribution
Agreement shall be substantially in the form
attached to this Facility Agreement as Annex II, subject only to
such amendments, supplements and modifications permitted by this
Section 5.08 and (ii) such agreements are with MTN Dealers
previously approved by the Fronting Bank and the Agent in
writing.
SECTION 5.09. No Third Party Beneficiaries. The benefits
of this Facility Agreement, the other Issuance Agreements and the
Credit Agreement are intended solely for the parties hereto and
thereto and nothing in this Facility Agreement is intended to give
any holder of LOC Debt or beneficiary of any LOC any right, remedy
or claim under this Agreement, the Issuance Agreements or the
Credit Agreement.
SECTION 5.10. Debt Without Recourse. All amounts payable
pursuant to the Credit Agreement, the Security Agreement, the Deed
of Trust and the Notes (as defined in the Credit Agreement) shall
be paid only from the income of and the proceeds from the Leathers
Facility and the Collateral. The Banks and the Fronting Bank agree
that they will look solely to the income of and the proceeds from
the Leathers Facility and the Collateral as
provided in the Credit Agreement, in the Security Agreement and in
the Deed of Trust, and none of Magma, Mission, Red Hill, San Felipe
or any other partner of the Borrower shall be personally liable to
the Banks or the Fronting Bank for any amounts payable under the
Credit Agreement, the Security Agreement, the Deed of Trust and the
Notes (as defined in the Credit Agreement) or, except for fraud,
subject to any liability under the Credit Agreement; provided that
the foregoing shall not relieve Magma, Mission, Red Hill, San
Felipe or any other partner of the
Borrower from any obligation it may have to return to the
Borrower any amounts distributed to it in violation of the Credit
Agreement or the Limited Partnership Agreement or as otherwise
required by the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date and year first above
written.
DEL RANCH, L.P., a limited
partnership organized under the
laws of the State of California
By: RED HILL GEOTHERMAL, INC.,
a Delaware corporation, a
general partner
By: /s/ Wallace Dieckmann
Name:
Title: Vice President
By: CONEJO ENERGY COMPANY,
a California corporation,
a general partner
By: /s/ Scott B.T. Sinclair
Name:
Title: Vice President
and Treasurer
THE FUJI BANK, LIMITED,
LOS ANGELES AGENCY,
as Fronting Bank
By: /s/ Kenichiro Tanaka
Name:
Title: Joint General
Manager
THE FUJI BANK, LIMITED,
LOS ANGELES AGENCY
By: /s/ Kenichiro Tanaka
Name:
Title: Joint General Manager
THE LONG-TERM CREDIT BANK
OF JAPAN, LTD.
By: /s/ Yutaka Hotta
Name:
Title: Deputy General Manager
THE SUMITOMO BANK, LIMITED
By: /s/ Toshiyuki Kashima
Name:
Title: Joint General Manager
UNION BANK OF SWITZERLAND,
LOS ANGELES BRANCH
By: /s/ Paul E. Barbian
Name:
Title: Vice President
By: /s/ Paul G. Naumann
Name:
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ George L. Brown
Name:
Title: Vice President
TOKYO LEASING (U.S.A.) INC.
By: /s/ Minoru Okada
Name:
Title: President
THE MITSUBISHI BANK, LIMITED,
NEW YORK BRANCH
By: /s/ Robert J. Munczinski
Name:
Title: Senior Vice President
and Chief Manager
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By: /s/ George L. Brown
Name:
Title: Vice President
Exhibit 10.75
DEL RANCH, L.P.
AMENDMENT NUMBER ONE TO SECURITY AGREEMENT
This amendment is dated as of April 14, 1989 among DEL RANCH,
L.P. (formerly known as Del Ranch, Ltd., a California limited
partnership) ("Grantor"), MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as Agent for and on behalf of the BANKS (the "Agent"), MORGAN
GUARANTY TRUST COMPANY OF NEW YORK ("Morgan") and MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, as Security Agent (the
"Security Agent"),
W I T N E S S E T H :
WHEREAS, the parties hereto are the parties to the Security
Agreement dated as of March 14, 1988 among the Grantor, the Agent,
Morgan and the Security Agent (the "Security Agreement:); and
WHEREAS, the parties hereto desire to amend the Security
Agreement as provided herein;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise
specifically defined herein, each term used herein which is defined
in the Security Agreement has the meaning assigned to such term in
the Security Agreement. Each reference to "hereof", "hereunder",
"herein" and "hereby" and each other similar
reference and each reference to "this Agreement" and each other
similar reference contained in the Security Agreement shall from
and after the date hereof refer to the Security Agreement as
amended hereby.
SECTION 2. Amendment of Section 1 of the Security Agreement.
The following definitions set forth in Section 1 of the Security
Agreement are amended to read as follows:
"Letters of Credit" means, collectively, (i) letter of credit
No. S-860952 issued by Morgan in an amount not exceeding $671,000
relating to the IID Agreements (the "IID Letter of Credit"), (ii)
letter of credit No. S-860914 issued by Morgan in an amount not
exceeding $500,000 relating to that certain
Conditional Use Permit number 9002-86 issued by Imperial County,
California on October 7, 1986 (the "CUP Letter of Credit") and
(iii) a letter of credit to be issued by Morgan in an amount not
exceeding $240,000 relating to the increase in Nominated Capacity
to 40 MW, a copy of which will be delivered to the Banks within
five Domestic Business Days of issuance.
"Reimbursement Obligations" means the obligations of the
Grantor under the following agreements, including the obligations
to reimburse Morgan for any draws under the Letters of Credit: (i)
Continuing Standby Letter and Guarantee Agreement between Morgan
and the Grantor dated as of March 14, 1988 with respect to the IID
Letter of Credit, (ii) Continuing Standby Letter of Credit and
Guarantee Agreement between Morgan and the Grantor dated as of
March 14, 1988 with respect to the CUP Letter of Credit and (iii)
Continuing Standby Letter of Credit and Guaranty Agreement between
Morgan and the Grantor dated as of April 14, 1989 with respect to
the Letters of Credit other than the IID Letter of Credit and the
CUP Letter of Credit.
"Secured Parties" means (i) each and all of the "Banks" under
and as defined in the Credit Agreement and Morgan in its capacity
as "Agent" thereunder and any successor in such capacity, (ii)
Morgan as issuer of the Letters of Credit and in respect of its
rights under the Reimbursement Obligations and (iii) Morgan as
Security Agent hereunder and any successors in such capacity.
SECTION 3. Governing Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 4. Counterparts. This Amendment may be signed in any
number of counterparts, each of which shall be an original, with
the same effect as if the signatories thereto and hereto were upon
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the first date as above
written.
DEL RANCH, L.P., a limited partnership
organized under the laws of the State of
California
By: RED HILL GEOTHERMAL, INC.,
a Delaware corporation, a
general partner
By /s/ Jonathan S. Fish
Name: Johnathan S. Fish
Title: Vice President
By: /s/ Wallace C. Dieckmann
Name: Wallace C. Dieckmann
Title: Assistant Secretary
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By: /s/ Barrett R. Petty
Name: Barrett R. Petty
Title: Managing Director
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By: /s/ Mark H. Wittleder
Name: Mark H. Wittleder
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Security Agent
By: /s/ Mark H. Wittleder
Name: Mark H. Wittleder
Title: Vice President
Exhibit 10.75 (Cont.)
CONFORMED COPY
DEL RANCH, L.P.
AMENDMENT NUMBER TWO TO SECURITY AGREEMENT
This amendment is dated as of April 18, 1990 among DEL RANCH,
L.P. (the "Grantor"), MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Agent for and on behalf of the BANKS (the "Agent"), MORGAN GUARANTY
TRUST COMPANY OF NEW YORK ("Morgan") and MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Security Agent (the
"Security Agent"),
W I T N E S S E T H :
WHEREAS, the parties hereto are the parties to the Security
Agreement dated as of March 14, 1988 among the Grantor, the Agent,
Morgan and the Security Agent (the "Original Security Agreement");
WHEREAS, the Original Security Agreement was amended by
Amendment Number One to Security Agreement dated April 14, 1989
(the Original Security Agreement, as amended, being referred to
herein as the "Security Agreement"); and
WHEREAS, the parties hereto desire to further amend the
Security Agreement as provided herein;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise
specifically defined herein, each term used herein which is defined
in the Security Agreement has the meaning assigned to such term in
the Security Agreement. Each reference to "hereof", "hereunder",
"herein" and "hereby" and each other similar
reference and each reference to "this Agreement" and each other
similar reference contained in the Security Agreement shall from
and after the date hereof refer to the Security Agreement as
amended hereby.
SECTION 2. Amendment of Section 1. (A) The following
definitions set forth in Section 1 of the Security Agreement are
amended to read as follows:
"Credit Agreement" means the Amended and Restated Secured
Credit Agreement, dated as of April 18, 1990, among Del Ranch,
L.P., the banks listed on the signature pages thereof, The Fuji
Bank, Limited, Los Angeles Agency, as Fronting Bank, and Morgan
Guaranty Trust Company of New York, as Agent, as amended from time
to time.
"Obligations" means (i) the obligations of the Grantor under
this Security Agreement, (ii) the obligations of the Grantor, now
existing or hereafter arising, owing to the Banks under the Credit
Agreement, the Deed of Trust or the Notes, (iii) the Reimbursement
Obligations, (iv) the LOC Disbursement Obligations, (v) the
Collateralized LOC Obligations, (vi) any renewal or extension of
any of the foregoing and (vii) the aggregate of the Secured Swap
Amounts under the Secured Swap Agreements (provided that such
aggregate shall at no time exceed 10% of the aggregate Utilization
outstanding at such time).
"Secured Parties" means (i) each and all of the "Banks" under
and as defined in the Credit Agreement, Morgan in its capacity as
"Agent" thereunder and The Fuji Bank, Limited, Los Angeles Agency
in its capacity as "Fronting Bank" thereunder, and any successors
in such capacities, (ii) Morgan as issuer of the Letters of Credit
and in respect of its rights under the
Reimbursement Obligation, (iii) the Secured Counterparties and (iv)
Morgan as Security Agent hereunder and any successors in such
capacity.
(B) The following definitions are added to Section 1 of the
Security Agreement, in the appropriate alphabetical order:
"Collateralized LOC Obligations" means the obligations of the
Grantor to reimburse the Fronting Bank for any disbursements under
the Collateralized LOCs pursuant to the Credit Agreement and the
LOC Debt Facility Agreement; provided that such amount shall,
solely for the purposes of this Security Agreement, be limited to
the aggregate Collateral in the Defeasance Accounts.
"Defeasance Accounts" means the Defeasance Accounts as defined
in Section 1(d) of the Depositary Agreement.
"LOC Disbursement Obligations" means the obligations of the
Grantor to reimburse the Fronting Bank and the Banks for LOC
Disbursements pursuant to the Credit Agreement and the LOC Debt
Facility Agreement.
"Note Proceeds Account" means the Note Proceeds Account as
defined in Section 1(a) of the Depositary Agreement.
SECTION 3. Amendment of Section 5. (A) The lead-in
paragraph of subsection (a) of Section 5 of the Security
Agreement is amended to read as follows:
(a) The proceeds of any sale of, or other realization upon,
all or any part of the Collateral or the proceeds from any
foreclosure under this Security Agreement or the Deed of Trust
shall be applied by the Security Agent (A) to the extent that such
proceeds are derived from the Defeasance Accounts, to the
reimbursement of the Fronting Bank for disbursements with respect
to Collateralized LOCs, and (B) thereafter in the following order
of priority:
(B) Subsection (c) of Section 5 of the Security Agreement is
amended by adding the following sentence at the end of such
subsection:
The provisions of this subsection (c) of Section 5 shall not in any
way apply to the Defeasance Accounts.
SECTION 4. Amendment of Section 13. Section 13 of the
Security Agreement is amended to read as follows:
13. Termination of Security Interests; Release of
Collateral. Upon the payment in full of the Obligations, the
Security Interests shall terminate and all rights to the
Collateral shall revert to the Grantor. Upon any such
termination, the Security Agent will, at the Grantor's expense,
execute and deliver to the Grantor such documents as the Grantor
shall reasonably request to evidence such termination. At any time
and from time to time prior to such termination of the Security
Interests, if no Default has occurred and is continuing (i) the
Depositary, upon the instructions of the Security Agent (which
instructions may be standing instructions), shall release any of
the funds on deposit in the Note Proceeds Account and the
Defeasance Accounts to reimburse the Fronting Bank for LOC
Disbursements and disbursements under the Collateralized LOCs,
respectively, (ii) the Security Agent may release any of the
Collateral (other than the Note Proceeds Account and the
Defeasance Accounts) with the prior written consent of each of the
Secured Parties or (iii) the Grantor may apply funds in the
Operating Account, the Construction Disbursement Account, the Major
Capital Expenditure Reserve Account, the Partnership Holding
Account, or the Debt Service Reserve Account as provided in the
Operating and Maintenance Agreement, the Construction Management
Agreement or the Limited Partnership Agreement.
SECTION 5. Amendment of Exhibit A to Security Agreement.
Exhibit A to Security Agreement is amended in accordance with
Exhibit A attached hereto.
SECTION 6. Governing Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Amendment may be signed in any
number of counterparts, each of which shall be an original, with
the same effect as if the signatories thereto and hereto were upon
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the first date as above
written.
DEL RANCH, L.P. a limited
partnership organized under the
laws of the State of California
By: RED HILL GEOTHERMAL, INC.,
a Delaware corporation, a
general partner
By /s/ Wallace C. Dieckmann
Name:
Title: Vice President
By: CONEJO ENERGY COMPANY
a California corporation,
a general partner
By /s/ Scott B.T. Sinclair
Name:
Title: Vice President and
Treasurer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ George L. Brown
Name:
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ George L. Brown
Name:
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Security Agent
By /s/ George L. Brown
Name:
Title: Vice President
Exhibit 10.77
RECORDING REQUESTED BY
AND WHEN RECORDED
RETURN TO:
Arnold A. Pinkston
Orrick, Herrington &
Sutcliffe
Old Federal Reserve Bank Bldg.
400 Sansome Street
San Francisco, CA 94111
FIRST AMENDMENT TO DEED TO TRUST
THIS FIRST AMENDMENT TO DEED OF TRUST dated as of April 18, 1990
is entered into by and between DEL RANCH, L.P., ("Trustor"), and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK as Security Agent (as
defined below) for the benefit of the Secured Parties (as defined
below) (in such capacity, the "Beneficiary").
RECITALS
(1) Trustor, Trustee and Beneficiary are parties to that certain
Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Filing (Construction Deed of Trust) ("Deed of Trust") dated as of
March 14, 1988 which was recorded on March 14, 1988, as instrument
no. 88-04019, in the Official Records of Imperial County,
California.
(2) Except as expressly provided herein, capitalized terms used
herein which are defined in the Deed of Trust (as amended hereby)
shall have the respective meanings given to those terms in the Deed
of Trust (as amended hereby).
(3) Trustor, Beneficiary, The Fuji Bank, Limited, Los Angeles
Agency, as Fronting Bank ("Fronting Bank") and the Banks listed
therein have entered into that certain Amended and Restated Secured
Credit Agreement dated as of April 18, 1990 ("Amended Credit
Agreement'), pursuant to which such parties have amended and
restated the Secured Credit Agreement dated as of March 14, 1988
(as amended on April 14, 1989, and partially assigned by Morgan
Guaranty Trust Company of New York ("MGT") to Amsterdam-Rotterdam
Bank N.V. on June 21, 1989, the ("Original Credit Agreement") among
Trustor, Morgan Guaranty Trust Company of New York as Agent
("Agent') for the Banks, and the banks ("Banks") which are party
thereto. The Deed of Trust was recorded to secure, among other
things, the obligations of the Trustor under the Original Credit
Agreement.
(4) The parties wish to amend the Deed of Trust to reflect the
Amended Credit Agreement.
AGREEMENT
1. Credit Agreement. The term Credit Agreement, as used in the
Deed of Trust, shall mean the Original Credit Agreement as
amended and restated by the Amended Credit Agreement as the same
may be amended, modified, supplemented, restated or replaced from
time to time.
2. Security Agreement. The term Security Agreement, as used in the
Deed of Trust, shall mean the Security Agreement, dated as of March
14, 1989 between Trustor, Security Agent, MGT, and Agent, as
amended by the certain Amendment Number One to the Security
Agreement dated as of April 14, 1989 between Trustor, Security
Agent, MGT, and Agent and that certain Amendment Number Two to the
Security Agreement dated as of April 18, 1990 between
Trustor, Security Agent, MGT, and Agent, as the same may be
amended, modified, supplemented, restated or replaced from time to
time.
3. Obligations Secured.
(a) Item 1 of the Article entitled Obligations Secured (page
eight) in the Deed of Trust is amended to read as follows:
"1. Payment to Beneficiary of all indebtedness evidenced by,
or arising under or pursuant to, the Credit Agreement, including
without limitation the Notes (which shall not
mature later than September 15, 2002 unless a later date is
agreed upon in writing by the parties to the Credit
Agreement) described in the Credit Agreement payable to the
Beneficiary and/or the Banks or order in an original
principal amount not to exceed Sixty-six Million Dollars
($66,000,000), together with interest thereon and fees due in
connection therewith, and any modifications, additions,
extensions or renewals of the Credit Agreement and the
Notes (including without limitation (i) modifications of the
required principal and/or interest payment dates,
deferring or accelerating said payment dates in whole or in
part, (ii) modifications, extensions or renewals at a
different rate of interest, and/or (iii) modifications or
additional amounts advanced under the Credit Agreement and the
Notes) whether or not any such modification, addition, extension
or renewal is evidenced by a new or additional promissory note
or notes"
(b) Item 4 of the Article entitled Obligations Secured (pages
nine) in the Deed of Trust is amended to read as follows:
"4. The observance and performance by Trustor of each
covenant and obligation (including the Obligations as
defined in the Security Agreement) on the part of Trustor to
be observed or performed pursuant to or arising under or in
connection with the terms and provisions of the Credit Documents
and the Project Agreements, and all amendments, modifications,
supplements, restatements or replacements thereto."
4. Effect of This Amendment. On and after the date of this
Amendment, each reference in the Deed of Trust to the Deed of
Trust, shall mean the Deed of Trust as amended hereby. Except as
specifically amended above, the Deed of Trust shall remain in full
force and effect and is hereby ratified and confirmed. The
execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as a waiver of any
right, power, or remedy of the Agent or any of the Banks, nor
constitute a waiver of any provision of the Deed of Trust.
5. Headings. The headings in this Amendment are for
convenience of reference only and not part of the substance hereof.
6. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of California.
7. Counterparts. This Amendment may be executed in any number
of identical counterparts, any set of which signed by both parties
hereto shall be deemed and constitute a complete executed original
for all purposes.
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be executed, and this First Amendment shall be
effective, as of the day and year first above written.
DEL RANCH, L.P., a California
limited partnership
By: Red Hill Geothermal, Inc.
a Delaware corporation,
general partner
By: /s/ Jon R. Peele
Its: Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
in its capacity as Security Agent
By: /s/ George L. Brown
Its: Vice President
Exhibit 10.78
AMENDED AND RESTATED
SECURED CREDIT AGREEMENT
AMENDED AND RESTATED SECURED CREDIT AGREEMENT dated as of
April 18, 1990 among ELMORE, L.P. (the "Borrower"), the BANKS
listed on the signature pages hereof (the "Banks"), THE FUJI BANK,
LIMITED, LOS ANGELES AGENCY, as Fronting Bank, and MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, as Agent, amending and
restating the Secured Credit Agreement dated as of March 14, 1988
(the "Original Agreement", the Original Agreement as amended and
restated hereby is referred to herein as the "Agreement"), among
the Borrower, the banks listed on the signature pages thereof (the
"Original Banks") and Morgan Guaranty Trust Company of New York, as
Agent.
WHEREAS, the Borrower, the Original Banks and the Agent
entered into the Original Agreement in order to finance the
construction of the Elmore Facility (as defined below);
WHEREAS, on May 23, 1988 and April 14, 1989 the Borrower, the
Original Banks and the Agent amended the Original Agreement; and
WHEREAS, the Borrower, the Banks, the Fronting Bank and the
Agent now wish to further amend the Original Agreement to provide
for the issuance of LOC Debt supported by LOCs of the Fronting
Bank, all as set forth in this Amended and Restated Secured Credit
Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used
herein, have the following meanings:
"Additional Cure Period" means an additional 60 day period
granted to the Borrower to cure any Default pursuant to
paragraphs (c), (g) or (t) of Section 7.01, as the case may be.
"Additional Cure Period Request" means a written request of
the Borrower for an Additional Cure Period, including a
description of the Default, the corrective action taken to date and
further proposed corrective action pursuant to
paragraphs (c), (g) or (t) of Section 7.01, as the case may be.
"Adjusted CD Rate" has the meaning set forth in Section
3.05(b).
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section 3.05(c).
"Affiliate" means, when used with reference to a specified
Person, (a) any Person who directly or indirectly controls, is
controlled by or is under common control with the specified Person,
(b) any Person who is an officer, partner or trustee of, or serves
in a similar capacity with respect to, the specified Person, or for
which the specified Person is an officer, partner or trustee or
serves in a similar capacity, provided that Persons who are
partners of the same partnership will not be considered to be
partners of each other, (c) any Person who, directly or indirectly,
is the beneficial owner of 10% or more of any class of equity
securities of the specified Person, or of which the specified
Person, directly or indirectly, is the owner of 10% or more of any
class of equity securities, and (d) any relative of the specified
Person.
"Agent" means Morgan Guaranty Trust Company of New York in its
capacity as agent for the Banks hereunder, and its successors in
such capacity.
"Assessment Rate" has the meaning set forth in Section
3.05(b).
"Bank" means each bank or financial institution listed as a
"Bank" on the signature pages hereof, and its successors and
assigns.
"Borrower" means Elmore, L.P., a limited partnership
organized under the laws of the State of California, the general
partners of which as of the date hereof are Red Hill and Niguel,
and the limited partners of which are Magma and Niguel.
"Borrowing" means a borrowing hereunder consisting of (i) a
Loan made to the Borrower by the Fronting Bank with
participations by the Banks pursuant to Article II and Section 3.14
or (ii) Loans made to the Borrower at the same time by the Banks
pursuant to Article III. A Borrowing is a "Domestic
Borrowing" if such Loans are Domestic Loans or a "Euro-Dollar
Borrowing" if such Loans are Euro-Dollar Loans. A Domestic
Borrowing is a "CD Borrowing" if such Domestic Loans are CD Loans
or a "Prime Borrowing" if such Domestic Loans are Prime Loans.
"BTU Energy" means the heat value in British Thermal Units
which can be extracted from Geothermal Brine.
"Capital Contribution" means a Scheduled Capital
Contribution as defined in Section 3.4.1 of the Limited
Partnership Agreement.
"CD Base Rate" has the meaning set forth in Section 3.05(b).
"CD Loan" means a Loan to be made as a CD Loan pursuant to the
applicable Notice of Borrowing.
"CD Margin" has the meaning set forth in Section 3.05(b).
"CD Reference Banks" means The Fuji Bank, Limited, Union Bank
of Switzerland and Morgan Guaranty Trust Company of New York, and
each such other bank as may be appointed pursuant to Section
10.07(d).
"CEC" means the California Energy Commission, and its
successors.
"CEC Event" means a determination by the CEC that the
Leathers Facility is and shall be subject to its jurisdiction,
which determination is likely, in the reasonable opinion of the
Required Banks, to have a material adverse effect on the Borrower
or on the completion or operation of the Leathers Facility as
contemplated by this Agreement and the Project Agreements.
"Code" means the Internal Revenue Code of 1986, as amended, or
any successor statute.
"Collateral" means, collectively, Collateral as defined in the
Security Agreement and Mortgaged Property as defined in the Deed of
Trust.
"Collateral Documents" means, collectively, the Security
Agreement, the Deed of Trust and all financing statements
delivered or to be delivered to the Security Agent pursuant to the
foregoing or this Agreement, in each case as amended from time to
time.
"Collateralized LOC" has the meaning set forth in the LOC Debt
Facility Agreement.
"Commercial Paper Notes" has the meaning set forth in the LOC
Debt Facility Agreement.
"Commitment" means (except as provided in the definitions of
"Tranche A" and "Tranche B"), with respect to each Bank, the amount
set forth opposite the name of such Bank on Schedule I as its Total
Commitment, as such amount may be reduced from time to time
pursuant to Sections 3.08 and 3.09.
"Commitment Reduction Date" means each September 15 and March
15 subsequent to the Conversion Date (but no earlier than September
15, 1990) to and including the twenty-fifth Commitment Reduction
Date subsequent to the Conversion Date.
"Completion Date" means the date the Completion Tests are
completed.
"Completion Tests" means those tests for completion of the
Elmore Facility described in Schedule II hereto.
"Construction Management Agreement" means the Construction
Management and Asset Transfer Agreement dated as of March 14, 1988,
between the Construction Manager and the Borrower, as amended from
time to time.
"Construction Manager" means Magma.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414 of the
Code.
"Conversion Date" means the date forty-five calendar days
after the date on which the Completion Tests are completed.
"CP Dealer" has the meaning set forth in the LOC Debt
Facility Agreement.
"CP Dealer Agreement" has the meaning set forth in the LOC
Debt Facility Agreement.
"Credit Event" means the making of any Loan or the issuance of
any LOC which, after application of the proceeds therefrom, results
in a net increase in the Utilization of any Bank.
"Credit Facility Borrowing" means a Borrowing made pursuant to
Article III.
"Credit Periods" means, collectively, the Tranche A Credit
Period and the Tranche B Credit Period.
"Date of Issuance" has the meaning set forth in the LOC Debt
Facility Agreement.
"DCC" means The Dow Chemical Company, a Delaware
corporation.
"Dealer" has the meaning set forth in the LOC Debt Facility
Agreement.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person to
pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee
under capital leases, (v) all Debt of others secured by a Lien on
any asset of such Person, whether or not such Debt is assumed by
such Person, (vi) all Debt of others Guaranteed by such Person,
(vii) all obligations of such Person to purchase securities (or
other property) which arise out of or in connection with the sale
of the same or substantially similar securities or property, and
(viii) all non-contingent obligations of such Person to reimburse
any bank or other Person in respect of amounts paid under a letter
of credit or similar instrument.
"Debt Service Reserve Account" means the reserve account
established and maintained pursuant to Section 11.1 of the
Operating and Maintenance Agreement.
"DEC" means Dow Engineering Company, a Delaware corporation.
"Deed of Trust" means the first lien Deed of Trust,
Assignment of Rents, Security Agreement and Fixture Filing dated as
of March 14, 1988, among the Borrower, the Security Agent and Ticor
Title Insurance Company of California, as trustee, covering the
Elmore Facility, the leasehold estate created by the Ground Lease,
and the easement granted by the Easement Agreement, as amended by
First Amendment to Deed of Trust dated as of April 18, 1990 and as
further amended from time to time.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of
time or both would, unless cured or waived, become an Event of
Default.
"Defeasance Date" has the meaning set forth in the LOC Debt
Facility Agreement.
"Defeased Note" has the meaning set forth in the LOC Debt
Facility Agreement.
"Depositary" has the meaning set forth in the LOC Debt
Facility Agreement.
"Depositary Agreement" has the meaning set forth in the LOC
Debt Facility Agreement.
"Development of the Elmore Facility" means the design,
engineering, construction, testing and start-up of the Elmore
Facility.
"Distributable Cash" means, with respect to any period between
Distribution Dates, the amount of cash or property
delivered by Red Hill in its capacity as Operator under the
Operating and Maintenance Agreement to the general partners of the
Borrower pursuant to Section 12.2(xvi) of the Operating and
Maintenance Agreement.
"Distribution Dates" means each March 31 and September 30.
"Dollars" or "$" shall mean lawful money of the United States
of America.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in New York City,
Chicago, Illinois, or Los Angeles, California are authorized by law
to close.
"Domestic Lending Office" means, as to each Bank, its office
located at its address set forth on the signature pages hereof (or
identified on the signature pages hereof as its Domestic Lending
Office) or such other office as such Bank may hereafter designate
as its Domestic Lending Office by notice to the
Borrower and the Agent; provided that any Bank may from time to
time by notice to the Borrower and the Agent designate separate
Domestic Lending Offices for its Prime Loans, on the one hand, and
its CD Loans, on the other hand, in which case all references
herein to the Domestic Lending Office of such Bank shall be deemed
to refer to either or both of such offices, as the context may
require.
"Domestic Loans" means CD Loans or Prime Loans or both.
"Domestic Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing the
obligation of the Borrower to repay the Domestic Loans.
"Domestic Reserve Percentage" has the meaning set forth in
Section 3.05(b).
"Dow Undertaking" means the undertaking of DCC,
substantially in the form of Exhibit G hereto.
"Easement Agreement" means the Easement Grant Deed and
Agreement Regarding Rights for Geothermal Development, dated as of
August 15, 1988, by and between Magma and the Borrower, as amended
by that certain First Amendment of Easement Grant Deed and
Agreement Regarding Rights for Geothermal Development dated as of
October 26, 1988, as amended from time to time.
"Elmore Facility" means that certain geothermal electrical
generating facility being constructed pursuant to the Plans and
Specifications and any "as-built" plans on the Elmore Property
which, when completed, will have the capacity to convert BTU Energy
from Geothermal Brine into electrical energy, together with the
Supporting Equipment.
"Elmore Facility Brine Requirement" means that amount of
Geothermal Brine which, when Processed by the Elmore Facility, will
yield the amount of BTU Energy required to generate
332,880,000 kilowatt hours per year of "Energy", as that term is
defined in the Elmore Power Purchase Contract.
"Elmore Facility Projected Project Cost" means the total
projected cost of completing development and construction of the
Elmore Facility as reflected on Exhibit I to the Construction
Management Agreement.
"Elmore Geothermal Lease Unit" means that certain New River
Ranch Geothermal Unit created pursuant to Declaration of Unit dated
as of February 1, 1964, as amended by the First Restatement and
Partial Restructuring of Unit dated as of January 19, 1988.
"Elmore Power Purchase Contract" means that certain Power
Purchase Contract dated February 22, 1984 by and between Magma and
SCE, as amended, which has been assigned by Magma to the Borrower,
and as the same may be amended from time to time.
"Elmore Property" means the parcel of real property, more
particularly described on Exhibit "A" to the Ground Lease, as that
description may be modified from time to time pursuant to Section
3.3 of the Ground Lease.
"Elmore Property Preliminary Title Report" means that
certain Preliminary Title Report No. 105141-A (Elmore), dated
February 17, 1988, a copy of which is attached as Exhibit L to the
Construction Management Agreement.
"Engineer" means R.W. Beck and Associates, or their
successors in the capacity of engineers and consultants with
respect to the Development of the Elmore Facility and operation of
the Elmore Facility.
"Engineer's Report" means the report of the Engineer in form
and substance satisfactory to the Agent and Banks.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business
(including dealings in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its
office, branch or affiliate located at its address set forth on the
signature pages hereof (or identified on the signature pages hereof
as its Euro-Dollar Lending Office) or such other office, branch or
affiliate of such Bank as it may hereafter designate as its Euro-
Dollar Lending Office by notice to the Borrower and the Agent.
"Euro-Dollar Loan" means a Loan to be made as a Euro-Dollar
Loan pursuant to the applicable Notice of Borrowing.
"Euro-Dollar Margin" has the meaning set forth in Section
3.05(c).
"Euro-Dollar Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit B hereto, evidencing the
obligation of the Borrower to repay the Euro-Dollar Loans.
"Euro-Dollar Reserve Percentage" has the meaning set forth in
Section 3.05(c).
"Euro-Dollar Reference Banks" means the principal London
offices of The Fuji Bank, Limited, Union Bank of Switzerland and
Morgan Guaranty Trust Company of New York and each such other bank
as may be appointed pursuant to Section 10.07(d).
"Event of Default" has the meaning set forth in Section 7.01.
"Face Amount" means (i) with respect to any LOC Debt, the LOC
Debt Principal Amount of such LOC Debt plus the LOC Debt Interest
Amount of such LOC Debt and (ii) with respect to any LOC, the Face
Amount of the LOC Debt to which such LOC relates.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100th of 1%) equal
to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal
Reserve Bank of New York on the Domestic Business Day next
succeeding such day, provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Domestic
Business Day as so published on the next succeeding Domestic
Business Day, and (ii) if no such rate is so published on such next
succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Morgan Guaranty Trust
Company of New York on such day on such transactions as determined
by the Agent.
"Federal Power Act" means the Federal Power Act, excluding
Sections 1-18, 21-30, 202(c), 210, 211, 212, 305(c) and any
necessary enforcement provisions of Part III of the Act with regard
to the foregoing sections.
"Financing" has the meaning given to the term Financing in the
Limited Partnership Agreement.
"Firm Operation Date" means the first date on which Firm
Operation (as defined in the Elmore Power Purchase Contract) occurs
under the Elmore Power Purchase Contract.
"Fixed CD Rate" has the meaning set forth in Section
3.05(b).
"Fixed Rate Borrowing" means a CD Borrowing or a Euro-Dollar
Borrowing.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or
both.
"Fronting Bank" means The Fuji Bank, Limited, Los Angeles
Agency, in its capacity hereunder as issuer of LOCs and any
successor thereto or replacement thereof as provided herein.
"Funding and Construction Agreement" means the Funding and
Construction Agreement dated June 29, 1987 among the Imperial
Irrigation District and the Participants listed on the signature
pages thereof, as amended from time to time.
"General Partner" means Red Hill, as a general partner of the
Borrower, or its successor under the Limited Partnership Agreement.
"Geothermal Brine" shall mean the total amount of geothermal
brine contained in the Elmore Geothermal Lease Unit.
"Geothermal Lease Rights Properties Preliminary Title
Report" means, collectively, Geothermal Lease Right Preliminary
Title Reports Numbers 105142 (L. Baretta), 105143 (McCoy) and
105141-B (Elmore), dated February 16, 1988, February 16, 1988 and
February 17, 1988, respectively, copies of which are attached as
Exhibit C to the Easement Agreement.
"Geothermal Leases" means the geothermal leases identified in
Exhibit C to the Easement Agreement.
"GeothermEx" means GeothermEx, Inc., a California
corporation.
"Ground Lease" means the ground lease dated as of March 14,
1988, between Magma and the Borrower, as amended from time to time.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any
Debt or other obligation of any other Person and, without limiting
the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase
or pay (or advance or supply funds for the purchase or payment of)
such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise) or (ii)
entered into for the purpose of assuring in any other manner the
obligee of such Debt or other obligation of the payment thereof or
to protect such obligee against loss in respect
thereof (in whole or in part), provided that the term Guarantee
shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb
has a corresponding meaning.
"IID" means the Imperial Irrigation District, organized under
the Water Code of the State of California.
"IID Agreements" means, collectively, (i) the Funding and
Construction Agreement, (ii) the Joint Funding Agreement dated June
29, 1987, among the Participants listed on the signature pages
thereof and (iii) any "IID-Transmission Service Agreement For
Alternative Resources" (the "Transmission Agreements") which may be
entered into between IID and the Borrower, copies of which are
attached as Exhibit G to the Construction Management
Agreement, in each case as amended from time to time.
"Interest" means the entire ownership interest of a partner in
the Borrower at any particular time, including the right of such
partner to any and all benefits to which a partner may be entitled
as provided in the Limited Partnership Agreement, together with the
obligations of such partner to comply with all of the terms and
provisions of the Limited Partnership Agreement. "Interest Period"
means: (1) with respect to each Euro-Dollar Borrowing, the period
commencing on the date of such Borrowing and ending one, two, three
or six months thereafter, or for a longer period if available, as
the Borrower may elect in the applicable Notice of Borrowing;
provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Euro-Dollar
Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar 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,
subject to clauses (c) and (d) below, end on the last
Euro-Dollar Business Day of a calendar month;
(c) any Interest Period which begins before the first
Commitment Reduction Date and would otherwise end after the
first Commitment Reduction Date shall end on the first
Commitment Reduction Date; and
(d) if any Interest Period includes a date on which a
payment of principal of the Loans is required to be made under
Section 3.09 but does not end on such date, then (i) the
principal amount (if any) of each Euro-Dollar Loan required to
be repaid on such date shall have an Interest Period ending on
such date and (ii) the remainder (if any) of each such Euro-Dollar
Loan shall have an Interest Period determined as set forth above.
(2) with respect to each CD Borrowing, the period commencing on the
date of such Borrowing and ending thirty, sixty, ninety or one
hundred eighty days thereafter, as the Borrower may elect in the
applicable Notice of Borrowing; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (c)(i) below) which would
otherwise end on a day which is not a Euro-Dollar Business Day
shall be extended to the next succeeding Euro-Dollar Business
Day;
(b) any Interest Period which begins before the first
Commitment Reduction Date and would otherwise end after the
first Commitment Reduction Date shall end on the first
Commitment Reduction Date; and
(c) if any Interest Period includes a date on which a
payment of principal of the Loans is required to be made under
Section 3.09 but does not end on such date, then (i) the
principal amount (if any) of each CD Loan required to be repaid
on such date shall have an Interest Period ending on such date
and (ii) the remainder (if any) of each such CD Loan shall have
an Interest Period determined as set forth above.
(3) with respect to each Prime Borrowing, the period commencing on
the date of such Borrowing and (x) in the case of Borrowings made
pursuant to Section 2.06, ending seven Euro-Dollar Business Days
thereafter, (y) in the case of Borrowings (other than
Borrowings covered by the preceding clause (x)) made pursuant to
Section 3.01(c)(iii), (A) if no Prime Loans shall then be
outstanding, ending 30 days thereafter or (B) if Prime Loans shall
then be outstanding, ending on the date on which such outstanding
Prime Loans shall mature, or (z) in all other cases, ending 30 days
thereafter, unless the Agent and the Borrower shall have otherwise
agreed; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (c)(i) below) which would
otherwise end on a day which is not a Euro-Dollar Business Day
shall be extended to the next succeeding Euro-Dollar Business
Day;
(b) any Interest Period which begins before the first
Commitment Reduction Date and would otherwise end after the
first Commitment Reduction Date shall end on the first
Commitment Reduction Date; and
(c) if any Interest Period includes a date on which a
payment of principal of the Loans is required to be made under
Section 3.09 but does not end on such date, then (i) the
principal amount (if any) of each Prime Loan required to be
repaid on such date shall have an Interest Period ending on such
date and (ii) the remainder (if any) of each such Prime Loan
shall have an Interest Period determined as set forth above.
"Investment" means any investment in any Person, whether by
means of share purchase, capital contribution, loan, time deposit
or otherwise.
"Issuance Agreements" means, collectively, each CP Dealer
Agreement, the Depositary Agreement, the LOC Debt Facility
Agreement and each MTN Distribution Agreement.
"Late Participation Penalty" means the amount, if any, by
which (i) the rate of interest publicly announced by the Fronting
Bank from time to time as its prime rate, plus 100 basis points,
exceeds (ii) the rate of interest applicable to Prime Loans from
time to time pursuant to Section 3.05(a).
"Lending Office" means as to any Bank its Domestic Lending
Office or its Euro-Dollar Lending Office, as the context may
require.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in
respect of such asset. For the purposes of this Agreement, the
Borrower shall be deemed to own subject to a Lien any asset which
it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
"Limited Partnership Agreement" means the Limited
Partnership Agreement of the Borrower, dated as of February 5,
1988, as amended and restated as of March 14, 1988, and as
further amended from time to time.
"Loan Utilization" of a Bank means, at any time, the
aggregate unpaid principal amount of such Bank's Loans at such
time.
"Loans" means (i) the loans of any Bank made (subject, as
appropriate, to any adjustment required by the last sentence of
Section 3.14), or deemed under Section 3.14 to be made, from time
to time pursuant to Section 2.06(b), (ii) the loans of any Bank
made from time to time pursuant to Section 3.01 and (iii) if any
unreimbursed LOC Disbursement by the Fronting Bank is not
converted into a Loan as provided in Section 2.06(b), such
unreimbursed LOC Disbursement. The term "Loan" may refer to a
Domestic Loan or a Euro-Dollar Loan and the term "Loans" may refer
to Domestic Loans or Euro-Dollar Loans.
"LOC" means a direct-pay letter of credit (a) issued by the
Fronting Bank for the account of the Borrower in accordance with
and as contemplated by Section 2.01, (b) supporting payment
obligations under LOC Debt and (c) that is not a Collateralized
LOC.
"LOC Commitment" means $66,000,000 or such lesser amount to
which the commitment of the Fronting Bank to issue LOCs hereunder
may be reduced from time to time as provided in Section 3.17.
"LOC Commitment Percentage" of a Bank means (a) at any time
when Section 9.02(b) is applicable to any Bank (other than such
Bank), the percentage that the Commitment of such Bank bears to the
aggregate Commitments of all Banks not subject to such
Section, (b) at any time such Section is applicable to such Bank,
zero and (c) at all other times, the percentage that the
Commitment of such Bank bears to the aggregate Commitments of all
the Banks.
"LOC Debt" means Commercial Paper Notes and Medium-Term Notes
(a) with a maturity date not later than August 31, 2001, (b) the
proceeds of which are used for the purposes set forth in Section
6.20 or to repay Loans and (c) that are supported by LOCs.
"LOC Debt Facility Agreement" means that certain LOC Debt
Facility Agreement dated as of April 18, 1990, by and among the
Borrower, the Banks, the Fronting Bank and the Agent, as amended
from time to time.
"LOC Debt Interest Amount" means (a) with respect to any LOC
Debt that consists of Medium-Term Notes issued on an
interest-bearing basis, up to but not exceeding 217 days'
interest payable by the Borrower on such Medium-Term Notes, (b)
with respect to LOC Debt that consists of Commercial Paper Notes
issued on an interest-bearing basis, up to but not exceeding 270
days' interest payable by the Borrower on such Commercial Paper
Notes and (c) with respect to any Commercial Paper Notes issued on
a discounted basis, the amount payable by the Borrower on the
maturity thereof in respect of the discounted portion of such
Commercial Paper Notes.
"LOC Debt Principal Amount" means (a) with respect to any LOC
Debt issued on a discounted basis, the face or principal amount
thereof less the amount of such discount and (b) with respect to
any LOC Debt not issued on a discounted basis, the face or
principal amount thereof.
"LOC Disbursement" means any payment made by the Fronting Bank
pursuant to a drawing under an LOC.
"LOC Utilization" of a Bank means, at any time, the amount of
such Bank's ratable share of the aggregate Face Amount of all
Outstanding LOC Debt at such time based upon its LOC Commitment
Percentage at the respective times such Outstanding LOC Debt was
issued.
"London Interbank Offered Rate" has the meaning set forth in
Section 3.05(c).
"Magma" means Magma Power Company, a Nevada corporation.
"Magma Undertaking" means the undertaking of Magma,
substantially in the form of Exhibit F hereto.
"Major Capital Expenditure Reserve Account" means the
reserve account established and maintained pursuant to Section 11.2
of the Operating and Maintenance Agreement.
"Maturity Date" has the meaning set forth in the Depositary
Agreement.
"Medium-Term Notes" has the meaning set forth in the LOC Debt
Facility Agreement.
"MTN Dealer" has the meaning set forth in the LOC Debt
Facility Agreement.
"MTN Distribution Agreement" has the meaning set forth in the
LOC Debt Facility Agreement.
"Mission" means Mission Energy Company, a California
corporation.
"Niguel" means Niguel Energy Company, a California
corporation.
"Note" means a Domestic Note or a Euro-Dollar Note, and
"Notes" means the Domestic Notes or the Euro-Dollar Notes or both.
"Note Proceeds Account" has the meaning set forth in the
Depositary Agreement.
"Notice of Borrowing" has the meaning set forth in Section
3.02.
"Notice of Issuance" has the meaning set forth in Section
2.04.
"Officer" means, with respect to the General Partner, the
Chairman of its Board of Directors, its President or any of its
Vice Presidents.
"Officer's Certificate" means a certificate of the General
Partner, duly executed by any Officer.
"Operating and Maintenance Agreement" means the Operating and
Maintenance Agreement dated as of March 14, 1988 between the
Borrower and Red Hill, as amended from time to time.
"Original Coverage" has the meaning set forth in Section
6.13(g).
"Outstanding LOC Debt" at any time means all LOC Debt
theretofore authenticated and delivered to a Dealer (whether or not
payment of the purchase price thereof has been received by the
Depositary and deposited in the Note Proceeds Account) other than
(i) LOC Debt which has matured and been paid in full by the
Depositary with funds withdrawn from the Special Payment Account,
(ii) LOC Debt which has matured and funds for payment of which are
on deposit in the Special Payment Account, (iii) LOC Debt whose
purchase price has not been paid and which has been
returned (but not presented for payment) to the Depositary for
cancellation and (iv) Defeased Notes.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including
a government or political subdivision or an agency or
instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
which is covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code and is either (i)
maintained by a member of the Controlled Group for employees of a
member of the Controlled Group or (ii) maintained pursuant to a
collective bargaining agreement or any other arrangement under
which more than one employer makes contributions and to which a
member of the Controlled Group is then making or accruing an
obligation to make contributions or has within the preceding five
plan years made contributions.
"Plans and Specifications" means the plans and
specifications for the construction of the Elmore Facility, copies
of which are referenced in Exhibit H to the Construction Management
Agreement.
"Prime Loan" means a Loan to be made as a Prime Loan
pursuant to Section 2.06, Section 3.02 or Article IX.
"Prime Rate" means the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York in New York City from
time to time as its Prime Rate.
"Principal Payment Amount" has the meaning set forth in
Section 3.14.
"Process" means the process by which BTU Energy is extracted
from the Geothermal Brine.
"Project Agreements" means the agreements listed in Schedule
I to the Security Agreement, and all other agreements to which the
Borrower is a party now in effect or hereafter entered into in
connection with the Development of the Elmore Facility or the
operation of the Elmore Facility.
"Project Contingency Costs" means that item in any budget or
statement of anticipated Project Costs that represents an open item
or reserve for unexpected expenses that may arise due to unforeseen
circumstances.
"Project Cost Overruns" means such Project Costs as, when
aggregated with all Project Costs previously incurred, are in
excess of $93,846,154.00.
"Project Costs" has the meaning set forth for such term in the
Limited Partnership Agreement, including, without limitation, the
funding of Working Capital in an amount equal to the Working
Capital Requirement.
"Project Debt" means any Loan or LOC Debt.
"Red Hill" means Red Hill Geothermal, Inc., a Delaware
corporation, a general partner of the Borrower.
"Reference Banks" means the CD Reference Banks or the
Euro-Dollar Reference Banks, as the context may require, and
"Reference Bank" means any one of such Reference Banks.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Reimbursement Obligation" has the meaning set forth in the
Security Agreement.
"Required Banks" means at any time Banks having at least 66
2/3% of the aggregate amount of the Commitments or, if the
Commitments shall have been terminated, holding Notes evidencing at
least 66 2/3% of the aggregate unpaid principal amount of the
Loans.
"Resource Engineer" means GeothermEx, or its successors in the
capacity as resource engineer.
"Resource Engineer's Report" means the report of the
Resource Engineer in form and substance satisfactory to the Banks.
"Restricted Payment" means (i) any distribution of
Distributable Cash pursuant to Article IV of the Limited
Partnership Agreement or other distribution of assets of the
Borrower (other than tax benefits) on any Interest, or (ii) any
payment to any Affiliate of the Borrower other than pursuant to the
Project Agreements.
"Sale" has the meaning given to the term Sale in the Limited
Partnership Agreement.
"Sale or Financing Proceeds" means the aggregate amount of
cash, readily marketable cash equivalents or other consideration
received by the Borrower at any time or from time to time in
respect of any Sale or Financing minus the reasonable costs and
expenses (including, without limitation, fees and commissions,
costs of discontinuance and taxes), incurred in connection with
such Sale or Financing and not payable to the Borrower or any
Affiliate of the Borrower; provided that such aggregate amount
shall not include the aggregate of any insurance proceeds
released to the Borrower pursuant to Section 6.13 and any
proceeds from any sale of LOC Debt.
"SCE" means Southern California Edison Company, a California
corporation.
"Security Agent" means Morgan Guaranty Trust Company of New
York, as Security Agent under the Security Agreement.
"Security Agreement" means the Security Agreement dated as of
March 14, 1988 among the Borrower, Morgan Guaranty Trust Company of
New York, as Agent hereunder for and on behalf of the Banks and the
Fronting Bank, Morgan Guaranty Trust Company of New York, and
Morgan Guaranty Trust Company of New York, as Security Agent
(collectively, the "Security Agreement Parties"), as
amended by Amendment Number One to Security Agreement dated as of
April 14, 1989 among the Security Agreement Parties and Amendment
Number Two to Security Agreement dated as of April 18, 1990 among
the Security Agreement Parties and as further amended from time to
time.
"Security Interests" means the security interests granted to
the Security Agent for the benefit of the Secured Parties (as
defined in the Security Agreement) under the Security Agreement and
the Deed of Trust.
"Special Payment Account" has the meaning set forth in the
Depositary Agreement.
"Subsidiary" means, with respect to any Person, any
corporation or other entity of which securities or other
ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by
such Person.
"Supporting Equipment" means all items described in Section
2.2.2 of the Easement Agreement, including all such items located
on the Elmore Property, and any real property interest associated
therewith.
"Technical Consultant" means the Engineer or the Resource
Engineer or any other engineering or technical consultant to the
Banks that may be selected by the Required Banks from time to time
to advise the Banks as to technical aspects of the
Development of the Elmore Facility or operation of the Elmore
Facility.
"Temporary Cash Investment" means any Investment in (i) direct
obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency
thereof, (ii) commercial paper rated in the highest grade by a
nationally recognized credit rating agency, (iii) deposits with,
including certificates of deposit issued by, any office located in
the United States of any Bank or any other bank or trust company
which is organized under the laws of the United States or any state
thereof and the certificates of deposit of which are rated in one
of the two highest grades by a nationally recognized credit rating
agency, (iv) bankers' acceptances issued by (A) any Bank or (B) any
trust company organized under the laws of Japan that has
certificates of deposits rated in one of the two highest grades by
a nationally recognized credit rating agency in the United States
and (v) certificates of deposit, commonly known as "Euro-CDs", that
are issued by any office located in London of any bank or trust
company and that are rated in one of the two highest grades by a
nationally recognized credit rating agency in the United States;
provided that in each case such Investment matures within one year
from the date of acquisition thereof by the Borrower.
"Title Insurance Policy" shall mean a title insurance policy
issued by Ticor Title Insurance Company of California, insuring the
validity and first priority of the lien of the Deed of Trust in the
Elmore Facility ("Parcel A"), the leasehold estate created by the
Ground Lease ("Parcel B") and the easement created by the Easement
Agreement ("Parcel C"). The Title Insurance Policy shall be in the
form of an American Land Title Association
Standard Loan Policy-Form 1970 (L.P. 10), with ALTA Endorsement
Form 1 coverage, and shall satisfy the following requirements:
(a) The Title Insurance Policy shall provide coverage in an
amount equal to 115% of the aggregate amount of the Tranche A
Commitments and Tranche B Commitments;
(b) The Title Insurance Policy shall contain with respect
to Parcel A and Parcel B, CLTA Indorsements Nos. 100
(modified) and 116.1, and such other endorsements as the
Required Banks may reasonably require;
(c) Except as approved by the Required Banks in writing
prior to the date of the first Borrowing, the Title Insurance
Policy shall not contain any exceptions to coverage other than
the exceptions contained in the Elmore Property Preliminary
Title Report and the Geothermal Lease Rights Properties
Preliminary Title Report, it being acknowledged by the parties
hereto that, with respect to Parcel C, the Title Insurance
Policy shall contain the standard California Land Title
Association exceptions to coverage; and
(d) The Title Insurance Policy shall contain such direct
access reinsurance agreements as the Required Banks may
require.
"Tranche A" or "Tranche B" means, when used with respect to
(i) a Bank's Commitment, the portion of such Bank's Commitment
identified with respect to such Tranche on Schedule I hereto, as
such portion of the Commitment may be reduced pursuant to Section
3.08 or 3.09, (ii) a Borrowing, a Borrowing made by the Borrower
under such Tranche, as identified in the Notice of Borrowing with
respect thereto, (iii) a Loan, a Loan made as part of a Borrowing
under such Tranche, (iv) a Note, a Note evidencing the obligation
of the Borrower to pay Loans outstanding under such Tranche, (v) a
Bank's Utilization, the Utilization of such Bank attributable to
such Tranche, (vi) LOC Debt, the LOC Debt that is attributable to
such Tranche and (vii) LOCs, a LOC that has been issued in respect
of such Tranche's LOC Debt.
"Tranche A Credit Period" means the period from the date of
the Original Agreement to and including the Conversion Date;
provided that if the Tranche A Credit Period would otherwise end on
a day which is not a Domestic Business Day, the Tranche A Credit
Period shall end on the next preceding Domestic Business Day.
"Tranche B Credit Period" means the period from the date
during the Tranche A Credit Period on which the Borrower has
Tranche A Loans outstanding in the aggregate amount of the
Tranche A Commitments to and including the Conversion Date;
provided that if the Tranche B Credit Period would otherwise end on
a day which is not a Domestic Business Day, the Tranche B Credit
Period shall end on the next preceding Domestic Business Day.
"Transmission Agreement" has the meaning set forth in the
definition of "IID Agreements" in this Section 1.01.
"Unfunded Vested Liabilities" means, with respect to any Plan
at any time, the amount (if any) by which (i) the present value of
all vested nonforfeitable benefits under such Plan exceeds (ii) the
fair market value of all Plan assets allocable to such benefits,
all determined as of the then most recent valuation date for such
Plan, but only to the extent that such excess represents a
potential liability of a member of the
Controlled Group to the PBGC or the Plan under Title IV of ERISA.
"Unused Commitment" of a Bank means such Bank's Commitment
less its Loan Utilization.
"Utilization" of a Bank means, at any time, an amount equal to
the sum of (a) such Bank's LOC Utilization at such time and (b) its
Loan Utilization at such time.
"Working Capital" means, at any time, the difference between
(i) the sum of the Borrower's cash, cash equivalents and accounts
receivable, less any amounts in the Debt Service Reserve Account or
the Major Capital Expenditure Reserve Account established pursuant
to Section 11 of the Operating and Maintenance
Agreement, and (ii) the Borrower's accounts payable.
"Working Capital Requirement" means: (i) from the Conversion
Date to but excluding the first anniversary of the Conversion Date,
$1,000,000; (ii) from the first anniversary of the
Conversion Date to but excluding the second anniversary of the
Conversion Date, $1,400,000; (iii) from the second anniversary of
the Conversion Date to but excluding the third anniversary of the
Conversion Date, $1,800,000; (iv) from the third anniversary of the
Conversion Date to but excluding the fourth anniversary of the
Conversion Date, $2,200,000; (v) from the fourth anniversary of the
Conversion Date to but excluding the fifth anniversary of the
Conversion Date, $2,600,000; and (vi) after the fifth
anniversary of the Conversion Date, $3,000,000.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall
be interpreted, all accounting determinations hereunder shall be
made, and all financial statements required to be
delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to
time, applied on a basis consistent (except for changes
concurred in by the Borrower's independent public accountants) (i)
with financial statements of Magma until audited financial
statements of the Borrower are available (and to the extent
relevant), and (ii) thereafter with the most recent audited
financial statements of the Borrower delivered to the Banks.
ARTICLE II
THE LETTER OF CREDIT FACILITY
SECTION 2.01. LOC Commitment. Upon the terms and subject to
the conditions hereinafter set forth, the Fronting Bank (i) agrees
to issue and deliver LOCs from time to time during the availability
of the LOC Commitment and (ii) consents to the issuance and sale of
LOC Debt entitled to the benefits of the LOCs. LOC Debt may be
issued in accordance with this Agreement and the Depositary
Agreement on the instructions of the Borrower to the Depositary on
any Domestic Business Day prior to the Conversion Date on which
there are unused LOC Commitments and on any Domestic Business Day
thereafter in an aggregate Face Amount (1) on the maturity date of
any LOC Debt, up to the aggregate Face Amount of such maturing LOC
Debt, (2) on any day on which the principal of any Loans is prepaid
or scheduled to be repaid, up to the aggregate amount of such
principal (subject to
compliance with Section 3.10 hereof), (3) on any day on which
Medium-Term Notes become Defeased Notes pursuant to Section 4.01 of
the LOC Debt Facility Agreement, up to the aggregate Face Amount of
such Defeased Notes and (4) on any day on which any LOC Debt is
returned to the Depositary for cancellation, without the purchase
price therefor having been paid and without having been presented
to the Depositary for payment, up to the Face Amount of the LOC
Debt so returned; provided that (a) on any one day LOC Debt may be
issued under more than one of the foregoing
circumstances if applicable, and (b) LOC Debt shall be issued from
time to time hereunder and under the Depositary Agreement with such
maturities that LOC Debt with an aggregate Face Amount of no more
than $25,000,000 shall mature on any one day. The LOC Commitment
shall become available upon the execution and delivery by the
appropriate parties of the Issuance Agreements and satisfaction of
the conditions precedent to issuance of LOC Debt set forth therein
and herein.
SECTION 2.02. LOCs. Each LOC shall (a) be denominated in
Dollars, (b) be dated the date of issuance of the LOC Debt
supported thereby, (c) expire 15 days after the maturity date of
such LOC Debt (or if such fifteenth day is not a Domestic
Business Day, on the next succeeding Domestic Business Day) and (d)
be in an amount equal to the Face Amount of such LOC Debt.
SECTION 2.03. Forms of LOCs. Each LOC with respect to
Commercial Paper Notes shall be initially in the form of Exhibit
A-2 to the Depositary Agreement and thereafter any other form of
letter of credit acceptable to the Fronting Bank, the Agent and the
Borrower. Each LOC with respect to Medium-Term Notes shall be
initially in the form of Exhibit B-2 to the Depositary
Agreement and thereafter any other form of letter of credit
acceptable to the Fronting Bank, the Agent and the Borrower.
SECTION 2.04. Notice of Issuance. The Borrower shall, not
later than three Domestic Business Days prior to the proposed date
of issuance of any LOC Debt and related LOC, if such
issuance is a Credit Event, provide a written notice of such
issuance (a "Notice of Issuance") to the Fronting Bank and the
Agent, specifying the aggregate Face Amount of LOC Debt expected to
be issued, the expected maturity dates thereof and the Tranche to
which such LOC Debt is attributable.
SECTION 2.05. Issuance of LOCs and LOC Debt. (a) General.
The issuance, authentication, marketing, sale and delivery of LOC
Debt and the LOCs related thereto, the making of payments in
respect thereof and the appointment by the Borrower, the Fronting
Bank and the Banks of authenticating, selling and paying agents,
the Depositary and other representatives in connection with the
foregoing shall be subject to the terms and conditions of this
Agreement (including, without limitation, the terms and
conditions set forth in subsection (b) below) and the applicable
Issuance Agreements.
(b) Conditions Precedent to Issuances of LOC Debt. Each
issuance of LOC Debt and the LOCs related thereto shall be
subject to the satisfaction of the applicable conditions
precedent set forth in Article III of the LOC Debt Facility
Agreement.
(c) Notice of Actual Issuances. Promptly after each
issuance of LOC Debt, the Fronting Bank shall provide the Agent and
the Banks with a written notice setting forth the terms thereof,
including the Tranche attributable thereto.
SECTION 2.06. Agreement to Reimburse LOC Disbursements and
Automatic Conversion to Loans. (a) The Borrower hereby agrees to
reimburse the Fronting Bank, for its own account, for each LOC
Disbursement made by the Fronting Bank without demand or notice of
any kind, on the date that such LOC Disbursement is made, in an
amount equal to the amount of such LOC Disbursement.
(b) The Borrower or any Dealer shall notify the Depositary
and the Fronting Bank by telephone (which notification shall
promptly be confirmed by telex or facsimile transmission) not later
than 12:30 P.M. (New York City time), on any day an LOC
Disbursement is made, of the amount, if any, of such LOC
Disbursement to be reimbursed and the anticipated source of such
reimbursement on such day. If the Borrower or any Dealer timely
delivers such notice, any such reimbursement made in the amount so
notified by the close of business in New York City on such day
shall be credited on such day. Any LOC Disbursement not fully
reimbursed by the close of business in New York City on the day
when made shall, to the extent not so reimbursed, automatically and
without further act or notice, be converted at such close of
business into a Prime Loan of the Fronting Bank unless the LOC
Commitment has been terminated pursuant to Section 7.01. If the
Borrower or any Dealer shall fail to notify the Depositary prior to
12:30 P.M. (New York City time) that an LOC Disbursement is to be
reimbursed on such day, (i) payments made prior to 12:30 P.M. (New
York City time) on such day shall nevertheless be accepted by the
Fronting Bank and credited as a reimbursement made on such date and
(ii) any payments made after 12:30 P.M. (New York City time) on
such day shall be deemed to have been received on the next
succeeding Domestic Business Day and all or any portion of such LOC
Disbursement not reimbursed pursuant to clause (i) above shall be
converted into a Prime Loan of the Fronting Bank, as of the close
of business on such day.
(c) If by 12:30 P.M. (New York City time) on any day on which
an LOC Disbursement has been made and the Fronting Bank has not
received either a notice under subsection (b) of this Section that
reimbursement of such LOC Disbursement will be made in full on such
day or funds in reimbursement in full of such LOC
Disbursement, then the Fronting Bank shall promptly (and in any
event by 1:30 P.M., New York City time) notify the Agent, the
Borrower and each Bank of the date and amount of such LOC
Disbursement to be converted into a Prime Loan and the ratable
share of each Bank in such Prime Loan. If (i) at the close of
business (New York City time) on any day any LOC Disbursement made
on such day has not been reimbursed in full despite previous notice
under subsection (b) of this Section of such expected
reimbursement, (ii) such LOC Disbursement has been converted into
a Prime Loan of the Fronting Bank pursuant to subsection (b) of
this Section and (iii) such Prime Loan is not repaid in full by
10:30 A.M. (New York City time) on the next succeeding Domestic
Business Day, then the Fronting Bank shall promptly (and in any
event by 1:30 P.M., New York City time) provide the notice
required by this subsection on such next succeeding Domestic
Business Day. The failure of the Fronting Bank to provide any
notice on the day required by this subsection shall not
constitute a default of the Fronting Bank for purposes of Section
3.16.
(d) The Borrower's obligation to reimburse the Fronting Bank
for the amount of all LOC Disbursements and to repay the Prime
Loans, if any, into which LOC Disbursements have been converted in
accordance with Section 2.06(b) shall be
unconditional and absolute under any and all circumstances;
provided that the Borrower shall not be obligated to reimburse the
Fronting Bank for any wrongful LOC Disbursement made as a result of
the gross negligence or willful misconduct of the Fronting Bank (or
to repay any Prime Loan into which any such LOC Disbursement has
been converted) to the extent of any damages which the Borrower
proves were suffered by it directly as a result thereof.
SECTION 2.07. Participations of the Banks. (a) By the
issuance of an LOC, the Fronting Bank hereby grants to each other
Bank, and each other Bank hereby absolutely and unconditionally
agrees to acquire from the Fronting Bank, a participation in such
LOC, each LOC Disbursement made thereunder and each Prime Loan into
which such LOC Disbursement is converted hereunder and to pay to
the Fronting Bank in accordance with Section 3.14 an amount equal
to such Bank's LOC Commitment Percentage (as
determined at the time of the issuance of each LOC to which an
unreimbursed LOC Disbursement relates) (i) of each Prime Loan into
which an unreimbursed LOC Disbursement is converted pursuant to
Section 2.06(b) and 3.14 or (ii) of each unreimbursed LOC
Disbursement, if such unreimbursed LOC Disbursement is not
(contrary to the agreement and intention herein set forth, other
than the rights of the Banks to terminate the LOC Commitment
pursuant to Section 7.01 hereof) for any reason (including, without
limitation, a termination of the LOC Commitment by the Banks
pursuant to Section 7.01 hereof) converted into a Prime Loan
pursuant to Section 2.06(b), promptly upon receiving notice from
the Fronting Bank of such non-conversion; provided that the
Fronting Bank has not made a wrongful LOC Disbursement for the
reasons set forth in Section 2.06(d) hereof.
(b) Except as otherwise expressly stated herein, each Bank
acknowledges and agrees that its obligation pursuant to this
Section 2.07 (i) to acquire a participation in each LOC, each LOC
Disbursement and each Prime Loan into which an unreimbursed LOC
Disbursement is converted and (ii) to make the payments specified
in Sections 2.07 and 3.14, and the right of the Fronting Bank to
receive the same in the manner specified herein, is unconditional
and absolute and shall not be affected by any circumstances
whatsoever (other than the termination of such obligation upon (x)
the cash collateralization of such LOC pursuant to Section 4.01 of
the LOC Debt Facility Agreement, and (y) the
reimbursement of the Fronting Bank of such LOC Disbursements prior
to such Bank funding such participation), including the occurrence
of any Event of Default, and that each such payment shall be made
without any offset, counterclaim, abatement,
withholding or reduction whatsoever.
(c) Notwithstanding the termination of the obligations of the
Banks to participate in Collateralized LOCs, the Borrower shall
remain obligated to reimburse the Fronting Bank in full for the
disbursements under such Collateralized LOCs whether from funds on
deposit in the Defeasance Accounts or otherwise.
SECTION 2.08. Election to Reduce LOC Utilization. (a) The
Borrower may, upon three Domestic Business Days' written notice
before an intended Domestic Borrowing and upon five Euro-Dollar
Business Days' written notice before an intended Euro-Dollar
Borrowing to the Fronting Bank and the Agent (which shall
promptly transmit such notice to the Banks), elect to reduce its
utilization of LOC Debt and increase its utilization of Loans by
not issuing LOC Debt on the next Maturity Date of LOC Debt or on
the next Defeasance Date and instead giving a Notice of Borrowing
pursuant to Section 3.02 with respect to such Maturity Date or
Defeasance Date, as the case may be. Any such election need not
be permanent and may be reversed in whole or in part pursuant to an
election under Section 3.15 hereof.
(b) For purposes of any election by the Borrower pursuant to
this Section 2.08, the Borrower shall specify in its written notice
of such election which Tranche is involved.
SECTION 2.09. Limited Liability of the Banks. The Borrower
assumes all risk of liability of the Banks and the Fronting Bank
arising from the acts or omissions of each holder or beneficiary of
an LOC with respect to its use of such LOC. Neither the Fronting
Bank nor any other Bank nor any of their respective officers or
directors shall be liable or responsible for: (a) the use which
may be made of any LOC or for any acts or omissions of any holder
or beneficiary of any LOC in connection therewith; (b) the
validity, sufficiency or genuineness of any LOC or LOC Debt
instrument or any documents offered in support of a claim with
respect to any lost, stolen or mutilated LOC or LOC Debt instrument
or to or in respect of any endorsement thereon, even if such LOC or
LOC Debt instrument or such documents should in fact prove to be in
any or all respects invalid, insufficient, fraudulent or forged;
(c) payment by or on behalf of the Fronting Bank against
presentation of documents which do not comply with the terms of any
LOC, including failure of any documents to bear reference or
adequate reference to such LOC; or (d) any other circumstances
whatsoever in making or failing to make payment under any LOC;
provided that the Borrower shall have a claim against the Fronting
Bank, and the Fronting Bank shall be liable to the Borrower, to the
extent of any damages suffered by the Borrower which the Borrower
proves were caused by (i) the gross negligence of the Fronting Bank
in determining whether documents presented under any LOC complied
with the terms of such LOC or (ii) the willful failure of the
Fronting Bank to pay under any LOC after the timely and proper
presentation to it by the holder or beneficiary of any LOC of all
requisite documents strictly complying with the terms and
conditions of such LOC. In
furtherance and not in limitation of the foregoing, documents that
appear on their face to be in order may be accepted by the Fronting
Bank.
SECTION 2.10. Indemnity. The Borrower agrees to indemnify
the Fronting Bank, the Agent and each Bank, and their respective
officers, directors, employees, agents, attorneys-in-fact and
Affiliates, and hold each such indemnified party harmless from and
against any and all claims, damages, losses, liabilities, costs or
expenses whatsoever (exclusive of ordinary operating costs of the
Fronting Bank or any Bank) which such indemnified party may incur
or suffer by reason of or in connection with payment under any LOC
except only if and to the extent that any such claims, damages,
losses, liabilities, costs or expenses shall be caused by the
willful misconduct or gross negligence of such indemnified party in
performing its obligations, if any, under this Agreement or in
making payment under any LOC which does not comply with the terms
thereof. Each indemnified party shall provide to the Borrower a
certificate, signed by an officer of such indemnified party setting
forth the amount of any such loss or expense of such indemnified
party, which statement shall be final, conclusive and binding as to
the amount due in the absence of manifest error. The Borrower,
upon demand by any indemnified party at any time, shall promptly
reimburse such indemnified party for any reasonable legal or other
expenses incurred in connection with investigating or defending
against any of the foregoing except if the same is due to such
indemnified party's gross negligence or willful misconduct. If any
action, suit or proceeding arising from any of the foregoing is
brought against any indemnified party, the Borrower will resist and
defend such action, suit or proceeding or cause the same to be
resisted and defended by counsel designated by the Borrower and
satisfactory to such indemnified party. The
indemnities contained herein shall survive the termination of this
Agreement for the applicable statute of limitations.
ARTICLE III
THE CREDIT FACILITY
SECTION 3.01. Commitments to Lend.
(a) Tranche A. In addition to the Commitments of each Bank
to lend pursuant to Article II hereof, during the Tranche A Credit
Period each Bank severally agrees, on the terms and
conditions set forth in this Agreement, to lend to the Borrower
from time to time Tranche A Loans up to the amount, if any, equal
to the excess of (i) the Tranche A Commitment of such Bank over
(ii) the Tranche A Utilization of such Bank, immediately prior to
the time of making such Tranche A Loans. Each Borrowing under
this subsection (a) shall be in an aggregate principal amount of
$2,500,000 or any larger multiple of $500,000 (except that any such
Borrowing may be in the aggregate amount of the unused Tranche A
Commitments), shall be made no more frequently than once a month
and shall be made from the several Banks ratably in proportion to
their respective Tranche A Commitments. Within the foregoing
limits, the Borrower may borrow under this subsection (a), repay,
or to the extent permitted by Section 3.10, prepay Loans and
reborrow at any time during the Tranche A Credit Period under this
subsection (a).
(b) Tranche B. In addition to the Commitments of each Bank
to lend pursuant to Article II hereof, during the Tranche B Credit
Period each Bank severally agrees, on the terms and
conditions set forth in this Agreement, to lend to the Borrower
from time to time Tranche B Loans up to the amount, if any, equal
to the excess of (i) the Tranche B Commitment of such Bank over
(ii) the Tranche B Utilization of such Bank, immediately prior to
the time of making such Tranche B Loans. Each Borrowing under
this subsection (b) shall be in an aggregate principal amount of
$1,000,000 or any larger multiple of $500,000 (except that any such
Borrowing may be in the aggregate amount of the unused Tranche B
Commitments), shall be made no more frequently than once a month
and shall be made from the several Banks ratably in proportion to
their respective Tranche B Commitments. Within the foregoing
limits, the Borrower may borrow under this subsection (b), repay,
or to the extent permitted by Section 3.10, prepay Loans and
reborrow at any time during the Tranche B Credit Period under this
subsection (b).
(c) After Credit Periods. In addition to the Commitments of
each Bank to lend pursuant to Article II hereof, after the end of
each of the Tranche A and Tranche B Credit Periods, (A) the Tranche
B Commitment of each Bank shall be added to such Bank's Tranche A
Commitment and the Tranche B Commitment shall thereupon terminate,
(B) the Tranche B Loans of each Bank shall be deemed to be Tranche
A Loans of such Bank and all subsequent Loans by the Banks shall be
Tranche A Loans, and (C) each Bank severally agrees, on the terms
and conditions set forth in this Agreement, to make new Tranche A
Loans to the Borrower upon (i) any
repayment of outstanding Tranche A Loans pursuant to Section 3.04,
(ii) any optional prepayment of outstanding Tranche A Loans
pursuant to Section 3.10 and (iii) any election to increase
utilization of Loans pursuant to Section 2.08; provided that the
principal amount of such Bank's new Loan shall not exceed the
principal amount of its outstanding Loan or Loans being repaid or
prepaid (or, in the case of an election under Section 2.08, the
aggregate Face Amount of the LOC Debt maturing or being defeased
and not being replaced with LOC Debt); and provided further that
the aggregate principal amount of such Bank's outstanding Tranche
A Utilization shall not, immediately after a Borrowing, exceed its
Tranche A Commitment. Each Borrowing under this subsection (c)
shall be made from the several Banks ratably in proportion to their
respective Commitments. Amounts required to be repaid pursuant to
Section 3.09(f) shall not be reborrowed, and amounts repaid
pursuant to Section 9.02 shall not be reborrowed except as provided
therein.
(d) Consolidation of Outstanding Loans. On the first
Commitment Reduction Date each Bank's outstanding Tranche A Loans
shall be consolidated into a single Loan and thereafter no Bank
shall have more than three Loans outstanding hereunder at any time
with the Prime Loans arising under Section 2.06 counted as a single
Loan for this purpose. If any combination of CD Loans, Prime
Loans and Euro-Dollar Loans are outstanding within a
Tranche immediately prior to the first Commitment Reduction Date,
the Borrower shall borrow new Loans of not more than three types on
such date to the extent required to refund its outstanding Loans of
any other type.
SECTION 3.02. Method of Borrowing. (a) Except for Prime
Loans arising under Section 2.06, the Borrower shall give the Agent
notice (a "Notice of Borrowing") by 11:00 A.M. (New York City time)
at least three Domestic Business Days before each Domestic
Borrowing and at least five Euro-Dollar Business Days before each
Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Domestic Borrowing or a
Euro-Dollar Business Day in the case of a Euro-Dollar
Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are to
be CD Loans, Prime Loans or Euro-Dollar Loans,
(iv) whether such Borrowing is a Tranche A Borrowing or a
Tranche B Borrowing, and
(v) in the case of a Fixed Rate Borrowing, the duration of
the Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing (or deemed Notice
of Borrowing pursuant to subsection (d) hereof), the Agent shall
promptly notify each Bank of the contents thereof and of such
Bank's ratable share of such Borrowing and such Notice of
Borrowing shall not thereafter be revocable by the Borrower.
(c) Not later than 1:00 P.M. (New York City time) on the date
of each Borrowing, each Bank shall (except as provided in
subsection (e) of this Section) make available its ratable share of
such Borrowing, in Federal or other funds immediately
available in New York City, to the Agent at its address specified
in or pursuant to Section 10.01. Unless the Agent determines that
any applicable condition specified in Article IV has not been
satisfied, the Agent will make the funds so received from the Banks
available to the Borrower at the Agent's aforesaid address.
(d) If the Agent does not receive a timely Notice of
Borrowing prior to the expiration of any Interest Period
applicable to any outstanding CD Borrowing, Prime Borrowing or
Euro-Dollar Borrowing, as the case may be, unless the Borrower
repays such CD Borrowing, Prime Borrowing or Euro-Dollar
Borrowing in accordance with the provisions of this Agreement, the
Borrower shall be deemed to have given the Agent a Notice of
Borrowing to make a Prime Borrowing upon the expiration of such
Interest Period, in an aggregate amount equal to the sum of the
aggregate principal amount of such CD Borrowing, Prime Borrowing or
Euro-Dollar Borrowing outstanding at the expiration of such
Interest Period; provided that the Banks shall not be obligated to
make Loans in an aggregate amount in excess of the aggregate
Commitments.
(e) If any Bank makes a new Loan hereunder on a day on which
the Borrower is to repay all or any part of an outstanding Loan
from such Bank, such Bank shall apply the proceeds of its new Loan
to make such repayment and only an amount equal to the difference
(if any) between the amount being borrowed and the amount being
repaid shall be made available by such Bank to the Agent as
provided in subsection (c) of this Section, or remitted by the
Borrower to the Agent as provided in Section 3.11, as the case may
be.
SECTION 3.03. Notes. (a) The Tranche A Domestic Loans and
the Tranche B Domestic Loans of each Bank are evidenced by a single
Tranche A Domestic Note and a single Tranche B Domestic Note,
respectively, payable to the order of such Bank for the account of
its Domestic Lending Office in an amount equal to the aggregate
unpaid principal amount of such Bank's Tranche A
Domestic Loans and Tranche B Domestic Loans, respectively. Such
Notes were delivered by the Borrower to the Banks prior to the
first Borrowing under the Original Agreement.
(b) The Tranche A Euro-Dollar Loans and Tranche B
Euro-Dollar Loans of each Bank are evidenced by a single Tranche A
Euro-Dollar Note and a single Tranche B Euro-Dollar Note,
respectively, payable to the order of such Bank for the account of
its Euro-Dollar Lending Office in an amount equal to the aggregate
unpaid principal amount of such Bank's Tranche A
Euro-Dollar Loans and Tranche B Euro-Dollar Loans. Such Notes
were delivered by the Borrower to the Banks prior to the first
Borrowing under the Original Agreement.
(c) The Banks had the option prior to the first Borrowing
under the Original Agreement to request that their Prime Loans and
CD Loans in either or both Tranches be evidenced by separate Prime
and CD Notes payable to the order of such Banks for the account of
their Domestic Lending Office in an amount equal to the aggregate
unpaid principal amount of such Banks' Prime Loans and CD Loans,
respectively, within the affected Tranche. Each such Note that was
delivered pursuant to such a request was in substantially the form
of Exhibit A hereto with appropriate modifications to reflect the
fact that it evidences solely Prime Loans or CD Loans, as the case
may be. Each reference in this Agreement to the "Notes" or
"Domestic Note" shall be deemed to refer to and include either or
both of such Notes within a
specified Tranche, as the context may require.
(d) Each Bank shall record, and prior to any transfer of its
Notes shall endorse on the schedules forming a part thereof
appropriate notations to evidence, the date, amount and maturity of
each Loan made by it and the date and amount of each payment of
principal made by the Borrower with respect thereto; provided that
the failure of any Bank to make any such recordation or endorsement
shall not affect the obligations of the Borrower hereunder or under
the Notes. Each Bank is hereby irrevocably authorized by the
Borrower to endorse its Notes and to attach to and make a part of
any Note a continuation of any such schedule as and when required.
SECTION 3.04. Maturity of Loans. Each Loan included in any
Borrowing shall mature, and the principal amount thereof shall be
due and payable, on the last day of the Interest Period
applicable to such Borrowing.
SECTION 3.05. Interest Rates. (a) Each Prime Loan shall
bear interest on the outstanding principal amount thereof, for each
day from the date such Loan is made until it becomes due, at a rate
per annum equal to (w) 3/8% plus the Prime Rate for such day, if
such day falls prior to the Conversion Date; (x) 1/8 of 1% plus the
Prime Rate for such day, if such day falls on or after the
Conversion Date and prior to the fourth anniversary of the
Conversion Date; (y) 1/4 of 1% plus the Prime Rate for such day, if
such day falls on or after the fourth anniversary of the Conversion
Date and prior to the eighth anniversary of the
Conversion Date; and (z) 1/2 of 1% plus the Prime Rate for such
day, if such day falls on or after the eighth anniversary of the
Conversion Date. Such interest shall be payable for each
Interest Period on the last day thereof. Any overdue principal of
and, to the extent permitted by law, overdue interest on any Prime
Loan shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the sum of 1% plus the otherwise
applicable rate for such day.
(b) Each CD Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable
thereto, at a rate per annum equal to the applicable Fixed CD Rate;
provided that if any CD Loan or any portion thereof shall, as a
result of clause (2)(b) or (2)(c)(i) of the definition of Interest
Period, have an Interest Period of less than 30 days, such portion
shall bear interest during such Interest Period at the rate
applicable to Prime Loans during such period. Such interest shall
be payable for each Interest Period on the last day thereof and, if
such Interest Period is longer than 90 days, at intervals of 90
days after the first day thereof. Any overdue principal of and, to
the extent permitted by law, overdue
interest on any CD Loan shall bear interest, payable on demand, for
each day until paid at a rate per annum equal to the sum of 1% plus
the higher of (i) the Fixed CD Rate applicable to such Loan and
(ii) the rate applicable to Prime Loans for such day.
The "Fixed CD Rate" applicable to any CD Loan for any
Interest Period means a rate per annum equal to the sum of the CD
Margin plus the applicable Adjusted CD Rate.
"CD Margin" means (w) 7/8 of 1% prior to the Conversion Date;
(x) 5/8 of 1% on and after the Conversion Date and prior to the
fourth anniversary of the Conversion Date; (y) 3/4 of 1% on and
after the fourth anniversary of the Conversion Date and prior to
the eighth anniversary of the Conversion Date; and (z) 7/8 of 1% on
or after the eighth anniversary of the Conversion Date.
The "Adjusted CD Rate" applicable to any Interest Period means
a rate per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
__________
* The amount in brackets being rounded upwards, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period is the
rate of interest determined by the Agent to be the arithmetic
average (rounded upward, if necessary, to the next higher 1/100 of
1%) of the prevailing rates per annum bid at 10:00 A.M. (New York
City time) (or as soon thereafter as practicable) on the first day
of such Interest Period by two or more New York
certificate of deposit dealers of recognized standing for the
purchase at face value from each CD Reference Bank of its
certificates of deposit in an amount comparable to the unpaid
principal amount of the CD Loan of such CD Reference Bank to which
such Interest Period applies and having a maturity
comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day,
as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement (including without limitation any basic, supplemental
or emergency reserves) for a member bank of the Federal Reserve
System in New York City with deposits exceeding five billion
dollars in respect of new non-personal time deposits in dollars in
New York City having a maturity comparable to the related Interest
Period and in an amount of $100,000 or more. The Fixed CD Rate
shall be adjusted automatically on and as of the effective date of
any change in the Domestic Reserve
Percentage.
"Assessment Rate" means for any Interest Period the net annual
assessment rate (rounded upwards, if necessary, to the next higher
1/100 of 1%) actually incurred by Morgan Guaranty Trust Company of
New York to the Federal Deposit Insurance
Corporation (or any successor) for such Corporation's (or such
successor's) insuring time deposits at offices of Morgan Guaranty
Trust Company of New York in the United States during the most
recent period for which such rate has been determined prior to the
commencement of such Interest Period.
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the
Euro-Dollar Margin plus the applicable Adjusted London Interbank
Offered Rate. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is
longer than three months, at intervals of three months after the
first day thereof.
"Euro-Dollar Margin" means (w) 3/4 of 1% prior to the
Conversion Date; (x) 1/2 of 1% on and after the Conversion Date and
prior to the fourth anniversary of the Conversion Date; (y) 5/8 of
1% on and after the fourth anniversary of the Conversion Date and
prior to the eighth anniversary of the Conversion Date; and (z) 3/4
of 1% on and after the eighth anniversary of
Conversion Date.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient
obtained (rounded upwards, if necessary, to the next higher 1/100
of 1%) by dividing (i) the applicable London Interbank Offered Rate
by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any
Interest Period means the average (rounded upward, if necessary, to
the next higher 1/16 of 1%) of the respective rates per annum at
which deposits in dollars are offered to each of the
Euro-Dollar Reference Banks in the London interbank market at
approximately 11:00 A.M. (London time) two Euro-Dollar Business
Days before the first day of such Interest Period in an amount
approximately equal to the principal amount of the Euro-Dollar Loan
of such Euro-Dollar Reference Bank to which such Interest Period is
to apply and for a period of time comparable to such Interest
Period.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day,
as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement for a member bank of the Federal Reserve System in New
York City with deposits exceeding five billion dollars in respect
of "Eurocurrency liabilities" (or in respect of any other category
of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of
extensions of credit or other assets which includes loans by a non-
United States office of any Bank to United States residents). The
Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the
Euro-Dollar Reserve
Percentage.
(d) Any overdue principal of and, to the extent permitted by
law, overdue interest on any Euro-Dollar Loan shall bear interest,
payable on demand, for each day from and including the date payment
thereof was due to but excluding the date of actual payment, at a
rate per annum equal to the sum of 1% plus the Euro-Dollar Margin
plus the quotient obtained (rounded upwards, if necessary, to the
next higher 1/100 of 1%) by dividing (i) the rate per annum at
which one day (or, if such amount due remains unpaid more than
three Euro-Dollar Business Days, then for such other period of time
not longer than six months as the Agent may elect) deposits in
dollars in an amount approximately equal to such overdue payment
due to each of the Euro-Dollar Reference Banks are offered to such
Euro-Dollar Reference Bank in the London interbank market for the
applicable period determined as provided above by (ii) 1.00 minus
the Euro-Dollar Reserve
Percentage (or, if the circumstances described in clause (a) or (b)
of Section 9.01 shall exist, at a rate per annum equal to the sum
of 1% plus the rate applicable to Prime Loans for such day).
(e) The Agent shall determine each interest rate applicable
to the Loans hereunder. The Agent shall give prompt notice to the
Borrower and the Banks by telex or cable of each rate of interest
so determined, and its determination thereof shall be conclusive in
the absence of manifest error.
(f) Each Reference Bank agrees to use its best efforts to
furnish quotations to Agent as contemplated hereby. If any
Reference Bank does not furnish timely quotations, the Agent shall
determine the relevant interest rate on the basis of the quotation
or quotations furnished by the remaining Reference Bank or Banks
or, if none of such quotations is available on timely basis, the
provisions of Section 9.01 shall apply.
SECTION 3.06. Commitment Fees; Participation Fees. (a) The
Borrower shall pay to the Agent for the account of the Banks pro-
rata a commitment fee (i) during the Credit Periods, at the rate of
3/8 of 1% per annum on the average aggregate amount of Unused
Commitments less the average of the LOC Utilization and (ii) both
during and after the Credit Periods, at the rate per annum equal to
the applicable Euro-Dollar Margin on the average amount of the LOC
Utilization.
(b) Fees under this Section 3.06 shall accrue from and
including March 3, 1988 and shall be payable on June 15, 1988 and
thereafter quarterly in arrears on each March 15, June 15,
September 15 and December 15 and on the date on which there shall
be no outstanding Loans or Commitments hereunder.
SECTION 3.07. Agency and Fronting Bank Fee. (a) The
Borrower shall pay to the Agent for its own account as
compensation for its services hereunder an annual fee in an amount
agreed upon by the Agent and the Borrower, payable on the date of
the first Borrowing under the Original Agreement and on each
anniversary of such date until the termination of the Banks'
Commitments hereunder and on the date of such termination.
(b) The Borrower shall pay to the Fronting Bank as
compensation for its services hereunder fees in such amounts and at
such times as heretofore agreed upon by the Fronting Bank and the
Borrower.
SECTION 3.08. Optional Termination or Reduction of
Commitments. (a) The Borrower may, upon at least three Domestic
Business Days' notice to the Agent and the Fronting Bank,
terminate at any time, or proportionately reduce from time to time
by an aggregate amount of $5,000,000 or any larger multiple of
$1,000,000 the unused portions of the Tranche A Commitments. If
the Tranche A Commitments are terminated in their entirety, all
accrued fees shall be payable on the effective date of such
termination.
(b) From the date of the Original Agreement to the
Conversion Date, the Borrower may, upon at least three Domestic
Business Days' notice to the Agent and the Fronting Bank,
terminate at any time, or proportionately reduce from time to time
by an aggregate amount of $1,000,000 or any larger multiple of
$500,000, the unused portions of the Tranche B Commitments. If
the Tranche B Commitments are terminated in their entirety, all
accrued fees shall be payable on the effective date of such
termination.
SECTION 3.09. Mandatory Termination or Reduction of
Commitments. (a) The Tranche A and Tranche B Commitments shall
terminate on September 15, 2001, and any Loans then outstanding
(together with accrued interest thereon) shall be due and payable
on such date.
(b) On any date on or after the last day of the Credit
Periods on which the Commitments with respect to either Tranche A
or Tranche B shall be greater than the Utilization within the
applicable Tranche on such date (after giving effect to any
repayment, prepayment and borrowing on such date), the
Commitments with respect to such Tranche shall be automatically
proportionately reduced to an amount equal to such Utilization.
(c) The Tranche A Commitment of each Bank shall be further
reduced on each Commitment Reduction Date by an amount equal to a
percentage of such Bank's Tranche A Commitment in effect on the
last day of the Tranche A Credit Period (after giving effect to any
reduction pursuant to subsection (b) on such date), with such
percentages being 2.500% on the first Commitment Reduction Date,
3.078% on the next four Commitment Reduction Dates, 5.227% on the
next eight Commitment Reduction Dates, 5.478% on the next six
Commitment Reduction Dates, 1.750% on the remaining six
Commitment Reduction Dates.
(d) The Tranche A Commitments and Tranche B Commitments shall
be further proportionately reduced by the amount of Sale or
Financing Proceeds on each day any such proceeds are received by
the Borrower.
(e) The Tranche B Commitment of each Bank shall be further
reduced on each Commitment Reduction Date by an amount equal to a
percentage of such Bank's Tranche B Commitment in effect on the
last day of the Tranche B Credit Period (after giving effect to any
reduction pursuant to subsection (b) on such date), with such
percentages being 2.500% on the first Commitment Reduction Date,
3.078% on the next four Commitment Reduction Dates, 5.227% on the
next eight Commitment Reduction Dates, 5.478% on the next six
Commitment Reduction Dates, 1.750% on the remaining six
Commitment Reduction Dates.
(f) On each Commitment Reduction Date and on each date on
which there is a reduction of Commitments pursuant to paragraph (d)
of this Section 3.09, (i) the Borrower shall repay such principal
amount (together with accrued interest thereon) of the outstanding
Tranche A Loans, if any, as may be necessary so that after such
repayment, the Tranche A Utilization does not exceed the amount of
the Tranche A Commitments as then reduced and (ii) the Borrower
shall repay such principal amount (together with accrued interest
thereon) of the outstanding Tranche B Loans, if any, as may be
necessary so that after such repayment, the unpaid principal amount
of the outstanding Tranche B Utilization does not exceed the amount
of the Tranche B Commitments as then
reduced.
SECTION 3.10. Optional Prepayments. (a) The Borrower may,
upon at least three Domestic Business Days' notice to the Agent,
prepay any Prime Borrowing in whole at any time, or from time to
time in part in amounts aggregating $5,000,000 or any larger
multiple of $1,000,000, in the case of a Tranche A Loan and
$1,000,000 or any larger multiple of $500,000 in the case of a
Tranche B Loan, in either case by paying the principal amount to be
prepaid together with accrued interest thereon to the date of
prepayment; provided that in the case of Prime Borrowings made
pursuant to Section 2.06 due to a failure to deliver conforming
Commercial Paper Notes or Medium-Term Notes on a timely basis, the
Borrower may without notice prepay such Prime Borrowing in whole
irrespective of the amount of such prepayment with the proceeds of
LOC Debt issued on the next day and otherwise upon one Domestic
Business Day's notice. Each such optional
prepayment shall be applied to prepay ratably the Prime Loans of
the several Banks included in such Borrowing.
(b) Except as provided in Section 9.02, the Borrower may not
prepay all or any portion of the principal amount of any Fixed Rate
Loan prior to the maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to this
Section, the Agent shall promptly notify each Bank of the
contents thereof and of such Bank's ratable share of such
prepayment and such notice shall not thereafter be revocable by the
Borrower.
SECTION 3.11. General Provisions as to Payments. The
Borrower shall make each payment of principal of, and interest on,
the Loans and of fees hereunder, not later than 1:00 P.M. (New York
City time) on the date when due, in Federal or other funds
immediately available in New York City, to the Agent at its address
specified in or pursuant to Section 10.01. The Agent will promptly
distribute to each Bank its ratable share of each such payment
received by the Agent for the account of the Banks. Whenever any
payment of principal of, or interest on, the
Domestic Loans or of commitment fees shall be due on a day which is
not a Domestic Business Day, the date for payment thereof shall be
extended to the next succeeding Domestic Business Day. Whenever
any payment of principal of, or interest on, the
Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day unless
such Euro-Dollar Business Day falls in another calendar month, in
which case the date for payment thereof shall be the next
preceding Euro-Dollar Business Day. If the date for any payment of
principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
SECTION 3.12. Funding Losses. If the Borrower makes any
payment of principal with respect to any Fixed Rate Loan
(pursuant to Article III, VII or IX or otherwise) on any day other
than the last day of the Interest Period applicable
thereto, or the end of an applicable period fixed pursuant to
Section 3.05(d), or if the Borrower fails to borrow any Fixed Rate
Loans after notice has been given to any Bank in accordance with
Section 3.02(b), the Borrower shall reimburse each Bank on demand
for any resulting loss or expense incurred by it (or by any
existing or prospective participant in the related Loan), including
(without limitation) any loss incurred in obtaining, liquidating or
employing deposits from third parties, but
excluding loss of margin for the period after any such payment or
failure to borrow; provided that such Bank shall have delivered to
the Borrower a certificate as to the amount of such loss or
expense, the rate of such Fixed Rate Loan at the time it was
borrowed and the rate which a loan of similar interest period could
have been borrowed at the time of such payment or failure to borrow
hereunder, which certificate shall be presumptive evidence in the
absence of manifest error.
SECTION 3.13. Computation of Interest and Fees. Interest on
Domestic Loans based on the Prime Rate and the fee payable pursuant
to Section 3.06(a)(i) shall be computed on the basis of a year of
365 days (or 366 days in a leap year) and paid for the actual
number of days elapsed (including the first day but
excluding the last day). Interest on Domestic Loans based on the
Adjusted CD Rate and interest on Euro-Dollar Loans and fees
hereunder (other than the fee payable pursuant to Section
3.06(a)(i)) shall be computed on the basis of a year of 360 days
and paid for the actual number of days elapsed, calculated as to
each Interest Period or period fixed pursuant to Section 3.05(d)
from and including the first day thereof to but excluding the last
day thereof.
SECTION 3.14. Procedure for Bank Participation in Certain
Loans. Pursuant to Section 2.06(c), the Fronting Bank shall give
the other Banks prompt notice of any unreimbursed LOC
Disbursement made by the Fronting Bank to be converted or
converted in whole or in part into a Prime Loan of the Fronting
Bank. Any such notice shall specify the date on which all or any
part of such unreimbursed LOC Disbursement is to be or was
converted into a Prime Loan and the amount of such Prime Loan. As
promptly as possible, and in any case by the close of business on
the date of receipt of such notice if such notice is received not
later than 1:30 P.M. (New York City time) on such date, each other
Bank shall, pursuant to Section 2.07, pay to the Fronting Bank for
its account, in immediately available funds, an amount equal to
such Bank's LOC Commitment Percentage (as determined at the time of
and with respect to the issuance of the LOC to which such
unreimbursed LOC Disbursement relates) of such Prime Loan (the
"Principal Payment Amount") plus, if such payment is
received by the Fronting Bank after the date of such unreimbursed
LOC Disbursement, interest (i) for the period from the day of such
unreimbursed LOC Disbursement to but excluding the Domestic
Business Day next succeeding the date of such unreimbursed LOC
Disbursement at a rate per annum equal to the rate of interest
applicable to Prime Loans from time to time pursuant to Section
3.05(a) and (ii) for the period from and including the Domestic
Business Day next succeeding the date of such unreimbursed LOC
Disbursement to the date such payment is received by the Fronting
Bank at a rate per annum equal to the rate of interest applicable
to Prime Loans from time to time pursuant to Section 3.05(a) plus
the Late Participation Penalty. At the time of, and by virtue of,
such payment, such Bank shall be deemed to have purchased, and the
Fronting Bank to have sold, a portion, equal to the LOC Commitment
Percentage of such Bank, of all of the right, title and interest of
the Fronting Bank under and with respect to the Prime Loan of the
Fronting Bank into which such unreimbursed LOC Disbursement was
converted, together with an equal portion of any and all Collateral
serving as security therefor. For all
purposes of this Agreement, such Bank shall, thereupon, be deemed
to have made a separate Prime Loan to the Borrower on and as of the
date of the related Prime Loan of the Fronting Bank in a principal
amount equal to such Bank's Principal Payment Amount, and the
Borrower hereby expressly consents to such participations being
treated as separate Prime Loans for all purposes hereunder, and the
principal amount of such Prime Loan of the Fronting Bank shall, on
and as of such date, be deemed reduced by an equal amount; provided
that the Fronting Bank shall reimburse each Bank for payment of any
Principal Payment Amount made by such Bank to the Fronting Bank,
immediately upon a final determination that the LOC Disbursement
(with respect to which such payment of such Principal Payment
Amount was made) was wrongfully made for the reasons set forth in
Section 2.06(d) hereof, in an amount equal to the sum of (i) such
Principal Payment Amount plus (ii) any interest originally paid
thereon by such Bank to the Fronting Bank pursuant to this Section
plus (iii) interest on the
foregoing amounts in clauses (i) and (ii) at the Federal Funds Rate
from but not including the date of such payment to the Fronting
Bank to and including the date the Fronting Bank makes such
reimbursement in full.
SECTION 3.15. Election to Reduce Loan Utilization.
Subject to the provisions of Section 3.10 hereof, the Borrower may,
upon at least three Domestic Business Days' notice to the Fronting
Bank and the Agent (and the Agent shall promptly
transmit such notice to the Banks), elect to reduce its
utilization of the Loans and increase its utilization of LOC Debt
by (i) repaying or, subject to Section 3.10 hereof, prepaying the
outstanding amount of the Loans made as part of a Borrowing in
whole or ratably in part, with accrued interest to the date of such
repayment on the amount repaid, and (ii) contemporaneously with
such prepayment and after giving the appropriate Notice of Issuance
and satisfying the conditions precedent, issue LOC Debt in an
aggregate Face Amount equal to the aggregate principal amount of
the Loans so repaid or prepaid; provided that, after conversion of
an unreimbursed LOC Disbursement to a Prime Loan upon a failure of
the Depositary to deliver conforming Commercial Paper Notes or
Medium-Term Notes to a Dealer, the Borrower may re-issue such Notes
on the next succeeding Domestic Business Day after the day of such
failure and use the proceeds therefrom to prepay such Prime Loan
without prior notice.
SECTION 3.16. Replacement Fronting Bank. (a) If the
Fronting Bank defaults in making any required LOC Disbursement
hereunder, the Fronting Bank shall, upon substitution of a
replacement financial institution, cease to act as a Bank
hereunder and, upon substitution of a replacement Fronting Bank,
cease to act as Fronting Bank under this Agreement. In such
instance, the Borrower and the Banks agree to use their best
efforts to substitute a financial institution for the Fronting Bank
as a Bank hereunder which is satisfactory to the Banks and to the
Borrower (which financial institution may be one of the Banks);
provided that such substituted financial institution and each party
hereto (other than the defaulting Fronting Bank as a Bank) shall
execute and deliver an appropriate novation to this Agreement, in
form and substance satisfactory to all parties thereto, whereby
such substituted institution (i) shall agree to assume the
remaining Commitment and obligations of the Fronting Bank (in its
capacity as a Bank) hereunder and (ii) shall agree to be bound by
all of the terms hereof and to undertake all of the obligations
contained herein of the Fronting Bank as a Bank hereunder. The
Borrower and the Banks further agree to use their best efforts to
substitute another bank as Fronting Bank hereunder, satisfactory to
the Banks and to the Borrower the LOCs of which will result in the
LOC Debt supported thereby being an exempt security pursuant to
Section 3(a)(2) of the Securities Act of 1933 (which may be one of
the Banks); provided, that such substitution shall be conditioned
on the execution and delivery of appropriate novations to this
Agreement and each Issuance Agreement, in form and substance
reasonably satisfactory to all parties (other than the defaulting
Fronting Bank as such) hereto and thereto; provided further that
the Fronting Bank shall not be deemed to be released from any of
its obligations for actions taken or failed to be taken by it prior
to the date of such substitution to the extent such actions taken
or failed to be taken constitute gross negligence or willful
misconduct of the Fronting Bank.
(b) If the rating assigned to the Fronting Bank by either
Moody's Investors Services Inc. or Standard & Poor's Corporation is
reduced, the Fronting Bank shall notify the Agent, the
Borrower and each Bank thereof and, upon substitution of a
replacement Fronting Bank, shall cease to act as Fronting Bank
under this Agreement. In such instance, the Borrower and the
Banks agree to use their best efforts to substitute another bank as
Fronting Bank hereunder, satisfactory to the Banks and to the
Borrower, the LOCs of which will result in the LOC Debt supported
thereby being an exempt security pursuant to Section 3(a)(2) of the
Securities Act of 1933 (which bank may be one of the Banks);
provided, that such substitution shall be conditioned on the
execution and delivery of appropriate novations to this Agreement
and each Issuance Agreement, in form and substance reasonably
satisfactory to all parties hereto and thereto; provided further
that the downgraded Fronting Bank shall not be deemed to be
released from any of its obligations for actions taken or failed to
be taken by it prior to the date of such substitution to the extent
such actions taken or failed to be taken constitute gross
negligence or willful misconduct of the downgraded Fronting Bank.
SECTION 3.17. Reduction of LOC Commitment. At the time of
any reduction of the Commitments pursuant to this Article III, the
LOC Commitment shall be reduced by an amount equal to the aggregate
amount by which the Commitments of the Banks are
reduced; provided that the LOC Commitment shall not be reduced
below an amount equal to the then Outstanding LOC Debt.
ARTICLE IV
CONDITIONS
The obligation of each Bank to make a Loan on the occasion of
each Credit Facility Borrowing and the obligation of the Fronting
Bank to issue LOCs during the Credit Period are subject to the
satisfaction of the following conditions:
SECTION 4.01. All Credit Facility Borrowings. In the case of
each Credit Facility Borrowing:
(a) receipt by the Agent of notice of such Borrowing as
required by Section 3.02;
(b) the fact that, immediately after such Borrowing, no
Default shall have occurred and be continuing; and
(c) the fact that the representations and warranties of the
Borrower contained in this Agreement (except, in the case of a
Borrowing that is not a Credit Event, the representations and
warranties set forth in Sections 5.04(a) and 5.07 and Section
5.12 as to any material adverse change) shall be true on and as
of the date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of such Borrowing as to the
facts specified in clauses (b) and (c) of this Section.
SECTION 4.02. Certain Borrowings and LOC Debt Issuances. In
the case of each Credit Facility Borrowing or issuance of LOC Debt
that is a Credit Event:
(a) in the case of a Tranche A Borrowing or issuance of LOC
Debt attributable to Tranche A, immediately after such
Borrowing or such LOC Debt issuance, the Borrower's ratio of
Debt to Capital Contributions shall be no greater than
1.85714:1;
(b) receipt by the Banks of a CLTA Indorsement 122 of the
Title Insurance Policy;
(c) receipt by the Banks of a certificate of the Engineer,
dated no earlier than 10 days preceding the Borrowing,
substantially in the form of Exhibit J hereto and which is
favorable in all material respects, except as otherwise
approved by the Required Banks;
(d) receipt by the Agent (and, in the case of LOC Debt
issuances, the Fronting Bank), with sufficient copies for the
Banks, of an Officer's Certificate to the effect that (i) true
and correct copies of all Project Agreements then in effect have
been delivered to the Banks, (ii) each of the Elmore Power
Purchase Contract, the IID Agreements (other than the
Transmission Agreements) is in full force and effect and has not
been amended or modified, (iii) the Borrower has no reason to
believe that SCE is dissatisfied with, or will be making
recommendations or requesting modifications with respect to, the
design of or construction schedule for the Elmore
Facility, (iv) to the best of the Borrower's knowledge, no
postponement is considered or planned for Completion of the
Transmission Project, no Participant is in default under the IID
Agreements and the Borrower has not agreed to and is not aware
of any increase of the Borrower's Project Contribution above
$6,622,546 (terms used in this clause (iv) not otherwise defined
in this Agreement having the meanings given to them in the
Funding and Construction Agreement) and (v) the conditions set
forth in clauses (b) and (c) of Section 4.01 and clause (a) of
this Section 4.02 are met with respect to this
Borrowing;
(e) receipt by the Agent (and, in the case of LOC Debt
issuances, the Fronting Bank), with sufficient copies for the
Banks, of a certificate of an officer of the Construction
Manager or the General Partner stating (i) the amount of Project
Costs paid (or liability for which has been accrued in such
manner as is not disapproved by the Required Banks) since the
immediately preceding Borrowing and stating the general nature
and amount of such Project Costs, (ii) that the amount of the
Borrowing is equal to the sum of (x) actual Project Costs
incurred to the date of such Borrowing and not covered by
Capital Contributions as of the date of such Borrowing and funds
from any previous Borrowing hereunder, and (y) the total amount
of Project Costs (including a reasonable amount
included for Project Contingency Costs) anticipated to be
incurred within four weeks of the date of such Borrowing, and
(iii) that to the best of the Construction Manager's or the
General Partner's knowledge and belief, as applicable, there has
occurred no event or circumstance that materially
adversely affects the feasibility of the Elmore Facility or
the economic viability of the Elmore Facility; together with a
certificate of an engineer employed by the Construction
Manager, the General Partner or DEC reporting on the progress
of the Development of the Elmore Facility and stating that the
Development of the Elmore Facility as a whole is no more than
two weeks behind schedule for the Firm Operation Date
specified in the most recent written schedule submitted to the
Banks; and
(f) receipt by the Banks of a certificate of the Resource
Engineer, dated no earlier than 90 days preceding such
Borrowing, substantially in the form of Exhibit K hereto and
which is favorable in all material respects, except as
otherwise approved by the Required Banks; provided that no
such certificate shall be required after the Resource Engineer
has certified that existing wells can provide a satisfactory
quantity and quality of Geothermal Brine for Firm Operation (as
defined in the Elmore Power Purchase Contract) of the Elmore
Facility.
The documents and opinions referred to in this Section shall be
delivered to the Agent or the Banks, as the case may be, no later
than four Euro-Dollar Business Days prior to the date of such
Borrowing or issuance of LOC Debt, and shall in all cases be in
form and substance satisfactory to the Agent or approved by the
Required Banks, as the case may be. In the case of LOC Debt
issuances, all documents and opinions to be delivered to the Agent
shall also be delivered to the Fronting Bank at the same time.
SECTION 4.03. After Completion Date. In the case of each
Borrowing after the Completion Date that is a Credit Event or an
issuance of LOC Debt after the Completion Date that is a Credit
Event:
(a) all of the conditions set forth in Section 4.02 shall
be satisfied in full; and
(b) the Agent (and, in the case of LOC Debt issuances, the
Fronting Bank) shall receive an Officer's Certificate not less
than five days prior to the Borrowing or LOC Debt issuance (x)
itemizing what the funds borrowed shall be applied to; (y)
stating that the Banks had received a written list of such
proposed expenditures not less than 10 days prior to the
proposed Borrowing or LOC Debt issuance; and (z) stating that
the Required Banks had not disapproved of any of the proposed
expenditures.
SECTION 4.04. Conditions to Effectiveness. This Agreement
shall become effective as of the date hereof, subject to the
satisfaction of the following conditions, and, as of the date
hereof, the Original Agreement is amended and restated in its
entirety to read as set forth herein:
(a) receipt by the Agent on or prior to the date of this
Agreement of counterparts hereof signed by all the parties
hereto;
(b) receipt by the Agent of a certificate of the Borrower,
signed by an authorized financial officer of the Borrower and
dated on or prior to the date of this Agreement, to the effect
that (i) no Default under this Agreement has occurred and is
continuing as of the date hereof, (ii) the representations and
warranties of the Borrower contained in this Agreement are true
as of the date hereof and (iii) all necessary
governmental, third party and other approvals necessary in
connection with the transactions contemplated by this
Agreement and the Issuance Agreements have been obtained and
remain in effect;
(c) receipt by the Agent on behalf of the Banks of the
opinions of Latham & Watkins, special counsel to the Borrower,
substantially in the form of Exhibits C-1 and C-2 hereto and
covering such additional matters relating to the transactions
contemplated hereby as the Agent shall reasonably request;
(d) receipt by the Agent on behalf of the Banks of an
opinion of Orrick, Herrington & Sutcliffe, special California
counsel to the Banks and the Agent, substantially in the form of
Exhibit D hereto and covering such additional matters relating
to the transactions contemplated hereby as the Agent shall
reasonably request;
(e) receipt by the Agent on behalf of the Banks of an
opinion of Davis Polk & Wardwell, special New York counsel to
the Banks and the Agent, substantially in the form of Exhibit E
hereto and covering such additional matters relating to the
transactions contemplated hereby as the Agent shall reasonably
request;
(f) receipt by the Agent on behalf of the Banks of an
opinion of Jones, Day, Reavis & Pogue, special counsel to the
Fronting Bank, substantially in the form of Exhibit M hereto and
covering such additional matters relating to the
transactions contemplated hereby as the Agent shall reasonably
request;
(g) receipt by the Agent on behalf of the Banks of an
opinion of Logan, Okamoto & Takashima, special Japanese
counsel to the Fronting Bank, substantially in the form of
Exhibit N hereto and covering such additional matters relating
to the transactions contemplated hereby as the Agent shall
reasonably request;
(h) receipt by the Agent of a copy of such Indorsements to
the Title Insurance Policy as the Agent shall reasonably
request;
(i) receipt by the Agent of an executed copy of the First
Amendment to Deed of Trust;
(j) receipt by the Agent of an executed copy of Amendment
Number Two to Security Agreement;
(k) receipt by the Agent of executed copies of the Issuance
Agreements; and
(l) receipt by the Agent of an executed copy of the Second
Amendment to Operating and Maintenance Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 5.01. Existence and Power. The Limited Partnership
Agreement is in full force and effect, and is a valid and binding
agreement of all the parties thereto. The Borrower is a limited
partnership duly formed, validly existing and in good standing
under the laws of the state of California, and has all powers under
the Limited Partnership Agreement and the laws of the State of
California and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now
conducted and proposed to be conducted.
SECTION 5.02. Authorization; Contravention. The execution,
delivery and performance by the Borrower of this Agreement, the
Notes, the Security Agreement, the Deed of Trust, the Issuance
Agreements and the Project Agreements are within the powers of the
Borrower, have been duly authorized by all necessary actions,
require no action by or in respect of, or filing with, any
governmental body, agency or official other than such actions as
have already been taken, and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of
the Limited Partnership Agreement or of any agreement, judgment,
injunction, order, decree or other instrument (including any
Geothermal Leases) binding upon the Borrower or result in the
creation or imposition of any Lien (other than the Security
Interests) on any asset of the Borrower.
SECTION 5.03. Binding Effect. This Agreement, the Deed of
Trust and the Security Agreement constitute valid and binding
agreements of the Borrower; the Notes, when executed and
delivered in accordance with this Agreement, will constitute valid
and binding obligations of the Borrower.
SECTION 5.04. Litigation. There is no action, suit or
proceeding pending against, or to the knowledge of the Borrower,
threatened against or affecting the Borrower before any court or
arbitrator or any governmental body, agency or official in which
there is a reasonable possibility of an adverse decision (a) which
could materially adversely affect the business, financial position
or results of operations of the Borrower or (b) which in any manner
draws into question the validity of this Agreement, the Notes, the
Security Agreement, the Deed of Trust, the
Issuance Agreements or any material Project Agreement.
SECTION 5.05. Compliance with ERISA. Each member of the
Controlled Group has fulfilled its obligations under the minimum
funding standards of ERISA and the Code with respect to each Plan
and is in compliance in all material respects with the presently
applicable provisions of ERISA and the Code, and has not incurred
any liability to the PBGC or a Plan under Title IV of ERISA other
than a liability to the PBGC for premiums under Section 4007 of
ERISA.
SECTION 5.06. Taxes. The Borrower has filed all United
States Federal income tax returns and all income tax returns of the
State of California which are required to be filed by it. The
charges, accruals and reserves on the books of the Borrower in
respect of taxes or other governmental charges are, in the opinion
of the Borrower, adequate to cover the Borrower's
liability with respect to such taxes and charges.
SECTION 5.07. Hazardous Waste. To the best of the
Borrower's knowledge after inquiry and physical inspection, the
Elmore Property does not contain hazardous wastes, hazardous
substances, hazardous materials, toxic wastes, toxic substances or
toxic pollutants in violation of the Resource Conservation and
Recovery Act, the Comprehensive Environmental Response
Compensation and Liability Act, the Hazardous Materials
Transportation Act, the Toxic Substances Control Act, the Clean Air
Act, the Clean Water Act, the California Hazardous Waste Control
Act, the California Hazardous Substance Act, the
Porter-Cologne Water Quality Control Act, any regulations
promulgated pursuant thereto, or any other applicable law,
ordinance, rule or regulation, nor does it contain any other
substance, waste or material considered toxic or hazardous in
amounts in violation of any applicable federal, state or local law,
ordinance, rule or regulation.
SECTION 5.08. CEC. The Elmore Facility is not subject to the
jurisdiction of the CEC on the date of this Agreement, and no CEC
Event has occurred since the date of the Original Agreement.
SECTION 5.09. Compliance with Laws. (a) The Borrower is in
compliance in all material respects with all applicable laws,
ordinances, rules, regulations and requirements of governmental
authorities (including, without limitation, the Geothermal Steam
Act of 1970, those laws identified in Section 5.07 above, any other
laws relating to the protection of the environment, ERISA, all
relevant California state and local laws, and all rules and
regulations promulgated thereunder).
(b) The Borrower has obtained (or has applied for as
necessary to timely obtain) all material permits and
authorizations of any governmental body, agency or official
necessary for the Development of the Elmore Facility, operation of
the Elmore Facility or required for the Borrower to sell
electricity to SCE under the Elmore Power Purchase Contract and all
of such permits and authorizations obtained by the Borrower remain
in full force and effect.
(c) The Borrower has filed an application to be certified as
a "qualifying facility" under 18 C.F.R. Section 292.203, as
amended.
SECTION 5.10. Properties and Arrangements; Project Costs and
Schedule. (a) Subject to the exceptions identified in the Elmore
Property Preliminary Title Report and the Geothermal Lease Rights
Properties Preliminary Title Report, all properties and rights and
all contractual arrangements (including, without limitation, rights
and title to land and geothermal properties, electricity
transmission and interconnection facilities, rights to use patents
and other proprietary processes, designs and information, and
contracts for process design, engineering and construction
services) necessary in connection with the
Development of the Elmore Facility, the operation of the Elmore
Facility on the Elmore Property and the sale of electricity to SCE
under the Elmore Power Purchase Contract (i) if properties or
rights, have been obtained and are held by the Borrower subject to
no Liens (other than the Liens created by the Deed of Trust and the
Security Agreement) and no adverse claims that might, if proven to
be correct, individually or in the aggregate, have a material
negative impact on the feasibility of the Elmore
Facility or the business prospects of the Borrower and (ii) if
contractual arrangements, are in full force and effect, with the
relevant benefits thereunder accruing to the Borrower, and
constitute valid and binding agreements of the parties thereto,
except for those services, materials and rights that can
reasonably be expected to be commercially available at the site of
the Elmore Facility or are granted to the Borrower under the Ground
Lease or Easement Agreement. Such contractual
arrangements are all identified as Project Agreements.
(b) The budget set forth on Exhibit I to the Construction
Management Agreement for Elmore Projected Project Costs and
schedule for completion of the Elmore Facility previously
delivered to the Agent, as the same may be amended from time to
time with the approval of the Required Banks, are correct and
complete based on all available information and represent the
Borrower's present best estimates of Elmore Projected Project Costs
and the schedule for completion of the Elmore Facility, and the
budget for Elmore Projected Project Costs includes a
reasonable amount for Project Contingency Costs and includes all
costs to the Borrower associated with the properties and rights and
the contractual arrangements referred to in subsection (a) above.
SECTION 5.11. Security Agreement and Deed of Trust
Representations and Warranties. The representations and
warranties of the Borrower contained in the Security Agreement and
the Deed of Trust are true and correct in all material
respects.
SECTION 5.12. Material Adverse Change. Since September 30,
1987, there has been no material adverse change in the business,
financial position, results of operations or prospects of Magma and
its Consolidated Subsidiaries, considered as a whole, or of the
Borrower or of the General Partner.
SECTION 5.13. Offering of Interests. Neither the Borrower
nor any agent or other Person acting on its behalf, has offered,
directly or indirectly, any of the Interests or any similar
security of the Borrower for sale to or solicited offers to buy any
thereof from, or otherwise approached or negotiated with respect
thereto with, any person in a manner that would subject the
offering of the Interests to the registration requirements of the
Securities Act of 1933, as amended.
SECTION 5.14. Not an Investment Company. The Borrower is not
an "investment company" within the meaning of the Investment
Company Act of 1940, as amended and neither the Borrower nor any of
its Affiliates (other than SCE) is subject to the Federal Power Act
or Public Utility Holding Company Act of 1935, except as such Acts
apply to "qualifying facilities" under 18 C.F.R. Section 292.203.
SECTION 5.15. Governmental Regulation. Neither the
Borrower, nor the Banks, nor the Agent, nor any Affiliate of any of
them (other than SCE or any of its Affiliates, except Mission and
its Subsidiaries) will, as a result of the construction, ownership,
leasing or operation of the Elmore Facility, the sale of
electricity therefrom or the entering into any Project
Agreement or any transaction contemplated hereby or thereby, be
subject to regulation under the Federal Power Act or the Public
Utility Holding Company Act of 1935 or under state laws and
regulations respecting the rates or the financial or
organizational regulation of electric utilities.
SECTION 5.16. Geothermal Lease Amendments. All Geothermal
Leases encumbering property upon which production and reinjection
wells for the Elmore Facility are located have been amended in a
form approved by the Agent so as to provide lender cure rights to
the Banks.
ARTICLE VI
COVENANTS
The Borrower agrees that, so long as any Bank has any
Commitment hereunder or any amount payable under any Note remains
unpaid:
SECTION 6.01. Information. The Borrower will deliver to each
of the Banks:
(a) as soon as available and in any event within 105 days
after the end of each fiscal year of the Borrower, a balance
sheet of the Borrower as of the end of such fiscal year and
related statements of operations and changes in financial
position for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all
reported on as to the fairness of the presentation, generally
accepted accounting principles and consistency in a manner
acceptable to Coopers & Lybrand or other independent public
accountants of nationally recognized standing;
(b) as soon as available and in any event within 55 days
after the end of each of the first three quarters of each fiscal
year of the Borrower, a balance sheet of the Borrower as of the
end of such quarter and related statements of
operations and changes in financial position for such quarter
and for the portion of the Borrower's fiscal year ended at the
end of such quarter, setting forth in each case in comparative
form the figures for the corresponding quarter and the
corresponding portion of the Borrower's previous fiscal year,
all certified (subject to normal year-end adjustments) as to
fairness of presentation, generally accepted accounting
principles and consistency in presentation with prior
statements by the chief financial officer or the chief
accounting officer of the General Partner;
(c) simultaneously with the delivery of each set of
financial statements referred to in clauses (a) and (b) above,
an Officer's Certificate (i) setting forth in reasonable
detail the information or calculations required to establish
whether the Borrower was in compliance with the requirements of
Sections 6.07, 6.08, 6.16 and 6.21 on the date of such financial
statements, (ii) stating that the representations and warranties
of the Borrower contained in this Agreement (except the
representations and warranties set forth in
Sections 5.04(a) and 5.07 and Section 5.12 as to any material
adverse change) are true on and as of the date of such
certificate and (iii) stating whether any Default exists on
the date of such certificate and the information and
calculations used as the basis for such conclusion and, if any
Default then exists, setting forth the details thereof and the
action which the Borrower is taking or proposes to take with
respect thereto;
(d) simultaneously with the delivery of each set of
financial statements referred to in clause (a) above, a
statement of the firm of independent public accountants which
reported on such statements (i) whether anything has come to
their attention in the course of their review to cause them to
believe that any Default existed on the date of such
statements and (ii) confirming the information set forth in
the Officer's Certificate delivered simultaneously therewith
pursuant to clause (c)(i) above;
(e) forthwith upon the occurrence of any Default, an
Officer's Certificate setting forth the details thereof and
the action which the Borrower is taking or proposes to take with
respect thereto;
(f) if and when any member of the Controlled Group (i)
gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of ERISA) with
respect to any Plan which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that
the plan administrator of any Plan has given or is
required to give notice of any such reportable event, a copy
of the notice of such reportable event given or required to be
given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA, a copy of such
notice; or (iii) receives notice from the PBGC under Title IV of
ERISA of an intent to terminate or appoint a trustee to
administer any Plan, a copy of such notice; and
(g) from time to time such additional information regarding
the financial position, business or operations of the Borrower
as the Agent, at the request of any Bank, may reasonably
request.
SECTION 6.02. Payment of Obligations. The Borrower will pay
and discharge at or before maturity all of its respective material
obligations and liabilities, including, without
limitation, tax liabilities, except where the same may be
contested in good faith by appropriate proceedings, and will
maintain, in accordance with generally accepted accounting
principles, appropriate reserves for the accrual of any of the
same.
SECTION 6.03. Maintenance of Property. The Borrower will
keep all property useful and necessary in its business in good
working order and condition, ordinary wear and tear excepted.
SECTION 6.04. Conduct of Business and Maintenance of
Existence. The Borrower will continue to engage in business now
conducted and proposed to be conducted by the Borrower, and will
preserve, renew and keep in full force and effect its existence and
its rights, privileges and franchises necessary or desirable in the
normal conduct of such business.
SECTION 6.05. Compliance with Laws. The Borrower will comply
in all material respects with all applicable laws,
ordinances, rules, regulations and requirements of governmental
authorities (including, without limitation, ERISA and the rules and
regulations thereunder) except where the necessity of
compliance therewith is contested in good faith by appropriate
proceedings.
SECTION 6.06. Inspection of Property, Books and Records. The
Borrower will keep proper books of record and account in which
full, true and correct entries shall be made of all
dealings and transactions in relation to its business and
activities; and will permit representatives of any Bank at such
Bank's expense to visit and inspect any of its properties, to
examine and make abstracts from any of its books and records and to
discuss its affairs, finances and accounts with its respective
officers, employees and independent public accountants, all at such
reasonable times and as often as may reasonably be desired.
SECTION 6.07. Restricted Payments. The Borrower shall make
no Restricted Payment (i) prior to the Conversion Date, (ii) after
the Conversion Date, when a Default exists and is
continuing or (iii) after the Conversion Date, when the Debt
Service Reserve Account and Major Capital Expenditure Reserve
Account are not funded to the extent required by Section 11 of the
Operating and Maintenance Agreement; provided that the
Borrower may make distributions pursuant to Sections 3.6 and 4.1 of
the Limited Partnership Agreement at any time so long as no Default
shall have occurred and be continuing.
SECTION 6.08. Debt. The Borrower shall not incur or suffer
to exist Debt other than (i) Debt under this Agreement, the Notes
and the Magma Undertaking, (ii) Debt that may exist from time to
time in the ordinary course of the Borrower's business, but in no
event shall such Debt be in an aggregate amount in excess of
$1,000,000, (iii) Debt arising under the Project Agreements, (iv)
LOC Debt, (v) Debt under the IID Agreements, (vi) Debt under
obligations relating to interest rate hedging permitted pursuant to
Section 6.19, (vii) any obligations of the Borrower under the
Reimbursement Obligation, and (viii) the Collateralized LOCs and
the Defeased Notes.
SECTION 6.09. Investments. The Borrower will not make or
acquire any Investment in any Person other than Temporary Cash
Investments.
SECTION 6.10. Consolidations, Mergers and Sales of Assets.
The Borrower will not (i) consolidate or merge with or into any
other Person or (ii) sell, lease or otherwise transfer all or any
substantial part of its assets to any other Person.
SECTION 6.11. Project Agreements; Project Rights. (a) The
Borrower will not amend or modify any material provision of any
material Project Agreement (including any technical or design
specifications under the Dow Engineering Agreement) or terminate or
agree to termination of any material Project Agreement or waive any
material right thereunder without the prior written consent of the
Required Banks, it being understood that any amendment or
modification by the Borrower of any provision of any of the Project
Agreements or waiver of any right thereunder which is permitted by
this Section 6.11 shall not constitute a breach of, or a default
under, any collateral assignment delivered by the Borrower pursuant
to Section 3 of the Security Agreement or any consent thereto.
(b) The Borrower will not enter into any material Project
Agreement in the future without first (i) having obtained the prior
written consent of the Required Banks (which consent will not be
unreasonably withheld) and (ii) taking any and all steps necessary
to create and perfect the Banks' Security Interest therein,
including, without limitation, the updating of Schedule I to the
Security Agreement to include such Project Agreement.
(c) The Borrower shall comply with the terms of each
material Project Agreement, shall enforce the terms of each
material Project Agreement against the other party or parties
thereto, and shall promptly advise the Agent of any material
default under any Project Agreement and the steps proposed to be
taken in connection therewith.
(d) In addition to any other relevant provisions hereof or of
the Security Agreement or the Deed of Trust, the Borrower agrees
that all properties and rights of the type referred to in Section
5.10 shall be obtained or renewed, all contractual
arrangements of the type referred to in Section 5.10 shall be
entered into, and all such properties and rights and contractual
arrangements shall be maintained in full force and effect, in each
case as necessary from time to time in connection with the
Development of the Elmore Facility, the operation of the Elmore
Facility and the sale of electricity to SCE under the Elmore Power
Purchase Contract.
SECTION 6.12. Covenants Under the Security Agreement and the
Deed of Trust. The Borrower will observe and perform its covenants
and agreements under the Security Agreement and the Deed of Trust.
SECTION 6.13. Insurance. (a) The Borrower, at its own cost
and expense, will cause to be maintained, with insurance companies
rated at least B+ by A.M. Best Company or such other insurance
companies as may be acceptable to the Required Banks, (i) during
the course of construction, builders' risk insurance on an all-risk
basis, including but not limited to extended coverage, coverage for
flood, earthquake (to the extent possible) and collapse and all
other risks and perils normally covered in "all-risk" policies, for
full replacement value on a
completed-value basis of all hard costs incurred (excluding the
cost of the transmission lines, wells and brine pipelines), plus
coverage for the Banks' construction period interest and fees on
the Tranche A and Tranche B Loans; (ii) at all times after
completion of construction, insurance on the Elmore Facility
against all risks of physical loss or damage, including flood,
earthquake (to the extent possible) and collapse and all other
risks and perils normally covered in "all risk" policies, for the
full cost of repair or replacement (excluding the costs of the
transmission lines, wells and brine pipelines); (iii) as soon as
possible in the course of construction of the Elmore Facility and
at all times after completion of construction of the Elmore
Facility, boiler and machinery insurance written on a
comprehensive form for the full repair and replacement value of
Elmore Facility equipment; (iv) at all times, comprehensive general
liability insurance with a limit of no less than
$1,000,000, combined single limit, bodily injury and property
damage, for each occurrence; (v) at all times, excess public
liability insurance in the form of an umbrella policy which
umbrella policy shall afford coverage of not less than $10
million per occurrence over and above the coverage provided by the
policies described above; (vi) on and after the Firm
Operation Date, business interruption insurance covering, for an
annual term, only amounts due (including, without limitation,
interest, principal repayment and any other fees and expenses) on
the Banks' Loans; and (vii) as soon as practicable after the Agent
shall request, such other insurance with respect to the Elmore
Facility in such amounts equal to the greater of, and against such
insurable hazards, (x) as Magma maintains with respect to other
facilities similar to the Elmore Facility, which either of them
owns or operates, (y) as is usually carried by corporations of
established reputation operating similar
properties or (z) as the Agent may from time to time reasonably
request.
(b) Each insurance policy required under subsection (a) of
this Section 6.13 (i) shall (except for the liability insurance
referred to in subsection (a)(iv) above, which shall name the Banks
as an additional insured) insure the Banks' interests as
beneficiary under the Deed of Trust and shall provide that all
insurance proceeds payable under such policy shall, until notice
from the Agent to the contrary, be paid over directly to the Agent
for the benefit of the Banks, (ii) shall provide that it cannot be
cancelled or terminated without thirty days' prior written notice
to the Agent, (iii) shall include waivers by the insurer of all
claims for the payments by the Banks and the Agent of insurance
premiums, (iv) shall (except for the liability insurance referred
to in subsection (a)(iv) above) provide for losses to be payable to
the Banks notwithstanding (x) any act or failure to act by the
insured or violation by the insured of warranties, declarations or
conditions contained in the policy, (y) any foreclosure or sale or
other proceeding relating to the Elmore Facility or construction
work in progress or (z) any change in the title to or ownership of
the Elmore Facility or construction work in progress, (v) shall
(except for the
liability insurance referred to in subsection (a)(v) above, which
shall have no deductible) provide for deductibles for (x) "all
risk" coverage of no greater than $500,000 per occurrence and (y)
business interruption coverage of no greater than 60 days, and (vi)
shall be in all other respects satisfactory to the Required Banks.
On or before the date of the first Borrowing under this Agreement,
the Borrower will provide the Agent, with sufficient copies for the
Banks, with certified copies of the insurance policies providing
coverage as then required hereunder together with evidence that
such policies are in effect or, if certified copies are not
available on or prior to the first Borrowing, certificates of
insurance executed by the insurer or its
authorized agent shall be acceptable in lieu of the certified
copies until such certified copies are available.
(c) (i) Unless a Default shall have occurred and be
continuing, to the extent that insurance proceeds received under
the insurance referred to in subsections (a)(i), (ii) and (iii)
above with respect to any one incident or any series of incidents
occurring within a twelve-month period, (x) do not exceed
$1,000,000, such proceeds shall be released by the Banks to the
Borrower for repair and/or replacement of damaged portions of the
Elmore Facility or construction work in progress with respect to
which such insurance proceeds have been received and (y) exceed
$1,000,000, such proceeds shall be released by the Banks to the
Borrower for such repair and/or replacement only upon receipt by
the Banks of a certificate from its Technical Consultant to the
effect that there has occurred no event or circumstance
(including the event or circumstance with respect to which such
proceeds are payable) since the date of the Original Agreement that
materially adversely affects the feasibility of the
Development of the Elmore Facility or the rebuilding of the Elmore
Facility, the economic viability of the Elmore Facility or the
business prospects of the Borrower.
(ii) Unless a Default shall have occurred and be
continuing, insurance proceeds received under the insurance
referred to in subsection (a)(v) above shall be released by the
Banks to the Borrower for application for the purposes specified
for Tranche A Loans in Section 6.20 hereof and for the rebuilding
of the Elmore Facility.
(d) As soon as practicable after the end of each fiscal year
of the Borrower commencing with the current fiscal year, and in any
event within 90 days thereafter, the Borrower shall
deliver to the Agent (i) an Officer's Certificate setting forth the
insurance obtained by the Borrower pursuant to this Section 6.13 as
then in effect, and stating whether, in the opinion of such
Officer, such insurance policies comply with the
requirements of this Section 6.13, and that all premiums then due
thereon have been paid and the same are in full force and effect
and (ii) a report by an independent insurance broker or
independent insurance consultant reasonably satisfactory to the
Agent, reviewing the most recent report delivered pursuant to the
preceding sentence and setting forth recommendations of such
independent insurance broker or independent insurance consultant as
to additional insurance, if any, reasonably required for the
protection of the respective interests of the Banks in the light of
available insurance coverage and practice of corporations of
established reputation operating similar businesses and
properties in the same general region.
(e) The Borrower shall instruct the insurers with which it
maintains insurance to advise the Banks in writing promptly of any
act or omission on the part of the Borrower of which any such
insurer has knowledge which may invalidate or render
unenforceable, in whole or in part, any such insurance. The
Borrower's obligation under this Section 6.13(e) shall be
satisfied if the applicable insurance policy or policies or
certificate or certificates of insurance shall so obligate such
insurer or insurers.
(f) The foregoing requirements as to insurance are in
addition to any statutory requirements, including, without
limitation, any requirements for employer's liability and
workmen's compensation insurance.
(g) If at any time the Borrower believes that any insurance
coverage required by this Section 6.13 is unavailable or is not
available on reasonable terms (an "Original Coverage"), the
Borrower shall provide written notice to the Agent, with
sufficient copies for the Banks, detailing the difficulties of
obtaining such Original Coverage and proposing alternative
insurance coverage. The Agent, with the consent of the Required
Banks, shall notify the Borrower within 30 days if such proposed
alternative is satisfactory to it, in which event such
alternative coverage shall be deemed to be substituted for the
relevant requirements of this Section 6.13. If at any time
thereafter any Original Coverage for which there has been a
substitution shall become available on reasonable terms: (i) the
Borrower shall immediately so notify the Agent in writing, (ii) the
Borrower shall obtain such Original Coverage as soon as practicable
and (iii) the alternative insurance requirements in force pursuant
to this Section 6.13(g) shall cease to be
effective and the relevant Original Coverage requirements set forth
in paragraphs (a) or (b) of this Section 6.13 shall become
effective again.
SECTION 6.14. Additional Facilities. The Borrower will take
no action under Section 2.3.4 of the Easement Agreement or Section
2.2 of the Ground Lease unless those actions are taken in strict
compliance with the terms of those provisions of the Easement
Agreement and the Ground Lease, respectively.
SECTION 6.15. Notices. The Borrower shall promptly
deliver, or cause to be delivered, to the Agent, with sufficient
copies for the Banks, all notices, reports and other information
delivered to the limited partners pursuant to the Limited
Partnership Agreement, notice of any reimbursement of the
Construction Manager under Section 3 of the Construction
Management Agreement, copies of all written information delivered
to the Borrower pursuant to Section 6.1.7 of the Construction
Management Agreement, and all notices, reports and certificates
delivered under Sections 2.04 or 5.05 of the Funding and
Construction Agreement.
SECTION 6.16. Negative Pledge. The Borrower will not create,
assume or suffer to exist any Lien on any asset now owned or
hereafter acquired by it, except:
(a) Liens created by the Security Agreement and the Deed of
Trust;
(b) Liens for taxes, assessments, or governmental charges
(i) not yet past due or (ii) that are being contested in good
faith by appropriate proceedings and as long as the Borrower has
established and maintains adequate reserves for the
payment of the same in conformity with generally accepted
accounting principles;
(c) Liens imposed by statutory or common law, such as
carrier's, warehousemen's, mechanics, materialmen's and other
similar liens, arising in the ordinary course of business in
respect of obligations that (i) are not overdue or (ii) are
being contested in good faith by appropriate proceedings, and
for which the Borrower establishes and maintains adequate
reserves for the payment of the same in conformity with
generally accepted accounting principles;
(d) Liens incurred in the ordinary course of business to
secure surety, stay, appeal or customs bonds, or pledges or
deposits for purposes of like nature which do not exceed in the
aggregate $500,000;
(e) Zoning restrictions, covenants, conditions, easements,
rights-of-way, or other restrictions or encumbrances on the use
of real property or minor irregularities in the title thereto
which do not in the aggregate materially detract from the value
of its assets or materially impair the use thereof in the
operation of its business; and
(f) Liens created by any litigation or legal proceeding
that is currently being contested by the Borrower in good faith
or arising from any judgment, provided that the judgment does
not constitute an Event of Default under Section 7.01(m) and
such Liens do not in the aggregate exceed $200,000.
SECTION 6.17. Business. The Borrower will not engage in any
business or activities, other than the Development of the Elmore
Facility, operation of the Elmore Facility and sale of electricity
to SCE under the Elmore Power Purchase Contract and any activities
incidental to any of the foregoing, and shall not abandon the
Development of the Elmore Facility or the Elmore Facility, without,
in each case, the prior written consent of the Required Banks.
SECTION 6.18. Qualifying Facility. Neither the General
Partner nor the Borrower shall engage in any activity or
activities which would result in the Elmore Facility's inability to
satisfy the criteria required to be satisfied in order to be a
"qualifying facility" under 18 C.F.R. Section 292.203, as
amended. If the Elmore Facility has not been certified as a
"qualifying facility" prior to July 15, 1988, the Borrower will
take all action necessary so that the Elmore Facility is in a
position to "self-certify" as a "qualifying facility" and has done
so prior to August 15, 1988.
SECTION 6.19. Interest Rate Hedging. The Borrower shall not
enter into or obtain interest rate swaps, interest rate cap
agreements or any such other instrument which results in
effectively fixing or capping the interest costs to the Borrower of
funds borrowed under this Agreement with any Person whose senior
debt obligations are rated less than one of the two
highest rating categories by either Moody's Investors Service, Inc.
or Standard & Poor's Corporation, or if such services shall no
longer exist, such other nationally recognized statistical rating
organization as shall be specified by the Required Banks.
SECTION 6.20. Use of Proceeds. The proceeds of the Loans
made under Tranche A of this Agreement and Tranche A LOC Debt will
be used by the Borrower for the direct or indirect financing of
Project Costs and the direct or indirect financing of Project
Contributions (as that term is defined in the Funding and
Construction Agreement). The proceeds of the Loans made under
Tranche B of this Agreement and Tranche B LOC Debt will be used by
the Borrower for direct or indirect financing of Project Cost
Overruns. None of such proceeds will be used, directly or
indirectly, for the purpose, whether immediate, incidental or
ultimate, of (x) purchasing or carrying any "margin stock" within
the meaning of Regulation U, or (y) financing any distribution of
cash or securities or property to the partners of the Borrower.
SECTION 6.21. Working Capital. The Borrower shall at the end
of each fiscal quarter and immediately after each
distribution to any of its partners, have Working Capital in an
amount equal to or greater than the Working Capital Requirement.
SECTION 6.22. Construction of Elmore Facility. The
Borrower will use its best efforts to complete, or cause to be
completed, the Development of the Elmore Facility substantially on
schedule and in accordance with the Plans and Specifications
described on Exhibit H to the Construction Management Agreement and
will obtain the necessary Capital Contributions to permit
Borrowings under Section 4.02(a) for such purpose.
SECTION 6.23. Accounts. All accounts of the Borrower shall
at all times be maintained at banks or trust companies that have
certificates of deposit rated in one of the two highest grades by
a nationally recognized rating agency; provided that the Borrower
may keep an aggregate of $100,000 in accounts at banks or trust
companies that do not meet the foregoing rating requirement.
SECTION 6.24. Issuance Agreements. The Borrower will not
modify any provision of any Issuance Agreement, other than a
provision relating to the fees payable by the Borrower under such
Issuance Agreements, without the written consent of the Agent, such
consent not to be unreasonably withheld.
ARTICLE VII
DEFAULTS
SECTION 7.01. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be
continuing:
(a) the Borrower shall fail to pay when due any principal
of or interest on any Loan, any fees or any other amount payable
hereunder;
(b) the Borrower shall fail to observe or perform any
covenant contained in Sections 6.07, 6.08, 6.09, 6.10,
6.11(a), 6.11(b), 6.13, 6.14, 6.16, 6.20 or 6.21 of this
Agreement or in Section 7 of the Security Agreement;
(c) the Borrower shall fail to observe or perform any of
its covenants or agreements contained in this Agreement, the
Security Agreement or the Deed of Trust (other than those
covered by clauses (a) or (b) above) for 10 days after written
notice thereof has been given to the Borrower by the Agent;
provided that if any such failure cannot be cured within 10
days, such failure shall not constitute an Event of Default if
such failure can be corrected, corrective action has been taken by
the Borrower or a general partner of the Borrower within the 10 day
period and is being diligently pursued and such failure is
corrected within 60 days of the end of the 10 day period; provided
further that if at the end of such 60 day period such failure is
not cured, such failure shall not constitute an Event of Default if
(i) such failure can be corrected, (ii) corrective action has been
diligently pursued by the Borrower, (iii) the Borrower shall have
provided the Banks, at least 10 Domestic Business Days prior to the
end of such 60 day period (or prior to the end of an Additional
Cure Period permitted pursuant to this proviso), with an Additional
Cure Period Request, (iv) the Agent shall have notified the
Borrower that the Required Banks have not, within seven Domestic
Business Days of receipt of such Additional Cure Period Request, in
their reasonable judgment, denied such Additional Cure Period
Request and (v) such failure is corrected within such Additional
Cure Period, unless the conditions of this proviso shall have again
been satisfied;
(d) Magma shall fail to observe or perform any of its
financial obligations, covenants or agreements contained in the
Magma Undertaking;
(e) a Dissolution or Liquidation shall occur pursuant to
Article X of the Limited Partnership Agreement;
(f) any representation, warranty, certification or
statement made by the Borrower in this Agreement, the Security
Agreement or the Deed of Trust or in any certificate, financial
statement or other document delivered pursuant to this Agreement,
the Deed of Trust or the Security Agreement shall prove to have
been incorrect in any material respect when made (or deemed made);
(g) a material default under any material Project Agreement
by any party to the Project Agreements shall have occurred and
be continuing; provided that if any such default by the Borrower
cannot be cured within any applicable grace period, such default
shall not constitute an Event of Default if such default can be
corrected and does not relate to a monetary obligation, corrective
action has been taken by the Borrower or a general partner of the
Borrower within the applicable grace period and is being diligently
pursued and such default is corrected within 60 days of the end of
the applicable grace period; provided further that if at the end of
such 60 day period such failure is not cured, such failure shall
not constitute an Event of Default if (i) such failure can be
corrected, (ii) corrective action has been diligently pursued by
the Borrower, (iii) the Borrower shall have provided the Banks, at
least 10 Domestic Business Days prior to the end of such 60 day
period (or prior to the end of an Additional Cure Period permitted
pursuant to this proviso) with an Additional Cure Period Request,
(iv) the Agent shall have notified the Borrower that the Required
Banks have not, within seven Domestic Business Days of receipt of
such Additional Cure Period Request, in their reasonable judgment,
denied such Additional Cure Period Request and (v) such failure is
corrected within such Additional Cure Period, unless the conditions
of this proviso shall have again been satisfied;
(h) any event or condition shall occur which results in the
acceleration of the maturity of any Debt of the Borrower, Debt
of Magma which has a principal amount in excess of $2,000,000,
or Debt of the General Partner which has a principal amount in
excess of $500,000, or which enables (or, with the giving of
notice or lapse of time or both, would enable) the holder of any
such Debt or any Person acting on such holder's behalf to
accelerate the maturity thereof, provided that, in the case of
any such event or condition relating to Debt of Magma, such
event or condition shall not have been cured (by payment of the
amount due upon acceleration or otherwise) within 10 days after
receipt by Mission of notice thereof from Magma, the Agent or any
Bank;
(i) the Borrower, the General Partner or Magma 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 it or any substantial part of its
property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing;
(j) an involuntary case or other proceeding shall be
commenced against the Borrower, the General Partner or Magma
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 and unstayed for
a period of 60 days; or an order for relief shall be entered
against the Borrower, the General Partner or Magma under the
federal bankruptcy laws as now or hereafter in effect;
(k) any member of the Controlled Group shall fail to pay
when due an amount or amounts aggregating in excess of $500,000
which it shall have become liable to pay to the PBGC or to a Plan
under Title IV of ERISA; or notice of intent to terminate a Plan or
Plans having aggregate Unfunded Vested Liabilities in excess of
$2,500,000 (collectively, a "Material Plan") shall be filed under
Title IV of ERISA by any member of the Controlled Group, any plan
administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate or
to cause a trustee to be appointed to administer any Material Plan
or a proceeding shall be instituted by a fiduciary of any Material
Plan against any member of the Controlled Group to enforce Section
515 or 4219(c)(5) of ERISA and such proceeding shall not have been
dismissed within 30 days thereafter; or a condition shall exist by
reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated;
(l) at any time after August 15, 1988, the Elmore Facility
(x) shall fail to satisfy the criteria required to be satisfied in
order to be a "qualifying facility" under 18 C.F.R. Section
292.203, as amended, or (y) shall not have been so certified by the
Federal Energy Regulatory Commission or shall not have so "self-
certified";
(m) a judgment or order for the payment of money in excess
of $500,000 shall be rendered against the Borrower or the
General Partner and such judgment or order shall continue
unsatisfied, unstayed or unappealed for a period of 20 days;
(n) the Elmore Power Purchase Contract shall cease to be in
full force and effect or shall cease to be the valid and
binding obligation of SCE;
(o) there shall be a judgment or order of any court or
arbitrator or any governmental body, agency or official which
renders the Elmore Power Purchase Contract invalid or unenforceable
or requires a material modification of such contract, which
judgment or order continues unstayed or unappealed for a period in
excess of 20 days;
(p) the Elmore Facility or construction work in progress
shall be totally destroyed or shall be damaged to the extent
that it is a total or constructive loss, or insurance proceeds
payable in respect of loss of or damage to the Elmore Facility
or construction work in progress shall exceed $10,000,000 with
respect to any one incident or any series of incidents occurring
within a twelve month period; or the Elmore Facility or
construction work in progress or the real property and real
property interests (including geothermal rights) associated with
the Elmore Facility or necessary for Development of the Elmore
Facility shall be condemned or shall become subject to eminent
domain proceedings affecting substantially all thereof, or
condemnation awards or amounts payable in connection with eminent
domain proceedings with respect to any of such properties shall
exceed, in any twelve month period, $10,000,000;
(q) the Completion Date shall not occur on or before June
30, 1989;
(r) the Firm Operation Date shall not occur on or prior to
February 22, 1989;
(s) the Borrower, any Bank, the Agent or the General
Partner shall, solely by reason of the transactions contemplated by
the Project Agreements, become subject to regulation under the
Federal Power Act or the Public Utility Holding Company Act of 1935
or under state laws or regulations respecting the rates or the
financial or organizational regulation of electric utilities;
(t) a material default shall have occurred and be
continuing under any of the Geothermal Leases, any Geothermal
Lease shall cease to be in full force and effect or shall cease to
be a valid and binding obligation of the parties thereto; provided,
that if any such default cannot be cured within any applicable
grace period, such default shall not constitute an Event of Default
if such default can be corrected and does not relate to a monetary
obligation, corrective action has been taken by the Borrower or a
general partner of the Borrower within the applicable grace period
and is being diligently pursued and such default is corrected
within 60 days of the end of the applicable grace period; provided
further that if at the end of such 60 day period such failure is
not cured, such failure shall not constitute an Event of Default if
(i) such failure can be corrected, (ii) corrective action has been
diligently pursued by the Borrower, (iii) the Borrower shall have
provided the Banks, at least 10 Domestic Business Days prior to the
end of such 60 day period (or prior to the end of an Additional
Cure Period permitted pursuant to this proviso), with an Additional
Cure Period Request, (iv) the Agent shall have notified the
Borrower that the Required Banks have not, within seven Domestic
Business Days of receipt of such Additional Cure Period Request, in
their reasonable judgment, denied such Additional Cure Period
Request and (v) such failure is corrected within such Additional
Cure Period, unless the conditions of this proviso shall have again
been satisfied;
(u) a CEC Event shall have occurred; or
(v) Red Hill shall have been removed or replaced as General
Partner or shall cease to be a wholly-owned subsidiary of Magma
(otherwise than by merger with or into Magma), or any general
partner of the Borrower shall have been removed or replaced prior
to the Conversion Date unless, in each case, the consent of the
Required Banks shall have been obtained, provided that no such
consent shall be necessary for any conversion of Niguel's interest
as a general partner into a limited partner interest pursuant to
Section 13.2 of the Limited Partnership Agreement;
then, and in every such event (unless specifically waived as
provided in Section 10.06 hereof), the Agent shall:
(i) if requested by Banks having more than 50% in aggregate
amount of the Tranche A Commitments and Tranche B Commitments,
(A) by notice to the Borrower terminate the Commitments and the LOC
Commitment whereupon the Commitments and the LOC Commitment shall
terminate (which termination of the LOC Commitment shall not,
however, affect the obligations to make disbursements with respect
to outstanding LOCs andCollateralized LOCs or the several
obligations of the Banks to purchase participations in LOCs and
Loans as set forth in Articles II and III), without demand or
further notice of any kind, all of which are expressly waived
hereby, anything contained herein or in the Depositary Agreement or
the LOCs to the contrary notwithstanding, and (B) instruct the
Fronting Bank not to issue LOCs and the Depositary not to issue or
release for delivery any LOC Debt after such instructions have
been given (a copy of such notice shall be provided to the MTN
Dealer, but failure to provide a copy of such notice shall not
affect the validity of such notice); and
(ii) if requested by Banks holding Notes evidencing more
than 50% in aggregate principal amount of the Loans, (A) by
notice to the Borrower (a copy of which notice shall be provided to
the Depositary) declare the Notes (together with accrued interest
thereon) to be, and the Notes shall thereupon become, immediately
due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower,
and (B) deliver a demand to the Borrower to provide, and the
Borrower shall immediately provide, the Security Agent with cash
collateral in an amount equal to the aggregate Face Amount of all
Outstanding LOC Debt;
provided that in the case of any of the Events of Default
specified in clauses (i) or (j) above with respect to the
Borrower, without any notice to the Borrower or any other act by
the Agent or the Banks, the Commitments shall thereupon terminate
and the Notes (together with accrued interest thereon) shall become
immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the
Borrower, and provided further that the existence of an Event of
Default will not affect the obligations of the Banks to participate
in LOCs outstanding at such time.
SECTION 7.02. Notice of Default. The Agent shall give notice
to the Borrower under Section 7.01(c) promptly upon being requested
to do so by any Bank and shall thereupon notify all the Banks
thereof.
ARTICLE VIII
THE AGENT
SECTION 8.01. Appointment and Authorization. Each Bank
irrevocably appoints and authorizes the Agent to take such action
as agent on its behalf and to exercise such powers under this
Agreement and the Notes as are delegated to the Agent by the terms
hereof or thereof, together with all such powers as are reasonably
incidental thereto. Each Bank also irrevocably authorizes the
Agent, as part of its function as Agent hereunder, to enter into
the Collateral Documents as Security Agent on behalf of the Banks,
and to take such action and to exercise such powers under the
Collateral Documents as are delegated to the Security Agent by the
terms thereof, together with all such powers as are reasonably
incidental thereto.
SECTION 8.02. Agent and Affiliates. Morgan Guaranty Trust
Company of New York shall have the same rights and powers under
this Agreement and the Collateral Documents as any other Bank and
may exercise or refrain from exercising the same as though it were
not the Agent, and Morgan Guaranty Trust Company of New York and
its affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Borrower or any
Affiliate of the Borrower as if it were not the Agent hereunder or
the Security Agent in connection with the Collateral Documents.
SECTION 8.03. Action by Agent. The obligations of the Agent
hereunder are only those expressly set forth herein and in the
Collateral Documents. Without limiting the generality of the
foregoing, the Agent shall not be required to take any action with
respect to any Default, except as expressly provided in Article VII
and in the Collateral Documents.
SECTION 8.04. Consultation with Experts. The Agent may
consult with legal counsel (who may be counsel for the Borrower),
independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by
it in good faith in accordance with the advice of such counsel,
accountants or experts.
SECTION 8.05. Liability of Agent. Neither the Agent nor any
of its directors, officers, agents, or employees shall be liable
for any action taken or not taken by it in connection herewith or
under the Collateral Documents, (i) with the consent or at the
request of the Required Banks or (ii) in the absence of its own
gross negligence or willful misconduct. Neither the Agent nor any
of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or
verify (i) any statement, warranty or representation made in
connection with this Agreement, the Collateral Documents or any
borrowing hereunder; (ii) the performance or observance of any of
the covenants or agreements of the Borrower; (iii) the satisfaction
of any condition specified in Article IV, except receipt of items
required to be delivered to the Agent; or (iv) the validity,
effectiveness or genuineness of this Agreement, the Collateral
Documents, the Notes or any other instrument or
writing furnished in connection herewith. The Agent shall not
incur any liability by acting in reliance upon any notice,
consent, certificate, statement, or other writing (which may be a
bank wire, telex, telecopy or similar writing) believed by it to be
genuine or to be signed by the proper party or parties. The Agent
shall be permitted to assume that the Banks have, pursuant to
Section 3.14, purchased participations in Loans made by the
Fronting Bank pursuant to Section 2.06 as of the date such Loans
were made by the Fronting Bank, except to the extent the Fronting
Bank has provided written notice to the Agent to the contrary. The
Agent has no responsibility to assist the Fronting Bank in
collecting funds owed to the Fronting Bank pursuant to Section
3.14.
SECTION 8.06. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent (to the extent
not reimbursed by the Borrower) against any cost, expense
(including counsel fees and disbursements), claim, demand,
action, loss or liability (except such as result from the Agent's
gross negligence or willful misconduct) that the Agent may suffer
or incur in connection with this Agreement or under the
Collateral Documents or any action taken or omitted by the Agent
hereunder or under the Collateral Documents.
SECTION 8.07. Credit Decision. Each Bank acknowledges that
it has, independently and without reliance upon the Agent 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 acknowledges that it
will, independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
decisions in taking or not taking any action under this Agreement.
SECTION 8.08. Successor Agent. The Agent may resign at any
time by giving at least three Domestic Business Days' written
notice thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a
successor Agent. If no successor Agent shall have been so
appointed by the Required Banks, and shall have accepted such
appointment, within 30 days after the retiring Agent's giving of
notice of resignation, then the retiring Agent may, on behalf of
the Banks, appoint a successor Agent, which 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 $50,000,000. Upon the acceptance of its appointment as Agent
hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights and
duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder and under the
Collateral Documents. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article shall inure to
its benefit as to any actions taken or omitted to be taken by it
while it was Agent.
SECTION 8.09. Certain Duties of Agent. The Agent will
transmit to the Banks all material information it receives from the
Borrower pursuant to this Agreement concerning the financial
position, business or operations of the Borrower. The Agent will
consult with the Banks (but shall not be bound by their advice) in
making its interest rate determination pursuant to Section 11.1(iv)
of the Operating and Maintenance Agreement. Whenever the Agent is
authorized under the Security Agreement or the Deed of Trust to
take any action to cure defaults, the Agent
undertakes to take any action that it shall be requested to take by
the Required Banks, provided that the Banks making such
request shall bear the costs of any such action and indemnify the
Agent in a manner satisfactory to the Agent against any losses,
damages, liabilities or expenses that the Agent may suffer or incur
as a result of taking such action.
ARTICLE IX
CHANGE IN CIRCUMSTANCES
SECTION 9.01. Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of any
Interest Period:
(a) the Agent is advised by the Reference Banks that
deposits in dollars (in the applicable amounts) are not being
offered to the Reference Banks in the relevant market for such
Interest Period, or
(b) Banks having 50% or more of the aggregate amount of
the Commitments advise the Agent that the Adjusted CD Rate or
the Adjusted London Interbank Offered Rate, as the case may be, as
determined by the Agent will not adequately and fairly reflect the
cost to such Banks of funding their Fixed Rate Loans for such
Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and
the Banks, whereupon until the Agent notifies the Borrower that the
circumstances giving rise to such suspension no longer exist, the
obligations of the Banks to make CD Loans or Euro-Dollar Loans, as
the case may be, shall be suspended. Unless the Borrower notifies
the Agent at least two Domestic Business Days before the date of
any Fixed Rate Borrowing for which a Notice of Borrowing has
previously been given that it elects not to borrow on such date,
such Borrowing shall instead be made as a Prime Borrowing.
SECTION 9.02. Illegality. (a) If, after the date of this
Agreement, the adoption of any applicable law, rule or
regulation, 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 any Bank
(or its Euro-Dollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or
impossible for any Bank (or its Euro-Dollar Lending Office) to
make, maintain or fund its Euro-Dollar Loans and such Bank shall so
notify the Agent, the Agent shall forthwith give notice thereof to
the other Banks and the Borrower, whereupon until such Bank
notifies the Borrower and the Agent that the circumstances giving
rise to such suspension no longer exist, the obligation of such
Bank to make Euro-Dollar Loans shall be suspended. Before giving
any notice to the Agent pursuant to this Section, such Bank shall
designate a different Euro-Dollar Lending Office if such
designation will avoid the need for giving such notice and will
not, in the judgment of such Bank, be otherwise disadvantageous to
such Bank. If such Bank shall determine that it may not lawfully
continue to maintain and fund any of its outstanding Euro-Dollar
Loans to maturity and shall so specify in such notice, the Borrower
shall immediately prepay in full the then outstanding principal
amount of each such Euro-Dollar Loan, together with accrued
interest thereon. Concurrently with prepaying each such Euro-
Dollar Loan, the Borrower shall borrow a Prime Loan in an equal
principal amount from such Bank (on which interest and principal
shall be payable contemporaneously with the related Euro-Dollar
Loans of the other Banks), and such Bank shall make such a Prime
Loan.
(b) If, after the date of this Agreement, the adoption of any
applicable law, rule or regulation, 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
any Bank or the Fronting Bank with any request or directive
(whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or
impossible for any Bank or the Fronting Bank to participate in or
issue, as the case may be, LOCs and such Bank or Fronting Bank, as
the case may be, shall so notify the Agent, the Agent shall
forthwith give notice thereof to the other Banks and the
Borrower, whereupon until such Bank or Fronting Bank notifies the
Borrower and the Agent that the circumstances giving rise to such
suspension no longer exist, the obligation of such Bank or
Fronting Bank to participate as provided in Section 2.07 in LOCs
issued thereafter, or, in the case of the Fronting Bank, to issues
LOCs thereafter, shall be suspended forthwith and the LOC
Commitment shall be proportionately suspended in whole or in part
accordingly, subject in each case to restoration if such
unlawfulness or impossibility ceases to exist. The terms of any
other provision of this Agreement notwithstanding, no such
suspension pursuant to this Section 9.02 shall affect the
obligations of such Bank to participate in accordance with
Section 3.14 in any outstanding LOCs with respect to LOC Debt
theretofore issued and delivered prior to such suspension and
otherwise entitled to the benefits of any LOC or shall affect the
obligations of the Fronting Bank under any outstanding LOC. If the
Commitment of a Bank to incur liability under or participate in
LOCs issued or to be issued pursuant hereto shall have been
suspended in accordance with the foregoing provisions of this
Section 9.02(b), then, upon the incurrence by the other Banks of
any further LOC Utilization under or in respect of any such LOC
pursuant hereto, such Bank shall make a Loan to the Borrower in an
amount such that the respective Utilizations of all the Banks will
remain in the proportions specified in Section 3.01, and the
Borrower agrees to utilize the Commitment of such Bank
accordingly.
SECTION 9.03. Increased Cost and Reduced Return. (a) If
after the date hereof, the adoption of any applicable law, rule or
regulation, 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 any Bank
(or its Lending Office) with any request or directive (whether or
not having the force of law) of any such authority, any central
bank or comparable agency:
(i) shall subject any Bank (or its Lending Office) to any
tax, duty or other charge with respect to its Fixed Rate Loans, its
Notes or its obligation to make Fixed Rate Loans, or shall change
the basis of taxation of payments to any Bank (or its Lending
Office) of the principal of or interest on its Fixed Rate Loans or
any other amounts due under this Agreement in respect of its Fixed
Rate Loans or its obligation to make Fixed Rate Loans (except for
changes in the rate of tax on the overall net income of such Bank
or its Lending Office imposed by the jurisdiction in which such
Bank's principal executive office or Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without
limitation, any such requirement imposed by the Board of Governors
of the Federal Reserve System, but excluding (A) with respect to
any CD Loan any such requirement included in an applicable Domestic
Reserve Percentage and (B) with respect to any Euro-Dollar Loan any
such requirement included in an applicable Euro-Dollar Reserve
Percentage) against assets of, deposits with or for the account of,
or credit extended by, any Bank (or its Lending Office) or shall
impose on any Bank (or its Lending Office) or on the United States
market for certificates of deposit or the London interbank market
any other condition affecting its Fixed Rate Loans, its Notes or
its obligation to make Fixed Rate Loans;
and the result of any of the foregoing is to increase the cost to
such Bank (or its Lending Office) of making or maintaining any
Fixed Rate Loan, or to reduce the amount of any sum received or
receivable by such Bank (or its Lending Office) under this
Agreement or under its Notes with respect thereto, by an amount
deemed by such Bank to be material, then, within 15 days after
demand by such Bank (with a copy to the Agent), the Borrower shall
pay to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction.
(b) If after the date hereof, any Bank shall have
determined that the adoption of any applicable law, rule or
regulation 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 compliance by
any Bank (or its Lending Office) with 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 such Bank's
capital as a consequence of its obligations hereunder to a level
below that which such Bank could have achieved but for such
adoption, change or compliance (taking into consideration such
Bank's policies with respect to capital adequacy) by an amount
deemed by such Bank to be material, then from time to time, within
15 days after demand by such Bank (with a copy to the Agent), the
Borrower shall pay to such Bank such additional amount or amounts
as will compensate such Bank for such reduction; provided that if
(x) the event giving rise to any such demand relates to one or
more, but less than all, of the Banks, or (y) there are
circumstances unique to one or more, but less than all, of the
Banks that result in a demand by such Bank for payment of an amount
that is materially greater than the amount demanded by other Banks,
the Borrower shall have the right to replace any Bank making such
demand with another bank satisfactory to the Agent that agrees to
assume and be bound by all of such replaced Bank's obligations
hereunder.
(c) Each Bank will promptly notify the Borrower and the Agent
of any event of which it has knowledge, occurring after the date
hereof, which will entitle 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 judgment of such Bank, be
otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error. In determining such
amount, such Bank may use any reasonable averaging and attribution
methods.
SECTION 9.04. Prime Loans Substituted for Affected Fixed Rate
Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans
has been suspended pursuant to Section 9.02 or (ii) any Bank has
demanded compensation under Section 9.03(a) and the Borrower shall,
by at least five Euro-Dollar Business Days' prior notice to such
Bank through the Agent, have elected that the provisions of this
Section shall apply to such Bank, then, unless and until such Bank
notifies the Borrower that the circumstances giving rise to such
suspension or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by such Bank as
CD Loans or Euro-Dollar Loans, as the case may be, shall be made
instead as Prime Loans (on which interest and principal shall be
payable contemporaneously with the related Fixed Rate Loans of the
other Banks), and
(b) after each of its CD Loans or Euro-Dollar Loans, as the
case may be, has been repaid, all payments of principal which would
otherwise be applied to repay such Fixed Rate Loans shall be
applied to repay its Prime Loans instead.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing
(including bank wire, telex, telecopy or similar writing) and shall
be given to such party at its address, telex number or telecopy
number set forth on the signature pages hereof or such other
address, telex number or telecopy number as such party may
hereafter specify for the purpose by notice to the Agent and the
Borrower. Each such notice, request or other communication shall
be effective (i) if given by telex, when such telex is transmitted
to the telex number specified in this Section and the appropriate
answerback is received, (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid or (iii) if given by any other
means, when delivered at the address specified in this Section;
provided that notices to the Agent under Article II, Article III or
Article IX shall not be effective until received.
SECTION 10.02. No Waivers. No failure or delay by the Agent
or any Bank in exercising any right, power or privilege hereunder
or under any Note shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by
law.
SECTION 10.03. Expenses; Documentary Taxes. (a) The
Borrower shall pay (i) all out-of-pocket expenses of the Agent
incurred in connection with the Development of the Elmore Facility
and the preparation and administration of this Agreement, the
Notes, the Security Agreement and the Deed of Trust, any waiver or
consent hereunder or thereunder or any amendment hereof or thereof
or any Default or alleged Default hereunder, including fees and
disbursements of New York and California counsel for the Agent and
the Banks, travel expenses, computer expenses, consulting fees for
engineering reports, surveys and other technical analyses,
publicity costs and costs of monitoring construction, testing and
start-up of the Elmore Facility and (ii) if a Default occurs, all
out-of-pocket expenses incurred by the Banks, including fees and
disbursements of counsel, in connection with such Default and
collection and other enforcement proceedings resulting therefrom.
The Borrower shall indemnify the Agent and the Banks against any
transfer taxes, documentary taxes, assessments or charges made by
any governmental authority by reason of the execution and delivery
of this Agreement, the Security Agreement, the Deed of Trust, the
Notes or any Issuance Agreement.
(b) Notwithstanding the provisions of Section 10.12, the
Borrower and the General Partner agree to indemnify each Bank and
hold each Bank harmless from and against any and all liabilities,
losses, damages, costs and expenses of any kind (including, without
limitation, the reasonable fees and disbursements of counsel for
any Bank in connection with any investigative, administrative or
judicial proceeding, whether or not such Bank shall be designated
a party thereto) which may be incurred by any Bank (or by the Agent
in connection with its actions as Agent hereunder), relating to or
arising out of the generation, transportation, storage, disposal or
clean-up of hazardous wastes in connection with the Development of
the Elmore Facility and Elmore Facility; provided that no Bank
shall have the right to be indemnified hereunder for its own gross
negligence or willful misconduct as determined by a court of
competent jurisdiction.
SECTION 10.04. Confidentiality; Safety Rules. (a) The Agent
and the Banks agree that they shall use their best efforts to
maintain confidential and not disclose to others any proprietary
business or technical information disclosed by Magma or the
Borrower hereunder and identified as proprietary information at the
time of disclosure, provided (i) that any such information (x)
which was in the Banks' possession prior to its disclosure
hereunder, or (y) is or becomes part of the public domain through
no fault of the Agent or the Banks, or (z) which comes into the
Agent's or Banks' possession from a third party which the Agent or
Banks had reason to believe had the right to disclose such
information, shall not be subject to these restrictions; (ii) such
information may be provided by the Agent to the Technical
Consultants and to successors or assigns, if any (or potential
participants), as contemplated by Section 10.07 for the purposes of
this Agreement and subject to conditions similar to those of this
Section 10.04(a) and, upon enforcement by the Security Agent of the
Security Interests, to any transferee or proposed transferee of the
Collateral; and (iii) such information may be disclosed by the
Agent as required by law or a governmental agency or pursuant to
legal process.
(b) The Agent and the Banks agree that any on-site
inspections made by them or their representatives hereunder shall
be made in compliance with applicable safety rules and insurance
requirements of which it has been advised.
SECTION 10.05. Sharing of Set-Offs. Each Bank agrees it
shall exercise a right of set-off or counterclaim only with the
written consent of the Banks. If a Bank shall, by exercising any
right of set-off or counterclaim or otherwise, receive payment of
a proportion of the aggregate amount of principal and interest due
with respect to any Note held by it which is greater than the
proportion received by any other Bank in respect of the aggregate
amount of principal and interest due with respect to any Note held
by such other Bank, the Bank receiving such proportionately greater
payment shall purchase such participations in the Notes held by the
other Banks, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest with
respect to the Notes held by the Banks shall be shared by the Banks
pro rata; provided that nothing in this Section shall impair the
right of any Bank to exercise any right of set-off or counterclaim
it may have and to apply the amount subject to such exercise to the
payment of indebtedness of the Borrower other than its indebtedness
under the Notes. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a
participation in a Note, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of set-off or
counterclaim and other rights with respect to such participation as
fully as if such holder of a participation were a direct creditor
of the Borrower in the amount of such participation.
SECTION 10.06. Amendments and Waivers. Any provision of this
Agreement or the Notes may be amended or waived if, but only if,
such amendment or waiver is in writing and is signed by the
Borrower and the Required Banks (and, if the rights or duties of
the Agent are affected thereby, by the Agent and, if the rights and
duties of the Fronting Bank are affected thereby, the Fronting
Bank); provided that no such amendment or waiver shall, unless
signed by all the Banks, (i) increase or decrease the Commitment of
any Bank or subject any Bank to any additional obligation, (ii)
reduce the principal of or rate of interest on any Loan or any fees
hereunder, (iii) postpone the date fixed for any payment of
principal of or interest on any Loan or any fees hereunder, (iv)
release any Collateral, except as otherwise permitted by the
Security Agreement, or (v) change the percentage of the Commitments
or of the aggregate unpaid principal amount of the Notes, or the
number of Banks, which shall be required for the Banks or any of
them to take any action under this Section or any other provision
of this Agreement.
SECTION 10.07. Successors and Assigns. (a) The provisions
of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns,
except that the Borrower may not assign or otherwise transfer any
of its rights under this Agreement.
(b) The Agent and the Borrower may, for all purposes of this
Agreement, treat any Bank as the holder of any Note drawn to its
order (and owner of the Loans evidenced thereby).
(c) No assignee, participant or other transferee of any
Bank's rights shall be entitled to receive any greater payment
under Section 9.03 than such Bank would have been entitled to
receive with respect to the rights transferred, unless such
transfer is made with the Borrower's prior written consent or by
reason of the provisions of Section 9.02 or 9.03 requiring such
Bank to designate a different Lending Office under certain
circumstances or at a time when the circumstances giving rise to
such greater payment did not exist.
(d) If any Reference Bank assigns its Notes to an
unaffiliated institution, the Agent shall, in consultation with the
Borrower and with the consent of Required Banks, appoint another
bank to act as a Reference Bank hereunder.
SECTION 10.08. Collateral. Each of the Banks represents to
the Agent and each of the other Banks that it in good faith is not
relying upon any "margin stock" (as defined in Regulation U) as
collateral in the extension or maintenance of the credit provided
for in this Agreement.
SECTION 10.09. New York Law. This Agreement and each Note
shall be construed in accordance with and governed by the law of
the State of New York.
SECTION 10.10. Counterparts; Integration; Effectiveness.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This
Agreement constitutes the entire agreement and understanding among
the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter
hereof.
SECTION 10.11. Involvement of Magma and Mission.
Notwithstanding anything contained in this Agreement to the
contrary, the Borrower and the Banks acknowledge and agree that
neither Magma nor Mission shall be deemed a guarantor of any of the
Borrower's obligations hereunder including, without limitation, the
Borrower's obligation to repay the Loans. In this regard, except
for Magma's financial obligations with respect solely to the Magma
Undertaking and the Indemnity Agreement dated as of March 14, 1988
between Magma and the Agent on behalf of the Banks, the
creditworthiness of Magma and Mission are not relevant to the Banks
entering into this Agreement. In delivering the certificates
specified in Section 4.02(e) hereof, Magma makes no warranty of the
feasibility or economic viability of the Elmore Facility.
SECTION 10.12. Debt Without Recourse. All amounts payable
pursuant to this Agreement, the Security Agreement, the Deed of
Trust and the Notes shall be paid only from the income of and the
proceeds from the Elmore Facility and the Collateral. The Banks
agree that they will look solely to the income of and the proceeds
from the Elmore Facility and the Collateral as provided herein, in
the Security Agreement and in the Deed of Trust, and none of Magma,
Mission, Red Hill, Niguel or any other partner of the Borrower
shall be personally liable to the Banks for any amounts payable
under this Agreement, the Security Agreement, the Deed of Trust and
the Notes or, except for fraud, subject to any liability under this
Agreement; provided that the foregoing shall not relieve Magma,
Mission, Red Hill, Niguel or any other partner of the Borrower from
any obligation it may have to return to the Borrower any amounts
distributed to it in violation of this Agreement or the Limited
Partnership Agreement or as otherwise required by the laws of the
State of California.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
ELMORE, L.P., a limited
partnership organized under the
laws of the State of California
By: RED HILL GEOTHERMAL, INC.,
a Delaware corporation, a
general partner
By: /s/ Wallace C. Dieckmann
Name:
Title: Vice President
11770 Bernardo Plaza Court
Suite 366
San Diego, CA 92128
Telex number:
By: NIGUEL ENERGY COMPANY,
a California corporation,
a general partner
By: /s/ Scott B.T. Sinclair
Name:
Title: Vice President
and Treasurer
18872 MacArthur Boulevard
Suite 400
Irvine, CA 92715
Attention: Treasurer
FRONTING BANK
THE FUJI BANK, LIMITED,
LOS ANGELES AGENCY,
as Fronting Bank
By: /s/ Kenichiro Tanaka
Name:
Title: Joint General Manager
333 South Grand Avenue
25th Floor
Los Angeles, California 90071
Attn: Project Finance Group
Telephone number:(213) 680-9855
Telecopy number: (213) 626-0475
(213) 625-0189
Telex: 67-3336
Attention: Project Finance Group
BANKS
THE FUJI BANK, LIMITED,
LOS ANGELES AGENCY
By: /s/ Kenichiro Tanaka
Name:
Title: Joint General Manager
333 South Grand Avenue
25th Floor
Los Angeles, California 90071
Attn: Project Finance Group
Telephone number:(213) 680-9855
Telecopy number: (213) 626-0475
(213) 625-0189
Telex: 67-3336
Attention: Project Finance Group
THE LONG-TERM CREDIT BANK
OF JAPAN, LTD.
By: /s/ Yutaka Hotta
Name:
Title: Deputy General Manager
444 South Flower Street
Suite 3700
Los Angeles, California 90071
Telephone number: (213) 629-5777
Telecopy number: (213) 622-6908
Telex: 67-3558
Attention: Takeshi Sugai
THE SUMITOMO BANK, LIMITED
By: /s/ Toshiyuki Kashima
Name:
Title: Joint General Manager
Chicago Branch
233 South Wacker Drive
Suite 7117
Chicago, Illinois 60606
Telephone number: (312) 876-0525
Telecopy number: (312) 876-6436
Telex: 253734, answerback SUMITCGO
Attention: Marketing/Loan
Administration
UNION BANK OF SWITZERLAND,
LOS ANGELES BRANCH
By: /s/ Paul E. Barbian
Name:
Title: Vice President
By: /s/ Paul G. Naumann
Name:
Title: Vice President
Domestic Lending Office
444 South Flower Street
Los Angeles, California 90071
Telephone number: (213) 489-0600
Telecopy number: (213) 489-0637
Telex: 4720453, answerback UBSLA
Attention: Corporate Banking
Department
With a copy to
EuroDollar Lending Office
Union Bank of Switzerland
Cayman Island Branch
c/o Union Bank of Switzerland
299 Park Avenue
New York, NY 10171
Telephone number: (212) 715-3000
Telecopy number: (212) 715-3459
Telex: 0620317, answerback UBSUW
Attention: Project Finance
Department
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ George L. Brown
Name:
Title: Vice President
Domestic Lending Office
Morgan Guaranty Trust Company
of New York
60 Wall Street
New York, New York 10260
Telex number: 177615
TOKYO LEASING (U.S.A.) INC.
By: /s/ Minoru Okada
Name:
Title: President
Two Soundview Drive
Greenwich, Connecticut 06830
Telephone number: (203) 661-2322
Telecopy number: (203) 661-2389
Telex: None
Attention: Manager
THE MITSUBISHI BANK, LIMITED,
NEW YORK BRANCH
By: /s/ Robert J. Munczinski
Name:
Title: Senior Vice President
and
Chief Manager
225 Liberty Street
Two World Financial Center
New York, NY 10281
Telephone number: (212) 667-2670
Telecopy number: (212) 667-3550
Telex: 232328, Answerback MITUR
Attention: Manager, Planning and
Administration
Department
THE AGENT
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By: /s/ George L. Brown
Name:
Title: Vice President
60 Wall Street
New York, New York 10260
Attention: Mult-Option Desk -
Loan Department
Telex number: 177615
Exhibit 10.79
LOC DEBT FACILITY AGREEMENT, dated as of April 18, 1990, among
ELMORE, L.P., a limited partnership organized under the laws of
California (the "Borrower"), the BANKS listed on the signature
pages hereof (the "Banks"), MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as Agent under the Credit Agreement (as defined below) (the
"Agent") and THE FUJI BANK, LIMITED, LOS ANGELES AGENCY, as
Fronting Bank (the "Fronting Bank").
The parties hereto, intending to be legally bound and in
consideration of the premises and mutual covenants herein
contained, hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.01 Definitions. For all purposes of this
Agreement, the following terms shall have the following meanings:
"Bank" means each bank or financial institution listed on the
signature pages hereof, and its successors and assigns.
"Collateralized LOCs" has the meaning set forth in Section
4.01.
"Commercial Paper Notes" shall mean the short-term
promissory notes to be issued payable to bearer or to a named payee
in the form of Exhibit A-1 to the Depositary Agreement (or any
variation thereof agreed to by the CP Dealers, the Agent, the
Fronting Bank, the Banks, the Borrower and the Depositary),
constituting LOC Debt of the Borrower, having a Face Amount of at
least $100,000, having a term not greater than 270 days and not
being subject to extension, automatic renewal or roll-over.
"CP Dealer" shall mean Merrill Lynch Money Markets Inc. and/or
Smith Barney, Harris Upham & Co. Inc. or any other Person appointed
as a CP Dealer in a CP Dealer Agreement with the prior written
consents of the Fronting Bank and the Agent, which
consents shall not be unreasonably withheld.
"CP Dealer Agreement" shall mean each Commercial Paper Dealer
Agreement between the Borrower and a CP Dealer,
substantially in the form attached to this Facility Agreement as
Annex I, with only such changes therein as are permitted by Section
5.07 hereof.
"Credit Agreement" shall mean the Amended and Restated Secured
Credit Agreement, dated as of April 18, 1990 among the Borrower,
the Banks, The Fuji Bank, Limited, Los Angeles Agency, as Fronting
Bank and Morgan Guaranty Trust Company of New York, as Agent, as
amended from time to time.
"Date of Issuance" shall mean the date on which any LOC Debt
is issued hereunder and under the Depositary Agreement.
"Dealer" shall mean any CP Dealer or MTN Dealer.
"Defeasance Account" has the meaning set forth in Section
4.01.
"Defeasance Date" has the meaning set forth in Section 4.01.
"Defeased Note" has the meaning set forth in Section 4.01.
"Depositary" shall mean The Fuji Bank and Trust Company or any
successor thereto as such pursuant to the Depositary
Agreement.
"Depositary Agreement" shall mean a Depositary Agreement among
the Borrower, the Fronting Bank, the Agent and the
Depositary, concerning the issuance by the Borrower of LOC Debt,
substantially in the form attached to this Facility Agreement as
Annex III.
"Facility Agreement" shall mean this LOC Debt Facility
Agreement.
"Medium-Term Notes" shall mean the interest-bearing notes to
be issued payable to the order of a named payee, in the form of
Exhibit B-1 to the Depositary Agreement (or any variation thereof
agreed to by the MTN Dealers, the Agent, the Fronting Bank, the
Banks, the Borrower and the Depositary), constituting LOC Debt of
the Borrower and having a term ending not earlier than 270 days
from the date of issuance and not later than August 31, 2001.
"MTN Dealer" shall mean Merrill Lynch Capital Markets, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Smith Barney, Harris
Upham & Co. Incorporated and The First Boston Corporation or any
other Person appointed as an MTN Dealer in an MTN
Distribution Agreement with the prior written consents of the
Fronting Bank and the Agent, which consents shall not be
unreasonably withheld.
"MTN Distribution Agreement" shall mean each Medium-Term Note
Distribution Agreement between the Borrower and an MTN Dealer,
substantially in the form attached to this Facility Agreement as
Annex II, with only such changes therein as are permitted by
Section 5.08 hereof.
"Net Sales Price" shall mean with respect to any Note the
initial purchase price of such Note minus the compensation
payable to the relevant Dealer in connection with the sale of such
Note.
"Notes" has the meaning assigned to such term in the
Depositary Agreement.
"Notice of Defeasance" has the meaning set forth in Section
4.01.
"Offering Material" shall have the meaning set forth in
Section 3.02(v).
SECTION 1.02. Interpretation. Unless otherwise defined
herein, capitalized terms used herein shall have the meanings
assigned to such terms in Article I of the Credit Agreement.
SECTION 1.03. Construction. This Facility Agreement is
supplemental to the Credit Agreement and shall be interpreted and
applied in all respects as though it were a part thereof.
SECTION 1.04. Issuance Agreements. The parties hereto
hereby approve each of this Facility Agreement, the Depositary
Agreement, the CP Dealer Agreement, and the MTN Distribution
Agreement, each of which shall constitute an Issuance Agreement for
purposes of the Credit Agreement regardless of when executed and
delivered. Each of the Banks authorizes and directs the Agent to
execute and deliver this Facility Agreement and the Depositary
Agreement and to perform its obligations hereunder and thereunder
as Agent for the Banks.
ARTICLE II
LOCs SUPPORTING LOC DEBT
SECTION 2.01. Issuance of LOCs and Related LOC Debt. (a)
Commitment. Upon the terms and subject to the conditions set forth
herein, in the Depositary Agreement and in the Credit Agreement,
and relying upon the representations and warranties set forth in
clause (iv) of Section 3.02 hereof, the Fronting Bank agrees to
issue LOCs in support of LOC Debt.
(b) Description of LOCs and Related LOC Debt. Each LOC
issued pursuant hereto shall (i) be printed on, or together with
and attached to, a Commercial Paper Note or a Medium-Term Note and
bear the same identifying number as such Commercial Paper Note or
Medium-Term Note, respectively, and (ii) comply with Sections 2.02
and 2.03 of the Credit Agreement. Each Commercial Paper Note and
related LOC or Medium-Term Note and related LOC shall be in the
form required by, and duly completed, executed and authenticated in
accordance with, the Depositary Agreement.
SECTION 2.02. Issuance of Commercial Paper Notes. (a)
Depositary Agreement; CP Dealer Agreement. As of the date hereof,
(i) the Borrower, by entering into the Depositary Agreement, has
authorized and directed the Depositary to act as depositary for
safekeeping of the Commercial Paper Notes and as the agent of the
Borrower for the authentication, issuance and delivery of
Commercial Paper Notes on the terms and conditions set forth herein
and therein and (ii) the Borrower, by entering into the CP Dealer
Agreement, has made arrangements for the sale of Commercial Paper
Notes.
(b) Instructions not to Issue Commercial Paper Notes. If at
any time the Agent determines, or is instructed by the Required
Banks, that the Borrower is not entitled to issue Commercial Paper
Notes under this Facility Agreement, the Credit Agreement or the
Depositary Agreement, the Agent shall instruct the Borrower and the
Depositary not to issue or release for delivery, and the CP Dealer
not to sell, Commercial Paper Notes. When so instructed, the
Depositary shall not issue or release for delivery any Commercial
Paper Notes until such instructions are revoked. Any pending
contracts to purchase Commercial Paper Notes from the Borrower
shall not be consummated after the time of receipt by the CP Dealer
of the stop notice. Any instructions given pursuant to this
Section 2.02(b) not to issue, release for delivery or sell
Commercial Paper Notes (x) shall specify the reason therefor,
including reference to the applicable provisions of the relevant
Issuance Agreement, (y) shall be promptly confirmed in writing if
not initially given in writing and (z) may be superseded, revised
or revoked only by the Agent in writing. In no event shall the
Agent, the Fronting Bank or the Depositary be liable to any party
for any losses or claims arising out of any actions taken in
accordance with this Section 2.02(b) absent gross negligence or
willful misconduct of the Agent, the Fronting Bank or the
Depositary.
SECTION 2.03. Issuance of Medium-Term Notes. (a)
Depositary Agreement; MTN Distribution Agreement. As of the date
hereof, (i) the Borrower, by entering into the Depositary
Agreement, has authorized and directed the Depositary to act as
depositary for safekeeping of the Medium-Term Notes and as the
agent of the Borrower for the authentication, issuance and
delivery of Medium-Term Notes on the terms and conditions set forth
herein and therein and (ii) the Borrower, by entering into the MTN
Distribution Agreement, has made arrangements for the sale of such
Medium-Term Notes.
(b) Instructions not to Issue Medium-Term Notes. If at any
time the Agent determines, or is instructed by the Required Banks,
that the Borrower is not entitled to issue Medium-Term Notes under
this Facility Agreement, the Credit Agreement or the Depositary
Agreement, the Agent shall instruct the Borrower and the Depositary
not to issue or release for delivery, and the MTN Dealers not to
consummate the sale of, Medium-Term Notes. When so instructed, the
Depositary shall not issue or release for delivery any Medium-Term
Notes notwithstanding the prior agreement by the MTN Dealers to
sell such Medium-Term Notes. Any instructions given pursuant to
this Section 2.03(b) not to issue, release for delivery or
consummate the sale of Medium-Term Notes (i) shall specify the
reason therefor, including reference to the applicable provisions
of the relevant Issuance Agreement, (ii) shall be promptly
confirmed in writing if not initially given in writing and (iii)
may be superseded, revised or revoked only by the Agent in writing.
In no event shall the Agent, the Fronting Bank or the Depositary be
liable to any party for any losses or claims arising out of actions
taken in accordance with this Section 2.03(b) absent gross
negligence or willful misconduct of the Agent, the Fronting Bank or
the Depositary.
SECTION 2.04. Payment from Fronting Bank's Funds. The
Fronting Bank agrees that (a) all LOC Disbursements and
disbursements with respect to Collateralized LOCs shall be paid
only out of the general funds of the Fronting Bank, (b) no LOC
Disbursements or disbursements with respect to Collateralized LOCs
shall be contingent upon or directly or indirectly drawn from
amounts on deposit in the Note Proceeds Account (as defined in the
Depositary Agreement) or amounts on deposit in any account
maintained by the Borrower with the Fronting Bank, (c)
reimbursement for any LOC Disbursements will be sought and
effected only after such LOC Disbursements have been made in
accordance with the foregoing, whether by deposit of funds in the
Special Payment Account (as defined in the Depositary Agreement) or
otherwise, and (d) disbursements with respect to Collateralized
LOCs shall be reimbursed first, pursuant to the Security Agreement
from the Collateral in the Defeasance Accounts to the extent of
such Collateral and second, directly from the Borrower.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Conditions to First Issuance. The obligation
of the Fronting Bank to issue the initial LOCs shall be subject to
the satisfaction of the following conditions precedent (in addition
to the conditions precedent set forth in Section 3.02 hereof and in
Article IV of the Credit Agreement) on the first Date of Issuance
with respect to the Commercial Paper Notes or Medium-Term Notes to
be issued on such first Date of Issuance:
(i) the LOC Debt (x) if Commercial Paper Notes, shall have
received the highest short-term rating from at least one of the
nationally recognized rating agencies; provided that if the
Commercial Paper Notes shall not have received such rating because
of the credit rating of the Fronting Bank, the Borrower may waive
this requirement by written notice to the Fronting Bank and (y) if
Medium-Term Notes, shall have received the highest long-term rating
for long-term debt securities from at least one of the nationally
recognized rating agencies; provided that if the Medium-Term Notes
shall not have received such rating because of the credit rating of
the Fronting Bank, the Borrower may waive this requirement by
written notice to the Fronting Bank;
(ii) the Fronting Bank and the Agent shall have received
the following:
(A) executed counterparts of the Depositary Agreement,
the CP Dealer Agreement and the MTN Distribution Agreement; and
(B) such other documents as the Fronting Bank or the
Agent may reasonably request; and
(iii) the Borrower and the CP Dealer shall each have
received an executed letter agreement in the form of Exhibit B to
the CP Dealer Agreement from the Fronting Bank and the Borrower and
the MTN Dealer shall each have received an executed letter
agreement in the form of Exhibit C to the MTN Distribution
Agreement from the Fronting Bank.
SECTION 3.02. Conditions to Each Issuance. The obligation of
the Fronting Bank to issue LOCs shall be subject to the
satisfaction of the following conditions precedent (in addition to
the applicable conditions precedent set forth in Article IV of the
Credit Agreement) to the satisfaction of the Agent on each proposed
Date of Issuance:
(i) the Depositary shall have received appropriate
instructions in accordance with Section 3 of the Depositary
Agreement and, if required, the Fronting Bank and the Agent shall
have received in a timely manner the requisite Notice of Issuance
provided for in Section 2.04 of the Credit Agreement;
(ii) the LOC Debt proposed to be issued shall not be
subject to the registration requirements of the Securities Act of
1933 or any registration or qualification requirements under the
securities or blue sky laws of any State unless the Agent and the
Fronting Bank shall otherwise agree in writing prior to any such
issuance;
(iii) the Borrower shall be either (A) not an "investment
company" and not a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940
or (B) exempt under an order of the Securities and Exchange
Commission from the provisions of such Act, which order shall be in
full force and effect and a copy of which shall have been delivered
to the Agent and the Fronting Bank;
(iv) on the Date of Issuance of such LOC Debt (and after
giving effect to such issuance), the representations and
warranties set forth in Section 3(c) of the Depositary Agreement
shall be true and correct, with the same force and effect as though
such representations and warranties had been made on and as of such
date;
(v) (A) each information statement, offering memorandum or
other offering material (collectively, the "Offering Material") to
be used in connection with any offer, issuance, sale or delivery of
such LOC Debt shall have been delivered to the Fronting Bank, (B)
the Offering Material shall not contain any untrue statement of a
material fact or fail to state a material fact about the Borrower
necessary in order to make the statements therein not misleading,
and (C) the Offering Material shall be in form and substance
satisfactory to the Fronting Bank;
(vi) immediately after such issuance, no Default shall have
occurred and be continuing;
(vii) there shall not have been any restrictions imposed
upon the Fronting Bank or the Borrower by any law or regulation of
the United States or any State thereof or other governmental
authority (including without limitation any legal lending limits
imposed by law or regulations of the United States or any State
thereof) which would prevent the Fronting Bank from issuing LOCs or
which would prevent the issuance or sale of LOC Debt entitled to
the benefits of LOCs;
(viii) the Depositary Agreement and either a CP Dealer
Agreement, in the case of an issuance of Commercial Paper Notes, or
an MTN Distribution Agreement, in the case of an issuance of
Medium-Term Notes, shall be in full force and effect and the
Borrower shall not be in default under either of the Depositary
Agreement, the MTN Distribution Agreement or the CP Dealer
Agreement, as the case may be;
(ix) the sum of
(A) the aggregate Face Amount of all Outstanding LOC Debt
on such Date of Issuance (excluding all LOC Debt maturing on such
day or becoming Defeased Notes on such day and including all LOC
Debt being issued on such day) plus (B) the aggregate principal
amount of all Loans outstanding on such Date of Issuance (excluding
all Loans being repaid on such day and including all Loans being
made on such day)
shall not exceed the aggregate Commitments of the Banks in effect
on the Date of Issuance (after giving effect to any reduction
thereof on such date);
(x) if the maturity date of any LOC Debt being issued on such
Date of Issuance will occur after any Commitment Reduction Date,
the sum of the principal amount of Loans plus the Face Amount of
Outstanding LOC Debt after such issuance and scheduled to mature
after such Commitment Reduction Date will not exceed the aggregate
Commitments of the Banks on such Commitment Reduction Date after
giving effect to the scheduled reduction on such date of such
Commitments;
(xi) the aggregate Face Amount of Notes maturing on a
single day shall not exceed $25,000,000;
(xii) all fees due and payable to the Fronting Bank and the
Depositary shall have been paid; and
(xiii) each Note shall be identified as belonging to either
Tranche A or Tranche B under the Credit Agreement and, to the
extent practicable, the aggregate Loans and Notes attributable to
a particular Tranche shall not exceed the aggregate Commitments
with respect to such Tranche.
Each Notice of Issuance and each instruction of the Borrower
given pursuant to Section 3 of the Depositary Agreement to the
Depositary to issue LOC Debt shall be deemed to be a
representation and warranty by the Borrower to the Banks on the
date thereof as to the facts set forth in clauses (ii), (iii),
(iv), (v), (vi), (vii) (to the extent applicable to the Borrower),
(viii) and (ix) of the preceding paragraph; provided that in the
case of clause (v), such representation and warranty shall be
deemed to exclude any information about the Fronting Bank or
information not approved by the Borrower expressly for use therein.
ARTICLE IV
COLLATERALIZED LOCS
SECTION 4.01. Defeased Notes. (a) If no Default has
occurred and is continuing, the Borrower may, upon three Domestic
Business Days' written notice to the Fronting Bank and the Agent (a
"Notice of Defeasance"), at any time cash collateralize in full its
reimbursement obligations with respect to LOCs (the "Collateralized
LOCs") attached to any then-outstanding Medium-Term Notes (the
"Defeased Notes"). Each Notice of Defeasance shall specify the
serial number of, the face amount of, the interest rate on, and the
interest payment dates of, each Defeased Note and the date of such
collateralization (the
"Defeasance Date").
(b) On or prior to the Defeasance Date, the Borrower shall
establish, pursuant to the Depositary Agreement, a Defeasance
Account into which the Borrower shall irrevocably deposit cash or
Temporary Cash Investments in an amount which a firm of independent
certified public accountants satisfactory to the Agent and the
Fronting Bank shall reasonably determine to be sufficient to
provide for reimbursing in full the Fronting Bank for disbursements
made in respect of the Collateralized LOCs with respect to the
principal of and interest on the Defeased Notes in the amounts and
at the times provided in each Defeased Note. Each Defeasance
Account, and all moneys and securities therein (including interest
thereon), shall be in the name of the Security Agent, shall be for
the sole and exclusive benefit of the Fronting Bank and the Banks
and shall constitute part of the Collateral under the Security
Agreement. The Security Agent shall have the sole and exclusive
right to effect any withdrawal or distribution from each Defeasance
Account. The Borrower shall not have any legal or equitable right,
title or interest in any Defeasance Account.
(c) The Security Agent shall, prior to an Event of Default,
apply the cash and Temporary Cash Investments on deposit in each
Defeasance Account to reimburse the Fronting Bank for disbursements
made from time to time in respect of Collateralized LOCs with
respect to the interest on and principal of the Defeased Notes to
which such Defeasance Account relates. After an Event of Default,
the Security Agent shall apply the cash and Temporary Cash
Investments on deposit in each Defeasance Account as provided in
the Security Agreement.
SECTION 4.02. Termination of Participations in Collateralized
LOCs. The participations of the Banks in the Collateralized LOC in
respect of each Defeased Note shall terminate at 5:00 P.M. (New
York City time) on the Defeasance Date of such Defeased Note, and
such Collateralized LOC shall thereupon cease to be an LOC for
purposes of the Issuance Agreements, the Credit Agreement and the
Security Agreement. Notwithstanding the termination of the
obligations of the Banks to participate in Collateralized LOCs, the
Borrower shall remain obligated to reimburse the Fronting Bank in
full for LOC Disbursements under such Collateralized LOCs, whether
from funds on deposit in the Defeasance Accounts or otherwise.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Notices, etc. Except as otherwise provided
herein, all notices, demands, instructions and other communications
required or permitted to be given to or made upon any party hereto
or any other Person shall be given or made, as the case may be, as
provided in Section 10.01 of the Credit Agreement.
SECTION 5.02. Binding Effect; Assignment. This Facility
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns;
provided that no party may assign any of its rights or
obligations hereunder without the consent of the other parties
hereto.
SECTION 5.03. Governing Law. This Facility Agreement shall
be governed by and construed in accordance with the laws of the
State of New York applicable to contracts made and performed within
the State of New York.
SECTION 5.04. Execution in Counterparts. This Facility
Agreement may be executed in any number of counterparts. Each
counterpart, when so executed and delivered, shall be deemed to be
an original, and all of such counterparts, taken together, shall
constitute one and the same Facility Agreement.
SECTION 5.05. Headings. Section headings used in this
Facility Agreement are for convenience of reference only and shall
not define or limit any of the terms or provisions hereof.
SECTION 5.06. Survival of Facility Agreement. All
covenants, agreements, representations and warranties made herein
shall survive the issuance of LOCs by the Fronting Bank and shall
continue in full force and effect as long as any LOC is
outstanding or any amount is owing to the Fronting Bank or any Bank
in respect of any LOCs.
SECTION 5.07. CP Dealer Agreement. Notwithstanding any
provision in the Credit Agreement to the contrary, on five days'
prior written notice to the Fronting Bank, the CP Dealer, the Agent
and the Depositary, the Borrower may terminate any CP Dealer
Agreement so long as at least one CP Dealer Agreement remains in
effect. The Borrower may not amend, supplement, modify or waive
the provisions of any CP Dealer Agreement in any respect materially
adverse to the Fronting Bank, the Agent, the Banks or the
Depositary without the prior written authorization of the Fronting
Bank, the Agent (acting for the Banks) and the Depositary. The
Borrower may enter into additional CP Dealer Agreements without
further written authorization so long as (i) each such additional
CP Dealer Agreement shall be substantially in the form attached to
this Facility Agreement as Annex I, subject only to such
amendments, supplements and modifications permitted by this Section
5.07 and (ii) such agreements are with CP Dealers previously
approved by the Fronting Bank and the Agent in writing.
SECTION 5.08. MTN Distribution Agreement. Notwithstanding
any provision of the Credit Agreement to the contrary, on five
days' prior written notice to the Fronting Bank, the MTN Dealer,
the Agent and the Depositary, the Borrower may terminate any MTN
Distribution Agreement so long as at least one MTN Distribution
Agreement remains in effect. The Borrower may not amend,
supplement, modify or waive the provisions of any MTN
Distribution Agreement in any respect materially adverse to the
Fronting Bank, the Agent, the Banks or the Depositary without the
prior written authorization of the Fronting Bank, the Agent (acting
for the Banks) and the Depositary. The Borrower may enter into
additional MTN Distribution Agreements without further written
authorization so long as (i) each such additional MTN Distribution
Agreement shall be substantially in the form
attached to this Facility Agreement as Annex II, subject only to
such amendments, supplements and modifications permitted by this
Section 5.08 and (ii) such agreements are with MTN Dealers
previously approved by the Fronting Bank and the Agent in
writing.
SECTION 5.09. No Third Party Beneficiaries. The benefits of
this Facility Agreement, the other Issuance Agreements and the
Credit Agreement are intended solely for the parties hereto and
thereto and nothing in this Facility Agreement is intended to give
any holder of LOC Debt or beneficiary of any LOC any right, remedy
or claim under this Agreement, the Issuance Agreements or the
Credit Agreement.
SECTION 5.10. Debt Without Recourse. All amounts payable
pursuant to the Credit Agreement, the Security Agreement, the Deed
of Trust and the Notes (as defined in the Credit Agreement) shall
be paid only from the income of and the proceeds from the Leathers
Facility and the Collateral. The Banks and the Fronting Bank agree
that they will look solely to the income of and the proceeds from
the Leathers Facility and the Collateral as
provided in the Credit Agreement, in the Security Agreement and in
the Deed of Trust, and none of Magma, Mission, Red Hill, San Felipe
or any other partner of the Borrower shall be personally liable to
the Banks or the Fronting Bank for any amounts payable under the
Credit Agreement, the Security Agreement, the Deed of Trust and the
Notes (as defined in the Credit Agreement) or, except for fraud,
subject to any liability under the Credit Agreement; provided that
the foregoing shall not relieve Magma, Mission, Red Hill, San
Felipe or any other partner of the Borrower from any obligation it
may have to return to the Borrower any amounts distributed to it in
violation of the Credit Agreement or the Limited Partnership
Agreement or as otherwise required by the laws of the State of
California.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date and year first above
written.
ELMORE, L.P., a limited
partnership organized under the
laws of the State of California
By: RED HILL GEOTHERMAL, INC.,
a Delaware corporation, a
general partner
By: /s/ Wallace C. Dieckmann
Name:
Title: Vice President
By: NIGUEL ENERGY COMPANY,
a California corporation,
a general partner
By: /s/ Scott B. T. Sinclair
Name:
Title: Vice President
and Treasurer
THE FUJI BANK, LIMITED,
LOS ANGELES AGENCY,
as Fronting Bank
By: /s/ Kenichiro Tanaka
Name:
Title: Joint General Manager
THE FUJI BANK, LIMITED,
LOS ANGELES AGENCY
By: /s/ Kenichiro Tanaka
Name:
Title: Joint General Manager
THE LONG-TERM CREDIT BANK
OF JAPAN, LTD.
By: /s/ Yutaka Hotta
Name:
Title: Deputy General Manager
THE SUMITOMO BANK, LIMITED
By: /s/ Toshiyuki Kashima
Name:
Title: Joint General Manager
UNION BANK OF SWITZERLAND,
LOS ANGELES BRANCH
By: /s/ Paul E. Barbian
Name:
Title: Vice President
By: /s/ Paul G. Naumann
Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ George L. Brown
Name:
Title: Vice President
TOKYO LEASING (U.S.A.) INC.
By: /s/ Minoru Okada
Name:
Title: President
THE MITSUBISHI BANK, LIMITED,
NEW YORK BRANCH
By: /s/ Robert J. Munczinski
Name:
Title: Senior Vice President
and Chief Manager
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By: /s/ George L. Brown
Name:
Title: Vice President
Exhibit 10.81
ELMORE, L.P.
AMENDMENT NUMBER ONE TO SECURITY AGREEMENT
This amendment is dated as of April 14, 1989 among ELMORE, L.P.
(formerly known as Elmore, Ltd., a California limited
partnership) ("Grantor"), MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as Agent for and on behalf of the BANKS (the "Agent"), MORGAN
GUARANTY TRUST COMPANY OF NEW YORK ("Morgan") and MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, as Security Agent (the
"Security Agent"),
W I T N E S S E T H :
WHEREAS, the parties hereto are the parties to the Security
Agreement dated as of March 14, 1988 among the Grantor, the Agent,
Morgan and the Security Agent (the "Security Agreement:); and
WHEREAS, the parties hereto desire to amend the Security
Agreement as provided herein;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise
specifically defined herein, each term used herein which is defined
in the Security Agreement has the meaning assigned to such term in
the Security Agreement. Each reference to "hereof", "hereunder",
"herein" and "hereby" and each other similar
reference and each reference to "this Agreement" and each other
similar reference contained in the Security Agreement shall from
and after the date hereof refer to the Security Agreement as
amended hereby.
SECTION 2. Amendment of Section 1 of the Security Agreement.
The following definitions set forth in Section 1 of the Security
Agreement are amended to read as follows:
"Letters of Credit" means, collectively, (i) letter of credit
No. S-860951 issued by Morgan in an amount not exceeding $671,000
relating to the IID Agreements (the "IID Letter of Credit"), (ii)
letter of credit No. S-860953 issued by Morgan in an amount not
exceeding $500,000 relating to that certain
Conditional Use Permit number 9007-87 issued by Imperial County,
California on April 8, 1987 (the "CUP Letter of Credit") and (iii)
a letter of credit to be issued by Morgan in an amount not
exceeding $240,000 relating to the increase in Nominated Capacity
to 40 MW, a copy of which will be delivered to the Banks within
five Domestic Business Days of issuance.
"Reimbursement Obligations" means the obligations of the
Grantor under the following agreements, including the obligations
to reimburse Morgan for any draws under the Letters of Credit: (i)
Continuing Standby Letter and Guarantee Agreement between Morgan
and the Grantor dated as of March 14, 1988 with respect to the IID
Letter of Credit, (ii) Continuing Standby Letter of Credit and
Guarantee Agreement between Morgan and the Grantor dated as of
March 14, 1988 with respect to the CUP Letter of Credit and (iii)
Continuing Standby Letter of Credit and Guaranty Agreement between
Morgan and the Grantor dated as of April 14, 1989 with respect to
the Letters of Credit other than the IID Letter of Credit and the
CUP Letter of Credit.
"Secured Parties" means (i) each and all of the "Banks" under
and as defined in the Credit Agreement and Morgan in its capacity
as "Agent" thereunder and any successor in such capacity, (ii)
Morgan as issuer of the Letters of Credit and in respect of its
rights under the Reimbursement Obligations and (iii) Morgan as
Security Agent hereunder and any successors in such capacity.
SECTION 3. Governing Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 4. Counterparts. This Amendment may be signed in any
number of counterparts, each of which shall be an original, with
the same effect as if the signatories thereto and hereto were upon
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the first date as above
written.
ELMORE, L.P., a limited partnership
organized under the laws of the State of
California
By: RED HILL GEOTHERMAL, INC.,
a Delaware corporation, a
general partner
By /s/ Jonathan S. Fish
Name: Johnathan S. Fish
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By: /s/ Barrett R. Petty
Name: Barrett R. Petty
Title: Managing Director
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By: /s/ Mark H. Wittleder
Name: Mark H. Wittleder
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Security Agent
By: /s/ Mark H. Wittleder
Name: Mark H. Wittleder
Title: Vice President
Exhibit 10.81 (Cont.)
CONFORMED COPY
ELMORE, L.P.
AMENDMENT NUMBER TWO TO SECURITY AGREEMENT
This amendment is dated as of April 18, 1990 among
ELMORE, L.P. (the "Grantor"), MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as Agent for and on behalf of the BANKS (the "Agent"), MORGAN
GUARANTY TRUST COMPANY OF NEW YORK ("Morgan") and MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, as Security Agent (the
"Security Agent"),
W I T N E S S E T H :
WHEREAS, the parties hereto are the parties to the
Security Agreement dated as of March 14, 1988 among the Grantor,
the Agent, Morgan and the Security Agent (the "Original Security
Agreement");
WHEREAS, the Original Security Agreement was amended by
Amendment Number One to Security Agreement dated April 14, 1989
(the Original Security Agreement, as amended, being referred to
herein as the "Security Agreement"); and
WHEREAS, the parties hereto desire to further amend the
Security Agreement as provided herein;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise
specifically defined herein, each term used herein which is defined
in the Security Agreement has the meaning assigned to such term in
the Security Agreement. Each reference to "hereof", "hereunder",
"herein" and "hereby" and each other similar reference and each
reference to "this Agreement" and each other similar reference
contained in the Security Agreement shall from and after the date
hereof refer to the Security Agreement as amended hereby.
SECTION 2. Amendment of Section 1. (A) The following
definitions set forth in Section 1 of the Security Agreement are
amended to read as follows:
"Credit Agreement" means the Amended and Restated
Secured Credit Agreement, dated as of April 18, 1990, among
Elmore, L.P., the banks listed on the signature pages thereof,
The Fuji Bank, Limited, Los Angeles Agency, as Fronting Bank,
and Morgan Guaranty Trust Company of New York, as Agent, as
amended from time to time.
"Obligations" means (i) the obligations of the
Grantor under this Security Agreement, (ii) the obligations of
the Grantor, now existing or hereafter arising, owing to the
Banks under the Credit Agreement, the Deed of Trust or the Notes,
(iii) the Reimbursement Obligations, (iv) the LOC Disbursement
Obligations, (v) the Collateralized LOC Obligations, (vi) any
renewal or extension of any of the foregoing and (vii) the
aggregate of the Secured Swap Amounts under the Secured Swap
Agreements (provided that such aggregate shall at no time exceed
10% of the aggregate Utilization outstanding at such time).
"Secured Parties" means (i) each and all of the
"Banks" under and as defined in the Credit Agreement, Morgan in
its capacity as "Agent" thereunder and The Fuji Bank, Limited, Los
Angeles Agency in its capacity as "Fronting Bank" thereunder, and
any successors in such capacities, (ii) Morgan as issuer of the
Letters of Credit and in respect of its rights under the
Reimbursement Obligation, (iii) the Secured Counterparties and (iv)
Morgan as Security Agent hereunder and any successors in such
capacity.
(B) The following definitions are added to Section 1 of
the Security Agreement, in the appropriate alphabetical order:
"Collateralized LOC Obligations" means the obligations
of the Grantor to reimburse the Fronting Bank for any disbursements
under the Collateralized LOCs pursuant to the Credit Agreement and
the LOC Debt Facility Agreement; provided that such amount shall,
solely for the purposes of this Security Agreement, be limited to
the aggregate Collateral in the Defeasance Accounts.
"Defeasance Accounts" means the Defeasance Accounts
as defined in Section 1(d) of the Depositary Agreement.
"LOC Disbursement Obligations" means the obligations
of the Grantor to reimburse the Fronting Bank and the Banks
for LOC Disbursements pursuant to the Credit Agreement and the
LOC Debt Facility Agreement.
"Note Proceeds Account" means the Note Proceeds
Account as defined in Section 1(a) of the Depositary Agreement.
SECTION 3. Amendment of Section 5. (A) The lead-in
paragraph of subsection (a) of Section 5 of the Security Agreement
is amended to read as follows:
(a) The proceeds of any sale of, or other realization
upon, all or any part of the Collateral or the proceeds from any
foreclosure under this Security Agreement or the Deed of Trust
shall be applied by the Security Agent (A) to the extent that such
proceeds are derived from the Defeasance Accounts, to the
reimbursement of the Fronting Bank for disbursements with respect
to Collateralized LOCs, and (B) thereafter in the following order
of priority:
(B) Subsection (c) of Section 5 of the Security
Agreement is amended by adding the following sentence at the end of
such subsection:
The provisions of this subsection (c) of Section 5 shall not
in any way apply to the Defeasance Accounts.
SECTION 4. Amendment of Section 13. Section 13 of the
Security Agreement is amended to read as follows:
13. Termination of Security Interests; Release of
Collateral. Upon the payment in full of the Obligations, the
Security Interests shall terminate and all rights to the Collateral
shall revert to the Grantor. Upon any such termination, the
Security Agent will, at the Grantor's expense, execute and deliver
to the Grantor such documents as the Grantor shall reasonably
request to evidence such termination. At any time and from time to
time prior to such termination of the Security Interests, if no
Default has occurred and is continuing (i) the Depositary, upon the
instructions of the Security Agent (which instructions may be
standing instructions), shall release any of the funds on deposit
in the Note Proceeds Account and the Defeasance Accounts to
reimburse the Fronting Bank for LOC Disbursements and disbursements
under the Collateralized LOCs, respectively, (ii) the Security
Agent may release any of the Collateral (other than the Note
Proceeds Account and the Defeasance Accounts) with the prior
written consent of each of the Secured Parties or (iii) the Grantor
may apply funds in the Operating Account, the Construction
Disbursement Account, the Major Capital Expenditure Reserve
Account, the Partnership Holding Account, or the Debt Service
Reserve Account as provided in the Operating and Maintenance
Agreement, the Construction Management Agreement or the Limited
Partnership Agreement.
SECTION 5. Amendment of Exhibit A to Security
Agreement. Exhibit A to Security Agreement is amended in
accordance with Exhibit A attached hereto.
SECTION 6. Governing Law. This Amendment shall be governed
by and construed in accordance with the laws of the State of New
York.
SECTION 7. Counterparts. This Amendment may be signed in any
number of counterparts, each of which shall be an original, with
the same effect as if the signatories thereto and hereto were upon
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the first date as above
written.
ELMORE, L.P. a limited
partnership organized under the
laws of the State of California
By: RED HILL GEOTHERMAL, INC.,
a Delaware corporation, a
general partner
By /s/ Wallace C. Dieckmann
Name:
Title: Vice President
By: NIGUEL ENERGY COMPANY
a California corporation,
a general partner
By /s/ Scott B.T. Sinclair
Name:
Title: Vice President and
Treasurer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ George L. Brown
Name:
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ George L. Brown
Name:
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Security Agent
By /s/ George L. Brown
Name:
Title: Vice President
Exhibit 10.83
RECORDING REQUESTED BY
AND WHEN RECORDED
RETURN TO:
Arnold A. Pinkston
Orrick, Herrington &
Sutcliffe
Old Federal Reserve Bank Bldg.
400 Sansome Street
San Francisco, CA 94111
FIRST AMENDMENT TO DEED TO TRUST
THIS FIRST AMENDMENT TO DEED OF TRUST dated as of April 18, 1990
is entered into by and between ELMORE, L.P., ("Trustor"), and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK as Security Agent (as
defined below) for the benefit of the Secured Parties (as defined
below) (in such capacity, the "Beneficiary").
RECITALS
(1) Trustor, Trustee and Beneficiary are parties to that certain
Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Filing (Construction Deed of Trust) ("Deed of Trust") dated as of
March 14, 1988 which was recorded on March 14, 1988, as instrument
no. 88-04026, in the Official Records of Imperial County,
California.
(2) Except as expressly provided herein, capitalized terms used
herein which are defined in the Deed of Trust (as amended hereby)
shall have the respective meanings given to those terms in the Deed
of Trust (as amended hereby).
(3) Trustor, Beneficiary, The Fuji Bank, Limited, Los Angeles
Agency, as Fronting Bank ("Fronting Bank") and the Banks listed
therein have entered into that certain Amended and Restated Secured
Credit Agreement dated as of April 18, 1990 ("Amended Credit
Agreement'), pursuant to which such parties have amended and
restated the Secured Credit Agreement dated as of March 14, 1988
(as amended on April 14, 1989, and partially assigned by Morgan
Guaranty Trust Company of New York ("MGT") to Amsterdam-Rotterdam
Bank N.V. on June 21, 1989, the ("Original Credit Agreement") among
Trustor, Morgan Guaranty Trust Company of New York as Agent
("Agent') for the Banks, and the banks ("Banks") which are party
thereto. The Deed of Trust was recorded to secure, among other
things, the obligations of the Trustor under the Original Credit
Agreement.
(4) The parties wish to amend the Deed of Trust to reflect the
Amended Credit Agreement.
AGREEMENT
1. Credit Agreement. The term Credit Agreement, as used in the
Deed of Trust, shall mean the Original Credit Agreement as amended
and restated by the Amended Credit Agreement as the same may be
amended, modified, supplemented, restated or replaced from time to
time.
2. Security Agreement. The term Security Agreement, as used in the
Deed of Trust, shall mean the Security Agreement, dated as of March
14, 1989 between Trustor, Security Agent, MGT, and Agent, as
amended by the certain Amendment Number One to the Security
Agreement dated as of April 14, 1989 between Trustor, Security
Agent, MGT, and Agent and that certain Amendment Number Two to the
Security Agreement dated as of April 18, 1990 between Trustor,
Security Agent, MGT, and Agent, as the same may be amended,
modified, supplemented, restated or replaced from time to time.
3. Obligations Secured.
(a) Item 1 of the Article entitled Obligations Secured (page
eight) in the Deed of Trust is amended to read as follows:
"1. Payment to Beneficiary of all indebtedness evidenced by,
or arising under or pursuant to, the Credit Agreement,
including without limitation the Notes (which shall not
mature later than September 15, 2001 unless a later date is
agreed upon in writing by the parties to the Credit
Agreement) described in the Credit Agreement payable to the
Beneficiary and/or the Banks or order in an original
principal amount not to exceed Sixty-six Million Dollars
($66,000,000), together with interest thereon and fees due in
connection therewith, and any modifications, additions,
extensions or renewals of the Credit Agreement and the Notes
(including without limitation (i) modifications of the
required principal and/or interest payment dates, deferring or
accelerating said payment dates in whole or in part, (ii)
modifications, extensions or renewals at a different rate of
interest, and/or (iii) modifications or additional amounts
advanced under the Credit Agreement and the Notes) whether or
not any such modification, addition, extension or renewal is
evidenced by a new or additional promissory note or notes"
(b) Item 4 of the Article entitled Obligations Secured (pages
nine) in the Deed of Trust is amended to read as follows:
"4. The observance and performance by Trustor of each
covenant and obligation (including the Obligations as defined in
the Security Agreement) on the part of Trustor to be observed or
performed pursuant to or arising under or in connection with the
terms and provisions of the Credit Documents and the Project
Agreements, and all amendments, modifications, supplements,
restatements or replacements thereto."
4. Effect of This Amendment. On and after the date of this
Amendment, each reference in the Deed of Trust to the Deed of
Trust, shall mean the Deed of Trust as amended hereby. Except as
specifically amended above, the Deed of Trust shall remain in full
force and effect and is hereby ratified and confirmed. The
execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as a waiver of any
right, power, or remedy of the Agent or any of the Banks, nor
constitute a waiver of any provision of the Deed of Trust.
5. Headings. The headings in this Amendment are for
convenience of reference only and not part of the substance hereof.
6. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of California.
7. Counterparts. This Amendment may be executed in any number
of identical counterparts, any set of which signed by both parties
hereto shall be deemed and constitute a complete executed original
for all purposes.
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be executed, and this First Amendment shall be
effective, as of the day and year first above written.
ELMORE, L.P., a California
limited partnership
By: Red Hill Geothermal, Inc.
a Delaware corporation,
general partner
By: /s/ Jon R. Peele
Its: Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
in its capacity as Security Agent
By: /s/ George L. Brown
Its: Vice President
Exhibit 10.84
AMENDED AND RESTATED
SECURED CREDIT AGREEMENT
AMENDED AND RESTATED SECURED CREDIT AGREEMENT dated as of
April 18, 1990 among LEATHERS, L.P. (the "Borrower"), the BANKS
listed on the signature pages hereof (the "Banks"), THE FUJI BANK,
LIMITED, LOS ANGELES AGENCY, as Fronting Bank, and MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, as Agent, amending and restating the
Secured Credit Agreement dated as of October 26, 1988 (the
"Original Agreement", the Original Agreement as amended and
restated hereby is referred to herein as the "Agreement"), among
the Borrower, the banks listed on the signature pages thereof (the
"Original Banks") and Morgan Guaranty Trust Company of New York, as
Agent.
WHEREAS, the Borrower, the Original Banks and the Agent
entered into the Original Agreement in order to finance the
construction of the Leathers Facility (as defined below);
WHEREAS, on April 14, 1989 the Borrower, the Original Banks
and the Agent amended the Original Agreement; and
WHEREAS, on June 21, 1989 Morgan Guaranty Trust Company of New
York ("MGT"), Amsterdam-Rotterdam Bank, N.V. ("Amro") and the
Borrower entered into an Assignment and Assumption Agreement (the
"Amro Assignment") pursuant to which MGT assigned a portion of its
commitment and its loans to Amro and Amro became a Bank under the
Original Agreement; and
WHEREAS, the Borrower, the Banks, the Fronting Bank and the
Agent now wish to further amend the Original Agreement to provide
for the issuance of LOC Debt supported by LOCs of the Fronting
Bank, all as set forth in this Amended and Restated Secured Credit
Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used
herein, have the following meanings:
"Additional Cure Period" means an additional 60 day period
granted to the Borrower to cure any Default pursuant to
paragraphs (c), (g) or (t) of Section 7.01, as the case may be.
"Additional Cure Period Request" means a written request of
the Borrower for an Additional Cure Period, including a description
of the Default, the corrective action taken to date and further
proposed corrective action pursuant to paragraphs (c), (g) or (t)
of Section 7.01, as the case may be.
"Adjusted CD Rate" has the meaning set forth in Section
3.05(b).
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section 3.05(c).
"Affiliate" means, when used with reference to a specified
Person, (a) any Person who directly or indirectly controls, is
controlled by or is under common control with the specified Person,
(b) any Person who is an officer, partner or trustee of, or serves
in a similar capacity with respect to, the specified Person, or for
which the specified Person is an officer, partner or trustee or
serves in a similar capacity, provided that Persons who are
partners of the same partnership will not be considered to be
partners of each other, (c) any Person who, directly or indirectly,
is the beneficial owner of 10% or more of any class of equity
securities of the specified Person, or of which the specified
Person, directly or indirectly, is the owner of 10% or more of any
class of equity securities, and (d) any relative of the specified
Person.
"Agent" means Morgan Guaranty Trust Company of New York in its
capacity as agent for the Banks hereunder, and its successors in
such capacity.
"Assessment Rate" has the meaning set forth in Section
3.05(b).
"Bank" means each bank or financial institution listed as a
"Bank" on the signature pages hereof, and its successors and
assigns.
"Borrower" means Leathers, L.P., a limited partnership
organized under the laws of the State of California, the general
partners of which as of the date hereof are Red Hill and San
Felipe, and the limited partners of which are Magma and San Felipe.
"Borrowing" means a borrowing hereunder consisting of (i) a
Loan made to the Borrower by the Fronting Bank with participations
by the Banks pursuant to Article II and Section 3.14 or (ii) Loans
made to the Borrower at the same time by the Banks pursuant to
Article III. A Borrowing is a "Domestic Borrowing" if such Loans
are Domestic Loans or a "Euro-Dollar Borrowing" if such Loans are
Euro-Dollar Loans. A Domestic Borrowing is a "CD Borrowing" if
such Domestic Loans are CD Loans or a "Prime Borrowing" if such
Domestic Loans are Prime Loans.
"BTU Energy" means the heat value in British Thermal Units
which can be extracted from Geothermal Brine.
"Capital Contribution" means a Scheduled Capital Contribution
as defined in Section 3.4.1 of the Limited Partnership Agreement.
"CD Base Rate" has the meaning set forth in Section 3.05(b).
"CD Loan" means a Loan to be made as a CD Loan pursuant to the
applicable Notice of Borrowing.
"CD Margin" has the meaning set forth in Section 3.05(b).
"CD Reference Banks" means The Fuji Bank, Limited, Union Bank
of Switzerland, the Sumitomo Bank, Limited and Morgan Guaranty
Trust Company of New York, and each such other bank as may be
appointed pursuant to Section 10.07(d).
"CEC" means the California Energy Commission, and its
successors.
"CEC Event" means a determination by the CEC that the Leathers
Facility is and shall be subject to its jurisdiction, which
determination is likely, in the reasonable opinion of the Required
Banks, to have a material adverse effect on the Borrower or on the
completion or operation of the Leathers Facility as contemplated by
this Agreement and the Project Agreements.
"Code" means the Internal Revenue Code of 1986, as amended, or
any successor statute.
"Collateral" means, collectively, Collateral as defined in the
Security Agreement and Mortgaged Property as defined in the Deed of
Trust.
"Collateral Documents" means, collectively, the Security
Agreement, the Deed of Trust and all financing statements delivered
or to be delivered to the Security Agent pursuant to the foregoing
or this Agreement, in each case as amended from time to time.
"Collateralized LOC" has the meaning set forth in the LOC Debt
Facility Agreement.
"Commercial Paper Notes" has the meaning set forth in the LOC
Debt Facility Agreement.
"Commitment" means (except as provided in the definitions of
"Tranche A" and "Tranche B"), with respect to each Bank, the amount
set forth opposite the name of such Bank on Schedule I as its Total
Commitment, as such amount may be reduced from time to time
pursuant to Sections 3.08 and 3.09.
"Commitment Reduction Date" means each September 15 and March
15 subsequent to the Conversion Date (but no earlier than September
15, 1990) to and including the twenty-fifth Commitment Reduction
Date subsequent to the Conversion Date.
"Completion Date" means the date the Completion Tests are
completed.
"Completion Tests" means those tests for completion of the
Leathers Facility described in Schedule II hereto.
"Construction Management Agreement" means the Construction
Management and Asset Transfer Agreement dated as of March 14, 1988,
between the Construction Manager and the Borrower, as amended from
time to time.
"Construction Manager" means Magma.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414 of the
Code.
"Conversion Date" means the date forty-five calendar days
after the date on which the Completion Tests are completed.
"CP Dealer" has the meaning set forth in the LOC Debt Facility
Agreement.
"CP Dealer Agreement" has the meaning set forth in the LOC
Debt Facility Agreement.
"Credit Event" means the making of any Loan or the issuance of
any LOC which, after application of the proceeds therefrom, results
in a net increase in the Utilization of any Bank.
"Credit Facility Borrowing" means a Borrowing made pursuant to
Article III.
"Credit Periods" means, collectively, the Tranche A Credit
Period and the Tranche B Credit Period.
"Date of Issuance" has the meaning set forth in the LOC Debt
Facility Agreement.
"DCC" means The Dow Chemical Company, a Delaware corporation.
"Dealer" has the meaning set forth in the LOC Debt Facility
Agreement.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person to
pay the deferred purchase price of property or services, except
trade accounts payable arising in the ordinary course of business,
(iv) all obligations of such Person as lessee under capital leases,
(v) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, (vi)
all Debt of others Guaranteed by such Person, (vii) all obligations
of such Person to purchase securities (or other property) which
arise out of or in connection with the sale of the same or
substantially similar securities or property, and (viii) all non-
contingent obligations of such Person to reimburse any bank or
other Person in respect of amounts paid under a letter of credit or
similar instrument.
"Debt Service Reserve Account" means the reserve account
established and maintained pursuant to Section 11.1 of the
Operating and Maintenance Agreement.
"DEC" means Dow Engineering Company, a Delaware corporation.
"Deed of Trust" means the first lien Deed of Trust, Assignment
of Rents, Security Agreement and Fixture Filing dated as of October
26, 1988, among the Borrower, the Security Agent and Ticor Title
Insurance Company of California, as trustee, covering the Leathers
Facility, the leasehold estate created by the Ground Lease, and the
easement granted by the Easement Agreement, as amended by First
Amendment to Deed of Trust dated as of April 18, 1990 and as
further amended from time to time.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of
time or both would, unless cured or waived, become an Event of
Default.
"Defeasance Date" has the meaning set forth in the LOC Debt
Facility Agreement.
"Defeased Note" has the meaning set forth in the LOC Debt
Facility Agreement.
"Depositary" has the meaning set forth in the LOC Debt
Facility Agreement.
"Depositary Agreement" has the meaning set forth in the LOC
Debt Facility Agreement.
"Development of the Leathers Facility" means the design,
engineering, construction, testing and start-up of the Leathers
Facility.
"Distributable Cash" means, with respect to any period between
Distribution Dates, the amount of cash or property delivered by Red
Hill in its capacity as Operator under the Operating and
Maintenance Agreement to the general partners of the Borrower
pursuant to Section 12.2(xvi) of the Operating and Maintenance
Agreement.
"Distribution Dates" means each March 31 and September 30.
"Dollars" or "$" shall mean lawful money of the United States
of America.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in New York City,
Chicago, Illinois, or Los Angeles, California are authorized by law
to close.
"Domestic Lending Office" means, as to each Bank, its office
located at its address set forth on the signature pages hereof (or
identified on the signature pages hereof as its Domestic Lending
Office) or such other office as such Bank may hereafter designate
as its Domestic Lending Office by notice to the Borrower and the
Agent; provided that any Bank may from time to time by notice to
the Borrower and the Agent designate separate Domestic Lending
Offices for its Prime Loans, on the one hand, and its CD Loans, on
the other hand, in which case all references herein to the Domestic
Lending Office of such Bank shall be deemed to refer to either or
both of such offices, as the context may require.
"Domestic Loans" means CD Loans or Prime Loans or both.
"Domestic Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing the
obligation of the Borrower to repay the Domestic Loans.
"Domestic Reserve Percentage" has the meaning set forth in
Section 3.05(b).
"Dow Undertaking" means the undertaking of DCC, substantially
in the form of Exhibit G hereto.
"Easement Agreement" means the Easement Grant Deed and
Agreement Regarding Rights for Geothermal Development, dated as of
August 15, 1988, by and between Magma and the Borrower, as amended
by that certain Frist Amendment of Easement Grant Deed and
Agreement Regarding Rights for Geothermal Development dated as of
October 26, 1988, as amended from time to time.
"Engineer" means R.W. Beck and Associates, or their successors
in the capacity of engineers and consultants with respect to the
Development of the Leathers Facility and operation of the Leathers
Facility.
"Engineer's Report" means the report of the Engineer in form
and substance satisfactory to the Agent and Banks.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business
(including dealings in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its
office, branch or affiliate located at its address set forth on the
signature pages hereof (or identified on the signature pages hereof
as its Euro-Dollar Lending Office) or such other office, branch or
affiliate of such Bank as it may hereafter designate as its Euro-
Dollar Lending Office by notice to the Borrower and the Agent.
"Euro-Dollar Loan" means a Loan to be made as a Euro-Dollar
Loan pursuant to the applicable Notice of Borrowing.
"Euro-Dollar Margin" has the meaning set forth in Section
3.05(c).
"Euro-Dollar Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit B hereto, evidencing the
obligation of the Borrower to repay the Euro-Dollar Loans.
"Euro-Dollar Reference Banks" means the principal London
offices of Union Bank of Switzerland, The Sumitomo Bank, Ltd. and
Morgan Guaranty Trust Company of New York and each such other bank
as may be appointed pursuant to Section 10.07(d).
"Euro-Dollar Reserve Percentage" has the meaning set forth in
Section 3.05(c).
"Event of Default" has the meaning set forth in Section 7.01.
"Face Amount" means (i) with respect to any LOC Debt, the LOC
Debt Principal Amount of such LOC Debt plus the LOC Debt Interest
Amount of such LOC Debt and (ii) with respect to any LOC, the Face
Amount of the LOC Debt to which such LOC relates.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100th of 1%) equal
to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal
Reserve Bank of New York on the Domestic Business Day next
succeeding such day, provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Domestic
Business Day as so published on the next succeeding Domestic
Business Day, and (ii) if no such rate is so published on such next
succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Morgan Guaranty Trust
Company of New York on such day on such transactions as determined
by the Agent.
"Federal Power Act" means the Federal Power Act, excluding
Sections 1-18, 21-30, 202(c), 210, 211, 212, 305(c) and any
necessary enforcement provisions of Part III of the Act with regard
to the foregoing sections.
"Financing" has the meaning given to the term Financing in the
Limited Partnership Agreement.
"Firm Operation Date" means the first date on which Firm
Operation (as defined in the Leathers Power Purchase Contract)
occurs under the Leathers Power Purchase Contract.
"Fixed CD Rate" has the meaning set forth in Section 3.05(b).
"Fixed Rate Borrowing" means a CD Borrowing or a Euro-Dollar
Borrowing.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or
both.
"Fronting Bank" means The Fuji Bank, Limited, Los Angeles
Agency, in its capacity hereunder as issuer of LOCs and any
successor thereto or replacement thereof as provided herein.
"Funding and Construction Agreement" means the Funding and
Construction Agreement dated June 29, 1987 among the Imperial
Irrigation District and the Participants listed on the signature
pages thereof, as amended from time to time.
"General Partner" means Red Hill, as a general partner of the
Borrower, or its successor under the Limited Partnership Agreement.
"Geothermal Brine" shall mean the total amount of geothermal
brine contained in the Vulcan Geothermal Lease Unit.
"Geothermal Lease Rights Properties Preliminary Title Report"
means, collectively, the following preliminary title reports
prepared by Ticor Title Insurance Company of California: (i)
Preliminary Title Report No. 107685-A dated October 7, 1988, (ii)
Preliminary Title Report No. 105612 - Amended dated October 7,
1988, supplemented October 13, 1988, and (iii) Preliminary Title
Report No. 106183 dated October 7, 1988, supplemented October 13,
1988.
"Geothermal Leases" means the geothermal leases identified in
Exhibit C to the Easement Agreement.
"GeothermEx" means GeothermEx, Inc., a California corporation.
"Ground Lease" means the ground lease dated as of October 26,
1988, between Magma and the Borrower.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any
Debt or other obligation of any other Person and, without limiting
the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase
or pay (or advance or supply funds for the purchase or payment of)
such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise) or (ii)
entered into for the purpose of assuring in any other manner the
obligee of such Debt or other obligation of the payment thereof or
to protect such obligee against loss in respect thereof (in whole
or in part), provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding
meaning.
"IID" means the Imperial Irrigation District, organized under
the Water Code of the State of California.
"IID Agreements" means, collectively, (i) the Funding and
Construction Agreement, (ii) the Joint Funding Agreement dated June
29, 1987, among the Participants listed on the signature pages
thereof and (iii) any "IID-Transmission Service Agreement For
Alternative Resources" (the "Transmission Agreements") which may be
entered into between IID and the Borrower, copies of which are
attached as Exhibit G to the Construction Management Agreement, in
each case as amended from time to time.
"Intertie Agreement" means the Funding Agreement dated June
15, 1988 between Magma and SCE, as amended from time to time.
"Interest" means the entire ownership interest of a partner in
the Borrower at any particular time, including the right of such
partner to any and all benefits to which a partner may be entitled
as provided in the Limited Partnership Agreement, together with the
obligations of such partner to comply with all of the terms and
provisions of the Limited Partnership Agreement.
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and
ending one, two, three or six months thereafter, or for a longer
period if available, as the Borrower may elect in the applicable
Notice of Borrowing; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Euro-Dollar
Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
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, subject to clauses (c) and
(d) below, end on the last Euro-Dollar Business Day of a calendar
month;
(c) any Interest Period which begins before the first
Commitment Reduction Date and would otherwise end after the
first Commitment Reduction Date shall end on the first Commitment
Reduction Date; and
(d) if any Interest Period includes a date on which a payment
of principal of the Loans is required to be made under Section 3.09
but does not end on such date, then (i) the principal amount (if
any) of each Euro-Dollar Loan required to be repaid on such date
shall have an Interest Period ending on such date and (ii) the
remainder (if any) of each such Euro-Dollar Loan shall have an
Interest Period determined as set forth above.
(2) with respect to each CD Borrowing, the period commencing on the
date of such Borrowing and ending thirty, sixty, ninety or one
hundred eighty days thereafter, as the Borrower may elect in the
applicable Notice of Borrowing; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (c)(i) below) which would otherwise
end on a day which is not a Euro-Dollar Business Day shall be
extended to the next succeeding Euro-Dollar Business Day;
(b) any Interest Period which begins before the first
Commitment Reduction Date and would otherwise end after the
first Commitment Reduction Date shall end on the first
Commitment Reduction Date; and
(c) if any Interest Period includes a date on which a payment
of principal of the Loans is required to be made under Section 3.09
but does not end on such date, then (i) the principal amount (if
any) of each CD Loan required to be repaid on such date shall have
an Interest Period ending on such date and (ii) the remainder (if
any) of each such CD Loan shall have an Interest Period determined
as set forth above.
(3) with respect to each Prime Borrowing, the period commencing on
the date of such Borrowing and (x) in the case of Borrowings made
pursuant to Section 2.06, ending seven Euro-Dollar Business Days
thereafter, (y) in the case of Borrowings (other than Borrowings
covered by the preceding clause (x)) made pursuant to Section
3.01(c)(iii), (A) if no Prime Loans shall then be outstanding,
ending 30 days thereafter or (B) if Prime Loans shall then be
outstanding, ending on the date on which such outstanding Prime
Loans shall mature, or (z) in all other cases, ending 30 days
thereafter, unless the Agent and the Borrower shall have otherwise
agreed; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (c)(i) below) which would otherwise
end on a day which is not a Euro-Dollar Business Day shall be
extended to the next succeeding Euro-Dollar Business Day;
(b) any Interest Period which begins before the first
Commitment Reduction Date and would otherwise end after the
first Commitment Reduction Date shall end on the first
Commitment Reduction Date; and
(c) if any Interest Period includes a date on which a payment
of principal of the Loans is required to be made under Section
3.09 but does not end on such date, then (i) the principal
amount (if any) of each Prime Loan required to be repaid on such
date shall have an Interest Period ending on such date and (ii)
the remainder (if any) of each such Prime Loan shall have an
Interest Period determined as set forth above.
"Investment" means any investment in any Person, whether by
means of share purchase, capital contribution, loan, time deposit
or otherwise.
"Issuance Agreements" means, collectively, each CP Dealer
Agreement, the Depositary Agreement, the LOC Debt Facility
Agreement and each MTN Distribution Agreement.
"Late Participation Penalty" means the amount, if any, by
which (i) the rate of interest publicly announced by the Fronting
Bank from time to time as its prime rate, plus 100 basis points,
exceeds (ii) the rate of interest applicable to Prime Loans from
time to time pursuant to Section 3.05(a).
"Leathers Facility" means that certain geothermal electrical
generating facility being constructed pursuant to the Plans and
Specifications and any "as-built" plans on the Leathers Property
which, when completed, will have the capacity to convert BTU Energy
from Geothermal Brine into electrical energy, together with the
Supporting Equipment.
"Leathers Facility Brine Requirement" means that amount of
Geothermal Brine which, when Processed by the Leathers Facility,
will yield the amount of BTU Energy required to generate
332,880,000 kilowatt hours per year of "Energy", as that term is
defined in the Leathers Power Purchase Contract.
"Leathers Facility Projected Project Cost" means the total
projected cost of completing development and construction of the
Leathers Facility as reflected on Exhibit I to the Construction
Management Agreement.
"Leathers Geothermal Lease Unit: means that certain New River
Ranch Geothermal Unit created pursuant to Declaration and Notice of
Unit and Pooling of Lands under Leases dated as of October 14,
1988, recorded October 21, 1988, in the Official Records of
Imperial County as instrument number 16991.
"Leathers Power Purchase Contract" means that certain Power
Purchase Contract dated February 22, 1984 by and between Magma and
SCE, as the same may be amended from time to time.
"Leathers Property" means the parcel of real property, more
particularly described on Exhibit "A" to the Ground Lease, as that
description may be modified from time to time pursuant to Section
3.3 of the Ground Lease.
"Leathers Property Preliminary Title Report" means that
certain Preliminary Title Report No. 105612-B, dated October 7,
1988, supplemented October 13, 1988.
"Lending Office" means as to any Bank its Domestic Lending
Office or its Euro-Dollar Lending Office, as the context may
require.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in
respect of such asset. For the purposes of this Agreement, the
Borrower shall be deemed to own subject to a Lien any asset which
it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
"Limited Partnership Agreement" means the Limited Partnership
Agreement of the Borrower, dated as of August 15, 1988, as amended
from time to time.
"Loan Utilization" of a Bank means, at any time, the aggregate
unpaid principal amount of such Bank's Loans at such time.
"Loans" means (i) the loans of any Bank made (subject, as
appropriate, to any adjustment required by the last sentence of
Section 3.14), or deemed under Section 3.14 to be made, from time
to time pursuant to Section 2.06(b), (ii) the loans of any Bank
made from time to time pursuant to Section 3.01 and (iii) if any
unreimbursed LOC Disbursement by the Fronting Bank is not converted
into a Loan as provided in Section 2.06(b), such unreimbursed LOC
Disbursement. The term "Loan" may refer to a Domestic Loan or a
Euro-Dollar Loan and the term "Loans" may refer to Domestic Loans
or Euro-Dollar Loans.
"LOC" means a direct-pay letter of credit (a) issued by the
Fronting Bank for the account of the Borrower in accordance with
and as contemplated by Section 2.01, (b) supporting payment
obligations under LOC Debt and (c) that is not a Collateralized
LOC.
"LOC Commitment" means $82,000,000 or such lesser amount to
which the commitment of the Fronting Bank to issue LOCs hereunder
may be reduced from time to time as provided in Section 3.17.
"LOC Commitment Percentage" of a Bank means (a) at any time
when Section 9.02(b) is applicable to any Bank (other than such
Bank), the percentage that the Commitment of such Bank bears to the
aggregate Commitments of all Banks not subject to such Section, (b)
at any time such Section is applicable to such Bank, zero and (c)
at all other times, the percentage that the Commitment of such Bank
bears to the aggregate Commitments of all the Banks.
"LOC Debt" means Commercial Paper Notes and Medium-Term Notes
(a) with a maturity date not later than August 31, 2001, (b) the
proceeds of which are used for the purposes set forth in Section
6.20 or to repay Loans and (c) that are supported by LOCs.
"LOC Debt Facility Agreement" means that certain LOC Debt
Facility Agreement dated as of April 18, 1990, by and among the
Borrower, the Banks, the Fronting Bank and the Agent, as amended
from time to time.
"LOC Debt Interest Amount" means (a) with respect to any LOC
Debt that consists of Medium-Term Notes issued on an interest-
bearing basis, up to but not exceeding 217 days' interest payable
by the Borrower on such Medium-Term Notes, (b) with respect to LOC
Debt that consists of Commercial Paper Notes issued on an interest-
bearing basis, up to but not exceeding 270 days' interest payable
by the Borrower on such Commercial Paper Notes and (c) with respect
to any Commercial Paper Notes issued on a discounted basis, the
amount payable by the Borrower on the maturity thereof in respect
of the discounted portion of such Commercial Paper Notes.
"LOC Debt Principal Amount" means (a) with respect to any LOC
Debt issued on a discounted basis, the face or principal amount
thereof less the amount of such discount and (b) with respect to
any LOC Debt not issued on a discounted basis, the face or
principal amount thereof.
"LOC Disbursement" means any payment made by the Fronting Bank
pursuant to a drawing under an LOC.
"LOC Utilization" of a Bank means, at any time, the amount of
such Bank's ratable share of the aggregate Face Amount of all
Outstanding LOC Debt at such time based upon its LOC Commitment
Percentage at the respective times such Outstanding LOC Debt was
issued.
"London Interbank Offered Rate" has the meaning set forth in
Section 3.05(c).
"Magma" means Magma Power Company, a Nevada corporation.
"Magma Undertaking" means the undertaking of Magma,
substantially in the form of Exhibit F hereto.
"Major Capital Expenditure Reserve Account" means the reserve
account established and maintained pursuant to Section 11.2 of the
Operating and Maintenance Agreement.
"Maturity Date" has the meaning set forth in the Depositary
Agreement.
"Medium-Term Notes" has the meaning set forth in the LOC Debt
Facility Agreement.
"MTN Dealer" has the meaning set forth in the LOC Debt
Facility Agreement.
"MTN Distribution Agreement" has the meaning set forth in the
LOC Debt Facility Agreement.
"Mission" means Mission Energy Company, a California
corporation.
"Note" means a Domestic Note or a Euro-Dollar Note, and
"Notes" means the Domestic Notes or the Euro-Dollar Notes or both.
"Note Proceeds Account" has the meaning set forth in the
Depositary Agreement.
"Notice of Borrowing" has the meaning set forth in Section
3.02.
"Notice of Issuance" has the meaning set forth in Section
2.04.
"Officer" means, with respect to the General Partner, the
Chairman of its Board of Directors, its President or any of its
Vice Presidents.
"Officer's Certificate" means a certificate of the General
Partner, duly executed by any Officer.
"Operating and Maintenance Agreement" means the Operating and
Maintenance Agreement dated as of August 15, 1988 between the
Borrower and Red Hill, as amended from time to time.
"Original Coverage" has the meaning set forth in Section
6.13(g).
"Outstanding LOC Debt" at any time means all LOC Debt
theretofore authenticated and delivered to a Dealer (whether or not
payment of the purchase price thereof has been received by the
Depositary and deposited in the Note Proceeds Account) other than
(i) LOC Debt which has matured and been paid in full by the
Depositary with funds withdrawn from the Special Payment Account,
(ii) LOC Debt which has matured and funds for payment of which are
on deposit in the Special Payment Account, (iii) LOC Debt whose
purchase price has not been paid and which has been returned (but
not presented for payment) to the Depositary for cancellation and
(iv) Defeased Notes.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including
a government or political subdivision or an agency or
instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
which is covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code and is either (i)
maintained by a member of the Controlled Group for employees of a
member of the Controlled Group or (ii) maintained pursuant to a
collective bargaining agreement or any other arrangement under
which more than one employer makes contributions and to which a
member of the Controlled Group is then making or accruing an
obligation to make contributions or has within the preceding five
plan years made contributions.
"Plans and Specifications" means the plans and specifications
for the construction of the Leathers Facility, copies of which are
referenced in Exhibit H to the Construction Management Agreement.
"Prime Loan" means a Loan to be made as a Prime Loan pursuant
to Section 2.06, Section 3.02 or Article IX.
"Prime Rate" means the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York in New York City from
time to time as its Prime Rate.
"Principal Payment Amount" has the meaning set forth in
Section 3.14.
"Process" means the process by which BTU Energy is extracted
from the Geothermal Brine.
"Project Agreements" means the agreements listed in Schedule
I to the Security Agreement, and all other agreements to which the
Borrower is a party now in effect or hereafter entered into in
connection with the Development of the Leathers Facility or the
operation of the Leathers Facility.
"Project Contingency Costs" means that item in any budget or
statement of anticipated Project Costs that represents an open item
or reserve for unexpected expenses that may arise due to unforeseen
circumstances.
"Project Cost Overruns" means such Project Costs as, when
aggregated with all Project Costs previously incurred, are in
excess of $110,000,000.00.
"Project Costs" has the meaning set forth for such term in the
Limited Partnership Agreement, including, without limitation, the
funding of Working Capital in an amount equal to the Working
Capital Requirement.
"Project Debt" means any Loan or LOC Debt.
"Red Hill" means Red Hill Geothermal, Inc., a Delaware
corporation, a general partner of the Borrower.
"Reference Banks" means the CD Reference Banks or the
Euro-Dollar Reference Banks, as the context may require, and
"Reference Bank" means any one of such Reference Banks.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Reimbursement Obligation" has the meaning set forth in the
Security Agreement.
"Required Banks" means at any time Banks having at least 66
2/3% of the aggregate amount of the Commitments or, if the
Commitments shall have been terminated, holding Notes evidencing at
least 66 2/3% of the aggregate unpaid principal amount of the
Loans.
"Resource Engineer" means GeothermEx, or its successors in the
capacity as resource engineer.
"Resource Engineer's Report" means the report of the Resource
Engineer in form and substance satisfactory to the Banks.
"Restricted Payment" means (i) any distribution of
Distributable Cash pursuant to Article IV of the Limited
Partnership Agreement or other distribution of assets of the
Borrower (other than tax benefits) on any Interest, or (ii) any
payment to any Affiliate of the Borrower other than pursuant to the
Project Agreements.
"River Ranch Leasehold Bridge Agreement" means that certain
River Ranch Leasehold Bridge Agreement dated as of October 26, 1988
among Magma, the Borrower and the Security Agent.
"Sale" has the meaning given to the term Sale in the Limited
Partnership Agreement.
"Sale or Financing Proceeds" means the aggregate amount of
cash, readily marketable cash equivalents or other consideration
received by the Borrower at any time or from time to time in
respect of any Sale or Financing minus the reasonable costs and
expenses (including, without limitation, fees and commissions,
costs of discontinuance and taxes), incurred in connection with
such Sale or Financing and not payable to the Borrower or any
Affiliate of the Borrower; provided that such aggregate amount
shall not include the aggregate of any insurance proceeds released
to the Borrower pursuant to Section 6.13 and any proceeds from any
sale of LOC Debt.
"San Felipe" means San Felipe Energy Company, a California
corporation.
"SCE" means Southern California Edison Company, a California
corporation.
"Security Agent" means Morgan Guaranty Trust Company of New
York, as Security Agent under the Security Agreement.
"Security Agreement" means the Security Agreement dated as of
October 26, 1988 among the Borrower, Morgan Guaranty Trust Company
of New York, as Agent hereunder for and on behalf of the Banks and
the Fronting Bank, Morgan Guaranty Trust Company of New York, and
Morgan Guaranty Trust Company of New York, as Security Agent
(collectively, the "Security Agreement Parties"), as amended by
Amendment Number One to Security Agreement dated as of April 14,
1989 among the Security Agreement Parties and Amendment Number Two
to Security Agreement dated as of April 18, 1990 among the Security
Agreement Parties and as further amended from time to time.
"Security Interests" means the security interests granted to
the Security Agent for the benefit of the Secured Parties (as
defined in the Security Agreement) under the Security Agreement and
the Deed of Trust.
"Special Payment Account" has the meaning set forth in the
Depositary Agreement.
"Subsidiary" means, with respect to any Person, any
corporation or other entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions
are at the time directly or indirectly owned by such Person.
"Supporting Equipment" means all items described in Section
2.2.2 of the Easement Agreement, including all such items located
on the Leathers Property, and any real property interest associated
therewith.
"Technical Consultant" means the Engineer or the Resource
Engineer or any other engineering or technical consultant to the
Banks that may be selected by the Required Banks from time to time
to advise the Banks as to technical aspects of the Development of
the Leathers Facility or operation of the Leathers Facility.
"Temporary Cash Investment" means any Investment in (i) direct
obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof,
(ii) commercial paper rated in the highest grade by a nationally
recognized credit rating agency, (iii) deposits with, including
certificates of deposit issued by, any office located in the United
States of any Bank or any other bank or trust company which is
organized under the laws of the United States or any state thereof
and the certificates of deposit of which are rated in one of the
two highest grades by a nationally recognized credit rating agency,
(iv) bankers' acceptances issued by (A) any Bank or (B) any trust
company organized under the laws of Japan that has certificates of
deposits rated in one of the two highest grades by a nationally
recognized credit rating agency in the United States and (v)
certificates of deposit, commonly known as "Euro-CDs", that are
issued by any office located in London of any bank or trust company
and that are rated in one of the two highest grades by a nationally
recognized credit rating agency in the United States; provided that
in each case such Investment matures within one year from the date
of acquisition thereof by the Borrower.
"Title Insurance Policy" shall mean a title insurance policy
issued by Ticor Title Insurance Company of California, insuring the
validity and first priority of the lien of the Deed of Trust in the
Leathers Facility ("Parcel A"), the leasehold estate created by the
Ground Lease ("Parcel B") and the easement created by the Easement
Agreement ("Parcel C"). The Title Insurance Policy shall be in the
form of an American Land Title Association Standard Loan
Policy-Form 1987 (L.P. 10), with ALTA Endorsement Form 1 coverage,
and shall satisfy the following requirements:
(a) The Title Insurance Policy shall provide coverage in an
amount equal to 115% of the aggregate amount of the Tranche A
Commitments and Tranche B Commitments;
(b) The Title Insurance Policy shall contain with respect to
(i) Parcel A and Parcel B, CLTA Indorsement Nos. 100 (modified) and
116.1, (ii) Parcel C, CLTA Endorsement No. 101 and (iii) Parcels A,
B and C, CLTA Endorsement No. 111.5, and such other endorsements as
the Required Banks may reasonably require;
(c) Except as approved by the Required Banks in writing prior
to the date of the first Borrowing, the Title Insurance Policy
shall not contain any exceptions to coverage other than the
exceptions contained in the Leathers Property Preliminary Title
Report and the Geothermal Lease Rights Properties Preliminary
Title Report, it being acknowledged by the parties hereto that,
(i) with respect to Parcel C, the Title Insurance Policy shall
contain the standard California Land Title Association exceptions
to coverage and (ii) with respect to Parcels A and B, the Title
Insurance Policy shall contain the standard American Land Title
Association exceptions to coverage; and
(d) The Title Insurance Policy shall contain such direct
access reinsurance agreements as the Required Banks may require.
"Tranche A" or "Tranche B" means, when used with respect to
(i) a Bank's Commitment, the portion of such Bank's Commitment
identified with respect to such Tranche on Schedule I hereto, as
such portion of the Commitment may be reduced pursuant to Section
3.08 or 3.09, (ii) a Borrowing, a Borrowing made by the Borrower
under such Tranche, as identified in the Notice of Borrowing with
respect thereto, (iii) a Loan, a Loan made as part of a Borrowing
under such Tranche, (iv) a Note, a Note evidencing the obligation
of the Borrower to pay Loans outstanding under such Tranche, (v) a
Bank's Utilization, the Utilization of such Bank attributable to
such Tranche, (vi) LOC Debt, the LOC Debt that is attributable to
such Tranche and (vii) LOCs, a LOC that has been issued in respect
of such Tranche's LOC Debt.
"Tranche A Credit Period" means the period from the date of
the Original Agreement to and including the Conversion Date;
provided that if the Tranche A Credit Period would otherwise end on
a day which is not a Domestic Business Day, the Tranche A Credit
Period shall end on the next preceding Domestic Business Day.
"Tranche B Credit Period" means the period from the date
during the Tranche A Credit Period on which the Borrower has
Tranche A Loans outstanding in the aggregate amount of the Tranche
A Commitments to and including the Conversion Date; provided that
if the Tranche B Credit Period would otherwise end on a day which
is not a Domestic Business Day, the Tranche B Credit Period shall
end on the next preceding Domestic Business Day.
"Transmission Agreement" has the meaning set forth in the
definition of "IID Agreements" in this Section 1.01.
"Unfunded Vested Liabilities" means, with respect to any Plan
at any time, the amount (if any) by which (i) the present value of
all vested nonforfeitable benefits under such Plan exceeds (ii) the
fair market value of all Plan assets allocable to such benefits,
all determined as of the then most recent valuation date for such
Plan, but only to the extent that such excess represents a
potential liability of a member of the Controlled Group to the PBGC
or the Plan under Title IV of ERISA.
"Unused Commitment" of a Bank means such Bank's Commitment
less its Loan Utilization.
"Utilization" of a Bank means, at any time, an amount equal to
the sum of (a) such Bank's LOC Utilization at such time and (b) its
Loan Utilization at such time.
"Working Capital" means, at any time, the difference between
(i) the sum of the Borrower's cash, cash equivalents and accounts
receivable, less any amounts in the Debt Service Reserve Account or
the Major Capital Expenditure Reserve Account established pursuant
to Section 11 of the Operating and Maintenance Agreement, and (ii)
the Borrower's accounts payable.
"Working Capital Requirement" means: (i) from the Conversion
Date to but excluding the first anniversary of the Conversion Date,
$1,000,000; (ii) from the first anniversary of the Conversion Date
to but excluding the second anniversary of the Conversion Date,
$1,400,000; (iii) from the second anniversary of the Conversion
Date to but excluding the third anniversary of the Conversion Date,
$1,800,000; (iv) from the third anniversary of the Conversion Date
to but excluding the fourth anniversary of the Conversion Date,
$2,200,000; (v) from the fourth anniversary of the Conversion Date
to but excluding the fifth anniversary of the Conversion Date,
$2,600,000; and (vi) after the fifth anniversary of the Conversion
Date, $3,000,000.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall
be interpreted, all accounting determinations hereunder shall be
made, and all financial statements required to be delivered
hereunder shall be prepared in accordance with generally accepted
accounting principles as in effect from time to time, applied on a
basis consistent (except for changes concurred in by the Borrower's
independent public accountants) (i) with financial statements of
Magma until audited financial statements of the Borrower are
available (and to the extent relevant), and (ii) thereafter with
the most recent audited financial statements of the Borrower
delivered to the Banks.
ARTICLE II
THE LETTER OF CREDIT FACILITY
SECTION 2.01. LOC Commitment. Upon the terms and subject to
the conditions hereinafter set forth, the Fronting Bank (i) agrees
to issue and deliver LOCs from time to time during the availability
of the LOC Commitment and (ii) consents to the issuance and sale of
LOC Debt entitled to the benefits of the LOCs. LOC Debt may be
issued in accordance with this Agreement and the Depositary
Agreement on the instructions of the Borrower to the Depositary on
any Domestic Business Day prior to the Conversion Date on which
there are unused LOC Commitments and on any Domestic Business Day
thereafter in an aggregate Face Amount (1) on the maturity date of
any LOC Debt, up to the aggregate Face Amount of such maturing LOC
Debt, (2) on any day on which the principal of any Loans is prepaid
or scheduled to be repaid, up to the aggregate amount of such
principal (subject to compliance with Section 3.10 hereof), (3) on
any day on which Medium-Term Notes become Defeased Notes pursuant
to Section 4.01 of the LOC Debt Facility Agreement, up to the
aggregate Face Amount of such Defeased Notes and (4) on any day on
which any LOC Debt is returned to the Depositary for cancellation,
without the purchase price therefor having been paid and without
having been presented to the Depositary for payment, up to the Face
Amount of the LOC Debt so returned; provided that (a) on any one
day LOC Debt may be issued under more than one of the foregoing
circumstances if applicable, and (b) LOC Debt shall be issued from
time to time hereunder and under the Depositary Agreement with such
maturities that LOC Debt with an aggregate Face Amount of no more
than $25,000,000 shall mature on any one day. The LOC Commitment
shall become available upon the execution and delivery by the
appropriate parties of the Issuance Agreements and satisfaction of
the conditions precedent to issuance of LOC Debt set forth therein
and herein.
SECTION 2.02. LOCs. Each LOC shall (a) be denominated in
Dollars, (b) be dated the date of issuance of the LOC Debt
supported thereby, (c) expire 15 days after the maturity date of
such LOC Debt (or if such fifteenth day is not a Domestic Business
Day, on the next succeeding Domestic Business Day) and (d) be in an
amount equal to the Face Amount of such LOC Debt.
SECTION 2.03. Forms of LOCs. Each LOC with respect to
Commercial Paper Notes shall be initially in the form of Exhibit
A-2 to the Depositary Agreement and thereafter any other form of
letter of credit acceptable to the Fronting Bank, the Agent and the
Borrower. Each LOC with respect to Medium-Term Notes shall be
initially in the form of Exhibit B-2 to the Depositary Agreement
and thereafter any other form of letter of credit acceptable to the
Fronting Bank, the Agent and the Borrower.
SECTION 2.04. Notice of Issuance. The Borrower shall, not
later than three Domestic Business Days prior to the proposed date
of issuance of any LOC Debt and related LOC, if such issuance is a
Credit Event, provide a written notice of such issuance (a "Notice
of Issuance") to the Fronting Bank and the Agent, specifying the
aggregate Face Amount of LOC Debt expected to be issued, the
expected maturity dates thereof and the Tranche to which such LOC
Debt is attributable.
SECTION 2.05. Issuance of LOCs and LOC Debt. (a) General.
The issuance, authentication, marketing, sale and delivery of LOC
Debt and the LOCs related thereto, the making of payments in
respect thereof and the appointment by the Borrower, the Fronting
Bank and the Banks of authenticating, selling and paying agents,
the Depositary and other representatives in connection with the
foregoing shall be subject to the terms and conditions of this
Agreement (including, without limitation, the terms and conditions
set forth in subsection (b) below) and the applicable Issuance
Agreements.
(b) Conditions Precedent to Issuances of LOC Debt. Each
issuance of LOC Debt and the LOCs related thereto shall be subject
to the satisfaction of the applicable conditions precedent set
forth in Article III of the LOC Debt Facility Agreement.
(c) Notice of Actual Issuances. Promptly after each issuance
of LOC Debt, the Fronting Bank shall provide the Agent and the
Banks with a written notice setting forth the terms thereof,
including the Tranche attributable thereto.
SECTION 2.06. Agreement to Reimburse LOC Disbursements and
Automatic Conversion to Loans. (a) The Borrower hereby agrees to
reimburse the Fronting Bank, for its own account, for each LOC
Disbursement made by the Fronting Bank without demand or notice of
any kind, on the date that such LOC Disbursement is made, in an
amount equal to the amount of such LOC Disbursement.
(b) The Borrower or any Dealer shall notify the Depositary
and the Fronting Bank by telephone (which notification shall
promptly be confirmed by telex or facsimile transmission) not later
than 12:30 P.M. (New York City time), on any day an LOC
Disbursement is made, of the amount, if any, of such LOC
Disbursement to be reimbursed and the anticipated source of such
reimbursement on such day. If the Borrower or any Dealer timely
delivers such notice, any such reimbursement made in the amount so
notified by the close of business in New York City on such day
shall be credited on such day. Any LOC Disbursement not fully
reimbursed by the close of business in New York City on the day
when made shall, to the extent not so reimbursed, automatically and
without further act or notice, be converted at such close of
business into a Prime Loan of the Fronting Bank unless the LOC
Commitment has been terminated pursuant to Section 7.01. If the
Borrower or any Dealer shall fail to notify the Depositary prior to
12:30 P.M. (New York City time) that an LOC Disbursement is to be
reimbursed on such day, (i) payments made prior to 12:30 P.M. (New
York City time) on such day shall nevertheless be accepted by the
Fronting Bank and credited as a reimbursement made on such date and
(ii) any payments made after 12:30 P.M. (New York City time) on
such day shall be deemed to have been received on the next
succeeding Domestic Business Day and all or any portion of such LOC
Disbursement not reimbursed pursuant to clause (i) above shall be
converted into a Prime Loan of the Fronting Bank, as of the close
of business on such day.
(c) If by 12:30 P.M. (New York City time) on any day on which
an LOC Disbursement has been made and the Fronting Bank has not
received either a notice under subsection (b) of this Section that
reimbursement of such LOC Disbursement will be made in full on such
day or funds in reimbursement in full of such LOC Disbursement,
then the Fronting Bank shall promptly (and in any event by 1:30
P.M., New York City time) notify the Agent, the Borrower and each
Bank of the date and amount of such LOC Disbursement to be
converted into a Prime Loan and the ratable share of each Bank in
such Prime Loan. If (i) at the close of business (New York City
time) on any day any LOC Disbursement made on such day has not been
reimbursed in full despite previous notice under subsection (b) of
this Section of such expected reimbursement, (ii) such LOC
Disbursement has been converted into a Prime Loan of the Fronting
Bank pursuant to subsection (b) of this Section and (iii) such
Prime Loan is not repaid in full by 10:30 A.M. (New York City time)
on the next succeeding Domestic Business Day, then the Fronting
Bank shall promptly (and in any event by 1:30 P.M., New York City
time) provide the notice required by this subsection on such next
succeeding Domestic Business Day. The failure of the Fronting Bank
to provide any notice on the day required by this subsection shall
not constitute a default of the Fronting Bank for purposes of
Section 3.16.
(d) The Borrower's obligation to reimburse the Fronting Bank
for the amount of all LOC Disbursements and to repay the Prime
Loans, if any, into which LOC Disbursements have been converted in
accordance with Section 2.06(b) shall be unconditional and absolute
under any and all circumstances; provided that the Borrower shall
not be obligated to reimburse the Fronting Bank for any wrongful
LOC Disbursement made as a result of the gross negligence or
willful misconduct of the Fronting Bank (or to repay any Prime Loan
into which any such LOC Disbursement has been converted) to the
extent of any damages which the Borrower proves were suffered by it
directly as a result thereof.
SECTION 2.07. Participations of the Banks. (a) By the
issuance of an LOC, the Fronting Bank hereby grants to each other
Bank, and each other Bank hereby absolutely and unconditionally
agrees to acquire from the Fronting Bank, a participation in such
LOC, each LOC Disbursement made thereunder and each Prime Loan into
which such LOC Disbursement is converted hereunder and to pay to
the Fronting Bank in accordance with Section 3.14 an amount equal
to such Bank's LOC Commitment Percentage (as determined at the time
of the issuance of each LOC to which an unreimbursed LOC
Disbursement relates) (i) of each Prime Loan into which an
unreimbursed LOC Disbursement is converted pursuant to Section
2.06(b) and 3.14 or (ii) of each unreimbursed LOC Disbursement, if
such unreimbursed LOC Disbursement is not (contrary to the
agreement and intention herein set forth, other than the rights of
the Banks to terminate the LOC Commitment pursuant to Section 7.01
hereof) for any reason (including, without limitation, a
termination of the LOC Commitment by the Banks pursuant to Section
7.01 hereof) converted into a Prime Loan pursuant to Section
2.06(b), promptly upon receiving notice from the Fronting Bank of
such non-conversion; provided that the Fronting Bank has not made
a wrongful LOC Disbursement for the reasons set forth in Section
2.06(d) hereof.
(b) Except as otherwise expressly stated herein, each Bank
acknowledges and agrees that its obligation pursuant to this
Section 2.07 (i) to acquire a participation in each LOC, each LOC
Disbursement and each Prime Loan into which an unreimbursed LOC
Disbursement is converted and (ii) to make the payments specified
in Sections 2.07 and 3.14, and the right of the Fronting Bank to
receive the same in the manner specified herein, is unconditional
and absolute and shall not be affected by any circumstances
whatsoever (other than the termination of such obligation upon (x)
the cash collateralization of such LOC pursuant to Section 4.01 of
the LOC Debt Facility Agreement, and (y) the reimbursement of the
Fronting Bank of such LOC Disbursements prior to such Bank funding
such participation), including the occurrence of any Event of
Default, and that each such payment shall be made without any
offset, counterclaim, abatement, withholding or reduction
whatsoever.
(c) Notwithstanding the termination of the obligations of the
Banks to participate in Collateralized LOCs, the Borrower shall
remain obligated to reimburse the Fronting Bank in full for the
disbursements under such Collateralized LOCs whether from funds on
deposit in the Defeasance Accounts or otherwise.
SECTION 2.08. Election to Reduce LOC Utilization. (a) The
Borrower may, upon three Domestic Business Days' written notice
before an intended Domestic Borrowing and upon five Euro-Dollar
Business Days' written notice before an intended Euro-Dollar
Borrowing to the Fronting Bank and the Agent (which shall promptly
transmit such notice to the Banks), elect to reduce its utilization
of LOC Debt and increase its utilization of Loans by not issuing
LOC Debt on the next Maturity Date of LOC Debt or on the next
Defeasance Date and instead giving a Notice of Borrowing pursuant
to Section 3.02 with respect to such Maturity Date or Defeasance
Date, as the case may be. Any such election need not be permanent
and may be reversed in whole or in part pursuant to an election
under Section 3.15 hereof.
(b) For purposes of any election by the Borrower pursuant to
this Section 2.08, the Borrower shall specify in its written notice
of such election which Tranche is involved.
SECTION 2.09. Limited Liability of the Banks. The Borrower
assumes all risk of liability of the Banks and the Fronting Bank
arising from the acts or omissions of each holder or beneficiary of
an LOC with respect to its use of such LOC. Neither the Fronting
Bank nor any other Bank nor any of their respective officers or
directors shall be liable or responsible for: (a) the use which
may be made of any LOC or for any acts or omissions of any holder
or beneficiary of any LOC in connection therewith; (b) the
validity, sufficiency or genuineness of any LOC or LOC Debt
instrument or any documents offered in support of a claim with
respect to any lost, stolen or mutilated LOC or LOC Debt instrument
or to or in respect of any endorsement thereon, even if such LOC or
LOC Debt instrument or such documents should in fact prove to be in
any or all respects invalid, insufficient, fraudulent or forged;
(c) payment by or on behalf of the Fronting Bank against
presentation of documents which do not comply with the terms of any
LOC, including failure of any documents to bear reference or
adequate reference to such LOC; or (d) any other circumstances
whatsoever in making or failing to make payment under any LOC;
provided that the Borrower shall have a claim against the Fronting
Bank, and the Fronting Bank shall be liable to the Borrower, to the
extent of any damages suffered by the Borrower which the Borrower
proves were caused by (i) the gross negligence of the Fronting Bank
in determining whether documents presented under any LOC complied
with the terms of such LOC or (ii) the willful failure of the
Fronting Bank to pay under any LOC after the timely and proper
presentation to it by the holder or beneficiary of any LOC of all
requisite documents strictly complying with the terms and
conditions of such LOC. In furtherance and not in limitation of
the foregoing, documents that appear on their face to be in order
may be accepted by the Fronting Bank.
SECTION 2.10. Indemnity. The Borrower agrees to indemnify
the Fronting Bank, the Agent and each Bank, and their respective
officers, directors, employees, agents, attorneys-in-fact and
Affiliates, and hold each such indemnified party harmless from and
against any and all claims, damages, losses, liabilities, costs or
expenses whatsoever (exclusive of ordinary operating costs of the
Fronting Bank or any Bank) which such indemnified party may incur
or suffer by reason of or in connection with payment under any LOC
except only if and to the extent that any such claims, damages,
losses, liabilities, costs or expenses shall be caused by the
willful misconduct or gross negligence of such indemnified party in
performing its obligations, if any, under this Agreement or in
making payment under any LOC which does not comply with the terms
thereof. Each indemnified party shall provide to the Borrower a
certificate, signed by an officer of such indemnified party setting
forth the amount of any such loss or expense of such indemnified
party, which statement shall be final, conclusive and binding as to
the amount due in the absence of manifest error. The Borrower,
upon demand by any indemnified party at any time, shall promptly
reimburse such indemnified party for any reasonable legal or other
expenses incurred in connection with investigating or defending
against any of the foregoing except if the same is due to such
indemnified party's gross negligence or willful misconduct. If any
action, suit or proceeding arising from any of the foregoing is
brought against any indemnified party, the Borrower will resist and
defend such action, suit or proceeding or cause the same to be
resisted and defended by counsel designated by the Borrower and
satisfactory to such indemnified party. The indemnities contained
herein shall survive the termination of this Agreement for the
applicable statute of limitations.
ARTICLE III
THE CREDIT FACILITY
SECTION 3.01. Commitments to Lend.
(a) Tranche A. In addition to the Commitments of each Bank
to lend pursuant to Article II hereof, during the Tranche A Credit
Period each Bank severally agrees, on the terms and conditions set
forth in this Agreement, to lend to the Borrower from time to time
Tranche A Loans up to the amount, if any, equal to the excess of
(i) the Tranche A Commitment of such Bank over (ii) the Tranche A
Utilization of such Bank, immediately prior to the time of making
such Tranche A Loans. Each Borrowing under this subsection (a)
shall be in an aggregate principal amount of $2,500,000 or any
larger multiple of $500,000 (except that any such Borrowing may be
in the aggregate amount of the unused Tranche A Commitments), shall
be made no more frequently than once a month and shall be made from
the several Banks ratably in proportion to their respective Tranche
A Commitments. Within the foregoing limits, the Borrower may
borrow under this subsection (a), repay, or to the extent permitted
by Section 3.10, prepay Loans and reborrow at any time during the
Tranche A Credit Period under this subsection (a).
(b) Tranche B. In addition to the Commitments of each Bank
to lend pursuant to Article II hereof, during the Tranche B Credit
Period each Bank severally agrees, on the terms and conditions set
forth in this Agreement, to lend to the Borrower from time to time
Tranche B Loans up to the amount, if any, equal to the excess of
(i) the Tranche B Commitment of such Bank over (ii) the Tranche B
Utilization of such Bank, immediately prior to the time of making
such Tranche B Loans. Each Borrowing under this subsection (b)
shall be in an aggregate principal amount of $1,000,000 or any
larger multiple of $500,000 (except that any such Borrowing may be
in the aggregate amount of the unused Tranche B Commitments), shall
be made no more frequently than once a month and shall be made from
the several Banks ratably in proportion to their respective Tranche
B Commitments. Within the foregoing limits, the Borrower may
borrow under this subsection (b), repay, or to the extent permitted
by Section 3.10, prepay Loans and reborrow at any time during the
Tranche B Credit Period under this subsection (b).
(c) After Credit Periods. In addition to the Commitments of
each Bank to lend pursuant to Article II hereof, after the end of
each of the Tranche A and Tranche B Credit Periods, (A) the Tranche
B Commitment of each Bank shall be added to such Bank's Tranche A
Commitment and the Tranche B Commitment shall thereupon terminate,
(B) the Tranche B Loans of each Bank shall be deemed to be Tranche
A Loans of such Bank and all subsequent Loans by the Banks shall be
Tranche A Loans, and (C) each Bank severally agrees, on the terms
and conditions set forth in this Agreement, to make new Tranche A
Loans to the Borrower upon (i) any repayment of outstanding Tranche
A Loans pursuant to Section 3.04, (ii) any optional prepayment of
outstanding Tranche A Loans pursuant to Section 3.10 and (iii) any
election to increase utilization of Loans pursuant to Section 2.08;
provided that the principal amount of such Bank's new Loan shall
not exceed the principal amount of its outstanding Loan or Loans
being repaid or prepaid (or, in the case of an election under
Section 2.08, the aggregate Face Amount of the LOC Debt maturing or
being defeased and not being replaced with LOC Debt); and provided
further that the aggregate principal amount of such Bank's
outstanding Tranche A Utilization shall not, immediately after a
Borrowing, exceed its Tranche A Commitment. Each Borrowing under
this subsection (c) shall be made from the several Banks ratably in
proportion to their respective Commitments. Amounts required to be
repaid pursuant to Section 3.09(f) shall not be reborrowed, and
amounts repaid pursuant to Section 9.02 shall not be reborrowed
except as provided therein.
(d) Consolidation of Outstanding Loans. On the first
Commitment Reduction Date each Bank's outstanding Tranche A Loans
shall be consolidated into a single Loan and thereafter no Bank
shall have more than three Loans outstanding hereunder at any time
with the Prime Loans arising under Section 2.06 counted as a single
Loan for this purpose. If any combination of CD Loans, Prime Loans
and Euro-Dollar Loans are outstanding within a Tranche immediately
prior to the first Commitment Reduction Date, the Borrower shall
borrow new Loans of not more than three types on such date to the
extent required to refund its outstanding Loans of any other type.
SECTION 3.02. Method of Borrowing. (a) Except for Prime
Loans arising under Section 2.06, the Borrower shall give the Agent
notice (a "Notice of Borrowing") by 11:00 A.M. (New York City time)
at least three Domestic Business Days before each Domestic
Borrowing and at least five Euro-Dollar Business Days before each
Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Domestic Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are to be
CD Loans, Prime Loans or Euro-Dollar Loans,
(iv) whether such Borrowing is a Tranche A Borrowing or a
Tranche B Borrowing, and
(v) in the case of a Fixed Rate Borrowing, the duration of
the Interest Period applicable thereto, subject to the provisions
of the definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing (or deemed Notice
of Borrowing pursuant to subsection (d) hereof), the Agent shall
promptly notify each Bank of the contents thereof and of such
Bank's ratable share of such Borrowing and such Notice of Borrowing
shall not thereafter be revocable by the Borrower.
(c) Not later than 1:00 P.M. (New York City time) on the date
of each Borrowing, each Bank shall (except as provided in
subsection (e) of this Section) make available its ratable share of
such Borrowing, in Federal or other funds immediately available in
New York City, to the Agent at its address specified in or pursuant
to Section 10.01. Unless the Agent determines that any applicable
condition specified in Article IV has not been satisfied, the Agent
will make the funds so received from the Banks available to the
Borrower at the Agent's aforesaid address.
(d) If the Agent does not receive a timely Notice of
Borrowing prior to the expiration of any Interest Period applicable
to any outstanding CD Borrowing, Prime Borrowing or Euro-Dollar
Borrowing, as the case may be, unless the Borrower repays such CD
Borrowing, Prime Borrowing or Euro-Dollar Borrowing in accordance
with the provisions of this Agreement, the Borrower shall be deemed
to have given the Agent a Notice of Borrowing to make a Prime
Borrowing upon the expiration of such Interest Period, in an
aggregate amount equal to the sum of the aggregate principal amount
of such CD Borrowing, Prime Borrowing or Euro-Dollar Borrowing
outstanding at the expiration of such Interest Period; provided
that the Banks shall not be obligated to make Loans in an aggregate
amount in excess of the aggregate Commitments.
(e) If any Bank makes a new Loan hereunder on a day on which
the Borrower is to repay all or any part of an outstanding Loan
from such Bank, such Bank shall apply the proceeds of its new Loan
to make such repayment and only an amount equal to the difference
(if any) between the amount being borrowed and the amount being
repaid shall be made available by such Bank to the Agent as
provided in subsection (c) of this Section, or remitted by the
Borrower to the Agent as provided in Section 3.11, as the case may
be.
SECTION 3.03. Notes. (a) The Tranche A Domestic Loans and
the Tranche B Domestic Loans of each Bank are evidenced by a single
Tranche A Domestic Note and a single Tranche B Domestic Note,
respectively, payable to the order of such Bank for the account of
its Domestic Lending Office in an amount equal to the aggregate
unpaid principal amount of such Bank's Tranche A Domestic Loans and
Tranche B Domestic Loans, respectively. Such Notes were delivered
by the Borrower to the Banks prior to the first Borrowing under the
Original Agreement and in connection with the Amro Assignment, as
applicable.
(b) The Tranche A Euro-Dollar Loans and Tranche B Euro-Dollar
Loans of each Bank are evidenced by a single Tranche A Euro-Dollar
Note and a single Tranche B Euro-Dollar Note, respectively, payable
to the order of such Bank for the account of its Euro-Dollar
Lending Office in an amount equal to the aggregate unpaid principal
amount of such Bank's Tranche A Euro-Dollar Loans and Tranche B
Euro-Dollar Loans. Such Notes were delivered by the Borrower to
the Banks prior to the first Borrowing under the Original Agreement
and in connection with the Amro Assignment, as applicable.
(c) The Banks had the option prior to the first Borrowing
under the Original Agreement to request that their Prime Loans and
CD Loans in either or both Tranches be evidenced by separate Prime
and CD Notes payable to the order of such Banks for the account of
their Domestic Lending Office in an amount equal to the aggregate
unpaid principal amount of such Banks' Prime Loans and CD Loans,
respectively, within the affected Tranche. Each such Note that was
delivered pursuant to such a request was in substantially the form
of Exhibit A hereto with appropriate modifications to reflect the
fact that it evidences solely Prime Loans or CD Loans, as the case
may be. Each reference in this Agreement to the "Notes" or
"Domestic Note" shall be deemed to refer to and include either or
both of such Notes within a specified Tranche, as the context may
require.
(d) Each Bank shall record, and prior to any transfer of its
Notes shall endorse on the schedules forming a part thereof
appropriate notations to evidence, the date, amount and maturity of
each Loan made by it and the date and amount of each payment of
principal made by the Borrower with respect thereto; provided that
the failure of any Bank to make any such recordation or endorsement
shall not affect the obligations of the Borrower hereunder or under
the Notes. Each Bank is hereby irrevocably authorized by the
Borrower to endorse its Notes and to attach to and make a part of
any Note a continuation of any such schedule as and when required.
SECTION 3.04. Maturity of Loans. Each Loan included in any
Borrowing shall mature, and the principal amount thereof shall be
due and payable, on the last day of the Interest Period applicable
to such Borrowing.
SECTION 3.05. Interest Rates. (a) Each Prime Loan shall
bear interest on the outstanding principal amount thereof, for each
day from the date such Loan is made until it becomes due, at a rate
per annum equal to (w) 3/8% plus the Prime Rate for such day, if
such day falls prior to the Conversion Date; (x) 1/8 of 1% plus the
Prime Rate for such day, if such day falls on or after the
Conversion Date and prior to the fourth anniversary of the
Conversion Date; (y) 1/4 of 1% plus the Prime Rate for such day, if
such day falls on or after the fourth anniversary of the Conversion
Date and prior to the eighth anniversary of the Conversion Date;
and (z) 1/2 of 1% plus the Prime Rate for such day, if such day
falls on or after the eighth anniversary of the Conversion Date.
Such interest shall be payable for each Interest Period on the last
day thereof. Any overdue principal of and, to the extent permitted
by law, overdue interest on any Prime Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum
equal to the sum of 1% plus the otherwise applicable rate for such
day.
(b) Each CD Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable
thereto, at a rate per annum equal to the applicable Fixed CD Rate;
provided that if any CD Loan or any portion thereof shall, as a
result of clause (2)(b) or (2)(c)(i) of the definition of Interest
Period, have an Interest Period of less than 30 days, such portion
shall bear interest during such Interest Period at the rate
applicable to Prime Loans during such period. Such interest shall
be payable for each Interest Period on the last day thereof and, if
such Interest Period is longer than 90 days, at intervals of 90
days after the first day thereof. Any overdue principal of and, to
the extent permitted by law, overdue interest on any CD Loan shall
bear interest, payable on demand, for each day until paid at a rate
per annum equal to the sum of 1% plus the higher of (i) the Fixed
CD Rate applicable to such Loan and (ii) the rate applicable to
Prime Loans for such day.
The "Fixed CD Rate" applicable to any CD Loan for any Interest
Period means a rate per annum equal to the sum of the CD Margin
plus the applicable Adjusted CD Rate.
"CD Margin" means (w) 7/8 of 1% prior to the Conversion Date;
(x) 5/8 of 1% on and after the Conversion Date and prior to the
fourth anniversary of the Conversion Date; (y) 3/4 of 1% on and
after the fourth anniversary of the Conversion Date and prior to
the eighth anniversary of the Conversion Date; and (z) 7/8 of 1% on
or after the eighth anniversary of the Conversion Date.
The "Adjusted CD Rate" applicable to any Interest Period means
a rate per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
__________
* The amount in brackets being rounded upwards, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period is the
rate of interest determined by the Agent to be the arithmetic
average (rounded upward, if necessary, to the next higher 1/100 of
1%) of the prevailing rates per annum bid at 10:00 A.M. (New York
City time) (or as soon thereafter as practicable) on the first day
of such Interest Period by two or more New York certificate of
deposit dealers of recognized standing for the purchase at face
value from each CD Reference Bank of its certificates of deposit in
an amount comparable to the unpaid principal amount of the CD Loan
of such CD Reference Bank to which such Interest Period applies and
having a maturity comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day,
as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement (including without limitation any basic, supplemental
or emergency reserves) for a member bank of the Federal Reserve
System in New York City with deposits exceeding five billion
dollars in respect of new non-personal time deposits in dollars in
New York City having a maturity comparable to the related Interest
Period and in an amount of $100,000 or more. The Fixed CD Rate
shall be adjusted automatically on and as of the effective date of
any change in the Domestic Reserve Percentage.
"Assessment Rate" means for any Interest Period the net annual
assessment rate (rounded upwards, if necessary, to the next higher
1/100 of 1%) actually incurred by Morgan Guaranty Trust Company of
New York to the Federal Deposit Insurance Corporation (or any
successor) for such Corporation's (or such successor's) insuring
time deposits at offices of Morgan Guaranty Trust Company of New
York in the United States during the most recent period for which
such rate has been determined prior to the commencement of such
Interest Period.
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the
Euro-Dollar Margin plus the applicable Adjusted London Interbank
Offered Rate. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is
longer than three months, at intervals of three months after the
first day thereof.
"Euro-Dollar Margin" means (w) 3/4 of 1% prior to the
Conversion Date; (x) 1/2 of 1% on and after the Conversion Date and
prior to the fourth anniversary of the Conversion Date; (y) 5/8 of
1% on and after the fourth anniversary of the Conversion Date and
prior to the eighth anniversary of the Conversion Date; and (z) 3/4
of 1% on and after the eighth anniversary of Conversion Date.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient
obtained (rounded upwards, if necessary, to the next higher 1/100
of 1%) by dividing (i) the applicable London Interbank Offered Rate
by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest
Period means the average (rounded upward, if necessary, to the next
higher 1/16 of 1%) of the respective rates per annum at which
deposits in dollars are offered to each of the Euro-Dollar
Reference Banks in the London interbank market at approximately
11:00 A.M. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately equal
to the principal amount of the Euro-Dollar Loan of such Euro-Dollar
Reference Bank to which such Interest Period is to apply and for a
period of time comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day,
as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement for a member bank of the Federal Reserve System in New
York City with deposits exceeding five billion dollars in respect
of "Eurocurrency liabilities" (or in respect of any other category
of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of
extensions of credit or other assets which includes loans by a non-
United States office of any Bank to United States residents). The
Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the
Euro-Dollar Reserve Percentage.
(d) Any overdue principal of and, to the extent permitted by
law, overdue interest on any Euro-Dollar Loan shall bear interest,
payable on demand, for each day from and including the date payment
thereof was due to but excluding the date of actual payment, at a
rate per annum equal to the sum of 1% plus the Euro-Dollar Margin
plus the quotient obtained (rounded upwards, if necessary, to the
next higher 1/100 of 1%) by dividing (i) the rate per annum at
which one day (or, if such amount due remains unpaid more than
three Euro-Dollar Business Days, then for such other period of time
not longer than six months as the Agent may elect) deposits in
dollars in an amount approximately equal to such overdue payment
due to each of the Euro-Dollar Reference Banks are offered to such
Euro-Dollar Reference Bank in the London interbank market for the
applicable period determined as provided above by (ii) 1.00 minus
the Euro-Dollar Reserve Percentage (or, if the circumstances
described in clause (a) or (b) of Section 9.01 shall exist, at a
rate per annum equal to the sum of 1% plus the rate applicable to
Prime Loans for such day).
(e) The Agent shall determine each interest rate applicable
to the Loans hereunder. The Agent shall give prompt notice to the
Borrower and the Banks by telex or cable of each rate of interest
so determined, and its determination thereof shall be conclusive in
the absence of manifest error.
(f) Each Reference Bank agrees to use its best efforts to
furnish quotations to Agent as contemplated hereby. If any
Reference Bank does not furnish timely quotations, the Agent shall
determine the relevant interest rate on the basis of the quotation
or quotations furnished by the remaining Reference Bank or Banks
or, if none of such quotations is available on timely basis, the
provisions of Section 9.01 shall apply.
SECTION 3.06. Commitment Fees; Participation Fees. (a) The
Borrower shall pay to the Agent for the account of the Banks pro-
rata a commitment fee (i) during the Credit Periods, at the rate of
3/8 of 1% per annum on the average aggregate amount of Unused
Commitments less the average of the LOC Utilization and (ii) both
during and after the Credit Periods, at the rate per annum equal to
the applicable Euro-Dollar Margin on the average amount of the LOC
Utilization.
(b) Fees under this Section 3.06 shall accrue from and
including October 26, 1988 and shall be payable on December 15,
1988 and thereafter quarterly in arrears on each March 15, June 15,
September 15 and December 15 and on the date on which there shall
be no outstanding Loans or Commitments hereunder.
SECTION 3.07. Agency and Fronting Bank Fee. (a) The Borrower
shall pay to the Agent for its own account as compensation for its
services hereunder an annual fee in an amount agreed upon by the
Agent and the Borrower, payable on October 26, 1988 and on each
anniversary of such date until the termination of the Banks'
Commitments hereunder and on the date of such termination.
(b) The Borrower shall pay to the Fronting Bank as
compensation for its services hereunder fees in such amounts and at
such times as heretofore agreed upon by the Fronting Bank and the
Borrower.
SECTION 3.08. Optional Termination or Reduction of
Commitments. (a) The Borrower may, upon at least three Domestic
Business Days' notice to the Agent and the Fronting Bank, terminate
at any time, or proportionately reduce from time to time by an
aggregate amount of $2,500,000 or any larger multiple of $500,000,
the unused portions of the Tranche A Commitments. If the Tranche
A Commitments are terminated in their entirety, all accrued fees
shall be payable on the effective date of such termination.
(b) From the date of the Original Agreement to the Conversion
Date, the Borrower may, upon at least three Domestic Business Days'
notice to the Agent and the Fronting Bank, terminate at any time,
or proportionately reduce from time to time by an aggregate amount
of $1,000,000 or any larger multiple of $500,000, the unused
portions of the Tranche B Commitments. If the Tranche B
Commitments are terminated in their entirety, all accrued fees
shall be payable on the effective date of such termination.
SECTION 3.09. Mandatory Termination or Reduction of
Commitments. (a) The Tranche A and Tranche B Commitments shall
terminate on September 15, 2002, and any Loans then outstanding
(together with accrued interest thereon) shall be due and payable
on such date.
(b) On any date on or after the last day of the Credit
Periods on which the Commitments with respect to either Tranche A
or Tranche B shall be greater than the Utilization within the
applicable Tranche on such date (after giving effect to any
repayment, prepayment and borrowing on such date), the Commitments
with respect to such Tranche shall be automatically proportionately
reduced to an amount equal to such Utilization.
(c) The Tranche A Commitment of each Bank shall be further
reduced on each Commitment Reduction Date by an amount equal to a
percentage of such Bank's Tranche A Commitment in effect on the
last day of the Tranche A Credit Period (after giving effect to any
reduction pursuant to subsection (b) on such date), with such
percentages being 0.750% on the first Commitment Reduction Date,
1.875% on the next two Commitment Reduction Dates, 2.500% on the
next two Commitment Reduction Dates, 2.875% on the next two
Commitment Reduction Dates, 3.750% on the next two Commitment
Reduction Dates, 5.000% on the next two Commitment Reduction Dates,
7.250% on the next two Commitment Reduction Dates, 7.900% on the
next four Commitment Reduction Dates, 7.950% on the next two
Commitment Reduction Dates, 0.875% on the next six Commitment
Reduction Dates.
(d) The Tranche A Commitments and Tranche B Commitments shall
be further proportionately reduced by the amount of Sale or
Financing Proceeds on each day any such proceeds are received by
the Borrower.
(e) The Tranche B Commitment of each Bank shall be further
reduced on each Commitment Reduction Date by an amount equal to a
percentage of such Bank's Tranche B Commitment in effect on the
last day of the Tranche B Credit Period (after giving effect to any
reduction pursuant to subsection (b) on such date), with such
percentages being 0.750% on the first Commitment Reduction Date,
1.875% on the next two Commitment Reduction Dates, 2.500% on the
next two Commitment Reduction Dates, 2.875% on the next two
Commitment Reduction Dates, 3.750% on the next two Commitment
Reduction Dates, 5.000% on the next two Commitment Reduction Dates,
7.900% on the next four Commitment Reduction Dates, 7.950% on the
next two Commitment Reduction Dates, 0.875% on the next six
Commitment Reduction Dates.
(f) On each Commitment Reduction Date and on each date on
which there is a reduction of Commitments pursuant to paragraph (d)
of this Section 3.09, (i) the Borrower shall repay such principal
amount (together with accrued interest thereon) of the outstanding
Tranche A Loans, if any, as may be necessary so that after such
repayment, the Tranche A Utilization does not exceed the amount of
the Tranche A Commitments as then reduced and (ii) the Borrower
shall repay such principal amount (together with accrued interest
thereon) of the outstanding Tranche B Loans, if any, as may be
necessary so that after such repayment, the unpaid principal amount
of the outstanding Tranche B Utilization does not exceed the amount
of the Tranche B Commitments as then reduced.
SECTION 3.10. Optional Prepayments. (a) The Borrower may,
upon at least three Domestic Business Days' notice to the Agent,
prepay any Prime Borrowing in whole at any time, or from time to
time in part in amounts aggregating $2,500,000 or any larger
multiple of $500,000, in the case of a Tranche A Loan and
$1,000,000 or any larger multiple of $500,000 in the case of a
Tranche B Loan, in either case by paying the principal amount to be
prepaid together with accrued interest thereon to the date of
prepayment; provided that in the case of Prime Borrowings made
pursuant to Section 2.06 due to a failure to deliver conforming
Commercial Paper Notes or Medium-Term Notes on a timely basis, the
Borrower may without notice prepay such Prime Borrowing in whole
irrespective of the amount of such prepayment with the proceeds of
LOC Debt issued on the next day and otherwise upon one Domestic
Business Day's notice. Each such optional prepayment shall be
applied to prepay ratably the Prime Loans of the several Banks
included in such Borrowing.
(b) Except as provided in Section 9.02, the Borrower may not
prepay all or any portion of the principal amount of any Fixed Rate
Loan prior to the maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to this
Section, the Agent shall promptly notify each Bank of the contents
thereof and of such Bank's ratable share of such prepayment and
such notice shall not thereafter be revocable by the Borrower.
SECTION 3.11. General Provisions as to Payments. The
Borrower shall make each payment of principal of, and interest on,
the Loans and of fees hereunder, not later than 1:00 P.M. (New York
City time) on the date when due, in Federal or other funds
immediately available in New York City, to the Agent at its address
specified in or pursuant to Section 10.01. The Agent will promptly
distribute to each Bank its ratable share of each such payment
received by the Agent for the account of the Banks. Whenever any
payment of principal of, or interest on, the Domestic Loans or of
commitment fees shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended to the
next succeeding Domestic Business Day. Whenever any payment of
principal of, or interest on, the Euro-Dollar Loans shall be due on
a day which is not a Euro-Dollar Business Day, the date for payment
thereof shall be extended to the next succeeding Euro-Dollar
Business Day unless such Euro-Dollar Business Day falls in another
calendar month, in which case the date for payment thereof shall be
the next preceding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
SECTION 3.12. Funding Losses. If the Borrower makes any
payment of principal with respect to any Fixed Rate Loan (pursuant
to Article III, VII or IX or otherwise) on any day other than the
last day of the Interest Period applicable thereto, or the end of
an applicable period fixed pursuant to Section 3.05(d), or if the
Borrower fails to borrow any Fixed Rate Loans after notice has been
given to any Bank in accordance with Section 3.02(b), the Borrower
shall reimburse each Bank on demand for any resulting loss or
expense incurred by it (or by any existing or prospective
participant in the related Loan), including (without limitation)
any loss incurred in obtaining, liquidating or employing deposits
from third parties, but excluding loss of margin for the period
after any such payment or failure to borrow; provided that such
Bank shall have delivered to the Borrower a certificate as to the
amount of such loss or expense, the rate of such Fixed Rate Loan at
the time it was borrowed and the rate which a loan of similar
interest period could have been borrowed at the time of such
payment or failure to borrow hereunder, which certificate shall be
presumptive evidence in the absence of manifest error.
SECTION 3.13. Computation of Interest and Fees. Interest on
Domestic Loans based on the Prime Rate and the fee payable pursuant
to Section 3.06(a)(i) shall be computed on the basis of a year of
365 days (or 366 days in a leap year) and paid for the actual
number of days elapsed (including the first day but excluding the
last day). Interest on Domestic Loans based on the Adjusted CD
Rate and interest on Euro-Dollar Loans and fees hereunder (other
than the fee payable pursuant to Section 3.06(a)(i)) shall be
computed on the basis of a year of 360 days and paid for the actual
number of days elapsed, calculated as to each Interest Period or
period fixed pursuant to Section 3.05(d) from and including the
first day thereof to but excluding the last day thereof.
SECTION 3.14. Procedure for Bank Participation in Certain
Loans. Pursuant to Section 2.06(c), the Fronting Bank shall give
the other Banks prompt notice of any unreimbursed LOC Disbursement
made by the Fronting Bank to be converted or converted in whole or
in part into a Prime Loan of the Fronting Bank. Any such notice
shall specify the date on which all or any part of such
unreimbursed LOC Disbursement is to be or was converted into a
Prime Loan and the amount of such Prime Loan. As promptly as
possible, and in any case by the close of business on the date of
receipt of such notice if such notice is received not later than
1:30 P.M. (New York City time) on such date, each other Bank shall,
pursuant to Section 2.07, pay to the Fronting Bank for its account,
in immediately available funds, an amount equal to such Bank's LOC
Commitment Percentage (as determined at the time of and with
respect to the issuance of the LOC to which such unreimbursed LOC
Disbursement relates) of such Prime Loan (the "Principal Payment
Amount") plus, if such payment is received by the Fronting Bank
after the date of such unreimbursed LOC Disbursement, interest (i)
for the period from the day of such unreimbursed LOC Disbursement
to but excluding the Domestic Business Day next succeeding the date
of such unreimbursed LOC Disbursement at a rate per annum equal to
the rate of interest applicable to Prime Loans from time to time
pursuant to Section 3.05(a) and (ii) for the period from and
including the Domestic Business Day next succeeding the date of
such unreimbursed LOC Disbursement to the date such payment is
received by the Fronting Bank at a rate per annum equal to the rate
of interest applicable to Prime Loans from time to time pursuant to
Section 3.05(a) plus the Late Participation Penalty. At the time
of, and by virtue of, such payment, such Bank shall be deemed to
have purchased, and the Fronting Bank to have sold, a portion,
equal to the LOC Commitment Percentage of such Bank, of all of the
right, title and interest of the Fronting Bank under and with
respect to the Prime Loan of the Fronting Bank into which such
unreimbursed LOC Disbursement was converted, together with an equal
portion of any and all Collateral serving as security therefor.
For all purposes of this Agreement, such Bank shall, thereupon, be
deemed to have made a separate Prime Loan to the Borrower on and as
of the date of the related Prime Loan of the Fronting Bank in a
principal amount equal to such Bank's Principal Payment Amount, and
the Borrower hereby expressly consents to such participations being
treated as separate Prime Loans for all purposes hereunder, and the
principal amount of such Prime Loan of the Fronting Bank shall, on
and as of such date, be deemed reduced by an equal amount; provided
that the Fronting Bank shall reimburse each Bank for payment of any
Principal Payment Amount made by such Bank to the Fronting Bank,
immediately upon a final determination that the LOC Disbursement
(with respect to which such payment of such Principal Payment
Amount was made) was wrongfully made for the reasons set forth in
Section 2.06(d) hereof, in an amount equal to the sum of (i) such
Principal Payment Amount plus (ii) any interest originally paid
thereon by such Bank to the Fronting Bank pursuant to this Section
plus (iii) interest on the foregoing amounts in clauses (i) and
(ii) at the Federal Funds Rate from but not including the date of
such payment to the Fronting Bank to and including the date the
Fronting Bank makes such reimbursement in full.
SECTION 3.15. Election to Reduce Loan Utilization. Subject
to the provisions of Section 3.10 hereof, the Borrower may, upon at
least three Domestic Business Days' notice to the Fronting Bank and
the Agent (and the Agent shall promptly transmit such notice to the
Banks), elect to reduce its utilization of the Loans and increase
its utilization of LOC Debt by (i) repaying or, subject to Section
3.10 hereof, prepaying the outstanding amount of the Loans made as
part of a Borrowing in whole or ratably in part, with accrued
interest to the date of such repayment on the amount repaid, and
(ii) contemporaneously with such prepayment and after giving the
appropriate Notice of Issuance and satisfying the conditions
precedent, issue LOC Debt in an aggregate Face Amount equal to the
aggregate principal amount of the Loans so repaid or prepaid;
provided that, after conversion of an unreimbursed LOC Disbursement
to a Prime Loan upon a failure of the Depositary to deliver
conforming Commercial Paper Notes or Medium-Term Notes to a Dealer,
the Borrower may re-issue such Notes on the next succeeding
Domestic Business Day after the day of such failure and use the
proceeds therefrom to prepay such Prime Loan without prior notice.
SECTION 3.16. Replacement Fronting Bank. (a) If the
Fronting Bank defaults in making any required LOC Disbursement
hereunder, the Fronting Bank shall, upon substitution of a
replacement financial institution, cease to act as a Bank hereunder
and, upon substitution of a replacement Fronting Bank, cease to act
as Fronting Bank under this Agreement. In such instance, the
Borrower and the Banks agree to use their best efforts to
substitute a financial institution for the Fronting Bank as a Bank
hereunder which is satisfactory to the Banks and to the Borrower
(which financial institution may be one of the Banks); provided
that such substituted financial institution and each party hereto
(other than the defaulting Fronting Bank as a Bank) shall execute
and deliver an appropriate novation to this Agreement, in form and
substance satisfactory to all parties thereto, whereby such
substituted institution (i) shall agree to assume the remaining
Commitment and obligations of the Fronting Bank (in its capacity as
a Bank) hereunder and (ii) shall agree to be bound by all of the
terms hereof and to undertake all of the obligations contained
herein of the Fronting Bank as a Bank hereunder. The Borrower and
the Banks further agree to use their best efforts to substitute
another bank as Fronting Bank hereunder, satisfactory to the Banks
and to the Borrower the LOCs of which will result in the LOC Debt
supported thereby being an exempt security pursuant to Section
3(a)(2) of the Securities Act of 1933 (which may be one of the
Banks); provided, that such substitution shall be conditioned on
the execution and delivery of appropriate novations to this
Agreement and each Issuance Agreement, in form and substance
reasonably satisfactory to all parties (other than the defaulting
Fronting Bank as such) hereto and thereto; provided further that
the Fronting Bank shall not be deemed to be released from any of
its obligations for actions taken or failed to be taken by it prior
to the date of such substitution to the extent such actions taken
or failed to be taken constitute gross negligence or willful
misconduct of the Fronting Bank.
(b) If the rating assigned to the Fronting Bank by either
Moody's Investors Services Inc. or Standard & Poor's Corporation is
reduced, the Fronting Bank shall notify the Agent, the Borrower and
each Bank thereof and, upon substitution of a replacement Fronting
Bank, shall cease to act as Fronting Bank under this Agreement. In
such instance, the Borrower and the Banks agree to use their best
efforts to substitute another bank as Fronting Bank hereunder,
satisfactory to the Banks and to the Borrower, the LOCs of which
will result in the LOC Debt supported thereby being an exempt
security pursuant to Section 3(a)(2) of the Securities Act of 1933
(which bank may be one of the Banks); provided, that such
substitution shall be conditioned on the execution and delivery of
appropriate novations to this Agreement and each Issuance
Agreement, in form and substance reasonably satisfactory to all
parties hereto and thereto; provided further that the downgraded
Fronting Bank shall not be deemed to be released from any of its
obligations for actions taken or failed to be taken by it prior to
the date of such substitution to the extent such actions taken or
failed to be taken constitute gross negligence or willful
misconduct of the downgraded Fronting Bank.
SECTION 3.17. Reduction of LOC Commitment. At the time of
any reduction of the Commitments pursuant to this Article III, the
LOC Commitment shall be reduced by an amount equal to the aggregate
amount by which the Commitments of the Banks are reduced, provided
that the LOC Commitment shall not be reduced below an amount equal
to the then Outstanding LOC Debt.
ARTICLE IV
CONDITIONS
The obligation of each Bank to make a Loan on the occasion of
each Credit Facility Borrowing and the obligation of the Fronting
Bank to issue LOCs during the Credit Period are subject to the
satisfaction of the following conditions:
SECTION 4.01. All Credit Facility Borrowings. In the case of
each Credit Facility Borrowing:
(a) receipt by the Agent of notice of such Borrowing as
required by Section 3.02;
(b) the fact that, immediately after such Borrowing, no
Default shall have occurred and be continuing; and
(c) the fact that the representations and warranties of the
Borrower contained in this Agreement (except, in the case of a
Borrowing that is not a Credit Event, the representations and
warranties set forth in Sections 5.04(a) and 5.07 and Section
5.12 as to any material adverse change) shall be true on and as
of the date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of such Borrowing as to the
facts specified in clauses (b) and (c) of this Section.
SECTION 4.02. Certain Borrowings and LOC Debt Issuances. In
the case of each Credit Facility Borrowing or issuance of LOC Debt
that is a Credit Event:
(a) in the case of a Tranche A Borrowing or issuance of LOC
Debt attributable to Tranche A, immediately after such Borrowing or
such LOC Debt issuance, the Borrower's ratio of Debt to Capital
Contributions shall be no greater than 2.3333:1;
(b) receipt by the Banks of a CLTA Indorsement 122 of the
Title Insurance Policy;
(c) receipt by the Banks of a certificate of the Engineer,
dated no earlier than 10 days preceding the Borrowing,
substantially in the form of Exhibit J hereto and which is
favorable in all material respects, except as otherwise approved
by the Required Banks;
(d) receipt by the Agent (and, in the case of LOC Debt
issuances, the Fronting Bank), with sufficient copies for the
Banks, of an Officer's Certificate to the effect that (i) true
and correct copies of all Project Agreements then in effect have
been delivered to the Banks, (ii) each of the Leathers Power
Purchase Contract, the IID Agreements (other than the
Transmission Agreements) and the Intertie Agreement is in full
force and effect and has not been amended or modified, (iii) the
Borrower has no reason to believe that SCE is dissatisfied with,
or will be making recommendations or requesting modifications
with respect to, the design of or construction schedule for the
Leathers Facility, (iv) to the best of the Borrower's knowledge,
no postponement is considered or planned for Completion of the
Transmission Project, no Participant is in default under the IID
Agreements and the Borrower has not agreed to and is not aware
of any increase of the Borrower's Project Contribution above
$6,622,546 (terms used in this clause (iv) not otherwise defined
in this Agreement having the meanings given to them in the
Funding and Construction Agreement), (v) to the best of the
Borrower's knowledge, all the condition precedent set forth in
Section 5 of the Intertie Agreement have been met, and the
Borrower's obligations under the Intertie Agreement have not
been increased from $1,515,189.87 and (vi) the conditions set
forth in clauses (b) and (c) of Section 4.01 and clause (a) of
this Section 4.02 are met with respect to this Borrowing;
(e) receipt by the Agent (and, in the case of LOC Debt
issuances, the Fronting Bank), with sufficient copies for the
Banks, of a certificate of an officer of the Construction
Manager or the General Partner stating (i) the amount of Project
Costs paid (or liability for which has been accrued in such
manner as is not disapproved by the Required Banks) since the
immediately preceding Borrowing and stating the general nature
and amount of such Project Costs, (ii) that the amount of the
Borrowing is equal to the sum of (x) actual Project Costs
incurred to the date of such Borrowing and not covered by
Capital Contributions as of the date of such Borrowing and funds
from any previous Borrowing hereunder, and (y) the total amount
of Project Costs (including a reasonable amount included for
Project Contingency Costs) anticipated to be incurred within
four weeks of the date of such Borrowing, and (iii) that to the
best of the Construction Manager's or the General Partner's
knowledge and belief, as applicable, there has occurred no event
or circumstance that materially adversely affects the
feasibility of the Leathers Facility or the economic viability
of the Leathers Facility; together with a certificate of an
engineer employed by the Construction Manager, the General
Partner or DEC reporting on the progress of the Development of
the Leathers Facility and stating that the Development of the
Leathers Facility as a whole is no more than two weeks behind
schedule for the Firm Operation Date specified in the most
recent written schedule submitted to the Banks; and
(f) receipt by the Banks of a certificate of the Resource
Engineer, dated no earlier than 90 days preceding such Borrowing,
substantially in the form of Exhibit K hereto and which is
favorable in all material respects, except as otherwise approved by
the Required Banks; provided that no such certificate shall be
required after the Resource Engineer has certified that existing
wells can provide a satisfactory quantity and quality of Geothermal
Brine for Firm Operation (as defined in the Leathers Power Purchase
Contract) of the Leathers Facility.
The documents and opinions referred to in this Section shall be
delivered to the Agent or the Banks, as the case may be, no later
than four Euro-Dollar Business Days prior to the date of such
Borrowing or issuance of LOC Debt, and shall in all cases be in
form and substance satisfactory to the Agent or approved by the
Required Banks, as the case may be. In the case of LOC Debt
issuances, all documents and opinions to be delivered to the Agent
shall also be delivered to the Fronting Bank at the same time.
SECTION 4.03. After Completion Date. In the case of each
Borrowing after the Completion Date that is a Credit Event or an
issuance of LOC Debt after the Completion Date that is a Credit
Event:
(a) all of the conditions set forth in Section 4.02 shall be
satisfied in full; and
(b) the Agent (and, in the case of LOC Debt issuances, the
Fronting Bank) shall receive an Officer's Certificate not less
than five days prior to the Borrowing or LOC Debt issuance (x)
itemizing what the funds borrowed shall be applied to; (y)
stating that the Banks had received a written list of such
proposed expenditures not less than 10 days prior to the
proposed Borrowing or LOC Debt issuance; and (z) stating that
the Required Banks had not disapproved of any of the proposed
expenditures; provided that, in the case of a Borrowing or LOC
Debt issuance in connection with the Borrower's obligations
under the Intertie Agreement, the Officer's Certificate need
only state that the Borrowing or LOC Debt issuance shall be used
for such purpose.
SECTION 4.04. Conditions to Effectiveness. This Agreement
shall become effective as of the date hereof, subject to the
satisfaction of the following conditions, and, as of the date
hereof, the Original Agreement is amended and restated in its
entirety to read as set forth herein:
(a) receipt by the Agent on or prior to the date of this
Agreement of counterparts hereof signed by all the parties
hereto;
(b) receipt by the Agent of a certificate of the Borrower,
signed by an authorized financial officer of the Borrower and
dated on or prior to the date of this Agreement, to the effect
that (i) no Default under this Agreement has occurred and is
continuing as of the date hereof, (ii) the representations and
warranties of the Borrower contained in this Agreement are true
as of the date hereof and (iii) all necessary governmental,
third party and other approvals necessary in connection with the
transactions contemplated by this Agreement and the Issuance
Agreements have been obtained and remain in effect;
(c) receipt by the Agent on behalf of the Banks of the
opinions of Latham & Watkins, special counsel to the Borrower,
substantially in the form of Exhibits C-1 and C-2 hereto and
covering such additional matters relating to the transactions
contemplated hereby as the Agent shall reasonably request;
(d) receipt by the Agent on behalf of the Banks of an opinion
of Orrick, Herrington & Sutcliffe, special California counsel to
the Banks and the Agent, substantially in the form of Exhibit D
hereto and covering such additional matters relating to the
transactions contemplated hereby as the Agent shall reasonably
request;
(e) receipt by the Agent on behalf of the Banks of an opinion
of Davis Polk & Wardwell, special New York counsel to the Banks
and the Agent, substantially in the form of Exhibit E hereto and
covering such additional matters relating to the transactions
contemplated hereby as the Agent shall reasonably request;
(f) receipt by the Agent on behalf of the Banks of an opinion
of Jones, Day, Reavis & Pogue, special counsel to the Fronting
Bank, substantially in the form of Exhibit M hereto and covering
such additional matters relating to the transactions contemplated
hereby as the Agent shall reasonably request;
(g) receipt by the Agent on behalf of the Banks of an opinion
of Logan, Okamoto & Takashima, special Japanese counsel to the
Fronting Bank, substantially in the form of Exhibit N hereto and
covering such additional matters relating to the transactions
contemplated hereby as the Agent shall reasonably request;
(h) receipt by the Agent of a copy of such Endorsements to
the Title Insurance Policy as the Agent shall reasonably
request;
(i) receipt by the Agent of an executed copy of the First
Amendment to Deed of Trust;
(j) receipt by the Agent of an executed copy of Amendment
Number Two to Security Agreement;
(k) receipt by the Agent of executed copies of the Issuance
Agreements; and
(l) receipt by the Agent of an executed copy of the Second
Amendment to Operating and Maintenance Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 5.01. Existence and Power. The Limited Partnership
Agreement is in full force and effect, and is a valid and binding
agreement of all the parties thereto. The Borrower is a limited
partnership duly formed, validly existing and in good standing
under the laws of the state of California, and has all powers under
the Limited Partnership Agreement and the laws of the State of
California and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now
conducted and proposed to be conducted.
SECTION 5.02. Authorization; Contravention. The execution,
delivery and performance by the Borrower of this Agreement, the
Notes, the Security Agreement, the Deed of Trust, the Issuance
Agreements and the Project Agreements are within the powers of the
Borrower, have been duly authorized by all necessary actions,
require no action by or in respect of, or filing with, any
governmental body, agency or official other than such actions as
have already been taken, and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of
the Limited Partnership Agreement or of any agreement, judgment,
injunction, order, decree or other instrument (including any
Geothermal Leases) binding upon the Borrower or result in the
creation or imposition of any Lien (other than the Security
Interests) on any asset of the Borrower.
SECTION 5.03. Binding Effect. This Agreement, the Deed of
Trust and the Security Agreement constitute valid and binding
agreements of the Borrower; the Notes, when executed and delivered
in accordance with this Agreement, will constitute valid and
binding obligations of the Borrower.
SECTION 5.04. Litigation. There is no action, suit or
proceeding pending against, or to the knowledge of the Borrower,
threatened against or affecting the Borrower before any court or
arbitrator or any governmental body, agency or official in which
there is a reasonable possibility of an adverse decision (a) which
could materially adversely affect the business, financial position
or results of operations of the Borrower or (b) which in any manner
draws into question the validity of this Agreement, the Notes, the
Security Agreement, the Deed of Trust, the Issuance Agreements or
any material Project Agreement.
SECTION 5.05. Compliance with ERISA. Each member of the
Controlled Group has fulfilled its obligations under the minimum
funding standards of ERISA and the Code with respect to each Plan
and is in compliance in all material respects with the presently
applicable provisions of ERISA and the Code, and has not incurred
any liability to the PBGC or a Plan under Title IV of ERISA other
than a liability to the PBGC for premiums under Section 4007 of
ERISA.
SECTION 5.06. Taxes. The Borrower has filed all United
States Federal income tax returns and all income tax returns of the
State of California which are required to be filed by it. The
charges, accruals and reserves on the books of the Borrower in
respect of taxes or other governmental charges are, in the opinion
of the Borrower, adequate to cover the Borrower's liability with
respect to such taxes and charges.
SECTION 5.07. Hazardous Waste. To the best of the Borrower's
knowledge after inquiry and physical inspection, the Leathers
Property does not contain hazardous wastes, hazardous substances,
hazardous materials, toxic wastes, toxic substances or toxic
pollutants in violation of the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response Compensation and
Liability Act, the Hazardous Materials Transportation Act, the
Toxic Substances Control Act, the Clean Air Act, the Clean Water
Act, the California Hazardous Waste Control Act, the California
Hazardous Substance Act, the Porter-Cologne Water Quality Control
Act, any regulations promulgated pursuant thereto, or any other
applicable law, ordinance, rule or regulation, nor does it contain
any other substance, waste or material considered toxic or
hazardous in amounts in violation of any applicable federal, state
or local law, ordinance, rule or regulation.
SECTION 5.08. CEC. The Leathers Facility is not subject to
the jurisdiction of the CEC on the date of this Agreement, and no
CEC Event has occurred since the date of the Original Agreement.
SECTION 5.09. Compliance with Laws. (a) The Borrower is in
compliance in all material respects with all applicable laws,
ordinances, rules, regulations and requirements of governmental
authorities (including, without limitation, the Geothermal Steam
Act of 1970, those laws identified in Section 5.07 above, any other
laws relating to the protection of the environment, ERISA, all
relevant California state and local laws, and all rules and
regulations promulgated thereunder).
(b) The Borrower has obtained (or has applied for as
necessary to timely obtain) all material permits and authorizations
of any governmental body, agency or official necessary for the
Development of the Leathers Facility, operation of the Leathers
Facility or required for the Borrower to sell electricity to SCE
under the Leathers Power Purchase Contract and all of such permits
and authorizations obtained by the Borrower remain in full force
and effect.
(c) The Borrower has filed an application to be certified as
a "qualifying facility" under 18 C.F.R. Section 292.203, as
amended.
SECTION 5.10. Properties and Arrangements; Project Costs and
Schedule. (a) Subject to the exceptions identified in the
Leathers Property Preliminary Report and the Geothermal Lease
Rights Properties Preliminary Title Report, all properties and
rights and all contractual arrangements (including, without
limitation, rights and title to land and geothermal properties,
electricity transmission and interconnection facilities, rights to
use patents and other proprietary processes, designs and
information, and contracts for process design, engineering and
construction services) necessary in connection with the Development
of the Leathers Facility, the operation of the Leathers Facility on
the Leathers Property and the sale of electricity to SCE under the
Leathers Power Purchase Contract (i) if properties or rights, have
been obtained and are held by the Borrower subject to no Liens
(other than the Liens created by the Deed of Trust and the Security
Agreement) and no adverse claims that might, if proven to be
correct, individually or in the aggregate, have a material negative
impact on the feasibility of the Leathers Facility or the business
prospects of the Borrower and (ii) if contractual arrangements, are
in full force and effect, with the relevant benefits thereunder
accruing to the Borrower, and constitute valid and binding
agreements of the parties thereto, except, (x) for such exceptions
as are identified in the Leathers Property Preliminary Title Report
and the Geothermal Lease Rights Properties Preliminary Title
Report, (y) for those services, materials and rights that can
reasonably be expected to be commercially available at the site of
the Leathers Facility or are granted to the Borrower under the
Ground Lease or Easement Agreement. Such contractual arrangements
are all identified as Project Agreements.
(b) The budget set forth on Exhibit I to the Construction
Management Agreement for Leathers Projected Project Costs and
schedule for completion of the Leathers Facility previously
delivered to the Agent, as the same may be amended from time to
time with the approval of the Required Banks, are correct and
complete based on all available information and represent the
Borrower's present best estimates of Leathers Projected Project
Costs and the schedule for completion of the Leathers Facility, and
the budget for Leathers Projected Project Costs includes a
reasonable amount for Project Contingency Costs and includes all
costs to the Borrower associated with the properties and rights and
the contractual arrangements referred to in subsection (a) above.
SECTION 5.11. Security Agreement and Deed of Trust
Representations and Warranties. The representations and warranties
of the Borrower contained in the Security Agreement and the Deed of
Trust are true and correct in all material respects.
SECTION 5.12. Material Adverse Change. There has been no
material adverse change in the business, financial position,
results of operations or prospects of Magma and its Consolidated
Subsidiaries, considered as a whole, since June 30, 1988 or of the
Borrower or of the General Partner since August 15, 1988.
SECTION 5.13. Offering of Interests. Neither the Borrower
nor any agent or other Person acting on its behalf, has offered,
directly or indirectly, any of the Interests or any similar
security of the Borrower for sale to or solicited offers to buy any
thereof from, or otherwise approached or negotiated with respect
thereto with, any person in a manner that would subject the
offering of the Interests to the registration requirements of the
Securities Act of 1933, as amended.
SECTION 5.14. Not an Investment Company. The Borrower is not
an "investment company" within the meaning of the Investment
Company Act of 1940, as amended and neither the Borrower nor any of
its Affiliates (other than SCE) is subject to the Federal Power Act
or Public Utility Holding Company Act of 1935, except as such Acts
apply to "qualifying facilities" under 18 C.F.R. Section 292.203.
SECTION 5.15. Governmental Regulation. Neither the Borrower,
nor the Banks, nor the Agent, nor any Affiliate of any of them
(other than SCE or any of its Affiliates, except Mission and its
Subsidiaries) will, as a result of the construction, ownership,
leasing or operation of the Leathers Facility, the sale of
electricity therefrom or the entering into any Project Agreement or
any transaction contemplated hereby or thereby, be subject to
regulation under the Federal Power Act or the Public Utility
Holding Company Act of 1935 or under state laws and regulations
respecting the rates or the financial or organizational regulation
of electric utilities.
SECTION 5.16. Geothermal Lease Amendments. All Geothermal
Leases encumbering property upon which production and reinjection
wells for the Leathers Facility are located have been amended in a
form approved by the Agent so as to provide lender cure rights to
the Banks.
ARTICLE VI
COVENANTS
The Borrower agrees that, so long as any Bank has any
Commitment hereunder or any amount payable under any Note remains
unpaid:
SECTION 6.01. Information. The Borrower will deliver to
each of the Banks:
(a) as soon as available and in any event within 105 days
after the end of each fiscal year of the Borrower, a balance
sheet of the Borrower as of the end of such fiscal year and
related statements of operations and changes in financial
position for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all
reported on as to the fairness of the presentation, generally
accepted accounting principles and consistency in a manner
acceptable to Coopers & Lybrand or other independent public
accountants of nationally recognized standing;
(b) as soon as available and in any event within 55 days
after the end of each of the first three quarters of each fiscal
year of the Borrower, a balance sheet of the Borrower as of the
end of such quarter and related statements of operations and
changes in financial position for such quarter and for the
portion of the Borrower's fiscal year ended at the end of such
quarter, setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding
portion of the Borrower's previous fiscal year, all certified
(subject to normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles and
consistency in presentation with prior statements by the chief
financial officer or the chief accounting officer of the General
Partner;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, an Officer's
Certificate (i) setting forth in reasonable detail the information
or calculations required to establish whether the Borrower was in
compliance with the requirements of Sections 6.07, 6.08, 6.16 and
6.21 on the date of such financial statements, (ii) stating that
the representations and warranties of the Borrower contained in
this Agreement (except the representations and warranties set forth
in Sections 5.04(a) and 5.07 and Section 5.12 as to any material
adverse change) are true on and as of the date of such certificate
and (iii) stating whether any Default exists on the date of such
certificate and the information and calculations used as the basis
for such conclusion and, if any Default then exists, setting forth
the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the
firm of independent public accountants which reported on such
statements (i) whether anything has come to their attention in
the course of their review to cause them to believe that any
Default existed on the date of such statements and (ii) confirming
the information set forth in the Officer's Certificate delivered
simultaneously therewith pursuant to clause (c)(i) above;
(e) forthwith upon the occurrence of any Default, an
Officer's Certificate setting forth the details thereof and the
action which the Borrower is taking or proposes to take with
respect thereto;
(f) if and when any member of the Controlled Group (i) gives
or is required to give notice to the PBGC of any "reportable
event" (as defined in Section 4043 of ERISA) with respect to any
Plan which might constitute grounds for a termination of such
Plan under Title IV of ERISA, or knows that the plan administrator
of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event
given or required to be given to the PBGC; (ii) receives notice of
complete or partial withdrawal liability under Title IV of ERISA,
a copy of such notice; or (iii) receives notice from the PBGC under
Title IV of ERISA of an intent to terminate or appoint a trustee to
administer any Plan, a copy of such notice; and
(g) from time to time such additional information regarding
the financial position, business or operations of the Borrower
as the Agent, at the request of any Bank, may reasonably
request.
SECTION 6.02. Payment of Obligations. The Borrower will pay
and discharge at or before maturity all of its respective material
obligations and liabilities, including, without limitation, tax
liabilities, except where the same may be contested in good faith
by appropriate proceedings, and will maintain, in accordance with
generally accepted accounting principles, appropriate reserves for
the accrual of any of the same.
SECTION 6.03. Maintenance of Property. The Borrower will
keep all property useful and necessary in its business in good
working order and condition, ordinary wear and tear excepted.
SECTION 6.04. Conduct of Business and Maintenance of
Existence. The Borrower will continue to engage in business now
conducted and proposed to be conducted by the Borrower, and will
preserve, renew and keep in full force and effect its existence and
its rights, privileges and franchises necessary or desirable in the
normal conduct of such business.
SECTION 6.05. Compliance with Laws. The Borrower will
comply in all material respects with all applicable laws,
ordinances, rules, regulations and requirements of governmental
authorities (including, without limitation, ERISA and the rules and
regulations thereunder) except where the necessity of compliance
therewith is contested in good faith by appropriate proceedings.
SECTION 6.06. Inspection of Property, Books and Records. The
Borrower will keep proper books of record and account in which
full, true and correct entries shall be made of all dealings and
transactions in relation to its business and activities; and will
permit representatives of any Bank at such Bank's expense to visit
and inspect any of its properties, to examine and make abstracts
from any of its books and records and to discuss its affairs,
finances and accounts with its respective officers, employees and
independent public accountants, all at such reasonable times and as
often as may reasonably be desired.
SECTION 6.07. Restricted Payments. The Borrower shall make
no Restricted Payment (i) prior to the Conversion Date, (ii) after
the Conversion Date, when a Default exists and is continuing or
(iii) after the Conversion Date, when the Debt Service Reserve
Account and Major Capital Expenditure Reserve Account are not
funded to the extent required by Section 11 of the Operating and
Maintenance Agreement; provided that the Borrower may make
distributions pursuant to Sections 3.6 and 4.1 of the Limited
Partnership Agreement at any time so long as no Default shall have
occurred and be continuing.
SECTION 6.08. Debt. The Borrower shall not incur or suffer
to exist Debt other than (i) Debt under this Agreement, the Notes
and the Magma Undertaking, (ii) Debt that may exist from time to
time in the ordinary course of the Borrower's business, but in no
event shall such Debt be in an aggregate amount in excess of
$1,000,000, (iii) Debt arising under the Project Agreements, (iv)
LOC Debt, (v) Debt under the IID Agreements and the Intertie
Agreement, (vi) Debt under obligations relating to interest rate
hedging permitted pursuant to Section 6.19, (vii) any obligations
of the Borrower under the Reimbursement Obligation, and (viii) the
Collateralized LOCs and the Defeased Notes.
SECTION 6.09. Investments. The Borrower will not make or
acquire any Investment in any Person other than Temporary Cash
Investments.
SECTION 6.10. Consolidations, Mergers and Sales of Assets.
The Borrower will not (i) consolidate or merge with or into any
other Person or (ii) sell, lease or otherwise transfer all or any
substantial part of its assets to any other Person.
SECTION 6.11. Project Agreements; Project Rights. (a) The
Borrower will not amend or modify any material provision of any
material Project Agreement (including any technical or design
specifications under the Dow Engineering Agreement) or terminate or
agree to termination of any material Project Agreement or waive any
material right thereunder without the prior written consent of the
Required Banks, it being understood that any amendment or
modification by the Borrower of any provision of any of the Project
Agreements or waiver of any right thereunder which is permitted by
this Section 6.11 shall not constitute a breach of, or a default
under, any collateral assignment delivered by the Borrower pursuant
to Section 3 of the Security Agreement or any consent thereto.
(b) The Borrower will not enter into any material Project
Agreement in the future without first (i) having obtained the prior
written consent of the Required Banks (which consent will not be
unreasonably withheld) and (ii) taking any and all steps necessary
to create and perfect the Banks' Security Interest therein,
including, without limitation, the updating of Schedule I to the
Security Agreement to include such Project Agreement.
(c) The Borrower shall comply with the terms of each material
Project Agreement, shall enforce the terms of each material Project
Agreement against the other party or parties thereto, and shall
promptly advise the Agent of any material default under any Project
Agreement and the steps proposed to be taken in connection
therewith.
(d) In addition to any other relevant provisions hereof or of
the Security Agreement or the Deed of Trust, the Borrower agrees
that all properties and rights of the type referred to in Section
5.10 shall be obtained or renewed, all contractual arrangements of
the type referred to in Section 5.10 shall be entered into, and all
such properties and rights and contractual arrangements shall be
maintained in full force and effect, in each case as necessary from
time to time in connection with the Development of the Leathers
Facility, the operation of the Leathers Facility and the sale of
electricity to SCE under the Leathers Power Purchase Contract.
SECTION 6.12. Covenants Under the Security Agreement and the
Deed of Trust. The Borrower will observe and perform its covenants
and agreements under the Security Agreement and the Deed of Trust.
SECTION 6.13. Insurance. (a) The Borrower, at its own cost
and expense, will cause to be maintained, with insurance companies
rated at least B+ by A.M. Best Company or such other insurance
companies as may be acceptable to the Required Banks, (i) during
the course of construction, builders' risk insurance on an all-risk
basis, including but not limited to extended coverage, coverage for
flood, earthquake (to the extent possible) and collapse and all
other risks and perils normally covered in "all-risk" policies, for
full replacement value on a completed-value basis of all hard costs
incurred (excluding the cost of the transmission lines, wells and
brine pipelines), plus coverage for the Banks' construction period
interest and fees on the Tranche A and Tranche B Loans; (ii) at all
times after completion of construction, insurance on the Leathers
Facility against all risks of physical loss or damage, including
flood, earthquake (to the extent possible) and collapse and all
other risks and perils normally covered in "all risk" policies, for
the full cost of repair or replacement (excluding the costs of the
transmission lines, wells and brine pipelines); (iii) as soon as
possible in the course of construction of the Leathers Facility and
at all times after completion of construction of the Leathers
Facility, boiler and machinery insurance written on a comprehensive
form for the full repair and replacement value of Leathers Facility
equipment; (iv) at all times, comprehensive general liability
insurance with a limit of no less than $1,000,000, combined single
limit, bodily injury and property damage, for each occurrence; (v)
at all times, excess public liability insurance in the form of an
umbrella policy which umbrella policy shall afford coverage of not
less than $10 million per occurrence over and above the coverage
provided by the policies described above; (vi) on and after the
Firm Operation Date, business interruption insurance covering, for
an annual term, only amounts due (including, without limitation,
interest, principal repayment and any other fees and expenses) on
the Banks' Loans; and (vii) as soon as practicable after the Agent
shall request, such other insurance with respect to the Leathers
Facility in such amounts equal to the greater of, and against such
insurable hazards, (x) as Magma maintains with respect to other
facilities similar to the Leathers Facility, which it owns or
operates, (y) as is usually carried by corporations of established
reputation operating similar properties or (z) as the Agent may
from time to time reasonably request.
(b) Each insurance policy required under subsection (a) of
this Section 6.13 (i) shall (except for the liability insurance
referred to in subsection (a)(iv) above, which shall name the Banks
as an additional insured) insure the Banks' interests as
beneficiary under the Deed of Trust and shall provide that all
insurance proceeds payable under such policy shall, until notice
from the Agent to the contrary, be paid over directly to the Agent
for the benefit of the Banks, (ii) shall provide that it cannot be
cancelled or terminated without thirty days' prior written notice
to the Agent, (iii) shall include waivers by the insurer of all
claims for the payments by the Banks and the Agent of insurance
premiums, (iv) shall (except for the liability insurance referred
to in subsection (a)(iv) above) provide for losses to be payable to
the Banks notwithstanding (x) any act or failure to act by the
insured or violation by the insured of warranties, declarations or
conditions contained in the policy, (y) any foreclosure or sale or
other proceeding relating to the Leathers Facility or construction
work in progress or (z) any change in the title to or ownership of
the Leathers Facility or construction work in progress, (v) shall
(except for the liability insurance referred to in subsection
(a)(v) above, which shall have no deductible) provide for
deductibles for (x) "all risk" coverage of no greater than $500,000
per occurrence and (y) business interruption coverage of no greater
than 60 days, and (vi) shall be in all other respects satisfactory
to the Required Banks. On or before the date of the first
Borrowing under this Agreement, the Borrower will provide the
Agent, with sufficient copies for the Banks, with certified copies
of the insurance policies providing coverage as then required
hereunder together with evidence that such policies are in effect
or, if certified copies are not available on or prior to the first
Borrowing, certificates of insurance executed by the insurer or its
authorized agent shall be acceptable in lieu of the certified
copies until such certified copies are available.
(c) (i) Unless a Default shall have occurred and be
continuing, to the extent that insurance proceeds received under
the insurance referred to in subsections (a)(i), (ii) and (iii)
above with respect to any one incident or any series of incidents
occurring within a twelve-month period, (x) do not exceed
$1,000,000, such proceeds shall be released by the Banks to the
Borrower for repair and/or replacement of damaged portions of the
Leathers Facility or construction work in progress with respect to
which such insurance proceeds have been received and (y) exceed
$1,000,000, such proceeds shall be released by the Banks to the
Borrower for such repair and/or replacement only upon receipt by
the Banks of a certificate from its Technical Consultant to the
effect that there has occurred no event or circumstance (including
the event or circumstance with respect to which such proceeds are
payable) since the date of the Original Agreement that materially
adversely affects the feasibility of the Development of the
Leathers Facility or the rebuilding of the Leathers Facility, the
economic viability of the Leathers Facility or the business
prospects of the Borrower.
(ii) Unless a Default shall have occurred and be continuing,
insurance proceeds received under the insurance referred to in
subsection (a)(v) above shall be released by the Banks to the
Borrower for application for the purposes specified for Tranche A
Loans in Section 6.20 hereof and for the rebuilding of the Leathers
Facility.
(d) As soon as practicable after the end of each fiscal year
of the Borrower commencing with the current fiscal year, and in any
event within 90 days thereafter, the Borrower shall deliver to the
Agent (i) an Officer's Certificate setting forth the insurance
obtained by the Borrower pursuant to this Section 6.13 as then in
effect, and stating whether, in the opinion of such Officer, such
insurance policies comply with the requirements of this Section
6.13, and that all premiums then due thereon have been paid and the
same are in full force and effect and (ii) a report by an
independent insurance broker or independent insurance consultant
reasonably satisfactory to the Agent, reviewing the most recent
report delivered pursuant to the preceding sentence and setting
forth recommendations of such independent insurance broker or
independent insurance consultant as to additional insurance, if
any, reasonably required for the protection of the respective
interests of the Banks in the light of available insurance coverage
and practice of corporations of established reputation operating
similar businesses and properties in the same general region.
(e) The Borrower shall instruct the insurers with which it
maintains insurance to advise the Banks in writing promptly of any
act or omission on the part of the Borrower of which any such
insurer has knowledge which may invalidate or render unenforceable,
in whole or in part, any such insurance. The Borrower's obligation
under this Section 6.13(e) shall be satisfied if the applicable
insurance policy or policies or certificate or certificates of
insurance shall so obligate such insurer or insurers.
(f) The foregoing requirements as to insurance are in
addition to any statutory requirements, including, without
limitation, any requirements for employer's liability and workmen's
compensation insurance.
(g) If at any time the Borrower believes that any insurance
coverage required by this Section 6.13 is unavailable or is not
available on reasonable terms (an "Original Coverage"), the
Borrower shall provide written notice to the Agent, with sufficient
copies for the Banks, detailing the difficulties of obtaining such
Original Coverage and proposing alternative insurance coverage.
The Agent, with the consent of the Required Banks, shall notify the
Borrower within 30 days if such proposed alternative is
satisfactory to it, in which event such alternative coverage shall
be deemed to be substituted for the relevant requirements of this
Section 6.13. If at any time thereafter any Original Coverage for
which there has been a substitution shall become available on
reasonable terms: (i) the Borrower shall immediately so notify the
Agent in writing, (ii) the Borrower shall obtain such Original
Coverage as soon as practicable and (iii) the alternative insurance
requirements in force pursuant to this Section 6.13(g) shall cease
to be effective and the relevant Original Coverage requirements set
forth in paragraphs (a) or (b) of this Section 6.13 shall become
effective again.
SECTION 6.14. Additional Facilities. The Borrower will take
no action under Section 2.3.4 of the Easement Agreement or Section
2.2 of the Ground Lease unless those actions are taken in strict
compliance with the terms of those provisions of the Easement
Agreement and the Ground Lease, respectively.
SECTION 6.15. Notices. The Borrower shall promptly deliver,
or cause to be delivered, to the Agent, with sufficient copies for
the Banks, all notices, reports and other information delivered to
the limited partners pursuant to the Limited Partnership Agreement,
notice of any reimbursement of the Construction Manager under
Section 3 of the Construction Management Agreement, copies of all
written information delivered to the Borrower pursuant to Section
6.1.7 of the Construction Management Agreement, and all notices,
reports and certificates delivered under Sections 2.04 or 5.05 of
the Funding and Construction Agreement.
SECTION 6.16. Negative Pledge. The Borrower will not create,
assume or suffer to exist any Lien on any asset now owned or
hereafter acquired by it, except:
(a) Liens created by the Security Agreement and the Deed of
Trust;
(b) Liens for taxes, assessments, or governmental charges (i)
not yet past due or (ii) that are being contested in good faith
by appropriate proceedings and as long as the Borrower has
established and maintains adequate reserves for the payment of
the same in conformity with generally accepted accounting
principles;
(c) Liens imposed by statutory or common law, such as
carrier's, warehousemen's, mechanics, materialmen's and other
similar liens, arising in the ordinary course of business in
respect of obligations that (i) are not overdue or (ii) are
being contested in good faith by appropriate proceedings, and
for which the Borrower establishes and maintains adequate
reserves for the payment of the same in conformity with generally
accepted accounting principles;
(d) Liens incurred in the ordinary course of business to
secure surety, stay, appeal or customs bonds, or pledges or
deposits for purposes of like nature which do not exceed in the
aggregate $500,000;
(e) Zoning restrictions, covenants, conditions, easements,
rights-of-way, or other restrictions or encumbrances on the use
of real property or minor irregularities in the title thereto which
do not in the aggregate materially detract from the value of its
assets or materially impair the use thereof in the operation of its
business; and
(f) Liens created by any litigation or legal proceeding that
is currently being contested by the Borrower in good faith or
arising from any judgment, provided that the judgment does not
constitute an Event of Default under Section 7.01(m) and such
Liens do not in the aggregate exceed $200,000.
SECTION 6.17. Business. The Borrower will not engage in any
business or activities, other than the Development of the Leathers
Facility, operation of the Leathers Facility and sale of
electricity to SCE under the Leathers Power Purchase Contract and
any activities incidental to any of the foregoing, and shall not
abandon the Development of the Leathers Facility or the Leathers
Facility, without, in each case, the prior written consent of the
Required Banks.
SECTION 6.18. Qualifying Facility. Neither the General
Partner nor the Borrower shall engage in any activity or activities
which would result in the Leathers Facility's inability to satisfy
the criteria required to be satisfied in order to be a "qualifying
facility" under 18 C.F.R. Section 292.203, as amended. If the
Leathers Facility has not been certified as a "qualifying facility"
prior to March 15, 1989, the Borrower will take all action
necessary so that the Leathers Facility is in a position to "self-
certify" as a "qualifying facility" and has done so prior to August
15, 1990.
SECTION 6.19. Interest Rate Hedging. The Borrower shall not
enter into or obtain interest rate swaps, interest rate cap
agreements or any such other instrument which results in
effectively fixing or capping the interest costs to the Borrower of
funds borrowed under this Agreement with any Person whose senior
debt obligations are rated less than one of the two highest rating
categories by either Moody's Investors Service, Inc. or Standard &
Poor's Corporation, or if such services shall no longer exist, such
other nationally recognized statistical rating organization as
shall be specified by the Required Banks.
SECTION 6.20. Use of Proceeds. The proceeds of the Loans
made under Tranche A of this Agreement and Tranche A LOC Debt will
be used by the Borrower for the direct or indirect financing of
Project Costs and the direct or indirect financing of Project
Contributions (as that term is defined in the Funding and
Construction Agreement). The proceeds of the Loans made under
Tranche B of this Agreement and Tranche B LOC Debt will be used by
the Borrower for direct or indirect financing of Project Cost
Overruns. None of such proceeds will be used, directly or
indirectly, for the purpose, whether immediate, incidental or
ultimate, of (x) purchasing or carrying any "margin stock" within
the meaning of Regulation U, or (y) financing any distribution of
cash or securities or property to the partners of the Borrower.
SECTION 6.21. Working Capital. The Borrower shall at the end
of each fiscal quarter and immediately after each distribution to
any of its partners, have Working Capital in an amount equal to or
greater than the Working Capital Requirement.
SECTION 6.22. Construction of Leathers Facility. The
Borrower will use its best efforts to complete, or cause to be
completed, the Development of the Leathers Facility substantially
on schedule and in accordance with the Plans and Specifications
described on Exhibit H to the Construction Management Agreement and
will obtain the necessary Capital Contributions to permit
Borrowings under Section 4.02(a) for such purpose.
SECTION 6.23. Accounts. All accounts of the Borrower shall
at all times be maintained at banks or trust companies that have
certificates of deposit rated in one of the two highest grades by
a nationally recognized rating agency; provided that the Borrower
may keep an aggregate of $100,000 in accounts at banks or trust
companies that do not meet the foregoing rating requirement.
SECTION 6.24. Issuance Agreements. The Borrower will not
modify any provision of any Issuance Agreement, other than a
provision relating to the fees payable by the Borrower under such
Issuance Agreements, without the written consent of the Agent, such
consent not to be unreasonably withheld.
ARTICLE VII
DEFAULTS
SECTION 7.01. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be
continuing:
(a) the Borrower shall fail to pay when due any principal of
or interest on any Loan, any fees or any other amount payable
hereunder;
(b) the Borrower shall fail to observe or perform any
covenant contained in Sections 6.07, 6.08, 6.09, 6.10, 6.11(a),
6.11(b), 6.13, 6.14, 6.16, 6.20 or 6.21 of this Agreement or in
Section 7 of the Security Agreement;
(c) the Borrower shall fail to observe or perform any of
its covenants or agreements contained in this Agreement, the
Security Agreement or the Deed of Trust (other than those covered
by clauses (a) or (b) above) for 10 days after written notice
thereof has been given to the Borrower by the Agent; provided that
if any such failure cannot be cured within 10 days, such failure
shall not constitute an Event of Default if such failure can be
corrected, corrective action has been taken by the Borrower or a
general partner of the Borrower within the 10 day period and is
being diligently pursued and such failure is corrected within 60
days of the end of the 10 day period; provided further that if at
the end of such 60 day period such failure is not cured, such
failure shall not constitute an Event of Default if (i) such
failure can be corrected, (ii) corrective action has been
diligently pursued by the Borrower, (iii) the Borrower shall have
provided the Banks, at least 10 Domestic Business Days prior to the
end of such 60 day period (or prior to the end of an Additional
Cure Period permitted pursuant to this proviso), with an Additional
Cure Period Request, (iv) the Agent shall have notified the
Borrower that the Required Banks have not, within seven Domestic
Business Days of receipt of such Additional Cure Period Request, in
their reasonable judgment, denied such Additional Cure Period
Request and (v) such failure is corrected within such Additional
Cure Period, unless the conditions of this proviso shall have again
been satisfied;
(d) Magma shall fail to observe or perform any of its
financial obligations, covenants or agreements contained in the
Magma Undertaking;
(e) a Dissolution or Liquidation shall occur pursuant to
Article X of the Limited Partnership Agreement;
(f) any representation, warranty, certification or
statement made by the Borrower in this Agreement, the Security
Agreement or the Deed of Trust or in any certificate, financial
statement or other document delivered pursuant to this Agreement,
the Deed of Trust or the Security Agreement shall prove to have
been incorrect in any material respect when made (or deemed made);
(g) a material default under any material Project Agreement
by any party to the Project Agreements shall have occurred and
be continuing; provided that if any such default by the Borrower
cannot be cured within any applicable grace period, such default
shall not constitute an Event of Default if such default can be
corrected and does not relate to a monetary obligation, corrective
action has been taken by the Borrower or a general partner of the
Borrower within the applicable grace period and is being diligently
pursued and such default is corrected within 60 days of the end of
the applicable grace period; provided further that if at the end of
such 60 day period such failure is not cured, such failure shall
not constitute an Event of Default if (i) such failure can be
corrected, (ii) corrective action has been diligently pursued by
the Borrower, (iii) the Borrower shall have provided the Banks, at
least 10 Domestic Business Days prior to the end of such 60 day
period (or prior to the end of an Additional Cure Period permitted
pursuant to this proviso) with an Additional Cure Period Request,
(iv) the Agent shall have notified the Borrower that the Required
Banks have not, within seven Domestic Business Days of receipt of
such Additional Cure Period Request, in their reasonable judgment,
denied such Additional Cure Period Request and (v) such failure is
corrected within such Additional Cure Period, unless the
conditions of this proviso shall have again been satisfied;
(h) any event or condition shall occur which results in the
acceleration of the maturity of any Debt of the Borrower, Debt of
Magma which has a principal amount in excess of $2,000,000, or Debt
of the General Partner which has a principal amount in excess of
$500,000, or which enables (or, with the giving of notice or lapse
of time or both, would enable) the holder of any such Debt or any
Person acting on such holder's behalf to accelerate the maturity
thereof, provided that, in the case of any such event or condition
relating to Debt of Magma, such event or condition shall not have
been cured (by payment of the amount due upon acceleration or
otherwise) within 10 days after receipt by Mission of notice
thereof from Magma, the Agent or any Bank;
(i) the Borrower, the General Partner or Magma 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 it or
any substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced
against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become
due, or shall take any corporate action to authorize any of the
foregoing;
(j) an involuntary case or other proceeding shall be
commenced against the Borrower, the General Partner or Magma
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 and unstayed for
a period of 60 days; or an order for relief shall be entered
against the Borrower, the General Partner or Magma under the
federal bankruptcy laws as now or hereafter in effect;
(k) any member of the Controlled Group shall fail to pay
when due an amount or amounts aggregating in excess of $500,000
which it shall have become liable to pay to the PBGC or to a Plan
under Title IV of ERISA; or notice of intent to terminate a Plan or
Plans having aggregate Unfunded Vested Liabilities in excess of
$2,500,000 (collectively, a "Material Plan") shall be filed under
Title IV of ERISA by any member of the Controlled Group, any plan
administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate or
to cause a trustee to be appointed to administer any Material Plan
or a proceeding shall be instituted by a fiduciary of any Material
Plan against any member of the Controlled Group to enforce Section
515 or 4219(c)(5) of ERISA and such proceeding shall not have been
dismissed within 30 days thereafter; or a condition shall exist by
reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated;
(l) at any time after August 15, 1988, the Leathers Facility
(x) shall fail to satisfy the criteria required to be satisfied in
order to be a "qualifying facility" under 18 C.F.R. Section
292.203, as amended, or (y) shall not have been so certified by the
Federal Energy Regulatory Commission or shall not have so "self-
certified";
(m) a judgment or order for the payment of money in excess
of $500,000 shall be rendered against the Borrower or the General
Partner and such judgment or order shall continue unsatisfied,
unstayed or unappealed for a period of 20 days;
(n) the Leathers Power Purchase Contract shall cease to be
in full force and effect or shall cease to be the valid and binding
obligation of SCE;
(o) there shall be a judgment or order of any court or
arbitrator or any governmental body, agency or official which
renders the Leathers Power Purchase Contract invalid or
unenforceable or requires a material modification of such contract,
which judgment or order continues unstayed or unappealed for a
period in excess of 20 days;
(p) the Leathers Facility or construction work in progress
shall be totally destroyed or shall be damaged to the extent
that it is a total or constructive loss, or insurance proceeds
payable in respect of loss of or damage to the Leathers Facility or
construction work in progress shall exceed $10,000,000 with respect
to any one incident or any series of incidents occurring within a
twelve month period; or the Leathers Facility or construction work
in progress or the real property and real property interests
(including geothermal rights) associated with the Leathers Facility
or necessary for Development of the Leathers Facility shall be
condemned or shall become subject to eminent domain proceedings
affecting substantially all thereof, or condemnation awards or
amounts payable in connection with eminent domain proceedings with
respect to any of such properties shall exceed, in any twelve
month period, $10,000,000;
(q) the Completion Date shall not occur on or before June
30, 1990;
(r) the Firm Operation Date shall not occur on or prior to
April 16, 1990;
(s) the Borrower, any Bank, the Agent or the General
Partner shall, solely by reason of the transactions contemplated by
the Project Agreements, become subject to regulation under the
Federal Power Act or the Public Utility Holding Company Act of 1935
or under state laws or regulations respecting the rates or the
financial or organizational regulation of electric utilities;
(t) a material default shall have occurred and be continuing
under any of the Geothermal Leases, any Geothermal Lease shall
cease to be in full force and effect or shall cease to be a valid
and binding obligation of the parties thereto; provided, that if
any such default cannot be cured within any applicable grace
period, such default shall not constitute an Event of Default if
such default can be corrected and does not relate to a monetary
obligation, corrective action has been taken by the Borrower or a
general partner of the Borrower within the applicable grace period
and is being diligently pursued and such default is corrected
within 60 days of the end of the applicable grace period; provided
further that if at the end of such 60 day period such failure is
not cured, such failure shall not constitute an Event of Default if
(i) such failure can be corrected, (ii) corrective action has been
diligently pursued by the Borrower, (iii) the Borrower shall have
provided the Banks, at least 10 Domestic Business Days prior to the
end of such 60 day period (or prior to the end of an Additional
Cure Period permitted pursuant to this proviso), with an Additional
Cure Period Request, (iv) the Agent shall have notified the
Borrower that the Required Banks have not, within seven Domestic
Business Days of receipt of such Additional Cure Period Request, in
their reasonable judgment, denied such Additional Cure Period
Request and (v) such failure is corrected within such Additional
Cure Period, unless the conditions of this proviso shall have
again been satisfied;
(u) a CEC Event shall have occurred; or
(v) Red Hill shall have been removed or replaced as General
Partner or shall cease to be a wholly-owned subsidiary of Magma
(otherwise than by merger with or into Magma), or any general
partner of the Borrower shall have been removed or replaced prior
to the Conversion Date unless, in each case, the consent of the
Required Banks shall have been obtained, provided that no such
consent shall be necessary for any conversion of San Felipe's
interest as a general partner into a limited partner interest
pursuant to Section 13.2 of the Limited Partnership Agreement;
then, and in every such event (unless specifically waived as
provided in Section 10.06 hereof), the Agent shall:
(i) if requested by Banks having more than 50% in aggregate
amount of the Tranche A Commitments and Tranche B Commitments,
(A) by notice to the Borrower terminate the Commitments and the LOC
Commitment whereupon the Commitments and the LOC Commitment shall
terminate (which termination of the LOC Commitment shall not,
however, affect the obligations to make disbursements with respect
to outstanding LOCs and Collateralized LOCs or the several
obligations of the Banks to purchase participations in LOCs and
Loans as set forth in Articles II and III), without demand or
further notice of any kind, all of which are expressly waived
hereby, anything contained herein or in the Depositary Agreement or
the LOCs to the contrary notwithstanding, and (B) instruct the
Fronting Bank not to issue LOCs and the Depositary not to issue or
release for delivery any LOC Debt after such instructions have
been given (a copy of such notice shall be provided to the MTN
Dealers, but failure to provide a copy of such notice shall not
affect the validity of such notice); and
(ii) if requested by Banks holding Notes evidencing more
than 50% in aggregate principal amount of the Loans, (A) by
notice to the Borrower (a copy of which notice shall be provided to
the Depositary) declare the Notes (together with accrued interest
thereon) to be, and the Notes shall thereupon become, immediately
due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower,
and (B) deliver a demand to the Borrower to provide, and the
Borrower shall immediately provide, the Security Agent with cash
collateral in an amount equal to the aggregate Face Amount of all
Outstanding LOC Debt;
provided that in the case of any of the Events of Default
specified in clauses (i) or (j) above with respect to the
Borrower, without any notice to the Borrower or any other act by
the Agent or the Banks, the Commitments shall thereupon terminate
and the Notes (together with accrued interest thereon) shall become
immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the
Borrower, and provided further that the existence of an Event of
Default will not affect the obligations of the Banks to participate
in LOCs outstanding at such time.
SECTION 7.02. Notice of Default. The Agent shall give notice
to the Borrower under Section 7.01(c) promptly upon being requested
to do so by any Bank and shall thereupon notify all the Banks
thereof.
ARTICLE VIII
THE AGENT
SECTION 8.01. Appointment and Authorization. Each Bank
irrevocably appoints and authorizes the Agent to take such action
as agent on its behalf and to exercise such powers under this
Agreement and the Notes as are delegated to the Agent by the terms
hereof or thereof, together with all such powers as are reasonably
incidental thereto. Each Bank also irrevocably authorizes the
Agent, as part of its function as Agent hereunder, to enter into
the Collateral Documents as Security Agent on behalf of the Banks,
and to take such action and to exercise such powers under the
Collateral Documents as are delegated to the Security Agent by the
terms thereof, together with all such powers as are reasonably
incidental thereto.
SECTION 8.02. Agent and Affiliates. Morgan Guaranty Trust
Company of New York shall have the same rights and powers under
this Agreement and the Collateral Documents as any other Bank and
may exercise or refrain from exercising the same as though it were
not the Agent, and Morgan Guaranty Trust Company of New York and
its affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Borrower or any
Affiliate of the Borrower as if it were not the Agent hereunder or
the Security Agent in connection with the Collateral
Documents.
SECTION 8.03. Action by Agent. The obligations of the Agent
hereunder are only those expressly set forth herein and in the
Collateral Documents. Without limiting the generality of the
foregoing, the Agent shall not be required to take any action with
respect to any Default, except as expressly provided in Article VII
and in the Collateral Documents.
SECTION 8.04. Consultation with Experts. The Agent may
consult with legal counsel (who may be counsel for the Borrower),
independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by
it in good faith in accordance with the advice of such counsel,
accountants or experts.
SECTION 8.05. Liability of Agent. Neither the Agent nor any
of its directors, officers, agents, or employees shall be liable
for any action taken or not taken by it in connection herewith or
under the Collateral Documents, (i) with the consent or at the
request of the Required Banks or (ii) in the absence of its own
gross negligence or willful misconduct. Neither the Agent nor any
of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or
verify (i) any statement, warranty or representation made in
connection with this Agreement, the Collateral Documents or any
borrowing hereunder; (ii) the performance or observance of any of
the covenants or agreements of the Borrower; (iii) the satisfaction
of any condition specified in Article IV, except receipt of items
required to be delivered to the Agent; or (iv) the validity,
effectiveness or genuineness of this Agreement, the Collateral
Documents, the Notes or any other instrument or
writing furnished in connection herewith. The Agent shall not
incur any liability by acting in reliance upon any notice,
consent, certificate, statement, or other writing (which may be a
bank wire, telex, telecopy or similar writing) believed by it to be
genuine or to be signed by the proper party or parties. The Agent
shall be permitted to assume that the Banks have, pursuant to
Section 3.14, purchased participations in Loans made by the
Fronting Bank pursuant to Section 2.06 as of the date such Loans
were made by the Fronting Bank, except to the extent the Fronting
Bank has provided written notice to the Agent to the contrary. The
Agent has no responsibility to assist the Fronting Bank in
collecting funds owed to the Fronting Bank pursuant to Section
3.14.
SECTION 8.06. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent (to the extent
not reimbursed by the Borrower) against any cost, expense
(including counsel fees and disbursements), claim, demand,
action, loss or liability (except such as result from the Agent's
gross negligence or willful misconduct) that the Agent may suffer
or incur in connection with this Agreement or under the
Collateral Documents or any action taken or omitted by the Agent
hereunder or under the Collateral Documents.
SECTION 8.07. Credit Decision. Each Bank acknowledges that
it has, independently and without reliance upon the Agent 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 acknowledges that it
will, independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
decisions in taking or not taking any action under this Agreement.
SECTION 8.08. Successor Agent. The Agent may resign at any
time by giving at least three Domestic Business Days' written
notice thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a
successor Agent. If no successor Agent shall have been so
appointed by the Required Banks, and shall have accepted such
appointment, within 30 days after the retiring Agent's giving of
notice of resignation, then the retiring Agent may, on behalf of
the Banks, appoint a successor Agent, which 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 $50,000,000. Upon the acceptance of its appointment as Agent
hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights and
duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder and under the
Collateral Documents. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article shall inure to
its benefit as to any actions taken or omitted to be taken by it
while it was Agent.
SECTION 8.09. Certain Duties of Agent. The Agent will
transmit to the Banks all material information it receives from the
Borrower pursuant to this Agreement concerning the financial
position, business or operations of the Borrower. The Agent will
consult with the Banks (but shall not be bound by their advice) in
making its interest rate determination pursuant to Section 11.1(iv)
of the Operating and Maintenance Agreement. Whenever the Agent is
authorized under the Security Agreement or the Deed of Trust to
take any action to cure defaults, the Agent
undertakes to take any action that it shall be requested to take by
the Required Banks, provided that the Banks making such
request shall bear the costs of any such action and indemnify the
Agent in a manner satisfactory to the Agent against any losses,
damages, liabilities or expenses that the Agent may suffer or incur
as a result of taking such action.
ARTICLE IX
CHANGE IN CIRCUMSTANCES
SECTION 9.01. Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of any
Interest Period:
(a) the Agent is advised by the Reference Banks that
deposits in dollars (in the applicable amounts) are not being
offered to the Reference Banks in the relevant market for such
Interest Period, or
(b) Banks having 50% or more of the aggregate amount of
the Commitments advise the Agent that the Adjusted CD Rate or
the Adjusted London Interbank Offered Rate, as the case may be,
as determined by the Agent will not adequately and fairly
reflect the cost to such Banks of funding their Fixed Rate Loans
for such Interest Period.
The Agent shall forthwith give notice thereof to the Borrower
and the Banks, whereupon until the Agent notifies the Borrower that
the circumstances giving rise to such suspension no longer exist,
the obligations of the Banks to make CD Loans or
Euro-Dollar Loans, as the case may be, shall be suspended. Unless
the Borrower notifies the Agent at least two Domestic Business Days
before the date of any Fixed Rate Borrowing for which a Notice of
Borrowing has previously been given that it elects not to borrow on
such date, such Borrowing shall instead be made as a Prime
Borrowing.
SECTION 9.02. Illegality. (a) If, after the date of this
Agreement, the adoption of any applicable law, rule or
regulation, 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 any Bank
(or its Euro-Dollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it
unlawful or impossible for any Bank (or its Euro-Dollar Lending
Office) to make, maintain or fund its Euro-Dollar Loans and such
Bank shall so notify the Agent, the Agent shall forthwith give
notice thereof to the other Banks and the Borrower, whereupon until
such Bank notifies the Borrower and the Agent that the
circumstances giving rise to such suspension no longer exist, the
obligation of such Bank to make Euro-Dollar Loans shall be
suspended. Before giving any notice to the Agent pursuant to this
Section, such Bank shall designate a different Euro-Dollar Lending
Office if such designation will avoid the need for giving such
notice and will not, in the judgment of such Bank, be
otherwise disadvantageous to such Bank. If such Bank shall
determine that it may not lawfully continue to maintain and fund
any of its outstanding Euro-Dollar Loans to maturity and shall so
specify in such notice, the Borrower shall immediately prepay in
full the then outstanding principal amount of each such
Euro-Dollar Loan, together with accrued interest thereon.
Concurrently with prepaying each such Euro-Dollar Loan, the
Borrower shall borrow a Prime Loan in an equal principal amount
from such Bank (on which interest and principal shall be payable
contemporaneously with the related Euro-Dollar Loans of the other
Banks), and such Bank shall make such a Prime Loan.
(b) If, after the date of this Agreement, the adoption of any
applicable law, rule or regulation, 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
any Bank or the Fronting Bank with any request or directive
(whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or
impossible for any Bank or the Fronting Bank to participate in or
issue, as the case may be, LOCs and such Bank or Fronting Bank, as
the case may be, shall so notify the Agent, the Agent shall
forthwith give notice thereof to the other Banks and the
Borrower, whereupon until such Bank or Fronting Bank notifies the
Borrower and the Agent that the circumstances giving rise to such
suspension no longer exist, the obligation of such Bank or
Fronting Bank to participate as provided in Section 2.07 in LOCs
issued thereafter, or, in the case of the Fronting Bank, to issues
LOCs thereafter, shall be suspended forthwith and the LOC
Commitment shall be proportionately suspended in whole or in part
accordingly, subject in each case to restoration if such
unlawfulness or impossibility ceases to exist. The terms of any
other provision of this Agreement notwithstanding, no such
suspension pursuant to this Section 9.02 shall affect the
obligations of such Bank to participate in accordance with
Section 3.14 in any outstanding LOCs with respect to LOC Debt
theretofore issued and delivered prior to such suspension and
otherwise entitled to the benefits of any LOC or shall affect the
obligations of the Fronting Bank under any outstanding LOC. If the
Commitment of a Bank to incur liability under or participate in
LOCs issued or to be issued pursuant hereto shall have been
suspended in accordance with the foregoing provisions of this
Section 9.02(b), then, upon the incurrence by the other Banks of
any further LOC Utilization under or in respect of any such LOC
pursuant hereto, such Bank shall make a Loan to the Borrower in an
amount such that the respective Utilizations of all the Banks will
remain in the proportions specified in Section 3.01, and the
Borrower agrees to utilize the Commitment of such Bank
accordingly.
SECTION 9.03. Increased Cost and Reduced Return. (a) If
after the date hereof, the adoption of any applicable law, rule or
regulation, 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 any Bank
(or its Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, any
central bank or comparable agency:
(i) shall subject any Bank (or its Lending Office) to any
tax, duty or other charge with respect to its Fixed Rate Loans,
its Notes or its obligation to make Fixed Rate Loans, or shall
change the basis of taxation of payments to any Bank (or its
Lending Office) of the principal of or interest on its Fixed
Rate Loans or any other amounts due under this Agreement in
respect of its Fixed Rate Loans or its obligation to make Fixed
Rate Loans (except for changes in the rate of tax on the overall
net income of such Bank or its Lending Office imposed by the
jurisdiction in which such Bank's principal executive office or
Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without
limitation, any such requirement imposed by the Board of Governors
of the Federal Reserve System, but excluding (A) with respect to
any CD Loan any such requirement included in an applicable Domestic
Reserve Percentage and (B) with respect to any Euro-Dollar Loan any
such requirement included in an applicable Euro-Dollar Reserve
Percentage) against assets of, deposits with or for the account of,
or credit extended by, any Bank (or its Lending Office) or shall
impose on any Bank (or its Lending Office) or on the United States
market for certificates of deposit or the London interbank market
any other condition affecting its Fixed Rate Loans, its Notes or
its obligation to make Fixed Rate Loans;
and the result of any of the foregoing is to increase the cost to
such Bank (or its Lending Office) of making or maintaining any
Fixed Rate Loan, or to reduce the amount of any sum received or
receivable by such Bank (or its Lending Office) under this
Agreement or under its Notes with respect thereto, by an amount
deemed by such Bank to be material, then, within 15 days after
demand by such Bank (with a copy to the Agent), the Borrower shall
pay to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction.
(b) If after the date hereof, any Bank shall have
determined that the adoption of any applicable law, rule or
regulation 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 compliance by
any Bank (or its Lending Office) with 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 such Bank's
capital as a consequence of its obligations hereunder to a level
below that which such Bank could have achieved but for such
adoption, change or compliance (taking into consideration such
Bank's policies with respect to capital adequacy) by an amount
deemed by such Bank to be material, then from time to time, within
15 days after demand by such Bank (with a copy to the Agent), the
Borrower shall pay to such Bank such additional amount or amounts
as will compensate such Bank for such reduction; provided that if
(x) the event giving rise to any such demand relates to one or
more, but less than all, of the Banks, or (y) there are
circumstances unique to one or more, but less than all, of the
Banks that result in a demand by such Bank for payment of an amount
that is materially greater than the amount demanded by other Banks,
the Borrower shall have the right to replace any Bank making such
demand with another bank satisfactory to the Agent that agrees to
assume and be bound by all of such replaced Bank's obligations
hereunder.
(c) Each Bank will promptly notify the Borrower and the Agent
of any event of which it has knowledge, occurring after the date
hereof, which will entitle 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 judgment of such
Bank, be otherwise disadvantageous to such Bank. A
certificate of any Bank claiming compensation under this Section
and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error. In
determining such amount, such Bank may use any
reasonable averaging and attribution methods.
SECTION 9.04. Prime Loans Substituted for Affected Fixed Rate
Loans. If (i) the obligation of any Bank to make
Euro-Dollar Loans has been suspended pursuant to Section 9.02 or
(ii) any Bank has demanded compensation under Section 9.03(a) and
the Borrower shall, by at least five Euro-Dollar Business Days'
prior notice to such Bank through the Agent, have elected that the
provisions of this Section shall apply to such Bank, then, unless
and until such Bank notifies the Borrower that the
circumstances giving rise to such suspension or demand for
compensation no longer apply:
(a) all Loans which would otherwise be made by such Bank as
CD Loans or Euro-Dollar Loans, as the case may be, shall be made
instead as Prime Loans (on which interest and principal shall be
payable contemporaneously with the related Fixed Rate Loans of the
other Banks), and
(b) after each of its CD Loans or Euro-Dollar Loans, as the
case may be, has been repaid, all payments of principal which
would otherwise be applied to repay such Fixed Rate Loans shall
be applied to repay its Prime Loans instead.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing
(including bank wire, telex, telecopy or similar writing) and shall
be given to such party at its address, telex number or telecopy
number set forth on the signature pages hereof or such other
address, telex number or telecopy number as such party may
hereafter specify for the purpose by notice to the Agent and the
Borrower. Each such notice, request or other communication shall
be effective (i) if given by telex, when such telex is
transmitted to the telex number specified in this Section and the
appropriate answerback is received, (ii) if given by mail, 72 hours
after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any
other means, when delivered at the address specified in this
Section; provided that notices to the Agent under Article II,
Article III or Article IX shall not be effective until
received.
SECTION 10.02. No Waivers. No failure or delay by the Agent
or any Bank in exercising any right, power or privilege hereunder
or under any Note shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by
law.
SECTION 10.03. Expenses; Documentary Taxes. (a) The
Borrower shall pay (i) all out-of-pocket expenses of the Agent
incurred in connection with the Development of the Leathers
Facility and the preparation and administration of this
Agreement, the Notes, the Security Agreement and the Deed of Trust,
any waiver or consent hereunder or thereunder or any amendment
hereof or thereof or any Default or alleged Default hereunder,
including fees and disbursements of New York and California counsel
for the Agent and the Banks, travel expenses, computer expenses,
consulting fees for engineering reports, surveys and other
technical analyses, publicity costs and costs of monitoring
construction, testing and start-up of the Leathers Facility and
(ii) if a Default occurs, all out-of-pocket expenses incurred by
the Banks, including fees and disbursements of
counsel, in connection with such Default and collection and other
enforcement proceedings resulting therefrom. The Borrower shall
indemnify the Agent and the Banks against any transfer taxes,
documentary taxes, assessments or charges made by any
governmental authority by reason of the execution and delivery of
this Agreement, the Security Agreement, the Deed of Trust, the
Notes or any Issuance Agreement.
(b) Notwithstanding the provisions of Section 10.12, the
Borrower and the General Partner agree to indemnify each Bank and
hold each Bank harmless from and against any and all liabilities,
losses, damages, costs and expenses of any kind (including, without
limitation, the reasonable fees and disbursements of counsel for
any Bank in connection with any investigative,
administrative or judicial proceeding, whether or not such Bank
shall be designated a party thereto) which may be incurred by any
Bank (or by the Agent in connection with its actions as Agent
hereunder), relating to or arising out of the generation,
transportation, storage, disposal or clean-up of hazardous wastes
in connection with the Development of the Leathers Facility and
Leathers Facility; provided that no Bank shall have the right to be
indemnified hereunder for its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
SECTION 10.04. Confidentiality; Safety Rules. (a) The Agent
and the Banks agree that they shall use their best efforts to
maintain confidential and not disclose to others any proprietary
business or technical information disclosed by Magma or the
Borrower hereunder and identified as proprietary information at the
time of disclosure, provided (i) that any such information (x)
which was in the Banks' possession prior to its disclosure
hereunder, or (y) is or becomes part of the public domain through
no fault of the Agent or the Banks, or (z) which comes into the
Agent's or Banks' possession from a third party which the Agent or
Banks had reason to believe had the right to disclose such
information, shall not be subject to these restrictions; (ii) such
information may be provided by the Agent to the Technical
Consultants and to successors or assigns, if any (or potential
participants), as contemplated by Section 10.07 for the purposes of
this Agreement and subject to conditions similar to those of this
Section 10.04(a) and, upon enforcement by the Security Agent of the
Security Interests, to any transferee or proposed transferee of the
Collateral; and (iii) such information may be disclosed by the
Agent as required by law or a governmental agency or pursuant to
legal process.
(b) The Agent and the Banks agree that any on-site
inspections made by them or their representatives hereunder shall
be made in compliance with applicable safety rules and insurance
requirements of which it has been advised.
SECTION 10.05. Sharing of Set-Offs. Each Bank agrees it
shall exercise a right of set-off or counterclaim only with the
written consent of the Banks. If a Bank shall, by exercising any
right of set-off or counterclaim or otherwise, receive payment of
a proportion of the aggregate amount of principal and interest due
with respect to any Note held by it which is greater than the
proportion received by any other Bank in respect of the aggregate
amount of principal and interest due with respect to any Note held
by such other Bank, the Bank receiving such proportionately greater
payment shall purchase such participations in the Notes held by the
other Banks, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest with
respect to the Notes held by the Banks shall be shared by the Banks
pro rata; provided that nothing in this Section shall impair the
right of any Bank to exercise any right of set-off or counterclaim
it may have and to apply the amount subject to such exercise to the
payment of indebtedness of the Borrower other than its indebtedness
under the Notes. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a
participation in a Note, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of set-off or
counterclaim and other rights with respect to such participation as
fully as if such holder of a participation were a direct creditor
of the Borrower in the amount of such participation.
SECTION 10.06. Amendments and Waivers. Any provision of this
Agreement or the Notes may be amended or waived if, but only if,
such amendment or waiver is in writing and is signed by the
Borrower and the Required Banks (and, if the rights or duties of
the Agent are affected thereby, by the Agent and, if the rights and
duties of the Fronting Bank are affected thereby, the Fronting
Bank); provided that no such amendment or waiver shall, unless
signed by all the Banks, (i) increase or decrease the Commitment of
any Bank or subject any Bank to any additional obligation, (ii)
reduce the principal of or rate of interest on any Loan or any fees
hereunder, (iii) postpone the date fixed for any payment of
principal of or interest on any Loan or any fees hereunder, (iv)
release any Collateral, except as otherwise permitted by the
Security Agreement, or (v) change the percentage of the Commitments
or of the aggregate unpaid principal amount of the Notes, or the
number of Banks, which shall be required for the Banks or any of
them to take any action under this Section or any other provision
of this Agreement.
SECTION 10.07. Successors and Assigns. (a) The provisions
of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns,
except that the Borrower may not assign or otherwise transfer any
of its rights under this Agreement.
(b) The Agent and the Borrower may, for all purposes of this
Agreement, treat any Bank as the holder of any Note drawn to its
order (and owner of the Loans evidenced thereby).
(c) No assignee, participant or other transferee of any
Bank's rights shall be entitled to receive any greater payment
under Section 9.03 than such Bank would have been entitled to
receive with respect to the rights transferred, unless such
transfer is made with the Borrower's prior written consent or by
reason of the provisions of Section 9.02 or 9.03 requiring such
Bank to designate a different Lending Office under certain
circumstances or at a time when the circumstances giving rise to
such greater payment did not exist.
(d) If any Reference Bank assigns its Notes to an
unaffiliated institution, the Agent shall, in consultation with the
Borrower and with the consent of Required Banks, appoint another
bank to act as a Reference Bank hereunder.
SECTION 10.08. Collateral. Each of the Banks represents to
the Agent and each of the other Banks that it in good faith is not
relying upon any "margin stock" (as defined in Regulation U) as
collateral in the extension or maintenance of the credit provided
for in this Agreement.
SECTION 10.09. New York Law. This Agreement and each Note
shall be construed in accordance with and governed by the law of
the State of New York.
SECTION 10.10. Counterparts; Integration; Effectiveness.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This
Agreement constitutes the entire agreement and understanding among
the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter
hereof.
SECTION 10.11. Involvement of Magma and Mission.
Notwithstanding anything contained in this Agreement to the
contrary, the Borrower and the Banks acknowledge and agree that
neither Magma nor Mission shall be deemed a guarantor of any of the
Borrower's obligations hereunder including, without limitation, the
Borrower's obligation to repay the Loans. In this regard, except
for Magma's financial obligations with respect solely to the Magma
Undertaking and the Indemnity Agreement dated as of October 26,
1988 between Magma and the Agent on behalf of the Banks, the
creditworthiness of Magma and Mission are not relevant to the Banks
entering into this Agreement. In delivering the certificates
specified in Section 4.02(e) hereof, Magma makes no warranty of the
feasibility or economic viability of the Leathers Facility.
SECTION 10.12. Debt Without Recourse. All amounts payable
pursuant to this Agreement, the Security Agreement, the Deed of
Trust and the Notes shall be paid only from the income of and the
proceeds from the Leathers Facility and the Collateral. The Banks
agree that they will look solely to the income of and the proceeds
from the Leathers Facility and the Collateral as provided herein,
in the Security Agreement and in the Deed of Trust, and none of
Magma, Mission, Red Hill, San Felipe or any other partner of the
Borrower shall be personally liable to the Banks for any amounts
payable under this Agreement, the Security Agreement, the Deed of
Trust and the Notes or, except for fraud, subject to any liability
under this Agreement; provided that the foregoing shall not relieve
Magma, Mission, Red Hill, San Felipe or any other partner of the
Borrower from any obligation it may have to return to the Borrower
any amounts distributed to it in violation of this Agreement or the
Limited Partnership Agreement or as otherwise required by the laws
of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
LEATHERS, L.P., a limited
partnership organized under the
laws of the State of California
By: RED HILL GEOTHERMAL, INC.,
a Delaware corporation, a
general partner
By: /s/ Wallace C. Dieckmann
Its: Vice President
11770 Bernardo Plaza Court
Suite 366
San Diego, CA 92128
Telex number:
By: SAN FELIPE ENERGY COMPANY, a
California corporation, a
general partner
By: /s/ Scott B.T. Sinclair
Its: Vice President and
Treasurer
18872 MacArthur Boulevard
Suite 400
Irvine, CA 92715
Attention: Treasurer
FRONTING BANK
THE FUJI BANK, LIMITED,
LOS ANGELES AGENCY,
as Fronting Bank
By: /s/ Kenichiro Tanaka
Name:
Title: Joint General Manager
333 South Grand Avenue
25th Floor
Los Angeles, California 90071
Attn: Project Finance Group
Telephone number:(213) 680-9855
Telecopy number: (213) 626-0475
(213) 625-0189
Telex: 67-3336
Attention: Project Finance Group
BANKS
THE FUJI BANK, LIMITED,
LOS ANGELES AGENCY
By: /s/ Kenichiro Tanaka
Name:
Title: Joint General Manager
333 South Grand Avenue
25th Floor
Los Angeles, California 90071
Attn: Project Finance Group
Telephone number:(213) 680-9855
Telecopy number: (213) 626-0475
(213) 625-0189
Telex: 67-3336
Attention: Project Finance Group
THE SUMITOMO BANK, LIMITED
By: /s/ Toshiyuki Kashima
Name:
Title: Joint General Manager
Chicago Branch
233 South Wacker Drive
Suite 7117
Chicago, Illinois 60606
Telephone number: (312) 876-0525
Telecopy number: (312) 876-6436
Telex: 253734, answerback SUMITCGO
Attention: Marketing/Loan Administration
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ George L. Brown
Name:
Title: Vice President
Domestic Lending Office
Morgan Guaranty Trust Company
of New York
60 Wall Street
New York, New York 10260
Telex number: 177615
TOKYO LEASING (U.S.A.) INC.
By: /s/ Minoru Okada
Name:
Title: President
Two Soundview Drive
Greenwich, Connecticut 06830
Telephone number: (203) 661-2322
Telecopy number: (203) 661-2389
Telex: None
Attention: Manager
THE MITSUBISHI BANK, LIMITED,
NEW YORK BRANCH
By: /s/ Robert J. Munczinski
Name:
Title: Senior Vice President and
Chief Manager
225 Liberty Street
Two World Financial Center
New York, NY 10281
Telephone number: (212) 667-2670
Telecopy number: (212) 667-3550
Telex: 232328, Answerback MITUR
Attention: Manager, Planning and
Administration Department
AMSTERDAM-ROTTERDAM BANK, N.V.
By: /s/ E. J. Mahre
Name: E. J. Mahre
Title: Senior Vice President
By: /s/ Glenn S. Kolleeng
Name: Glenn S. Kolleeng
Title: Legal Counsel
500 Park Avenue
New York, New York 10022
Telephone: (212) 838-7300
Telecopier: (212) 980-1464
THE AGENT
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By: /s/ George L. Brown
Name:
Title: Vice President
60 Wall Street
New York, New York 10260
Attention: Mult-Option Desk-Loan
Department
Telex number: 177615
Exhibit 10.85
SECURITY AGREEMENT
This Security Agreement, dated as of October 26, 1988 is entered
into by and among Leathers, L.P., having its principal place of
business in Imperial County, California ("Grantor"), Morgan
Guaranty Trust Company of New York as Agent ("Agent") on behalf and
for the benefit of the Banks listed on the signature pages of the
Secured Credit Agreement of even date herewith among the Grantor,
such Banks and the Agent (the "Credit Agreement"), Morgan Guaranty
Trust Company of New York and Morgan Guaranty Trust Company of New
York, as Security Agent.
PREFACE
Grantor intends to finish the construction of and to operate a
geothermal power project (the "Project") in Imperial County,
California.
Grantor will finance the Project with a loan in the principal
amount not to exceed $82,000,000 made by the Banks to Grantor
pursuant to the Credit Agreement.
Grantor will be the account party under Letters of Credit (as
hereinafter defined) issued by Morgan Guaranty Trust Company of New
York in connection with (i) the construction of certain
transmission lines required for the operation of the Project
pursuant to the IID Agreements, (ii) certain obligations of Grantor
in respect of Imperial County amended conditional use permit No.
9006-86 dated October 28, 1987 (iii) certain obligations of Grantor
relating to the Intertie Agreement and (iv) certain obligations of
Grantor relating to SCE's Qualifying Facility Milestone Procedure.
As a condition precedent to the advancement of any funds by the
Banks under the Credit Agreements and to the issuance of the
Letters of Credit by Morgan Guaranty Trust Company of New York,
Grantor shall have granted the assignment and security interest
contemplated by this Security Agreement.
AGREEMENT
In consideration of the premises herein and in order to induce the
Banks to enter into the Credit Agreement, and to make the Tranche
A Loans and the Tranche B Loans (collectively the "Loans") pursuant
to the terms thereof, and to induce Morgan Guaranty Trust Company
of New York to issue the Letters of Credit and for other good and
valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Grantor hereby agrees with the Security
Agent and the Secured Parties as follows:
1. Definitions. (a) The following terms, as used herein, have
the following meanings:
"Counterparty" means any Person which enters into a Swap
Agreement with the Borrower; provided that the Counterparty shall
be an institution approved by the Required Banks in their sole
discretion.
"Letters of Credit" shall mean the Morgan letter of credit
Number S-860140, dated October 26, 1988 in the face amount of
$973,842, with the respect to the Grantor's obligations under the
IID Agreements (the "IID Letter of Credit"), the Morgan letter of
credit Number S-861532, dated October 26, 1988 in the face amount
of $500,000 with the respect to certain obligations of Grantor
under Imperial County amended conditional use permit No. 9006-86
dated October 28, 1987 (the "CUP Letter of Credit"), the Morgan
letter of credit No. S-861171 in the face amount of $1,515,189.87
in respect of certain obligations of Grantor relating to the
Intertie Agreement (the "Intertie Letter of Credit"), and the
Morgan letter of credit No. S-861530 in the face amount of
$190,000 in respect of certain obligations of Grantor relating to
the SCE Qualifying Facility Milestone Procedure (the "SCE Milestone
Procedure Letter of Credit").
"Morgan" means Morgan Guaranty Trust Company of New York and its
successors.
"Obligations" means (i) the obligations of the Grantor under
this Security Agreement, (ii) the obligations of the Grantor, now
existing or hereafter arising, owing to the Banks under the Credit
Agreement, the Deed of Trust or the Notes, (iii) the Reimbursement
Obligation, (iv) any renewal or extension of any of the foregoing
and (v) the aggregate of the Secured Swap Amounts under the Secured
Swap Agreements (provide that such aggregate shall at no time
exceed 10% of the aggregate of Loans outstanding from time to
time).
"Reimbursement Obligation" means the obligations of the Grantor
to reimburse Morgan for any draws under the Letters of Credit
pursuant to the Continuing Standby Letter of Credit and Guarantee
Agreement between Morgan and the Grantor dated as of October 26,
1988.
"Secured Counterparty" means a Counterparty to a Secured Swap
Agreement.
"Secured Parties" means (i) each and all of the "Banks" under
and as defined in the Credit Agreement and Morgan in its capacity
as "Agent" thereunder and any successor in such capacity, (ii)
Morgan as issuer of the Letters of Credit and in respect of its
rights under the Reimbursement Obligation, (iii) the Secured
Counterparties and (iv) Morgan as Security Agent hereunder and any
successors in such capacity.
"Secured Swap Agreement" means a Swap Agreement identified in a
Security Agreement Supplement signed by the Borrower and the
relevant Counterparty and delivered to the Security Agent pursuant
to Section 23 hereof.
"Secured Swap Amount" means, with respect to a Secured Swap
Agreement, the lesser of (i) 10% of the notional amount of such
Secured Swap Agreement and (ii) the net payment obligations of the
Borrower under such Secured Swap Agreement. If it becomes
necessary for purposes of this Security Agreement to determine to
determine the exact amount of the Borrower's net payment
obligations under any Secured Swap Agreement at a time when the
exact amount thereof has not been determined under the provisions
of such Secured Swap Agreement, such amount shall be an amount
mutually agreed upon between the Security Agent and the
Counterparty.
"Security Agent" means Morgan in its capacity as Security Agent
under this Agreement and any successor in such capacity.
"Security Agreement Supplement" means an instrument
substantially in the form of Exhibit B hereto, signed by the
Borrower and a Counterparty under a Swap Agreement, in which the
Borrower grants a security interest in the Collateral to such
Counterparty to secure the Borrower's obligations under such Swap
Agreement.
"Security Interest" means the Security Interest granted pursuant
to Section 2, as well as all other Security Interests created or
assigned as additional security for the Obligations pursuant to the
provisions of this Agreement.
"Swap Agreement" means any agreement entered into by the
Borrower with another person after October 26, 1988 for the purpose
of protecting the Borrower against the effects of fluctuations in
interest rates, including (without limitation) any interest rate
exchange agreement, interest rate collar agreement or interest rate
insurance agreement; provided that (i) the Partnership shall have
provided the Banks with a copy of such Swap Agreement at least five
Domestic Business Days before its execution and (ii) such Swap
Agreement shall contain (A) provisions that give the Security Agent
the right, but not the obligation, to cure any default thereunder,
in a form reasonably satisfactorily to the Required Banks and (B)
a consent to collateral assignment in favor of the Security Agent,
in a form reasonably satisfactory to the Required Banks.
(b) Unless otherwise defined, all terms used herein which are
defined in the Credit Agreement shall have their respective
meanings therein defined.
2. Assignment, Pledge and Grant of Security Interest. To
secure the timely payment of the Obligations, Grantor does hereby
assign, transfer and pledge to, and grant pursuant to the
California Uniform Commercial Code a security interest in favor of
the Security Agent, on behalf of and for the benefit of the Secured
Parties, in all the estate, right, title and interest of Grantor
in, to and under the following (the "Collateral")
(i) All tangible personal property, goods, equipment and
fixtures of any kind now owned or hereafter acquired by Grantor or
in which Grantor now has or may hereafter have any interest,
including without limitation (A) all tools, machinery, equipment,
steam turbine generators, heat recovery units, transformers,
interconnection facilities, engines, appliances, heating,
ventilating and air conditioning systems, plumbing, mechanical and
electrical systems, elevators, lighting, alarm systems, fire
control systems, furnishings, furniture, service equipment and
building or maintenance equipment which is incorporated in or used
or consumed in connection with the Leathers Facility, and all
additions and accessions thereto, whether located at the Leathers
Facility, at Grantor's places of business or elsewhere, (B) all
building or maintenance materials and supplies, goods, goods held
for sale, for lease or for use, raw materials, component parts,
work in process, and other inventory and tangible assets used or
consumed in connection with the Leathers Facility, and all products
thereof, whether in the possession of Grantor, warehousemen,
bailees or any other person and whether located at the Leathers
Facility, Grantor's places of business or elsewhere, (C) all goods
and property covered by any warehouse receipts, bills of lading and
other documents evidencing any goods or other tangible personal
property of any kind ( including any Collateral), (D) all inventory
of Grantor or the Leathers Facility, including spare parts, whether
located at the Leathers Facility, the Grantor's place of business
or stored in any facility owned or leased by Red Hill Geothermal,
Inc. or elsewhere, (E) all equipment leased by Grantor, (F) all
maps, plans, specifications, architectural, engineering,
construction or shop drawings (including, without limitation, the
Plans and Specifications), manuals or similar documents or writings
related to the development construction, use, operation, repair or
maintenance of the Leathers Facility, (G) all other goods,
equipment, machinery, fixtures, inventory or other tangible
personal property of Grantor or used in connection with the
development, construction, use, operation, repair or maintenance of
the Leathers Facility, whether or not acquired with the proceeds of
the Loans, and (H) all motor vehicles owned by Grantor;
(ii) All agreements, contracts or other documents relating to
the Leathers Facility ("Project Agreements," a partial list of
which is shown in Schedule I attached hereto), including without
limitation (A) the Construction Management Agreement, (B) the
Leathers Power Purchase Contract, (C) the Operating and Maintenance
Agreement, (D) all insurance policies insuring against any loss or
damage to the Leathers Facility or any loss of revenues by reason
of interruption of the operation of the Leathers Facility, and all
proceeds and other amounts payable to Grantor thereunder, (E) all
vendor warranties, payment, performance and other bonds and letters
of credit benefiting, running to or assigned to Grantor and,
relating to the Development of the Leathers Facility or the
acquisition, use, operation, repair or maintenance of the Leathers
Facility, or the transport of material or equipment to or from the
Leathers Facility, (F) the Ground Lease and any other leases or
licenses of or rights to use real property in connection with the
Leathers Facility, (G) the Easement Agreement and any other
easements or rights to use real property in connection with the
Leathers Facility, (H) any other lease agreements relating to any
equipment or facilities to which Grantor may become a party, (I)
the Technology Transfer Agreement dated as of August 15, 1988 by
and between Magma and Grantor (the "Technology Transfer Agreement")
and any other licenses or rights to use technology in connection
with the Leathers Facility, (J) the Administrative Services
Agreement dated as of August 15, 1988 by and between Red Hill and
the Grantor (the "Administrative Services Agreement"), (K) rights
under the Magma Undertaking, (L) the IID Agreements, (M) the
Services Agreement for the Performance of Engineering, Procurement,
Construction Administration, Accounting, and Pre-Operating Services
for the JM Leathers Plant DEC 702 dated April 22, 1987 between
Magma and DEC (the "DEC Services Agreement"), (N) the River Ranch
Leasehold Bridge Agreement dated as of October 26, 1988 between
Magma, Grantor and Security Agent, (O) all amendments, supplements,
substitutions and renewals to any of the aforesaid agreements,
contracts and documents, and (P) any other agreement to which
Grantor may become a party relating to the Development of the
Leathers Facility or the use, operation, repair or maintenance of
the Leathers Facility, or any part thereof;
(iii) All intangible personal property, money, accounts, and
contract or other rights of any kind now owned or hereafter
acquired by Grantor or in which Grantor now has or hereafter
acquires an interest relating to the Development of the Leathers
Facility or the operation, use, repair or maintenance of the
Leathers Facility, including without limitation (A) the Operating
Account (as defined in the Operating and Maintenance Agreement)
(the "Operating Account") and all funds at any time held therein,
(B) the Debt Service Reserve Account and all funds at any time held
therein, (C) the Major Capital Expenditure Reserve Account and all
funds at any time held therein, (D) the Partnership Holding Account
(as defined in the Limited Partnership Agreement) (the "Partnership
Holding Account") and all funds at any time held therein, (E) the
Construction Disbursement Account (as defined in the Construction
Management Agreement) (the "Construction Disbursement Account")
established under the Construction Management Agreement and all
funds at any time held therein, (F) all other accounts of any kind,
including deposit accounts, with any bank, savings and loan or
other institution or depository, (G) all deposits with any
governmental agency or public utility, (H) all accounts receivable,
(I) all condemnation or eminent domain awards or settlements, (J)
all proceeds or settlements under any and all insurance policies
relating to the Leathers Facility, (K) all payment, performance or
other bonds relating to the Leathers Facility or any of the Project
Agreements, (L) any proceeds received in connection with any sale
or other transfer of all or any portion of the Collateral, and (M)
all money, instruments, investment securities, accounts, contract
rights, documents, copyrights trademarks, trade names, good will,
accounts, deposit accounts, chattel paper or general intangibles of
any kind;
(iv) all governmental permits and licenses, whether obtained
from local, state or federal government, or any agency or
subdivision of any of the foregoing, at any time held by the
Grantor or any agent, that is necessary or useful in the
Development of the Leathers Facility, or the acquisition, use,
operation, repair or maintenance of the Leathers Facility, or the
importation to, exportation from or transport of equipment to or
from the Leathers Facility;
(v) All rents, revenues, profits and income of any kind derived
in any manner by Grantor from its ownership and/or operation of the
Leathers Facility;
(vi) All rights of Grantor under the Limited Partnership
Agreement to receive Capital Contributions from its partners and
any right Grantor may have to the return of distributions made to
its partners in violation of the Credit Agreement, the Limited
Partnership Agreement or California Law; and
(vii) (A) All products, accessions, additions, substitutions,
replacements or proceeds of any and all of the foregoing, (B) all
rights of the Grantor to receive moneys due and to become due under
or pursuant to the Collateral, (C) all rights of the Grantor to
receive return of any premiums for or proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Collateral, (D)
all claims of the Grantor for damages arising out of or for breach
of or default under the Project Agreements or relating to any other
Collateral, (E) all rights of the Grantor to terminate, amend,
supplement, modify or waive performance under the Project
Agreements, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder, and (F) to the extent
not included in the foregoing, all proceeds receivable or received
when any and all of the foregoing Collateral is sold, collected,
exchanged or otherwise disposed of, whether voluntarily or
involuntarily.
This Agreement secures the payment of all obligations of the
Grantor, now existing or hereafter arising, owing to the Secured
Parties under the Obligations.
Grantor does hereby constitute the Security Agent, acting for
and on behalf of itself, the other Secured Parties and each
successor or assign of each of them, the true and lawful attorney
of Grantor, irrevocably, with full power (in the name of Grantor or
otherwise) to ask, require, demand, receive, compound and give
acquittance for any and all moneys and claims for moneys due and to
become due under or arising out of the Project Agreements or any of
the other Collateral, including without limitation any insurance
policies with respect to the Leathers Facility, to elect remedies
thereunder, to endorse any checks or other instruments or orders
in connection therewith and to file any claims or take any action
or institute any proceedings in connection therewith which the
Security Agent may deem to be necessary or advisable.
Any replacements, renewals, substitutions or additional tangible
or intangible personal property hereafter acquired by Grantor
and/or placed or installed in or upon the Leathers Facility shall
immediately become subject to this Security Agreement without the
necessity of any further agreement or writing. Nonetheless, upon
demand of the Security Agent, Grantor, in order to further confirm
the same, will execute a new or amended security agreement or any
other documents deemed necessary by the Security Agent to
effectuate the purpose of this Security Agreement. Whenever deemed
necessary by the Security Agent, Grantor will obtain from any
conditional vendor or holder of a purchase money lien its consent
to the security hereby created.
3. Project Agreements.
(a) In order to effectuate the foregoing, Grantor has
heretofore delivered or concurrently with the delivery hereof is
delivering to the Security Agent, a copy of an executed counterpart
of each of the Project Agreements and separate instruments
evidencing the collateral assignment of the Project Agreements
listed on Schedule II in favor of the Secured Parties; and an
executed counterpart of each material future lease, construction
agreement, operation agreement and other agreement relating to the
Leathers Facility, and amendments and supplements to the foregoing,
included in the Collateral, as they are entered into by Grantor,
will likewise be delivered to the Security Agent, promptly upon the
execution thereof, together with any appropriate instruments of
collateral assignment. If delivery to the Security Agent of an
executed counterpart of any agreement leaves Grantor without an
executed counterpart thereof, the Security Agent will release its
executed counterpart to Grantor, upon Grantor's request, provided
that no Event of Default shall have occurred and be continuing, for
Grantor's temporary use in the enforcement of such agreement by
judicial proceedings. Notwithstanding anything to the contrary
contained herein, no such future lease, construction agreement,
operation agreement or other agreement relating to the Leathers
Facility may be entered into by Grantor without the prior written
approval of the Required Banks except for contracts relating to the
construction of the Leathers Facility which are provided for in the
construction budget.
(b) Anything herein contained to the contrary notwithstanding,
Grantor shall remain liable under each of the Project Agreements,
each future lease, construction agreement, operating agreement and
other agreement relating to the Leathers Facility and any
amendments or supplements to any of the foregoing, to perform all
of the obligations assumed by it thereunder, all in accordance with
and pursuant to the terms and provisions thereof, and the Security
Agent shall have no obligation or liability under any of such
Project Agreements, leases or agreements by reason of or arising
out of this Security Agreement, nor shall the Security Agent be
required or obligated in any manner to perform or fulfill any
obligations of Grantor thereunder or to make any payment, or to
make any inquiry as to the nature or sufficiency of any payment
received by it, or present or file any claim, or take any action to
collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
(c) If any default by Grantor under any of the Project
Agreements shall occur, the Security Agent shall, at its option, be
permitted (but shall not be obligated) to remedy any such default,
provided that any curing by the Security Agent of Grantor's default
under any of the Project Agreements shall not be construed as an
assumption by the Security Agent of any obligations, covenants or
agreements of Grantor under such Project Agreements. This Security
Agreement shall not be deemed to release or to affect in any way
the obligations of Grantor under the Project Agreements.
4. Remedies. (a) If any Event of Default has occurred and is
continuing, the Security Agent shall, on behalf of the Secured
Parties, at the direction of the Required Banks, in addition to any
rights or remedies that it or they may have under the Credit
Agreement, the Deed of Trust or the Reimbursement Obligation, (i)
proceed to protect and enforce the rights vested in it by this
Security Agreement, including without limitation the right to cause
all revenues hereby pledged as security and all other moneys
pledged hereunder to be paid directly to it, and to enforce its
rights hereunder to such payments and all other rights hereunder by
such appropriate judicial proceedings as it shall deem most
effective to protect and enforce any of such rights, including
specific enforcement of any covenant or agreement contained in any
of the Project Agreements, to aid in the exercise of any power
therein or herein granted, for any foreclosure hereunder and sale
under a judgment or decree in any judicial proceeding, or to
enforce any other legal or equitable right vested in it by this
Security Agreement or by law: (ii) cause any action at law or suit
in equity or other proceeding to be instituted and prosecuted to
collect or enforce any obligations or rights included in the
Collateral, or to foreclose or enforce any other agreement or other
instrument by, under or pursuant to which such obligations are
issued or secured, subject in each case to the provisions and
requirements thereof; (iii) sell or otherwise dispose of any or all
of the Collateral or cause the Collateral to be sold or otherwise
disposed of in one or more sales or transactions, at such prices as
the Security Agent may deem appropriate or adequate, for cash or on
credit or for future delivery, without assumption of any credit
risk, at any broker's board or at public or private sale, without
demand or performance or notice of intention to sell or of time or
place of sale (except such notice as is required by the Credit
Agreement or which under applicable law cannot be waived), and any
Secured Party or any other Person may be the purchaser of any or
all of the Collateral so sold and thereafter hold the same
absolutely, free from any claim or right of whatsoever kind,
including any equity of redemption, of the Grantor, any such
demand, notice or right and equity being hereby expressly waived
and released; (iv) incur expenses, including attorneys' fees,
consultants' fees, and other costs appropriate to the exercise of
any right or power under this Agreement; (v) perform any obligation
of Grantor hereunder or under any other agreement assigned, pledged
or in which a security interest is granted pursuant to Section 2
hereof, and make payments, purchase, contest or compromise any
encumbrance, charge, or lien, and pay taxes and expenses, without,
however, any obligation so to do; (vi) take possession of the
Collateral and render it usable, and repair and renovate the same,
without, however, any obligation so to do, and enter upon the
Leathers Facility or any other location where the same may be
located for that purpose, control, manage, operate, rent, and lease
the Collateral, either separately or in conjunction with the
Leathers Facility, and collect all rents and income from the
Collateral; (vii) secure the appointment of a receiver of a
Leathers Facility and/or the Collateral; or (viii) exercise any
other or additional rights or remedies granted to a secured party
under the California Uniform Commercial Code. Any cash or proceeds
received by the Security Agent pursuant to the foregoing sentence
shall be applied as specified in Section 5. If, pursuant to
applicable law, prior notice of any such action is required to be
given to Grantor, Grantor hereby acknowledges that the minimum time
required by such applicable law, or if no minimum is specified,
five (5) Domestic Business Days, shall be deemed a reasonable
notice period.
(b) In addition to the foregoing remedies, the Security Agent
may, but shall not be obligated to, cure any Event of Default and
incur fees, costs and expenses in doing so, in which event Grantor
shall immediately reimburse the Security Agent as provided in
Section 16. Subject to Grantor's right to contest claims, liens
and encumbrances, as provided in the Credit Agreement, the Security
Agent shall be the sole judge of the validity of any adverse
claims, taxes, assessments, charge or encumbrances, and the amount
to be paid in satisfaction thereof, and of the necessity for, and
of the time and manner of doing everything herein authorized to be
done, provided the Security Agent shall be under no obligation to
do any such acts or make any such payments.
(c) Upon the occurrence of an Event of Default, the Security
Agent may require Grantor to, and upon demand from the Security
Agent, Grantor shall, assemble the Collateral and make it available
to the Security Agent at a place to be designated by the Security
Agent.
(d) All costs and expenses (including without limitation
attorneys' fees and expenses) incurred by the Security Agent or any
other Secured Party in connection with any suit or proceeding or
otherwise in enforcing the rights of the Security Agent or any
other Security Party in connection with this Security Agreement, or
in connection with the performance by the Security Agent of any of
Grantor's agreements contained herein or in any of the Project
Agreements or in respect of any part of the Collateral pursuant to
the terms of this Security Agreement, together with interest
thereon at a per annum rate of interest equal to the sum of (i) the
rate of interest publicly announced by Morgan in New York City from
time to time as its "Prime Rate" and (ii) 1-1/2% (or such lesser
amount as shall be permitted under any applicable law or laws),
from the date on which such costs or expenses are incurred to the
date of payment thereof, shall constitute additional indebtedness
secured by this Security Agreement and shall be paid by Grantor to
the Security Agent as provided in Section 16.
(e) The inclusion herein of any Collateral which may now be or
hereafter become affixed or in any manner attached to the Leathers
Facility shall not prevent such property from being subject to the
lien of the Deed of Trust. Should the Collateral include any
appliances, equipment, fixtures, or other items which are also
covered by the Deed of Trust, any sale held under either the Deed
of Trust or under this Security Agreement pursuant to the
California Uniform Commercial Code shall conclusively bar the
rights of Grantor in such items.
5. Application of Proceeds.
(a) The proceeds of any sale of, or other realization upon, all
or any part of the Collateral or the proceeds received from any
foreclosure under this Security Agreement or the Deed of Trust
shall be applied by the Security Agent in the following order of
priority:
first, to payment of the expenses of such sale or other
realization, including reasonable compensation to the Security
Agent and its agents and counsel or, to the extent applicable, any
Secured Party and its agents and counsel, and all expenses,
liabilities and advances incurred or made by the Security Agent or,
to the extent applicable, any Secured Party in connection
therewith, and any other unreimbursed expenses for which the
Security Agent is to be reimbursed pursuant to Section 16;
second, to the Secured Parties, ratably in proportion to the
outstanding principal amounts of the obligations (the outstanding
principal amount of any Reimbursement Obligation being deemed to be
the face amount of the related Letter of Credit), until all
Obligations have been paid in full; and finally, to payment to the
Grantor, or its successors or assigns, or as a court of competent
jurisdiction may direct, of any surplus then remaining from such
proceeds.
The Security Agent may make distributions hereunder in cash or in
kind or, on a ratable basis, in any combination thereof.
(b) In making the determinations and allocations required by
this Section 5, the Security Agent may rely upon information
supplied by the holders of the Obligations as to the amounts of the
Obligations held by them, and the Security Agent shall have no
liability to any of the Secured Parties or holders of Obligations
for actions taken in reliance on such information. All
distributions made by the Security Agent pursuant to this Section
5 shall be final and the Security Agent shall have no duty to
inquire as to the application by the Secured Parties of any amount
distributed to them. However, if at any time the Security Agent
determines that an allocation or distribution previously made
pursuant to this Section was based on a mistake of fact (including,
without limiting the generality of the foregoing, mistakes based on
an assumption that principal or interest has been paid by payments
which are subsequently recovered from the recipient thereof through
the operation of any bankruptcy, reorganization, insolvency or
other laws or otherwise), the Security Agent may in its discretion,
but shall not be obligated to, adjust subsequent allocations and
distributions hereunder so that, on a cumulative basis, the Secured
Parties receive the distributions to which they would have been
entitled if such mistake of fact had not been made.
(c) If, through the operation of any bankruptcy,
reorganization, insolvency or other laws or otherwise, the Security
Interests are enforced with respect to some, but not all, of the
Obligations, the Security Agent shall nonetheless apply the
proceeds for the benefit of the holders of all the Obligations, in
the proportion and subject to the priorities specified in Section
5(a). To the extent that the Security Agent distributes proceeds
collected with respect to one Obligation ("Obligation A") to or on
behalf of the holder of another Obligation ("Obligation B"), the
holder of Obligation A shall be deemed to have purchased a
participation in Obligation B, or shall be subrogated to the rights
of the holder of Obligation B to receive any subsequent payments
and distributions made with respect to the portion thereof paid or
to be paid by the application of such proceeds.
6. Remedies Cumulative; Delay Not Waiver. No right, power or
remedy herein conferred upon or reserved to the Security Agent is
intended to be exclusive of any other right, power or remedy, and
every such right, power and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right, power
and remedy given hereunder or now or hereafter existing at law or
in equity or otherwise. The assertion or employment of any right
or remedy hereunder, or otherwise, shall not present the concurrent
assertion or employment of any other appropriate right or remedy.
No delay or omission of the Security Agent to exercise any right
or power accruing upon the occurrence and during the continuance of
any Event of Default as aforesaid shall impair any such right or
power or shall be construed to be a waiver of any such Event of
Default or an acquiescence therein; and every power and remedy
given by this Security Agreement may be exercised from time to
time, and as often as shall be deemed expedient, by the Security
Agent.
7. Covenants and Representations. Grantor covenants, agrees
and represents as follows:
(a) No Financing Statements on File. No effective financing
statement, fixture filing or other instrument similar in effect
covering all or any part of the Grantor's interest in the
Collateral is on file in any recording office, except such as may
have been filed pursuant to this Agreement and as shown on Exhibit
A hereto.
(b) Grantor's Right, Title and Interest in Collateral. The
Grantor is lawfully possessed of ownership of the Collateral and
has full right, title and interest in all rights purported to be
granted to it under the Project Agreements, subject to no
mortgages, liens, charges, or encumbrances other than those
permitted under the Secured Credit Agreement or created pursuant to
this Security Agreement, or the Deed of Trust, and those set forth
on Exhibit A hereto, and has full power and lawful authority to
grant and assign the Collateral hereunder. The Grantor will, so
long as any Obligations shall be outstanding, warrant and defend
its title to the Collateral against the claims and demands of all
persons whomsoever.
(c) Discharge of Liens. Except as permitted by Section 5.16 of
the Credit Agreement, Grantor will not directly or indirectly
create, incur, assume or suffer to exist any Liens on or with
respect to any property or assets constituting a part of the
Collateral and Grantor will at its own cost and expense promptly
take such action as may be necessary to discharge any such Liens on
or with respect to any properties or assets constituting a part of
the Collateral.
(d) Other Assignments of Contracts. Grantor represents and
warrants that it has not assigned and will not assign any of its
rights under the Project Agreements except as provided in this
Security Agreement, the Deed of Trust or the Credit Agreement.
(e) Actions in Name of Grantor. Grantor agrees that any action
or proceeding to enforce this Security Agreement may be taken by
the Security Agent either in Grantor's name or in the name of the
Security Agent on behalf of the Secured Parties, as the Security
Agent may deem necessary.
(f) Other Business. Except as provided in the Credit
Agreement, Grantor will not engage in any business other than
activities relating to the operation of the Leathers Facility;
provided, however, that nothing herein shall be construed to
restrict Red Hill, Magma or San Felipe from engaging in other
business activities.
(g) Amendments, Waivers, etc. of Contracts.
(i) The Grantor will not amend or modify any material
provision of any material Project Agreement (including any
technical or design specifications under the Dow Engineering
Agreement) or terminate or agree to termination of any material
Project Agreement or waive any material right thereunder without
the prior written consent of the Required Banks, it being
understood that any amendment or modification by the Grantor of
any provision of any of the Project Agreements or waiver of any
right thereunder which is permitted by this Section 7(g) shall
not constitute a breach of, or a default under, any collateral
assignment delivered by the Borrower pursuant to Section 3 of
this Security Agreement or any consent thereto.
(ii) The Grantor will not enter into any material Project
Agreement in the future without first (i) having obtained the
prior written consent of the Required Banks which consent will
not be unreasonably withheld and (ii) taking any and all steps
necessary to create and perfect the Banks' Security Interest
therein, including, without limitation, the updating of Schedule
I to this Security Agreement to include such Project Agreement.
(iii) The Grantor shall comply with the terms of each
material Project Agreement, shall enforce the terms of each
material Project Agreement against the other party or parties
thereto, and shall promptly advice the Agent of any material
default under any Project Agreement and the steps proposed to be
taken in connection therewith.
(iv) In addition to any other relevant provisions hereof or
of the Credit Agreement or the Deed of Trust, the Grantor agrees
that all properties and rights of the type referred to in
Section 4.10 of the Credit Agreement shall be obtained or
renewed, all contractual arrangements of the type referred to in
Section 4.10 of the Credit Agreement shall be entered into, and
all such properties and rights and contractual arrangements
shall be maintained from time to time in connection with the
Development of the Leathers Facility, the operation of the
Leathers Facility and the sale of electricity to SCE under the
Leathers Power Purchase Contract.
(h) Consents to Assignment. Except as disclosed on Schedule
II, Grantor has obtained all necessary consents to this Agreement
(including, specifically the provisions regarding the Security
Agent's cure rights contained in Section 3 hereof) from each of the
parties to the Project Agreements (the "Contracting Parties"), and
agrees to use its best efforts to obtain such consents from each
future or successor Contracting Party.
(i) Notice of Defaults, Etc. Grantor shall give to the
Security Agent prompt notice, if Grantor has knowledge or has
received notice, of (i) any event of default or any event which
with the giving of notice or the passage of time or both might
become an event of default under any Project Agreement, (ii) the
creation of any Liens with respect to the Collateral if such Liens
would have a materially adverse effect on any of the interests of
the Security Agent or the Secured Parties in the Collateral, and
(iii) any other event which does or reasonably may have an adverse
effect on any of the interests of the Security Agent or the Secured
Parties in the Collateral. Nothing in this subsection 7(i) shall
be construed to limit or eliminate any other notice requirements
under this Security Agreement, the Credit Agreement, or any other
document related to this transaction.
(j) Accounts. Grantor shall (i) establish or cause to be
established on or before October 26, 1988, at Agent's New York
office the Debt Service Reserve Account, and the Partnership
Holding Account, (ii) establish or cause to be established at the
Main Los Angeles Branch office of First Interstate Bank of
California, Los Angeles, California 90017, the Operating Account,
the Construction Disbursement Account and the Major Capital
Expenditure Reserve Account. Grantor agrees to consent to the
giving of notice of the security interest granted hereby to any
bank at which any such account is held. Grantor shall fund or
cause the above-referenced accounts to be funded pursuant to the
terms and conditions of the Operating and Maintenance Agreement,
the Construction Management Agreement or the Limited Partnership
Agreement, as appropriate. The Grantor will not permit the funds
in the above-referenced accounts to be used in any manner other
than as expressly provided in or permitted by the Operating and
Maintenance Agreement, the Construction Management Agreement or the
Limited Partnership Agreement, as appropriate. Grantor will not
change the location of any such account without the prior written
consent of the Required Banks.
(k) Validity Perfection and Priority of Security Interests.
This Security Agreement has been duly authorized, executed and
delivered by the Grantor, and constitutes a valid and binding
obligation of the Grantor and is enforceable in accordance with its
terms. As of the date hereof, the Security Agent, on behalf of the
Secured Parties, will have valid and perfected security interests
in that portion of the Collateral consisting of goods, equipment,
inventory, fixtures and any other portions of the Collateral a
security interest in which may be perfected under the California
Uniform Commercial Code by the filing of a financing statement,
subject to no prior Lien except as shown on Exhibit A. Other than
the filing of financing statements under the California Uniform
Commercial Code at the California Secretary of State office and
office of the Imperial County Recorder, which have been made, no
registration, recordation or filing with any governmental body,
agency or official is required in connection with the execution or
delivery of this Security Agreement, or is necessary for the
validity or enforceability hereof or for the perfection of the
security interests created hereby. The execution, delivery,
performance and enforcement of this Security Agreement do not and
will not contravene, or constitute a default under, any provision
of applicable law or regulation or of the Limited Partnership
Agreement or of any agreement, judgment, injunction, order, decree
or other instrument binding upon the Grantor or result in the
creation or imposition of any Lien (other than the Liens created
hereby) upon any asset of the Grantor. The Grantor has not
performed any acts which might prevent the Security Agent from
enforcing any of the terms and conditions of this Security
Agreement or which would limit the Security Agent in any such
enforcement.
(l) Grantor shall, within 30 days after a request of the
Security Agent or any Security Party, provide a list of all or such
portion of the Collateral as the requesting party shall request.
8. Notices. Unless otherwise specifically herein provided, all
notices required or permitted under the terms and provisions hereof
shall be in writing and any such notice shall become effective (i)
upon receipt if hand delivered, (ii) when the appropriate answer
back is received if sent by telex, and (iii) if otherwise
delivered, (3 days) Domestic Business Days after being sent by
registered or certified mail, return receipt requested, with proper
postage affixed thereto, and addressed as specified in the
Obligations, or at such other address as the parties shall from
time to time designate in like manner.
9. Further Assurances. (a) The Grantor agrees that from time
to time, at the expense of the Grantor, the Grantor will promptly
execute and deliver all further instruments and documents, and take
all further action, that may be necessary or desirable, or that the
Security Agent may request, in order to perfect and protect the
assignment and security interest granted or intended to be granted
hereby or to enable the Security Agent for the ratable benefit of
the Secured Parties to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, the Grantor will: (i) if any
collateral shall be evidenced by a promissory note or other
instrument, deliver and pledge to the Security Agent for the
benefit of the Security Agent such note or instrument duly endorsed
(without recourse) and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to
the Security Agent; and (ii) execute and file such financing or
continuation statements, or amendments thereto, and such other
instruments, endorsements or notices, as may be necessary or
desirable, or as the Security Agent may request, in order to
perfect and preserve the assignments and security interests granted
or purported to be granted hereby.
(b) The Grantor hereby authorizes the Security Agent to file
one or more financing or continuation statements, and amendments
thereto, relative to all or any part of the Collateral without the
signature of the Grantor where permitted by law. Copies of any
such statement or amendment thereto shall promptly be delivered to
the Grantor.
(c) The Grantor shall pay all filing, registration and
recording fees of refiling, re-registration and re-recording fees,
and all expenses incident to the execution and acknowledgment of
this Agreement, any assurance, and all federal, state, county and
municipal stamp taxes and other taxes, duties, imports, assessments
and charges arising out of or in connection with the execution and
delivery of this Agreement, or any agreement supplemental hereto
and any instruments of further assurance.
10. Place of Perfection; Records. The Grantor shall give the
Agent at least 30 Domestic Business Days' notice before it changes
its name or the location of its chief place of business and chief
executive office and shall at the expense of the Grantor execute
and deliver such instruments and documents as required to maintain
thereafter a prior perfected security interest in the Collateral
and as requested by the Security Agent. The Grantor will hold and
preserve such records and will permit representatives of the
Security Agent at any time during normal business hours to inspect
and make abstracts from such records.
11. Covenants of the Grantor. The Grantor shall pay, before
the imposition of any fine, penalty, interest or cost attached
thereto, all taxes, assessments and other governmental or non-
governmental charges or levies now or hereafter assessed or levied
against the collateral or upon the Security Interest provided for
herein (except for liens for taxes and assessments not then
delinquent or which the Grantor may, pursuant to the provisions of
Section 5.02 of the Credit Agreement, permit to remain unpaid) as
well as pay, or cause to be paid, all claims for labor, materials
or supplies which, if unpaid, might become a prior Lien thereon,
and will exhibit receipts showing payment of any of the foregoing.
12. Continuing Assignment and Security Interest; Transfer of
Notes. This Agreement shall create a continuing assignment of and
security interest in the Collateral and shall (i) remain in full
force and effect until payment in full of the Obligations and all
other amounts owing to the Secured Parties, (ii) be binding upon
the Grantor, its successors and assigns and (iii) inure, together
with the rights and remedies of the Security Agent, to the benefit
of the Secured Parties and their respective successors, transferees
and assigns. Without limiting the generality of the foregoing
clause (iii), subject to the provisions of the Obligations, each or
any of the Secured Parties may assign or otherwise transfer the
Notes or other evidence of indebtedness held by it to any other
Person, and such other Person shall thereupon become vested with
all the benefits in respect thereof granted to such Secured Party
herein or otherwise.
13. Termination of Security Interests; Release of Collateral.
Upon the payment in full of the Obligations, the Security Interests
shall terminate and all rights to the Collateral shall revert to
the Grantor. Upon any such termination, the Security Agent will,
at the Grantor's expense, execute and deliver to the Grantor such
documents as the Grantor shall reasonably request to evidence such
termination. At any time and from time to time prior to such
termination of the Security Interests, if no Default has occurred
and is continuing (i) the Security Agent may release any of the
Collateral with the prior written consent of each of the Secured
Parties or (ii) the Grantor may apply funds in the Operating
Account, the Construction Disbursement Account, the Major Capital
Expenditure Reserve Account, the Partnership Holding Account, or
the Debt Service Reserve Account as provided in the Operating and
Maintenance Agreement, the Construction Management Agreement or the
Limited Partnership Agreement.
14. Concerning the Security Agent.
The Grantor, each Party and each holder of any Obligation by its
acceptance thereof, agrees with the Security Agent as follows:
(a) The Security Agent is authorized to take all such action as
is provided to be taken by it in such capacity hereunder and under
the Deed of Trust and all other action reasonably incidental
thereto. As to any matters not expressly provided for herein
(including, without limitation, the timing and methods of
realization upon the Collateral and, any waivers of amendments of
the provisions hereof), the Security Agent shall act or refrain
from acting in accordance with written instructions from the
Required Banks or, in the absence of such instructions, in
accordance with its discretion.
(b) Neither the Security Agent nor any of its directors,
officers, attorneys, agents or employees shall be liable for any
action taken or omitted to be taken by it, or by them on its
behalf, as the Security Agent under this Security Agreement or the
Deed of Trust or in respect of any of the Collateral or otherwise
in connection with any of the foregoing, except for its or their
own gross negligence or willful misconduct.
(c) In connection with its duties under this Security Agreement
and the Deed of Trust, the Security Agent shall be entitled to rely
on an paper or document believed by it to be genuine and correct
and, in respect of legal matters, upon the opinion of legal counsel
selected by it; and any action taken or omitted in good faith by
the Security Agent in accordance with the opinion of such counsel
shall be full justification and protection to it.
(d) The Security Agent shall not be responsible for the
genuineness, validity, or effectiveness of any of the Collateral
nor shall it be liable because of any invalidity of the security
provisions hereof or of any other security agreement, whether
arising from law or by reason of any action or omission to act on
its part, nor shall it be bound to ascertain or inquire as to the
performance or observance of any of the terms of this Security
Agreement by the Grantor.
(e) The Security Agent may employ agents and attorneys-in-fact
and shall not be answerable, except as to money or securities
received by it or its authorized agents, for the default or
misconduct of any such agents or attorneys-in-fact selected in good
faith.
(f) With respect to Obligations owing to it, the Security Agent
shall have the same rights as any other Secured Party and may
exercise the same as though it were not the Security Agent, may
become the owner of any of the Collateral, and may accept deposits
from, lend money to, and generally engage in any kind of banking or
trust business with Grantor or any of its affiliates as if it were
not the Security Agent.
(g) The Security Agent may resign at any time by giving at
least three (3) Domestic Business Days written notice thereof to
the Secured Parties and the Grantor. Upon any such resignation,
the Required Banks shall have the right to appoint a successor
Security Agent. If no successor Security Agent shall have been so
appointed by the Required Banks, and shall have accepted such
appointment, within 30 days after the retiring Security Agent's
giving of notice of resignation, then the retiring Security Agent
may, on behalf of the Secured Parties, appoint a successor Security
Agent, which 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 surplus of at least $50,000,000. Upon the
acceptance of any appointment as Security Agent by a successor
Security Agent, such successor Security Agent shall thereupon
succeed to and become vested with all the rights and duties of the
retiring Security Agent, and the retiring Security Agent shall be
discharged from its duties and obligations in such capacity. After
any retiring Security Agent's resignation or removal as Security
Agent, the provisions of this Section shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was
Security Agent.
(h) The Secured Parties have appointed Morgan Guaranty Trust
Company of New York to act for them as the Security Agent
hereunder. Morgan Guaranty Trust Company of New York agrees to act
as the Security Agent in accordance with the terms of this
Agreement.
(i) No Counterparty shall have any right to enforce directly
the Liens created by this Security Agreement or the other
Collateral Documents. No Counterparty shall have any right to
require the Security Agent to take or fail to take any action under
this Security Agreement or any other Collateral Document or to
receive any application of funds except pursuant to Section 5.
Notwithstanding any provision to the contrary herein, no
Counterparty shall have any right to direct any action to be taken
by the Security Agent or to vote hereunder.
15. Appointment of Co-Agents. At any time or times, in order
to comply with any legal requirement in any jurisdiction, the
Security Agent may, with the consent of the Required Banks, appoint
another bank or trust company or one or more other persons, either
to act as co-agent or co-agents, jointly with the Security Agent,
or to act as separate agent or agents on behalf of the Secured
Parties with such power and authority as may be necessary for the
effectual operation of the provisions hereof or of any other
Security Agreement and may be specified in the instrument of
appointment (which may, in the discretion of the Security Agent,
include provisions for the protection of such co-agent or separate
agent similar to the provisions of Section 14).
16. Expenses. In the event that the Grantor fails to comply
with the provisions of this Agreement, such that the value of any
Collateral or the validity, perfection, rank or value of any
Security Interest is thereby diminished or potentially diminished
or put at risk, the Security Agent, if requested by the Required
Banks, shall effect such compliance on behalf of such Grantor, and
the Grantor agrees to reimburse the Security Agent for the costs
thereof on demand. All insurance expenses and all expense of
protecting, storing, warehousing, appraising, insuring, handling,
maintaining, and shipping the Collateral, any and all excise,
property, sales, and use taxes imposed by any state, federal, or
local authority on any of the Collateral, or in respect of periodic
appraisals and inspections of the Collateral to the extent the same
may be requested by the Security Agent from time to time, or in
respect of the sale thereof shall be borne and paid by the Grantor;
and if Grantor fails to promptly pay any portion thereof when due,
the Security Agent or Secured Party (which term, for purposes of
this Section 16, shall exclude any and all Secured Counterparties)
may, at its option, but shall not be required to, pay the same and
charge the account of the Grantor therefore, the Grantor hereby
further agrees that it will forthwith upon demand pay to the
Security Agent and any Secured Party the amount of any taxes which
the Security Agent and any secured Party may have been required to
pay by reason of the Security Interests (including any applicable
transfer taxes) or to free an of the Collateral from any Lien
thereon and the amount of any and all reasonable out-of-pocket-
expense, including the reasonable fees and disbursements of counsel
and of any agents or other experts which the Security Agent and any
Secured Party may incur in connection with (w) the administration
of this Agreement, (x) the collection, sale or other disposition of
any of the Collateral, (y) the exercise by the Security Agent or
any Secured Party of any of the rights conferred upon it hereunder
or (z) any Default. The Grantor agrees to reimburse the Security
Agent or such Secured Party promptly therefore with interest
accruing thereon daily at a per annum rate of interest equal to the
sum of (i) the rate of interest publicly announced by Agent in New
York City from time to time as its "Prime Rate" and (ii) 1 1/2% or
such maximum lesser amount as shall be permitted under any
applicable law or laws. All sums so paid or incurred by the
Security Agent or any Secured Party for any of the foregoing and
any and all other sums for which the Grantor may become liable
hereunder and all costs and expenses (including attorneys' fees,
legal expenses and court costs) reasonably incurred by the Security
Agent or any Secured Party in enforcing or protecting the Security
Interests or any of their rights or remedies under this Agreement,
shall, together with interest thereon until paid at such rate per
annum, be additional Obligations hereunder.
17. Severability. Any provision of this Agreement 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.
18. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, inure to the benefit of,
the parties and their respective successors and assigns; provided,
that Grantor may not assign its rights or obligations hereunder
except as otherwise provided in the Credit Agreement.
19. Headings. The headings of the various Sections herein are
for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
20. Governing Law. This Security Agreement, including all
matters of construction, validity and performance and matters
relating to the creation, validity, enforcement and priority of the
lien of, and security interests created by, this Security Agreement
upon the Collateral shall be governed by the laws of the State of
California.
21. References to Other Documents. All defined terms used in
this Security Agreement which refer to other documents shall be
deemed to refer to such other documents as they may be amended,
supplemented or replaced from time to time, provided such documents
were not amended in breach of a covenant contained in any agreement
to which Grantor, the Security Agent or any/of the Secured Parties
is a party.
22. Nonrecourse. Notwithstanding any provision of any agreement
relating to the Obligations secured by this Security Agreement
(including, without limitation, the Reimbursement Obligation), such
Obligations shall be paid only from the income of and the proceeds
from the Leathers Facility and the Collateral and the Mortgaged
Property as provided in Section 9.12 of the Secured Credit
Agreement, which provision is hereby incorporated by this
reference.
23. Security Agreement Supplements. Upon (i) receipt of a
Security Agreement Supplement signed by the Borrower and the
Counterparty referred to therein and (ii) the execution of a
collateral assignment of the relevant Swap Agreement in favor of
the Security Agent, the Security Agent shall acknowledge receipt of
such Security Agreement Supplement in the manner set forth therein.
As of the date of such acknowledgement, such Security Agreement
Supplement shall become effective and such Counterparty shall
thereupon become a Secured Counterparty and be (i) entitled to all
of the rights of a Secured Counterparty for all purposes of this
Security Agreement and (ii) bound by all of the duties,
obligations, restrictions, limitations and liabilities of a Secured
Counterparty under this Security Agreement.
IN WITNESS WHEREOF, Grantor has caused this Agreement to be duly
executed by its officers thereunder duly authorized, as of the day
and year first above written.
LEATHERS, L.P.,
a limited partnership organized
under the laws of the State of California
By: RED HILL GEOTHERMAL, INC.
a Delaware corporation
a General Partners
By: /s/ Russ L. Tenney
Its: President
By: /s/ Wallace C. Dieckmann
Its: Assistant Secretary
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Agent for the Banks
pursuant to the Secured Credit
Agreement dated as of October 26,
1988 among Leathers, L.P., the
Banks parties thereto and Morgan
Guaranty Trust Company of New
York, as Agent.
By: /s/ Charlton H. Chatfield
Its: Senior Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By: /s/ Charlton H. Chatfield
Its: Senior Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Security Agent
By: /s/ Charlton H. Chatfield
Its: Senior Vice President
Exhibit 10.85 (Cont.)
LEATHERS, L.P.
AMENDMENT NUMBER ONE TO SECURITY AGREEMENT
This amendment is dated as of April 14, 1989 among LEATHERS,
L.P. ("Grantor"), MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Agent for and on behalf of the BANKS (the "Agent"), MORGAN GUARANTY
TRUST COMPANY OF NEW YORK ("Morgan") and MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Security Agent (the "Security Agent"),
W I T N E S S E T H :
WHEREAS, the parties hereto are the parties to the Security
Agreement dated as of October 26, 1988 among the Borrower, the
Agent, Morgan and the Security Agent (the "Security Agreement:);
and
WHEREAS, the parties hereto desire to amend the Security
Agreement as provided herein;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise
specifically defined herein, each term used herein which is defined
in the Security Agreement has the meaning assigned to such term in
the Security Agreement. Each reference to "hereof", "hereunder",
"herein" and "hereby" and each other similar reference and each
reference to "this Agreement" and each other similar reference
contained in the Security Agreement shall from and after the date
hereof refer to the Security Agreement as amended hereby.
SECTION 2. Amendment of Section 1 of the Security Agreement.
The following definitions set forth in Section 1 of the Security
Agreement are amended to read as follows:
"Letters of Credit" means, collectively, (i) letter of credit
No. S-861171 issued by Morgan Guaranty Trust Company of New York in
an amount not exceeding $1,515,189.87 relating to the Intertie
Agreement, (ii) letter of credit No. S-861532 issued by Morgan
Guaranty Trust Company of New York in an amount not exceeding
$671,000 relating to the IID Agreements, (iii) letter of credit
No. S-861532 issued by Morgan Guaranty Trust Company of New York in
an amount not exceeding $500,000 relating to that certain Amended
Conditional Use Permit number 9006-86 issued by Imperial County,
California on October 28, 1987, (iv) letter of credit No. S-861530
issued by Morgan Guaranty Trust Company of New York in an amount
not exceeding $190,000 relating to SCE's Qualifying Facility
Milstone Procedure and (v) a letter of credit to be issued by
Morgan Guaranty Trust Company of New York in an amount not
exceeding $80,000 relating to the increase in Nominated Capacity to
40 MW, a copy of which will be delivered to the Banks within five
Domestic Business Days of issuance.
"Obligations" means (i) the obligations of the Grantor under
this Security Agreement, (ii) the obligations of the Grantor, now
existing or hereafter arising, owing to the Banks under the Credit
Agreement, the Deed of Trust or the Notes, (iii) the Reimbursement
Obligation, (iv) any renewal or extension of any of the foregoing
and (v) the aggregate of the Secured Swap Amounts under the Secured
Swap Agreements (provided that such aggregate shall not at any time
exceed 10% of the aggregate of Loans outstanding at such time).
"Reimbursement Obligation" means the obligations of the
Grantor to reimburse Morgan for any draws under the Letters of
Credit pursuant to the Continuing Standby Letter of Credit and
Guarantee Agreement between Morgan and the Grantor dated as of
October 26, 1988 with respect to the Letters of Credit.
"Swap Agreement" means any agreement entered into by Borrower
with another person after October 26, 1988 for the purpose of
protecting the Borrower against the effects of fluctuations in
interest rates, including (without limitation) any interest rate
exchange agreement, interest rate collar agreement or interest rate
insurance agreement; provided that (i) the Partnership shall have
provided the Banks with a copy of such Swap Agreement at least give
Domestic Business days before its execution and (ii) such Swap
Agreement shall contain (A) provisions that give the Security Agent
the right, but not the obligation, to cure any default thereunder,
in a form reasonably satisfactory to the Required Banks and (B) a
consent to collateral assignment of the Swap Agreement in favor of
the Security Agent, in a form reasonably satisfactory to the
Required Banks.
SECTION 3. Amendment to Section 4. Paragraph (d) of
Section 4 of the Security Agreement is hereby amended to read as
follows:
(d) All costs and expenses (including without limitation
attorneys' fees and expenses) incurred by the Security Agent or any
other Secured Party (other than Secured Counterparties) in
connection with any suit or proceeding or otherwise in enforcing
the rights of the Security Agent or any other Secured Party in
connection with this Security Agreement, or in connection with the
performance by the Security Agent of any of Grantor's agreements
contained herein or in any of the Project Agreements or in respect
of any part of the Collateral pursuant to the terms of this
Security Agreement, together with interest thereon at a per annum
rate of interest equal to the sum of (i) the rate of interest
publicly announced by Morgan in New York City from time to time as
its "Prime Rate" and (ii) 1-1/2% (or such lesser amount as shall be
permitted under any applicable law or laws), from the date on which
such costs or expenses are incurred to the date of payment thereof,
shall constitute additional indebtedness secured by this Security
Agreement as provided in Section 16.
SECTION 4. Amendment to Section 5. Paragraph "second" of
subsection (a) of Section 5 of the Security Agreement is hereby
amended to read as follows:
second, to the Secured Parties, ratably in proportion to the
outstanding principal amounts of the Obligations (the outstanding
principal amount of (x) the Reimbursement Obligation being deemed
to be the face amount of the Letters of Credit issued pursuant
thereto and (y) of any Secured Swap Agreement being deemed to be
the Secured Swap Amount (provided that the aggregate of all Secured
Swap Amounts shall not at any time exceed 10% of the aggregate of
the Loans outstanding at such time)), until all obligations have
been paid in full; and
finally, to payment to the Grantor, or its successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining from such proceeds.
SECTION 5. Amendment to Section 14. Subsection (1) of
Section 14 of the Security Agreement is hereby amended to read as
follows:
(i) No Secured Counterparty shall have the right, and each
Secured Counterparty agrees that it shall not act or seek, (a) to
enforce directly the Liens created by this Security Agreement or
the other Collateral Documents, (b) to require the Security Agent
to take or fail to take any action under the Security Agreement or
the other Collateral Documents, (c) to take any action adversely
affecting the rights of the Security Agent or the other Secured
Parties, (d) to receive any application of funds other than
pursuant to Section 5 or (e) to direct any action to be taken by
the Security Agent or to vote hereunder. Each Secured Counterparty
agrees that the Security Agent and the Secured Parties (other than
the Secured Counterparties) may exercise any and all rights and
remedies hereunder or the other Collateral Documents in their
respective absolute discretion regardless of any rights or
privileges of the Secured Counterparty (except the right of the
Secured Counterparty to receive application of funds pursuant to
Section 5).
SECTION 6. Amendment to Section 16. The last sentence of
Section 16 of the Security Agreement is hereby amended to read as
follows:
All sums so paid or incurred by the Security Agent or any Secured
Party for any of the foregoing and any and all other sums for which
the Grantor may become liable hereunder and all costs and expenses
(including attorneys' fees, legal expenses and court costs)
reasonably incurred by the Security Agent or any Secured Party in
enforcing or protecting the Security Interests or any of its rights
or remedies under this Agreement, shall, together with interest
thereon until paid at such rate per annum, be additional
obligations hereunder; provided that, to the extent such sums are
neither reimbursed by the Grantor nor repaid through applications
of proceeds pursuant to Section 5, each Secured Party shall bear
and shall pay its pro rata share (measured in accordance with the
provisions of Section 5) of such sums.
SECTION 7. Governing Law. This Amendment shall be
governed by and construed in accordance with the laws of the State
of New York.
SECTION 8. Counterparts. This Amendment may be signed in any
number of counterparts, each of which shall be an original, with
the same effect as if the signatories thereto and hereto were upon
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the first date as above
written.
LEATHERS, L.P., a limited partnership
organized under the laws of the State of
California
By: RED HILL GEOTHERMAL, INC.,
a Delaware corporation, a
general partner
By /s/ Jonathan S. Fish
Name: Johnathan S. Fish
Title: Vice President
By: /s/ Wallace C. Dieckmann
Name: Wallace C. Dieckmann
Title: Assistant Secretary
By: SAN FELIPE ENERGY COMPANY, a
California corporation, a general
partner
By: /s/ Mark M. Robinson
Name: Mark M. Robinson
Title: Vice President
By: /s/ Scott B. T. Sinclair
Name: Scott B. T. Sinclair
Title: Vice President &
Treasurer
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By: /s/ Barrett R. Petty
Name: Barrett R. Petty
Title: Managing Director
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By: /s/ Mark H. Wittleder
Name: Mark H. Wittleder
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Security Agent
By: /s/ Mark H. Wittleder
Name: Mark H. Wittleder
Title: Vice President
Exhibit 10.85 (Cont.)
CONFORMED COPY
LEATHERS, L.P.
AMENDMENT NUMBER TWO TO SECURITY AGREEMENT
This amendment is dated as of April 18, 1990 among LEATHERS,
L.P. (the "Grantor"), MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Agent for and on behalf of the BANKS (the "Agent"), MORGAN GUARANTY
TRUST COMPANY OF NEW YORK ("Morgan") and MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Security Agent (the "Security Agent")
W I T N E S S E T H:
WHEREAS, the parties hereto are the parties to the Security
Agreement dated as of October 26, 1988 among the Grantor, the
Agent, Morgan and the Security Agent (the "Original Security
Agreement");
WHEREAS, the Original Security Agreement was amended by
Amendment Number One to Security Agreement dated April 14, 1989
(the Original Security Agreement, as amended, being referred to
herein as the "Security Agreement"); and
WHEREAS, the parties hereto desire to further amend the
Security Agreement as provided herein;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise
specifically defined herein, each term used herein which is defined
in the Security Agreement has the meaning assigned to such term in
the Security Agreement. Each reference to "hereof", "hereunder",
"herein" and "hereby" and each other similar reference and each
reference to "this Agreement" and each other similar reference
contained in the Security Agreement shall from and after the date
hereof refer to the Security Agreement as amended hereby.
SECTION 2. Amendment of Section 1. (A) The following
definitions set forth in Section 1 of the Security Agreement are
amended to read as follows:
"Credit Agreement" means the Amended and Restated Secured
Credit Agreement, dated as of April 18, 1990, among Leathers,
L.P., the banks listed on the signature pages thereof, The Fuji
Bank, Limited, Los Angeles Agency, as Fronting Bank, and Morgan
Guaranty Trust Company of New York, as Agent, as amended from
time to time.
"Obligations" means (i) the obligations of the Grantor under
this Security Agreement, (ii) the obligations of the Grantor, now
existing or hereafter arising, owing to the Banks under the Credit
Agreement, the Deed of Trust or the Notes, (iii) the Reimbursement
Obligation, (iv) the LOC Disbursement Obligations, (v) the
Collateralized LOC Obligations, (vi) any renewal or extension of
any of the foregoing and (vii) the aggregate of the Secured Swap
Amounts under the Secured Swap Agreements (provided that such
aggregate shall at no time exceed 10% of the aggregate
Utilization outstanding at such time).
"Secured Parties" means (i) each and all of the "Banks" under
and as defined in the Credit Agreement, Morgan in its capacity as
"Agent" thereunder and The Fuji Bank, Limited, Los Angeles Agency
in its capacity as "Fronting Bank" thereunder, and any successors
in such capacities, (ii) Morgan as issuer of the Letters of Credit
and in respect of its rights under the Reimbursement Obligation,
(iii) the Secured Counterparties and (iv) Morgan as Security Agent
hereunder and any successors in such capacity.
(B) The following definitions are added to Section 1 of the
Security Agreement, in the appropriate alphabetical order:
"Collateralized LOC Obligations" means the obligations of the
Grantor to reimburse the Fronting Bank for any disbursements under
the Collateralized LOCs pursuant to the Credit Agreement and the
LOC Debt Facility Agreement; provided that such amount shall,
solely for the purposes of this Security Agreement, be limited to
the aggregate Collateral in the Defeasance Accounts.
"Defeasance Accounts" means the Defeasance Accounts as defined
in Section 1(d) of the Depositary Agreement.
"LOC Disbursement Obligations" means the obligations of the
Grantor to reimburse the Fronting Bank and the Banks for LOC
Disbursements pursuant to the Credit Agreement and the LOC Debt
Facility Agreement.
"Note Proceeds Account" means the Note Proceeds Account as
defined in Section 1(a) of the Depositary Agreement.
SECTION 3. Amendment of Section 5. (A) The lead-in paragraph
of subsection (a) of Section 5 of the Security Agreement is amended
to read as follows:
(a) The proceeds of any sale of, or other realization upon,
all or any part of the Collateral or the proceeds from any
foreclosure under this Security Agreement or the Deed of Trust
shall be applied by the Security Agent (A) to the extent that
such proceeds are derived from the Defeasance Accounts, to the
reimbursement of the Fronting Bank for disbursements with
respect to Collateralized LOCs, and (B) thereafter in the
following order of priority:
(B) Subsection (c) of Section 5 of the Security Agreement is
amended by adding the following sentence at the end of such
subsection:
The provisions of this subsection (c) of Section 5 shall not in
any way apply to the Defeasance Accounts.
SECTION 4. Amendment of Section 13. Section 13 of the
Security Agreement is amended to read as follows:
13. Termination of Security Interests; Release of
Collateral. Upon the payment in full of the Obligations, the
Security Interests shall terminate and all rights to the
Collateral shall revert to the Grantor. Upon any such
termination, the Security Agent will, at the Grantor's expense,
execute and deliver to the Grantor such documents as the Grantor
shall reasonably request to evidence such termination. At any
time and from time to time prior to such termination of the
Security Interests, if no Default has occurred and is continuing
(i) the Depositary, upon the instructions of the Security Agent
(which instructions may be standing instructions), shall release
any of the funds on deposit in the Note Proceeds Account and the
Defeasance Accounts to reimburse the Fronting Bank for LOC
Disbursements and disbursements under the Collateralized LOCs,
respectively, (ii) the Security Agent may release any of the
Collateral (other than the Note Proceeds Account and the
Defeasance Accounts) with the prior written consent of each of
the Secured Parties or (iii) the Grantor may apply funds in the
Operating Account, the Construction Disbursement Account, the
Major Capital Expenditure Reserve Account, the Partnership
Holding Account, or the Debt Service Reserve Account as provided
in the Operating and Maintenance Agreement, the Construction
Management Agreement or the Limited Partnership Agreement.
SECTION 5. Governing Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 6. Counterparts. This Amendment may be signed in any
number of counterparts, each of which shall be an original, with
the same effect as if the signatories thereto and hereto were upon
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the first date as above
written.
LEATHERS, L.P. a limited
partnership organized under the
laws of the State of California
By: RED HILL GEOTHERMAL, INC.,
a Delaware corporation, a
general partner
By /s/ Wallace C. Dieckmann
Name:
Title: Vice President
By: SAN FELIPE ENERGY COMPANY
a California corporation,
a general partner
By /s/ Scott B.T. Sinclair
Name:
Title: Vice President and
Treasurer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ George L. Brown
Name:
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ George L. Brown
Name:
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Security Agent
By /s/ George L. Brown
Name:
Title: Vice President
Exhibit 10.86
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
ORRICK, HERRINGTON & SUTCLIFFE
600 Montgomery Street
SAN Francisco, CA 94111
ATTN: Tim Flato, Esq.
DEED OF TRUST, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
(CONSTRUCTION TRUST DEED)
THIS DEED OF TRUST, ASSIGNMENT OF RENTS SECURITY AGREEMENT AND
FIXTURE FILING ("Deed of Trust") dated as of October 26, 1988, is
entered into among LEATHERS, L.P., ("Trustor"), TICOR TITLE
INSURANCE COMPANY OF CALIFORNIA ("Trustee") and MORGAN GUARANTY
TRUST COMPANY OF NEW YORK as Security Agent (as defined below) for
the benefit of the Secured Parties (as defined below) (in such
capacity, the "Beneficiary").
Trustor, certain Banks and Morgan Guaranty Trust Company of
New York as Agent have entered into that certain Secured Credit
Agreement dated as of October 26, 1988 ("Credit Agreement")
pursuant to which the Banks agreed to make loans to Trustor in the
amount specified and on the terms and subject to the conditions set
forth therein.
Trustor has requested Morgan Guaranty Trust Company of New
York to issue letters of credit to support certain obligations of
Trustor (i) in respect of the IID Agreements, (ii) in respect of
Imperial County amended conditional use permit No. 9006-86 dated
October 28, 1987, (iii) in respect of the Intertie Agreement, and
(iv) in respect of the SCE's Qualifying Facility Milestone
Procedure. The Trustor's reimbursement obligations under such
letters of credit are hereinafter referred to as the Reimbursement
obligations.
Trustor, Morgan Guaranty Trust Company of New York, as Agent
for the Banks, Morgan Guaranty Trust Company of New York and Morgan
Guaranty Trust Company of New York as Security Agent ("the Security
Agent") have entered into that certain Security Agreement dated as
of October 26, 1988 ("Security Agreement"), providing for security
interests in certain Collateral for the benefit of the Secured
Parties (as such terms are defined therein).
Trustor now desires to grant, transfer and assign to the
Trustee, to hold for the benefit and security of the Secured
Parties, all of Trustor's right, title and interest in and to the
Mortgaged Property as hereinafter defined.
Except as otherwise expressly provided, capitalized terms used
in this Deed of Trust and its Exhibits shall have the meanings
given in the Security Agreement.
GRANT IN TRUST
Trustor, in consideration of the indebtedness herein recited
and the trust herein created, hereby irrevocably grants, conveys,
assigns and transfers to Trustee, in trust, with power of sale and
right of entry and possession as provided herein, all of Trustor's
estate, right, title, interest, property or claim, whether now
owned or hereafter acquired or arising, in or to the following
property and rights (all of Trustor's estate, right, title, claim,
property and interest as specified in (a) through (j) below,
whether now owned or hereafter acquired or arising, is hereinafter
collectively referred to as the "Mortgaged Property"):
(a) All estate, right, title and interest of Trustor, now
owned or hereafter acquired, in or to that certain real property
located in Imperial County, California, more particularly described
in Exhibit A attached hereto and by this reference incorporated
herein, together with all easements, rights of way, gores of land,
streets, ways, alleys, passages, privileges, liberties, tenements,
hereditaments, rents, issues and profits and all other rights now
or hereafter made appurtenant thereto, all improvements now or
hereafter located thereon, all fixtures, and all additions and
accretions thereto. Said real property, appurtenances,
improvements (including the "Improvements" as hereinafter defined),
fixtures, additions and accretions are hereinafter called the "Real
Property", and all building structures and other improvements of
Trustor thereon are hereinafter called the "Improvements";
(b) All machinery, apparatus, equipment, fittings, fixtures
and other personal property of every kind and nature whatsoever
owned by Trustor, or in which Trustor has or may hereafter have or
acquire and interest, now or hereafter located at, upon or about
the Real Property, the Leathers Facility or any other Mortgaged
Property, or any appurtenance thereto, and used or usable in
connection with the present or future operation and occupancy of
all or any party of the Mortgaged Property or the Leathers
Facility, and all buildings equipment, materials and supplies of
any nature whatsoever owned by Trustor, or in which Trustor has or
may hereafter have or acquire an interest, now or hereafter located
upon the Real Property, the Leathers Facility or any other
Mortgaged Property, including without limitation power plants,
particle separators, moisture separators, injection systems, steam
wells, steam gathering piping, condensate piping, reinjection
piping and wells, steam turbine generators and associated
condensers, cooling systems, abatement systems, piping, electrical
equipment, sewage treatment equipment, fill protection systems,
maintenance and control facilities, power lines, pumps, control and
monitoring equipment, and tanks, all of which equipment, including
replacements and additions thereto, shall, to the fullest extent
permitted by law and for the purposes of this Deed of Trust, be
deemed to be part and parcel of the Mortgaged Property (hereinafter
collectively referred to as the "Equipment");
(c) All licenses, permits, franchises, authorizations and
agreements (including all applicable permits) now or hereafter
obtained by Trustor from any governmental authorities having
jurisdiction over the operation, management or use of the Leathers
Facility, the Real Property, the Improvements, the Equipment or the
construction of the Leathers Facility or the Improvements and all
intangible property and rights relating to the Development of the
Leathers Facility, the Real Property, the Improvements, the
Equipment or the operation, management or use thereof, or used in
connection therewith, including without limitation options, option
rights, and contract rights;
(d) All of Trustor's rights, royalties, and profits in
connection with all development rights or credits, air rights,
water, water rights (whether riparian, appropriative, or otherwise,
and whether or not appurtenant) and water stock with respect to the
Mortgaged Property;
(e) All of Trustor's right, title and interest in and to any
and all moneys deposited by Trustor or deposited on behalf of
Trustor with any federal, state, city, county, governmental agency,
irrigation, sewer or water district or company, gas or electric
company, telephone company, other utility company and other public
or quasi-public body or agency, for the installation, or to secure
the installation of, any utility or public service or work
pertaining to the Mortgaged Property;
(f) The Project Agreements to which Trustor is a party or in
which Trustor has an interest and all other leases and easements or
other agreements of every kind or nature affecting the use or
occupancy of the Mortgaged Property, including without limitation
the Leathers Facility, the Improvements, the Real Property, the
Equipment, and, except as otherwise expressly provided herein, the
right to receive and apply the rents, issues, profits, products,
income and royalties of the Mortgaged Property to the payment of
the obligations secured hereby;
(g) Any accounts and all money, securities and other property
now or hereafter held or established hereunder or under the Credit
Agreement, the Security Agreement, the Operating and Maintenance
Agreement, the Construction Management Agreement and the Limited
Partnership Agreement, including without limitation the Operating
Account, the Debt Service Reserve Account, the Major Capital
Expenditure Reserve Account, the Construction Disbursement Account,
and the Partnership Holding Account;
(h) All the remainders, reversions, rents, revenues, issues,
profits, products, royalties, income and other benefits derived by
Trustor from the Mortgaged Property, including without limitation
the Real Property , the Leathers Facility, the Improvements, the
Equipment, the water rights and any mineral rights, all of which
are hereby assigned to the Beneficiary, who, except as provided
herein, is hereby authorized to collect and receive the same, to
give proper receipts and acquittances therefor and to apply the
same to the payment of the obligations secured hereby,
notwithstanding the fact that the same may not then be due and
payable;
(i) All proceeds of the conversion, voluntary or involuntary,
of any of the foregoing into cash or liquidated claims or amounts,
including without limitation all proceeds of the insurance required
by the Credit Agreement to be maintained by Trustor and all awards
or other compensation heretofore or hereafter made to Trustor with
respect to condemnation of any part of the Mortgaged Property, all
of which are hereby assigned to the Beneficiary, who, subject to
the terms and conditions of the Credit Agreement and the Security
Agreement (collectively, the "Credit Documents"), is hereby
authorized to collect and receive the same, to give proper receipts
and acquittances therefor and to apply the same to the payment of
the obligations secured hereby, notwithstanding the fact that the
same may not then be due and payable; and
(j) All accounts receivable, contract rights, chattel paper,
instruments, general intangibles and other obligations of any kind
now or hereafter existing, arising out of or in connection with the
sale, lease or other disposition of electrical or other energy,
goods or the rendering of services from the Leathers Facility, and
all rights now or hereafter existing in and to all security
agreements, leases, easements and other contracts securing or
otherwise relating to any such accounts receivable, contract
rights, chattel paper, instruments, general intangibles or
obligations, the Leathers Facility and the proceeds thereof and all
inventory, now owned or hereafter acquired, of the Trustor and the
Leathers Facility, including raw materials, supplies, component
parts or work in process on the Leathers Facility, and the proceeds
thereof.
ASSIGNMENT OF RENTS AND LEASES
Trustor absolutely and irrevocably assigns to Beneficiary all
right, title, interest and leasehold estate of Trustor in, to or
under any leases (including the Lease as hereinafter defined) or
subleases, written or verbal, or other agreements for the use or
occupancy of the Mortgaged Property or any part thereof. Trustor
further absolutely and irrevocably assigns to Beneficiary all of
the rents, issues and profits of the Mortgaged Property, including
any leases or subleases thereof, all of Trustor's rights or
interests in or to any royalties, production payments or other
similar payments and all proceeds of the conversion, voluntary or
involuntary, of the Mortgaged Property into cash or liquidated
amounts or claims for the purposes and upon the terms and
conditions hereinafter set forth. Beneficiary is hereby authorized
to collect and receive the foregoing rents, issues, profits,
royalties, production and other payments and proceeds, to give
proper receipts and acquittances therefore and to apply the same to
the payment of the obligations secured hereby, notwithstanding the
fact that the same may not then be due and payable, however,
Beneficiary hereby grants Trustor a revocable license to collect
and receive such rents, issues, profits, royalties, production and
other payments and proceeds until an Event of Default occurs
pursuant to the terms hereof. The foregoing assignment shall not
impose upon Beneficiary any duty to produce rents from the
Mortgaged Property, and said assignment shall not cause Beneficiary
to be a "mortgagee in possession" for any purpose.
SECURITY AGREEMENT AND FIXTURE FILING
Pursuant to the Security Agreement and California Uniform
Commercial Code ("UCC") Sections 9313 and 9402 as amended and
recodified from time to time, this Deed of Trust shall constitute
a Fixture Filing. Trustor is sometimes referred to herein as
"Borrower," and Beneficiary is sometimes referred to herein as
"Agent".
1. Description of Collateral. The Collateral, as defined in
the Security Agreement, includes, without limitation, the following
items and types of Collateral as well as certain other items and
types of Collateral:
(a) All inventory of Trustor now owned and hereafter
acquired;
(b) All equipment of Trustor now owned and hereafter
acquired (including, without limitation, trucks and vehicles,
machinery, and office equipment), together with all additions and
accessions thereto and replacements therefor;
(c) All accounts, instruments and chattel paper now
owned and hereafter acquired and all goods repossessed or returned
in connection therewith;
(d) All other personal property and fixtures of Trustor,
now owned and hereafter acquired, including without limitation all
goods, fixtures, contract rights, documents, deposit accounts,
money, general intangibles and other property of Trustor; and
(e) All proceeds of the foregoing (including, without
limitation, whatever is receivable or received when Collateral or
proceeds is sold, collected, exchanged or otherwise disposed,
whether such disposition is voluntary or involuntary, including
rights to payment and return of premiums and insurance proceeds
under insurance with respect to any Collateral, and all rights to
payment with respect to any cause of action affecting or relating
to the Collateral).
As used herein to qualify the scope of Beneficiary's security
interest in any of the Collateral, the phrase "in connection with
any or all of the Mortgaged Property or Collateral" shall be used
in its broadest and most comprehensive sense and shall include
without limitation property used or acquired (or to be used or
acquired) in connection with the improvement, development,
construction or remodeling of any or all of the Mortgaged Property,
property arising (or to arise) from or in connection with the
operation, use, maintenance, occupancy, sale, lease or disposition
of any or all of the Mortgaged Property or Collateral, property
used or acquired (or to be used or acquired) in connection with
Trustor's performance of any of its obligations under any of the
Credit Documents or any other contract or instrument executed at
any time pursuant to or as provided in any of the Credit Documents,
and property acquired with any Loan proceeds or pursuant to any of
the Credit Documents. If any property is used (or to be used) for
multiple or different purposes, and one such purpose relates to any
aspect of the Mortgaged Property or collateral, such property shall
constitute Collateral hereunder, unless Beneficiary shall release
such property from this Fixture Filing and Beneficiary's security
interest therein by a duly executed written instrument.
2. Relation of Fixture Filing to Deed of Trust: Some or all
of the Collateral described in Section 1 above may be or become a
fixture in which Beneficiary has a security interest under the
aforementioned Security Agreement. However, nothing herein shall
be deemed to create any lien or interest in favor of the Trustee
under this Deed of Trust in any such Collateral which is not a
fixture, and the purpose of this Deed of Trust is to create a
fixture filing under UCC Section 9313. The rights, remedies and
interests of Beneficiary under this Deed of Trust and the Security
Agreement are independent and cumulative, and there shall be no
merger of any lien hereunder with any security interest created by
the Security Agreement. Beneficiary may elect to exercise or
enforce any of its rights, remedies, or interests under either or
both this Deed of Trust or the Security Agreement as Beneficiary
may from time to time deem appropriate.
3. Completion. For the sole and limited purpose of defining
"completion" within the meaning of UCC Section 9313 as amended or
recodified form time to time, "completion" shall not be deemed to
have occurred until: (i) after the Banks shall have disbursed all
Loan proceeds which have been allocated to the Mortgaged Property,
Improvements, Equipment and Collateral pursuant to the terms of the
Credit Agreement; (ii) after physical completion of all
Improvements as required by the Credit Agreement, as amended or
supplemented from time to time (including any corrective or
remedial work, whether structural or cosmetic in nature), to the
point where the Improvements are finished in a first class
condition which requires no further work to render the same fully
and immediately available for occupancy and all contemplated and
appropriate uses; and (iii) after the permanent cessation of all
construction and related work on any of the Mortgaged Property or
Improvements by or for the account of the Trustor or any of its
successors or assignees. This definition of "completion" is not
intended nor shall it be construed to impair or affect the
Trustor's or any other parties' right to record or obtain Notice(s)
of Non-Responsibility, Notice(s) of Completion, Certificate(s) of
Completion or Certificate(s) of Occupancy under applicable law.
4. Limitations. Except as otherwise clearly and expressly
provided in the Credit Agreement, the Security Agreement or herein:
(i) Beneficiary has not consented to any other security interest of
any other person in any fixtures and has not disclaimed any
interest in any fixtures; and (ii) Beneficiary has not agreed or
consented to the removal of any fixtures from the Mortgaged
Property, and any such consent by Trustor shall not be binding on
Beneficiary.
5. Removal. Notwithstanding any other provisions of this
Deed of Trust or any other agreement or contract between Trustor
and Beneficiary to the contrary, Trustor shall not, without the
prior written consent of Beneficiary, remove or permit the removal
of any fixture from the Mortgaged Property with a replacement cost
in excess of one hundred twenty-five thousand Dollars ($125,000)
for any item or two million Dollars ($2,000,000) in the aggregate
of all such fixtures removed from the date of such completion until
the date this Deed of Trust is reconveyed, except for fixtures
removed and replaced in the ordinary course of business or, so long
as such removal and replacement impairs no prior perfected security
interest under any of the Credit Documents, within the State of
California. Beneficiary further reserves the right to prohibit the
removal of any such fixture by any person with the legal right to
remove any fixture from the Mortgaged Property unless and until
such person makes arrangements with (and satisfactory to)
Beneficiary for the payment to Beneficiary of all costs of
repairing any physical injury to the Mortgaged Property which may
be caused by the removal of that fixture. Any such payment shall
be made directly to Beneficiary, and Beneficiary may hold such
payment as additional collateral under this Deed of Trust or the
Security Agreement or may apply such payment to any indebtedness
secured by the Security Agreement pursuant to UCC Section 9502 or
otherwise. Failure by Trustor to cause the delivery to Beneficiary
of any such payment shall constitute both (a) waste under (and a
breach of) this Deed of Trust; and (b) conversion of Collateral
under (and a breach of) the Security Agreement.
OBLIGATIONS SECURED
Trustor makes the foregoing grant for the purpose of securing:
1. Payment to Beneficiary of all indebtedness evidenced by
or arising under, or other obligations pursuant to, the Credit
Agreement, including without limitation the Notes (which shall not
mature later that September 15, 2002 unless a later date is agreed
upon in writing by the parties to the Credit Agreement) described
in the Credit Agreement payable to the Beneficiary and/or the Banks
or order in an original principal amount not to exceed Eighty-two
Million Dollars ($82,000,000), together with interest thereon and
fees due in connection therewith, and any modifications, additions,
extensions or renewals of the Notes (including without limitation
(i) modifications of the required principal and/or interest payment
dates, deferring or accelerating said payment dates in whole or in
part, (ii) modifications, extensions or renewals at a different
rate of interest, and/or (iii) modifications or additional amounts
advanced under the Notes) whether or not any such modification,
addition, extension or renewal is evidenced by a new or additional
promissory note or notes;
2. Payment of such further sums and/or performance of such
further obligations, including without limitation the Reimbursement
Obligations, as Trustor or the then record owner of the Mortgaged
Property may undertake to pay and/or perform (whether as principal,
surety or guarantor) for the benefit of Beneficiary, and their
successors or assigns, when said borrowing and/or obligation is
evidenced by a writing or writings reciting that it or they are
secured by this Deed of Trust;
3. Performance of each agreement of Trustor herein contained
or incorporated herein by reference and payment of each fee, cost
and expense by Trustor as herein set forth; and
4. The observance and performance by Trustor of each
covenant and obligation on the part of the Trustor to be observed
or performed pursuant to the Credit Documents and Project
Agreements.
ARTICLE I
[RESERVED]
ARTICLE II
COVENANTS OF BORROWER
SECTION 2.1. Mortgaged Property. Trustor agrees (i) as
provided in or contemplated by the Credit Agreement, to keep the
Mortgaged Property in good condition and repair, (ii) not to commit
or permit any waste or deterioration of the Mortgaged Property,
(iii) except as provided in or contemplated by the Credit Agreement
and herein, not to commit or permit any removal, demolition or
substantial alteration of the Mortgaged Property except for such
alterations as may be required by any law, ordinance, rule,
regulation or order of any governmental authority having
jurisdiction over the Mortgaged Property or as are contemplated
under the Credit Agreement, (iv) to complete in good, first class
and workmanlike manner any construction or restoration which may be
performed on the Mortgaged Property and the construction and
improvements contemplated in the Credit Agreement, all as provided
in or contemplated by the Credit Agreement, (v) as provided in or
contemplated by the Credit Agreement, to promptly restore any
portion of the Mortgaged Property which may be damaged or destroyed
and (vi) not to permit any Liens of any kind against the Mortgaged
Property, except as expressly permitted by the Credit Agreement.
SECTION 2.2. Compliance With Laws. The Trustor shall comply
in all material respects with the requirements of all applicable
laws, rules, regulations and orders of any governmental authority
as provided in the Credit Agreement.
SECTION 2.3. Books and Records. Trustor shall maintain, or
cause to be maintained, in the county in which the Leathers
Facility is located, or another location approved by Beneficiary,
proper and accurate books, records and accounts reflecting all
items of income and expense in connection with the operation of the
Leathers Facility or in connection with any services, equipment or
other items provided in connection with the operation of the
Leathers Facility, whether such income or expense be realized by
Trustor or by any other Person. The Trustor shall, upon reasonable
request by the Beneficiary, give any representative of the
Beneficiary access to such books, records and documents as provided
in the Credit Agreement.
SECTION 2.4. Insurance and Condemnation. Trustor shall at
all times provide, maintain and keep in force all of the insurance
required under the Credit Agreement. All proceeds of insurance
received or receivable by Trustor shall be delivered and applied as
provided for in the Credit Agreement. All proceeds of a taking by
eminent domain or by inverse condemnation for any public or quasi-
public use under any statute or otherwise, shall be distributed
first to the Beneficiary to pay the obligations secured hereunder.
SECTION 2.5 Proceeds on Foreclosure. In the event of the
foreclosure of this Deed of Trust or other transfer of title to all
or part of the Mortgaged Property to Beneficiary or other Person,
in extinguishment, in whole or in part, of the obligations secured
hereby, all right, title and interest of Trustor in and to any
insurance policy then in force shall pass to the purchaser or
grantee.
SECTION 2.6. Taxes and Other Charges. Except as provided in
Section 5.02 of the Credit Agreement, Trustor shall pay or cause to
be paid:
(a) Prior to the assessment of any penalty or delinquency,
all taxes, assessments and other governmental or public charges
affecting the mortgaged Property or any party thereof as provided
in the Credit Agreement.
(b) When due, all encumbrances (including any debt secured by
a deed of trust), ground rents, liens, and/or charges, with
interest, on the Mortgaged Property or any part thereof.
(c) When due, all charges for utilities or services,
including without limitation electricity, gas, water and sewer, in
connection with the Leathers Facility.
SECTION 2.7 Security Account. Upon an Event of Default, at
Beneficiary's option and upon its demand and except where and to
the degree prohibited by law, Trustor shall, until every
indebtedness secured hereby has been paid in full, pay to
Beneficiary each month an amount estimated by Beneficiary to be
equal to (i) the taxes, assessments, levies, and charges referred
to above, and (ii) premiums for fire, hazard and other insurance
next due. Said tax and insurance estimate shall be calculated by
dividing the amount next due by, in each instance, the number of
months to lapse preceding the month in which the same,
respectively, will become due. All sums so paid shall not bear
interest, except to the extent and in the minimum amount required
by law, and Beneficiary shall, at its sole option, either (i) apply
said funds to the payment of, or at the sole option of Beneficiary
release said funds to Trustor for application to and payment of,
such taxes, assessments, levies, charges and insurance premiums, or
(ii) apply all or any part of said sums to any indebtedness secured
hereby or to cure such Default. In order to cure such Default,
Trustor shall be required to restore all of the amounts so applied,
as well as to correct the other events or conditions of default not
corrected by such application.
SECTION 2.8. Certain Taxes. In the event of the passage,
after the date of this Deed of Trust, of any law deducting from the
value of the Mortgaged Property for the purpose of taxation, any
lien thereon, or changing in any way the laws now in force for the
taxation of deeds of trust or debts secured by deeds of trust or
similar instruments, or the manner of the collection of any such
taxes, so as to affect this Deed of Trust, or imposing payment of
the whole or any portion of any taxes, assessments or other similar
charges against the Mortgaged Property upon the Beneficiary,
Trustor shall pay such tax or increased portion and shall agree
with Beneficiary in writing to pay, or reimburse Beneficiary for
the payment of, any such tax or increased portion thereof when
thereafter levied or assessed against the Mortgaged Property or any
portion thereof. The obligations of Trustor under such agreement
shall be secured by this Deed of Trust.
SECTION 2.9. Subleases. Trustor shall submit to Beneficiary
for its prior written approval any sublease of the Leathers
Facility or any portion of the Mortgaged Property, including
approval of any tenant thereunder, and no sublease shall be
effective unless and until it has been approved by Beneficiary. In
the event Beneficiary approves any such sublease, Trustor shall not
accept prepayments of rent for any period in excess of one month
and shall perform all covenants of the lessor under all subleases
affecting the Leathers Facility or the Mortgaged Property. As used
herein, "sublease" includes any extensions or renewals thereof and
any amendments thereto to which Beneficiary has consented. Trustor
shall not amend or terminate any subleases without the prior
written consent of Beneficiary and shall not consent to any
assignment or subletting under any subleases without the prior
written consent of Beneficiary. Trustor shall immediately give
notice to Beneficiary of any default under any of the subleases it
receives or delivers. Beneficiary shall have the right but not the
obligation to cure any default of Trustor upon notice under any of
the subleases and all amounts disbursed in connection with said
cure shall be deemed to be disbursements under the Credit Agreement
and to be secured hereby.
SECTION 2.10. Subordination. Each sublease of any portion of
the Leathers Facility or the Mortgaged Property shall be absolutely
subordinate to the lien of this Deed of Trust, but shall contain a
provision satisfactory to Beneficiary that in the event of the
exercise of the private power of sale or a judicial foreclosure
hereunder, such sublease, at the option of the purchaser at such
sale, shall not be terminated and the tenant thereunder shall
attorn to such purchaser, and if requested to do so, shall enter
into a new sublease for the balance of the term of such sublease
then remaining upon the same terms and conditions.
SECTION 2.11. Leases. With respect to the Easement Agreement
and the Ground Lease (the "Lease"), Trustor agrees:
(a) (i) To keep and perform each and every covenant,
agreement and obligation of the lessee or grantee set forth in the
Lease and the Easement Agreement, and any statute, ordinance, rule
or regulation relating thereto, and not to commit, suffer or permit
any breach thereof. If Trustor shall default under the Lease or
the Easement Agreement, as the case may be, Beneficiary may, after
a date which is six Domestic Business Days prior to the expiration
of any period provided for in such Lease or Easement Agreement for
curing such default, at its option but without any obligation to do
so, take any action necessary or desirable to cure any default by
Trustor in the performance of any of the terms, covenants and
conditions of the Lease or the Easement Agreement, as the case may
be, Beneficiary being authorized to enter upon the Real Property
for such purposes. Trustor shall, immediately on demand, pay to
Beneficiary all costs of Beneficiary incurred in curing any such
default, together with interest on such costs from the date of
expenditure at a rate per annum equal to the Default Rate. All
sums due to Beneficiary pursuant to this Section 2.11 shall be
secured by this Deed of Trust. Any default by Trustor under the
Lease or the Easement Agreement, as the case may be, shall be a
default hereunder.
(ii) To give immediate notice to Beneficiary of any
default under the Lease or the Easement Agreement within Trustor's
knowledge or of the receipt by it of any notice of default from a
lessor under the Lease ("Lessor") or the grantor under the Easement
Agreement ("Grantor"), and to furnish to Beneficiary all
information that it may request concerning the performance by
Trustor of the covenants of the Lease or the Easement Agreement.
(iii) That the provisions hereof shall be deemed to be
obligations of Trustor in addition to Trustor's obligations as
lessee and grantee with respect to similar matters contained in the
Lease and the Easement Agreement, provided, however, the inclusion
herein of any covenants and agreements relating to similar matters
as to which Trustor is obligated under the Lease or the Easement
Agreement shall not restrict or limit Trustor's duties and
obligations to keep and perform promptly all of its covenants,
agreements and obligations as lessee or grantee under the Lease or
the Easement Agreement and nothing in this Deed of Trust shall be
construed as requiring Trustor or Beneficiary to take or omit to
take any action which would cause a default under the Lease or the
Easement Agreement.
(iv) That so long as this Deed of Trust is in effect, there
shall be no merger of the Lease or the Easement Agreement or any
interest therein nor of the leasehold estate or other estate
created thereby with the fee estate in the Real Property or any
portion thereof by reason of the fact that the Lease or the
Easement Agreement or any interest therein or the leasehold or
other estate thereunder may be held directly or indirectly by or
for the account of any person who also holds the fee estate in the
Real Property or a portion thereof or any interest therein. In
case Trustor acquires the fee title or any other estate, title or
interest in the Real Property, this Deed of Trust shall attach to
and cover and be a lien upon the fee title or such other estate so
acquired, and such fee title or other estate shall, without further
assignment, mortgage or conveyance, become and be subject to the
lien of and covered by this Deed of Trust. Trustor shall notify
Beneficiary of any such acquisition by Trustor and, on written
request by Beneficiary, shall cause to be executed and recorded all
such other and further assurances or other instruments in writing
as may in the opinion of Beneficiary be required to carry out the
intent and meaning hereof.
(v) That, so long as this Deed of Trust is in effect, no
surrender (except as a surrender upon the expiration of the term of
the Lease or the Easement Agreement) by Trustor as lessee or
grantee under the Lease or the Easement Agreement to the lessor or
grantor thereunder or any portion thereof or of any interest
therein, and no termination of the Lease or the Easement Agreement
by Trustor as lessee or grantee thereunder, shall be valid or
effective, and neither such Lease or the Easement Agreement nor the
terms thereof may be amended, modified, changed, surrendered or
cancelled, or subordinated to any mortgage, to any lease, or to any
other interest, either orally or in writing, without the prior
written consent of Beneficiary in each case, and Trustor agrees
that any such action without the prior written consent of
Beneficiary shall be void.
(vi) That Trustor shall, promptly after the execution and
delivery of this Deed of Trust or of any instrument or agreement
supplemental thereto, give written notice to any Lessor and/or to
Grantor of the execution and delivery of this Deed of Trust.
(vii) That if the Lease or the Easement Agreement is for
any reason whatsoever terminated prior to the expiration of its
term and, if pursuant to any provision of any Lease or the Easement
Agreement or otherwise, Beneficiary or its designee shall acquire
from the Lessor or Grantor a new lease or easement of real property
affected by any Lease or the Easement Agreement, Trustor shall have
no right, title or interest in or to such new lease or other
agreement or the estate created thereby.
(b) Trustor warrants that the Lease and the Easement
Agreement, and each of them, are in full force and effect, that
neither Trustor nor, to the best of Trustor's knowledge, any lessor
or grantor is in default under any of the terms or provisions of
the Lease or the Easement Agreement, and that neither Trustor nor
any Lessor or Grantor has made any claim of such default.
SECTION 2.12. Lessor's Bankruptcy. (a) Trustor acknowledges
that pursuant to Section 365 of the Bankruptcy Reform Act of 1978
(as the same may be amended from time to time, "Bankruptcy Act") it
is possible that a trustee in bankruptcy of a Lessor or a Lessor as
a debtor-in-possession could reject the Lease, in which case
Trustor, as lessee, would have the election described in Section
365(h) of the Bankruptcy Act (which election, as the same may be
amended from time to time, and together with any comparable right
under any other state or federal law relating to bankruptcy,
reorganization or other relief for debtors, whether now or
hereafter in effect, is herein called the "Election") to treat the
Lease as terminated by such rejection or, in the alternative, to
remain in possession for the balance of the term of the Lease and
any renewal or extension thereof that is enforceable by the lessee
under applicable nonbankruptcy law.
Trustor covenants that it will not suffer or permit the
termination of the Lease by exercise of the Election or otherwise
without the prior written consent of Beneficiary. Trustor
acknowledges that since the Lease is a primary part of the security
for the obligations secured hereby, it is not anticipated that
Beneficiary would consent to termination of the Lease and
Beneficiary shall not under any circumstances be obliged to give
such consent.
(b) In order to secure the covenant made in Section 2.12(a)
and as security for the Notes, Trustor assigns the Election and all
rights related thereto to Beneficiary. Trustor acknowledges and
agrees that the foregoing assignment of the Election and related
rights is one of the rights which Beneficiary may use at any time
in order to protect and preserve the other rights and interests of
Beneficiary under this Deed of Trust, since exercise of the
Election in favor of terminating any Lease would constitute waste
hereunder.
Trustor acknowledges and agrees that the Election is in the
nature of a remedy and is not a property interest which Trustor can
separate from the Lease. Therefore, Trustor agrees that exercise
of the Election in favor of preserving the right to possession
under the Lease shall not be deemed to constitute a taking or sale
of the Mortgaged Property by Beneficiary and shall not entitle
Trustor to any credit against the obligations secured by this Deed
of Trust.
(c) Trustor acknowledges and agrees that in the event the
Election is exercised in favor of Trustor remaining in possession,
Trustor's resulting rights under the Lease, as adjusted by the
effect of Section 365 of the Bankruptcy Act, shall then be part of
the Mortgaged Property and shall be subject to the lien created by
this Deed of Trust.
SECTION 2.13. Reasonable Acts. Trustor shall do any and all
acts which, from the character or use of the Mortgaged Property,
may be reasonably necessary to protect and preserve the security of
Beneficiary, the specific enumerations herein not excluding the
general.
SECTION 2.14. Performance. Trustor will faithfully perform
each and every covenant to be performed by Trustor under any lien
or encumbrance upon or affecting the Mortgaged Property, including
without limiting the generality hereof mortgages, deeds of trust,
leases, declaration of covenants, easements, conditions and/or
restrictions and other agreements which affect the Mortgaged
Property, in law or in equity. A breach of or a default under any
such lien or encumbrance shall constitute an Event of Default under
this Deed of Trust.
SECTION 2.15. Attorneys. Upon election of either Beneficiary
or Trustee so to do, employment of an attorney is authorized and
payment by Trustor of all attorneys' fees, costs and expenses in
connection with any action and/or actions (including the cost of
evidence or search title), which may be brought for the foreclosure
of this Deed of Trust, and/or for possession of the property
covered hereby, and/or for the appointment of a receiver, and/or
for the enforcement of any covenant or right in this Deed of Trust
contained as hereinafter provided shall be secured hereby.
SECTION 2.16. Person Property. Except as provided in the
Credit Documents, no personal property covered by the security
interest granted herein may be removed from the Property without
the prior written consent of Beneficiary unless Trustor shall
immediately replace such personal property with similar property of
equivalent value on which Beneficiary has a valid first lien.
SECTION 2.17. Acceleration Upon Sale or Encumbrance. Except
as expressly permitted herein or in the Credit Agreement, upon the
sale, transfer, hypothecation, assignment or encumbrance, whether
voluntary, involuntary or by operation of law, of all or any part
of the Mortgaged Property or any interest therein or the transfer
of any interest in Trustor or any other sale, transfer or
disposition not permitted by the Credit Agreement without the prior
written consent of Beneficiary, Beneficiary may, at its sole option
(exercised in accordance with the Credit Agreement), by written
notice to Trustor, declare all obligations secured hereby
immediately due and payable, except to the extent that such
acceleration by Beneficiary is prohibited by law.
ARTICLE III
DEFAULTS; REMEDIES OF BENEFICIARY
SECTION 3.1. Events of Default. An Event of Default
hereunder shall occur if an Event of Default shall occur and be
continuing under the Credit Agreement.
SECTION 3.2. Remedies and Acceleration. If an Event of
Default hereunder shall have occurred and be continuing, subject to
the Credit Agreement, the Beneficiary may declare the principal of
and interest on the Notes and all other sums secured hereby to be
immediately due and payable by giving notice to the Trustor, and
such principal, interest and other sums shall thereupon be due.
Whether or not the Beneficiary has declared all such amounts
immediately due and payable, if an Event of Default has occurred
and is continuing, the Beneficiary or Trustee may take any of the
following actions:
(a) With or without notice, and without releasing the Trustor
from any obligation hereunder, cure any default of the Trustor
hereunder and, in connection therewith, enter upon the Mortgaged
Property and do such acts and things as directed by the
Beneficiary, if such acts and things are in the opinion of the
Beneficiary necessary or desirable to protect the security hereof
including without limitation appearing and defending any action or
proceeding purporting to affect the title to the Mortgaged
Property, the security hereof or the rights or powers of
Beneficiary or Trustee hereunder; pay, purchase, contest or
compromise any encumbrance, charge, lien or claim of lien as
directed by the Beneficiary which, in its sole judgment, is prior
or superior hereto or adversely affects the security hereof; pay
any premiums or charges with respect to insurance required to be
carried hereunder; and employ counsel, accountants, contractors and
other appropriate persons as directed by the Beneficiary which it
in its sole discretion deems necessary.
(b) By itself or by its agents enter and take possession of
all or any part of the rents, issues, profits, income or proceeds
of all or any part of the Mortgaged Property ("Rents and Profits"),
to the exclusion of the Trustor and those claiming under or through
the Trustor.
(c) With or without entry or possession, in its own name or
in the name of the Trustor, use, administer, manage, operate and
control the Mortgaged Property and/or the Rents and Profits,
collect any tolls, rents, revenues, profits, income and proceeds
thereof, conduct the business thereof to the same extent as the
Trustor might and in connection therewith incur expenses for
maintenance, insurance and repairs.
(d) By itself or by its agents may enter and take possession
of the Mortgaged Property, including without limitation, the Real
Property and the Leathers Facility, or any part thereof, exclude
Trustor and all persons claiming under Trustor wholly or partly
therefrom, and operate, use, manage and control the same, either in
the name of the Trustor or otherwise, and upon such entry, from
time to time and at the expense of Trustor and of the Mortgaged
Property, make all such repairs, replacements, alterations,
additions or improvements thereto as the Trustee may be directed by
the Beneficiary, collect and receive the rents, revenues, issues,
profits, royalties, income and benefits thereof and apply the same
to the payment of all expenses which the Trustee may be authorized
to make under the provisions of this Deed of Trust and applicable
law, the remainder to be applied to the payment, performance and
discharge of the obligations secured herewith in such order as is
required by the Credit Documents.
(e) By itself or by its agent may enter and take possession
of the Mortgaged Property, including the Real Property and the
Leathers Facility, or any part thereof, and complete the Leathers
Facility and take such action as directed by the Beneficiary in
order to fulfill the obligations of Trustor under the Project
Documents and hereunder, including the right either to avail itself
and procure performance of existing construction contracts or to
enter into other contracts with the same contractors or others.
Without limiting the generality of the foregoing, Trustor hereby
appoints and constitutes the Trustee for the benefit of the
Beneficiary as its lawful attorney-in-fact with full power of
substitution (it being understood and agreed that this power is
coupled with an interest and cannot be revoked) to complete the
Leathers Facility in the name of the Trustor, to use unadvanced
funds under the Credit Documents, if any, or funds that may be
otherwise available to, or reserved, escrowed or set aside by or
for, the Trustor in respect of the completion of the Leathers
Facility, or to advance the Beneficiary's own funds, to complete
the Leathers Facility, and to do any and every act that the Trustor
might do in its own behalf in respect of completing the Leathers
Facility.
(f) Commence and maintain actions in any court of competent
jurisdiction to foreclose this instrument as a deed of trust or a
mortgage or to obtain specific enforcement of the covenants of the
Trustor hereunder. The Trustor agrees that such covenants shall be
specifically enforceable by injunction or any other appropriate
equitable remedy and that for the purposes of any suit brought
under this subparagraph, the Trustor waives the defense of laches
and any applicable statute of limitations.
(g) Execute and deliver to Trustee a written declaration of
default and demand for sale and written notice of default and of
its election to cause all or any part of the Mortgaged Property to
be sold to satisfy the obligations secured hereby. If requested by
Trustee, Beneficiary shall thereupon surrender this Deed of Trust,
and the Notes secured hereby and all documents evidencing
expenditures hereunder to Trustee. Trustee shall give and record
such notice as the law then requires as a condition precedent to a
trustee's sale or other private sale hereunder. When the minimum
period of time required by law after recordation of the notice of
default has elapsed, Trustee, without notice to or demand upon the
Trustor except as otherwise required by law, shall sell the
Mortgaged Property at a time and place of sale fixed by it in the
notice of sale, either as a whole or in separate parcels and in
such order as Beneficiary may, in its sole discretion, determine,
at public auction to the highest bidder for cash, in lawful money
of the United States (the obligations hereby secured being the
equivalent of cash for purposes of said sale), payable at time of
sale. The Trustor shall have no right to direct the order in which
the Mortgaged Property is sold. Trustee may postpone sale of all
or any portion of the Mortgaged Property by public announcement at
such time and place of sale, and from time to time thereafter may
postpone such sale by public announcement at such time and place
fixed by the preceding postponement. Trustee shall deliver to the
purchaser at such sale a deed or other appropriate instrument
conveying the Mortgaged Property or portion thereof so sold, but
without any covenant or warranty, express or implied. The recitals
in such deed or other instrument of any matters or facts shall be
conclusive proof of the truthfulness thereof. Any person,
including Trustee, Trustor and Beneficiary may purchase at such
sale.
(h) By itself or by its agents, Beneficiary may exercise any
or all of the remedies available to a secured party under the UCC,
including without limitation:
(1) Either itself, by its agents or by means of a court
appointed receiver, take possession of all or any part of the
Mortgaged Property and exclude therefrom Trustor and all other
claiming under Trustor, and thereafter hold, store, operate,
use, manage, maintain and control, make repairs, replacements,
alterations, additions and improvements to and exercise all
rights and powers of Trustor in respect of the Mortgaged
Property or any part thereof, or cause the same to be operated
by a person or entity selected by the Trustee at the direction
of the Beneficiary. In the event the Beneficiary demands or
attempts to take possession of the Mortgaged Property in the
exercise of any rights hereunder or under the Credit Documents,
Trustor shall promptly turn over and deliver complete possession
thereof to the Beneficiary;
(2) Without notice to or demand upon Trustor make such
payments and do so acts as Beneficiary may deem necessary to
protect the security interest granted hereby in the Mortgaged
Property, including without limitation paying, purchasing,
contesting or compromising any encumbrance, charge or lien which
is prior or superior hereto, and in exercising any such powers
or authority to pay all expenses incurred in connection
therewith;
(3) Require Trustor to assemble the Mortgaged Property, or
any portion thereof, at a place designated by Beneficiary and
reasonably convenient to both parties, and promptly to deliver
such Mortgaged Property to the Beneficiary, or an agent or
representative designated by it, it being understood that the
Beneficiary, and its agents, representatives and employees,
shall have the right to enter upon any or all of Trustor's
premises and property to exercise the Beneficiary's rights
hereunder; and
(4) Sell, lease or otherwise dispose of the Mortgaged
Property at public or private sale, with or without having the
Mortgaged Property at the place of sale, and upon such terms and
in such manner as the Beneficiary may direct, and the
Beneficiary may be a purchaser at any such sale.
As to any personal property subject to the UCC included in the
Mortgaged Property, including without limitation deposit accounts,
contract rights and general intangibles, Beneficiary may proceed
separately against such personal property under the UCC or may
proceed as to both real and personal property in accordance with
the rights and remedies the Beneficiary has with respect to real
property. In either event, Trustor hereby acknowledges that any
sale of all or any portion of the Mortgaged Property pursuant to
this Section 3.2 is commercially reasonable.
(i) Resort to and realize upon the security hereunder and any
other security now or hereafter held by Beneficiary in such order
and manner as Beneficiary may, in its sole discretion, determine.
Resort to any or all such security may be taken concurrently or
successively and in one or several consolidated or independent
judicial actions or lawfully taken non-judicial proceedings, or
both.
SECTION 3.3. Provisions of Sale
(a) In any sale under any provision of this Deed of Trust,
the other Credit Documents or pursuant to any judgment or decree of
court, the Mortgaged Property, or any part thereof, to the extent
permitted by law, may be sold in one or more parts or parcels or as
an entirety and in such order as the Trustee, acting at the
direction of the Beneficiary, may elect, Trustor hereby waiving any
rights it or any person claiming under it may have to compel the
marshalling of assets.
(b) All rights of action under this Deed of Trust, or the
other Credit Documents or the Project Agreements may be enforced by
the Beneficiary or the Trustee at Beneficiary's direction without
the possession of the original Credit Documents or the Project
Agreements, or other evidences of the Notes and without the
production thereof at any trial or other proceeding relative
thereto. Subject to Section 3.4 hereof, any recovery of judgment
in any such suit or proceeding shall be for the benefit of the
Beneficiary.
SECTION 3.4. Application of Proceeds. Subject to the
provisions of the Credit Agreement, the Proceeds of any sale made
either under the power of sale hereby given or under a judgment,
order or decree made in any action to foreclose or to enforce this
Deed of Trust, shall, unless otherwise provided by law, be applied:
(a) first, to the payment of (i) the ongoing administration
fees and expenses of the Trustee and attorneys' fees of the Trustee
incurred in connection therewith, (ii) all costs and expenses of
such sale, including attorneys' fees of the Beneficiary, and (iii)
all charges, expenses and advances incurred or made by the Trustee
or the Beneficiary in order to protect the lien or estate created
by this Deed of Trust or the security afforded hereby; and
(b) any balance thereof shall be paid to the Beneficiary for
distribution as specified in Section 5 of the Security Agreement.
SECTION 3.5. Waiver of Stay, Extension, Moratorium Laws;
Equity of Redemption. Trustor shall not at any time (a) insist
upon, or plead, or in any manner whatever claim or take any benefit
or advantage of any applicable present or future stay, extension or
moratorium law, which may affect observance or performance of the
Notes, or (b) claim, take or insist upon any benefit or advantage
of any present or future law providing for the valuation or
appraisal of the Mortgaged Property or any portion thereof prior to
the exercise of any remedy under or pursuant to the provisions of
this Deed of Trust or the other Credit Documents. Trustor, to the
fullest extent that it lawfully may, hereby waives all benefit or
advantage of any such law or laws. Trustor, for itself and all who
may claim under it, hereby waives, to the extent permitted by
applicable law, any and all rights and equities of redemption under
any order or decree of foreclosure of this Deed of Trust and all
notice or notices of seizure, and all right to have the Mortgaged
Property marshalled upon any foreclosure hereof. The Beneficiary
or Trustee shall not be obligated to pursue or exhaust its rights
or remedies as against any other part of the Mortgaged Property
before proceeding against any other part thereof and Trustor hereby
waives any right or claim of right to have the Trustee proceed in
any particular order.
SECTION 3.6. Rights Cumulative. The Trustee's and
Beneficiary's rights, powers and remedies under this Deed of Trust
and the Credit Documents are cumulative and in addition to any
other rights, powers and remedies provided by law. No delay or
omission by the Trustee shall impair any such right, power or
remedy or be construed to be a waiver of acquiescence in any
default on the part of the Trustor.
SECTION 3.7. Attorney in Fact. The Trustor irrevocably
appoints each of the Trustee and the Beneficiary (with full power
of substitution) as the true and lawful attorney-in-fact of the
Trustor, each with the right, power and authority to execute and
deliver following an Event of Default hereunder, in the Trustor's
name and stead, all bills of sale, assignments, releases and other
proper instruments the Trustee may deem necessary to effect the
sale, assignment, transfer or delivery pursuant to the terms of
this Deed of Trust, to maintain the Mortgaged Property, to perfect
the security interest therein or to carry out the provisions of
this Deed of Trust, including without limitation assignments from
Trustor to Beneficiary of Trustor's right, title, interest and
leasehold estate in, to or under the Lease, any sublease and the
Easement Agreements.
SECTION 3.8. Receipt a Sufficient Discharge. Upon any sale
of the Mortgaged Property or any part thereof or interest therein,
whether pursuant to foreclosure or power of sale or otherwise, the
receipt of the officer making the sale under judicial proceedings
or of the Trustee shall be sufficient discharge to the purchaser
for the purchase money and such purchaser shall not be obligated to
see to the application of such funds.
SECTION 3.9. Other Rights. At the time and in the manner
herein provided, Beneficiary, or Trustee upon written instructions
from Beneficiary (the legality thereof to be determined solely by
Beneficiary), may, without notice to or demand upon Trustor,
without releasing Trustor from any obligation hereunder and without
waiving its right to declare an Event of Default as herein provided
or impairing any declaration of Default or election to cause the
Mortgaged Property to be sold or any sale proceeding predicated
thereon:
(a) Make or do the same in such manner and to such extent as
either may deem necessary to protect the security hereof,
Beneficiary and Trustee, at Beneficiary's direction, being
authorized to enter upon and take possession of the Mortgaged
Property for such purposes;
(b) Commence, appear in and/or defend any action or
proceedings purporting to affect the security hereof, and/or any
additional or other security therefor, the interests, rights,
powers and/or duties of Trustee and/or Beneficiary hereunder,
whether brought by or against Trustor, Trustee or Beneficiary;
(c) Pay, purchase, contest or compromise any claim, debt,
lien, charge or encumbrance which in the judgment of either may
affect or appear to affect the security of this Deed of Trust, the
interest of Beneficiary or the rights, power and/or duties of
Trustee and/or Beneficiary hereunder; and
(d) If an Event of Default shall have occurred and be
continuing, Beneficiary is authorized either by itself or by its
agents to be appointed by it for that purpose or by a receiver
appointed by a court of competent jurisdiction, to enter into and
upon and take and hold possession of all or any portion of the
Mortgaged Property, both real and personal, and exclude Trustor and
all other persons therefrom; and to operate and manage the
Mortgaged Property and rent and lease the same, perform such
reasonable acts of repair or protection as may be reasonably
necessary or proper to conserve the value thereof, collect any and
all income, rents, issues, profits and proceeds therefrom, the same
being hereby assigned and transferred to Beneficiary for the
benefit and protection of Beneficiary, and from time to time apply
and/or accumulate such income, rents, issues, profits and proceeds
in such order and manner as Beneficiary or such receiver in its
sole discretion shall consider advisable, to or upon the following:
the expense of receivership, if any, the proper costs of upkeep,
maintenance, repair and/or operation of the Mortgaged Property, the
repayment of any sums theretofore or thereafter advanced pursuant
to the terms of this Deed of Trust upon the indebtedness secured
hereby, the taxes and assessments upon the operation of the
Mortgaged Property, the repayment of any sums theretofore or
thereafter advanced pursuant to the terms of this Deed of Trust
upon the indebtedness secured hereby, the taxes and assessments
upon the Mortgaged Property then due or next to become due, or upon
the unpaid principal of such indebtedness. The collection and
receipt of income, rents issues, profits and proceeds from the
Mortgaged Property by Beneficiary, and its agent or receiver, after
declaration of an Event of Default and election to cause the
Mortgaged Property to be sold under and pursuant to the terms of
this Deed of Trust shall not affect or impair such Event of Default
or declaration of an Event of Default or election to cause the
Mortgaged Property to be sold or any sale proceedings predicated
thereon, but such proceedings may be conducted and sale effected
notwithstanding the receipt and collection of any such income,
rents, issues, profits and proceeds. Any such income, rents,
issues, profits and proceeds in the possession of Beneficiary, its
agent or receiver, at the time of sale and not theretofore applied
as herein provided, shall be applied in the same manner and for the
same purposes as the proceeds of the sale.
Neither Trustee nor Beneficiary shall be under any obligation
to make any of the payments or do any of the acts referred to in
this Section 3.9 and any of the actions referred to in this Section
3.9 may be taken by Trustee (at Beneficiary's direction) or
Beneficiary irrespective of whether any notice of default or
election to sell has been given hereunder and without regard to the
adequacy of the security for the indebtedness evidenced by the
Notes.
ARTICLE IV
TRUSTEE
SECTION 4.1. Acceptance of Trust; Notice of Indemnification.
Trustee accepts this trust when this Deed of Trust, duly executed
and acknowledged, becomes a public record as provided by law.
Trustee is not obligated to notify Trustor of any pending sale
under any other deed of trust or of any action or proceeding in
which Trustor, Beneficiary or Trustee shall be a party unless
Trustee brings such action. Trustee shall not be obligated to
perform any act required of it hereunder unless the performance of
such act is requested in writing and Trustee is reasonably
indemnified against loss, cost, liability and expense.
SECTION 4.2. Powers of Trustee. From time to time upon
written request of Beneficiary and presentation of this Deed of
Trust for endorsement, and without affecting the personal
liability, if any, of any person for payment of any indebtedness or
performance of the obligation secured hereby, Trustee may, without
liability therefor and without notice, reconvey all or any part of
the Mortgaged Property, consent to the making of any map or plat
thereof, join in granting any easement thereon, join in any
declaration of covenants and restrictions, or join in any extension
agreement or any agreement subordinating the lien or charge hereof.
Trustee or Beneficiary may from time to time apply to any court of
competent jurisdiction for aid and direction in the execution of
the trusts hereunder and the enforcement of the rights and remedies
available hereunder, and Trustee or Beneficiary may obtain orders
or decrees directing or confirming or approving acts in the
execution of said trusts and the enforcement of said remedies.
Trustee has no obligation to notify any party of any pending sale
or any action or proceeding unless held or commenced and maintained
by Trustee under this Deed of Trust. Trustor shall pay to Trustee
reasonable compensation and reimbursement for services and expenses
in the administration of the trusts created hereunder, including
reasonable attorneys' fees. Trustor indemnifies Trustee and
Beneficiary against all losses, claims, demands and liabilities
(except loss, claims, demands or liabilities arising solely from
the willful acts or gross negligence of the indemnified party)
which either may incur, suffer, or sustain in the execution of the
trusts created hereunder or in the performance of any act required
or permitted hereunder or by law.
SECTION 4.3. Substitution of Trustees. From time to time,
by a writing signed and acknowledged by Beneficiary and recorded in
the Office of the Recorder of the County in which the Mortgaged
Property is situated, Beneficiary may appoint another trustee to
act in the place and stead of Trustee or any successor. Such
writing shall refer to this Deed of Trust and set forth the date,
book and page of its recordation. The recordation of such
instrument of substitution shall discharge Trustee herein named and
shall appoint the new trustee as the trustee hereunder with the
same effect as if originally named Trustee herein. A writing
recorded pursuant to the provisions of this paragraph shall be
conclusive proof of the proper substitution of such new trustee.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Reconveyance. Upon Beneficiary's written
request, and upon surrender to Trustee for cancellation of this
Deed of Trust and any note, instrument or instruments, setting
forth all obligations secured hereby, Trustee shall reconvey,
without warranty, the Mortgaged Property or that portion thereof
then held hereunder, provided, however, that any indemnity made in
connection with the Credit Documents running in favor of
Beneficiary shall survive any such reconveyance. The recitals of
any matters or facts in any reconveyance executed hereunder shall
be conclusive proof of the truthfulness thereof. To the extent
permitted by law, the reconveyance may describe the grantee as "the
person or persons legally entitled thereto." Neither Beneficiary
nor Trustee shall have any duty to determine the rights of persons
claiming to be rightful grantees of any reconveyance. When the
Mortgaged Property has been fully reconveyed, the last such
reconveyance shall operate as a reassignment of all future rents,
issues and profits of the Mortgaged Property to the person or
persons legally entitled thereto, unless such reconveyance
expressly provides to the contrary.
SECTION 5.2. Power of Attorney. The Trustor hereby
constitutes each of the Trustee and the Beneficiary (with full
power of substitution) the true and lawful attorneys-in-fact of the
Trustor irrevocably with full power (in the name of Trustor or
otherwise) to ask, require, demand and receive any and all money
and claims for money due and to become due under or arising out of
the Project Agreements, to endorse any checks or other instruments
or orders in connection therewith and to file any claims or take
any action or institute any proceedings which the Trustee or
Beneficiary may request in connection with the Mortgaged Property.
This power of attorney is a power coupled with an interest and is
irrevocable.
SECTION 5.3. Further Assurances. If the Beneficiary shall
request that the Trustor execute an instrument or document
(including any memorandum of lease, security agreement, financing
statement, continuation statement, certificate of title or estoppel
certificate relating to the Notes, stating the interest and changes
then due and any known defaults) that is necessary or advisable so
that the Beneficiary and any other holders of the Notes may obtain
the full benefit of the lien intended to be created hereby and
rights and powers granted herein, and if it shall provide the
Trustor with such instrument or document, the Trustor shall
promptly execute and deliver such instrument or document.
SECTION 5.4. Notices. Unless otherwise specifically
provided herein, all notices, consents, directions, approvals,
instructions, requests, demands and other communications hereunder
shall be in writing. All notices shall be served or delivered as
provided in the Credit Agreement to the parties at the following
addresses or such other address as any party may designate by like
notice:
Trustor: Leathers, L.P.
c/o Red Hill Geothermal, Inc.
480 West Sinclair Road
Calipatria, California 93323
Beneficiary: Morgan Guaranty Trust Company of New
York
23 Wall Street
New York, New York 10015
SECTION 5.5. Trustor Not Released. Without affecting the
liability of any person, if any, including Trustor, for the payment
of any indebtedness secured hereby, or the lien of this Deed of
Trust on the remainder of the Mortgaged Property for the full
amount of any such indebtedness and liability unpaid, Beneficiary
is empowered as follows: Beneficiary may from time to time and
with notice (a) release any person liable for the payment of the
indebtedness, (b) extend the time or otherwise alter the terms of
payment of any of the indebtedness, (c) accept additional real or
personal property of any kind as security, or (d) alter,
substitute, or release any property securing the indebtedness.
SECTION 5.6. Severability. If all or any part of any
provision hereof shall be invalid, illegal or unenforceable in any
jurisdiction, the remaining provisions shall continue to be valid
and enforceable, and such provision shall continue to be valid and
enforceable in any other jurisdiction.
SECTION 5.7. Amendment. Any termination, amendment,
supplement, waiver or modification of any term hereof shall be in
writing, executed by Trustor and Beneficiary.
SECTION 5.8. Headings. The headings of the Articles,
Sections and subsections hereof are for convenience and shall not
affect the meaning of this Deed of Trust.
SECTION 5.9. Benefit. The parties hereto, their permitted
successors and assigns, but no others, shall be bound hereby and
entitled to the benefits hereof. Without limited the foregoing,
any of the Secured Parties may, at its election, assign, convey or
transfer all or any part(s) of its right, title or interest
hereunder in connection with any assignment or other transfer of
all or any part(s) of its interest in or to the Obligations.
SECTION 5.10. Designation of Ownership. In each instance
hereunder in which the Trustee is required to act or refrain from
acting upon instructions or notices from the Beneficiary, the
Trustee shall be entitled to rely upon certification of such status
received by the Trustee from the Beneficiary, and the Trustee shall
not be required to act or refrain from acting until such
certification has been received.
SECTION 5.11. Security Agreement. This Deed of Trust
constitutes both a real property deed of trust and a "security
agreement", within the meaning of the UCC, and the Mortgaged
Property includes both real and personal property and all other
rights and interest, whether tangible or intangible in nature, of
Trustor in the Mortgaged Property. Trustor by executing and
delivering this Deed of Trust has granted to the Trustee for the
benefit of the Secured Parties, as security for the obligations
secured hereunder, a security interest in the personal property
comprising the Mortgaged Property. If Trustor shall default under
the Credit Documents or this Deed of Trust, the Trustee, in
addition to any other rights and remedies which it may have, shall
have and may exercise immediately and without demand, any and all
rights and remedies granted to a secured party upon default under
the UCC, including, without limiting the generality of the
foregoing, the right to take possession of such personal property
or any part thereof, and to take such other measures as the Trustee
may deem necessary for the care, protection and preservation of
such personal property.
SECTION 5.12. Governing Law. This Deed of Trust shall be
governed by and construed in accordance with the law of the State
of California.
SECTION 5.13. Limitation of Liability. Notwithstanding
anything herein to the contrary, the personal liability of Trustor
hereunder and the limitation thereof shall be governed by the
provisions of the Credit Agreement.
SECTION 5.14. Nonrecourse. Notwithstanding any provision of
any agreement relating to the Obligations secured by this Deed of
Trust (including, without limitation, the Reimbursement
Obligations), such Obligations shall be paid only from the income
of and the proceeds from the Leathers Facility and the Collateral
as provided in Section 9.12 of the Credit Agreement, which
provision is hereby incorporated by this reference.
SECTION 5.15. Accounts. At any time and from time to time
prior to the reconveyance of all of the interests granted
hereunder, and if no Default has occurred and is continuing, the
Trustor may apply funds in the Operating Account, the Construction
Disbursement Account, the Major Capital Expenditure Reserve
Account, the Partnership Holding Account, or the Debt Service
Reserve Account, as provided in the Operating and Maintenance
Agreement, the Construction Management Agreement and the Limited
Partnership Agreement.
SECTION 5.16. Notice. Trustor hereby requests that any
notice of default or notice of sale as may be required by law be
mailed to Trustor at its address above stated.
TRUSTOR PLEASE NOTE: IN THE EVENT OF YOUR DEFAULT, CALIFORNIA
PROCEDURE PERMITS THE TRUSTEE TO SELL THE MORTGAGED PROPERTY AT A
SALE HELD WITHOUT SUPERVISION BY ANY COURT AFTER EXPIRATION OF A
PERIOD PRESCRIBED BY LAW. SEE SECTION 3.02 ABOVE FOR A DESCRIPTION
OF THIS PROCEDURE. UNLESS YOU PROVIDE AN ADDRESS FOR THE GIVING OF
NOTICE, YOU MAY NOT BE ENTITLED TO OTHER NOTICE OF THE COMMENCEMENT
OF SALE PROCEEDINGS. BY EXECUTION OF THIS DEED OF TRUST, YOU
CONSENT TO SUCH PROCEDURE. IF YOU HAVE ANY QUESTIONS CONCERNING
IT, YOU SHOULD CONSULT YOUR LEGAL ADVISOR. BENEFICIARY URGES YOU
TO GIVE IT PROMPT NOTICE OF ANY CHANGE IN YOUR ADDRESS SO THAT YOU
MAY RECEIVE PROMPTLY ANY NOTICE GIVEN PURSUANT TO THIS DEED OF
TRUST.
IN WITNESS WHEREOF, Trustor has caused this Deed of Trust to
be duly executed by its officers thereunto duly authorized as of
the day and year first above written.
TRUSTOR
LEATHERS, L.P., a limited
partnership organized under
the laws of the State of
California
By: RED HILL GEOTHERMAL,
INC, a Delaware
corporation, a General
Partner
By: /s/ Russ L. Tenney
Its: President
By: /s/ Wallace C. Dieckmann
Its: Assistant Secretary
Exhibit 10.86 (Cont.)
RECORDING REQUESTED BY
AND WHEN RECORDED
RETURN TO:
Arnold A. Pinkston
Orrick, Herrington &
Sutcliffe
Old Federal Reserve Bank Bldg.
400 Sansome Street
San Francisco, CA 94111
FIRST AMENDMENT TO DEED TO TRUST
THIS FIRST AMENDMENT TO DEED OF TRUST dated as of April 18, 1990
is entered into by and between LEATHERS, L.P., ("Trustor"), and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK as Security Agent (as
defined below) for the benefit of the Secured Parties (as defined
below) (in such capacity, the "Beneficiary").
RECITALS
(1) Trustor, Trustee and Beneficiary are parties to that certain
Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Filing (Construction Deed of Trust) ("Deed of Trust") dated as of
October 26, 1988 which was recorded on October 26, 1988, as
instrument no. 88-17188, in the Official Records of Imperial
County, California.
(2) Except as expressly provided herein, capitalized terms used
herein which are defined in the Deed of Trust (as amended hereby)
shall have the respective meanings given to those terms in the Deed
of Trust (as amended hereby).
(3) Trustor, Beneficiary, The Fuji Bank, Limited, Los Angeles
Agency, as Fronting Bank ("Fronting Bank") and the Banks listed
therein have entered into that certain Amended and Restated Secured
Credit Agreement dated as of April 18, 1990 ("Amended Credit
Agreement'), pursuant to which such parties have amended and
restated the Secured Credit Agreement dated as of October 26, 1988
(as amended on April 14, 1989, and partially assigned by Morgan
Guaranty Trust Company of New York ("MGT") to Amsterdam-Rotterdam
Bank N.V. on June 21, 1989, the ("Original Credit Agreement") among
Trustor, Morgan Guaranty Trust Company of New York as Agent
("Agent') for the Banks, and the banks ("Banks") which are party
thereto. The Deed of Trust was recorded to secure, among other
things, the obligations of the Trustor under the Original Credit
Agreement.
(4) The parties wish to amend the Deed of Trust to reflect the
Amended Credit Agreement.
AGREEMENT
1. Credit Agreement. The term Credit Agreement, as used in the
Deed of Trust, shall mean the Original Credit Agreement as amended
and restated by the Amended Credit Agreement as the same may be
amended, modified, supplemented, restated or replaced from time to
time.
2. Security Agreement. The term Security Agreement, as used in the
Deed of Trust, shall mean the Security Agreement, dated as of
October 26, 1989 between Trustor, Security Agent, MGT, and Agent,
as amended by the certain Amendment Number One to the Security
Agreement dated as of April 14, 1989 between Trustor, Security
Agent, MGT, and Agent and that certain Amendment Number Two to the
Security Agreement dated as of April 18, 1990 between Trustor,
Security Agent, MGT, and Agent, as the same may be amended,
modified, supplemented, restated or replaced from time to time.
3. Obligations Secured.
(a) Item 1 of the Article entitled Obligations Secured (page
eight) in the Deed of Trust is amended to read as follows:
"1. Payment to Beneficiary of all indebtedness evidenced by,
or arising under or pursuant to, the Credit Agreement, including
without limitation the Notes (which shall not mature later than
September 15, 2002 unless a later date is agreed upon in writing by
the parties to the Credit Agreement) described in the Credit
Agreement payable to the Beneficiary and/or the Banks or order in
an original principal amount not to exceed Sixty-six Million
Dollars ($66,000,000), together with interest thereon and fees due
in connection therewith, and any modifications, additions,
extensions or renewals of the Credit Agreement and the Notes
(including without limitation (i) modifications of the
required principal and/or interest payment dates, deferring or
accelerating said payment dates in whole or in part, (ii)
modifications, extensions or renewals at a different rate of
interest, and/or (iii) modifications or additional amounts
advanced under the Credit Agreement and the Notes) whether or
not any such modification, addition, extension or renewal is
evidenced by a new or additional promissory note or notes"
(b) Item 4 of the Article entitled Obligations Secured (pages
nine) in the Deed of Trust is amended to read as follows:
"4. The observance and performance by Trustor of each
covenant and obligation (including the Obligations as defined in
the Security Agreement) on the part of Trustor to be observed or
performed pursuant to or arising under or in connection with the
terms and provisions of the Credit Documents and the Project
Agreements, and all amendments, modifications, supplements,
restatements or replacements thereto."
4. Effect of This Amendment. On and after the date of this
Amendment, each reference in the Deed of Trust to the Deed of
Trust, shall mean the Deed of Trust as amended hereby. Except as
specifically amended above, the Deed of Trust shall remain in full
force and effect and is hereby ratified and confirmed. The
execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as a waiver of any
right, power, or remedy of the Agent or any of the Banks, nor
constitute a waiver of any provision of the Deed of Trust.
5. Headings. The headings in this Amendment are for
convenience of reference only and not part of the substance hereof.
6. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of California.
7. Counterparts. This Amendment may be executed in any number
of identical counterparts, any set of which signed by both parties
hereto shall be deemed and constitute a complete executed original
for all purposes.
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be executed, and this First Amendment shall be
effective, as of the day and year first above written.
LEATHERS, L.P., a California
limited partnership
By: Red Hill Geothermal, Inc.
a Delaware corporation,
general partner
By: /s/ Jon R. Peele
Its: Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
in its capacity as Security Agent
By: /s/ George L. Brown
Its: Vice President
Exhibit 10.87
LOC DEBT FACILITY AGREEMENT, dated as of April 18, 1990, among
LEATHERS, L.P., a limited partnership organized under the laws of
California (the "Borrower"), the BANKS listed on the signature
pages hereof (the "Banks"), MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as Agent under the Credit Agreement (as defined below) (the
"Agent") and THE FUJI BANK, LIMITED, LOS ANGELES AGENCY, as
Fronting Bank (the "Fronting Bank").
The parties hereto, intending to be legally bound and in
consideration of the premises and mutual covenants herein
contained, hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.01 Definitions. For all purposes of this
Agreement, the following terms shall have the following meanings:
"Bank" means each bank or financial institution listed on the
signature pages hereof, and its successors and assigns.
"Collateralized LOCs" has the meaning set forth in Section
4.01.
"Commercial Paper Notes" shall mean the short-term
promissory notes to be issued payable to bearer or to a named payee
in the form of Exhibit A-1 to the Depositary Agreement (or any
variation thereof agreed to by the CP Dealers, the Agent, the
Fronting Bank, the Banks, the Borrower and the Depositary),
constituting LOC Debt of the Borrower, having a Face Amount of at
least $100,000, having a term not greater than 270 days and not
being subject to extension, automatic renewal or roll-over.
"CP Dealer" shall mean Merrill Lynch Money Markets Inc. and/or
Smith Barney, Harris Upham & Co. Inc. or any other Person appointed
as a CP Dealer in a CP Dealer Agreement with the prior written
consents of the Fronting Bank and the Agent, which
consents shall not be unreasonably withheld.
"CP Dealer Agreement" shall mean each Commercial Paper Dealer
Agreement between the Borrower and a CP Dealer,
substantially in the form attached to this Facility Agreement as
Annex I, with only such changes therein as are permitted by Section
5.07 hereof.
"Credit Agreement" shall mean the Amended and Restated Secured
Credit Agreement, dated as of April 18, 1990 among the Borrower,
the Banks, The Fuji Bank, Limited, Los Angeles Agency, as Fronting
Bank and Morgan Guaranty Trust Company of New York, as Agent, as
amended from time to time.
"Date of Issuance" shall mean the date on which any LOC Debt
is issued hereunder and under the Depositary Agreement.
"Dealer" shall mean any CP Dealer or MTN Dealer.
"Defeasance Account" has the meaning set forth in Section
4.01.
"Defeasance Date" has the meaning set forth in Section 4.01.
"Defeased Note" has the meaning set forth in Section 4.01.
"Depositary" shall mean The Fuji Bank and Trust Company or any
successor thereto as such pursuant to the Depositary
Agreement.
"Depositary Agreement" shall mean a Depositary Agreement among
the Borrower, the Fronting Bank, the Agent and the
Depositary, concerning the issuance by the Borrower of LOC Debt,
substantially in the form attached to this Facility Agreement as
Annex III.
"Facility Agreement" shall mean this LOC Debt Facility
Agreement.
"Medium-Term Notes" shall mean the interest-bearing notes to
be issued payable to the order of a named payee, in the form of
Exhibit B-1 to the Depositary Agreement (or any variation thereof
agreed to by the MTN Dealers, the Agent, the Fronting Bank, the
Banks, the Borrower and the Depositary), constituting LOC Debt of
the Borrower and having a term ending not earlier than 270 days
from the date of issuance and not later than August 31, 2001.
"MTN Dealer" shall mean Merrill Lynch Capital Markets, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Smith Barney, Harris
Upham & Co. Incorporated and The First Boston Corporation or any
other Person appointed as an MTN Dealer in an MTN
Distribution Agreement with the prior written consents of the
Fronting Bank and the Agent, which consents shall not be
unreasonably withheld.
"MTN Distribution Agreement" shall mean each Medium-Term Note
Distribution Agreement between the Borrower and an MTN Dealer,
substantially in the form attached to this Facility Agreement as
Annex II, with only such changes therein as are permitted by
Section 5.08 hereof.
"Net Sales Price" shall mean with respect to any Note the
initial purchase price of such Note minus the compensation
payable to the relevant Dealer in connection with the sale of such
Note.
"Notes" has the meaning assigned to such term in the
Depositary Agreement.
"Notice of Defeasance" has the meaning set forth in Section
4.01.
"Offering Material" shall have the meaning set forth in
Section 3.02(v).
SECTION 1.02. Interpretation. Unless otherwise defined
herein, capitalized terms used herein shall have the meanings
assigned to such terms in Article I of the Credit Agreement.
SECTION 1.03. Construction. This Facility Agreement is
supplemental to the Credit Agreement and shall be interpreted and
applied in all respects as though it were a part thereof.
SECTION 1.04. Issuance Agreements. The parties hereto hereby
approve each of this Facility Agreement, the Depositary Agreement,
the CP Dealer Agreement, and the MTN Distribution Agreement, each
of which shall constitute an Issuance Agreement for purposes of the
Credit Agreement regardless of when executed and delivered. Each
of the Banks authorizes and directs the Agent to execute and
deliver this Facility Agreement and the Depositary Agreement and to
perform its obligations hereunder and thereunder as Agent for the
Banks.
ARTICLE II
LOCs SUPPORTING LOC DEBT
SECTION 2.01. Issuance of LOCs and Related LOC Debt. (a)
Commitment. Upon the terms and subject to the conditions set forth
herein, in the Depositary Agreement and in the Credit Agreement,
and relying upon the representations and warranties set forth in
clause (iv) of Section 3.02 hereof, the Fronting Bank agrees to
issue LOCs in support of LOC Debt.
(b) Description of LOCs and Related LOC Debt. Each LOC
issued pursuant hereto shall (i) be printed on, or together with
and attached to, a Commercial Paper Note or a Medium-Term Note and
bear the same identifying number as such Commercial Paper Note or
Medium-Term Note, respectively, and (ii) comply with Sections 2.02
and 2.03 of the Credit Agreement. Each Commercial Paper Note and
related LOC or Medium-Term Note and related LOC shall be in the
form required by, and duly completed, executed and authenticated in
accordance with, the Depositary Agreement.
SECTION 2.02. Issuance of Commercial Paper Notes. (a)
Depositary Agreement; CP Dealer Agreement. As of the date hereof,
(i) the Borrower, by entering into the Depositary Agreement, has
authorized and directed the Depositary to act as depositary for
safekeeping of the Commercial Paper Notes and as the agent of the
Borrower for the authentication, issuance and delivery of
Commercial Paper Notes on the terms and conditions set forth herein
and therein and (ii) the Borrower, by entering into the CP Dealer
Agreement, has made arrangements for the sale of Commercial Paper
Notes.
(b) Instructions not to Issue Commercial Paper Notes. If at
any time the Agent determines, or is instructed by the
Required Banks, that the Borrower is not entitled to issue
Commercial Paper Notes under this Facility Agreement, the Credit
Agreement or the Depositary Agreement, the Agent shall instruct the
Borrower and the Depositary not to issue or release for delivery,
and the CP Dealer not to sell, Commercial Paper Notes. When so
instructed, the Depositary shall not issue or release for delivery
any Commercial Paper Notes until such instructions are revoked.
Any pending contracts to purchase Commercial Paper Notes from the
Borrower shall not be consummated after the time of receipt by the
CP Dealer of the stop notice. Any instructions given pursuant to
this Section 2.02(b) not to issue, release for delivery or sell
Commercial Paper Notes (x) shall specify the reason therefor,
including reference to the applicable provisions of the relevant
Issuance Agreement, (y) shall be promptly
confirmed in writing if not initially given in writing and (z) may
be superseded, revised or revoked only by the Agent in
writing. In no event shall the Agent, the Fronting Bank or the
Depositary be liable to any party for any losses or claims
arising out of any actions taken in accordance with this Section
2.02(b) absent gross negligence or willful misconduct of the Agent,
the Fronting Bank or the Depositary.
SECTION 2.03. Issuance of Medium-Term Notes. (a)
Depositary Agreement; MTN Distribution Agreement. As of the date
hereof, (i) the Borrower, by entering into the Depositary
Agreement, has authorized and directed the Depositary to act as
depositary for safekeeping of the Medium-Term Notes and as the
agent of the Borrower for the authentication, issuance and
delivery of Medium-Term Notes on the terms and conditions set forth
herein and therein and (ii) the Borrower, by entering into the MTN
Distribution Agreement, has made arrangements for the sale of such
Medium-Term Notes.
(b) Instructions not to Issue Medium-Term Notes. If at any
time the Agent determines, or is instructed by the Required Banks,
that the Borrower is not entitled to issue Medium-Term Notes under
this Facility Agreement, the Credit Agreement or the Depositary
Agreement, the Agent shall instruct the Borrower and the Depositary
not to issue or release for delivery, and the MTN Dealers not to
consummate the sale of, Medium-Term Notes. When so instructed, the
Depositary shall not issue or release for delivery any Medium-Term
Notes notwithstanding the prior
agreement by the MTN Dealers to sell such Medium-Term Notes. Any
instructions given pursuant to this Section 2.03(b) not to issue,
release for delivery or consummate the sale of Medium-Term Notes
(i) shall specify the reason therefor, including reference to the
applicable provisions of the relevant Issuance Agreement, (ii)
shall be promptly confirmed in writing if not initially given in
writing and (iii) may be superseded, revised or revoked only by the
Agent in writing. In no event shall the Agent, the Fronting Bank
or the Depositary be liable to any party for any losses or claims
arising out of actions taken in accordance with this Section
2.03(b) absent gross negligence or willful misconduct of the Agent,
the Fronting Bank or the Depositary.
SECTION 2.04. Payment from Fronting Bank's Funds. The
Fronting Bank agrees that (a) all LOC Disbursements and
disbursements with respect to Collateralized LOCs shall be paid
only out of the general funds of the Fronting Bank, (b) no LOC
Disbursements or disbursements with respect to Collateralized LOCs
shall be contingent upon or directly or indirectly drawn from
amounts on deposit in the Note Proceeds Account (as defined in the
Depositary Agreement) or amounts on deposit in any account
maintained by the Borrower with the Fronting Bank, (c)
reimbursement for any LOC Disbursements will be sought and
effected only after such LOC Disbursements have been made in
accordance with the foregoing, whether by deposit of funds in the
Special Payment Account (as defined in the Depositary Agreement) or
otherwise, and (d) disbursements with respect to
Collateralized LOCs shall be reimbursed first, pursuant to the
Security Agreement from the Collateral in the Defeasance Accounts
to the extent of such Collateral and second, directly from the
Borrower.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Conditions to First Issuance. The obligation
of the Fronting Bank to issue the initial LOCs shall be subject to
the satisfaction of the following conditions precedent (in addition
to the conditions precedent set forth in Section 3.02 hereof and in
Article IV of the Credit Agreement) on the first Date of Issuance
with respect to the Commercial Paper Notes or Medium-Term Notes to
be issued on such first Date of Issuance:
(i) the LOC Debt (x) if Commercial Paper Notes, shall have
received the highest short-term rating from at least one of the
nationally recognized rating agencies; provided that if the
Commercial Paper Notes shall not have received such rating
because of the credit rating of the Fronting Bank, the Borrower may
waive this requirement by written notice to the Fronting Bank and
(y) if Medium-Term Notes, shall have received the highest long-term
rating for long-term debt securities from at least one of the
nationally recognized rating agencies; provided that if the Medium-
Term Notes shall not have received such rating because of the
credit rating of the Fronting Bank, the Borrower may waive this
requirement by written notice to the Fronting Bank;
(ii) the Fronting Bank and the Agent shall have received
the following:
(A) executed counterparts of the Depositary Agreement,
the CP Dealer Agreement and the MTN Distribution Agreement; and
(B) such other documents as the Fronting Bank or the
Agent may reasonably request; and
(iii) the Borrower and the CP Dealer shall each have
received an executed letter agreement in the form of Exhibit B to
the CP Dealer Agreement from the Fronting Bank and the Borrower and
the MTN Dealer shall each have received an executed letter
agreement in the form of Exhibit C to the MTN Distribution
Agreement from the Fronting Bank.
SECTION 3.02. Conditions to Each Issuance. The obligation of
the Fronting Bank to issue LOCs shall be subject to the
satisfaction of the following conditions precedent (in addition to
the applicable conditions precedent set forth in Article IV of the
Credit Agreement) to the satisfaction of the Agent on each proposed
Date of Issuance:
(i) the Depositary shall have received appropriate
instructions in accordance with Section 3 of the Depositary
Agreement and, if required, the Fronting Bank and the Agent shall
have received in a timely manner the requisite Notice of Issuance
provided for in Section 2.04 of the Credit Agreement;
(ii) the LOC Debt proposed to be issued shall not be
subject to the registration requirements of the Securities Act of
1933 or any registration or qualification requirements under the
securities or blue sky laws of any State unless the Agent and the
Fronting Bank shall otherwise agree in writing prior to any such
issuance;
(iii) the Borrower shall be either (A) not an "investment
company" and not a company "controlled" by an"investment company"
within the meaning of the Investment Company Act of 1940 or (B)
exempt under an order of the Securities and Exchange Commission
from the provisions of such Act, which order shall be in full force
and effect and a copy of which shall have been delivered to the
Agent and the Fronting Bank;
(iv) on the Date of Issuance of such LOC Debt (and after
giving effect to such issuance), the representations and warranties
set forth in Section 3(c) of the Depositary Agreement shall be true
and correct, with the same force and effect as though such
representations and warranties had been made on and as of such
date;
(v) (A) each information statement, offering memorandum or
other offering material (collectively, the "Offering Material") to
be used in connection with any offer, issuance, sale or
delivery of such LOC Debt shall have been delivered to the
Fronting Bank, (B) the Offering Material shall not contain any
untrue statement of a material fact or fail to state a material
fact about the Borrower necessary in order to make the statements
therein not misleading, and (C) the Offering Material shall be in
form and substance satisfactory to the Fronting Bank;
(vi) immediately after such issuance, no Default shall have
occurred and be continuing;
(vii) there shall not have been any restrictions imposed
upon the Fronting Bank or the Borrower by any law or regulation of
the United States or any State thereof or other governmental
authority (including without limitation any legal lending limits
imposed by law or regulations of the United States or any State
thereof) which would prevent the Fronting Bank from issuing LOCs or
which would prevent the issuance or sale of LOC Debt entitled to
the benefits of LOCs;
(viii) the Depositary Agreement and either a CP Dealer
Agreement, in the case of an issuance of Commercial Paper Notes, or
an MTN Distribution Agreement, in the case of an issuance of
Medium-Term Notes, shall be in full force and effect and the
Borrower shall not be in default under either of the Depositary
Agreement, the MTN Distribution Agreement or the CP Dealer
Agreement, as the case may be;
(ix) the sum of
(A) the aggregate Face Amount of all Outstanding LOC Debt
on such Date of Issuance (excluding all LOC Debt maturing on such
day or becoming Defeased Notes on such day and including all LOC
Debt being issued on such day) plus
(B) the aggregate principal amount of all Loans outstanding
on such Date of Issuance (excluding all Loans being repaid on such
day and including all Loans being made on such day)
shall not exceed the aggregate Commitments of the Banks in effect
on the Date of Issuance (after giving effect to any reduction
thereof on such date);
(x) if the maturity date of any LOC Debt being issued on
such Date of Issuance will occur after any Commitment Reduction
Date, the sum of the principal amount of Loans plus the Face Amount
of Outstanding LOC Debt after such issuance and scheduled to mature
after such Commitment Reduction Date will not exceed the aggregate
Commitments of the Banks on such Commitment Reduction Date after
giving effect to the scheduled reduction on such date of such
Commitments;
(xi) the aggregate Face Amount of Notes maturing on a
single day shall not exceed $25,000,000;
(xii) all fees due and payable to the Fronting Bank and the
Depositary shall have been paid; and
(xiii) each Note shall be identified as belonging to either
Tranche A or Tranche B under the Credit Agreement and, to the
extent practicable, the aggregate Loans and Notes attributable to
a particular Tranche shall not exceed the aggregate Commitments
with respect to such Tranche.
Each Notice of Issuance and each instruction of the Borrower
given pursuant to Section 3 of the Depositary Agreement to the
Depositary to issue LOC Debt shall be deemed to be a representation
and warranty by the Borrower to the Banks on the date thereof as to
the facts set forth in clauses (ii), (iii), (iv), (v), (vi), (vii)
(to the extent applicable to the Borrower), (viii) and (ix) of the
preceding paragraph; provided that in the case of clause (v), such
representation and warranty shall be deemed to exclude any
information about the Fronting Bank or information not approved by
the Borrower expressly for use therein.
ARTICLE IV
COLLATERALIZED LOCS
SECTION 4.01. Defeased Notes. (a) If no Default has
occurred and is continuing, the Borrower may, upon three Domestic
Business Days' written notice to the Fronting Bank and the Agent (a
"Notice of Defeasance"), at any time cash collateralize in full its
reimbursement obligations with respect to LOCs (the "Collateralized
LOCs") attached to any then-outstanding Medium-Term Notes (the
"Defeased Notes"). Each Notice ofDefeasance shall specify the
serial number of, the face amount of, the interest rate on, and the
interest payment dates of, each Defeased Note and the date of such
collateralization (the "Defeasance Date").
(b) On or prior to the Defeasance Date, the Borrower shall
establish, pursuant to the Depositary Agreement, a Defeasance
Account into which the Borrower shall irrevocably deposit cash or
Temporary Cash Investments in an amount which a firm of independent
certified public accountants satisfactory to the Agent and the
Fronting Bank shall reasonably determine to be sufficient to
provide for reimbursing in full the Fronting Bank for disbursements
made in respect of the Collateralized LOCs with respect to the
principal of and interest on the Defeased Notes in the amounts and
at the times provided in each Defeased Note. Each Defeasance
Account, and all moneys and securities therein (including interest
thereon), shall be in the name of the Security Agent, shall be for
the sole and exclusive benefit of the Fronting Bank and the Banks
and shall constitute part of the Collateral under the Security
Agreement. The Security Agent shall have the sole and exclusive
right to effect any withdrawal or distribution from each Defeasance
Account. The Borrower shall not have any legal or equitable right,
title or interest in any Defeasance Account.
(c) The Security Agent shall, prior to an Event of Default,
apply the cash and Temporary Cash Investments on deposit in each
Defeasance Account to reimburse the Fronting Bank for disbursements
made from time to time in respect of Collateralized LOCs with
respect to the interest on and principal of the Defeased Notes to
which such Defeasance Account relates. After an Event of Default,
the Security Agent shall apply the cash and Temporary Cash
Investments on deposit in each Defeasance Account as provided in
the Security Agreement.
SECTION 4.02. Termination of Participations in
Collateralized LOCs. The participations of the Banks in the
Collateralized LOC in respect of each Defeased Note shall
terminate at 5:00 P.M. (New York City time) on the Defeasance Date
of such Defeased Note, and such Collateralized LOC shall thereupon
cease to be an LOC for purposes of the Issuance Agreements, the
Credit Agreement and the Security Agreement. Notwithstanding the
termination of the obligations of the Banks to participate in
Collateralized LOCs, the Borrower shall remain obligated to
reimburse the Fronting Bank in full for LOC Disbursements under
such Collateralized LOCs, whether from funds on deposit in the
Defeasance Accounts or otherwise.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Notices, etc. Except as otherwise provided
herein, all notices, demands, instructions and other communications
required or permitted to be given to or made upon any party hereto
or any other Person shall be given or made, as the case may be, as
provided in Section 10.01 of the Credit Agreement.
SECTION 5.02. Binding Effect; Assignment. This Facility
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns;
provided that no party may assign any of its rights or obligations
hereunder without the consent of the other parties hereto.
SECTION 5.03. Governing Law. This Facility Agreement shall
be governed by and construed in accordance with the laws of the
State of New York applicable to contracts made and performed within
the State of New York.
SECTION 5.04. Execution in Counterparts. This Facility
Agreement may be executed in any number of counterparts. Each
counterpart, when so executed and delivered, shall be deemed to be
an original, and all of such counterparts, taken together, shall
constitute one and the same Facility Agreement.
SECTION 5.05. Headings. Section headings used in this
Facility Agreement are for convenience of reference only and shall
not define or limit any of the terms or provisions hereof.
SECTION 5.06. Survival of Facility Agreement. All covenants,
agreements, representations and warranties made herein shall
survive the issuance of LOCs by the Fronting Bank and shall
continue in full force and effect as long as any LOC is outstanding
or any amount is owing to the Fronting Bank or any Bank in respect
of any LOCs.
SECTION 5.07. CP Dealer Agreement. Notwithstanding any
provision in the Credit Agreement to the contrary, on five days'
prior written notice to the Fronting Bank, the CP Dealer, the Agent
and the Depositary, the Borrower may terminate any CP Dealer
Agreement so long as at least one CP Dealer Agreement remains in
effect. The Borrower may not amend, supplement, modify or waive
the provisions of any CP Dealer Agreement in any respect materially
adverse to the Fronting Bank, the Agent, the Banks or the
Depositary without the prior written authorization of the Fronting
Bank, the Agent (acting for the Banks) and the Depositary. The
Borrower may enter into additional CP Dealer Agreements without
further written authorization so long as (i) each such additional
CP Dealer Agreement shall be substantially in the form attached to
this Facility Agreement as Annex I, subject only to such
amendments, supplements and modifications permitted by this Section
5.07 and (ii) such agreements are with CP Dealers previously
approved by the Fronting Bank and the Agent in writing.
SECTION 5.08. MTN Distribution Agreement. Notwithstanding
any provision of the Credit Agreement to the contrary, on five
days' prior written notice to the Fronting Bank, the MTN Dealer,
the Agent and the Depositary, the Borrower may terminate any MTN
Distribution Agreement so long as at least one MTN Distribution
Agreement remains in effect. The Borrower may not amend,
supplement, modify or waive the provisions of any MTN Distribution
Agreement in any respect materially adverse to the Fronting Bank,
the Agent, the Banks or the Depositary without the prior written
authorization of the Fronting Bank, the Agent (acting for the
Banks) and the Depositary. The Borrower may enter into additional
MTN Distribution Agreements without further written authorization
so long as (i) each such additional MTN Distribution Agreement
shall be substantially in the form attached to this Facility
Agreement as Annex II, subject only to such amendments,
supplements and modifications permitted by this Section 5.08 and
(ii) such agreements are with MTN Dealers previously approved by
the Fronting Bank and the Agent in writing.
SECTION 5.09. No Third Party Beneficiaries. The benefits
of this Facility Agreement, the other Issuance Agreements and the
Credit Agreement are intended solely for the parties hereto and
thereto and nothing in this Facility Agreement is intended to give
any holder of LOC Debt or beneficiary of any LOC any right, remedy
or claim under this Agreement, the Issuance Agreements or the
Credit Agreement.
SECTION 5.10. Debt Without Recourse. All amounts payable
pursuant to the Credit Agreement, the Security Agreement, the Deed
of Trust and the Notes (as defined in the Credit Agreement) shall
be paid only from the income of and the proceeds from the Leathers
Facility and the Collateral. The Banks and the Fronting Bank agree
that they will look solely to the income of and the proceeds from
the Leathers Facility and the Collateral as provided in the Credit
Agreement, in the Security Agreement and in the Deed of Trust, and
none of Magma, Mission, Red Hill, San Felipe or any other partner
of the Borrower shall be personally liable to the Banks or the
Fronting Bank for any amounts payable under the Credit Agreement,
the Security Agreement, the Deed of Trust and the Notes (as defined
in the Credit Agreement) or, except for fraud, subject to any
liability under the Credit Agreement; provided that the foregoing
shall not relieve Magma, Mission, Red Hill, San Felipe or any other
partner of the Borrower from any obligation it may have to return
to the Borrower any amounts distributed to it in violation of the
Credit Agreement or the Limited Partnership Agreement or as
otherwise required by the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date and year first above
written.
LEATHERS, L.P., a limited
partnership organized under the
laws of the State of California
By: RED HILL GEOTHERMAL, INC.,
a Delaware corporation, a
general partner
By: /s/ Wallace Dieckmann
Name:
Title: Vice President
By: CONEJO ENERGY COMPANY,
a California corporation,
a general partner
By: /s/ Scott B.T. Sinclair
Name:
Title: Vice President
and Treasurer
THE FUJI BANK, LIMITED,
LOS ANGELES AGENCY,
as Fronting Bank
By: /s/ Kenichiro Tanaka
Name:
Title: Joint General
Manager
THE FUJI BANK, LIMITED,
LOS ANGELES AGENCY
By: /s/ Kenichiro Tanaka
Name:
Title: Joint General Manager
THE LONG-TERM CREDIT BANK
OF JAPAN, LTD.
By: /s/ Yutaka Hotta
Name:
Title: Deputy General Manager
THE SUMITOMO BANK, LIMITED
By: /s/ Toshiyuki Kashima
Name:
Title: Joint General Manager
UNION BANK OF SWITZERLAND,
LOS ANGELES BRANCH
By: /s/ Paul E. Barbian
Name:
Title: Vice President
By: /s/ Paul G. Naumann
Name:
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ George L. Brown
Name:
Title: Vice President
TOKYO LEASING (U.S.A.) INC.
By: /s/ Minoru Okada
Name:
Title: President
THE MITSUBISHI BANK, LIMITED,
NEW YORK BRANCH
By: /s/ Robert J. Munczinski
Name:
Title: Senior Vice President
and Chief Manager
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By: /s/ George L. Brown
Name:
Title: Vice President
Exhibit 10.95
This Agreement made and executed on this 6th day of September 1993
at Makati by and between:
1. PNOC-ENERGY DEVELOPMENT CORPORATION, hereinafter referred to as
PNOC-EDC, a wholly-owned subsidiary of the Philippine National Oil
Company, a corporation created and organized under
Presidential Decree No. 334, as amended, with principal office
address at Petron Building, 7901 Makati Avenue, Makati, Metro
Manila, Philippines, herein represented by its President Mr. MONICO
V. JACOB, who is duly authorized to represent it in this Agreement.
2. ORMAT INC., hereinafter referred to as the Operator, a
corporation organized and existing under the laws of the state of
Delaware, licensed to do business in the Republic of the
Philippines through its branch office at Suite 401, 4th Floor, Dona
Narcisa Building, 8751 Paseo de Roxas, Makati, Metro Manila,
Philippines represented herein by its Vice President, Mr. Jacob
Menachem, who is duly authorized to represent it in this
Agreement.
WITNESSETH THAT
WHEREAS, Republic Act No. 6957 dated July 9, 1990 (BOT Law)
authorized government infrastructure agencies, including PNOC-EDC,
to enter into contracts with private contractors for the financing,
construction, operation and maintenance of
infrastructure projects;
WHEREAS, NAPOCOR and PNOC-EDC have previously executed a
Memorandum of Understanding for the Development of Geothermal Power
Plant in PNOC-EDC Projects, including the geothermal
resources of the Greater Tongonan area of Leyte, comprising the
Upper and Lower Mahiao, Sambaloran, Malitbog and Mahanagdong
sectors, where PNOC-EDC holds an existing Geothermal Service
Contract;
WHEREAS, NAPOCOR intends to proceed with the installation of
electric power transmission links from Leyte to Cebu, Luzon and to
other areas of the Philippines;
WHEREAS, NAPOCOR and PNOC-EDC intend to execute a Power Purchase
Agreement for the purchase by NAPOCOR of electric power capacity
and electric energy produced by PNOC-EDC from the geothermal
resources of the Greater Tongonan area of Leyte;
WHEREAS, PNOC-EDC has invited several contractors to submit
proposals for the design, construction, operation and maintenance
of a geothermal power plant on a build-operate-transfer (BOT) basis
for the Upper Mahiao portion of the said Geothermal Service
Contract area, which power plant will convert PNOC-EDC's
geothermal energy into electricity for sale to NAPOCOR;
WHEREAS, The Operator has submitted a proposal, which PNOC-EDC has
accepted, to finance, design, construct, own and operate a
geothermal electricity generating plant utilizing the geothermal
resources of the Greater Tongonan area and with an installed
capacity of approximately one hundred twenty-five (125) MW,
installed on the Site, and to deliver electricity exclusively to
PNOC-EDC on such terms and conditions as set forth herein;
NOW, THEREFORE, for and in consideration of the foregoing
presents and the mutual covenants as hereinafter set forth, the
Operator and PNOC-EDC have agreed as follows:
ARTICLE 1 DEFINITION OF TERMS
1.1 DEFINITIONS
When used in this Agreement, the terms below shall have the
following meanings;
Accession Undertaking: The accession undertaking to be executed in
accordance with Subsection 18(b) and in the form of Annex H.
Agreement: This Agreement including Annexes, as may be amended
from time to time, complete with The Operator's Bid Forms and
accompanying data dated February 12, 1993 and the Bid Document.
Atmospheric Conditions: The atmospheric conditions specified in
the Bid Document as incorporated in the Interface Data attached
hereto as Annex I.
Authorities: The Government of the Republic of the Philippines
including all its political subdivisions, agencies and
instrumentalities.
Bid Document: The Leyte-Cebu Geothermal Project Bid
Documentation for 200 MW Leyte-Cebu Project, issued on December 15,
1992, prepared by PNOC-EDC.
Billing Period: The time interval from 10:00 AM on the twenty-
fifth (25th) day of the current month to 10:00 AM on the twenty-
fifth (25th) day of the following month where the Operator shall
read meters and accumulate data needed for the purpose of billing
NAPOCOR Power and Steamfield Power.
Brine Power Ratio: Is the ratio of gross power output of the brine
units to the total gross output of the Power Plant,
calculated from tests per Section 5.4.
Capacity Fee: The basic capacity payments per kilowatt (kW) per
month for electric power nominated by the Operator, consisting of
the Contract Capacity Rate for Capital Costs (CCR), the Contract
Capacity Rate for Fixed Operating Costs (OCR), and the Service Fee
Rate to reflect Return on Investments (SFR).
Commercial Operation Date: The first day of the Billing Period
following the Completion Date.
Commissioning Period: The period of three months prior to the
scheduled Completion Date.
Completion Date: The day upon which the Operator certifies to
PNOC-EDC that the Power Plant is capable of operating in
accordance with the Operating Parameters and has successfully
completed testing in accordance with Article 5, or the date it is
deemed completed in accordance with Section 4.9(b).
Contracted Capacity: Contracted Capacity means one hundred
eighteen point five (118.5) MW. Contracted Capacity contemplates
availability for the duration of the Cooperation Period, and
assumes continuous delivery and removal of Geothermal Fluids by
PNOC-EDC as specified in the Geothermal Fluid Specifications. Said
power shall be measured at (a) the interconnection point MP1 for
NAPOCOR Power and (b) the interconnection point MP2 for Steamfield
Power, each as indicated in Figure I-1 in Annex I.
Control: To establish the electrical output of the Power Plant
through dispatching procedures including shut-down and start-up.
Cooperation Period: The period of ten (10) years of commercial
operation of the Power Plant by the Operator, commencing from the
Commercial Operation Date unless earlier terminated in accordance
with this Agreement.
Correction Curves: The curves, set forth in Annex F, used to
adjust the Power Plant performance for variation in the
Geothermal Fluid Specifications and Atmospheric Conditions.
Effectivity Date: The date upon which PNOC-EDC and the Operator
agree that all of the conditions precedent contained in Article 25
have been duly fulfilled or waived to the satisfaction of the
relevant Party.
Elective Modification: A modification to the Operator's design of
the Power Plant requested by PNOC-EDC that is not solely for the
purpose of correcting design errors made by the Operator in its
design of the Power Plant.
Emergency: A condition or situation which in NAPOCOR's sole
judgement affects NAPOCOR's ability to maintain safe, adequate and
continuous electrical service.
Energy Delivered: NAPOCOR Power plus Steamfield Power, expressed
in kilowatt hours (kWh).
Energy Fee: The fees payable pursuant to Subsection 8.4.2.
Force Majeure: Each of the events set forth in Section 13.1.
Geothermal Fluid: The geothermal steam and brine to be supplied to
the Operator by PNOC-EDC and the condensed steam and cooled brine
to be received from the Operator by PNOC-EDC.
Geothermal Fluid Prices: The prices for steam and other
geothermal fluids set forth in the Geothermal Fluid
Specifications.
Geothermal Fluid Specifications: The design point specifications
for and quantities of Geothermal Fluid set forth in Annex I
including, without limitation, PNOC-EDC's undertakings to remove
spent geothermal fluid from the Power Plant for reinjection or
other proper disposal.
Guaranteed Net Plant Brine Rate: Is the Net Plant Brine Rate,
obtainable using brine supplied in accordance with the Geothermal
Fluid Specifications and at the design ambient temperature as
stated in Annex I and guaranteed by the Operator for the
Cooperation Period. It is 123.0 kg/kWh.
Guaranteed Net Plant Steam Rate: Is the Net Plant Steam Rate,
obtainable using steam supplied in accordance with the Geothermal
Fluid Specifications and at the design ambient temperature as
stated in Annex I and guaranteed by the Operator for the
Cooperation Period. It is 8.5 kg/kWh.
Interconnection Failure: Any event, circumstances or state of
facts located beyond the Power Plant side of the Points of
Interconnection which curtails or eliminates the ability of NAPOCOR
or PNOC-EDC to request and utilize power from the Power Plant
including, without limitation, problems in interconnection or
transmission equipment located beyond the Points of
Interconnection described in Annex I or any dispute which might
arise between PNOC-EDC and NAPOCOR (under the Power Purchase
Agreement or otherwise) which did not arise from any default of the
Operator under this Agreement.
Material Shortfall: A variation in the quantity or other
property of the Geothermal Fluid which is such as to materially
prevent the Operator from meeting its obligations under this
Agreement.
NAPOCOR: The National Power Corporation.
NAPOCOR Electric System Integrity: Operation of NAPOCOR's
electric system in a manner which minimizes risks of injury to
persons and/or property and enables NAPOCOR to provide adequate and
reliable electric service to its customers.
NAPOCOR Power: An amount of energy (in kWh) delivered to NAPOCOR
on behalf of PNOC-EDC measured at the high voltage side of the
transformer (MP1) at the relevant Point of Interconnection as
indicated in Figure I-1 in Annex I.
Net Plant Brine Rate: Is the ratio between the brine flow into the
Power Plant over a given period of time, expressed in
kilograms (kg), and that portion of NAPOCOR Power and Steamfield
Power, expressed in kilowatt hours (kWh), derived from that brine
flow, over the same period, the ratio expressed in kilograms per
kilowatt hour (kg/kWh). The portion of NAPOCOR Power and
Steamfield Power derived from the brine flow shall be that
portion which is the same ratio as the Brine Power Ratio. Any
measurement of Net Plant Brine Rate shall be corrected for
variations in ambient temperature and brine quantity and other
properties from the design ambient temperature as specified in the
Interface Data in Annex I and the Geothermal Fluid
Specifications using the Correction Curves of Annex F. During any
period in which actual geothermal brine as delivered and the volume
of spent fluids removed by PNOC-EDC for disposal are subject to a
Material Shortfall the Operator shall be excused from any guarantee
of actual Net Plant Brine Rate.
Net Plant Steam Rate: Is the ratio between the steam flow into the
Power Plant over a given period of time, expressed in
kilograms (kg), and that portion of NAPOCOR Power and Steamfield
Power, expressed in kilowatt hours (kWh), derived from that steam
flow, over the same period, the ratio expressed in kilograms per
kilowatt hour (kg/kWh). The portion of NAPOCOR Power and
Steamfield Power derived from the steam flow shall be that
portion which is the same ratio as the Steam Power Ratio. Any
measurement of Net Plant Steam Rate shall be corrected for
variations in ambient temperature and steam quantity and other
properties from the design ambient temperature as specified in the
Interface Data in Annex I and the Geothermal Fluid
Specifications using the Correction Curves of Annex F. During any
period in which actual geothermal steam as delivered and the volume
of spent fluids removed by PNOC-EDC for disposal are subject to a
Material Shortfall the Operator shall be excused from any guarantee
of actual Net Plant Steam Rate.
NEWCO: NEWCO means a company organized under the laws of the
Republic of the Philippines pursuant to the Shareholder's
agreement in Annex L, which will be a party to this Agreement by
and under the terms of the Accession Undertaking.
Nominated Capacity: The capacity that the Operator guarantees in
accordance with Article 6.13 for each given year of the
Cooperation Period, as NAPOCOR Power and Steamfield Power under
Geothermal Fluid Specifications, terms and conditions as defined
for Contracted Capacity.
Operating Parameters: The parameters set forth in Annex B4.
Operating Representative: Individual(s) appointed by each Party
and by NAPOCOR for the purpose of securing effective cooperation
and interchange of information between the Parties and NAPOCOR in
connection with administration and technical matters related to
this Agreement and the Power Purchase Agreement.
Outage: The inability of the Operator to meet a capacity up to the
Nominated Capacity when requested by NAPOCOR, provided, that no
Outage shall occur if:
(a) the Operator makes available to NAPOCOR capacity adjusted per
the Correction Curves at least equal to current Nominated Capacity
less Steamfield Power; or
(b) geothermal fluids delivered to the Site or the volume of spent
geothermal fluids removed by PNOC-EDC from the Site are subject to
a Material Shortfall; or
(c) an Interconnection Failure has occurred; or
(d) the inability of the Operator is due to Force Majeure; or
(e) the inability of the Operator is due to Scheduled
Maintenance.
Outage Hour: Any hour in which, due to Outage, the Operator
failed, for a continuous period of thirty (30) minutes, to
deliver power adjusted per the Correction Curves at a level of at
least eight five percent (85%) of the amount of kilowatts (kW)
requested by NAPOCOR. For the purpose of defining Outage Hour, if
NAPOCOR requests dispatch of capacity in excess of the amount
defined in Subsection (a) of the definition of Outage, failure to
deliver such excess amount shall not constitute an Outage Hour.
For purpose of calculating the total Outage Hours (OH) for any
given period, partial outages of the Power Plant shall be
computed as follows:
(a) For any hour during which the total delivered power adjusted
per the Correction Curves is less than eighty-five percent (85%) of
the Nominated Capacity (NC), but not less than seventy percent
(70%) of NC, 0.25 of one hour will be cumulated as outage time for
billing purposes.
(b) For any hour during which the total delivered power adjusted
per the Correction Curves is less than seventy percent (70%) of the
Nominated Capacity (NC), but not less than forty-five percent
(445%) of NC, 0.50 of one hour will be cumulated as outage time for
billing purposes.
(c) For any hour during which the total delivered power adjusted
per the Correction Curves is less than forty five percent (45%) of
the Nominated Capacity (NC), but not less than twenty percent (20%)
of NC, 0.75 of one hour will be cumulated as outage time for
billing purposes.
(d) For any hour during which the total delivered power adjusted
per the Correction Curves is less than twenty percent (20%) of the
Nominated Capacity (NC), one hour will be cumulated as outage time
for billing purposes.
Parties: The contracting parties in this Agreement, referring to
the Operator and PNOC-EDC.
Point of Interconnection: The point at the interconnection
facilities where the transfer and metering of NAPOCOR Power and
Steamfield Power takes place as indicated in Figure I1 of Annex I.
Power Plant: The Power Plant means the Operator's generating
equipment located at the Site including all of the step-up
transformers, switching facilities and interconnecting
transmission lines, and all protective and other associated
equipment and improvements as described in Annex B and Annex I,
necessary to produce electrical energy at the Point of
Interconnection excluding associated land, land rights and
interests in land.
Power Purchase Agreement: The agreement to be entered into between
NAPOCOr and PNOC-EDC for the sale by PNOC-EDC of electric power
energy from the Project to NAPOCOR.
Project: The geothermal wells, geothermal fluid collection and
disposal system, the Power Plant, facilities, and metering
equipment required to permit generation of electric power by the
Operator in parallel with NAPOCOR's electric system.
Protective Apparatus: The equipment and apparatus installed by the
Operator or PNOC-EDC or NAPOCOR pursuant to Article 6 hereof.
Scheduled Maintenance: The maintenance referred to in Section 6.14
and approved in accordance with Sections 6.15 and 6.16.
Site: The land located at Upper Mahiao to be provided by PNOC-EDC
for the construction of the Power Plant including all areas on
which component generator units are located.
Steamfield Power: An amount of energy (in kWh) delivered to PNOC-
EDC and measured at the relevant Points of Interconnection as
indicated in Figure I1 of Annex I for use in operating
geothermal wells, pipelines, fluid recovery and otherwise in
operating the steamfield. PNOC-EDC shall use its best efforts to
nominate and abide by a maximum capacity, but shall in any event be
entitled to all power reasonably required within the technical
limits of the interconnections described in Annex I.
Steam Power Ratio: Is the ratio of gross power output of the steam
units to the total gross output of the Power Plant,
calculated from tests per Section 5.4.
Termination Date: The date upon which this Agreement is
terminated pursuant to Article 9 or 14.
Transfer Date: The day following the last day of the Cooperation
Period provided, however, that in case of termination of this
Agreement pursuant to Article 9, the Transfer Date shall be the day
following full payment of the Buyout Price as defined in Section
9.2
1.2 INTERPRETATION
In this Agreement:
(a) any reference to an "Article", a "Section" or "Subsection", an
"Annex: or a "Clause" is a reference to an article, section or
subsection hereof or an annex hereto or a clause in an annex
hereto;
(b) the headings and sub-headings appear as a matter of
convenience and shall not affect the construction of this
Agreement;
(c) the singular includes the plural and vice versa, and words
importing any gender include the other genders;
(d) a reference to a person includes a reference to a body
corporate and to an unincorporated body of persons;
(e) references to any party include the successors and any
permitted assigns of that party;
1.3 ABBREVIATIONS
In this Agreement:
(a) "$" and "Dollar(s)" denote lawful currency of the United
States of America;
(b) "Ps" and "peso(s)" denote lawful currency of the
Philippines;
(c) "MW" denotes a megawatt;
(d) "MWh" denotes a megawatt hour;
(e) "kW" denotes a kilowatt;
(f) "GWh" denotes a gigawatt hour;
(g) "kWh" denotes a kilowatt hour;
(h) "kV" denotes a kilovolt;
(i) "DC" denotes direct current; and
(j) "AC" denotes alternating current.
ARTICLE 2 PROJECT
2.1 POWER FACILITY
The Operator shall be responsible for the finance, design,
supply, construction, testing, operation and maintenance of
approximately 125 MW of geothermal Power Plant, to be installed at
the Site, whose net generation shall be delivered to NAPOCOR on
behalf of PNOC-EDC and to PNOC-EDC for steamfield use during the
Cooperation Period. The Power Plant shall be located on the Site
which shall be made available by PNOC-EDC at no cost to the
Operator and subject to the provisions of Subsection 4.2.1.
2.2 ENERGY CONVERSION
In accordance with the specifications herein provided, PNOC-EDC
shall supply and deliver all Geothermal Fluid required by the
Operator necessary for the Power Plant to generate NAPOCOR Power
and Steamfield Power, and shall sell all electricity generated by
the Power Plant to NAPOCOR less that required for auxiliary
purposes by the Operator and PNOC-EDC for Steamfield Power. PNOC-
EDC shall pay to the Operator Capacity Fee and Energy Fee as
provided in this Agreement.
2.3 OWNERSHIP
From the Effectivity Date until the Transfer Date, the Operator
shall own the Power Plant and all the fixtures, fittings,
machinery and equipment on the Site and used in connection with the
Power Plant which have been supplied by it or at its cost, and
operate and manage the Power Plant for the purpose of
converting Geothermal Fluid of PNOC-EDC into electricity.
On the Transfer Date, ownership, management and operation of the
Power Plant shall be transferred in accordance with the terms and
conditions of Article 9 or 12, as the case may be, by the
Operator to PNOC-EDC.
Ownership of the Site shall remain with PNOC-EDC.
2.4 COMMENCEMENT 7 PROSECUTION OF THE PROJECT
2.4.1 COMMENCEMENT OF THE PROJECT
The Operator shall commence work in accordance with Subsection
4.1.1.
2.4.2 PROSECUTION OF THE PROJECT
The Operator shall prosecute the Project, or parts thereof, with
such resources, construction equipment and temporary facilities as,
in the reasonable judgment of Operator, are sufficient to complete
the Project in accordance with Annex B. The capacity of the
construction equipment and temporary facilities, sequence of
operations, method of operations, and resources employed shall be
such as to insure the completion of the Project within the
stipulated time.
ARTICLE 3 GENERAL RESPONSIBILITIES OF THE OPERATOR
3.1 PERFORMANCE BOND
To guarantee the faithful performance by the Operator of its
obligation to completely construct the Power Plant in accordance
with the terms and conditions of this Agreement, the Operator shall
post a construction performance bond (the "Construction Performance
Bond") in the form of a surety bond or standby letter of credit and
in a sum equivalent to One Hundred Dollars (US$100) per kilowatt
(kW) of Contracted Capacity or its equivalent in Philippine Pesos
or other currencies. The Construction
Performance Bond shall be delivered within ten (10) calendar days
from Effectivity Date. Prior thereto, the Operator shall ensure
that the bid bond required under the Bid Documents (the "Bid Bond")
shall be extended until and shall be released only on the date that
the Construction Performance Bond is posted by the Operator,
provided that, in the event that the Effectivity Date does not
occur on or before April 30, 1994, the Parties shall discuss and
agree on any further extension of the Bid Bond. As more fully
described in Subsection 14.2.1 PNOC-EDC shall have recourse to the
Construction Performance Bond to satisfy the final judgment in an
arbitral proceeding in accordance with Article 20.
The Construction Performance Bond shall be valid and in effect
until six (6) months after the Completion Date. Prior to the
Commercial Operation Date, the Operator shall convert the
Construction Performance Bond into an operation performance bond
(the "Operation Performance Bond") which may be in the same form as
the former and in the amount equivalent to Sixty Six US
Dollars (US$66) per kilowatt (kW) of Contracted Capacity, or its
equivalent in Philippine Pesos or in other currencies, to cover the
faithful performance of its obligation during the Cooperation
Period. As more fully described in Subsection 14.2.2, PNOC-EDC
shall have recourse to the Operation Performance bond to satisfy
the final judgment in an arbitral proceeding in accordance with
Article 20.
If any surety bond furnished in connection with the Agreement
becomes unacceptable to PNOC-EDC (in its reasonable discretion), or
if any such surety company fails to furnish reports as to its
financial condition from time to time as requested by PNOC-EDC, the
Operator shall promptly furnish an additional security or a
replacement security as may be required to protect the interests of
PNOC-EDC in the prosecution of the Project.
3.2 RESPONSIBILITY FOR DAMAGE & LOSSES
(a) The Operator shall be responsible for all damages to any
property belonging to PNOC-EDC, NAPOCOR, private parties or the
Authorities, to the extent that such damages arise from the
negligent acts or omissions of the Operator, and all deteriorations
and/or damages to permanent work due to accident or exposure during
and after construction activities and operations, shall be restored
by the Operator without any expense to PNOC-EDC. The Operator
shall also be held responsible for any damage done to adjoining
property, except to the extent such damages arise for reasons not
attributable to the Operator.
(b) Any and all losses and damages to the Project, due to any
cause or causes, whatsoever, that are the responsibility of the
Operator during the prosecution of the Agreement shall not
relieve the Operator from any of its obligations under the
Agreement.
(c) Unless specifically provided for in this Agreement, PNOC-EDC
shall not be responsible for any damage due to any increased
difficulty in the performance of the obligations under the
Agreement on account of any hindrance or delay due to any cause
whatsoever in the progress of the Project implementation. No
adjustment in the prices as set forth in Article 8 shall be made on
account of any such damage, increased difficulty, hindrance or
delay, but said hindrance or delay may entitle the Operator to an
extension of time for completing the construction of the Power
Plant as herein provided.
3.3 ENVIRONMENT
(a) The Operator shall keep the Site in a sanitary condition and
in compliance with the environmental requirements and mitigation
measures specified in the Environmental Compliance Certificate and
in accordance with the environmental laws rules and regulations
(including official interpretations thereof) of the Philippines in
effect at the date of this Agreement. The Operator shall comply
with any changes in such laws and rules and with any new laws,
rules and regulations (and official interpretations thereof),
provided that if such compliance would:
(i) result in the Power Plant being unable to operate at the
Guaranteed Net Plant Steam Rate and Guaranteed Net Brine Rate, in
accordance with the Operating Parameters, or otherwise in
accordance with the specifications set forth in this Agreement; or
(ii) result in the interest of the Operator in the Power Plant
and/or the Operator's expectation of its economic return (net of
tax or other imposition) on its investment being materially reduced
or otherwise adversely affected;
then the Parties shall meet and endeavor to agree on amendments to
this Agreement and if after sixty (60) days no such agreement has
been reached, then the provisions of Article 9 shall apply.
(b) If it is necessary for the Operator, in the prosecution of the
Project, to interrupt or obstruct the natural flow of rivers or
streams, the drainage of the surface, or the flow of artificial
drains, the Operator shall provide adequate measures to prevent
damage to either public or private properties. The Operator shall
be liable for all damages that may occur except to the extent that
such damages arise for reasons not attributable to the Operator.
(c) Subject to Section 3.3(a), the Operator shall assume
responsibility for any costs and liabilities arising from any
adverse environmental damage or health impacts that may be caused
by the Operator's negligence in constructing and operating the
Power Plant.
3.4 ORGANISATION
The Operator shall maintain at the Site an efficient and capable
organisation with adequate capacity and numbers of construction,
operating and maintenance personnel, equipment and facilities to
satisfactorily execute the Project in a safe, efficient,
environmentally sound and professional manner at the rate of
progress specified in the outline construction schedule in Annex G.
The Operator shall assign at the Site English-speaking personnel.
Any interpreters required shall be provided by the Operator at its
expense.
The Operator must have in its employ one or more engineer(s)
appropriately licensed to practice in the Philippines who shall
certify to the Project's construction and operation.
ARTICLE 4 CONSTRUCTION OF THE FACILITY
4.1 TIMING
4.1.1 PROJECT MILESTONE DATES
The Operator shall in good faith use all reasonable efforts to
construct the Project in accordance with the following schedule:
Activity Date
Ordering of long lead items the later of:
(turbo generators) (i) July 1, 1994; or
(ii) 120 days after
the Effectivity Date
Start of Commissioning Period April 1, 1996
Completion Date July 1, 1996
Commercial Operation Date July 25, 1996
The date of July 1, 1994 as the deadline for ordering the long lead
items (Long Lead Items Date) is the bench mark for the Operator to
achieve the Completion Date and the Commercial Operation Date on
schedule as provided in this Subsection 4.1.1. In the event that
120 days after Effectivity Date will occur later than the Long Lead
Items Date, the Completion Date and the Commercial Operation Date
shall be extended day for day by the delay in the Long Lead Items
Date.
4.1.2 TRANSMISSION LINE INTERCONNECTION & AVAILABILITY OF
GEOTHERMAL FLUID
(a) PNOC-EDC shall use good faith efforts to ensure that, on or
before April 1, 1996, a 230 kV transmission line, including all
interconnection facilities up to and including the Point of
Interconnection on the side of the transmission line (collectively,
the "Transmission Line"), is installed and is capable of being
connected to the Power Plant and of receiving all power generated
by the Power Plant.
(b) PNOC-EDC shall likewise ensure that, on or before April 1,
1996, Geothermal Fluid complying with the Geothermal Fluid
Specifications is made available to the Operator.
(c) The Operator shall construct and maintain all interconnection
facilities on the Power Plant's side of the Point of
Interconnection.
4.2 SITE PROVISION
(a) PNOC-EDC, at no cost to the Operator, shall make the Site as
described in Annex A available to the Operator for the purpose of
building and operating the Power Plant, and the Operator shall have
the right to possess, use and enjoy the Site, from the Effectivity
Date until the Transfer Date. Ownership or administration of the
Site shall remain with PNOC-EDC. PNOC-EDC shall be responsible
for, and hold the Operator harmless from, all claims by third
parties relating to the land provided for the Site, including
without limitation, claims under colour of ownership of any
interest in such land, real estate and other taxes or claims that
might give rise to any lien on the land or any improvements to it
(other than the Power Plant). If PNOC-EDC fails to duly satisfy
such claims on a timely basis, the Operator may do so (at his sole
discretion) and PNOC-EDC shall promptly reimburse such expenses.
(b) The Operator shall not obstruct any existing road or drainage
or disturb existing structures and facilities on the land so
furnished for construction purposes unless and until given written
permission by appropriate Authorities. Withholding or delay of
such permission shall constitute Force Majeure.
(c) The acquisition of all other lands, easements, and rights-of-
way which the Operator reasonably believes necessary for the
construction, operation and maintenance of the Power Plant,
including areas for the disposal of spoils, shall be negotiated
and/or undertaken by the Operator and all costs incident thereto
shall be for the account of PNOC-EDC.
4.3 INGRESS & EGRESS RIGHTS OF OPERATOR
PNOC-EDC shall ensure that all necessary access to and from the
Site is made available to the Operator, its employees,
contractors, sub-contractors and advisers.
4.4 EQUIPMENT IMPORTATION
The Operator shall be responsible for the importation and
transportation of all equipment for the Project to the Site
including duties, taxes and fees in connection therewith.]
It is the responsibility of the Operator to secure from the
Authorities the necessary permits, licenses, and other documents
for the importation of the Operator owned construction or
maintenance equipment that it may decide to bring into the
country for use in connection with the Agreement. PNOC-EDC shall
assist the Operator in obtaining such permits, licenses and other
documents on a best effort basis.
Any delays caused by meeting customs procedures for material
equipment and supplies or in obtaining necessary permits, licenses
and other documents to the extent not attributable to the Operator
and to the extent that they affect the Operator's ability to
undertake its performance under this Agreement shall extend the
project milestone dates set forth in Subsection 4.1.1 equivalent to
the period of the delay in obtaining such permits, licenses and
other documents. The Operator or PNOC-EDC shall promptly notify
the other Party of each such delay, and the Parties shall cooperate
to promptly satisfy the relevant Authority and remove the cause of
the delay. Any delay in excess of sixty (60) days after
notification by the Operator to PNOC-EDC shall cause Article 9 to
apply. The Operator shall not be subject to delay penalties as a
result of such delay.
The Capacity Fees do not include import taxes and duties on the
importation of Power Plant equipment and spare parts during the
period of construction and the Cooperation Period and are based on
the assumption that (i) incentives will be granted to the Operator
exempting it from such taxes and duties and (ii) the Operator will
not bear the cost of such import taxes and duties. In the event
that there is an increase in the cost of importing Power Plant
equipment and spare parts by reason of the aforesaid taxes and
duties, either (a) PNOC-EDC shall promptly reimburse the Operator
for all such increased costs, or (b) the Parties shall negotiate in
good faith with a view to make the appropriate adjustments in the
Capacity Fees. If no agreement can be reached after ninety (90)
days, provision (a) herein shall prevail.
4.5 PERMITS
Following the Effectivity Date, the Operator, at no cost to PNOC-
EDC, shall be responsible for security from the Authorities all
requisite authorizations, licenses and permits not previously
provided under the provisions of Article 25 for the construction
and operation of the Power Plant, except the Environmental
Compliance Certificate, which shall be obtained by PNOC-EDC.
Any delays, to the extent not attributable to the Operator and to
the extent that they affect the Operator's ability to undertake its
performance under this Agreement, caused in obtaining requisite
authorizations, licenses and permits shall extend the Completion
Date and other benchmark dates day for day. The Operator for PNOC-
EDC shall promptly notify the other Party of each such delay, and
the Parties shall cooperate to promptly satisfy the relevant
Authority and remove the cause of the delay. Any delay in excess
of sixty (60) days after notification shall cause Article 9 to
apply. The Operator shall not be subject to delay penalties as a
result of such a delay.
4.6 DRAWINGS, DOCUMENTS, DATA & INSTRUCTIONS
The Operator shall comply with the following on matters of drawings
and other documentary information and PNOC-EDC rights thereto:
4.6.1 SUBMISSION OF DRAWINGS AND DATA
The Operator shall submit to PNOC-EDC copies of all drawings,
plans, calculations, operating and maintenance instructions and, in
general, copies of all material documents related to the Power
Plant for reference and information. Prior to the start of
construction, within thirty (30) working days following receipt
thereof, PNOC-EDC shall describe to the Operator in writing any
flaws perceived by PNOC-EDC in the design. Failure by PNOC-EDC to
describe any flaws in such designs within such thirty (30) day
period shall be deemed to be a waiver of PNOC-EDC's right to
describe such flaws.
The Operator shall also advise PNOC-EDC of the names of potential
suppliers of material components or services who have been
shortlisted by the Operator. Within thirty (30) working days
following receipt of such advice, PNOC-EDC shall advise the
Operator of any such potential suppliers to which PNOC-EDC objects,
together with the reasons for objection and may request the
Operator to exclude such suppliers from the shortlist. The
Operator shall comply with such request by PNOC-EDC as it shall
deem reasonable.
Following the start of construction by the Operator on the Site,
the above mentioned thirty (30) working day periods shall be
reduced to fifteen (15) working days.
4.6.2 MODIFICATION RIGHTS
During the same thirty (30 or fifteen (15) working day period
following the receipt of the documents or list of such suppliers
under Subsection 4.6.1, PNOC-EDC shall have the right to require
modifications to the design as it deems necessary for proper and
safe operation of the Power Plant as it affects the operation of
the PNOC-EDC geothermal fluid collection and disposal system and
the NAPOCOR power system. In the event PNOC-EDC requests any
Elective Modifications, then the Parties shall negotiate in good
faith (i) to make any equitable adjustment to the Contract
Capacity Price or otherwise make appropriate compensation and (ii)
adjust the dates set forth in Subsection 4.1.1 to reflect any
delays in designing such Elective Modifications and any additional
time required by the Operator to complete such Elective
Modifications. In the event the Parties are unable to reach
agreement on such adjustments within sixty (60) days following
PNOC-EDC's request, PNOC-EDC may withdraw such request.
Thereafter, if such request is not withdrawn, either Party may
terminate this Agreement by giving written notice of termination to
the other Party and the provisions of Article 9 shall apply;
provided, however, that if the Operator gives such a written notice
of termination to PNOC-EDC, PNOC-EDC shall have five (5) working
days following delivery of such notice of termination to again
withdraw its request. If, following the process as described in
this Section 4.6.2, in the Operator's reasonable judgment a delay
has been caused to its construction schedule, the dates set forth
in Section 4.1.1 shall be extended and adjusted proportionally to
such a delay.
4.6.3 FUTURE MODIFICATION
Future changes in the design of the Power Plant, including changes
subsequent to the Commercial Operation Date, shall be subject to
the review and approval of PNOC-EDC and such approval shall not be
unreasonably withheld.
4.6.4 CONSTRUCTION SCHEDULE
The Operator shall submit to PNOC-EDC a detailed construction
schedule of the Power Plant within three (3) months following the
Effectivity Date. This schedule shall contain, in particular,
dates for the submission of all drawings, documents and data,
acceptance thereof, witnessing of tests and the overall procurement
schedule. PNOC-EDC shall have the right to review and approve,
which approval shall not be unreasonably withheld, the construction
schedule of the Power Plant.
4.6.5 MONITORING RIGHTS
PNOC-EDC shall be entitled at its own cost to monitor the progress
and quality of the construction and installation work. For this
purpose, the Operator shall:
(a) submit to PNOC-EDC a monthly progress report in such detail
and format as may be reasonably requested by PNOC-EDC;
(b) ensure that PNOC-EDC and any experts appointed by PNOC-EDC in
connection with the Project are afforded reasonable access to the
Site at times to be agreed with PNOC-EDC provided that such access
does not materially interfere with the works or expose any person
on the site to any danger; and
(c) make available for inspection at the Site copies of all plans
and designs.
4.6.6 DRAWINGS AND DOCUMENTS TO BE PROVIDED
The Operator shall furnish PNOC-EDC drawings and technical
details in accordance with the construction schedule as submitted
and approved in accordance with Subsection 4.6.4, such as, but not
limited to, the following:
(a) Arrangement plans for the general layout of machinery and
equipment.
(b) General and detailed drawings and specifications for
electro-mechanical works.
(c) General and detailed drawings and specifications for civil and
architectural works.
(d) Test procedures.
(e) Operation and maintenance manuals.
The Operator shall, within six months of the scheduled Completion
Date, supply PNOC-EDC with three (3) copies of all "as built"
plans, drawings, design calculations and quality assurance records,
one of which copies shall be reproducible.
4.7 DISCLAIMER
The following disclaimer shall be recognized in this Agreement:
(a) Any engineering review by PNOC-EDC of the Power Plant is
solely for its information. By making such review, PNOC-EDC makes
no representation as to the engineering soundness of the Power
Plant.
(b) The Operator shall in no way represent to any third party the
engineering soundness of the Power Plant as a result of the review
made by PNOC-EDC.
(c) The Operator is solely responsible for the economic and
technical feasibility, operational capability and reliability of
the Power Plant.
(d) PNOC-EDC shall not be liable to the Operator for, and the
Operator shall defend, hold harmless, and indemnify PNOC-EDC from,
any claim, cost, loss, damage, or liability arising from any
contrary representation by the Operator concerning the effect of
PNOC-EDC's engineering review of the Power Plant.
4.8 RESPONSIBILITY FOR UTILITIES
The Operator and PNOC-EDC shall each be responsible for the
provision of needed utilities, such as electric service, water,
communications and the like, necessary during the construction and
operation of the Power Plant according to the requirements of Annex
B2.3 and Annex B3 respectively.
4.9 DELAYS
(a) Should the Operator be obstructed or delayed at any time in
the progress of the construction work due to any of the following
causes:
(i) Failure of the Operator to obtain the necessary access to the
Site or failure of PNOC-EDC to deliver and remove geothermal fluid
meeting the Geothermal Fluid Specifications; or the failure of
PNOC-EDC to obtain the Environmental Compliance Certificate; or the
failure of the Operator, for reasons not attributable to the
Operator, to obtain the Authorization to Construct and Permit to
Operate; or
(ii) Any delay described in Sections 4.4 and 4.5, or any delay
caused by a PNOC-EDC directed modification in accordance with
Subsection 4.6.2; or
(iii) Delays due to Force Majeure conditions;
the Operator shall promptly notify PNOC-EDC of such delay,
including the details and supporting documents reasonably
calculated to describe the problem, steps taken to resolve it and
any proposed cooperative solution. Any delay under the terms of
this Section 4.9 shall extend day for day, unless otherwise agreed
between the Parties, the scheduled Completion Date and all other
related target dates.
(b) Notwithstanding any other term or provision of this
Agreement, if the Operator is unable to commence testing of the
Power Plant (on a date nominated by the Operator) as a result of:
(i) an Interconnection Failure; or
(ii) PNOC-EDC's failure to deliver and remove geothermal fluids as
specified in the Geothermal Fluid Specifications; or
(iii) the Operator's failure to receive all permits, licenses,
other governmental approvals and utilities required for operation
of the Power Plant, notwithstanding its reasonable efforts to
obtain the same, and assuming the Operator has complied with the
scope of work set forth in Annex B; or
(iv) PNOC-EDC or NAPOCOR's failure to provide any personnel or
resource necessary to witness and approve such testing;
then, in any such events, the Completion Date shall be deemed to
have occurred and PNOC-EDC shall be obligated to commence payments
of the Capacity Fee and the Energy Fee to the Operator on and from
the Completion Date. The capacity for purposes of calculating the
Capacity Fee payable under this Subsection shall be deemed to be
delivery of Nominated Capacity equal to the Contracted Capacity.
In the event that after Capacity Fee payments have commenced
pursuant to this Subsection and no event described in sub
paragraphs (i), (ii), (iii), or (iv) above shall be continuing, the
Operator is subsequently unable to pass all of the Power Plant's
performance tests as set forth herein, the Operator will be
obligated to refund or credit against future capacity made
available and actually delivered to PNOC-EDC that amount of
Capacity Fee actually received by the Operator prior to and during
such tests which exceed the amount of Capacity Fee which the
Operator would have been paid at the lower capacity rating actually
demonstrated in testing the Power Plant.
4.10 PENALTY DUE TO DELAYS
The Operator shall pay PNOC-EDC an amount as defined in Annex C for
any delay in the Commercial Operation Date of the Power Plant
except as provided in Section 4.9, provided, however, that in no
case shall the aggregate amount of the penalty for delay exceed
$11,250,000.00. Additionally, in the event that the Commercial
Operation Date does not occur within one hundred twenty (120)
calendar days after the Commercial Operation Date as specified in
Subsection 4.1.1 (including any extension thereof), the balance of
the Construction Performance Bond shall be forfeited in favour of
PNOC-EDC.
4.11 LIGHTS & BARRIERS
During construction, the Operator shall put up and maintain at the
Site such danger lights and barriers as shall effectively prevent
any accident in consequence of the Project. If work is done at
night, the Operator shall maintain from sunset to sunrise such
adequate lighting on or about the Power Plant and on the work area
as deemed necessary for the safety of the construction crew and for
the proper observance and inspection of the
construction and erection activities.
ARTICLE 5 TESTING OF THE FACILITY
5.1 TESTING PROCEDURES
The Parties shall agree on the procedures for testing of the Power
Plant as outlined in Annex D. Such procedures shall be followed by
the Operator.
5.2 TEST SCHEDULES
The Operator and PNOC-EDC shall agree prior to the Effectivity Date
on test schedules for the Power Plant. The schedules shall take
into consideration the operational requirements of PNOC-EDC and
NAPOCOR.
5.3 NOTICE OF TESTS
The Operator shall notify PNOC-EDC at least fifteen (15) calendar
days prior to carrying out any tests on the Power Plant and prior
to:
(a) the initial parallel operation of each of the Operator's
generating units; and,
(b) all testing of the Operator's Protective Apparatus.
PNOC-EDC shall have the right to have a representative present at
all tests. NAPOCOR shall have the right to have a representative
present at all tests of Protective Apparatus.
5.4 TESTS BEFORE COMPLETION
PNOC-EDC reserves the right to witness equipment tests at the
Operator's or other sub-contractor's or equipment supplier's
premises during the course of this Agreement.
The following provisions shall apply in testing the Power Plant
prior to completion:
(a) All costs, excluding Geothermal Fluid, incurred during the
testing of the Power Plant shall be borne by the Operator.
Electricity generated prior to the Completion Date shall be
delivered to NAPOCOR on behalf of PNOC-EDC and paid for by PNOC-EDC
at fifty percent (50%) of the rate actually received by PNOC-EDC
from NAPOCOR for this energy.
(b) The representatives of PNOC-EDC shall be present during any
test activity done by the Operator on the Power Plant. Tests
conducted without reasonable prior notice to PNOC-EDC shall not be
valid for the purposes of this Agreement. Upon completion of any
test, the Operator and PNOC-EDC shall jointly issue a certificate
that testing has been done on the Power Plant and that agreed
testing procedures shown in Annex D had been followed. No later
than two (2) days after the testing, the Operator shall notify
PNOC-EDC of the Nominated Capacity of the Power Plant for the first
year of operation.
(c) The Operator shall be entitled to repeat any test, including
those tests to establish the Completion Date.
(d) The Operator shall give PNOC-EDC written notice at least sixty
(60) but not more than ninety (90) days before it anticipates
conducting the tests to establish the Completion Date. When it
determines the actual date, it shall give PNOC-EDC at least fifteen
(15) days prior written notice thereof. If PNOC-EDC is unable to
provide a representative to witness the tests, the Operator shall
offer to repeat the tests on a date selected by PNOC-EDC at least
five (5) but no more than ten (10) days following the first
completion tests.
5.5 TESTS DURING COOPERATION PERIOD
The Net Plant Steam Rate, the Net Plant Brine Rate and net
capacity shall be tested every year in the presence of PNOC-EDC
personnel following agreed procedures as per Annex D. This test
shall be performed approximately six (6) months after completion of
the annual maintenance on each individual generating unit of the
Power Plant and shall be a reference for the Nominated
Capacity for the following year as defined by the Operator under
section 6.13. The Operator shall be entitled to repeat any of the
aforesaid tests.
ARTICLE 6 OPERATION OF THE FACILITY
6.1 COMPLETION DATE
(a) The Operator has undertaken to achieve the Completion Date on
or before July 1, 1996 subject to Subsection 4.1.1 and to possible
extensions under the terms of this Agreement.
(b) Upon the substantial completion of the Power Plant and subject
to confirmation by PNOC-EDC (which confirmation shall not be
unreasonably withheld), the Operator may certify that the
Completion Date has occurred notwithstanding that the Power Plant
is unable to produce the Contracted Capacity adjusted per
Correction Curves or to achieve the Guaranteed Net Plant Steam Rate
or the Guaranteed Net Plant Brine Rate, but in that event
adjustments shall be made to the Capacity Fee in accordance with
the penalty provisions of Subsection 8.4.1; provided, however, that
such certification may not be made if the Power Plant is unable to
produce at least seventy percent (70%) of the
Contracted Capacity, after application of the Correction Curves.
(c) In the event there is a difference of opinion about test
results, which cannot be resolved by the Parties within seven (7)
days, the controversy shall be resolved by a reputable
engineering firm. The Operator shall propose the engineering firm,
acceptable to PNOC-EDC, and the Parties will agree on such
engineering firm not later than six (6) months prior to the start
of the Commissioning Period. The Parties shall equally share any
costs associated with this procedure.
6.2 COMMERCIAL OPERATION DATE
On the Commercial Operation Date, the Operator shall commence the
delivery of electric power and energy to NAPOCOR on behalf of PNOC-
EDC in accordance with contracted levels. All other related
provisions on the operation of the Power Plant and the tariffs,
discounts, bonuses, and penalties on the regular sale of power and
energy shall also take effect on this date.
6.3 POWER RATES FOR INITIAL DELIVERY
In the event that the start of commercial operation of the Power
Plant falls on a date other than the start of a monthly Billing
Period, PNOC-EDC shall be billed by the Operator and shall pay the
Capacity Fee on a pro-rata basis and the Energy Fee for energy
actually delivered.
6.4 OPERATING PARAMETERS
The Operator shall operate the Power Plant following the
Operating Parameters as stipulated in Annex B4.
6.5 DISPATCH PROCEDURES
The Operator shall control and operate the Power Plant consistent
with NAPOCOR's dispatch requirements.
6.6 ENGINEERING STANDARDS
The Power Plant shall be designed, operated and maintained by the
Operator in accordance with applicable prudent utility industry
standards and good engineering practices.
6.7 ENVIRONMENTAL STANDARDS
The Power Plant shall be designed, constructed, operated and
maintained by the Operator in accordance with applicable
environmental standards and regulations, and in particular with the
requirements of the Environmental Compliance Certificate, Authority
to Construct and Permit to Operate. In case of any changes in law
and interpretation of law, Section 3.3 shall apply.
6.8 PROTECTIVE APPARATUS
The Power Plant shall be operated by the Operator with all of its
Protective Apparatus in service whenever it is connected to or is
operated in parallel with the NAPOCOR electric system.
6.9 INTEGRITY LOSS
If, at any time, NAPOCOR has reasonable basis to doubt the
integrity of any of the Operator's Protective Apparatus and to
believe that such loss of integrity would be hazardous to the
integrity of the NAPOCOR electric system, the Operator shall
demonstrate, to NAPOCOR's and PNOC-EDC's satisfaction, the
correct calibration and operation of the equipment in question. If
not so satisfied, NAPOCOR shall have the right to disconnect the
Operator and refuse to receive the power delivered by the Power
Plant and PNOC-EDC shall consider the Power Plant to be in Outage
for billing purposes. The inability of the Operator to meet
capacity by reason of any demonstration made by the Operator under
this Section 6.9 shall not be an Outage if the Operator is able to
show correct calibration and operation of its Protective Apparatus.
6.10 SETTINGS OF PROTECTIVE APPARATUS
All settings of all Protective Apparatus shall be subject to the
approval of NAPOCOR. Tests and calibration of this Protective
Apparatus shall be at the expense of the Operator.
6.11 SERVICE COMMITMENT
At NAPOCOR's request, the Operator shall make all reasonable
efforts on behalf of PNOC-EDC to deliver energy during periods of
Emergency.
6.12 MAINTENANCE DURING EMERGENCY
In the event that the Scheduled Maintenance coincides with an
Emergency, the Operator shall make all reasonable efforts to
reschedule such maintenance.
6.13 ANNUAL CAPACITY NOMINATION
The Nominated Capacity of the Power Plant shall be specified by the
Operator for the second year and each subsequent year of the
Cooperation Period no later than thirty (30) calendar days prior to
the anniversary of the Commercial Operation Date. PNOC-EDC shall
advise the Operator no later than thirty five (35) calendar days
prior to the anniversary of the Commercial Operation Date of the
maximum amount of power expressed in kilowatts (kW) of
Steamfield Power which PNOC-EDC shall require to be provided with
for the following year.
If, for a particular year, the Operator fails to specify a
Nominated Capacity, then the lower of the Contracted Capacity, the
last Nominated Capacity and the last test capacity adjusted per
Correction Curves shall be the Nominated Capacity for that
particular year.
6.14 MAINTENANCE SCHEDULE
The Operator shall submit a written schedule for the necessary
overhaul, maintenance, inspection and repair of the Power Plant
("Scheduled Maintenance") one hundred (100) calendar days prior to
the start of each calendar year during the Cooperation Period.
Such Scheduled Maintenance for each generating unit of the Power
Plant shall not exceed forty five (45) days per year.
6.15 APPROVAL OF MAINTENANCE SCHEDULE
PNOC-EDC shall notify the Operator within forty-five (45)
calendar days after receipt of the maintenance schedule from the
Operator whether the requested maintenance schedule is approved,
which approval shall not be unreasonably withheld. In the event
that the proposed schedule is not approved, the Parties shall
promptly and in good faith negotiate an alternative maintenance
schedule.
6.16 COMPLIANCE WITH APPROVED MAINTENANCE SCHEDULE
The Operator shall perform scheduled maintenance work on the Power
Plant during the periods approved by PNOC-EDC in accordance with
section 6.15.
6.17 UNSCHEDULED OUTAGE
The Operator shall immediately notify PNOC-EDC, and NAPOCOR on
behalf of PNOC-EDC, of any unscheduled outage and specify the
estimated duration of such outage.
6.18 DAILY OPERATING REPORT
For record purposes, the Operator shall keep PNOC-EDC and
NAPOCOR's Power Management Centre informed as to the daily
results of operation and generation capability of the Power Plant,
including, without limitation, any Outages.
6.19 OPERATING RECORDS
The Operator shall maintain an operating log for each generating
unit of the Power Plant with records of:
(a) real and reactive power production,
(b) changes in operating status,
(c) Outages,
(d) Protective Apparatus operations,
(e) any unusual conditions found during inspections, etc.
Changes in the setting of Protective Apparatus shall also be
logged. In addition, the Operator shall maintain records
applicable to the Power Plant, including maintenance and overhaul
records, the electrical characteristics of the generator and
settings or adjustments of the generator control equipment and
Protective Apparatus. At the end of the Cooperation Period, such
records shall be turned over to PNOC-EDC at no cost.
ARTICLE 7 GEOTHERMAL FLUIDS
7.1 FLUID SUPPLY
(a) PNOC-EDC shall deliver at no cost to the Operator at the Site
the total Geothermal Fluid requirements for the Power Plant.
(b) If either Party shall have reason to believe that any
geothermal fluids delivered to or removed from the Site are subject
to a Material Shortfall that Party shall promptly notify the other
Party. Such notice shall be reasonably detailed and focused on
possible solutions to the problem.
(c) If the Operator certifies to PNOC-EDC that a Material
Shortfall has occurred and is continuing, the Energy Fee shall be
modified as follows for so long as such Material Shortfall
continues. If the Operator operates the Power Plant and the
Material Shortfall is within the adjustment range of the
Correction Curves, the net capacity shall be deemed reduced for the
purpose of adjusting the Base Energy Rate only to the
applicable, normative capacity per the Correction Curve
("Normative Capacity"), and the Base Energy Rate shall be
increased by the following factor:
Contracted Capacity
Normative Capacity
using actual Energy Delivered so long as the Material Shortfall
shall continue within the bounds of a Correction Curve.
If the Material Shortfall is outside the adjustment range of the
Correction Curves then, for as long as the Material Shortfall
continues, the Energy Fee shall be calculated based on the Base
Energy Rate and the Nominated Capacity.
(d) The Operator shall use its best efforts to operate the Power
Plant with a Material Shortfall at the Normative Capacity
indicated by any relevant Correction Curves but shall not
continue operation of the Power Plant if such operation would
adversely affect the Power Plant or its operation.
7.2 FLUID DISPOSAL
The Operator shall deliver to PNOC-EDC and PNOC-EDC shall accept
for disposal at no cost to the Operator all spent geothermal brine
and steam condensate discharged from the Power Plant which complies
with the specifications stated in Annex I.
7.3 BY-PRODUCTS & EFFLUENTS
The Operator shall be responsible for the disposal of all waste
arising from the construction, operation or maintenance of the
Power Plant, including non-condensible gases, except for fluids
returned to PNOC-EDC in accordance with Section 7.2 and such non-
condensible gases as may be accepted by PNOC-EDC for re-injection.
Subject to the provisions of Section 3.3(a), the Power Plant shall
be designed to meet the environmental standards provided for in
Philippine laws as implemented by the Department of Environment and
Natural Resources and all waste disposal shall be in accordance
with such laws and with requirements of the Environmental
Compliance Certificate.
7.4 ENERGY MANAGEMENT
The Operator shall ensure that steam and electricity use is
optimized and shall exercise due diligence in the operation and
management of main and auxiliary machinery so as to minimize energy
consumption and wastage.
ARTICLE 8 DELIVERY OF CAPACITY AND ENERGY
8.1 OBLIGATIONS OF THE PARTIES
The Operator hereby agrees to convert PNOC-EDC's geothermal fluid
into electric energy and PNOC-EDC hereby agrees to sell to NAPOCOR,
at the Point of Interconnection, the electric capacity and energy
delivered by the Operator to NAPOCOR on behalf of PNOC-EDC during
the Cooperation Period. PNOC-EDC agrees to pay the Operator for
the electric capacity and energy delivered by the Operator at the
Point of Interconnection plus and deliveries made to PNOC-EDC for
its own use.
The Operator shall make available electric capacity and energy on
and from the Completion Date. The mutually agreed capacity and
energy charges shall be paid for by PNOC-EDC pursuant to the terms
and conditions of this Agreement.
8.2 ENERGY DELIVERY
PNOC-EDC may temporarily suspend receipt of electricity from the
Operator for:
(a) Tampering with meters by the Operator; or
(b) A condition on the Operator's side of the Point of
Interconnection dangerous to life or property.
Such condition shall be subject to confirmation by an independent
third party expert satisfactory to both Parties. If so confirmed,
PNOC-EDC shall be excused payment of capacity and energy charges
for the duration of such suspension and such suspension shall cease
on rectification of the initiating condition.
8.3 METERING
8.3.1 METER MAINTENANCE AND OWNERSHIP
(a) PNOC-EDC shall supply, own and maintain as part of the
interconnection facilities, meters and related equipment to be
utilized for the measurement of electric power and energy.
(b) NAPOCOR may also supply, own and maintain as part of the
interconnection facilities, meters and related equipment to be
utilized for the measurement of electric power and energy.
(c) PNOC-EDC shall supply, own and maintain meters and related
equipment to be utilized for the measurement of geothermal fluid
flow.
(d) The Operator shall supply, own and maintain equipment for the
measurement, calculation and recording of the theoretical steam and
brine consumption of the plant.
8.3.2 METER LOCATION
(a) The equipment used for metering NAPOCOR Power shall be located
at the high voltage side of the step-up transformer.
(b) The equipment used for metering geothermal fluid flow shall be
located in the geothermal fluid piping upstream of the point of
geothermal fluid supply from PNOC-EDC to the Operator.
(c) The equipment used for measuring Atmospheric Conditions shall
be located close to the air intake of the generating
equipment.
8.3.3 PLANT MONITORING EQUIPMENT
For the purpose of monitoring the Power Plant operation, the
Operator shall make reasonable provision for the installation of
other metering and telemetering devices at the generation side of
the step-up transformer as part of the PNOC-EDC Supervisory Control
and Data Acquisition (SCADA) system.
8.3.4 METER SEALS AND INSPECTION
PNOC-EDC's meters shall be sealed and the seals shall be broken
only when the meters are to be inspected or tested by PNOC-EDC.
The Operator shall be given reasonable notice of such occasions and
shall have the right to have its representative present.
8.3.5 METER TESTS
PNOC-EDC's electricity meters, installed pursuant to this
Agreement, shall be tested by PNOC-EDC at its own expense every six
months. Other tests may be conducted at any reasonable time upon
request by either Party, at the requesting Party's expense. If the
Operator makes such request, the Operator shall reimburse said
expense to PNOC-EDC within thirty (30) days after
presentation of a bill therefor. PNOC-EDC's meter test results
shall be deemed final and conclusive.
The Operator's equipment for the calculation and recording of
theoretical steam consumption shall be tested by the Operator at
its own expense, in the presence of PNOC-EDC, every six months.
8.3.6 METER ACCURACY
Electric metering equipment found to be inaccurate shall be
repaired, adjusted, or replaced by PNOC-EDC such that the
accuracy of said equipment shall be within 100% plus or minus one
percent (1%). Should the inaccuracy exceed plus or minus one
percent (1%), the correct amount of power energy delivered during
the previous billing period shall be estimated by PNOC-EDC and
agreed by the Parties. Adjustment for meter inaccuracy shall cover
only the current billing period and the billing period immediately
preceding it except when such meter inaccuracy is due to fraud.
8.4 TERMS OF PAYMENT
8.4.1 CAPACITY FEE
The total Capacity Fee shall be the sum of the Capital Cost
Recovery Fee, the Fixed Operating Cost Recovery Fee, and the
Service Fee to reflect Return on Investment. The Capacity Fee
shall be computed on the basis of the following formulae:
(a) Capital Cost Recovery Fee (A) to be paid in Dollars.
A = [(CCR x NC)(1 - TOH/Nh)] - [(y x 1.2(CCR)(CC - NC)]
(b) Fixed Operating Cost Recovery Fee (B) to be paid in
Philippine Peso and in Dollars.
B + [(OCR x NC)(1 - TOH/Nh)] - [(y x 1.2)(OCR)(CC - NC)]
(c) Service Fee for Return on Investment (C) stated in Dollars but
payable in equivalent Philippine Pesos using the prevailing
exchange rate at time of payment. In no case shall the Service Fee
be lower than 8% of the sum of the Capital Cost Recovery Fee and
the Fixed Operating Cost Recovery Fee.
C = {[(SFR x NC)(1 - TOH/Nh)] - [(y x 1.2)(SFR)(CC - NC)]} x Px
Where
A=Capacity Fee to recover capital cost for the Billing Period.
B=Capacity Fee to recover fixed operating cost for the Billing
Period.
C=Capacity Fee to reflect return on investment of the Operator for
the Billing Period.
CCR=$1.147 per kW per month.
OCR=Ps 32.155 per kW per month and $1.276 per kW per month.
SFR=$9.957 per kW per month.
CC=Contracted Capacity, in kW.
TOH=Total Outage Hours in Billing Period.
Nh=Total number of hours in the Billing Period.
NC=Nominated Capacity for the year, in kW.
Px=Conversion factor of payments to Philippine Peso quoted by the
Philippine National Bank.
y=variable, defined as follows:
if 0.95 x CC <NC < 1.05 x CC, then y = 0, otherwise, y = 1
8.4.2 ENERGY FEE
Energy Fee (D) to the Operator shall reflect the variable costs to
be paid by PNOC-EDC to the Operator for variable expenses incurred
by the Operator in the generation of electricity by its Power
Plant. Energy payments shall be computed on the basis of the
following formula and be paid in Philippine Pesos.
D = (BER x ED) + Us (Vgs - Vts) x zs + Ub (Vgb - Vtb) x zb
where:
D = Energy Fee for the Billing Period
BER = Base Energy Rate Ps 0.0277 per kilowatt-hour delivered during
the Billing Period.
ED = Energy Delivered during the Billing Period expressed in
kilowatt hours (kWh).
Us = Steam Price as set forth in Annex I.
Vgs = Cumulative theoretical steam consumption for the Billing
Period in metric tons computed on the basis of the Guaranteed Net
Plant Steam Rate for each hour (SRg), using the formula:
n
Vgs = EDsi x SRgi
i=1
where:
n = number of hours in the Billing Period
EDsi = Energy Delivered from steam units in hour i
= Energy Delivered in hour i x Steam Power Ratio
SRgi = Guaranteed Net Plant Steam Rate for each hour i adjusted for
variations from the Geothermal Fluid Specifications and Atmospheric
Conditions using the formula
SRgi = Guaranteed Net Plant Steam Rate
Fs1 x Fs2 x Fsa x Fsg
where:
Fs1 = Steam pressure correction factor for the steam units per
Correction Curves.
Fs2 = Steam flow correction factor for the steam units per
Correction Curves.
Fsa = Ambient temperature correction factor for the steam units per
Correction Curves.
Fsg = NCG content in steam flow correction factor per Correction
Curves.
Vts = Measured steam consumption for the Billing Period in metric
tons.
zs = Variable, defined as follows:
If 0.97 x Vgs < Vts < 1.03 x Vgs, then zs = 0, otherwise, zs = 1
Ub = Brine Price as set forth in Annex I
Vgb = Cumulative theoretical brine consumption for the Billing
Period in metric tons computed on the basis of the Guaranteed Net
Plant Brine Rate for each hour (BRg), using the formula
n
Vgb = EDbi x BRgi
u=1
where:
n = number of hours in the Billing Period
EDbi = Energy Delivered from brine units in hour i
= Energy Delivered in hour i x Brine Power Ratio
BRgi = Guaranteed Net Plant Brine Rate for each hour i adjusted for
variations from the Geothermal Fluid Specifications and Atmospheric
Conditions using the formula
BRgi = Guaranteed Net Plant Brine Rate
Fb1 x Fb2 x Fba
where:
Fb1 = Brine temperature correction factor for the brine units per
Correction Curves.
Fb2 = Brine flow correction factor for the brine units per
Correction Curves.
Fba = Ambient temperature correction factor for the Brine Units per
Correction Curves.
Vtb = Measured brine consumption for the Billing Period in metric
tons.
zb = Variable, defined as follows:
If 0.97 x Vgb < Vtb < 1.03 x Vgb, then zb = 0, otherwise, zb = 1
8.4.3 ENERGY GUARANTEE
The Operator guarantees delivery of at least nine hundred fifty
five point zero one five (955.015) GWh ("Guaranteed Energy") for
each year of the Cooperation Period except as otherwise provided in
this Agreement.
In any year of the Cooperation Period that Operator fails to
deliver the Guaranteed Energy except as otherwise provided in this
Agreement the Operator will pay to PNOC-EDC a compensation on the
shortfall to be computed as follows:
(i) For each kWh of shortfall up to sixty five point forty five
(65.45) GWh for any given year, the Operator shall pay to PNOC-EDC
a total annual penalty ("AP") at a penalty rate ("PR") of 1.65
Pesos/kW, computed in accordance with Subsection 8.4.3 (iii).
(ii) The Operator shall pay AP within five (5) calendar days after
the end of each calendar year.
(iii) The AP for shortfall of energy ("ES") shall be computed as
follows:
AP = PR x ES
where:
ES = GE - EDA
where:
GE = the Guaranteed Energy per year, in kWh.
EDA = Energy delivered in kWh as measured and adjusted using the
Correction Curves, plus energy in kWh related to available
capacity but not delivered for reasons other than Outage, during
the relevant year on the basis of the following formula:
n
EDA = EMi + NEi
i = 1
where:
i = any given hour in the year
n = number of hours in the year
EMi = the energy actually delivered, in kWh, as NAPOCOR Power and
Steamfield Power in hour i
ECFi = the total correction factor from the Correction Curves to be
applied to EMi
NEi = the energy, in kWh, related to available capacity but not
delivered for reasons other than Outage. NEi shall be equal to
Nominated Capacity x 1 hour minus EMi for any hour during which the
Power Plant is not in Outage and NEi shall be equal to zero (0) for
all other hours.
For the purposes of determining the hours during which capacity was
available but energy was not delivered for reasons other than
Outage, the Operator shall record in the Power Plant logbook, and
advise PNOC-EDC on a daily basis as part of the daily operating
report in accordance with Section 6.18, all of the following hours,
including the reason for their occurrence.
(i) hours for which there was a Material Shortfall in the supply
of geothermal fluids to the Power Plant for the removal of
geothermal fluids from the Power Plant; and
(ii) hours for which an Interconnection Failure has occurred; and
(iii) hours for which NAPOCOR dispatched less than the Nominated
Capacity of the Power Plant; and
(iv) hours for which the inability of the Operator to deliver is
caused by Force Majeure; and
(v) hours for which the inability of the Operator to deliver
energy, or to record the actual energy delivery (EMi), or to record
the data necessary to determine ECFi is due to reasons beyond the
Operator's reasonable control and such reason is specified in the
Power Plant logbook, advised to PNOC-EDC and PNOC-EDC has approved
the occurrence, which approval shall not be unreasonably withheld.
8.4.4 ESCALATION ADJUSTMENTS
In the billing months of January and July of each year (using the
indices for the prior months of December and June, respectively),
the amount of:
(i) Fixed Operating Cost Recovery Fee (OCR); and
(ii) Service Fee for Return on Investment (SFR); and
(iii) Base Energy Rate (BER); and
(iv) Steam Price (Us); and
(v) Brine Price (Ub); and
(vi) Penalty Rate (PR)
shall be adjusted proportionately by the change in the index
applicable to each component, as specified in Annex M, as from the
levels of such indices prevailing in June 1993.
8.5 BILLING PROCEDURES
The Operator shall bill PNOC-EDC for the delivery of electric power
and energy as adjusted on a monthly basis until the
termination of this Agreement.
The Operator shall arrange its billing schedule in accordance with
the billing system of PNOC-EDC. The Billing Period shall cover the
period from 10:00 AM on the twenty-fifth (25) day of the current
month to 10:00 AM of the twenty-fifth (25th) day of the following
month. Any changes in the billing system of PNOC-EDC shall be
followed by the Operator in billing PNOC-EDC. The Operator shall
send PNOC-EDC its bills within five (5) days reckoned from the last
day of the Billing Period. PNOC-EDC shall be required to settle
its monthly bills without penalty to
Operator within thirty (30) days from receipt of billing.
If PNOC-EDC disputes the amount specified in any invoice, it shall
so inform the Operator within seven (7) days following the receipt
of such invoice. If the dispute is not resolved by the due date,
PNOC-EDC shall pay the undisputed amount on or before such date and
the disputed amount shall be resolved as soon as is reasonably
practicable following the due date for such invoice.
8.6 PAYMENTS NET OF VALUE ADDED TAX & OTHER TAXES
All amounts payable to the Operator shall be made free and clear of
all present and future taxes, levies, imposts, stamp, duties or
other fees or charges imposed thereon by the Authorities except
that any such amounts shall be paid without the applicable Value
Added Tax thereon which the Operator shall bill separately and the
amount of which shall be paid by PNOC-EDC. Each sum payable shall
be increased so as to ensure that after PNOC-EDC has deducted
therefrom any and all taxes or charges required to be deducted
therefrom by PNOC-EDC there remains a sum equal to the amount that
would have been payable to the Operator had there been no
requirement to deduct or withhold such taxes or other charges.
PNOC-EDC shall be responsible for the payment of all taxes imposed
by the Authorities on the Operator or the Power Plant, including
real estate taxes in respect of the Site and the buildings and
other improvements thereon including the Power Plant, but not (i)
corporate income tax on the Operator, (ii) taxes on dividends or
profits remitted from the Philippines by the Operator, and (iii)
reasonable construction and permit fees and charges not exceeding
$50,000.
ARTICLE 9 BUYOUT
9.1 BUYOUT CONDITIONS
If,
(a) during the Cooperation Period in the reasonable opinion of
PNOC-EDC or the Operator, material changes in policies, laws and
regulations, including taxes, of the Authorities adversely affect
the operation of the Power Plant or the after-tax cash flow of the
Operator; or
(b) prior to the Cooperation Period, the provisions of Subsections
3.3(a), 4.4, 4.5, 4.6.2 or 13.4 make this Article 9 applicable; or
(c) PNOC-EDC fails to make any payments when due of the Capacity
Fee or Energy Fee; or
(d) during the Cooperation Period, a Material Shortfall or
Interconnection Failure causes the alternate pricing provisions
described in Section 7.1(d), or the exclusions of certain outages
from the definitions of Outage and Outage Day, account for 25% or
more of billings during three or more consecutive Billing Periods
or the Parties fail to agree on the terms under which this
Agreement may be continued in accordance with the provisions of
Section 13.4; or
(e) at any time during the effectivity of this Agreement, PNOC-EDC
or NAPOCOR is privatized in whole or in part or reorganized, or the
events defined in Article 19 shall occur,
then PNOC-EDC or the Operator as the case may be shall notify the
other Party of the occurrence of any of the forgoing events and the
Parties shall promptly meet and endeavor to make amendments to the
Agreement and agree to such amendments. If, after ninety (90)
calendar days, or sixty (60) calendar days in case of Section
9.1(c), since such changes become effective, no such agreement has
been reached, either Party may require a buyout of the Operator's
Power Plant by PNOC-EDC. If either Party determines that such an
impasse has been reached, that Party may deliver written notice to
the other Party requiring a buyout under this Article 9 provided
that for purposes of Section 9.1(a) above an adverse effect on the
Operator's after-tax cash flow shall refer to any adverse change in
the Operator's cash flow (after taxes) for any taxable year, as
confirmed by an independent auditor agreeable to both Parties and
provided that in case of Section 9.1(c) above only the Operator
shall have the right to require a buyout. If the Parties cannot
promptly reach a definitive, written agreement embodying the terms
of a buyout (notably the Buyout Price and payment terms), Article
20 shall apply.
9.2 BUYOUT PRICE
The purchase price (Buyout Price), in Dollars, of the Power Plant
as a result of the buyout shall be
(a) prior to the Cooperation Period, the Operator's actual costs
and disbursements in performing its obligations under this
Agreement, as estimated by an independent accountant jointly
appointed by the Parties, including, without limitation,
commitment fees, interest and other amounts paid to or owed to
lenders or vendors, plus ten percent (10%) return on equity; or
(b) during the Cooperation Period the net present value of the
remaining stream of payments for the Capacity Fee for the rest of
the Cooperation Period on the basis of the last Nominated Capacity,
and using a discount rate equal to the last published Commercial
Interest Reference Rate (CIRR) for the Dollar published by the
Organization for Economic Cooperation and Development (OECD).
In calculating disbursements in accordance with clause (a), amounts
disbursed by lenders shall be prima facie evidence of actual
disbursements and interest accrued (whether or not paid) shall be
deemed actual disbursements. The actual rates of interest payable
to lenders shall be the interest rate attributable to that portion
of the Buyout Price.
9.3 PAYMENT TERMS
The Buyout Price shall be payable by PNOC-EDC within sixty (60)
calendar days after either Party requires a Buyout pursuant to
Section 9.1.
9.4 TRANSFER PROVISION
In respect of any transfer of ownership of the Power Plant pursuant
to the conditions stated above, the provisions on transfer of
ownership in Article 12 hereof shall apply thereto.
ARTICLE 10 REPRESENTATIONS & WARRANTIES OF THE PARTIES
10.1 CORPORATE EXISTENCE
The Operator represents that it is a private corporation duly
organized and existing under the laws of the State of Delaware and
licensed to do business under the laws of the Republic of the
Philippines and that it has the corporate power and authority to
execute, deliver and carry out the terms and conditions of this
Agreement.
10.2 GOVERNMENT AUTHORISATIONS
The Operator represents and warrants that by Effectivity Date it
will take all necessary corporate action and will secure or caused
to be secured all orders, consents or approvals, permits and
licenses required by the Authorities to construct, own and operate
the Power Plant, except for certain items notified to PNOC-EDC in
writing (which writing shall summarize in reasonable detail the
Operator's actions, those requested on PNOC-EDC, and the current
status of the application or similar proceeding).
10.3 INDEMNIFICATION
10.3.1 INDEMNITY BY THE OPERATOR
(a) The Operator shall hold free and harmless and defend PNOC-EDC
from any and all actions, claims, liabilities and suits for losses
and damages to properties of other contractors and/or third parties
arising in the prosecution of the Agreement and caused by the
Operator's negligence.
(b) The Operator shall hold free and harmless, and defend PNOC-EDC
from any and all actions, claims, liabilities and suits for losses
and damages to properties of other contractors and/or third parties
arising in the prosecution of the Agreement and caused by the
Operator's negligence.
(c) Any project related fines or other penalties incurred by the
Operator or its agents, employees or subcontractors for non-
compliance by the Operator or its employees, agents or
subcontractors with the laws, rules, regulations or ordinances
shall be the exclusive responsibility of the Operator. If fines,
penalties, or legal costs are assessed against PNOC-EDC by the
Authorities or any court due to willful or negligent non-
compliance by the Operator with any laws, rules, regulations or
ordinances with which compliance is required herein, or if the
operation of the Power Plant is suspended or stopped by order of
any Authority or court due to the Operator's willful non
compliance with any such laws, rules, regulations or ordinances,
the Operator shall indemnify and hold harmless PNOC-EDC against any
and all losses, liabilities, damages, and claims (other than
consequential damages not paid to third parties) suffered or
incurred by PNOC-EDC because of the willful failure of the
Operator to comply therewith. The Operator shall also reimburse
PNOC-EDC for any and all legal or other expenses (including
reasonable attorney's fees) reasonably incurred by PNOC-EDC in
connection with such willful losses, liabilities, damages or
claims.
10.3.2 INDEMNITY BY PNOC-EDC
PNOC-EDC shall hold free and harmless and defend the Operator, its
officers and employees harmless against any claims of any person
who directly or indirectly suffers or is injured by the performance
by the Operator of the obligations under this
Agreement, including damage or injury as a result of an
interruption of electricity supply or any other disruption or surge
of electricity supply and the Operator's, its officers, agents' or
employees' actions or omissions in connection
therewith, not arising out of the Operator's negligence.
10.4 WARRANTY AGAINST CORRUPTION
The Operator hereby warrants that it or its representatives
has/have not given or promised to give any money or gift to any
employees/official of PNOC-EDC to influence the decision
regarding the awarding of this Agreement nor has the Operator
and/or its representatives exerted or utilized any unlawful
influence to solicit or secure this Agreement through an
agreement to pay a commission, percentage, brokerage, or
contingent fee. The Operator agrees that breach of this warranty
shall be sufficient ground for the Philippine National Oil
Company or its affiliate to deduct, at its/their discretion, such
commission, percentage, brokerage, or contingent fees from the
contract price without prejudice to the Operator or any person's
civil or criminal liability under the Anti-Graft and Corrupt
Practices Act and other applicable laws.
ARTICLE 11 INSURANCE
The Operator shall, at its own expense, obtain and maintain in
force insurance as specified in Sections 11.1 and 11.2. The
Operator shall provide to PNOC-EDC evidence of this insurance. In
particular, evidence of the insurance required to be held during
the Cooperation Period shall be furnished prior to
commencing initial testing of the Power Plant.
11.1 INSURANCE DURING CONSTRUCTION
From the Effectivity Date until the commissioning of the Power
Plant, the Operator shall, at its own expense, obtain and
maintain in force the following insurance:
(a) All Risk Marine Insurance in respect of plant and equipment to
be imported into the Philippines;
(b) All Risks "Builder's Risk Insurance" to cover the entire works
from any and all kinds of damages customarily covered; and
(c) "Third Party Liability Insurance" to cover injury to or death
of persons including those of PNOC-EDC or damages to
property including those of PNOC-EDC caused by the works or by the
Operator's vehicles, tools and/or equipment or personnel including
its subcontractors;
11.2 INSURANCE DURING COOPERATION PERIOD
The Operator, at its own expense, shall keep the Power Plant
insured against accidental damage from all normal risks and to a
level normal for prudent operators of facilities similar to the
Power Plant. In addition, the Operator shall secure adequate
insurance cover for its employees as may be required by law.
ARTICLE 12 TRANSFER OF OWNERSHIP
12.1 TRANSFER OF TITLE
Title to the Power Plant shall automatically vest in PNOC-EDC on
the Transfer Date, subject to performance by PNOC-EDC of all of its
obligations under this Agreement. The Power Plant shall be
transferred free and clear of any liens or encumbrances except
those caused by PNOC-EDC. The Operator shall execute such
documents as may be reasonably necessary to effect the transfer of
the title to PNOC-EDC.
12.2 COSTS & EXPENSES
The Operator shall pay for all costs and expenses including but not
limited to documentation, fees and taxes incurred in
connection with the transfer referred to in Section 12.1 hereof not
to exceed $50,000.00.
12.3 TRAINING OF PNOC-EDC STAFF
During a minimum period of twelve (12) months prior to the
Transfer Date, the Operator shall provide training in operation and
maintenance of the Power Plant for PNOC-EDC staff. This training
shall be provided in accordance with a programme to be agreed
between PNOC-EDC and the Operator and shall be provided at no cost
to PNOC-EDC.
PNOC-EDC may offer to the Operator to take over the employment of
such of the Operator's operating and maintenance staff employed on
the Power Plant at the end of the Cooperation Period as PNOC-EDC
may, at its own sole discretion, consider suitable for
employment with PNOC-EDC.
12.4 CONDITION OF POWER PLANT ON TRANSFER
Within a period of six (6) months prior to the Transfer Date, the
Operator shall undertake performance and efficiency testing of the
Power Plant as specified in Annex D to demonstrate to the
satisfaction of PNOC-EDC the satisfactory condition of the Power
Plant for continued operation for the remaining duration of the
specified design life.
Subject to the provisions of Article 13, if the total tested
capacity of all generating units (receiving the appropriate
Geothermal Fluid complying with the Geothermal Fluid
Specification) shall prove to be less than the Contracted
Capacity, or if the Net Plant Steam Rate or Net Plant Brine Rate
shall prove to be more than the guaranteed figure, PNOC-EDC shall
be entitled to claim a portion of the Operation Performance Bond to
collect a final arbitral decision pursuant to Article 20, in an
amount proportional to the respective variances without
prejudice to other remedies available.
The provisions of the immediately preceding paragraph shall not
apply in the event that the guaranteed performance is not
achieved during the above six (6) month period due to an event of
Force Majeure. In that event, the Operator shall remit to PNOC-EDC
all proceeds of insurance paid on the Power Plant less costs
related to such event.
ARTICLE 13 FORCE MAJEURE
13.1 FORCE MAJEURE
Subject to the provisions of Section 13.3 no failure or omission to
carry out or observe any of the terms, provisions or
conditions of this Agreement shall give rise to any claim by any
Party against any other Party hereto, or be deemed to be a breach
or default of this Agreement if the same shall be caused by or
arise out of:
(a) (other than as referred to in subparagraph (b) below), any
war, declared or not, or hostilities, or belligerence, blockade,
revolution, insurrection, riot, public disorder, expropriation,
requisition, confiscation, or nationalization, export or import
restrictions by any Authorities, closing of harbours, docks,
canals, or other assistances to or adjuncts of the shipping or
navigation of or within any place, rationing or allocation, whether
imposed by law, decree or regulation by, or by compliance of
industry at the insistence of any governmental authority, or fire,
unusual floor, earthquake, storm, lightning, tide (other than
normal tides), tidal wave, perils of the sea, accidents of
navigation or breakdown or injury of vessels, accidents to
harbours, docks, canals or other assistance to or adjuncts of the
shipping or navigation, epidemic, quarantine, strikes or
combination of workmen, lockouts or other labour disturbances, or
any other event, matter or thing, wherever occurring, which shall
not be within the reasonable control of the Party affected
thereby; or
(b) war, declared or not, or hostilities involving the
Authorities, or belligerence, blockade, revolution, insurrection,
riot, public disorder, expropriation, requisition, confiscation or
nationalization by or involving the Authorities, export or import
restrictions by the Authorities, closing of harbours, docks,
canals, or other assistances to or adjuncts of the
shipping or navigation of or within the Republic of the
Philippines, rationing or allocation, whether imposed by law,
decree or regulation by, or by compliance of industry at the
insistence of the Authorities, or any other event, matter or thing,
wherever occurring, which shall be within the reasonable control of
PNOC-EDC or the Authorities
each of the foregoing events, matters or things being called "Force
Majeure" in this Agreement; provided that,
(i) The affected Party gives the other Party within forty eight
(48) hours a written notice describing the particulars of the
occurrence;
(ii) The suspension of performance is of not greater scope and of
no longer duration than is required by the Force Majeure;
(iii) The affected Party uses its best efforts to remedy its
inability to perform;
(iv) When the affected Party is able to resume performance of its
obligations under this Agreement, that Party shall give the other
Party written notice to that effect.
13.2 RESPONSIBILITY FOR DAMAGES
Damages or injuries to persons or properties resulting from a Force
Majeure event during the performance of the obligations provided
for in this Agreement shall not relieve the Operator of the
responsibility to bear the cost of the damage or injuries caused by
the Operator's negligence.
13.3 OBLIGATION OF PNOC-EDC
Except in respect of Force Majeure referred to in Section
13.1(a), (other than Force Majeure causing an Interconnection
Failure or affecting the ability of PNOC-EDC to deliver the
Geothermal Fluid), Force Majeure shall not excuse PNOC-EDC from its
obligation to pay the Capacity Fee.
13.4 REMEDIES
Except as otherwise provided, in no event shall any condition of
Force Majeure extend this Agreement beyond its stated term. If any
condition of Force Majeure delays a Party's performance for a
period greater than ninety (90) days, the Party affected by such
Force Majeure may suspend this Agreement. If the Force Majeure
prevents a Party's performance for a period greater than one
hundred eighty (180) days, the Parties hereto shall meet to discuss
the basis and terms upon which the arrangements set out in this
Agreement may be continued. The Parties hereto shall consult with
each other and take all reasonable steps to minimize the losses of
either Party resulting from Force Majeure. If no mutually
acceptable agreement is reached or implemented within ninety (90)
days from the date of first meeting, the provisions of Article 9
shall apply.
ARTICLE 14 SUSPENSION, ABANDONMENT AND TERMINATION
14.1 SUSPENSION OF PAYMENT
Subject to the provisions of Article 13, payments under this
Agreement, upon written request of the Operator, and for a period
reasonably required to replace or repair the Power Plant, may be
suspended if the Operator is temporarily unable to produce the
electricity contracted for due to physical destruction of or damage
to the Power Plant.
14.2 ABANDONMENT
14.2.1 ABANDONMENT DURING CONSTRUCTION
The construction of the Power Plant shall be deemed abandoned under
any of the following circumstances:
(a) the Operator, through a written notice to PNOC-EDC,
terminates construction of the Power Plant other than by reason of
Force Majeure or for reasons not attributable to the Operator; or
(b) the Operator fails (other than by reason of Force Majeure or
for reasons not attributable to the Operator) to place an order for
the long lead items (turbo-generators) twenty four (24) months
prior to the Completion Date, provided however that such 24 months
date is not earlier than one hundred twenty (120) days from the
Effectivity Date, in accordance with an subject to any extensions
provided in Subsection 4.4.1; or
(c) the Operator fails (other than by reason of Force Majeure or
for reasons not attributable to the Operator) to resume work (i)
within one hundred twenty (120) calendar days following receipt of
insurance proceeds relating to, and in amounts sufficient to cover
loss or damage arising from, Force Majeure, or (ii) if there is no
material damage to the Power Plant, within 120
calendar days following the termination or cessation of a Force
Majeure situation, provided that a notice of such termination or
cessation was given by PNOC-EDC to the Operator, or
(d) subject to the provisions of Article 13 and except for reasons
not attributable to the Operator, the Commercial Operation Date
does not occur within one hundred twenty (120) calendar days
following the Commercial Operation Date as specified in Subsection
4.1.1, as the same may be adjusted in accordance with this
Agreement.
If construction of the Power Plant is deemed abandoned in
accordance with this Subsection 14.2.1, PNOC-EDC may terminate this
Agreement. In case of termination under this Subsection 14.2.1,
the Operator shall forfeit the Construction Performance Bond to
PNOC-EDC and transfer, at no cost to PNOC-EDC, all of the
Operator's right, title and interest in the Power Plant to PNOC-
EDC, subject to any liens existing thereon on the date of such
transfer. Upon such termination, forfeiture and transfer, the
Operator shall have no further liability hereunder.
14.2.2 ABANDONMENT DURING COOPERATION PERIOD
The Power Plant shall be deemed abandoned during the Cooperation
Period under the following circumstances:
(a) the Operator, through a written notice to PNOC-EDC,
terminates operation of the Power Plant except (i) for Force
Majeure or (ii) for reasons not attributable to the Operator; or
(b) the Operator fails to deliver energy to NAPOCOR on behalf of
PNOC-EDC for a period of one hundred twenty (120) consecutive
calendar days except (i) for Force Majeure or (ii) for reasons not
attributable to the Operator; or
(c) subject to the provisions of Article 13 and except for reasons
not attributable to the Operator, the Operator fails to commence
reconstruction of the damaged Power Plant within one hundred twenty
(120) calendar days following receipt of insurance proceeds
relating to, and in amounts sufficient to cover loss or damage
arising from, Force Majeure or, if there is no material damage to
the Power Plant, the Operator fails to resume delivery of energy to
NAPOCOR on behalf of PNOC-EDC within one hundred twenty (120) days
following the termination or cessation of Force Majeure; provided
that a notice of such termination or cessation shall have been
given by PNOC-EDC to the Operator.
If the Power Plant is deemed abandoned during the Cooperation
Period in accordance with this Subsection 14.4.2, PNOC-EDC may
terminate this Agreement. Upon such termination, the Operator
shall forfeit the Operation Performance Bond to PNOC-EDC and shall
transfer, at no cost to PNOC-EDC, all of the Operator's rights,
title and interest in the Power Plant to PNOC-EDC,
subject to any liens existing thereon on the date of such
transfer, and the Operator shall have no further liability
hereunder.
14.3 TERMINATION OF CONTRACT
From and after the Completion Date, in the event that, during any
period of sixty (60) consecutive days, the Operator fails to
deliver energy which is equal to at least seventy percent (70%) of
the Contracted Capacity multiplied by the number of hours in the
aforesaid period (as adjusted with the applicable Correction Curves
and under Subsection 8.3.6) (the "Threshold Energy"), for any
reason other than those events where no Outage is deemed to occur
as enumerated in the definition of "Outage" under Section 1.1 of
this Agreement (as confirmed by an independent third party expert
appointed by PNOC-EDC and acceptable to the Operator), PNOC-EDC
shall give the Operator written notice of such failure requiring
the Operator to cure the failure within thirty (30) days following
such notice (the "Notice Period"). If, during the Notice Period,
the Operator still continuously fails to deliver the Threshold
Energy for any reasons other than those events referred to in the
immediately preceding sentence, PNOC-EDC may, subject to the prior
written consent of the lenders for the Project - which consent
shall not be unreasonably withheld and provided that any lender
with vested interest in the Operator (except where such interest is
solely as lender to the Operator) shall not be entitled to withhold
consent - terminate this Agreement by giving written notice thereof
to the Operator, subject to the Operator's right to question such
termination in accordance with Section 20(b); provided however that
PNOC-EDC shall have no termination rights under this Section 14.3
if:
(a) the Operator has commenced to cure the shortfall in the
Threshold Energy within the Notice Period and continues his efforts
to cure, or
(b) the Operator elects, by written notice to PNOC-EDC, to keep
this Agreement in full force and effect by payment to PNOC-EDC of
(i) any amount that PNOC-EDC is obligated to pay to NAPOCOR as a
result of the Operator's inability to meet the energy requested by
NAPOCOR from the Power Plant during any Billing Period and (ii) the
cost of the steam corresponding to the energy shortfall from the
Nominated Capacity times the number of hours in the same Billing
Period using the steam price in Annex I as escalated in accordance
with Subsection 8.4.4 and using the Guaranteed Net Plant Steam
Rate, such payments to be invoiced by PNOC-EDC on a monthly basis
and paid for by the Operator not later than five (5) working days
after the end of the Billing Period.
If, at any time, the Operator fails to remit amounts in
accordance with Section 14.3 (b) to PNOC-EDC, then PNOC-EDC shall
have the right to terminate this Agreement on the fifteenth (15th)
day next succeeding the day on which such amounts are due.
Notwithstanding the foregoing, if PNOC-EDC has not given the
Operator not less than five (5) working days' prior written notice
of any amount due, then the Operator shall have no
obligation to pay such amounts to PNOC-EDC and PNOC-EDC shall have
no right to terminate this Agreement if the Operator fails to pay.
Upon termination, PNOC-EDC may forfeit in its favor the Operation
Performance Bond. In the event that the arbitration tribunal finds
that the termination of this Agreement and the forfeiture by PNOC-
EDC of the Operation Performance Bond is improper, PNOC-EDC shall
indemnify the Operator for all costs and losses
incurred by the Operator as a result of or in connection with such
termination and forfeiture of the Operation Performance Bond.
ARTICLE 15 SEVERAL OBLIGATIONS
Except where specifically stated in the Agreement to be
otherwise, the duties, obligations, and liabilities of the
Parties 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 among
the Parties. Each Party shall be liable individually and
severally for its own obligations under this Agreement.
ARTICLE 16 COMMUNICATIONS AND NOTICES
16.1 COORDINATION MEETINGS
Coordination meetings between the Operator, PNOC-EDC and NAPOCOR
personnel shall be conducted for purposes of clarifying problems
that may arise during the prosecution of the work and throughout
the Cooperation Period.
In addition, throughout the term of this Agreement
representatives of PNOC-EDC and the Operator shall meet regularly
at not less than yearly intervals to discuss the progress of the
Project and the operation of the Power Plant in order to ensure
that the arrangements between the Parties proceed on a mutually
satisfactory basis. Representatives of NAPOCOR may be invited to
attend any such meeting.
The site of such meetings shall be mutually agreed upon by both
Parties. All expenses to be incurred by each of the Parties and
NAPOCOR shall be for its own account.
16.2 COMMUNICATIONS AMONG PARTIES
All orders and formal communications shall be made in writing.
Any communication made by PNOC-EDC to the Operator's designated
representative at the Site will be considered as made to the
Operator.
16.3 NOTICES
Any notice or communication required to be in writing hereunder
shall be given by any of the following means: registered mail,
telex or telefax, courier or personal delivery. Such notice or
communication shall be sent to the respective Parties at the
address listed below. Any notice given by registered mail or
courier shall be considered sent upon posting and the same shall be
considered received upon its acknowledgement.
In the case of Operator to:
The President
Ormat Inc.
980 Greg Street
Sparks, Nevada, 89431-6039
USA
Telefax +1-702-356-9039
In the case of PNOC-EDC to:
Executive Vice President
PNOC-Energy Development Corporation
Merritt Road
For Bonifacio
Makati, Metro Manila
Philippines
Telex No .22666 EDC PH
Telefax .+63-2-815 2747
Either Party may, by written notice to the other, change the
representative or the address to which such notices and
communications are to be sent.
ARTICLE 17 NON-WAIVER
None of the provisions of this Agreement shall be considered waived
by either Party except when such waiver is given in
writing. The failure of either Party to insist, in any one or more
instances, upon strict performance of any of the provisions of this
Agreement or to take advantage of any of its rights hereunder shall
not be construed as a wavier of any such
provisions or the relinquishment of any such rights for the future,
but the same shall continue and remain in full force and effect.
ARTICLE 18 ASSIGNMENT
(a) Except as provided under Section 18(b), the Operator shall not
assign or transfer any or all of its rights and obligations under
this Agreement without the prior written consent of PNOC-EDC. Any
such assignment or transfer made without such prior written consent
shall be null and void. Consent for such assignment or transfer
may not be unreasonably withheld, provided that, in the reasonable
opinion of PNOC-EDC, the assignee or transferee possesses all the
legal, financial and technical qualification required to operate
and maintain the Power Plant. Notwithstanding any of the
foregoing, the Operator may assign all of its right, title and
interest in and to or arising out of or in connection with this
Agreement as security for the financing of the project subject to
the consent of PNOC-EDC, which consent shall not be unreasonably
withheld.
(b) All obligations under this Agreement which the Operator agrees
to be responsible for hereunder shall be assumed by Newco which
shall undertake to perform the Operator's obligations to perform
such work and in consideration of which shall be paid all fees
payable to the Operator under this Agreement. Newco, in carrying
out such work and receiving the fees payable to the Operator under
this Agreement, shall act on its own behalf and for its own
benefit, and not as an agent or representative of the Operator.
For such purpose, PNOC-EDC, the Operator and Newco shall execute
and deliver the Accession Undertaking, upon the effectiveness of
which Newco shall become a party hereto without the need of any
further action on the part of the Operator and, the rights and
obligations of PNOC-EDC and the Operator under this Agreement shall
be transferred and amended in accordance with the terms of the
Accession Undertaking, as fully as if Newco had executed this
Agreement as amended by the terms of the
Accession Undertaking.
ARTICLE 19 PRIVATISATION ASSURANCES
In the event that either of the common stock or other equity
interests in PNOC-EDC or NAPOCOR, or any other portion of their
assets or business activities are sold or otherwise transferred or
announced to be sold or otherwise transferred, or any merger or
other corporate reorganization (or a series of any of the above):
(i) results in a real or purported assignment of rights or
assumption of obligation under this Agreement; or
(ii) substantially and adversely changes the net assets, projected
profits, projected net cash flow from operations, or otherwise
would prompt a reasonable person to conclude that the ability of
the relevant entity to duly perform its obligations hereunder on
timely basis had been materially and adversely affected;
then the Operator shall have the right to request reasonable
assurances from PNOC-EDC, NAPOCOR and the Authorities that the
Operator's right and net economic returns under this Agreement are
preserved and that PNOC-EDC's ability to fully and satisfactorily
comply with its obligations under this Agreement is not impaired.
If no mutually agreed, written resolution of the issues is reached
within ninety (90) days, then the provisions of Article 9 shall
apply. If the ability of PNOC-EDC to fund any resulting buyout is
in question, PNOC-EDC shall exercise any rights it may have to
cause NAPOCOR or other third-party to buyout PNOC-EDC paying the
proceeds directly to the Operator.
ARTICLE 20 DISPUTE RESOLUTION
As much as possible, disputes shall be settled amicably between the
Parties. The Parties each hereby elect binding arbitration as
their sole and exclusive remedy for any claim arising under this
Agreement or in any way related to the Project.
(a) The Parties agree that in the event that there is any
dispute or difference between them arising out of this Agreement or
in the interpretation of any of the provisions hereof, they shall
endeavor to meet together in an effort to resolve such dispute by
discussion between them. But failing such resolution, the Chief
Executives of PNOC-EDC and the Operator shall meet to resolve such
dispute or difference, and the joint decision of such Chief
Executives shall be binding upon the parties hereto. In the event
that a settlement of any such dispute or difference is not reached
pursuant to this subclause, then arbitration under the next
following subclause shall apply.
(b) Where any dispute is not resolved as provided for in the
preceding subclause, then the Parties shall enter into binding
arbitration procedures under the rules of conciliation and
arbitration of the International Chamber of Commerce. Such
arbitration shall take place in Paris, France before a tribunal of
three arbitrators, one to be chosen by each of the Operator and
PNOC-EDC, and the third to be chosen by the two first selected.
The arbitration proceedings shall be conducted in the English
language.
(c) To the extent that PNOC-EDC may in any jurisdiction claim for
itself or its assets or revenues immunity from suit, execution,
attachment (whether in aid of execution, before judgment or
otherwise) or other legal process, and to the extent that in any
such jurisdiction there may be attributed to itself or its assets
any immunity (whether or not claimed) PNOC-EDC agrees not to claim
and irrevocably waives such immunity to the full extent permitted
by the laws of such jurisdiction.
ARTICLE 21 GOVERNING PRIORITY
In case of discrepancies, the following sequence of priority shall
govern among the various sections of the contract documents
including the modifications of and additions to the relevant
document:
(a) This Agreement, including its Annexes;
(b) The Operator's Bid Forms and accompanying data dated
February 12, 1993;
(c) Addenda to the Technical Information & Requirements to the bid
document as per subparagraph (e) below;
(d) Technical Information & Requirements including drawings to the
bid document as per subparagraph (e) below;
(e) The Bid Document.
ARTICLE 22 GOVERNING LAW
This Agreement shall be governed by and construed in accordance
with Philippine Law.
ARTICLE 23 SEPARABILITY
If any part or parts of this Agreement shall be declared invalid by
competent courts, the other parts hereof shall not thereby be
affected or impaired.
ARTICLE 24 DURATION OF THE AGREEMENT
This Agreement shall be from the Effectivity Date up to the earlier
of the Transfer Date or Termination Date.
ARTICLE 25 EFFECTIVITY
25.1 PNOC-EDC CONDITIONS ON THE OPERATOR
It shall be a condition precedent to the effectivity of this
Agreement that the following are submitted by or on behalf of the
Operator to PNOC-EDC (except for such documents the submission of
which is waived by PNOC-EDC).
(a) a copy of the license to do business in the Philippines issued
to the Operator by the Securities and Exchange Commission, as
certified by an authorized officer of the Operator in a manner
satisfactory to PNOC-EDC.
(b) a copy of the certificate of registration of NEWCO with the
Board of Investments, as certified by an authorized officer of the
Operator in a manner satisfactory to PNOC-EDC.
(c) a copy of the Articles of Incorporation of Newco (jointly
established by California Energy Company Inc and the Operator in
accordance with the Shareholders' Agreement dated May 28, 1993,
attached hereto as Annex L), as registered with the Securities and
Exchange Commission, certified by the corporate secretary of Newco
in a manner satisfactory to PNOC-EDC.
25.2 OPERATOR CONDITIONS ON PNOC-EDC
It shall be a condition precedent to the effectivity of this
Agreement that the following are submitted by or on behalf of PNOC-
EDC to the Operator (except for such documents the submission of
which is waived by the Operator).
(a) copies of the Articles of Incorporation and By-Laws of PNOC-
EDC, and of resolutions of its Board of Directors authorizing the
execution, delivery and performance by PNOC-EDC of this Agreement
and the Accession Undertaking, each certified by the corporate
secretary of PNOC-EDC in a manner satisfactory to the Operator;
(b) a certificate of the corporate secretary of PNOC-EDC
confirming that all necessary corporate and other approvals and
action have been duly obtained and taken for the execution,
delivery and performance by PNOC-EDC of this Agreement and the
Accession Undertaking;
(c) a true copy of the Memorandum of Understanding and Power
Purchase Agreement executed between PNOC-EDC and NAPOCOR, less such
sections that PNOC-EDC deems to be of a confidential nature and do
not relate or pertain to the rights of the Operator under this
Agreement;
(d) copies of resolutions of the Board of Directors of each of
PNOC-EDC and NAPOCOR authorizing the execution, deliver and
performance by each of PNOC-EDC and NAPOCOR of the Power Purchase
Agreement;
(e) confirmation that PNOC-EDC has ownership of or the right to
use the Site and that the Operator has the right to use the site
from the Effectivity Date to the Transfer Date.
(f) copies of such consents, licenses, permits, approvals and
registration by or with the Authorities as may be necessary to
ensure the validity and enforceability of this Agreement and to
permit PNOC-EDC to perform its obligations of this Agreement,
including
(i) a Performance Undertaking executed in behalf of the Republic
of the Philippines by the Secretary or any of the
Undersecretaries of Finance named in the President of the
Republic of the Philippines' Full Power Authorization, to
guarantee the performance by PNOC-EDC of its obligations under this
Agreement, such Performance Undertaking to be substantially in the
form of Annex K and acceptable to the Operator;
(ii) an opinion by the Department of Justice confirming the
validity, enforceability and binding effect of the Performance
Undertaking;
(iii) Central Bank approval of the Project, for PNOC-EDC to make
foreign currency payments to the Operator and for any foreign
currency loans to be made by financial institutions for the purpose
of repaying any bridge loans extended to the Operator and for
meeting the capital requirements of the Project;
(iv) the Environmental Compliance Certificate issued by the
Department of Environment and Natural Resources;
(v) registration of PNOC-EDC as a Block Power Production
Facility under Executive Order No. 215;
(vi) an opinion by the National Electrification Administration and
the Energy Regulatory Board confirming that the operation by the
Operator of the Power Plant will not constitute a public entity so
as to require a franchise, certificate of public
convenience and other similar license;
(vii) National Economic Development Authority certification that
the project is a high priority economic project for power
development which is financed by or through foreign funds, and
Investment Coordinating Committee approval of the Project; and
(viii) An endorsement by the City or Regional Development
Council for the City or Region of the Project to the National
Economic Development Authority; and approval of the Project by the
Provincial Government of Leyte and, if applicable, the
Municipal Government where the Site is located.
25.3 OTHER CONDITIONS
It shall be a condition precedent to the effectivity of this
Agreement that the following is obtained or delivered by the
Operator:
(a) Board of Investments registration of NEWCO as a pioneer
enterprise, approval for the incentives set forth in Annex J and
endorsement to by the Department of Justice for foreign nationals
to be employed in supervisory, technical and advisory positions in
the Project.
(b) confirmation by the Operator of the availability of
financing or funding, at terms and conditions acceptable to the
Operator, such as written commitments or letters or intent, in
accordance with the practice of each lender and of insurance for
the Operator's equity investments.
(c) agreement between the Parties as provided in Clause I1 of
Annex I.
(d) agreement between the Parties regarding testing procedures in
accordance with Section 5.1 and Annex D.
25.4 MUTUAL COMMITMENT
The Parties mutually commit to do all things and to execute all
documents necessary to achieve the Effectivity Date on the
earlier of 120 days after the issuance of the Performance
Undertaking required under Subsection 25.2(f)(i) or 150 days after
the execution of this Agreement.
25.5 FULFILLMENT OR WAIVER
Upon the fulfillment or waiver of each individual condition
precedent enumerated in Sections 25.1, 25.2 and 25.3, each of PNOC-
EDC and the Operator shall certify in writing within seven (7) days
the fulfillment or waiver of such a condition precedent.
Upon the fulfillment or waiver of all the conditions precedent
enumerated in Sections 25.1, 25.2 and 25.3, each of PNOC-EDC and
the Operator shall certify in writing that all the conditions
enumerated in Section 25.1 (in the case of PNOC-EDC) and Sections
25.2 and 25.3 (in the case of the Operator) have been fulfilled or
waived. If by one hundred fifty (150) days from signing this
Agreement, one or more conditions in Sections 25.1, 25.2 and 25.3
have not been fulfilled or waived by PNOC-EDC or the Operator, as
the case may be, the Parties shall consult each other in good faith
with the view to achieving the Effectivity Date. If a mutually
acceptable arrangement is not reached and implemented within one
hundred sixty five (165) days from signing this
Agreement, either Party may terminate its commitments under this
Agreement, and such Party shall reimburse the other Party for all
costs and expenses incurred by the latter in respect of this
Agreement. Upon termination of this Agreement PNOC-EDC shall
return the Bid Bond to the Operator.
IN WITNESS WHEREOF, the parties hereto have set their hands this
6th day of September 1993 at Makati, Philippines.
ORMAT INC. PNOC-Energy Development
Corporation
(PNOC-EDC)
/s/ Jacob Menachem /s/ Monico V. Jacob
Signed in the Presence Of:
/s/ Nessim Forte /s/ Nazario C. Vasquez
Exhibit 10.95 (Cont.)
FIRST AMENDMENT TO 125 MW POWER PLANT - UPPER MAHIAO AGREEMENT
THIS FIRST AMENDMENT TO 125 MW POWER PLANT - UPPER MAHIAO
AGREEMENT (this "Amendment") is made as of January 28, 1994,
between PNOC-ENERGY DEVELOPMENT CORPORATION, a wholly owned
subsidiary of the Philippine National Oil Company, organized and
existing under Philippine law ("PNOC-EDC") and ORMAT INC., a
Delaware corporation ("Operator").
A. PNOC-EDC and Operator are the parties to that certain 125 MW
Power Plant - Upper Mahiao Agreement dated September 6, 1993 (the
"Original Agreement"), concerning the development and operation of
a 118.5 MW (net) geothermal power production facility in Leyte
Province, the Philippines. All capitalized terms not defined
herein shall have the meanings given them in the Original
Agreement.
B. PNOC-EDC and Operator each acknowledge that some but not all of
the conditions to "effectivity" of the Original Agreement set forth
in Sections 25.1, 25.2 and 25.3 of the Original Agreement have been
fulfilled.
C. PNOC-EDC and Operator recognize that additional time is needed
in order to fulfill the remaining conditions to
Effectivity set forth in Sections 25.1, 25.2, and 25.3 of the
Original Agreement.
D. Section 25.5 of the Original Agreement provides, inter alia,
that if by the date (the"Effectivity Date") that is one hundred and
fifty (150) days from the signing of the Agreement (I.E., February
3, 1994), one or more of the conditions set forth in Sections 25.1,
25.2 and 25.3 have not been fulfilled or waived by PNOC or the
Operator, as the case may be, the Parties shall consult in good
faith with a view to achieving Effectivity.
E. PNOC-EDC and Operator wish to amend the Original Agreement as
more fully set forth in this Amendment.
NOW THEREFORE, the parties hereto, intending to be legally bound,
and to bind their successors and assigns, agree as follows:
1. Amendment of Section 25.4 of the Original Agreement. Section
25.4 of the Original Agreement is hereby amended to read in its
entirety as follows:
The Parties mutually commit to do all things and to execute all
documents necessary to achieve the Effectivity Date on the
earlier of (A) 120 days after the issuance of the Performance
Undertaking required under Subsection 25.3(f)(i) or (B) March 8,
1994.
2. Amendment of Section 25.5 of the Original Agreement. Section
25.5 of the Original Agreement is hereby amended to read in its
entirety as follows:
Upon the fulfillment or waiver of all the conditions precedent
enumerated in Sections 25.1, 25.2 and 25.3, each of PNOC-EDC and
the Operator shall certify in writing that all conditions
enumerated in Section 25.1 (in the case of PNOC-EDC) and Section
25.3 and 25.3 (in the case of the Operator) have been fulfilled or
waived. If by March 8, 1994 one or more conditions in
Sections 25.1, 25.2 and 25.3 have not been fulfilled or waived by
PNOC-EDC or the Operator, as the case may be, the Parties shall
consult with each other in good faith with the view to achieving
the Effectivity Date. If a mutually acceptable arrangement is not
reached and implemented by March 23, 1994, either party may
terminate its commitments under this Agreement, and such Party
shall reimburse the other Party for all costs and expenses
incurred by the latter in respect of the Agreement. Upon
termination of this Agreement, PNOC-EDC shall return the Bid Bond
to the Operator.
3. General Ratification. Except as expressly amended hereby, all
the terms and provisions of the Original Agreement are hereby
ratified and confirmed and remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this First Amendment
to 125 MW Power Plant - Upper Mahiao Agreement as of the date first
above written.
PNOC-ENERGY DEVELOPMENT CORPORATION,
a wholly-owned subsidiary of the
Philippine National Oil Company
By:
/s/ Monico V. Jacob
Name: Monico V. Jacob
Title: President
ORMAT, INC.
a Delaware corporation
By:
/s/ Jacob Menahem
Name: Jacob Menahem
Title: Vice President
ACKNOWLEDGEMENT
REPUBLIC OF THE PHILIPPINES)
MAKATI, METRO MANILA ) S.S.
BEFORE ME, this 28th day of January 1994, in Makati, Metro
Manila, Philippines, personally appeared Monico V. Jacob with
Residence Certificate No. 17683780 issued on April 7, 1993 at
Makati, Metro Manila; and Jacob Menahem with Belgian Passport No.
961804 issued on 9/28/93 at Los Angeles, representing their
respective companies; known to me to be the same persons who
executed the foregoing agreement and they acknowledge to me that
the same is their free corporate act and deed.
CONSENT OF CE CEBU GEOTHERMAL POWER COMPANY, INC.
CE Cebu Geothermal Company, Inc., as the party to whom Ormat Inc.
will assign its rights and obligations as Operator under the
Original Agreement pursuant to the Accession Undertaking, hereby
consents to the terms of the foregoing First Amendment to 125 MW
Power Plant - Upper Mahiao Agreement.
CE CEBU GEOTHERMAL POWER
COMPANY, INC.
By: /s/ Donald M. O'Shei
Name: Donald M. O'Shei, Sr.
Title: President
Our ref: YS/ih-1819
February 10, 1994
PNOC-Energy Development Corporation
Petron Building
7901 Makati Avenue
Makati, Metro Manila
PHILIPPINES
Attention: Mr. Nazario C. Vasquez, Executive Vice-President
Reference: 125 MW Power Plant - Upper Mahiao Agreement (ECA)
Revised Interface Data
Dear Mr. Vasquez,
In line with the provisions of Annex 1 of our ECA agreement, and in
order to meet the effectivity date, enclosed please find the
following documents that together form the revised interface
conditions of the 118.5 MW (Contracted Capacity) Upper Mahiao Power
Plant:
1. Page 69 (INTERFACE PARAMETERS) of our ECA. The revised
parameters are underlined.
2. Annex F of the ECA Seven (7) revised Correction Curves (#UM
101-R3, # UM 102-R3, # UM 103-R3, # UM 104-R3; # UM 201-R2, # UM
203-R2, and # UM 204-R1) relevant to the revised interface Data.
3. Page 3 of the ECA. The revised definitions of the terms:
a. Guaranteed Net Plant Brine Rate, and
b. Guaranteed Net Plant Steam Rate
to reflect the revised interface conditions.
If the above modifications reflect our mutual agreement of the
revised interface conditions, kindly sign in the space provided
below, in order to enact the necessary modification of our ECA, as
provided for in Clause____ of Annex I of the 125 MW Power Plant -
Upper Mahiao Agreement.
Yours Sincerely,
ORMAT INC.
/s/ Yehudit Bronicki
By: Yehudit Bronicki, President
Agreed:
PNOC-ENERGY DEVELOPMENT CORPORATION
/s/ Nazario C. Vasquez
By: Nazario C. Vasquez, Executive Vice-President
February 18, 1994
PNOC-Energy Development Corporation
PNPC Compound
Merritt Road
For Bonifacio
Makati
Metro Manila
PHILIPPINES
Attention: Mr. Nazario C. Vasquez, Executive Vice President
Dear Mr. Vasquez,
This is to confirm the modifications to the 125 MW Power Plant -
Upper Mahiao Agreement, as executed between our companies on
September 6, 1993, and other related matters agreed between
ourselves on February 16, 1994, as follows:
1. PNOC-EDC shall provide steam to the power plant at the rate of
1,019,000 kg/hr. The condensate return temperature shall normally
be 58 degrees C, subject to a maximum of 65 degrees C and the
normal condensate return flow shall be 969,000 kg/hr. The steam
impurities specification (total solids) shall be
amended to include 1.0 ppm Cl and delete CO2. All other
interface conditions shall be as specified in Annex I of the
Agreement.
2. In Section 1.1 of the Agreement, the Guaranteed Net Plant Steam
Rate shall be 8.910 kg/kWh and the Guaranteed Net Plant Brine Rate
shall be 306.670 kg/kWh.
3. The Upper Mahiao power plant will be constructed by Ormat on
two separate sites to be interconnected by a local transmission
line to be constructed by Ormat:
a. One site of 7.0 hectares, located generally as per the
original request for bids and as per Annex A of the Agreement, and
to be used for the construction of the steam power plant; and
b. One site of 1.0 hectares, located near the Upper Mahiao
separation plant at an elevation of approximately 550 meters AMSL
and to be used for the construction of the brine power plant.
4. In consideration of the above, Ormat agrees to pay PNOC-EDC a
one time fee in the aggregate amount of US $2,500,000.00, payable
as follows:
a. US $1,000,000.00 by July 31, 1995, and
b. US $1,500,000.00 by December 31, 1995.
5. It is agreed between the parties to the Agreement that the
efficiency bonus/penalty calculations under Section 8.4.2 of the
Agreement shall be based on the gross outputs of individual units,
subject to correction for variations in auxiliary loads as
appropriately allocated to each unit, and that the steam and brine
rates used will be subject to appropriate corrections for
variations in external conditions and for operation at part load
conditions. The measurement requirements and calculation
procedures for the correct operation of the efficiency
bonus/penalty system in accordance with the above agreement shall
be further developed by the parties together.
6. It is further agreed between the parties to the Agreement that
the commissioning and other tests described in Annex D of the
Agreement shall include efficiency testing under full and part load
conditions, to be conducted on a unit by unit basis, based on
individual GCCI and Brine OEC units, plus other data collection as
required and agreed between the parties to provide sufficient
performance data for the equitable application of the efficiency
bonus/penalty system as described in paragraph 5 above. The data
resulting from these tests shall have priority over previously
supplied data in calculating efficiency bonuses or penalties.
It is agreed between the parties that the only and sole criteria to
establish Completion Date as defined in Section 6.1 of the
Agreement is that the following formula shall be demonstrated
during the power plant testing:
{The Corrected GCCUs' Net Electrical Power + the Corrected Brine
OECs' Net Electrical Power} greater than or equal to 70% of
Contracted Capacity.
Except as otherwise modified above, all other terms, conditions and
specifications in the Agreement remain in full force and effect.
Please indicate your acceptance of this agreement by signing the
conforme' below.
Sincerely yours
/s/ Jacob Menahem
Jacob Menahem
Vice President
Confome'
/s/ Nazario Vasquez
Nazario Vasquez
Executive Vice President
FOURTH AMENDMENT TO 125 MW POWER PLANT - UPPER MAHIAO AGREEMENT
THIS FOURTH AMENDMENT TO 125 MW POWER PLANT - UPPER MAHIAO
AGREEMENT (this "Amendment") is made as of March 7, 1994, between
PNOC_ENERGY DEVELOPMENT CORPORATION, a wholly owned subsidiary of
the Philippine National Oil Company, organized and existing under
Philippine law ("PNOC-EDC") and ORMAT INC., a Delaware
corporation ("Operator").
A. PNOC-EDC and Operator are the parties to the certain 125 MW
Power Plant - Upper Mahiao Agreement dated September 6, 1993 (the
"Original Agreement"), as amended by (i) the First Amendment to 125
MW Power Plant - Upper Mahiao Agreement dates as of January 28,
1994, (ii) the letter dated February 10, 1994 from the
Operator to PNOC-EDC and (iii) the letter dated February 18, 1994
from the Operator to PNOC-EDC (as so amended, the "Amended
Agreement"), concerning the development and operation of a 118.5 MW
(net) geothermal power production facility in Leyte Province, the
Philippines. All capitalized terms not defined herein shall have
the meanings given them in the Original Agreement.
B. PNOC-EDC and Operator each acknowledge that some but not all of
the conditions to "Effectivity" of the Original Agreement set forth
in Sections 25.1, 25.2 and 25.3 of the Original Agreement have been
fulfilled.
C. PNOC-EDC and Operator recognize that additional time is needed
in order to fulfill the remaining conditions to
Effectivity set forth in Sections 25.1, 25.2 and 25.3 of the
Original Agreement.
D. Section 25.5 of the Amended Agreement provides, inter alia,
that if by March 8, 1994, one or more of the conditions set forth
in Sections 25.1, 25.2 and 25.3 have not been fulfilled or waived
by PNOC or the Operator, as the case may be, the Parties shall
consult in good faith with a view to achieving Effectivity.
E. PNOC-EDC and Operator wish to amend the Original Agreement as
more fully set forth in this Amendment.
NOW THEREFORE, the parties hereto, intending to be legally bound,
and to bind their successors and assigns, agree as follows:
1. Amendment of Section 25.4 of the Amended Agreement. Section
25.4 of the Amended Agreement is hereby amended to read in its
entirety as follows:
The Parties mutually commit to do all things and to execute all
documents necessary to achieve the Effectivity Date on the
earlier of (A) 120 days after the issuance of the Performance
Undertaking required under Subsection 25.2 (f)(i) or (B) April 15,
1994.
2. Amendment of Section 25.5 of the Amended Agreement. Section
25.5 of the Amended Agreement is hereby amended to read in its
entirety as follows:
Upon the fulfillment or waiver of all the conditions precedent
enumerated in Sections 25.1, 25.2 and 25.3, each of PNOC-EDC and
the Operator shall certify in writing that all the conditions
enumerated in Sections 25.1 (in the case of PNOC-EDC) and
Sections 25.2 and 25.3 (in the case of the Operator) have been
fulfilled or waived. If by April 8, 1994 one or more conditions in
Sections 25.1, 25.2 or 25.3 have not been fulfilled or waived by
PNOC-EDC or the Operator, as the case may be, the Parties shall
consult with each other in good faith with the view to achieving
the Effectivity Date. If a mutually acceptable
arrangement is not reached and implemented by April 23, 1994,
either Party may terminate its commitments under this Agreement,
and such Party shall reimburse the other Party for all costs and
expenses incurred by the latter in respect of this Agreement. Upon
termination of this Agreement, PNOC-EDC shall return the Bid Bond
to the Operator.
3. General Ratification. Except as expressly amended hereby, all
the terms and provisions of the Amended Agreement are hereby
ratified and confirmed and remain in full force and effect.
4. Counterparts. This Fourth Amendment may be executed in any
number of counterparts, each executed counterpart constituting an
original but all together only one Fourth Amendment.
IN WITNESS WHEREOF, the parties have executed this Fourth
Amendment to 125 MW Power Plant - Upper Mahiao Agreement as of the
date first above written.
PNOC-ENERGY DEVELOPMENT CORPORATION,
a wholly-owned subsidiary of the
Philippine National Oil Company
By: /s/ Monico V. Jacob
Name: Monico V. Jacob
Title: President
ORMAT INC.
a Delaware corporation
By: /s/ Yehudit Bronicki
Name: Yehudit Bronicki
Title: President
CONSENT OF CE CEBU GEOTHERMAL POWER COMPANY, INC.
CE Cebu Geothermal Power Company, Inc., as the party to whom Ormat
Inc. will assign its rights and obligations as Operator under the
Amended Agreement pursuant to the Accession
Undertaking, hereby consents to the terms of the foregoing Fourth
Amendment to 125 MW Power Plant - Upper Mahiao Agreement
CE CEBU GEOTHERMAL POWER
COMPANY, INC.
By: /s/ Donald M. O'Shei, Sr.
Name: Donald M. O'Shei, Sr.
Title: President
Exhibit 10.96
CREDIT AGREEMENT
CREDIT AGREEMENT (this "Agreement"), dated as of April 8, 1994,
among CE CEBU GEOTHERMAL POWER COMPANY, INC., a corporation
organized and existing under the laws of the Republic of the
Philippines (the "Borrower"), the financial institutions listed in
Schedule I hereto, CREDIT SUISSE, as Arranger, as Agent for the
Issuing Bank and the Banks and as the Issuing Bank, and BANQUE
NATIONALE DE PARIS, as Co-Arranger and as Co-Underwriter.
W I T N E S S E T H :
WHEREAS, the Borrower has requested the Banks to make a credit
facility (the "Construction Credit") available to it on the terms
and subject to the conditions set forth in this Agreement, for the
purpose of financing a portion of the costs of construction of the
Project;
WHEREAS, (a) the Borrower and Eximbank are entering into the
Eximbank Credit Agreement, pursuant to which Eximbank has agreed,
subject to the terms and conditions set forth therein, to provide
certain term financing for the Project, (b) Eximbank, the Agent,
the Banks and the Collateral Agent are entering into the Eximbank
Guarantee Agreement, pursuant to which Eximbank has agreed, subject
to the terms and conditions set forth therein, to provide a limited
guaranty of the Loans made by the Banks under this Agreement, (c)
the Borrower and the Supplemental Lender are entering into the
Supplemental Credit Agreement, pursuant to which the Supplemental
Lender has agreed, subject to the terms and conditions set forth
therein, to provide certain construction and term financing for the
Project and (d) the Borrower, CECI, the Affiliated Funding
Entities, the Agent and the Collateral Agent are entering into the
Funding Agreement, pursuant to which CECI has agreed to cause the
Affiliated Funding Entities to make the Required Subordinated Loans
and/or the Required Equity Contributions and the parties thereto
have made provision to permit the making by the Affiliated Funding
Entities of the Optional Subordinated Loans; and
WHEREAS, the Banks are willing to make Loans to the Borrower and
the Issuing Bank is willing to issue the Letter of Credit, in each
case on the terms and subject to the conditions set forth in this
Agreement, for the purpose described above;
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE 1. Defined Terms and Principles of Construction
Section 1.1 Defined Terms and Principles of Construction. For all
purposes of this Agreement, (a) capitalized terms used but not
otherwise defined herein shall have the meanings set forth in
Schedule X attached hereto and (b) the principles of construction
set forth in Schedule X shall apply.
ARTICLE 2. Amount and Terms of Construction Credit
Section 2.1 The Commitments. (a) Subject to the terms and
conditions of this Agreement, each Bank severally agrees for its
own account to make available to the Borrower, during the
Availability Period, such Bank's Applicable Percentage of one or
more loans (each a "Loan" and, collectively, the "Loans") either
directly pursuant to Section 2.2 or in connection with the
reimbursement of drawings under the Letter of Credit pursuant to
Article 3; provided that (i) it is understood and agreed that upon
the issuance of the Letter of Credit pursuant to the terms of this
Agreement, each Bank's L/C Commitment shall not be
terminated or suspended; and (ii) the aggregate principal amount of
Loans outstanding from any Bank plus the amount of such Bank's L/C
Commitment shall at no time exceed the Commitment of such Bank at
such time.
(b) The Loans are not revolving in nature, and any amounts repaid,
prepaid or cancelled pursuant to the terms of this
Agreement may not be reborrowed.
(c) Any and all amounts due to the Banks, the Issuing Bank and the
Agent pursuant to the Loans, the Notes, the Letter of Credit, this
Agreement and the other Financing Documents are entitled to the
benefit of the Collateral which is held for the benefit of the
Secured Parties through the Collateral Agent pursuant to the terms
of the Security Documents and the Funding Agreement.
(d) The Borrower agrees that the proceeds of the Loans will be
applied only to finance the Financed Portion of the costs
incurred by the Borrower after November 9, 1992 for the purchase in
the United States and export to the Republic of the Items and 100%
of the Guarantee Exposure Fee. The aggregate amount of the Loans
shall not exceed in aggregate amount the lesser of (i) $154,882,613
and (ii) the sum of (x) the aggregate amount of Financed Portion
for all of the Items and (y) 100% of the
Guarantee Exposure Fee. The Borrower agrees to make cash
payments for each of the Items (from sources other than the
proceeds of the Loans and the Letter of Credit) in an aggregate
amount equal to not less than 15% of the Contract Price of each
Item.
Section 2.2 Procedures for Fundings. (a) From time to time, but
not more frequently than once per Month, the Borrower may submit an
Application for Funding to the Agent, properly executed, (i)
requesting a Loan, (ii) requesting the Agent to issue to the
Issuing Bank an approval of a drawing under the Letter of Credit (a
"Drawing Approval"), (iii) requesting the Agent's approval of a
request for a Supplemental Loan and/or (iv) requesting the Agent's
approval of a Progress Equity Contribution and/or a Progress
Subordinated Loan, in each case for the payment of Project Costs
specified in the Construction Budget which are then due and
payable. Notwithstanding the provisions of clause (iv) of the
immediately preceding sentence, (i) no Progress Subordinated Loans
shall be made on or at any time after, and the Borrower shall not
request the Agent's approval of a Progress Subordinated Loan to be
made on or at any time after, the Cooperation Period Commencement
Date and (ii) any Application for Funding requesting the Agent's
approval of a Progress Subordinated Loan to be made on or at any
time after the Cooperation Period Commencement Date shall be deemed
to be a request for the Agent's approval of a Progress Equity
Contribution. The form of Application for Funding attached hereto
as Schedule 2.2(a) shall be used by the Borrower for requesting
Loans, the Agent's issuance of a Drawing Approval and the Agent's
approval of a request for a Supplemental Loan, a Progress
Subordinated Loan and/or Progress Equity Contribution. Each such
Application for Funding shall be submitted to the Agent, with a
copy to the Independent Engineer, at least twelve (12) Business
Days prior to the date on which the Loan, the issuance of a Drawing
Approval, the Supplemental Loan, the Progress Equity Contribution
and/or the Progress Subordinated Loan is desired. An Application
for Funding for a Loan (i) shall in no event request a Loan in
excess of the then Total Unutilized Commitment (and the aggregate
amount of each Loan shall in no event exceed such amount) and (ii)
shall (except with respect to the final unused portion of the Total
Unutilized Commitment) request a Loan in an amount of at least
$100,000. An Application for Funding for the issuance of a Drawing
Approval shall in no event request the Agent to issue a Drawing
Approval in respect of a drawing under the Letter of Credit in an
amount less than $100,000 (except with respect to the final undrawn
portion of the Letter of Credit). For the avoidance of doubt, the
Borrower may submit an Application for Funding for the issuance of
a Drawing Approval in respect of the first drawing under the Letter
of Credit concurrently with the Borrower's request for the issuance
of the Letter of Credit by the Issuing Bank pursuant to Article 3
hereof. In requesting a Loan, the Borrower shall also comply with
the procedures, conditions and requirements specified in Part B of
Annex B hereto and shall deliver to the Agent and Eximbank, at
least twelve (12) Business Days prior to the proposed date of the
Loan, a Request for Disbursement to Account of Borrower,
substantially in the form of Exhibit 1 to Annex B, appropriately
completed and accompanied by all documents required under items (1)
through (5) of Part B of Annex B.
For the avoidance of doubt, Default Subordinated Loans and
Default Equity Contributions shall be made by the Affiliated
Funding Entities and incurred by the Borrower at the time and in
the amount specified in the Funding Agreement and it shall not be
necessary for the Borrower to submit an Application for Funding in
connection therewith.
Without restricting the Borrower's ability to amend the
Construction Budget from time to time in accordance with Section
6.29 hereof, no Application for Funding may request Loans for, the
issuing of a Drawing Approval for a drawing under the Letter of
Credit for, or approvals of requests for Supplemental Loans,
Progress Subordinated Loans and/or Progress Equity Contributions
for, any amounts with respect to any Budget Category which,
together with all prior Loans, drawings under the Letter of Credit,
Supplemental Loans, Progress Subordinated Loans and Progress Equity
Contributions with respect to such Budget Category, are in excess
of the amount set forth for such Budget Category (plus any
applicable contingency) in the Construction Budget as then in
effect.
The Agent shall not be required to disburse all or any part of a
Loan, issue a Drawing Approval in respect of all or any part of a
proposed drawing under the Letter of Credit or approve all or any
part of a request for a Supplemental Loan, a Progress Subordinated
Loan and/or a Progress Equity Contribution requested in an
Application for Funding (i) for which all conditions precedent for
the making of such Loan or Supplemental Loan or for the issuance of
such Drawing Approval have not been satisfied or waived pursuant to
this Agreement or the Supplemental Credit Agreement, as the case
may be, or (ii) as to which documentation required to be delivered
to the Agent has not been timely delivered. The making or
approving of any Loan, the issuance of any Drawing Approval or the
approving of any request for a Supplemental Loan, a Progress
Subordinated Loan or a Progress Equity Contribution on the
specified day on which such Loan, issuance of a Drawing Approval or
approval of request for a Supplemental Loan, a Progress
Subordinated Loan or a Progress Equity Contribution is requested
shall be contingent on the Agent's receipt of the Independent
Engineer's approval of such matters expressly delegated to the
Independent Engineer in the form of Application for Funding and
Article 5 hereof by at least 11:00 a.m. New York time (i) one (1)
Business Day before (x) in the case of a Loan, the day on which the
Borrower selects the Interest Rate and the Interest Period with
respect to such Loan (or at least two (2) Business Days before the
specified day on which the Loan is requested to be made if the
Borrower does not select an Interest Rate and Interest Period with
respect to such Loan), in accordance with Section 2.5(a) hereof,
(y) in the case of a Drawing Approval, the specified day on which
the Drawing Approval is requested to be issued and (z) in the case
of a request for approval of a Supplemental Loan, any period
preceding the making of a request for the Supplemental Loan which
is the subject of the Application for Funding pursuant to the
Supplemental Credit Agreement and (ii) in the case of a request for
approval of a Progress Subordinated Loan and/or a Progress Equity
Contribution, two (2) Business Days before the specified day on
which the Progress Subordinated Loan and/or Progress Equity
Contribution is requested to be made. The Agent shall apply the
same standards with respect to review and approval of any
Application for Funding for a Progress Subordinated Loan and/or a
Progress Equity Contribution as the Agent would apply to review and
approval of an Application for Funding for a Loan, including,
without limitation, determining whether all conditions precedent
set forth in Section 5.2 hereof have been satisfied, except that
the Agent may waive any and all such conditions precedent in
connection with approving any Application for Funding for a
Progress Subordinated Loan and/or a Progress Equity Contribution.
For the avoidance of doubt, with respect to Loans made in
connection with the reimbursement of drawings under the Letter of
Credit pursuant to Article 3 hereof, it shall only be necessary for
the Borrower to submit an Application for Funding requesting the
issuance of a Drawing Approval therefor and neither the obligations
of the Banks to reimburse the Issuing Bank for the amount of any
drawing set forth in an L/C Notice nor the incurrence by the
Borrower of Loans in connection with any such reimbursement shall
be contingent on the Borrower's submission of an Application for
Funding for a Loan. If the Agent shall approve an Application for
Funding requesting the issuance of a Drawing Approval, the Agent
shall, subject to the satisfaction of the conditions precedent set
forth in Section 5.2 hereof, issue such Drawing Approval to the
Issuing Bank upon receipt of notice from the Issuing Bank that the
Issuing Bank has found satisfactory all documents presented in
connection with the drawing under the Letter of Credit which is the
subject of such Application for Funding. If the Agent shall
determine not to approve an Application for Funding requesting the
issuance of a Drawing Approval, the Agent shall promptly notify the
Borrower of the reason(s) for such disapproval. If any Application
for Funding shall be disapproved in whole or in part on the basis
of errors contained therein or on the basis of incompleteness of
such Application for Funding, the Agent will cooperate in good
faith with the Borrower in the Borrower's efforts to correct any
and all such errors or incompleteness so as to permit the making of
a Loan, a Progress Equity Contribution and/or a Progress
Subordinated Loan and/or a Supplemental Loan and/or the issuance of
a Drawing Approval in a timely manner, taking into account the due
date for the payment of Project Costs which are subject of such
Application for Funding.
(b) The Agent shall promptly, but in no event later than three (3)
Business Days prior to the proposed date of a requested Loan, give
each Bank notice of such requested Loan, of the amount of funds
such Bank will have to disburse with respect thereto (which shall
be based on such Bank's Applicable Percentage) and the proposed
date of the requested Loan. Subject to the satisfaction of the
conditions precedent set forth in Article 5, including, without
limitation, in Section 5.2(k), no later than 10:00 a.m. New York
time on the applicable date specified in each Application for
Funding for a Loan, each Bank will make available its specified
portion of such Loan, in Dollars and in immediately available funds
to the Agent Account, and upon receipt thereof the Agent shall pay
to the Dollar Disbursement Account in immediately available funds
the aggregate of the amounts so made available by the Banks (other
than such portion thereof which relates to the Guarantee Exposure
Fee which shall be paid directly to Eximbank by the Agent as
specified in the related Application for Funding). As promptly as
practicable following the disbursement of a Loan to the Borrower,
the Agent shall provide written notice thereof to Eximbank, which
notice shall indicate the amount of such Loan.
(c) The Agent may assume that each Bank will make available to the
Agent such Bank's portion of any Loan to be made on the proposed
date of a Loan and the Agent may, in reliance upon such assumption,
make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Agent by
such Bank, the Agent shall be entitled to recover such
corresponding amount from such Bank on demand. If such Bank does
not pay such corresponding amount forthwith upon the Agent's demand
therefor, the Agent shall promptly notify the Borrower, and the
Borrower shall pay such corresponding amount to the Agent within
such period of time as the Agent deems reasonable in the
circumstances. The Agent shall also be entitled to recover on
demand from such Bank or the Borrower, as the case may be, interest
on such corresponding amount in respect of each day from the date
such corresponding amount was made available by the Agent to the
Borrower until the date such corresponding amount is recovered by
the Agent at the following interest rates: (i) with respect to
interest from the Borrower, at the applicable Interest Rate
selected by the Borrower with respect to such amount pursuant to
Section 2.5 and (ii) with respect to interest from such Bank, at
the Federal Funds Rate until the 3rd Business Day, and at the Base
Rate plus 1.75% thereafter. Nothing in this Section 2.2(c) shall
be deemed to relieve any Bank from its obligation to make Loans
hereunder or to prejudice any rights which the Borrower may have
against any Bank as a result of any failure by such Bank to make
Loans hereunder. The amount of any repayment by the Borrower to
the Agent pursuant to the third sentence of this Section 2.2(c)
shall not be considered a Loan hereunder and such repayment shall
not be deemed to be a prepayment of a Loan for purposes of this
Agreement and the other Financing Documents. In addition, in the
event a Bank fails to make its pro rata share of any Loan
available to the Agent as required pursuant to the terms of this
Section 2.2(c) and the Borrower has not reimbursed the Agent with
respect to such pro rata share pursuant to the third sentence of
this Section 2.2(c), such Bank for all purposes of this Agreement
hereby agrees to and does hereby assign all its right, title and
interest and delegate all its obligations with respect to such
defaulted obligation to such Person that the Agent may designate in
writing to such Bank, such assignment and delegation to take effect
from the date such designated Person accepts such assignment and
delegation; provided, that if the Agent so designates a Person
other than one of the Banks listed in Schedule I, the prior
approval of Eximbank (which shall not be unreasonably withheld)
shall be required for such designation. In any event, such Person
that the Agent may designate in accordance with the immediately
preceding sentence shall be a Person eligible for the coverage of
the Guarantee (as defined in the Eximbank Guarantee Agreement)
under the laws, rules, regulations and policies of or applicable to
Eximbank. Such defaulting Bank hereby agrees to cooperate with the
Agent and the designated assignee and to take all actions
necessary, in each case to effect such assignment and delegation.
Section 2.3 Failure to Make Loans. No Bank shall be responsible
for any default by any other Bank of its obligation to make Loans
hereunder and each Bank shall be obligated to make the Loans
provided to be made by it hereunder regardless of the failure of
any other Bank to make its Loans hereunder.
Section 2.4 Notes. (a) The Borrower's obligation to pay the
principal of, and interest on, each Bank's Applicable Percentage of
the Loans shall be evidenced by one separate promissory note for
each Bank, substantially in the form of Schedule 2.4 with blanks
appropriately completed in conformity herewith (individually, a
"Note" and, collectively, the "Notes"), payable to the order of
such Bank. All Loans made by each Bank, and all payments and
prepayments made on account of the principal thereof, shall be
recorded by such Bank on the schedule attached to its respective
Note, it being understood however that failure by any Bank to make
any such endorsement or any error therein shall not affect the
obligations of the Borrower hereunder in respect of such Loans
evidenced thereby.
(b) Each of the Notes shall (i) be dated the Effective Date, (ii)
be in a stated principal amount equal to the Commitment of the Bank
to whom the Note is payable, and be payable in the principal amount
of the Loans evidenced thereby, (iii) mature on the Maturity Date,
(iv) be subject to prepayment as provided in this Agreement, (v)
bear interest as provided herein and (vi) be entitled to the
benefits of this Agreement, the Security Documents and the Eximbank
Guarantee Agreement.
Section 2.5 Interest. (a) The Borrower shall select each
Interest Period and the Interest Rate therefor by giving written
notice of such selection to the Agent by 12:00 noon (New York time)
at least three (3) Business Days before the first day of such
Interest Period, in the case of an Interest Period based on LIBOR,
and by 12:00 noon (New York time) at least one (1) Business Day
before the first day of such Interest Period, in the case of an
Interest Period based on the Base Rate; provided that:
(i) 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, in the case of an Interest Period using LIBOR,
such Business Day falls in another Month, in which case such
Interest Period shall end on the next preceding Business Day;
(ii) any Interest Period using LIBOR which begins on the last
Business Day of a Month (or on a day for which there is no
numerically corresponding day in the Month in which such Interest
Period ends) shall, subject to clause (iv) below, end on the last
Business Day of a Month;
(iii) no Loan upon first being made shall be divided into or
allocated among more than two (2) Interest Periods;
(iv) no Interest Period for any Loan shall extend beyond the
Maturity Date or any date thereafter that the Agent shall, in its
sole discretion, deem reasonable; and
(v) unless otherwise consented to by the Agent, at no time shall
the outstanding principal amounts of the Loans accrue interest
pursuant to more than six (6) Interest Periods (each variation in
time or in the basis upon which interest is calculated constituting
an Interest Period).
Such notice shall specify the Interest Rate and Interest Period (if
the Interest Rate selected is based on LIBOR) selected by the
Borrower and the amount or amounts of each Loan (which shall be, in
the case of an Interest Rate based on LIBOR, not less than
$100,000) that shall bear interest at such Interest Rate for such
Interest Period. In the event the Borrower fails to provide such
notice to the Agent within such time, the Interest Rate shall be at
the rate per annum equal to the Base Rate plus 1.75%.
(b) On each Interest Payment Date, the Borrower shall pay to the
Agent, for the account of the Banks, interest in respect of each
Interest Period on the daily unpaid principal amounts of any Loan
outstanding during such Interest Period in arrears at the rates per
annum equal to the Interest Rates in effect applicable to each such
period. Interest shall be computed on the basis of the actual
number of days elapsed and (i) a year of 360 days for Interest
Rates based on LIBOR and (ii) a year of 365 or 366 days, as
appropriate, for Interest Rates based on the Base Rate.
(c) Without prejudice to the remedies available to the Banks, the
Issuing Bank and the Agent under this Agreement, or
otherwise, the Borrower shall pay in Dollars interest on any
principal of or interest on any Loan, or any other amount
(including, without limitation, Commitment Commission and Fees)
payable under this Agreement, the Notes, the Letter of Credit or
any other Financing Document which is not paid when due (whether by
lapse of time, acceleration, requirement for mandatory
prepayment or otherwise), for each day that such amounts are
overdue until payment in full thereof, at the rate per annum equal
to the Base Rate plus 3.75%, computed on the basis of the actual
number of days elapsed and a year of 365 or 366 days, as
appropriate. Such interest shall be payable by the Borrower to the
Agent, for the account of the Construction Financing Secured Party
to whom the payment obligation giving rise to the
obligation to pay such interest is owed from time to time, upon
demand by the Agent, on each Quarterly Date and on the date such
obligation is paid in full.
(d) The obligation of the Borrower to pay interest as provided in
Section 2.5(c) shall be without prejudice to its obligation to pay
principal and interest in accordance with Sections 2.5(b), 2.5(e)
and 2.6 and any other amounts payable under this
Agreement, the Notes or any other Financing Document.
(e) The Borrower shall pay in Dollars to each Bank, so long as
such Bank shall be required under regulations of the Board of
Governors to maintain reserves with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities
("Required Reserves"), additional interest on the unpaid
principal amount of each Loan of such Bank which is then
outstanding and at such time is subject to an Interest Period using
LIBOR, from the date of the commencement of each such Interest
Period until the end thereof, at an interest rate per annum equal
at all times to the difference obtained by
subtracting (i) LIBOR for such Interest Period from (ii) the rate
obtained by dividing such LIBOR by a percentage equal to 100% minus
the LIBOR Reserve Percentage of such Bank in respect of such
Required Reserves for such Interest Period. Such additional
interest shall be determined by such Bank and notified to the
Borrower through the Agent no later than 90 days after the end of
each Interest Period using LIBOR, and shall be due and payable by
the Borrower within five (5) days of delivery to the Borrower of
such Bank's certificate setting forth the amount of such
additional interest, which certificate shall be final and
conclusive, provided that such determination is made on a
reasonable basis. The foregoing notwithstanding, the Borrower
shall not be obligated to make any payment under this Section
2.5(e) to the extent such payment is duplicative of any payment
made by or on behalf of the Borrower pursuant to Section 2.16
hereof as a result of the same event or circumstances.
Section 2.6 Repayment. The outstanding principal amount of the
Loans shall be paid in a single lump sum on the Maturity Date.
Section 2.7 Commitment Commission and Fees. (a) The Borrower
shall pay in Dollars to the Agent for distribution to each Bank a
commitment commission (the "Commitment Commission") which shall be
at the rate of 0.50% per annum on the daily average of the
difference, from time to time, between (i) the Total Commitment and
(ii) the sum of (x) the Total Loans and (y) the Approved Drawing
Amount at such time. The Commitment Commission shall begin to
accrue on the Effective Date. The Commitment Commission shall be
computed on the basis of the actual number of days elapsed and a
year of 365 or 366 days, as appropriate, and shall be due and
payable in Dollars in arrears on each Quarterly Date, commencing on
the first Quarterly Date after the Effective Date, and on the last
day of the Availability Period or upon such earlier date as the
Total Commitment shall be terminated.
(b) The Borrower shall pay to the Agent in Dollars a non-
refundable annual agency fee in the amount of $200,000 per annum.
Such fee shall be payable in advance on the Credit Date and
annually thereafter on each anniversary of the Credit Date. (c)
The Borrower shall pay to the Agent in Dollars (i) for the account
of each Bank, a non-refundable letter of credit fee at a rate equal
to 2.5% per annum and (ii) for the account of the Issuing Bank, a
non-refundable fronting fee at a rate equal to 0.25% per annum, in
each case on the average daily Approved Drawing Amount, computed on
the basis of the actual number of days elapsed and a year of 360
days and payable in arrears on each Quarterly Date.
(d) (i) the Guarantee Exposure Fee and (ii) the Credit Exposure
Fee and the Commitment Fee payable to Eximbank pursuant to the
terms of the Eximbank Guarantee Agreement and the Eximbank Credit
Agreement, respectively, shall be for the account of the
Borrower. Such Guarantee Exposure Fee is to be financed as part of
a Loan or a drawing under the Letter of Credit in the manner
described in Annex B and such Credit Exposure Fee is to be
financed as provided in Section 3.04 of the Eximbank Credit
Agreement.
(e) The Borrower hereby agrees to pay to the Agent in accordance
with the terms of Section 2.8 of this Agreement the Commitment Fee
payable by the Borrower to Eximbank under the Eximbank Credit
Agreement on each date such Commitment Fee is due pursuant to the
terms of the Eximbank Credit Agreement, and upon receipt thereof
the Agent shall then pay to Eximbank in the manner and to the
account of Eximbank described in Section 3.08 of the Eximbank
Credit Agreement the amount so made available by the Borrower. The
Agent may assume that the Borrower will make available to the Agent
the amount of the Commitment Fee on each date such
Commitment Fee is due under the terms of the Eximbank Credit
Agreement, and the Agent may, in reliance upon such assumption,
make available to Eximbank a corresponding amount on each such
date. If such corresponding amount is not in fact made available
to the Agent by the Borrower, the Agent shall be entitled to
recover such corresponding amount from the Borrower on demand. If
the Borrower does not pay such corresponding amount forthwith upon
the Agent's demand therefor, the Agent shall promptly notify each
Bank of such failure to pay such amount by the Borrower, of the
amount owed by the Borrower, of such Bank's proportionate share
thereof (which shall be based on such Bank's Applicable Percentage)
and the date for payment of such amount by such Bank (which date
for payment shall be three (3) Business Days
following the date of the Agent's notice to such Bank), and on the
date for payment each Bank shall pay its pro rata share of such
amount to the Agent. The Agent shall also be entitled to recover
on demand from the Borrower or each Bank, as the case may be,
interest on such corresponding amount due to the Agent in respect
of each day from the date such corresponding amount was made
available by the Agent to Eximbank until the date such
corresponding amount is recovered by the Agent, at the following
interest rates, in each case computed on the basis of the actual
number of days elapsed and a year of 365 or 366 days, as
appropriate: (i) with respect to interest from the Borrower, at
the rate per annum equal to the Base Rate plus 3.75% and (ii) with
respect to interest from each Bank, at the Federal Funds Rate until
the 3rd Business Day and at the Base Rate plus 1.75% thereafter,
which interest shall be payable pro rata by the Banks if the Banks
are obligated to repay the Agent in accordance with the immediately
preceding sentence. Upon payment by a Bank of its pro rata share
of the amounts owing to the Agent pursuant to this Section 2.7(e),
such Bank shall be subrogated to the rights of the Agent with
respect to payment of such amounts from the Borrower and such Bank
shall be entitled to receive on demand from the Borrower interest
on such amounts paid to the Agent in respect of each day from the
date such Bank makes such amounts available to the Agent until the
date such Bank is reimbursed in full by the Borrower for such
amount at the rate per annum specified in clause (i) of the fifth
sentence of this Section 2.7(e). Nothing in this Section 2.7(e)
shall be deemed to relieve the Borrower of its obligation to pay
the Agent as required by the terms of this Section 2.7(e) for
amounts owing with respect to the Commitment Fee or to prejudice
any rights which the Agent or any Bank may have against the
Borrower as a result of any failure by the Borrower to make such
payments as required hereunder.
Section 2.8 Payments. (a) Except as otherwise specifically
provided herein, payments of principal, interest, Commitment
Commission, Fees and any other payment due to the Agent and/or the
Banks and/or the Issuing Bank under this Agreement shall be made to
the Agent for its own account or for the account of the Bank, Banks
or Issuing Bank entitled thereto, as the case may be, not later
than 10:00 a.m. (New York time) on the date when due and shall be
made in Dollars, in immediately available funds, to the Agent
Account.
(b) If any date for any payment under this Agreement shall not be
a Business Day then such payment shall be made on the next
succeeding Business Day and interest (or Commitment Commission, as
the case may be) shall continue to accrue for the period from such
due date to the next succeeding Business Day.
Section 2.9 Payment Allocation. (a) If the amount of any payment
made by the Borrower hereunder is less than the total amount due
and payable by the Borrower to the Banks and/or the Agent and/or
the Issuing Bank, as relevant, as of the date on which such payment
is actually made by the Borrower, such payment shall be applied
first against charges, fees, costs and expenses due hereunder; then
against interest on interest which became overdue, if any, with
respect to the Loans; then against interest on principal of the
Loans which became overdue, if any; then against interest due on
the Loans; then against the Loans due and payable; and thereafter
against the amount of the Total Letter of Credit at such time.
(b) Payments received by the Agent pursuant to Section 2.9(a),
2.13 and 2.14 shall be allocated to each Bank based on each Bank's
Applicable Percentage.
(c) To the extent the Agent is still holding monies for
application against the Total Letter of Credit after the Letter of
Credit has expired and no further drawings can be made thereunder,
the Agent shall, subject to the terms and conditions of the
Intercreditor Agreement, first apply such monies to any amounts
then owed by the Borrower under this Agreement in the order of
priority set forth in Section 2.9(a), and thereafter pay any
remaining amount to the Borrower. The application of monies
described under "first" in the immediately preceding sentence shall
not be deemed a prepayment of a Loan for purposes of this Agreement
and the other Financing Documents.
Section 2.10 Currency of Payment. The obligation of the
Borrower to pay in Dollars the aggregate amount of the principal
of, and interest, Commitment Commission, Fees and other charges on,
the Loans and any other amounts payable in Dollars under this
Agreement shall not be deemed to have been novated, discharged or
satisfied by any tender of (or recovery under judgment expressed
in) any currency other than Dollars, except to the extent to which
such tender (or recovery) shall result in the effective payment of
such aggregate amount in Dollars at the place where such payment is
to be made and, accordingly, the amount (if any) by which any such
tender (or recovery) shall fall short of such aggregate amount
shall be and remain due to the Banks, the
Issuing Bank and/or the Agent, as relevant, as a separate
obligation, unaffected by judgment having been obtained (if such is
the case) for any other amounts due under or in respect of this
Agreement.
Section 2.11 Net Payments. The Borrower shall cause all
payments made by the Borrower hereunder for the account of the
Banks, the Issuing Bank and/or the Agent to be made without setoff,
counterclaim or other defense. Subject to Section 9.6(b)(iii)
hereof: (a) the Borrower shall pay or cause to be paid all present
and future Bank Taxes now or at any time hereafter levied or
imposed on or in connection with the payment of any and all amounts
due under this Agreement, the Notes or the Letter of Credit, and
all payments of principal, interest and other amounts due under
this Agreement, the Notes or the Letter of Credit shall be made
without deduction for or on account of any such Bank Taxes; (b) if
any payment (including one required by this sentence) is reduced by
a Bank Tax, there shall be due from the Borrower together with it
a further payment equal to that reduction; (c) if the Agent, the
Issuing Bank or any Bank becomes liable for any Bank Tax on account
of a payment from which that Bank Tax has not been deducted, or
reasonably incurs a cost in connection with a Bank Tax, there shall
be due from the Borrower as an indemnity on demand by the affected
Bank, the Issuing Bank or the Agent, as relevant, a payment equal
to that Bank Tax or cost; and (d) in the event the Borrower is
prevented by operation of law or otherwise from paying or causing
to be paid such Bank Taxes as aforesaid, the principal, or as the
case may be, interest or other amounts due under this Agreement,
the Letter of Credit or the Notes shall be increased to such amount
as may be necessary to yield and remit to each of the Agent, the
Issuing Bank and the Banks the full amount it would have received
had such payments been made without deduction of such Bank Taxes.
The Borrower will provide evidence that all Bank Taxes imposed on
payments under this Agreement, the Notes or the Letter of Credit
have been fully paid to the appropriate authorities by delivering
official receipts or notarized copies thereof and/or, where
applicable, a report of the Monthly Remittance Return of Income
Taxes Withheld filed with the Bureau of Internal Revenue of the
Republic, in each case within 30 days after payment.
Section 2.12 Termination of Commitment. The Commitments of the
Banks shall automatically terminate in accordance with the
provisions of Article 7 hereof.
Section 2.13 Voluntary Prepayment. Subject to any required
Governmental Approvals having been obtained (including from the
Central Bank), the Borrower shall have the right, at any time on at
least 30 but not more than 60 days prior written notice to the
Agent (which notice the Agent shall promptly transmit to the
Banks), to prepay all or a part of the principal amount then
outstanding of the Loans, without premium or penalty; provided that
(a) no prepayment of any part of any Loan bearing interest using
LIBOR shall be made on a day which is not the last day of an
Interest Period with respect thereto unless the Borrower pays the
Banks the amounts determined by the Banks to be payable pursuant to
Section 2.15 hereof, (b) the amount of such
prepayment is applied in the following order of priority: first,
to prepay the Total Loans at such time; and second, to cash
collateralize the Total Letter of Credit at such time, (c) all
accrued interest on the principal amount of the Loans to be prepaid
and all other amounts then due to the Banks hereunder are paid at
the same time, and (d) in the case of partial prepayment, such
prepayment shall be in an amount equal to $1 million or more in
integral multiples of $100,000. Upon delivery of any such notice,
the Borrower shall be obligated to effect prepayment in accordance
with the terms thereof.
Section 2.14 Mandatory Prepayment. On the applicable dates set
forth in Sections 3.05(a) and 3.05(d) of the Disbursement
Agreement, the Borrower shall, without demand or notice, make
prepayments to the Agent using funds then made available for such
purpose from the Contingency Account by the Collateral Agent
pursuant to Sections 3.05(a) and 3.05(d) of the Disbursement
Agreement. The Borrower shall, if the Required Banks so require
pursuant to Section 3.04 of the Disbursement Agreement, make
prepayments to the Agent using funds then made available for such
purpose from the Default Subordinated Debt Proceeds Account by the
Collateral Agent pursuant to Section 3.04 of the Disbursement
Agreement.
Section 2.15 Funding Costs. If, as a result of (a) any failure by
the Borrower to pay when due the principal amount of or interest on
any Loan (or portion thereof) having an Interest Rate determined
using LIBOR, (b) any failure by the Borrower to make a borrowing of
any Loan having an Interest Rate determined using LIBOR after the
Borrower has selected an Interest Rate using LIBOR with respect to
such borrowing pursuant to Section 2.5(a) hereof, (c) any failure
by the Borrower to make a conversion of any Loan having an Interest
Rate determined using the Base Rate to a Loan having an Interest
Rate determined using LIBOR after the Borrower has given any notice
required hereunder electing such conversion, (d) any failure by the
Borrower to make any prepayment of any Loan having an Interest Rate
determined using LIBOR after the Borrower has given any notice
required hereunder regarding such prepayment or (e) the making of
a payment or prepayment (including, without limitation, on
acceleration) or the conversion of any Loan having an Interest Rate
determined using LIBOR on a day which is not the last day of an
Interest Period with respect thereto, any Bank shall incur any
costs, expenses or losses, the Borrower shall pay, in Dollars, upon
request by such Bank the amount which such Bank shall notify the
Borrower as being the aggregate of such costs, expenses and losses.
For the purposes of the preceding sentence, "costs, expenses or
losses" shall include, without limitation, any interest paid or
payable to carry any unpaid amount and any loss, premium, penalty
or expense which may be incurred in liquidating or employing
deposits of or borrowings from third parties in order to make,
maintain or fund the Loans or any portion thereof (but in the case
of a late payment, after taking into account any default interest
received under Section 2.5(c)).
Section 2.16 Maintenance Amount. (a) On each Interest Payment
Date, the Borrower shall pay in Dollars, in addition to interest on
the Loans, the amount which any Bank and/or the Issuing Bank shall
from time to time notify to the Borrower and the Agent as being the
aggregate of the Maintenance Amount (as defined in subsection (b)
below), if any, of such Bank and/or the Issuing Bank, as the case
may be, accrued and unpaid prior to such Interest Payment Date.
(b) For the purposes of subsection (a) above, the following terms
shall have the following meanings:
(i) "Maintenance Amount" means the amount, if any, certified in the
Maintenance Amount Certification to be the net incremental costs of
the affected Bank and/or the Issuing Bank with respect to the
making or maintaining of any Loan or the Letter of Credit (or any
reimbursement obligation with respect thereto) which result from
(A) any change in Applicable Law and/or (B) any compliance with any
request from, or requirement of, any central bank or other monetary
or other comparable authority, which in either case, subsequent to
the date of this Agreement, shall:
(1) impose, modify or deem applicable any reserve, special deposit
or similar requirements against assets held by, or
deposits with or for the account of, or loans by, such Bank or the
Issuing Bank;
(2) impose a cost on such Bank or the Issuing Bank as a result of
its having made any Loan or issued the Letter of Credit or reduce
the rate of return on the overall capital of such Bank or the
Issuing Bank which it would have been able to achieve if it had not
made such Loan or issued the Letter of Credit;
(3) change the basis of taxation on payments received by such Bank
or the Issuing Bank in respect of its Loans otherwise than by a
change in taxation of the overall net income of such Bank or the
Issuing Bank; or
(4) impose on such Bank or the Issuing Bank any other condition
regarding the making or maintaining of the Loans or the issuance or
maintaining of the Letter of Credit (or any reimbursement
obligation with respect thereto); and
(ii) the term "Maintenance Amount Certification" means a
certification furnished from time to time by any Bank or the
Issuing Bank to the Borrower and the Agent, certifying:
(A) the circumstances giving rise to the Maintenance Amount;
(B) that such net costs have increased;
(C) that, in the opinion of such Bank or the Issuing Bank, as the
case may be, it has exercised reasonable efforts to minimize or
eliminate such increase; and
(D) the Maintenance Amount.
(c) Notwithstanding anything in Section 2.13, and subject to any
Governmental Approvals having been obtained (including from the
Central Bank), the Borrower shall have the right on any Interest
Payment Date for the Loans upon not less than forty-five (45) days'
prior written notice to the Agent and the affected Bank (which
notice shall be irrevocable and shall bind the Borrower to make the
prepayment specified below) and upon payment of all accrued
interest and Maintenance Amount (if any) on the amount to be
prepaid, to prepay all or, as the case may be, that portion of the
Loans of which a Bank informs the Borrower and the Agent that
Maintenance Amount is then being charged; provided, however, that
no prepayment of any part of any Loan bearing interest using LIBOR
shall be made on any Interest Payment Date which is not the last
day of an Interest Period with respect thereto unless the Borrower
pays the affected Bank the amounts determined by such Bank to be
payable pursuant to Section 2.15 hereof.
Section 2.17 Illegality of Participation. (a) Notwithstanding any
other provision of this Agreement, if, subsequent to the date of
this Agreement, the making, funding or continuance of any
Commitment or any Loan has been made (x) unlawful by any change
made in any Applicable Law, (y) impossible by compliance by a Bank
with any request of a Governmental Authority (whether or not having
force of law) or (z) impracticable as a result of a contingency
occurring after the Effective Date which materially and adversely
affects the inter bank Eurodollar market, the Borrower shall, upon
notice by the affected Bank or Banks (but subject to the approval
of the appropriate Governmental Authorities (including the Central
Bank), which the Borrower agrees to take all reasonable steps to
obtain as quickly as possible, if such approval is then required),
prepay in full and on the next occurring Interest Payment Date
unless the effect of the Applicable Law, request or contingency
requires earlier or immediate repayment, in which case, on such
earlier date or immediately, as relevant, that portion of the
principal amount of the Loans affected thereby together with all
accrued interest and Maintenance Amount (if any) thereon and all
amounts, if any, determined by each affected Bank to be payable to
it pursuant to Section 2.15 hereof. In addition, the Commitment of
the affected Bank or Banks to make Loans similar to those affected
by the foregoing shall terminate immediately. In the event a L/C
Commitment of a Bank is terminated pursuant to the foregoing
provisions, (x) the obligation of the Issuing Bank to honor any
drawings under the Letter of Credit (other than any drawings in
respect of any Approved Drawing Amount) in excess of the
aggregate L/C Commitments then in effect or issue the Letter of
Credit (if the Letter of Credit shall not have previously been
issued) shall immediately be suspended until such time as one or
more Replacement Banks shall have assumed the L/C Commitment of the
affected Bank or Banks and (y) the Borrower thereafter shall
immediately, upon the payment of any drawing by the Issuing Bank in
connection with the Letter of Credit issued by the Issuing Bank,
reimburse the Issuing Bank for the portion of such payment that
would have been reimbursed to the Issuing Bank by such affected
Bank pursuant to Article 3.
(b) Notwithstanding any other provision of this Agreement, if,
subsequent to the date of this Agreement, the making, funding or
continuance by any Bank of its proportionate interest in any Loan
bearing interest based on LIBOR has been made (x) unlawful by any
change made in any Applicable Law or (y) impossible by compliance
by such Bank with any request of a Governmental Authority
(whether or not having the force of law), then such Bank shall
promptly give notice thereof to the Borrower and the Agent and the
obligation of such Bank to make or continue, or to convert Loans
into, Loans bearing interest based on LIBOR shall be immediately
suspended and during such suspension be converted into an
obligation to do the same with respect to Loans bearing interest at
the rate per annum equal to the Base Rate plus 1.75%; provided,
however, that if such Bank determines that it may lawfully continue
to maintain and fund any outstanding Loans bearing interest based
on LIBOR until the end of the applicable Interest Period then in
effect with respect thereto, upon written notice from the Borrower
to such Bank and the Agent, such outstanding Loans shall be
converted into Loans bearing interest at the rate per annum equal
to the Base Rate plus 1.75% on the last day of the then current
Interest Period applicable to such Loans.
(c) If the Borrower so requests within ten (10) days of receipt of
a notice from a Bank pursuant to clause (a) or (b) of this Section
2.17 (which notice, if pursuant to clause (b) of this Section 2.17,
is based on circumstances not generally applicable to United States
or foreign lenders making loans of the types contemplated
hereunder), such Bank shall (consistent with legal and regulatory
restrictions) (i) during the sixty-day period immediately following
receipt of such request from the Borrower, use reasonable efforts
to assist the Borrower in identifying a Replacement Bank willing to
accept an assignment of all or a part of such Bank's proportionate
share of the Loans or its Commitment and (ii) if the Borrower shall
designate a Replacement Bank within such sixty-day period, assign
all or a part of its proportionate share of the Loans or its
Commitment to the Replacement Bank designated by the Borrower;
provided that any assignment made by a Bank to a Replacement Bank
shall satisfy the following conditions: (x) the Borrower shall
promptly pay when due all reasonable fees and expenses which such
Bank incurs in connection with such assignment, (y) any assignment
of all or part of the Loans or any Bank's Commitment shall be made
without recourse, representation or warranty and (z) the Borrower
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 the Financing Documents to the
Bank assigning its interest in the Loans or its Commitment.
Section 2.18 Substitute Basis of Borrowing. If, on or before the
first day of any Interest Period relating to the Loans, either (a)
the Agent determines that, for whatever reason, deposits in Dollars
for a period equal to such Interest Period or in the relevant
amounts are not being offered generally to banks in the London
interbank market or (b) the Agent receives notice from the Required
Banks that the Interest Rate then in effect based on LIBOR for such
Interest Period will not adequately reflect the cost to such
Required Banks of making, funding or otherwise maintaining their
Loans for such Interest Period, the Agent shall promptly notify the
Borrower and the Banks of such event and interest for such Interest
Period with respect to a scheduled Utilization and for outstanding
Loans for which interest is then scheduled to be determined shall
accrue at the rate per annum equal to the Base Rate plus 1.75%.
Section 2.19 Mitigation Provision. Each Bank and the Issuing Bank
agree that (a) as promptly as practicable after it becomes aware of
the occurrence of an event or the existence of a condition arising
after the date hereof that would cause it to be affected under
Section 2.17 or 3.7 and (b) as promptly as practicable after it has
made a determination to make a claim for amounts under Section
2.11, 2.15 or 2.16 with respect to events or conditions arising
after the date hereof, it shall notify the Borrower of the same and
use commercially reasonable efforts (consistent with legal and
regulatory restrictions and such Bank's or the Issuing Bank's, as
relevant, internal policies) to mitigate the effect of such
provisions on the Borrower, including (i) in the case of Sections
2.11, 2.16, 2.17 or 3.7, efforts to make, fund, issue or maintain
its Loans or the Letter of Credit, as relevant, through another
office of such Bank or the Issuing Bank, as relevant and (ii) in
the case of Section 2.15, efforts to reemploy amounts held by such
Bank, (x) if as a result thereof the additional moneys which would
otherwise be required to be paid to such Bank pursuant to any of
such provisions of this Agreement would be reduced, or the
illegality or other adverse circumstances which would otherwise
require a prepayment of such Loans or the suspension of the
issuance of, or of drawings under, the Letter of Credit pursuant to
any of such provisions would cease to exist, and (y) if, as
determined by such Bank or the Issuing Bank, as relevant, in good
faith, the making, funding, issuing or maintaining of such Loan or
the Letter of Credit, or the making of drawings under the Letter of
Credit as relevant, through such other office would not otherwise
adversely affect such Bank or the Issuing Bank, as relevant.
ARTICLE 3. The Letter of Credit
Section 3.1 Issuance of Letter of Credit. In addition to the
procedures set forth in Section 2.2, the Borrower may borrow
hereunder by requesting (a) the Issuing Bank to open for the
account of the Borrower an irrevocable letter of credit,
substantially in the form of Exhibit G hereto, (the "Letter of
Credit") in favor of the Construction Supplier, and (b) the Issuing
Bank to examine documents and make payments under the Letter of
Credit issued by the Issuing Bank, provided that: (i) the amount of
the Letter of Credit shall not exceed the then Total Unutilized
Commitment (not including in the calculation of Total Letter of
Credit thereunder the face amount of the Letter of Credit which is
being requested to be opened); and (ii) the Issuing Bank shall not
issue, without the prior written consent of the Banks, the Letter
of Credit unless all the applicable conditions precedent set forth
in Article 5 have been met.
Section 3.2 Documents Accompanying Requests for Issuance of Letter
of Credit. Requests by the Borrower for the issuance of the Letter
of Credit by the Issuing Bank shall be made by delivering to the
Agent and the Issuing Bank, at least twelve (12) Business Days
prior to the proposed date for the issuance of the Letter of
Credit, the documents described in items (1), (3), (4) and (5) of
Part C of Annex B and by delivering to the Issuing Bank an
application on the Issuing Bank's customary forms for an
irrevocable documentary credit together with such other documents
on the Issuing Bank's customary forms relating to the opening of
commercial credits, as the Issuing Bank may request, in all cases
such documents to be appropriately completed. The Borrower shall
comply with all other procedures, conditions and requirements set
forth in Part C of Annex B attached hereto with respect to the
Letter of Credit to be issued pursuant hereto.
Section 3.3 Terms of Letter of Credit. (a) The Letter of Credit
issued hereunder (i) shall provide: (A) for payment of drawings on
the seventh (7th) Business Day (the "Payment Date") after the
Negotiation Date, (B) for an expiry date not later than the L/C
Termination Date, (C) that no Payment Date shall occur after the
L/C Termination Date and (D) for such terms as are set forth in the
documents described in Section 3.2; (ii) shall include all
provisions required in the Request for Letter of Credit Approval
applicable to the Letter of Credit as set forth in Exhibit 4 to
Annex B, including, as relevant, the provisions set forth therein
with respect to payment of the Guarantee Exposure Fee; and (iii)
shall be amended in accordance with the procedures set forth in
Annex B. The Letter of Credit, and the provisions of this
Agreement relating thereto, are subject to the Uniform Customs and
Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Brochure No. 500.
(b) Upon each Payment Date occurring in connection with a drawing
under the Letter of Credit, the amounts payable with respect to the
Guarantee Exposure Fee under the Letter of Credit shall be paid to
the Agent for allocation in accordance with the provisions of this
Section 3.3(b). The Agent shall transfer to Eximbank on such
Payment Date the Guarantee Exposure Fee applicable to such drawing
as calculated pursuant to the terms of the Eximbank Guarantee
Agreement and shall allocate any excess amounts paid with respect
to such Guarantee Exposure Fee under the Letter of Credit to the
parties entitled thereto as their interest may appear.
Section 3.4 Notices of Drawings. Promptly on each Negotiation
Date, the Issuing Bank shall notify the Construction Supplier, the
Agent, the Borrower and Eximbank in writing of the amount of such
drawing and the Payment Date of such drawing (each such notice, an
"L/C Notice").
Section 3.5 Drawings. (a) Upon receipt by the Agent of an L/C
Notice which advises that a drawing is to be made under the Letter
of Credit, the Agent shall promptly, but in no event later than
three (3) Business Days prior to the Payment Date stated in the L/C
Notice, give each Bank notice of the receipt of such L/C Notice, of
such Bank's proportionate share of the amount to be reimbursed to
the Issuing Bank based on the amount of the drawing stated in such
L/C Notice, and the Payment Date of such amount, and on the Payment
Date of such amount each Bank shall make its pro rata share thereof
available to the Agent in the same manner specified in Section
2.2(b) for a Loan, and the Agent shall then pay to the Issuing Bank
Account the aggregate of the amounts so made available by the
Banks.
(b) For the avoidance of doubt, (i) the amounts reimbursed by the
Banks to the Issuing Bank pursuant to Section 3.5(a) shall be
deemed to be Loans hereunder and (ii) the interest provisions
relating to Loans, including, without limitation, those described
in Section 2.5 shall apply to the amounts so reimbursed by the
Banks to the Issuing Bank pursuant to Section 3.5(a).
Section 3.6 Reimbursement by Banks of Issuing Bank. (a) If the
Letter of Credit is issued by the Issuing Bank as provided
herein, then each Bank hereby irrevocably and unconditionally
agrees that it shall reimburse the Issuing Bank in the manner and
at the times set forth in this Article 3 for such Bank's Applicable
Percentage of each payment of drawings made by the Issuing Bank in
accordance with the terms of the Letter of Credit.
(b) The obligation of the Banks to reimburse the Issuing Bank
pursuant to this Article 3 shall be absolute and unconditional and
shall not be affected by any circumstance whatsoever, including,
without limitation, any claim, counterclaim or right of setoff
which such Bank may have or assert against any other Bank, the
Issuing Bank, the Agent, the Borrower or any other Person, any fact
or circumstance relating to the Borrower or the occurrence and
continuance of a Construction Credit Default or Construction Credit
Event of Default. Without limiting the generality of the
foregoing, each Bank agrees that its obligation under this Section
3.6 is not subject at the time it is required to reimburse the
Issuing Bank hereunder to the satisfaction of any of the conditions
set forth in Article 5. Each Bank agrees that each payment made by
such Bank to the Issuing Bank pursuant to this Article 3 shall be
made without any offset, abatement, withholding or reduction
whatsoever.
(c) The Agent may assume that each Bank will make available to the
Agent such Bank's Applicable Percentage of any payment of drawings
made by the Issuing Bank under the Letter of Credit on the date
required by the terms of this Article 3, and the Agent may, in
reliance upon such assumption, make available to the Issuing Bank
a corresponding amount on such date. If such corresponding amount
is not in fact made available to the Agent by such Bank, the Agent
shall be entitled to recover such corresponding amount from the
Issuing Bank on demand. If the Issuing Bank does not pay such
corresponding amount forthwith upon the Agent's demand therefor,
the Agent shall promptly notify the Borrower, and the Borrower
shall pay such corresponding amount to the Agent within such period
of time as the Agent deems reasonable in the circumstances. The
Agent shall also be entitled to recover on demand from the Issuing
Bank or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to the Issuing
Bank until the date such corresponding amount is recovered by the
Agent, at the rate per annum equal to (i) if recovered from the
Issuing Bank, the Federal Funds Rate until the 3rd Business Day and
the Base Rate plus 1.75% thereafter and (ii) if recovered from the
Borrower, the applicable Interest Rate selected by the Borrower
with respect to such amount pursuant to Section 2.5 (or, if the
Borrower shall fail to so select an Interest Rate, at the rate per
annum equal to the Base Rate plus 1.75%). Nothing in this Section
3.6(c) shall be deemed to relieve any Bank from its obligation to
pay the Issuing Bank for drawings under the Letter of Credit as
required by the terms of this Article 3 or of making Loans to the
Borrower in connection therewith or to prejudice any rights which
the Issuing Bank or the Borrower may have against any Bank as a
result of any failure by such Bank to make such payments or Loans
as required hereunder. Any payment by the Borrower to the Agent
pursuant to this Section 3.6(c) shall not be considered a Loan
hereunder and such payment shall not be deemed to be a prepayment
of a Loan for purposes of this Agreement and the other Financing
Documents.
(d) Each of the Banks, upon reimbursement to the Issuing Bank
through the Agent of the amount owing by such Bank to the Issuing
Bank with respect to a drawing under the Letter of Credit, shall be
deemed to have made a Loan in the amount which each Bank so makes
available to the Issuing Bank through the Agent as of the date
thereof. As promptly as practicable following the making of any
Loan under this Article 3, the Agent shall provide written notice
thereof to Eximbank, which notice shall indicate the amount of such
Loan.
(e) If any Bank fails to make its pro rata share of any
reimbursement available to the Issuing Bank at the time and in the
manner required pursuant to this Article 3 and the Borrower has not
paid such amount pursuant to Section 3.6(c), (i) the Issuing Bank
shall promptly notify the Borrower, and the Borrower shall pay such
amount to the Issuing Bank within such period of time as the
Issuing Bank deems reasonable under the circumstances, and (ii)
interest which would otherwise be payable to such Bank in respect
of the Loan which would have been made by it shall be payable to
the Issuing Bank until such amount is recovered by the Issuing
Bank, in each case without prejudice to the rights of the Borrower
and the Issuing Bank against such Bank. Any payment by the
Borrower to the Issuing Bank pursuant to this Section 3.6(e) shall
not be considered a Loan hereunder and such payment shall not be
deemed to be a prepayment of a Loan for purposes of this Agreement
and the other Financing Documents. In the event a Bank fails to
make its pro rata share of any reimbursement available to the
Issuing Bank as required pursuant to the terms of this Section 3.6
and the Borrower has not reimbursed the Issuing Bank with respect
to such pro rata share pursuant to the first sentence of this
Section 3.6(e), such Bank for all purposes of this Agreement hereby
agrees to and does hereby assign all its right, title and interest
and delegate all its obligations with respect to such defaulted
obligation to such Person that the Issuing Bank may designate in
writing to such Bank, such assignment and delegation to take effect
from the date such designated Person accepts such assignment and
delegation; provided, that if the Issuing Bank so designates a
Person other than one of the Banks listed in Schedule I, the prior
approval of Eximbank (which shall not be unreasonably withheld)
shall be required for such designation. In any event, such Person
that the Issuing Bank may designate in accordance with the
immediately preceding sentence shall be a Person eligible for the
coverage of the Guarantee (as defined in the Eximbank Guarantee
Agreement) under the laws, rules, regulations and policies of or
applicable to Eximbank. Such defaulting Bank hereby agrees to
cooperate with the Agent, the Issuing Bank and the designated
assignee and to take all actions necessary, in each case to effect
such assignment and delegation.
(f) The Issuing Bank shall have all the voting rights of a Bank
and of a Secured Party under this Agreement and the other
relevant Financing Documents with respect to a Defaulted Amount
relating to the Letter of Credit for which the Issuing Bank has not
been reimbursed, until such time as such Defaulted Amount is
reimbursed to the Issuing Bank.
Section 3.7 Issuance of Letter of Credit; Illegality.
Notwithstanding any other provision of this Agreement, in the event
that any restrictions or limitations are, after the date hereof,
imposed upon or determined or held to be applicable to the Issuing
Bank by, under or pursuant to any Applicable Law now or hereafter
in effect or by reason of any interpretation thereof by any court
or Governmental Authority, which would prevent (as determined by
the Issuing Bank) the Issuing Bank from legally incurring liability
under the Letter of Credit to be issued pursuant hereto, then the
Issuing Bank shall give prompt written notice thereof to the Agent
(who shall notify the Borrower, Eximbank and each Bank thereof as
soon as reasonably practicable), whereupon the obligation of the
Issuing Bank to issue and allow drawings under the Letter of Credit
pursuant hereto shall be suspended until the Agent shall be advised
by the Issuing Bank that such event is no longer continuing or
until such event shall have continued for a period of one hundred
eighty (180) days, after which period the obligation of the Issuing
Bank to issue and allow drawings under the Letter of Credit
pursuant hereto shall terminate.
ARTICLE 4. Representations and Warranties
In order to induce the Agent, the Arranger, the Co-Arranger, each
of the Banks and the Issuing Bank to enter into this Agreement and
each of the other Financing Documents to which it is a party and in
order to induce each of the Banks to make the Loans and the Issuing
Bank to issue the Letter of Credit, the Borrower makes the
following representations, warranties and agreements as of the
Credit Date, which shall survive the execution and delivery of this
Agreement and the making and repayment of the Loans:
Section 4.1 Corporate Status. The Borrower (a) is a duly
organized and validly existing corporation in good standing under
the laws of the Republic, (b) is duly qualified to do business as
a foreign corporation under the laws of each jurisdiction in which
the character of the properties owned or leased by it or in which
the transaction of its business as presently conducted or proposed
to be conducted makes such qualification necessary and (c) has full
power and authority to own the property and assets owned by it and
to lease the properties leased by it and to transact the business
in which it is engaged or proposes to be engaged and to do all
things necessary or appropriate in respect of the Project and to
consummate the transactions contemplated by the Project Documents
in effect or required to be in effect as of each date this
representation is made or deemed made.
Section 4.2 Corporate Power and Authority. The Borrower has the
corporate power and authority to execute and deliver, and to
perform the terms and provisions of, each of the Project Documents
to which it is party and has taken all necessary corporate action
to authorize the execution, delivery and performance by it of each
of such Project Documents as have been executed and delivered as of
each date this representation and warranty is made. The Borrower
has, or in the case of the Project Documents other than this
Agreement, by the Credit Date will have, duly executed and
delivered each of the Project Documents to which it is party, and
each of such Project Documents constitutes or, in the case of each
such other Project Document when executed and delivered, will
constitute the legal, valid and binding obligations of the
Borrower, enforceable in accordance with its respective terms,
except as the enforceability thereof may be limited by (a)
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights
generally and (b) general equitable principles, regardless of
whether the issue of enforceability is considered in a proceeding
in equity or at law. Section 4.3 No Violation. Neither the
execution and delivery by the Borrower of the Project Documents to
which it is a party, nor the Borrower's compliance with or
performance of the terms and provisions thereof, nor the use of the
proceeds of the Loans as contemplated by this Agreement or the
Eximbank Guarantee Agreement (a) will contravene or violate any
provision of any Applicable Law to which the Borrower, any of its
assets or the Project is subject, (b) 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 (except any Construction
Period Permitted Liens) upon any of the property or assets of the
Borrower pursuant to the terms of any indenture, mortgage, deed of
trust, credit agreement, loan agreement or any other agreement,
contract or instrument to which the Borrower is a party or by which
it or any of its property or assets is bound or to which it may be
subject, (c) will violate any provision of the Articles of
Incorporation or By-Laws of the Borrower or (d) will require any
consent or approval of any Governmental Authority or any creditor,
shareholder, director or officer of the Borrower which has not been
obtained.
Section 4.4 Capitalization. As of the date of this Agreement, (i)
the authorized capital stock of the Borrower consists of 2,200,000
shares of common stock, par value P28 per share, of which 550,000
shares are duly and validly issued, outstanding, fully paid and
non-assessable; (ii) 263,996 of such issued shares of common stock
(representing approximately 48% of such 550,000 issued shares) are
owned and held by CE Philippines, a wholly-owned subsidiary of CE
International (a wholly-owned subsidiary of CECI); (iii) 285,996 of
such issued shares of common stock (representing approximately 52%
of such 550,000 issued shares) are owned and held by Ormat Cebu;
(iv) and eight (8) of such issued shares of common stock are
directors' qualifying shares. Except as described in the
Shareholder's Agreement, the Funding Agreement and the Convertible
Subordinated Notes, the Borrower does not have outstanding (i) any
securities convertible into or exchangeable for its capital stock
or (ii) any rights to subscribe for or to purchase, or any options
for the purchase of, or any agreements, arrangements or
understandings providing for the issuance (contingent or otherwise)
of, or any calls, commitments or claims of any character relating
to, its capital stock.
Section 4.5 Subsidiaries. The Borrower has no Subsidiaries and
owns no equity interest in any other Person.
Section 4.6 Single-Purpose Borrower. The Borrower has not
incurred any liabilities other than in connection with its
participation in the transactions contemplated by the Project
Documents. The Borrower (a) has not engaged in any business other
than the design, development, ownership, financing, construction
and operation of the Project and (b) is not a party to any
agreement, contract or commitment (other than (w) the agreements
identified in clauses (i) through (xiii) of the definition of the
term Operating Agreements set forth in Schedule X hereto, (x) the
Financing Documents, (y) agreements, contracts or commitments
contemplated by the O&M Parameters (including those relating to
employee training, secondment of employees and vehicle rentals),
the then-current Construction Budget or the then-current Annual
Budget and (z) agreements, contracts and commitments in respect of
Construction Period Permitted Indebtedness) which, individually,
creates an annual financial obligation of the Borrower in excess of
$100,000 (or the equivalent in other currency) or which would cause
the aggregate annual financial obligations of the Borrower under
all agreements, contracts and commitments (other than those
specified in clauses (w) through (z) immediately above) to which
the Borrower is a party to exceed $300,000 (or the equivalent in
other currency).
Section 4.7 Financial Statements; Financial Condition;
Undisclosed Liabilities; Etc. (a) The statements of financial
condition of the Borrower at December 31, 1993 heretofore
furnished to the Banks present fairly the financial condition of
the Borrower at the date of such statements of financial
condition and the results of the operations of the Borrower for
such fiscal year. Such financial statements have been prepared in
accordance with Philippine generally accepted accounting principles
and practices consistently applied. Since December 31, 1993, no
event, condition or circumstance (including without limitation
Force Majeure as defined in Articles 13.1(a) and 13.1(b) of the
Energy Conversion Agreement) has existed or has occurred which is
reasonably likely to have a Material Adverse Effect.
(b) Except as fully reflected in the financial statements
referred to in Section 4.7(a), there are no liabilities or
obligations with respect to the Borrower of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether or
not due) for the period to which such financial statements relate
which, either individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect. The Borrower does not
know of any reasonable basis for the assertion against the Borrower
of any liability or obligation of any nature whatsoever for such
relevant period that is not fully reflected in the financial
statements referred to in Section 4.7(a) which, either individually
or in the aggregate, is reasonably likely to have a Material
Adverse Effect.
Section 4.8 Litigation. Except as disclosed in Schedule 4.8
hereto, there is no action, suit, investigation or proceeding by or
before any court, arbitrator, administrative agency or other
Governmental Authority pending or, to the best of the Borrower's
knowledge, threatened against or affecting the Borrower or any of
its properties, revenues or assets or the Project or the Site which
has had or is reasonably likely to have a Material Adverse Effect.
The Borrower is not in default with respect to any order of any
court, arbitrator, administrative agency or other Governmental
Authority. There is no injunction, writ, preliminary restraining
order or any order of any nature issued by an arbitrator, court or
other Governmental Authority directing that any of the material
transactions provided for in any of the Project Documents not be
consummated as herein or therein provided. To the best of the
Borrower's knowledge, there is no action, suit, investigation or
proceeding by or before any court, arbitrator, administrative
agency or other Governmental Authority pending or threatened
against or affecting any party to any Project Document which is an
Affiliate of the Borrower or any of their properties, revenues or
assets, and the Borrower does not have actual knowledge of any such
action, suit, investigation or proceeding pending or threatened
against or affecting any other party to any Project Document or any
of their properties, revenues or assets, in each case described in
this sentence which has had or is reasonably likely to have a
Material Adverse Effect.
Section 4.9 True and Complete Disclosure. All factual
information (taken as a whole, which, for the avoidance of doubt
(i) shall not include any information by way of projections,
estimates or other expressions of view as to future circumstances
provided that such projections, estimates or other expressions of
view are expressed in good faith and on the basis of reasonable
assumptions and (ii) shall be qualified by any disclaimers with
respect to such factual information provided by the Borrower to the
Agent and/or the Banks) heretofore or contemporaneously furnished
by or on behalf of the Borrower, CECI or any other Affiliate of the
Borrower in writing to the Agent (including without limitation such
factual information as is contained in the Information Memorandum
and the Project Documents), and all other such factual information
(taken as a whole) hereafter furnished by or on behalf of the
Borrower or CECI in writing to the Agent will be, true and accurate
in all material respects on the date as of which such information
is dated or certified and not incomplete by omitting to state any
fact necessary to make such information (taken as a whole) not
misleading in any material respect at such time in light of the
circumstances under which such information was provided. There are
in existence no documents or agreements which have not been
disclosed to the Agent which are material in the context of the
Project Documents or which have the effect of varying any of the
Project Documents.
Section 4.10 Tax Returns and Payments. The Borrower has filed all
tax returns required by Applicable Law to be filed by it and has
paid all income taxes payable by it which have become due pursuant
to such tax returns and all other taxes and assessments payable by
it which have become due, other than those not yet delinquent and
except for those contested in good faith and for which adequate
reserves have been established. The Borrower has paid, or has
provided adequate reserves (in the good faith judgment of the
management of the Borrower) for the payment of, all national,
regional or local income taxes applicable for all prior Fiscal
Years and for the current Fiscal Year to the date hereof.
Section4.11 Governmental Approvals. All Governmental Approvals
necessary under Applicable Law in connection with (a) the due
execution and delivery of, and performance by the Borrower of its
obligations and the exercise of its rights under, the Project
Documents in effect or required to be in effect as of each date
this representation is made or deemed made, (b) the grant by each
of the Borrower, CECI, CE Philippines and Ormat Cebu of the Liens
created pursuant to the Security Documents and the Funding
Agreement and the validity, enforceability and perfection thereof
and the exercise by the Collateral Agent of its rights and
remedies thereunder and (c) the construction and operation of the
Project as contemplated by the Project Documents, to be obtained by
the Borrower are, and to be obtained by any other Person (to the
best knowledge of the Borrower) are, set forth in Schedule 4.11
hereto. Each of the Governmental Approvals set forth in Part A of
Schedule 4.11 hereto and each other Governmental Approval obtained
by the Borrower after the date hereof but on or prior to the date
this representation is made, has been duly obtained or made, is
validly issued, is in full force and effect, is not subject to
appeal (it being understood that for purposes of this Section 4.11,
a Governmental Approval shall not be considered to be subject to
appeal if it is being contested or challenged solely by Persons
other than the Governmental Authority which issued the Governmental
Approval notwithstanding that such contest or challenge is ongoing)
and is free from conditions or requirements compliance with which
is reasonably likely to have a Material Adverse Effect or which the
Borrower does not reasonably expect to be able to satisfy. There
is no proceeding pending or, to the best knowledge of the Borrower,
threatened which is reasonably likely to result in the recission,
termination, material modification, suspension or determination of
invalidity or lack of effectiveness of any such Governmental
Approval. The information set forth in each application and other
written material submitted by the Borrower to the applicable
Governmental Authority in connection with each such Governmental
Approval is accurate and complete in all material respects. The
Governmental Approvals set forth in Part B of Schedule 4.11 hereto
are required solely in connection with later stages of construction
and operation of the Project. The Borrower has no reason to
believe that any Governmental Approval that has not been obtained
by the Borrower, but which will be required in the future, will not
be granted to it in due course, on or prior to the date when
required and free from any condition or requirement compliance with
which is reasonably likely to have a Material Adverse Effect or
which the Borrower does not reasonably expect to be able to
satisfy. The Project, if constructed in accordance with the
Construction Contract, the Supply Contract and the other Project
Documents, will conform to and comply in all material respects with
all covenants, conditions, restrictions and reservations in the
Governmental Approvals and the Project Documents applicable thereto
and all Applicable Laws. The Borrower has no reason to believe
that the Collateral Agent will not be entitled, without undue
expense or delay, to the benefit of each Governmental Approval set
forth on Schedule 4.11 hereto upon the exercise of remedies under
the Security Documents. The Agent has received a true and complete
copy of each Governmental Approval heretofore obtained or made by
the Borrower.
Section 4.12 Compliance with Statutes, Etc. (a) The Borrower is
in compliance with all Applicable Laws in respect of the conduct of
its business and the ownership of its property (including, without
limitation, Applicable Laws relating to environmental standards and
controls and resettlements and Applicable Laws relating to the
maintenance of debt to equity ratios).
(b) Without limitation to the foregoing clause (a), the Borrower's
business and the Project are being carried out in compliance with
applicable Republic environmental guidelines.
Section 4.13 Environmental Matters. To the best of the Borrower's
knowledge, neither the Site nor the Plant (nor any other property
with respect to which the Borrower has retained or assumed
liability either contractually or by operation of the law) has been
affected by any Hazardous Material in a manner which does or is
reasonably likely to give rise to any material liability of the
Borrower under any Environmental Law or which has had or is
reasonably likely to have a Material Adverse Effect.
Section 4.14 Patents, Licenses, Franchises and Formulas. The
Borrower owns or has the right to use all the patents,
trademarks, permits, service marks, trade names, copyrights,
licenses, franchises and formulas, or rights with respect
thereto, and has obtained assignments of all leases and other
rights of whatever nature, necessary for the present and proposed
conduct of its business and the carrying out of the Project in the
manner contemplated by the Project Documents, without any known
conflict with the rights of others which, or the failure to obtain
which, as the case may be, is reasonably likely to have a Material
Adverse Effect.
Section 4.15 Submission to Law and Jurisdiction. As of the Credit
Date, the choice of governing law for each of the respective
Project Documents in effect or required to be in effect as of the
Credit Date will be recognized in the courts of the Republic, and
those courts will recognize and give effect to any judgment in
respect of such Project Document obtained by or against the
Borrower in the courts the jurisdictions of which the Borrower has
submitted to.
Section 4.16 Status of the Loans. The Construction Financing
Secured Obligations constitute direct, unconditional, and general
obligations of the Borrower and rank senior as to priority of
payment to all Subordinated Secured Obligations and all
Indebtedness of the Borrower described in Section 6.17(f) and no
less than pari passu as to priority of payment to all other
Indebtedness of the Borrower. Except as permitted by Section 6.18
of this Agreement, the Borrower has not secured or agreed to secure
any such other Indebtedness by any Lien upon any of its present or
future revenues or assets or capital stock.
Section 4.17 Documents; Sufficiency of Project Documents. (a)
The Agent has received a complete copy of each Project Document in
effect or required to be in effect as of each date this
representation is made or deemed made (including all exhibits,
schedules and disclosure letters referred to therein or delivered
pursuant thereto, if any).
(b) To the best of the Borrower's knowledge, the services to be
performed, the materials to be supplied and the easements,
licenses and other rights granted or to be granted to the
Borrower pursuant to the terms of the Project Documents provide or
will provide the Borrower with all rights and property
interests required to enable the Borrower to obtain all services,
materials or rights (including access) required for the design,
construction, start-up, operation and maintenance of the Project,
including the Borrower's full and prompt performance of its
obligations, and full and timely satisfaction of all conditions
precedent to the performance by others of their obligations, under
the Project Documents, other than those services, materials or
rights that reasonably can be expected to be obtainable in the
ordinary course of business without material additional expenses or
material delay.
Section 4.18 Fees and Enforcement. Other than amounts that have
been paid in full or will have been paid in full by the Credit
Date, no fees or taxes, including without limitation stamp,
transaction, registration or similar taxes, are required to be paid
for the legality, validity, or enforceability of this
Agreement or any of the other Project Documents in effect or
required to be in effect as of each date this representation is
made or deemed made. This Agreement and each of such Project
Documents are each in proper legal form under the laws of the
Republic, and under the respective governing laws selected in such
Project Documents, for the enforcement thereof in such jurisdiction
without any further action on the part of the Agent, the Collateral
Agent, the Issuing Bank or the Banks.
Section 4.19 Utility Availability. Arrangements reflected
accurately and completely in the Construction Budget have been made
under the Construction Contract, the Supply Contract, the Energy
Conversion Agreement or otherwise on commercially
reasonable terms for the provision of all services, materials and
utilities reasonably necessary for the construction of the
Project.
Section 4.20 Availability and Transfer of Foreign Currency.
Except as disclosed in Schedule 4.20, all requisite foreign
exchange control approvals and other authorizations, if any, by the
Republic or any department or agency thereof have been
validly obtained and will be kept current and in full force and
effect to assure (a) the ability of the Borrower to receive, and
the ability of any other party to make, any and all payments to the
Borrower contemplated by the Project Documents, (b) the
availability of Dollars to enable the Borrower to perform all of
its obligations hereunder and under the other Project Documents, as
the case may be, in accordance with their respective terms, and (c)
the ability of the Borrower to convert all sums received in Peso
amounts from PNOC-EDC under the Energy Conversion
Agreement and the PNOC-EDC Consent Agreement and from the
Republic under the Performance Undertaking and the Republic Consent
Agreement, including any Peso amounts representing SFRI Fees, from
Pesos to Dollars, immediately upon receipt thereof, and to use the
Dollars as necessary to perform all of its
obligations under the Project Documents, in accordance with their
respective terms. Except as disclosed in Schedule 4.20, there are
no restrictions or requirements which limit the availability or
transfer of foreign exchange, or the conversion to a foreign
exchange, for the purpose of the performance by the Borrower of its
obligations under this Agreement or under any of the other Project
Documents.
Section 4.21 Construction Budget. (a) The Construction Budget as
in effect on the date hereof is attached hereto as Schedule 4.21.
The Construction Budget accurately specifies, to the best of the
Borrower's knowledge, all costs and expenses incurred and
anticipated to be incurred prior to the latest date on which the
Maturity Date can be expected to occur to construct and finance the
construction of the Project in the manner contemplated by the
Project Documents. In addition, to the best of the Borrower's
knowledge, the amount of all costs and expenses required to be paid
or incurred prior to the latest date on which the Maturity Date can
be expected to occur to finance and construct the
Project in the manner contemplated by the Project Documents does
not exceed the amount reflected in the Construction Budget.
(b) To the best of the Borrower's knowledge, all projections and
budgets (including the Construction Budget and the Base Case
Forecast) furnished or to be furnished to the Agent, the
Collateral Agent, the Issuing Bank or the Banks by or on behalf of
the Borrower and the summaries of significant assumptions related
thereto (i) have been and will be prepared with due care, (ii)
fairly present, and will fairly present, the Borrower's
expectations as to the matters covered thereby as of their date,
(iii) are based on, and will be based on, reasonable assumptions as
to all factual and legal matters material to the estimates therein
(including interest rates and costs) and (iv) are in all material
respects consistent with, and will be in all material respects
consistent with, the provisions of the Project
Documents.
Section 4.22 Titles; Liens. The Borrower has good and valid title
to all of its properties and assets, in each case, free and clear
of all Liens other than Construction Period Permitted Liens. No
mortgage or financing statement or other instrument or recordation
covering all or any part of the property or assets of the Borrower
is on file in any recording office, except such as relate only to
Construction Period Permitted Liens described in clauses (b) and
(c) of Section 6.18 hereof.
Section 4.23 Transactions with Affiliates. The Borrower is not a
party to any contracts or agreements with, or any other
commitments to, whether or not in the ordinary course of
business, any Affiliate, which are individually valued in excess of
$100,000 or in the aggregate valued in excess of $300,000, except
for the Funding Agreement (and the agreements for the transactions
contemplated therein), the Pledge Agreement, the Supply Side
Agreement and any other contracts, agreements or commitments that
are contemplated in the O&M Parameters
(including those relating to employee training, vehicle rentals and
secondment of employees) or in the Funding Agreement.
Section 4.24 No Additional Fees. Other than as expressly set
forth in the Base Case Forecast and the Construction Budget, the
Borrower has not paid or become obligated to pay any fee or
commission to any broker, finder or intermediary for or on
account of arranging the financing of the transactions
contemplated by the Project Documents.
Section 4.25 Regulation of Parties. None of the Borrower, its
Affiliates nor any of the Construction Financing Secured Parties is
or will be, solely as a result of the participation by such parties
separately or as a group in the transactions contemplated hereby or
by any other Project Document, or as a result of the ownership, use
or operation of the Project, subject to regulation by any
Governmental Authority of the United States as a "public utility",
an "electric utility", an "electric utility holding company", a
"public utility holding company", a "holding company", or an
"electrical corporation" or a subsidiary or affiliate of any of the
foregoing under any Applicable Law of the United States (including,
without limitation, PUHCA and FPA) or by any Governmental Authority
of the Republic as a "public utility" under any Applicable Law of
the Republic. So long as the owner and operator of the Project is
an "exempt wholesalegenerator" under Section 32 of PUHCA or a
"foreign utility company" under Section 33 of PUHCA, none of the
Construction Financing Secured Parties will by reason of its or
their ownership or operation of the Project upon the exercise of
remedies under the Security Documents be subject to regulation by
any Governmental Authority of the United States as a "public
utility", an "electric utility", an "electric utility holding
company", a "holding company", or an electric corporation" or a
subsidiary or affiliate of any of the foregoing under any
Applicable Law of the United States (including, without
limitation, PUHCA and FPA).
Section 4.26 Regulatory Status. The Borrower is not subject to
regulation as a "subsidiary company" of a holding company under
PUHCA.
Section 4.27 ERISA and Employees. The Borrower does not
sponsor, maintain, administer, contribute to, participate in, or
have any obligation to contribute to or any liability under, any
Plan nor since the date which is six years immediately preceding
the Credit Date has the Borrower established, sponsored,
maintained, administered, contributed to, participated in, or had
any obligation to contribute to or liability under, any Plan. A
Termination Event has not occurred with respect to any Plan the
occurrence of which has had or to the Borrower's knowledge is
reasonably likely to result in a Material Adverse Effect.
Neither the Borrower nor any ERISA Affiliate has failed to make a
required contribution or payment to a Multiemployer Plan when due,
the failure of which has had or to the Borrower's knowledge is
reasonably likely to result in a Material Adverse Effect. To the
Borrower's knowledge, no accumulated funding deficiency as defined
in Section 412 of the Code has been incurred nor has any funding
waiver from the Internal Revenue Service been received or requested
with respect to any Pension Plan, nor has the Borrower or any ERISA
Affiliate failed to make any contribution or to pay any amount due
and owing as required by Section 412 of the Code, Section 302 of
ERISA or the terms of any Pension Plan, nor has there been any
event requiring disclosure under Section
4041(c)(3)(C) or Section 4063 of ERISA with respect to any
Pension Plan, the event or occurrence of which has had or to the
Borrower's knowledge is reasonably likely to result in a Material
Adverse Effect. To the Borrower's knowledge, the Borrower and each
ERISA Affiliate has met its minimum funding requirements under
ERISA and the Code with respect to the Plans and all benefit
liabilities under each Pension Plan are being funded in accordance
with applicable legal requirements and reasonable actuarial
assumptions and methods as set forth in ERISA and the Code. To the
Borrower's knowledge, no material proceeding, claim, lawsuit and/or
investigation exists or, to the best of the Borrower's knowledge,
is threatened concerning any (a) Pension Plan or (b) Multiemployer
Plan the occurrence of which has had or is reasonably likely to
result in a Material Adverse Effect. Neither the Borrower nor to
the Borrower's knowledge, any ERISA Affiliate has incurred any
liability to the PBGC other than for insurance premiums with
respect to a Pension Plan, the payment of which is not yet due.
Section 4.28 Investment Company Act. Neither the Borrower nor any
of its Affiliates is an "investment company" or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
The Borrower warrants to the Arranger, the Co-Arranger, the Agent,
the Issuing Bank and the Banks that each of the foregoing
representations is true and correct in all material respects as of
the date of this Agreement and that none of them omits any matter
necessary to make such representation not misleading in any
material respect. The rights and remedies of the Agent, the
Issuing Bank and the Banks in relation to any misrepresentations or
breach of warranty on the part of the Borrower shall not be
prejudiced by any investigation by or on behalf of any of the
Arranger, the Co-Arranger, the Agent, the Issuing Bank and the
Banks into the affairs of the Borrower, by the execution,
delivery or performance of this Agreement or any other Financing
Document or by any other act or thing which may be done by or on
behalf of the Arranger, the Co-Arranger, the Agent, the Issuing
Bank or the Banks or any of them in connection with this
Agreement or any other Financing Document and which might, apart
from this Section, prejudice such rights or remedies.
ARTICLE 5. Conditions Precedent
Section 5.1 Conditions of First Utilization. The initial
Utilization hereunder, whether it be the making of a Loan or the
issuance by the Issuing Bank of a Letter of Credit, shall be
subject to the satisfaction of the following conditions on or prior
to the date thereof (such date, the "Credit Date");
provided that if any such conditions shall have been satisfied on
or prior to the Effective Date, then, on the Credit Date, the
Borrower shall supply such evidence indicating that such
condition continues to be satisfied as the Agent may reasonably
require, including, without limitation, bring-down opinions and
certificates:
(a) Project Documents. Each of the Project Documents,
including, without limitation, the Eximbank Guarantee Agreement and
the Eximbank Credit Agreement, but excluding the Mortgage, the ECA
Operation Performance Bond, the Insurance Contracts, the
Governmental Approvals set forth in Part B of Schedule 4.11 hereto
and agreements and instruments pertaining to Working Capital
Subordinated Secured Obligations, Third Party Subordinated
Indebtedness and Senior Permitted Indebtedness, shall have been
entered into by the respective parties thereto, shall be
unconditional and fully effective in accordance with their
respective terms (except for this Agreement having become
unconditional and fully effective, if that is a condition of
effectiveness of any of such documents) and shall be in form and
substance satisfactory to the Banks. In addition, (i) the Power
Purchase Agreement shall have been entered into by PNOC-EDC and
NAPOCOR and shall have become unconditional and fully effective in
accordance with its terms and the Agent shall have received a copy
thereof from the Borrower and (ii) the Geothermal Fluid
Specifications (as defined in the Energy Conversion Agreement)
shall have been finalized as contemplated in Annex I to the Energy
Conversion Agreement and an agreement evidencing the finalization
of such specifications shall have been incorporated as an addendum
to the Energy Conversion Agreement. In addition, the Supplemental
Credit Agreement shall have been amended in a manner satisfactory
to the Agent to as to provide that the first Repayment Date (as
defined therein) shall occur no earlier than the Maturity Date (as
defined in Schedule X hereto) and that the Supplemental Loan
Availability Period (as defined therin) shall expire no earlier
than the Maturity Date (as defined in Schedule X hereto).
(b) CECI shall have obtained a commitment from OPIC to issue the
OPIC Contract of Insurance, which commitment shall be in form and
substance satisfactory to the Agent.
(c) Opinions of Counsel. The Banks, the Issuing Bank, the
Collateral Agent and the Agent shall have received signed legal
opinions of counsel to the Borrower, each of the Obligors (other
than the ECA Operation Performance Bond Issuer) and the Republic
and each such other Person as the Agent, the Issuing Bank, the
Collateral Agent or any Bank may reasonably require, each of which
shall be in form and substance satisfactory to the Agent, the
Issuing Bank, the Collateral Agent and the Banks and shall be dated
the Credit Date.
(d) Corporate Documents; Proceedings.
(i)The Agent, the Issuing Bank and the Banks shall have received a
certificate, dated the Credit Date, signed by a Financial Officer
of the Borrower, and attested to by the Secretary or any Assistant
Secretary of the Borrower, in form and substance
satisfactory to the Agent, together with copies of the Articles of
Incorporation and By-Laws of the Borrower and resolutions of the
Board of Directors of the Borrower reasonably requested by the
Agent.
(ii) The Agent, the Issuing Bank and the Banks shall have
received a certificate, dated the Credit Date, signed by a
Financial Officer of each Obligor (other than PNOC-EDC and the ECA
Operation Performance Bond Issuer) and attested to by the Secretary
or any Assistant Secretary of the Obligor, in form and substance
satisfactory to the Agent, together with copies of the Articles of
Incorporation and By-Laws of the Obligor and
resolutions of the Obligor reasonably requested by the Agent.
(iii) Arrangements satisfactory to the Agent shall have been made
for the appointment of Deloitte, Touche & Tohmatsu International or
such other firm of independent public accountants acceptable to the
Agent, as Auditors.
(e) Auditors. The Agent shall have received a copy of the
authorization to the Auditors referred to in Section 6.2(b).
(f) Pledged Stock; Convertible Subordinated Notes. CE
Philippines and Ormat Cebu shall have delivered to the Collateral
Agent, as pledgee, (i) the share certificates representing all of
the Pledged Stock, together with executed and undated stock powers,
and (ii) the Convertible Subordinated Notes evidencing Required
Subordinated Loans, together with executed instruments of transfer,
and the Collateral Agent shall have received share certificates
representing all directors' qualifying shares of the Borrower,
together with executed and undated stock powers.
(g) Consent Letters. The Agent shall have received a letter, in
form and substance satisfactory to the Agent, from (i) White &
Case, presently located at 1155 Avenue of the Americas, New York,
NY 10036-2787, indicating the consent of White & Case to its
appointment by the Borrower, CECI, CE Philippines and Ormat Cebu as
their agent to receive service of process as specified in Section
9.5 hereof, in the case of the Borrower, in the Funding Agreement,
in the case of CECI and in the Pledge Agreement, in the case of CE
Philippines and Ormat Cebu and (ii) CT Corporation System,
presently located at 1633 Broadway, New York, New York 10019,
indicating the consent of CT Corporation System to its appointment
by Ormat Industries and Ormat as their agent to receive service of
process as specified in the Ormat Industries Guaranty, in the case
of Ormat Industries, and in the Ormat Guaranty, in the case of
Ormat.
(h) Energy Conversion Agreement Effectiveness. Each of PNOC-EDC
and the Borrower shall have issued to the Agent, the Issuing Bank
and the Banks a certification confirming that the Effectivity Date
(as defined in the Energy Conversion Agreement) has
occurred.
(i) Certificates. The Agent, the Issuing Bank and each Bank shall
have received copies of each executed Project Document, together
with a certificate of a Financial Officer of the
Borrower certifying that (i) the Borrower is not in default in the
performance, observance or fulfillment of any of its
obligations, covenants or conditions contained therein and, to the
best of the Borrower's knowledge, no other party to any such
Project Document is in default in the performance, observance or
fulfillment of any of its material obligations, covenants or
conditions contained therein and (ii) in the case of each such
document to which the Agent is not a party, (x) that such
document is in full force and effect, (y) that, to the best of the
Borrower's knowledge, no force majeure has occurred
thereunder and that (z) the copy thereof delivered to the Agent,
the Banks and the Issuing Bank is true, correct and complete. The
Agent shall have received evidence or copies of all
Governmental Approvals set forth in Schedule 4.11 hereof (other
than those set forth in Part B thereof), certified by a Financial
Officer of the Borrower as being in full force and effect and,
except as disclosed in Schedule 4.11 hereof, not subject to appeal.
For purposes of this Section 5.1(i), a Governmental Approval shall
not be considered to be subject to appeal if it is being contested
or challenged solely by Persons other than the Governmental
Authority who issued the Governmental Approval notwithstanding that
such contest or challenge is ongoing.
(j) Construction Budget; Base Case Forecast. The Agent, the
Issuing Bank and each Bank shall have received the Construction
Budget and the Base Case Forecast, each of which shall be in form
and substance satisfactory to the Banks.
(k) Reports of Consultants. The Agent, the Issuing Bank and each
Bank shall have received the Independent Engineer's Report.
(l) Financial Statements. The Agent, the Issuing Bank and each
Bank shall have received copies of the most recent audited
financial statements of CECI and Ormat Industries and shall have
received copies of the most recent unaudited financial statements
(if audited financial statements are not otherwise available) of
the Borrower, each other Obligor (other than PNOC-EDC and the ECA
Operation Performance Bond Issuer) and CE International showing,
for each such Person, no material adverse change in the financial
condition of such Person since the date of the last financial
statements provided to the Agent prior to the date of this
Agreement, and certificates dated the Credit Date and signed by a
Financial Officer of each such Person stating that (x) such
financial statements are true, complete and correct and (y) no
material adverse change in the financial condition, operations,
properties, business or prospects of such Person has occurred since
the date of such financial statements.
(m) Items. The Borrower shall have delivered to the Agent,
Eximbank and the Issuing Bank a list of the Items, containing with
respect to each Item a brief description and the quantity and
estimated invoice cost and the estimated date of shipment, plus,
for each Item, a copy of the Purchase Contract for such Item. Such
Purchase Contracts shall not contravene any
applicable statute or public policy of the United States. The list
shall include the supplier's DUNS numbers, and the product SIC
Codes for each Item on the list.
(n) Evidence of Authority. The Agent shall have received
evidence of the authority of the Borrower to enter into this
Agreement and the Eximbank Credit Agreement, and the names,
specimen signatures and evidences of authority of the Persons
signing this Agreement, the Notes, the Eximbank Credit Agreement
and the other documents required by this Agreement and the
Eximbank Credit Agreement as of the Credit Date, or who, as of the
Credit Date, will otherwise act as representatives of the Borrower
in the operation of the Loans, the Letter of Credit and the credit
facility provided under the Eximbank Credit Agreement.
(o) Eximbank Conditions. The Agent shall have received written
confirmation from Eximbank that each of the conditions precedent
set forth in Article IV of the Eximbank Guarantee Agreement and
Section 5.01 of the Eximbank Credit Agreement has been satisfied in
a manner satisfactory to Eximbank.
(p) Eximbank Note and Request for Eximbank Disbursement to Account
of Borrower. The Agent shall have received from the Borrower (i)
a promissory note, substantially in the form of Annex A to the
Eximbank Credit Agreement, which has been signed by the Borrower,
but which has all the blanks therein left
uncompleted and (ii) a Request for Eximbank Disbursement to Account
of Borrower, substantially in the form of Annex B to the Eximbank
Credit Agreement, which has been signed by the Borrower, but which
has all the blanks therein left uncompleted.
(q) Blocked Account. The Borrower shall have established the
Blocked Account.
(r) Notice to Proceed and Contractor's and Supplier's
Representation. The Borrower shall have delivered to the Agent a
copy of the Notice to Proceed under (and as defined in) the
Construction Contract and the Notice to Proceed under (and as
defined in) the Supply Contract, each of which shall have been
issued on or prior to the Credit Date. The Agent, the Issuing Bank
and the Banks shall have received a certificate signed by an
authorized representative of each of the Construction Contractor
and the Construction Supplier to the effect that (i) as of the
Credit Date the Scheduled Completion Date is July 1, 1996 or such
later date (which is acceptable to the Agent) as shall correspond
to any extension of the milestone date set forth in Section 4.1.1
of the Energy Conversion Agreement for the achievement of the
Completion Date (as defined in the Energy Conversion Agreement),
(ii) as of the Credit Date the Guaranteed Substantial Completion
Date is the earlier of (x) the date 90 days after the occurrence of
ECA Completion and (y) December 1, 1996, or (in case of clause (y))
such later date (which is acceptable to the Agent) as shall
correspond to any amended Guaranteed Substantial Completion Date
under the Construction Contract and the Supply Contract, (iii) the
Borrower is not in default under the Construction Contract or the
Supply Contract, (iv) the Construction Contractor is not entitled
to any change orders under the Construction Contract and the
Construction Supplier is not entitled to any change orders under
the Supply Contract (in each case, other than change orders
previously disclosed to the Agent in writing) on such date and is
not then aware of any other change orders required under the
Construction Contract or the Supply Contract and (v) to the best of
the Construction Contractor's or the Construction Supplier's (as
the case may be) knowledge, after reasonable inquiry, no Force
Majeure event (as defined in each of the Construction Contract and
the Supply Contract) has occurred.
(s) Project Site. The Philippine National Oil Company shall have
obtained registered legal title to, or an easement over, those
portions of the Site not owned prior to the date hereof by the
Republic or a Governmental Authority thereof.
(t) Ormat Waiver. The Borrower shall have delivered to the Agent
evidence, satisfactory to the Agent, that Ormat has waived any and
all rights to indemnification from PNOC-EDC under the Site
Agreement, whether then existing or thereafter arising.
(u) Additional Conditions. The requirements of Section 5.2 hereof
shall have been satisfied.
Section 5.2 Conditions of Each Utilization and Each Issuance of
a Drawing Approval. Each Utilization hereunder and each issuance
of a Drawing Approval pursuant to Section 2.2 hereof shall be
subject to the satisfaction of the following conditions:
(a) No Default; Representations and Warranties. Immediately
before and after giving effect to such Utilization or to the
drawing under the Letter of Credit which is the subject of such
Drawing Approval, as the case may be:
(i) no Construction Credit Default or Construction Credit Event of
Default shall have occurred and be continuing;
(ii) all representations and warranties made by the Borrower and
any Obligor which is an Affiliate of the Borrower and contained
herein (other than the representations made pursuant to Section
4.7(b)) or in the other Project Documents (other than the
Insurance Contracts, Governmental Approvals or any other
agreement, commitment or understanding referred to in subsection
(xiii) of the definition of "Operating Agreements" in Schedule X)
shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made
on and as of the date of such Utilization or on or as of the date
of the issuance of such Drawing Approval, as the case may be,
except where expressed to be made only as of an earlier date (it
being understood that the representations and warranties made by
the Borrower in Article 4 of this Agreement shall not be deemed to
be made only as of an earlier date notwithstanding that the
preamble to such Article states that such representations and
warranties are made as of the Credit Date);
(iii) the following representations and warranties shall be true
and correct in all material respects with the same effect as though
such representations and warranties had been made on and as of the
date of such Utilization or on and as of the date of the issuance
of such Drawing Approval, as the case may be: (A) except as fully
reflected in each financial statement delivered prior to such
Utilization or prior to the issuance of such Drawing Approval (as
the case may be) pursuant to Sections 6.1(a) and 6.1(b), there
shall have been, as of the date of such financial statement, no
liabilities or obligations with respect to the Borrower of any
nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether or not due) which, either individually or in
the aggregate, is reasonably likely to have a Material Adverse
Effect and (B) the Borrower does not know of any reasonable basis
for the assertion against the Borrower of any liability or
obligation of any nature whatsoever that is not fully reflected in
the financial statements delivered pursuant to Sections 6.1(a) and
6.1(b) which, either individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect.
(b) Security. The Security, in form and substance satisfactory to
the Agent and the Collateral Agent, shall have been duly created,
perfected and, where appropriate, registered, to create a first
priority security interest and charge over the Collateral in
existence at the date of such Utilization or at the date of the
issuance of such Drawing Approval, as the case may be. Without
limitation to the preceding sentence, the Borrower shall have duly
authorized, executed and delivered or, as the case may be,
provided:
(i) acknowledgment copies of proper financing statements or other
instruments duly filed under the Applicable Law of each
jurisdiction as may be necessary or, in the reasonable opinion of
the Agent and the Collateral Agent, desirable to perfect the
charges and security interests purported to be created by the
Security Documents;
(ii) certified copies of requests for information or copies, or
equivalent reports, listing the financing statements and
instruments referred to in clause (i) above and all other
effective financing statements that name the Borrower as debtor and
that are filed in the jurisdictions referred to in said clause (i),
together with copies of such other financing
statements and instruments (none of which shall cover the
Collateral except to the extent evidencing Construction Period
Permitted Liens);
(iii)evidence of the completion of all other recordings and filings
of, or with respect to, the Security Documents as may be necessary
or, in the reasonable opinion of the Agent and the Collateral
Agent, desirable to perfect the security interests purported to be
created by the Security Documents; and
(iv)evidence that all other actions necessary or, in the
reasonable opinion of the Agent and the Collateral Agent,
desirable to perfect and protect the security interests purported
to be created by the Security Documents have been taken.
(c) Consents and Approvals. There shall have been obtained, or
there shall have been made arrangements, satisfactory to the Agent,
for obtaining, in addition to the Project Documents, all other
governmental, corporate, creditors', shareholders' and other
necessary licenses, approvals or consents (other than any board or
other internal approval or consents to be obtained by any of the
Banks or the Issuing Bank from the management or shareholders of
its respective institution or any approval which a Bank is required
by the laws or applicable regulations of its domicile to obtain
prior to making its Loans) for: (i) the
financing by each of the Banks and the Issuing Bank under this
Agreement; (ii) the carrying on of the business of the Borrower as
it is presently carried on and is contemplated to be carried on;
(iii) the carrying out of the Project; (iv) the due execution and
delivery of, and performance under, each Project Document which has
been entered into at the time of such Utilization or at the time of
issuance of such Drawing Approval (as the case may be), the
Security, and any documents in implementation of any thereof; and
(v) the remittance to the Collateral Agent and by the Collateral
Agent to the Secured Parties or their respective assignees, in
Dollars, of all monies payable pursuant to each Project Document
which has been entered into at the time of such Utilization or at
the time of issuance of such Drawing Approval (as the case may be),
and any documents in implementation of any thereof. In addition,
a true and complete copy of each material license, approval or
consent described in this Section 5.2(c) shall have been delivered
by the Borrower to the Agent.
(d) No Project Document Default; Governmental Approvals. Each of
the Project Documents which has been entered into or which is
required to have been entered into at the time of such
Utilization or at the time of issuance of such Drawing Approval
shall be in full force and effect and no material breach or default
shall have occurred under any such Project Document. No event of
Force Majeure (as defined in any of the Energy
Conversion Agreement, the Supply Contract and the Construction
Contract) shall have occurred which has had, or in the reasonable
judgment of the Agent is reasonably likely to have, a Material
Adverse Effect. No events shall have occurred pursuant to which a
claim could be made by the Agent on behalf of the Banks under the
Eximbank Guarantee Agreement.
(e) Limitations on Indebtedness. Immediately before and after
giving effect to such Utilization or to the drawing under the
Letter of Credit which is the subject of such Drawing Approval, as
the case may be, the sum of (i) the principal amount of all Loans
outstanding (including, in the case of a Drawing Approval, the
amounts to be reimbursed by the Banks to the Issuing Bank in
connection with a drawing under the Letter of Credit which is the
subject of such Drawing Approval) and (ii) the principal amount of
all Supplemental Loans outstanding shall not exceed
$161,258,000.
(f) Energy Conversion Agreement. The Agent, the Issuing Banks and
the Banks shall have received from the Borrower a
certification, in form and substance satisfactory to the Agent,
signed by an authorized representative of the Borrower and
expressed to be effective as of the date of the relevant
Utilization or as of the date of issuance of the relevant Drawing
Approval, stating that the Borrower is in compliance in all
material respects with all provisions of the Energy Conversion
Agreement.
(g) No Material Adverse Effect. Since the Credit Date, no event
or events shall have occurred which has had or is reasonably likely
to have a Material Adverse Effect.
(h) Costs; Construction Progress. The Agent and the Independent
Engineer shall be satisfied that (i) the costs and expenses
theretofore incurred by the Borrower and to be incurred by the
Borrower prior to the latest date on which the Maturity Date can be
expected to occur will not exceed $217,268,000; (ii) the
Disbursement Date (as defined in the Eximbank Credit Agreement) is
likely to occur on or before the Date Certain and (iii) the
Financed Portion of the costs incurred by the Borrower after
November 9, 1992 and before the Maturity Date for the purchase in
the United States and export to the Philippines of the Items will
(A) not exceed the difference between (1) the Total Commitment and
(2) 100% of the Guarantee Exposure Fee and (B) not be less than the
difference between (1) the Total Commitment less the Supplemental
Commitment and (2) 100% of the Guarantee Exposure Fee.
Notwithstanding the foregoing, but subject to all of the other
terms and conditions of this Agreement, condition (i) of this
paragraph (h) will be deemed waived from time to time to permit
fundings to the Construction Supplier; provided, however, that if
any such waiver shall have been given for a Utilization or the
issuance of a Drawing Approval, no Utilization or issuance of a
Drawing Approval shall be made thereafter unless either (x)
condition (i) of this paragraph (h) (and all other conditions
precedent to such Utilization or issuance of a Drawing Approval)
shall be satisfied at the date of such Utilization or issuance of
a Drawing Approval or (y) condition (i) of this paragraph (h) (and
all other conditions precedent to such Utilization or
issuance of a Drawing Approval) shall have been satisfied as of the
date of the immediately preceding Utilization or issuance of a
Drawing Approval.
(i) Insurance. The Agent shall have received a certificate from
the Insurance Consultant stating that the insurance policies
required pursuant to Section 6.3 hereof to be in effect on the date
of such Utilization or on the date of issuance of such Drawing
Approval are in full force and effect.
(j) Fees and Expenses. The Borrower shall have paid or arranged
for payment (including, to the extent permitted, arrangement for
payment out of Utilizations) of all fees, expenses and other
charges then payable by it under this Agreement.
(k) Eximbank Certificate. The Agent shall have received
(i) with respect to each Loan, a certificate from Eximbank, in form
and substance satisfactory to the Agent, which has been fully
completed and signed by Eximbank and which indicates that all of
the proceeds of such Loan will be eligible for Eximbank support and
(ii) with respect to the issuance of the Letter of Credit, a
certificate from Eximbank, in form and substance
satisfactory to the Agent, which has been fully completed and
signed by Eximbank and which indicates that such Letter of Credit
is in form and substance satisfactory to Eximbank and that 100% of
all payments under such Letter of Credit will be eligible for
Eximbank support.
(l) Lien Waivers. The Agent shall have received invoices
showing full payment, except for any applicable retention, of all
subcontractors contracting directly with the Construction
Supplier or the Construction Contractor whose subcontract is valued
at more than $150,000 or who can claim a Lien of more than $150,000
for which a prior Utilization or a prior issuance of a Drawing
Approval or a prior approval of an Application for
Funding for a Supplemental Loan, a Progress Subordinated Loan or a
Progress Equity Contribution has been made who have not been paid
directly by the Collateral Agent or, in lieu thereof, (i)
conditional Lien waivers for the Utilization or Drawing Approval
requested and unconditional Lien releases for all prior
Utilizations and Drawing Approvals and Applications for Fundings
from such subcontractors or (ii) a certificate executed by the
Construction Contractor and/or the Construction Supplier, as
appropriate, to the effect that all such subcontractors have been
paid to the extent that such amounts are then due or that payment
is subject to a good faith contest which is being diligently
pursued by the Construction Contractor and/or the Construction
Supplier, as appropriate; provided that such contest is being
pursued in a manner and on a basis acceptable to the Borrower and
the Agent.
(m) Other Conditions. The obligation of the Banks or the
Issuing Bank to make any Utilization and of the Agent to issue any
Drawing Approval shall also be subject to the conditions that:
(i) the Borrower shall have the corporate authority to borrow the
amount requested to be disbursed, the amount of the drawing which
is the subject of a Drawing Approval or the face amount of the
Letter of Credit, as the case may be;
(ii) the amount requested to be disbursed, the amount of the
drawing which is the subject of a Drawing Approval or the face
amount of the Letter of Credit, as the case may be, shall be within
the Borrower's available borrowing power;
(iii) after giving effect to such Utilization or to the drawing
under the Letter of Credit which is then the subject of a Drawing
Approval, as the case may be, the Borrower shall not be in
violation of its Articles of Incorporation or By-Laws, any
provision contained in any document to which the Borrower is a
party (including this Agreement) or by which the Borrower is bound,
or any Applicable Law directly or indirectly limiting or otherwise
restricting the Borrower's borrowing power or authority or its
ability to borrow (including, without limitation, any Applicable
Law requiring the maintenance of a debt to equity ratio); and
(iv) all corporate and legal proceedings necessary in the
reasonable judgment of the Agent to authorize the transactions
contemplated in this Agreement shall be satisfactory in form and
substance to the Agent.
(n) Certificates. The Borrower shall have delivered to the Agent
a certification, signed by a Financial Officer of the Borrower and
expressed to be effective as of the date of the relevant
Utilization or the relevant issuance of a Drawing Approval, as the
case may be, with respect to the satisfaction of the foregoing
conditions of this Article 5, which certification shall, in the
case of the issuance of the Letter of Credit, be substantially in
the form of Exhibit E hereto and, in the case of the making of a
Loan or the issuance of a Drawing Approval, be substantially in the
form of Exhibit A to Schedule 2.2(a) hereto. Such certification
shall also include: (i) such other evidence as to the proposed
utilization of the proceeds of the relevant Utilization or of the
proceeds of the drawing under the Letter of Credit which is the
subject of a Drawing Approval, and the utilization of the proceeds
of any prior Utilization or drawing under the Letter of Credit as
the Agent shall reasonably require; and (ii) if the Agent acting on
the instructions of the Required Banks shall so reasonably request,
a legal opinion or opinions, in form and substance satisfactory to
them, of counsel acceptable to the Agent, with respect to any
matters incident to the Utilization or the issuance of the Drawing
Approval.
Section 5.3 No Waivers. (a) No course of dealing or waiver by
the Agent, the Banks or the Issuing Bank in connection with any
condition of Utilization or issuance of a Drawing Approval under
this Agreement shall impair any right, power or remedy of the
Agent, the Banks or the Issuing Bank with respect to any other
condition of Utilization or issuance of a Drawing Approval, or be
construed to be a waiver thereof; nor shall the action of the
Agent, the Banks or the Issuing Bank in respect of any
Utilization or issuance of a Drawing Approval affect or impair any
right, power or remedy of the Agent, the Banks or the Issuing Bank
in respect of any other Utilization or issuance of a Drawing
Approval.
(b) Unless otherwise notified to the Borrower by the Agent, the
Banks or the Issuing Bank and without prejudice to the generality
of subsection (a) above, the right of the Agent, the Banks or the
Issuing Bank to require compliance with any condition under this
Agreement which may be waived by the Banks, the Agent or the
Issuing Bank in respect of any Utilization or issuance of a Drawing
Approval is expressly preserved for the purposes of any subsequent
Utilization and/or issuance of a Drawing Approval.
(c) The acceptance of the benefits of each Utilization or
issuance of a Drawing Approval shall constitute a representation
and warranty by the Borrower to the Agent, the Issuing Bank and
each of the Banks that all the conditions specified in this Article
5 have been satisfied (unless waived in accordance with this
Agreement) as of that time. All the certificates, legal opinions,
bylaws, articles of incorporation and other documents and papers
referred to in this Article 5, unless otherwise
specified, shall be delivered to the Agent and/or the Banks and/or
the Issuing Bank at their addresses specified in Section 9.1 of
this Agreement, or at such other office as any of them may
hereafter designate in writing to the other parties hereto, in
sufficient counterparts for the Agent, each of the Banks and the
Issuing Bank, and shall be satisfactory in form and substance to
the Agent.
ARTICLE 6. Covenants
The Borrower covenants and agrees that until the Construction
Financing Termination Date, and unless otherwise waived in
writing by the Required Banks:
Section 6.1 Information Covenants. The Borrower shall furnish to
the Agent (in sufficient quantities for the Issuing Bank and each
of the Banks):
(a) Quarterly Financial Statements of Borrower. As soon as
available but, in any event, within 60 days after the close of each
of the first three quarterly accounting periods in each Fiscal
Year,
(i) complete unaudited statements of financial condition of the
Borrower as at the end of such quarterly period with related
statements of income and retained earnings and statements of
changes in financial position for such quarterly period and for the
elapsed portion of the Fiscal Year ended with the last day of such
quarterly period, in each case setting forth comparative figures
for the related periods in the prior Fiscal Year, all of which
shall be in form satisfactory to the Agent and certified by the
chief financial officer of the Borrower, subject to normal year-end
audit adjustments;
(ii) a report on any event or condition which has had or which is
reasonably likely to have a Material Adverse Effect; and
(iii) a statement of all financial transactions in such Quarter
between the Borrower and any Affiliate of the Borrower, including
a certification that such transactions were on ordinary
commercial terms negotiated on an arms-length basis.
(b) Annual Financial Statements of Borrower. As soon as
available but, in any event, within 120 days after the close of
each Fiscal Year, the following, all in form satisfactory to the
Agent: (i) statements of financial condition of the Borrower as at
the end of such Fiscal Year with the related statements of income
and retained earnings and statements of changes in
financial position for such Fiscal Year, in each case setting forth
comparative figures for the preceding Fiscal Year and certified by
the Auditors (all such statements being in agreement with the
Borrower's books of account and prepared in accordance with
Philippine generally accepted accounting principles
consistently applied), and (ii) a report of the Auditors stating
that in the course of its regular audit of the financial
statements of the Borrower, which audit was conducted in
accordance with Philippine generally accepted auditing standards,
the Auditors obtained no knowledge of any Construction Credit
Default or Construction Credit Event of Default which has
occurred and is continuing or, if in the opinion of the Auditors
such a Construction Credit Default or Construction Credit Event of
Default has occurred and is continuing, a statement as to the
nature thereof.
(c) Financial Statements of CECI and Other Affiliates. Within 30
days after the filing of the same with the United States Securities
and Exchange Commission, copies of the annual and quarterly
financial statements (consisting of a balance sheet and the related
statements of income, equity and cash flows) of CECI and,
concurrently therewith, copies of the annual and quarterly
financial statements (consisting of a balance sheet and the related
statements of income, equity and cash flows), unaudited if audited
are not available, of CE International, Ormat Cebu and CE
Philippines, certified by the chief financial officer of CE
International, Ormat Cebu or CE Philippines, as the case may be;
provided, however, that so long as CE International, Ormat Cebu or
CE Philippines engage in no business other than the holding of
their respective direct or indirect ownership interests in the
Borrower, the Borrower shall be deemed to have complied with this
Section 6.1(c) if on each date the Borrower would otherwise be
required to furnish financial statements of any such Persons
pursuant to this Section 6.1(c), the Borrower instead furnishes a
certificate of the chief financial officer of each such Person
certifying that such Person is engaged in no other business.
(d) Management Letters. Promptly after the Borrower's receipt
thereof, a copy of any "management letter" or other similar
communication received by the Borrower from the Auditors in
relation to the Borrower's financial, accounting and other
systems, management and accounts.
(e) Annual Operating Budget. As soon as available but, in any
event, within 60 days prior to (i) the Operation Date and,
thereafter, (ii) the commencement of each Fiscal Year, an annual
operating budget (the "Annual Budget") (including budgeted
statements of income and sources and uses of cash and balance
sheets) prepared by the Borrower and accompanied by a statement of
the chief financial officer of the Borrower to the effect that, to
the best of his or her knowledge, the budget is a
reasonable estimate for the period covered thereby. The first
Annual Budget shall cover the period from the Operation Date
through the end of the Fiscal Year in which the Operation Date
occurs and, if such period consists of less than six (6) months,
for the immediately succeeding Fiscal Year. Each Annual Budget
shall contain complete, fair and accurate estimates (by principal
components) of Sales Proceeds, Operating and Maintenance Costs and
Debt Service for each Month covered by such Annual Budget based on
the Borrower's best projections at such time. Unless otherwise
consented to by the Agent (or, if a change therein, in the
reasonable judgment of the Agent, has had or is reasonably likely
to have a Material Adverse Effect, the Required Banks), which
consent shall not be unreasonably withheld, the Annual Budget from
year to year shall be based on the same format as the Base Case
Forecast and be maintained on the same basis and
provide sufficient detail to permit a meaningful comparison. The
Agent and the Independent Engineer shall have 30 days from the date
each Annual Budget is submitted by the Borrower to approve such
budget, which approval shall not be unreasonably withheld. If the
Agent and the Independent Engineer do not approve an Annual Budget,
the Agent shall notify the Borrower of the items which are
disapproved and the reason for such disapproval. Until such Annual
Budget is so approved, the Annual Budget most
recently in effect shall continue to apply, except that any items
of the then proposed Annual Budget that have been approved shall
also be given effect. From time to time, but not more frequently
than once per Quarter, the Borrower may propose amendments to an
Annual Budget, and the Agent and the Independent Engineer may
reject such proposal within ten (10) Business Days from the date
the Borrower submits such proposal if in their reasonable
judgment such amendment is not reasonably necessary or advisable
for operation of the Project and, if no such rejection is made,
subject to the following sentence, such amendments shall become
effective. If in the reasonable judgment of the Agent, any such
amendment proposed by the Borrower has had or is reasonably likely
to have a Material Adverse Effect, the Agent will so notify the
Borrower and promptly provide such proposal to the Banks and the
Required Banks shall have ten (10) Business Days after their
receipt of such proposal to reject the same in their reasonable
judgment and, if no such rejection is made, such amendments shall
become effective. Not later than three (3) Business Days after the
effective date of each Annual Budget and of any amendment thereto,
the Borrower shall provide a copy of the same to the Collateral
Agent.
(f) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Section 6.1(a) and (b), a
certificate of a Financial Officer of the Borrower to the effect
that, to the best of his knowledge, no Construction Credit
Default or Construction Credit Event of Default has occurred and is
continuing or, if any such Construction Credit Default or
Construction Credit Event of Default has occurred and is
continuing, specifying the nature and extent thereof and what
action the Borrower is taking or proposes to take in response
thereto.
(g) Notice of Default, Litigation, etc. (i) Immediately upon an
officer of the Borrower obtaining actual knowledge thereof, notice,
by facsimile, cable or telex, of the occurrence of any Construction
Credit Default or Construction Credit Event of Default or any
breach or default hereunder or under any of the other Project
Documents by the Borrower or any other party thereto, specifying
the nature thereof and the action which the Borrower is taking and
proposes to take with respect to the same; and (ii) promptly, and
in any event within 20 Business Days after an officer of the
Borrower obtains actual knowledge thereof, notice of:
(A) any litigation or governmental proceeding pending (x)
against the Borrower (i) involving a claim in excess of $500,000
(or the equivalent thereof in other currency) or (ii) which is
reasonably likely to have a Material Adverse Effect or (y) with
respect to any Project Document;
(B) any proposal by any Governmental Authority to acquire
compulsorily the Borrower, any of the Collateral or a substantial
part of the Borrower's business or assets;
(C) any substantial dispute between the Borrower or the Sponsor
and any Governmental Authority relating to the Project;
(D) any change in the authorized officers or directors referred to
in Section 5.1(d) above, giving certified specimen signatures of
any new officer or director so appointed and, if requested by the
Agent, satisfactory evidence of the authority of such new officer
or director;
(E) any actual or proposed termination, rescission, discharge
(otherwise than by performance), amendment or waiver or
indulgence under, any material provision of any Project Document
(other than by a Bank);
(F) any material notice or correspondence received or initiated by
the Borrower relating to a Governmental Approval or other license
or authorization necessary for the performance by it of its
obligations under the Project Documents;
(G) any Lien (other than a Construction Period Permitted Lien)
becoming enforceable over any of the Borrower's assets; or
(H) any proposed material change in the nature or scope of the
Project or the business or operations of the Borrower and any one
or more events, conditions or circumstances (including without
limitation Force Majeure as defined in Sections 13.1(a) and 13.1(b)
of the Energy Conversion Agreement) that exist or have occurred
which are reasonably likely to have a Material Adverse Effect;
(I) the occurrence of any event or act which could reasonably
qualify as a Political Risk (as defined in the Eximbank Guarantee
Agreement);
(J) and/or copies of: (x) each funding waiver request filed with
respect to any Pension Plan and all communications received or sent
by the Borrower or any ERISA Affiliate with respect to such
request; and (y) the failure of the Borrower or any ERISA Affiliate
to make a required installment or payment under Section 412 of the
Code, Section 302 of ERISA or the terms of any Pension Plan by the
due date (other than the quarterly contributions described in
Section 302(e) of ERISA or Section 412(m) of the Code);
(K) the occurrence of any Termination Event which has had or is
reasonably likely to result in a Material Adverse Effect in
connection with any Pension Plan or any trust thereunder,
specifying the nature thereof, what action the Borrower or the
ERISA Affiliate has taken, is taking or proposes to take with
respect thereto and, when known, any action taken or threatened by
the Internal Revenue Service, the Department of Labor or the PBGC
with respect thereto;
(L) and copies of: (x) all notices of the PBGC's intent to
terminate any Pension Plan or to have a trustee appointed to
administer any Pension Plan; and (y) all notices from a
Multiemployer Plan sponsor concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA;
(M) the filing of an intent to terminate any Pension Plan under a
distress termination within the meaning of Section 4041(c) of
ERISA; or
(N) and a copy of each agreement, commitment or understanding
(whether or not subject to the approval of the Agent or the Banks
pursuant to any other provision of this Agreement) executed by or
on behalf of the Borrower (excluding (x) the agreements set forth
in clauses (i) through (xi) of the definition of the term
"Operating Agreements" in Schedule X hereto but including
replacements thereof and (y) agreements, commitments or
understandings entered into in the ordinary course of business
which are required to perform the O&M Parameters and which (1) do
not, individually, create a financial obligation of the Borrower in
excess of $200,000 and (2) would not, in the aggregate, result in
the expenditure of funds in any Fiscal Year in excess of the amount
budgeted for Operating and Maintenance Costs (including the
Contingent O&M Amount) in the then-current Annual Budget for such
Fiscal Year) in connection with the Project, which notice shall
specifically refer to this Section 6.1(g)(ii)(N) and
request that the Agent confirm whether or not such agreement,
commitment or understanding shall constitute an Operating
Agreement, in which case such agreement, commitment or
understanding shall only constitute an Operating Agreement if the
Agent, in consultation with Eximbank, shall designate it as an
Operating Agreement in a writing delivered to the Borrower within
60 days of the Agent's receipt thereof.
(h) Implementation Reports. Prior to the Disbursement Date (as
defined in the Eximbank Credit Agreement), within 21 days of the
end of each Month, a report, in a form satisfactory to the Agent,
on the implementation and progress of the Project, including (1)
any factors materially and adversely affecting or which are
reasonably likely to materially and adversely affect the carrying
out of the Project and (2) copies of any reports received by the
Borrower from any outside technical consultant identifying any
matter that is of material adverse significance to the
construction or operation of the Plant.
(i) Operation Date and Eximbank Funding Condition Notices. The
Borrower shall notify the Agent, within two Business Days, of the
occurrence of each of (i) the Operation Date and (ii) the
satisfaction of the Eximbank Funding Conditions.
(j) Other Information. From time to time, such other
information or documents (financial or otherwise) as the Agent, any
Bank or the Issuing Bank may reasonably request including, without
limitation, (1) advance notice of the commencement of all
performance tests under the Construction Contract and (2) if the
Completion Date (as defined in the Energy Conversion Agreement)
shall have been deemed to have occurred pursuant to Section 4.9(b)
of the Energy Conversion Agreement, information as to the
circumstances giving rise to the same, the action(s) which the
Borrower (and, to the extent known by the Borrower, PNOC-EDC) is
taking or proposes to take with respect to the same and periodic
reports of the status of such actions and the implementation
thereof.
Section 6.2 Books, Records and Inspections; Accounting and Audit
Matters; Plans. (a) The Borrower will keep proper books of record
and account adequate to reflect truly and fairly the financial
condition and results of operations of the Borrower (including the
progress of the Project) in which full, true and correct entries in
conformity with Philippines generally accepted accounting
principles consistently applied and all Applicable Laws shall be
made of all dealings and transactions in relation to its business
and activities. The Borrower will permit officers and designated
representatives of the Agent, the Collateral Agent or the
Independent Engineer to visit and inspect, under guidance of
officers of the Borrower, any of the properties of the Borrower,
and to examine and make copies of the books of record and account
of the Borrower and discuss the affairs, finances and accounts of
the Borrower with, and be advised as to the same by, its officers,
all at such reasonable times and intervals and to such reasonable
extent as the Agent or the Collateral Agent may request.
(b) The Borrower shall authorize the Auditors to communicate
directly with the representatives of the Agent and the Independent
Engineer at reasonable intervals, but if a Construction Credit
Default or Construction Credit Event of Default has occurred or is
continuing, then at any time, regarding the Borrower's accounts and
operations and furnish to the Agent a copy of such authorization,
which shall be in form and substance satisfactory to the Agent;
provided, however, that the Agent will (i) provide the Borrower
with copies of any correspondence between such representatives and
the Auditors; and (ii) provide the Borrower with reasonable notice
of any meeting between such representatives and the Auditors, with
a description of the matters to be discussed at such meeting, and
allow the Borrower to attend any such meeting.
(c) The Borrower will at all times cause a complete set of the
current and (when available) as-built plans (and all supplements
thereto) relating to the Plant to be maintained at the Plant or the
Construction Contractor's office for inspection by the Independent
Engineer and the Agent.
Section 6.3 Maintenance of Property; Insurance. (a) The
Borrower will (i) keep all property useful and necessary in its
business in good working order and condition and (ii) keep its
present and future properties and business insured with financially
sound and reputable insurers satisfactory to the Agent against loss
or damage in such manner and to the same extent as required in
Section A of Schedule 6.3 hereto until the expiration of such
policies and immediately thereafter as required in Section C of
Schedule 6.3, in each case pursuant to policies naming the
Collateral Agent as sole loss payee thereunder and containing cut-
through endorsements to reinsurers and provisions requiring that
the Collateral Agent and the Agent shall receive notices of any
non-payment of premiums and that such policy may only be canceled
for non-payment of premiums, if cancelable, upon sixty (60) days
prior notice to the Collateral Agent and the Agent. On or prior to
the dates required pursuant to Section A or Section C, as the case
may be, of Schedule 6.3, the Borrower will submit to the Agent
certificates of insurance relating to the insurances required by
Section A and Section C of Schedule 6.3 (together with copies of
such insurance policies if then available) from the Borrower's
insurers and insurance brokers (including confirmation of premium
payments), which certificates shall indicate the properties
insured, amounts and risks covered, names of the beneficiaries,
expiration dates, names of the insurers and special features of the
insurance policies. The Borrower shall provide the Agent with
copies of insurance policies relating to the insurances required by
Section A and Section C of Schedule 6.3 hereto on or prior to the
date such policies are required to be delivered to the Agent in
accordance with such Section A or Section C, as the case may be,
such policies to be in form and substance, and issued by
companies, satisfactory to the Agent in consultation with the
Insurance Consultant.
(b) The Borrower will cause the Construction Contractor or the
Construction Supplier, as applicable, to (i) keep the insurances
described in Section B of Schedule 6.3 hereto with financially
sound and reputable insurers satisfactory to the Agent against loss
or damage in such manner and to the same extent as so described, in
each case pursuant to policies naming the Collateral Agent as sole
loss payee thereunder and containing cut-through endorsements to
reinsurers and provisions requiring that the Collateral Agent and
the Agent shall receive notices of any non-payment of premiums and
that such policy may only be canceled (x) as provided in Section B
of Schedule 6.3 thereto or (y), if not therein provided, for non-
payment of premiums, if cancelable, upon sixty (60) days prior
written notice to the Collateral Agent and the Agent. On or prior
to the dates required pursuant to Section B of Schedule 6.3, the
Borrower will cause the Construction Contractor or the Construction
Supplier, as applicable, to submit to the Agent certificates of
insurance relating to the insurances required by Section B of
Schedule 6.3 (together with copies of such insurance policies if
then available) from the insurers or insurance brokers for such
insurances (including confirmation of premium payments), which
certificates shall indicate the type of insurance, amounts and
risks covered, names of the beneficiaries, expiration dates, names
of the insurers and special features of the insurance policies.
The Borrower will cause the Construction Contractor or the
Construction Supplier, as applicable, to provide the Agent with
copies of insurance policies relating to the insurances described
in Section B of Schedule 6.3 hereto on or prior to the date such
policies are required to be delivered to the Agent in accordance
with such Section B of Schedule 6.3 hereto, such policies to be in
form and substance, and issued by companies, satisfactory to the
Agent in consultation with the Insurance Consultant. The Borrower
will cause the Construction Contractor to establish the ECA
Construction Performance Bond in favor of PNOC-EDC on or prior to
the date which is ten (10) calendar days after the Effectivity Date
(as defined in the Energy Conversion Agreement) and will deliver
evidence, in the form of the certificate attached as Exhibit F
hereto, of PNOC-EDC's acceptance of the ECA Construction
Performance Bond within fifteen (15) calendar days after the same
is so established.
(c) The provisions of this Section 6.3 shall be deemed to be
supplemental to, but not duplicative of, the provisions of any of
the Security Documents that require the maintenance of insurance.
In the event that any insurance whatsoever is purchased, taken or
otherwise obtained by the Borrower with respect to the Project
otherwise than as required hereunder or if not properly endorsed to
the Collateral Agent as the sole loss payee or beneficiary or
otherwise made upon the terms required in this Section 6.3, without
limitation to any provision of the Assignment and Security
Agreement, such insurance shall be considered assigned hereunder to
the Collateral Agent with the right of the Collateral Agent to
make, settle, comprise and liquidate any and all claims thereunder,
without prejudice to the exercise of any other rights and remedies
that the Collateral Agent may have under any of the Financing
Documents, or under any Applicable Law.
Section 6.4 Maintenance of Existence; Privileges; Etc.. The
Borrower shall at all times (a) preserve and maintain in full force
and effect (i) its existence as a corporation and good standing
under the laws of the Republic, (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 and (iii) all of its powers, rights,
privileges and franchise necessary for the construction, ownership,
maintenance and operation of the Project and the maintenance of its
existence, (b) obtain in a timely manner and maintain in full force
and effect (or where appropriate, renew) all Governmental Approvals
(including, without limitation, those under Environmental Laws) and
all other licenses, registrations, waivers, consents and approvals
required at any time or advisable in connection with the
construction, maintenance, ownership or good and orderly operation
of the Project and all licenses, consents and approvals necessary
for the conversion to Dollars of all Peso amounts (including,
without limitation, Peso amounts representing SFRI Fees) payable
under the Energy Conversion Agreement, the PNOC-EDC Consent
Agreement, the Performance Undertaking and the Republic Consent
Agreement and for the remission to the United States in Dollars of
any amounts paid or payable to the Secured Parties in connection
with any Financing Document or the transactions contemplated
thereby or the shares of common stock of the Borrower and (c)
preserve and maintain good and marketable title to its properties
and assets (it being understood that the Borrower's rights with
respect to the Site are solely as set forth in the Energy
Conversion Agreement and the Accession Undertaking) subject to no
Liens other than Construction Period Permitted Liens.
Section 6.5 Compliance with Statutes. The Borrower will comply
with all Applicable Laws in respect of the conduct of its
business and the ownership, operation and use of its property
(including, without limitation, Applicable Laws relating to
environmental standards and controls and Applicable Laws relating
to the maintenance of debt to equity ratios).
Section 6.6 Consultations Regarding Independent Engineer's Report.
The Borrower agrees that (a) in addition to any other consultation
required hereunder, following the end of each Month, upon the
request of the Agent, the Borrower shall consult with the Agent
regarding any materially adverse event or condition identified by
the Independent Engineer in the reports provided by the Independent
Engineer for such Month pursuant to the Representative Agreement,
and (b) in the event the Borrower fails to hold such consultations
within 30 days of such request, such event or condition shall be
deemed to have a Material Adverse Effect.
Section 6.7 Project Implementation. (a) The Borrower shall (i)
carry out the Project and conduct its business with due diligence
and efficiency and in accordance with sound engineering, financial,
and business practices and (ii) use the proceeds of all Loans only
for the purpose set forth in Section 2.1(d) and strictly in
accordance with the Construction Budget.
(b) Without limiting the generality of the preceding clause (a),
the Borrower will cause the construction of the Project to be
prosecuted and completed with due diligence and continuity
(except for interruptions due to events of force majeure, which the
Borrower will use its best efforts to mitigate), in a good and
workmanlike manner and in accordance with (i) sound generally
accepted building and engineering practices, (ii) all
Governmental Approvals and Applicable Laws applicable to the Site,
the Plant or the Borrower, (iii) the Construction Contract, (iv)
the Supply Contract and (v) the Construction Budget.
(c) In the Construction Budget, the Borrower will allocate $10
million to the payment of Contingency Costs and, except with the
prior written approval of the Agent, will not incur any
Contingency Costs if, after giving effect thereto, the aggregate
amount of all Contingency Costs incurred would exceed $2 million.
The Construction Budget shall also provide for the payment of the
Commitment Fee payable by the Borrower to Eximbank under the
Eximbank Credit Agreement solely from the proceeds of Required
Equity Contributions and/or Required Subordinated Loans.
(d) Without limiting the generality of clause (a) of this
Section 6.7, the Borrower will operate and maintain the Project,
and retain and maintain staff sufficient to operate and maintain
the Project, in accordance with the O&M Parameters and will
otherwise comply with and satisfy the requirements of the O&M
Parameters.
(e) The Borrower shall use reasonable efforts to become a member
of the multi-partite monitoring team described in paragraph 1 of
Section IV of the Environmental Compliance Certificate; provided,
however, that the Borrower need not become a member of such
monitoring team if, in the reasonable judgment of the Borrower,
after consultation with its counsel, the Borrower's participation
in the activities conducted by such monitoring team could
reasonably be expected to expose the Borrower to additional
liability under Applicable Laws of the Republic.
(f) Without limiting the generality of clauses (a) and (b) of this
Section 6.7, in order to avoid a deemed abandonment under Section
14.2.1(d) of the Energy Conversion Agreement, if the conditions
precedent specified in clauses (a) and (b) of Section 13.3 of the
Construction Contract have been satisfied the Borrower shall,
within ten (10) Business Days prior to the date of potential
abandonment under the Energy Conversion Agreement, exercise the
right granted to it under the last sentence of Section 13.3 of the
Construction Contract and certify to PNOC-EDC that the Power Plant
(as defined in the Construction Contract) has achieved ECA
Completion in accordance with Section 6.1(b) of the Energy
Conversion Agreement.
(g) Without limiting the generality of clauses (a) and (b) of this
Section 6.7, if (i) all of the conditions to ECA Completion have
not been satisfied or waived on or before the sixtieth (60th) day
after the Deemed Completion ECA Completion Date or (ii) the ECA
Completion Date does not occur on or before the sixtieth (60th) day
after the Scheduled Completion Date (in each case unless and to the
extent such failure is due to the Borrower's breach of its
obligations under the Construction Contract or the occurrence of
force majeure under the Energy Conversion Agreement), the Borrower
shall, at the written direction of the Required Banks, exercise
such of its remedies set forth in Sections 19.2 and 19.3 of the
Construction Contract as the Required Banks shall so direct,
including, without limitation, the termination of the Construction
Contract, the hiring of a substitute contractor at the Contractor's
expense or the enforcing of any security given by or on behalf of
the Contractor.
(h) If the Contractor shall fail to stay within thirty (30) days
of the schedule for achieving ECA Completion by the Scheduled
Completion Date under circumstances which would give rise to an
obligation of the Contractor under Section 14.1(b) of the
Construction Contract to submit for approval the Plan (as defined
in Section 14.1(b) of the Construction Contract), the Borrower,
promptly after obtaining knowledge of such failure, shall provide
written notice of such failure to the Agent and the Independent
Engineer. The Borrower shall not provide to the Contractor any
approval to any such Plan (as so defined) or any portion thereof
unless and until the Independent Engineer shall have approved the
same, such approval not to be unreasonably withheld.
(i) Without the prior written consent of the Agent, which
approval shall not be unreasonably withheld, the Borrower shall not
direct that Geothermal Fluid (as defined in the Construction
Contract) be run through any GCCU or OEC (as such terms are defined
in the Construction Contract) under circumstances which would give
rise to the commencement of any of the Warranty Periods (as defined
in the Construction Contract) pursuant to clause (a) of Section
17.10 of the Construction Contract.
(j) The Borrower shall provide the Agent with notice immediately
upon becoming aware that conditions to (i) drawdown have been met
permitting the drawdown of any amount under either or both of the
Supply Contract Letters of Credit and/or (ii) the enforcing of
either or both of the Ormat Industries Guaranty and the Ormat
Guaranty have been met.
Section 6.8 Auditors. In the event that Deloitte, Touche &
Tohmatsu International should cease to be the Auditors of the
Borrower for any reason, the Borrower shall appoint and maintain as
the Auditors another firm of independent public accountants
approved by the Required Banks.
Section 6.9 Taxes, Duties, Etc. The Borrower will pay and
discharge all taxes, duties, fees, assessments and other
governmental charges imposed on it, on its income or profits, on
any of its property, or in connection with the execution, issue,
delivery, registration, notarization, assignment or transfer of any
interest in or for the legality, validity or enforceability of any
Project Document (including, without limitation, any documentary,
stamp, registration or similar tax or fee imposed in connection
with any assignment or transfer by any Bank of its Note, its Loans
or any of its interests therein or herein pursuant to Sections 2.2,
2.17 or 3.6 hereof) prior to the date on which penalties attach
thereto, and all claims, levies or liabilities (including, without
limitation, claims for labor, services, materials and supplies) for
sums which have become due and payable and which have or, if
unpaid, might become a Lien upon the property of Borrower (or any
part thereof). The Borrower shall have the right, however, to
contest in good faith the validity or amount of any such tax,
assessment, governmental charge or claim by proper proceedings
timely instituted, and may permit the taxes, assessments,
governmental charges or claims so contested to remain unpaid during
the period of such contest if (i) the Borrower diligently
prosecutes such contest, (ii) during the period of such contest the
enforcement of any contested item is effectively stayed, (iii) the
Borrower sets aside on its books adequate reserves with respect to
the contested items and (iv) such contest does not, in the
reasonable discretion of the Agent, involve a material risk of the
sale, forfeiture or loss of any of the Collateral. The Borrower
will promptly pay or cause to be paid any valid, final judgment
enforcing any such tax, duty, fee, assessment, other governmental
charge or claim and cause the same to be satisfied of record.
Section 6.10 Independent Engineer; Insurance Consultant. The
Borrower (a) agrees to the Independent Engineer carrying out the
role described in the Representative Agreement, (b) confirms and
agrees to the terms of its Acknowledgment appended to the
Representative Agreement, which terms are incorporated herein by
reference as if fully set forth herein and (c) will ensure that the
Insurance Consultant will be provided with all information
reasonably required by the Insurance Consultant and will exercise
due care to ensure that any information which it may supply to the
Insurance Consultant is materially accurate and not, by omission of
information or otherwise, misleading in any material respect.
Section 6.11 Performance of Obligations. The Borrower will
perform all of its material obligations under the terms of each
mortgage, indenture, security agreement and other debt instrument
by which it is bound and will perform (i) all of its obligations
under the terms of the Financing Documents and the Energy
Conversion Agreement and (ii) such of its obligations under the
terms of the Project Documents (other than the Financing
Documents and the Energy Conversion Agreement) the non-
performance of which is reasonably likely to have a Material
Adverse Effect. The Borrower will maintain in full force and
effect the Eximbank Credit Agreement and each of the other
Project Documents to which it is a party. The Borrower will
preserve, protect, defend and enforce the rights granted to it
under or in connection with the Project Documents. The Borrower
shall take all action within its control required or in the
reasonable opinion of the Agent advisable to ensure that each of
the Project Documents is in proper legal form under the laws of the
Republic or under the respective governing laws selected in such
Project Documents, for the enforcement thereof in such
jurisdictions without any further action on the part of the Agent,
the Collateral Agent, the Issuing Bank or the Banks.
Section 6.12 Achievement of the Eximbank Performance Criteria. If
the tests provided for in the Construction Contract for the
demonstration of Substantial Completion do not demonstrate that the
Power Plant (as defined in the Construction Contract) has achieved
the Eximbank Performance Criteria (as defined in that certain
letter agreement dated as of the date hereof among the Borrower,
CECI, CE Philippines, the Agent and the Collateral Agent), the
Borrower shall take all actions necessary in the opinion of the
Agent to achieve the Eximbank Performance Criteria (as so defined).
Section 6.13 Name Changes; Etc. The Borrower shall not change its
name without the prior written consent of the Agent. The Borrower
shall not adopt or change any trade name or fictitious business
name without the prior written consent of the Agent. The Borrower
shall execute and deliver to the Agent and the Collateral Agent any
additional documents or certificates necessary or advisable to
reflect any permitted adoption of or change in its name, trade name
or fictitious business name.
Section 6.14 Consolidation, Merger, Sale of Assets, Etc. The
Borrower will not (a) wind up, liquidate or dissolve its affairs or
enter into any transaction of merger or consolidation; (b) convey,
sell, lease or otherwise dispose of (or agree to do any of the
foregoing at any future time) all or any part of its property or
assets (other than electricity and any chemical by-products
produced by the Plant) except, in the ordinary course of business,
or sales of equipment which is uneconomic or obsolete or sales of
assets that are no longer used by or useful to the Borrower and
which are promptly replaced (if applicable) by adequate substitutes
of substantially equivalent utility to the replaced assets; or (c)
purchase or otherwise acquire (in one or a series of related
transactions) any part of the property or assets of any Person
(other than purchases or other acquisitions of inventory or
materials or capital expenditures, each in the ordinary course of
business).
Section 6.15 Dividends; Restricted Payments. (a) The Borrower will
not declare or pay any dividends, or return any capital, to its
stockholders or authorize or make any other distribution, payment
or delivery of property or cash to its stockholders as such, or
redeem, retire, purchase or otherwise acquire, directly or
indirectly, for consideration, any shares of any class of its
capital stock now or hereafter outstanding (or any options or
warrants issued by the Borrower with respect to its capital stock),
or set aside any funds for any of the foregoing purposes.
(b) The Borrower will not (i) make any payment or delivery of
property or cash to any Subordinated Secured Party on account of
any Subordinated Debt Service or any Subordinated Secured
Obligations or (ii) redeem, retire, purchase or otherwise acquire,
directly or indirectly, for consideration, any Third Party
Subordinated Indebtedness, Affiliated Subordinated Indebtedness or
Subordinated Secured Working Capital Indebtedness or (iii) set
aside any funds for any of the foregoing purposes; provided,
however, that the Borrower may issue shares of its capital stock to
the Affiliated Funding Entities in accordance with the terms of the
Convertible Subordinated Notes in connection with the conversion of
the Affiliated Subordinated Loans contemplated by the Convertible
Subordinated Notes.
Section 6.16 Leases. Except as contemplated by the O&M
Parameters, the Construction Budget or the Annual Budget (in each
case as then in effect), the Borrower will not enter into any
agreement or arrangement to acquire by lease the use of any
property or equipment of any kind, except leases of operating
equipment and premises under which the aggregate rental payments
(including, without limitation, any property taxes paid as
additional rent) or lease payments do not exceed the equivalent of
$250,000 in any Fiscal Year.
Section 6.17 Indebtedness. The Borrower will not contract,
create, incur, assume or suffer to exist any Indebtedness, except
for the following types of Indebtedness ("Construction Period
Permitted Indebtedness"):
(a) Indebtedness of the Borrower incurred under the Financing
Documents (including, without limitation, any Required Subordinated
Loans and, subject to subparagraph (h) below, any Optional
Subordinated Loans but excluding any Unsecured Senior Working
Capital Indebtedness, Subordinated Secured Working Capital
Indebtedness and Third Party Subordinated Indebtedness not
otherwise permitted under subparagraphs (b), (c) and (h) of this
Section 6.17); provided, however, that the Borrower shall not incur
any Supplemental Loans if, after giving effect thereto, the sum of
(x)the aggregate principal amount of the Loans outstanding and (y)
the aggregate principal amount of the Supplemental Loans
outstanding, would exceed $161,258,000;
(b) subject to subparagraph (h) of this Section 6.17, Unsecured
Senior Working Capital Indebtedness or Subordinated Secured Working
Capital Indebtedness incurred after the Operation Date, which when
aggregated with the Borrower's contingent liability arising from
the discounting of trade receivables relating to the sale of
chemical by-products would not exceed at any one time outstanding
the equivalent of $500,000; provided, however, that the $500,000
limit set forth in the preceding provison of this Section 6.17(b)
shall, from time to time be increased to an amount not to exceed $1
million to the extent necessary (i) to permit the Borrower to make
expenditures required as a result of casualties for which the
Borrower is, in its good faith judgment insured (provided that (x)
the Borrower promptly files a claim for reimbursement under such
insurance for any such casualty, (y) the Borrower uses its best
efforts to expedite payment of such claims and (z) the proceeds
from any such insurance shall first be used to repay any Unsecured
Senior Working Capital Indebtedness incurred pursuant to this
clause (i) and any remaining proceeds shall be deposited in the
Contingency Account) or (ii) to take into account timing
differences between the Borrower's working capital needs and the
Borrower's receipt of Sales Proceeds (excluding ordinary course
payments) reflecting increases in Operating and Maintenance Costs
reimbursable under the Energy Conversion Agreement by PNOC-EDC; and
provided further that any and all Subordinated Working Capital
Lenders shall, prior to the date on which any Subordinated Secured
Working Capital Indebtedness is incurred, become party to the
Collateral Agency Agreement and deliver to each of the Agent and
the Collateral Agent an opinion of counsel to such Subordinated
Working Capital Lender reasonably satisfactory to the Agent to the
effect that the Collateral Agency Agreement and the subordination
terms set forth in Schedule 6.17(c) hereto constitute the binding
obligations of such Subordinated Working Capital Lender enforceable
in accordance with their respective terms (subject to customary
qualifications) and any and all Senior Working Capital Lenders
shall, prior to the date on which any Unsecured Senior Working
Capital Indebtedness is incurred, become party to the Intercreditor
Agreement;
(c) subject to subparagraph (h) of this Section 6.17, Third Party
Subordinated Indebtedness; provided, however, that any and all
Third Party Subordinated Lenders shall, prior to the date on which
such Indebtedness is incurred, become party to the Collateral
Agency Agreement and deliver to each of the Agent and the
Collateral Agent an opinion of counsel to such Third Party
Subordinated Lender reasonably satisfactory to the Agent to the
effect that the Collateral Agency Agreement and the subordination
terms set forth in Schedule 6.17(c) hereto constitute the binding
obligations of such Third Party Subordinated Lender enforceable in
accordance with their terms (subject to customary
qualifications);
(d) Indebtedness incurred after the Operation Date which is not in
a principal amount in excess, in the aggregate, of $1 million, at
any time and is accrued expenses or current trade accounts payable
incurred in the ordinary course of business, or obligations under
trade letters of credit incurred by the Borrower in the ordinary
course of business, which are to be repaid in full not more than
ninety days after the date on which such Indebtedness is originally
incurred to finance the purchase of goods by the Borrower;
(e) Indebtedness for purchase money Liens incurred after the
Operation Date and otherwise permitted under Section 6.18(c);
(f) subject to subparagraph (h) of this Section 6.17, Contingent
Obligations permitted under Section 6.19; and
(g) Indebtedness constituting lease obligations permitted under
Section 6.16 hereof.
(h) Notwithstanding the foregoing, the Borrower may not incur any
Optional Subordinated Loans or any Indebtedness described in
subparagraphs (b), (c) and (f) of this Section 6.17 unless, prior
to the incurrence of any such Indebtedness, the Borrower shall have
submitted evidence satisfactory to the Agent that such
Indebtedness, by its terms, will be converted into equity of the
Borrower or discharged by other means satisfactory to the Agent
such that the Borrower will be able to satisfy the requirements of
all Applicable Laws relating to the maintenance of debt to equity
ratios.
Section 6.18 Liens. The Borrower will not, and will not agree to,
create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets (real, personal or mixed,
tangible or intangible) of the Borrower, whether now owned or
hereafter acquired, provided that the provisions of this Section
6.18 shall not prevent the creation, incurrence, assumption or
existence of the following Liens (each, a "Construction Period
Permitted Lien"):
(a) Liens for current taxes, assessments and other governmental
charges, the payment of which is not at the time required
pursuant to Section 6.9;
(b) Liens created pursuant to the Security Documents;
(c) purchase money Liens on any property acquired after the
Operation Date, provided, however, that (A) any property subject to
such purchase money Lien is acquired by the Borrower in the
ordinary course of its business and such purchase money Lien
attaches to such property concurrently or within ninety days after
the acquisition thereof; (B) the Indebtedness secured by such
purchase money Lien shall not exceed 90% of the lesser of the cost
or the fair market value as of the time of the acquisition of the
property covered thereby by the Borrower; (C) each such purchase
money Lien shall attach only to the property so acquired and fixed
improvements thereon; (D) the Indebtedness secured by all such
purchase money Liens shall not, at any time exceed $2 million; and
(E) the Indebtedness secured by such purchase-money Lien is not
otherwise prohibited by the provisions of Section 6.17; and
(d) mechanics', materialmen's, carrier's and similar Liens securing
obligations incurred in the ordinary course of business which (i)
are not past due or which are the subject of a Good Faith Contest
by the Borrower (unless during the pendency of such contest or as
a result thereof the Liens of the Security Documents could
reasonably be expected to be materially endangered or any material
portion of the Site, the Plant or the Project could reasonably be
expected to become subject to loss or forfeiture) and (ii) which do
not in the aggregate materially detract from the value of the Site,
the Plant or the Project or other assets of the Borrower or
materially impair the use thereof; provided that upon the
commencement of any proceeding to foreclose or enforce any such
Construction Period Permitted Lien, the Collateral Agent may take
such action as it reasonably deems necessary to protect its
interest in the Site, the Plant or the Project including, without
limitation, payment of amounts reasonably necessary to release any
such Lien, and in such event the Borrower shall reimburse the
Collateral Agent upon demand for the cost thereof together with
interest thereon at a rate per annum equal to the Base Rate plus
3.75%.
Section 6.19 Guarantees. Without limitation to the restrictions
of Section 6.17 hereof, the Borrower will not enter into any
Contingent Obligations, including without limitation any
agreement or arrangement to guarantee or, in any way or under any
condition, become obligated for all or any part of any
Indebtedness or other obligation of another Person, except that,
notwithstanding the restrictions of this Section 6.19 or Section
6.17 hereof, the Borrower may enter into (a) the Accession
Undertaking, (b) Contingent Obligations set forth in the then-
current Construction Budget or Annual Budget and identified as
Contingent Obligations in any such budget so as to permit a
determination of the Borrower's compliance with this Section 6.19,
(c) an obligation, not secured by any Lien, to (i) reimburse the
ECA Operation Performance Bond Issuer for amounts paid to PNOC-EDC
under the ECA Operation Performance Bond, provided that such
obligation is subordinated to the prior payment in full of the
Construction Financing Secured Obligations on the terms set forth
in Schedule 6.17(c) or (ii) reimburse CECI, on the terms set forth
in Section 3 of the Funding Agreement, for amounts advanced by CECI
to the Borrower for purposes of reimbursing the ECA Operation
Performance Bond Issuer for amounts paid to PNOC-EDC under the ECA
Operation Performance Bond as contemplated by Section 3 of the
Funding Agreement, and (d) other Contingent Obligations to the
extent that the amount of all such other Contingent Obligations
does not exceed, in the aggregate, $100,000 (or the equivalent in
other currency).
Section 6.20 Subsidiaries; Advances, Investments and Loans. The
Borrower will not form or have any Subsidiaries, lend money or
credit or make deposits (other than deposits in relation to the
payment for goods and equipment in the ordinary course of
business) with or advances (except as specifically required by the
Construction Contract or the Supply Contract) to any Person, or
purchase or acquire any stock, obligations or securities of, or any
other interest in, or make any capital contribution to, any other
Person, except that the Borrower may use idle cash to acquire and
hold Cash Equivalents solely to give employment to its idle
resources in accordance with the Disbursement Agreement.
Section 6.21 Transactions. The Borrower will not (a) enter into
any transaction or series of related transactions with any Person
other than in the ordinary course of business and on an arm's-
length basis or (b) establish any sole and exclusive purchasing or
sales agency, or enter into any transaction whereby the Borrower
might receive less than the full ex-works commercial price (subject
to normal trade discounts) for electricity or pay more than ex-
works commercial price for products of others, provided, however,
that nothing in this Section 6.21 shall be deemed to prohibit the
execution, delivery, declaring effective and performance by the
Borrower of the Energy Conversion Agreement, the Construction
Contract, the Supply Contract, contracts contemplated by the O&M
Parameters (including those relating to employee training and
secondment of employees) and the Funding Agreement.
Section 6.22 Other Transactions. The Borrower will not enter into
any partnership, profit-sharing, or royalty agreement or other
similar arrangement whereby the Borrower's income or profits are,
or might be, shared with any other Person, or enter into any
management contract or similar arrangement whereby its business or
operations are managed by any other Person, provided, however, that
nothing in this Section 6.22 shall be deemed to prohibit the
execution, delivery, declaring effective and performance by the
Borrower of the contracts contemplated by the O&M Parameters and
the Funding Agreement.
Section 6.23 Modifications of Articles of Incorporation and By-
Laws; Additional Agreements; Assignments and Modifications of
Agreements; Etc. (a) The Borrower will not (i) amend or modify
its Articles of Incorporation or By-Laws or (ii) change its Fiscal
Year.
(b) The Borrower will not, without the prior written consent of
the Agent, become a party to any agreement, contract or commitment
(other than (w) the agreements identified in clauses (i) through
(xii) of the definition of the term Operating Agreements set forth
in Schedule X hereto, but not replacements thereof, (x) the
Financing Documents, (y) agreements, contracts or commitments
contemplated by the O&M Parameters (including those relating to
employee training, secondment of employees and vehicle rentals),
the then-current Construction Budget or the then-current Annual
Budget and (z) agreements, contracts or commitments in respect of
Construction Period Permitted Indebtedness) which, individually,
creates an annual financial obligation of the Borrower in excess of
$100,000 (or the equivalent in other currency) or which would cause
the aggregate annual financial obligations of the Borrower under
all agreements, contracts and commitments (other than those
specified in clauses (w) through (z) immediately above) to which
the Borrower is a party to exceed $300,000 (or the equivalent in
other currency).
(c) The Borrower shall not issue, direct, authorize, consent to or
permit to be effective any change order under the Construction
Contract or the Supply Contract or any Change in the Work without
the prior written approval of the Independent Engineer and the
Required Banks, except for change orders and/or Changes in the Work
which (i) do not change the plans and specifications therein in any
material respect, (ii) do not materially alter the construction
schedule and do not postpone or cause a postponement of Substantial
Completion beyond the Guaranteed Substantial Completion Date or ECA
Completion beyond the Scheduled Completion Date, (iii) do not alter
in any respect the performance or availability guarantees set forth
in the Construction Contract or the test methods for determining
the Plant's capability to meet such performance or availability
guarantees and (iv) do not change the Contract Price (as defined in
the Construction Contract) and the Contract Price (as defined in
the Supply Contract) by more than $2,000,000 in the aggregate
(taking into account all previous change orders and Changes in the
Work under both the Construction Contract and the Supply Contract),
(v) if the Contract Price (as defined in the Construction Contract)
or the Contract Price (as defined in the Supply Contract) is
increased, are effectuated simultaneously with a replacement of the
Supply Contract Letters of Credit to reflect such increase and (vi)
do not violate any provision of any Project Document. The Borrower
shall not issue, direct, authorize, consent to or permit to be
effective any change order under the Construction Contract or the
Supply Contract or any Change in the Work which does not require
the consent of the Required Banks pursuant to the preceding
sentence and which changes the Contract Price (as defined in the
Construction Contract) or the Contract Price (as defined in the
Supply Contract) by more than $50,000 as to any one change without
the prior written approval of the Independent Engineer and the
Agent (which approvals shall not be unreasonably withheld or
delayed).
(d) Without the prior written consent of the Required Banks, the
Borrower shall not, directly or indirectly, terminate, cancel or
suspend, or permit or consent to any termination, cancellation or
suspension of, or enter into or consent to or permit the
assignment of the rights or obligations of any party to, any of the
Project Documents; provided, however, that without the prior
written consent of the Required Banks the Borrower may do, permit
to be done or consent to any of the foregoing if (i) the Project
Document which is the subject of the proposed termination,
cancellation, suspension or assignment is an Insurance Contract and
the Agent, after consultation with the Insurance Consultant, shall
have consented thereto or (ii) the Project Document which is the
subject of the proposed termination, cancellation,
suspension or assignment is a non-material Governmental Approval or
an agreement, commitment or understanding described in clause (xv)
of the definition of the term "Operating Agreements" set forth in
Schedule X hereto and, in each case, the Agent shall have
reasonably determined that such termination, cancellation,
suspension or assignment is not reasonably likely to have a
Material Adverse Effect. The Borrower shall not, directly or
indirectly, amend, modify, supplement or waive, or permit or
consent to the amendment, modification, supplement or waiver of,
any of the provisions of, or give any consent under, any of the
Project Documents, except for change orders under the
Construction Contract or the Supply Contract or Changes in the Work
(provided that the provisions of clause (c) of this Section 6.23
are complied with in each case), without (i) first
submitting to the Agent and Eximbank a copy of such proposed
amendment, supplement, waiver, or consent and (ii) the prior
written consent of the Agent, unless in the reasonable judgment of
the Agent, such proposed amendment, supplement, waiver, or consent
is reasonably likely to have a Material Adverse Effect, in which
case, the express prior written consent of the Required Banks
thereto (provided, however, that if in any Project
Document, the consent of the Borrower to an assignment by the other
party thereto cannot be unreasonably withheld, the consent of the
Agent or the Required Banks, as the case may be, to such an
assignment shall not be unreasonably withheld). Notwithstanding
the foregoing, without the prior written consent of each of the
Banks, the Borrower shall not, (i) directly or indirectly, amend,
modify, supplement or waive, or permit or consent to the amendment,
modification, supplement or waiver of, (x) any provision of Article
9 of the Energy Conversion Agreement or (y) any other provision of
the Energy Conversion Agreement governing the terms and conditions
of, or the events or circumstances giving rise to the Borrower's or
PNOC-EDC's right to require, a buyout of the Power Plant (as
defined in the Energy Conversion Agreement) or (ii) enter into or
permit or grant any amendment or modification of the Energy
Conversion Agreement or any supplement to or waiver thereunder
which is reasonably likely to have an adverse financial impact on
the Borrower (including, without limitation, on the amounts of or
timing of payments to the Borrower under the Energy Conversion
Agreement).
(e) Other than the assignment as security of the Project
Documents to the Collateral Agent as security for the benefit of
the Secured Parties, the Borrower will not assign (except with
respect to Construction Period Permitted Liens) any of its rights
or obligations under any Project Document without the prior written
consent of the Required Banks.
(f) The Borrower will not take any action under Article 9 of the
Energy Conversion Agreement to require a Buyout without the prior
written consent of the Required Banks, which consent shall not be
unreasonably withheld or delayed.
(g) Without the prior written consent of the Required Banks, the
Borrower will not refund to PNOC-EDC (but may credit to PNOC-EDC)
any amount described in the last sentence of Section 4.9 of the
Energy Conversion Agreement.
(h) The Borrower shall not claim for itself Force Majeure as
provided in Article 13 of the Energy Conversion Agreement,
Section 22 of the Construction Contract or Section 20 of the Supply
Contract without the prior written consent of the Agent and the
Independent Engineer, which consents shall not be
unreasonably withheld or delayed.
Section 6.24 No Other Business. Without the prior written consent
of the Required Banks, except as contemplated by Section 6.20
hereof, the Borrower will not carry on any business other than in
connection with the completion and operation of the Project and
will take no action whether by acquisition or
otherwise which would constitute or result in any material
alteration to the nature of that business or the nature or scope of
the Project.
Section 6.25 Abandonment. The Borrower will not abandon or agree
to abandon the Project or place it or agree to place it on a "care
and maintenance" basis for more than 14 days in any calendar year,
provided, however, that (i) nothing in this Section 6.25 shall
prevent the Borrower from shut-downs necessary for repairs and
maintenance at the Plant or from putting the Plant on a "care and
maintenance basis" during any Force Majeure (as defined in the
Energy Conversion Agreement) not within the control of the
Borrower, which Force Majeure prevents the Borrower from
developing, constructing or operating the Plant; and (ii) nothing
in this Section 6.25 shall be deemed to waive or limit in any way
the right of any of the Banks to declare a Construction Credit
Event of Default as provided in Article 7 hereof, including without
limitation Sections 7.6 and 7.7 hereof.
Section 6.26 Improper Use. The Borrower will not use, maintain,
operate or occupy, or allow the use, maintenance, operation or
occupancy of, any portion of the Site or the Project for any
purpose:
(a) which may be dangerous, unless safeguarded as required by
Applicable Law (provided, however, that this clause (a) shall not
be deemed to prohibit the Borrower from carrying out the Project in
accordance with the terms of the Energy Conversion Agreement and
the Construction Contract in a reasonable and prudent
manner);
(b) which violates any Applicable Law in any material respect;
(c) which may constitute a public or private nuisance resulting in
a Material Adverse Effect;
(d) which may make void, voidable, or cancelable or increase the
premium of, any insurance then in force with respect to the Site or
the Project or any part thereof unless, in the case of an increase
in premium, the Borrower gives proof of payment of such increase;
or
(e) otherwise than for the intended purpose thereof in the
construction, operation and maintenance of the Plant.
Section 6.27 Budgets. From and after the Operation Date the
Borrower will not make expenditures in any Fiscal Year (up to the
Maturity Date) in excess of the projected annual Operating and
Maintenance Costs (including the Contingent O&M Amount) set forth
in the Annual Budget for such Fiscal Year (up to the Maturity Date)
except for (a) expenditures funded with the proceeds of Optional
Subordinated Loans, (b) Emergency Operating Costs Amounts funded
with the proceeds of withdrawals from the Debt Reserve Cash
Collateral Account in accordance with Section 3.03(b) of the
Disbursement Agreement and (c) provided no Construction Credit
Event of Default has occurred and is continuing, expenditures not
to exceed in any Fiscal Year in the aggregate $1.5 million required
as a result of casualties for which the Borrower is, in its good
faith judgment, insured, provided that (i) the Borrower promptly
files a claim or claims for reimbursement under such insurance for
any such casualty, (ii) the Borrower uses its best efforts to
expedite payment of such claims, and (iii) the proceeds from any
such insurance claims shall be paid into the Contingency Account.
Section 6.28 Capital Stock. The Borrower shall not allow the
capital stock of the Borrower to be other than as follows: (a) the
authorized capital stock of the Borrower shall consist of 2,200,000
shares of common stock, par value P28 per share, of which (i)
550,000 shares will be issued, outstanding and fully paid until the
day immediately prior to the commencement of the Cooperation Period
(as defined in the Energy Conversion Agreement) and (ii) commencing
on the day immediately prior to the commencement of the Cooperation
Period (as defined in the Energy Conversion Agreement) 550,000
shares, plus the amount of shares into which the Convertible
Subordinated Notes evidencing Required Subordinated Loans shall
have been converted as of such date, will be issued, outstanding
and fully paid; and (b) all such outstanding shares will be duly
and validly issued, fully paid and non-assessable.
Section 6.29 Amendment of Construction Budget. The Borrower will
not, directly or indirectly, amend, modify, allocate, re-allocate
or supplement or permit or consent to the amendment, modification,
allocation, re-allocation or supplement of, any of the provisions
of the Construction Budget, except with the prior written approval
of the Required Banks. Notwithstanding the foregoing, the Borrower
may make such allocations and re-
allocations with respect to the Construction Budget (other than
such portions thereof allocated to the payment of Contingency Costs
and the Commitment Fee payable to Eximbank under the
Eximbank Credit Agreement in accordance with Section 6.7(c) hereof
and other than such portion thereof allocated to the pre-funding of
the debt reserve on the Disbursement Date (as defined in the
Eximbank Credit Agreement)) as are approved in writing by the Agent
and the Independent Engineer.
Section 6.30 Covenants Regarding the Eximbank Credit Agreement.
(a) The Borrower shall observe and perform the covenants set forth
in Articles VII and VIII of the Eximbank Credit Agreement, which
covenants are incorporated by reference herein as if fully set
forth herein in accordance with the terms thereof; provided,
however, that to the extent such covenants permit (whether
expressly or by omission) the Borrower to engage in any
transaction or do any act or thing otherwise prohibited by the
terms of this Agreement, or permit (whether expressly or by
omission) the Borrower to refrain from doing any act or thing
otherwise required to be done by the terms of this Agreement, the
terms of this Agreement shall be controlling. The Borrower shall,
if and to the extent required by Eximbank, comply with World Bank
Guidelines.
(b) The Borrower acknowledges and agrees that no earlier than five
(5) Business Days prior to the proposed Disbursement Date (as
defined in the Eximbank Credit Agreement), the Agent, on behalf of
the Borrower, shall deliver to Eximbank the Request for Eximbank
Disbursement to Account of Borrower referred to in Section 5.1(p)
fully completed in an amount sufficient to pay all amounts of
principal of the Loans outstanding as of the Project Completion
Date (the "Final Principal Amount") and 100% of the Credit Exposure
Fee on the Final Principal Amount.
(c) The Borrower acknowledges and agrees that no earlier than five
(5) Business Days prior to the proposed Disbursement Date (as
defined in the Eximbank Credit Agreement), the Agent, on behalf of
the Borrower, shall deliver to Eximbank the promissory note
referred to in Section 5.1(p) fully completed, dated the date of
the proposed Disbursement Date and in an amount equal to the amount
set forth in the Request for Eximbank Disbursement to Account of
Borrower referred to in Section 6.30(b).
(d) The Borrower covenants and agrees to use all the proceeds of
the disbursement it receives under the Eximbank Credit Agreement
for the payment to the Banks of the Final Principal Amount and for
the payment to Eximbank of the Credit Exposure Fee. To accomplish
such payment to the Banks the Borrower hereby
irrevocably instructs the Agent (i) immediately to transfer from
the amounts paid into the Blocked Account pursuant to the Request
for Eximbank Disbursement to Account of Borrower referred to in
Section 6.30(b) an amount equal to the Final Principal Amount to
the Agent Account for payment to the Banks and (ii) to disregard
any contrary instructions whether received before, on or after the
date hereof unless such contrary instructions are agreed to in
writing by the Agent (with the consent of the Required Banks) and
Eximbank.
(e) The Borrower covenants and agrees to cause and take all
actions necessary to cause each condition precedent set forth in
the Eximbank Credit Agreement (including, without limitation,
delivery of the evidences of authority required by Section
5.02(c) of the Eximbank Credit Agreement and delivery of the
certification required under Section 5.02(d) of the Eximbank Credit
Agreement concerning the Borrower's compliance with the Energy
Conversion Agreement) to be satisfied no later than three (3)
Business Days prior to the proposed Disbursement Date (as defined
in the Eximbank Credit Agreement).
(f) Commencing on the Effective Date and until the Construction
Financing Termination Date, the Borrower shall not, without the
prior written consent of the Banks, (i) suspend, cancel or
terminate all or any part of the credit facility provided under the
Eximbank Credit Agreement or cause or permit the same to be
suspended, cancelled or terminated in any way or for any reason or
(ii) amend or modify or permit the amendment or modification of any
provision of the Eximbank Credit Agreement.
(g) Commencing on the Effective Date and until the Construction
Financing Termination Date, the Borrower shall promptly (x) notify
the Agent of any change of the names of the Persons
advised by the Borrower to the Agent pursuant to Section 5.1(n) as
being the Persons who will act as representatives of the Borrower
in the operation of the Loans, the Letter of Credit and the credit
facility provided under the Eximbank Credit Agreement and (y)
provide evidence of the authority of any new Persons so appointed
to act on behalf of the Borrower.
(h) The Borrower covenants and agrees promptly to deliver to the
Agent a copy of each notice or other written communication sent to
it by Eximbank in connection with the Eximbank Credit
Agreement, including, without limitation, any notice relating to a
change of Eximbank's account described in Section 3.08 of the
Eximbank Credit Agreement.
Section 6.31 Bank Accounts. The Borrower shall maintain all its
bank accounts with the Collateral Agent, except that the Borrower
may maintain, in accordance with the Disbursement Agreement, (a)
the Service Fee Account, (b) the Philippines Peso Account and (c)
the Dollar Operating Cost Account.
Section 6.32 Press Releases; Advertising. Neither the Borrower,
any Construction Financing Secured Party nor any Affiliate of the
Borrower shall issue or consent to the issuance of any press
release or other announcement or advertisement that refers to the
provision of financing by the Construction Financing Secured
Parties for the Project without the prior written consent of the
Borrower and the Agent, which consent shall not be unreasonably
withheld or delayed, except that no consent shall be required where
the issuance of any such press release, announcement or
advertisement is required by Applicable Law.
Section 6.33 Additional Documents; Filings and Recordings. The
Borrower shall execute and deliver, from time to time as
reasonably requested by the Agent or the Collateral Agent, at the
Borrower's expense, such other documents as shall be necessary or
advisable or that the Agent or the Collateral Agent may
reasonably request in connection with the rights and remedies of
the Secured Parties granted or provided for by the Project
Documents, as applicable, and to consummate the transactions
contemplated therein. The Borrower shall, at its own expense, take
all reasonable actions that have been or shall be requested by the
Agent or the Collateral Agent or that the Borrower knows are
necessary to establish, maintain, protect, perfect and continue the
perfection of the first priority security interests of the Secured
Parties created by the Security Documents and shall furnish timely
notice of the necessity of any such action, together with such
instruments, in execution form, and such other information as may
be required to enable the Agent and any other appropriate Secured
Party to effect any such action. Without limiting the generality
of the foregoing, the Borrower shall (a) execute or cause to be
executed and shall file or cause to be filed such financing
statements, continuation statements, fixture filings and mortgages
or deeds of trust in all places necessary or advisable (in the
opinion of counsel for the Agent or the Collateral Agent) to
establish, maintain and perfect such security interests and in all
other places that the Agent or the Collateral Agent shall
reasonably request and (b) do everything necessary in the
reasonable judgment of the Agent or the Collateral Agent to (i)
create and perfect the Security with respect to future assets
covered by the Mortgage, (ii) maintain the Security in full force
and effect at all times and (iii) preserve and protect the
Collateral and protect and enforce its rights and title and the
rights and title of the Secured Parties to the Collateral.
Section 6.34 Employees and Employee Plans. The Borrower shall not
adopt, establish, maintain, sponsor, administer, contribute to,
participate in, or incur any liability under or obligation to
contribute to, any Plan or incur any liability to provide post-
retirement welfare benefits, except such liability to provide post-
retirement welfare benefits as may be required by Applicable Law.
Section 6.35 Shipment of the Items. (a) All Items which are
financed under the Construction Credit and which are exported by
ocean vessel shall be transported from the United States in vessels
of U.S. Registry as required by 46 U.S.C. U 1241-1 (Public
Resolution No. 17 of the 73rd Congress of the United States, as
amended), except to the extent that a waiver of this requirement is
obtained from the U.S. Maritime Administration ("MARAD"). If
shipments are made on non-U.S. vessels without a waiver or contrary
to the provisions of the waiver, the Items will not be eligible for
financing under the Construction Credit.
(b) The costs of ocean or air freight for shipment of the Items on
vessels or aircraft of non-U.S. registry pursuant to a waiver from
MARAD will constitute Foreign Costs of the Items if such costs are
included in the Contract Price of the Items. If such freight costs
are for shipment of the Items on vessels or aircraft of U.S.
registry, such costs will constitute U.S. Content.
(c) The Borrower shall obtain insurance against marine and transit
hazards on all shipments of the Items in an amount not less than
the amount of the Loans made with respect to those shipments.
United States insurers shall be given a nondiscriminatory
opportunity to bid for such insurance business related to the
Items. The premiums for such insurance if provided by non-U.S.
insurers will be eligible for financing under this Agreement only
if they are included in the Contract Price of the Items. If such
premiums are paid to companies in the United States, they will be
considered as part of the U.S. Content of such Items. All other
such premiums will be considered as Foreign Costs of the Items.
Section 6.36 Agent Appointed Attorney-in-Fact. The Borrower
hereby irrevocably appoints the Agent, with full power of
substitution, the attorney-in-fact of the Borrower for the
purpose of completing the documents and instruments referred to in
Section 5.1(p) in such manner as the Agent deems necessary or
advisable and in accordance with the terms of this Agreement, and
for delivering such completed documents to Eximbank pursuant to the
terms of this Agreement and the Eximbank Credit Agreement and to
take any other action and execute any other instrument or document,
in each case in the name or on behalf of the Borrower, which the
Agent deems necessary or advisable to accomplish the purposes
hereof, which appointment is irrevocable and coupled with an
interest. The power of attorney in this Section 6.36 is of the
essence and forms an integral and inseparable part of this
Agreement without which this Agreement would not have been made.
ARTICLE 7. Events of Default
Notwithstanding anything herein or in any of the Financing
Documents or elsewhere to the contrary, upon the occurrence of any
of the following events (each of the following events, a
"Construction Credit Event of Default"):
Section 7.1 Payments. The Borrower shall (i) default in the
payment when due of any principal of any Loan or (ii) default, and
such default shall continue unremedied for five (5) or more
Business Days, in the payment when due of any interest on any Loan
or any other amounts owing to the Construction Financing Secured
Parties hereunder or under the Notes, the Letter of Credit or any
other Financing Document; or
Section 7.2 Representations, Etc. Any representation or
warranty confirmed or made in any Project Document by the
Borrower or any Affiliate of the Borrower, or in any writing
provided by any of them in connection with the execution and
delivery of, or in connection with any Application for Funding or
request for a Utilization under, this Agreement shall be found to
have been incorrect in any material respect when made or deemed to
be made and shall continue to be incorrect for a period of thirty
(30) days after notice thereof shall have been given to the
Borrower by a Construction Financing Secured Party; or
Section 7.3 Covenants. (a) The Borrower shall fail to perform
or observe any covenant, term or agreement contained in
Sections2.1(d) (The Commitments), 2.7(e) (Commitment Commission and
Fees), 6.3 (Maintenance of Property; Insurance), 6.12 (Achievement
of the Eximbank Performance Criteria), 6.14 (Consolidation, Merger,
Sale of Assets, Etc.), 6.15 (Dividends; Restricted Payments), 6.16
(Leases), 6.17 (Indebtedness), 6.18 (Liens), 6.19 (Guarantees),
6.20 (Subsidiaries; Advances, Investments and Loans), 6.23(b), (f)
and (g) (Modifications of Articles of Incorporation and By-Laws;
Additional Agreements; Assignments and Modifications of Agreements;
Etc.), 6.24 (No Other Business) or 6.30(b)-(f) (Covenants Regarding
the Eximbank Credit Agreement) hereof or any covenant, term or
agreement contained in the Energy Conversion Agreement; or
(b) The Borrower or any Obligor which is an Affiliate of the
Borrower shall fail to perform or observe any other covenant, term
or agreement contained in this Agreement or any other Project
Document and such failure shall not be remediable or, if
remediable, shall continue unremedied for a period of 30 days after
the earlier of (i) the date on which such failure shall have first
become known to the Borrower and (ii) the date on which written
notice thereof shall have been received by the Borrower from the
Agent; provided that if (A) such failure cannot be cured within
such 30-day period, (B) such failure is susceptible of cure, (C)
the Borrower is proceeding with diligence and in good faith to cure
such failure, (D) the existence of such failure in the reasonable
judgment of the Required Banks has not had and is not reasonably
likely to have a Material Adverse Effect and (E) the Agent shall
have received an officer's certificate signed by a Financial
Officer of the Borrower to the effect of clauses (A), (B) and (C)
above and stating what action the Borrower is taking to cure such
failure, then, such 30-day cure period shall be extended by up to
an additional 60 days as shall be necessary for the Borrower
diligently to cure such failure; or
Section 7.4 Default Under Other Agreements. (a) The Borrower
shall (i) default in any payment of any Indebtedness For Borrowed
Money (other than the Loans) beyond the period of grace, if any,
provided in the instrument or agreement under which such
Indebtedness For Borrowed Money was created or (ii) default (other
than in the manner referred to in clause (i)) in the observance or
performance of any agreement or condition relating to any
Indebtedness For Borrowed Money (other than the Loans) or contained
in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition shall exist,
the effect of which such default or other event or condition is to
(x) cause any such Indebtedness For Borrowed Money to become due
prior to its stated maturity or (y) if such Indebtedness For
Borrowed Money is pari passu in right of payment to the
Construction Financing Secured Obligations, permit the Person to
whom such Indebtedness For Borrowed Money is owed to declare the
same due and payable prior to the stated maturity thereof; or
(b) any Indebtedness For Borrowed Money of the Borrower shall be
declared to be due and payable, or required to be prepaid other
than by a regularly scheduled required prepayment, prior to the
stated maturity thereof; or
(c) any Obligor (other than PNOC-EDC, the ECA Operation
Performance Bond Issuer and CECI) shall (i) default in any
payment of any Indebtedness For Borrowed Money in an aggregate
principal amount exceeding $2 million beyond the period of grace,
if any, provided in the instrument or agreement under which such
Indebtedness For Borrowed Money was created or (ii) default in the
observance or performance of any agreement or condition relating to
any Indebtedness For Borrowed Money in an aggregate principal
amount exceeding $2 million or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default
or other event or condition is to cause any such Indebtedness For
Borrowed Money to become due prior to its stated maturity; or
(d) CECI shall (i) default in any payment of any Indebtedness For
Borrowed Money in an aggregate principal amount exceeding $10
million beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness For
Borrowed Money was created or (ii) default in the observance of
performance of any agreement or condition relating to any
Indebtedness for Borrowed Money in an aggregate principal amount
exceeding $10 million or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other
event or condition is to cause any such Indebtedness For Borrowed
Money to become due prior to its stated maturity; provided,
however, that if one or more of the events described in this clause
(d) shall occur after the date on which CECI shall cease to be an
Obligor, the occurrence of such event or events shall not be deemed
a Construction Credit Event of Default unless, in the reasonable
judgment of the Required Banks, the occurrence of such event or
events has had or is reasonably likely to have a material adverse
effect on the operations, business, condition (financial or
otherwise) or property of the Borrower; or
(e) any Indebtedness For Borrowed Money in an aggregate
principal amount exceeding $2 million of any Obligor (other than
CECI, the ECA Operation Performance Bond Issuer and PNOC-EDC), or
any Indebtedness For Borrowed Money in an aggregate principal
amount exceeding $10 million of CECI, shall be declared to be due
and payable, or required to be prepaid other than by a regularly
scheduled required prepayment, prior to the stated maturity
thereof, and, if such Obligor is Ormat Industries, the existence of
such Indebtedness For Borrowed Money that has been declared due and
payable prior to the stated maturity thereof, in the reasonable
judgment of the Required Banks, has had or is reasonably likely to
have a Material Adverse Effect; provided, however, that if one or
more of the events described in this clause (e) with respect to
Indebtedness For Borrowed Money of CECI shall occur after the date
on which CECI shall cease to be an Obligor, the occurrence of such
event or events shall not be deemed a Construction Credit Event of
Default unless, in the reasonable judgment of the Required Banks,
the occurrence of such event or events has had or is reasonably
likely to have a material adverse effect on the operations,
business, condition (financial or otherwise) or property of the
Borrower; or
(f) a default shall have occurred in the performance of any
material obligation by (i) any Obligor or the Republic under any of
the Project Documents to which such Person is a party and such
default shall continue unremedied beyond the period of grace, if
any, extended to such Person with respect to such default, as
specified in the Project Document under which such obligation was
created or (ii) any other party (other than the Persons referred to
in clause (i) of this Section 7.4(f)) under any of the Project
Documents and the existence of such default in the reasonable
judgment of the Required Banks has had or is reasonably likely to
have a Material Adverse Effect (and such default has not been cured
within 60 days); or
Section 7.5 Bankruptcy, Etc. There shall have been entered
against the Borrower or any Obligor (other than the ECA Operation
Performance Bond Issuer and PNOC-EDC) a decree or order by a court
adjudging the Borrower or such Obligor bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the
Borrower or such Obligor under any Applicable Law; or appointing a
receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Borrower or such Obligor or of any
substantial part of its property or other assets, or ordering the
winding up or liquidation of its affairs; or the institution by the
Borrower or such Obligor of proceedings to be adjudicated bankrupt
or insolvent, or the consent by it to the institution of bankruptcy
or insolvency proceedings against it; or the filing by it of a
petition or answer or consent seeking reorganization or debt relief
under any Applicable Law; or the consent by it to the filing of any
such petition or to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the
Borrower or any such Obligor or of any substantial part of its
property; or the making by it of an assignment for the benefit of
creditors; or the admission by it in writing of its inability to
pay its debts generally as they become due; or any other event
shall have occurred which under any Applicable Law would have an
effect analogous to any of those events listed above in this
subsection with respect to the Borrower or any such Obligor; or any
corporate action is taken by the Borrower or any such Obligor for
the purpose of effecting any of the foregoing; provided that any
reorganization or reconstruction of a company while solvent with
the prior consent of the Required Banks, such consent not to be
unreasonably withheld or delayed, shall not be held to constitute
any event mentioned in this paragraph; and provided, further, that
(a) in connection with any Obligor, no Construction Credit Event of
Default shall be declared under this Section 7.5 if (x) such Person
has fully complied and continues to fully comply with all of its
obligations under all Project Documents to which such Person is a
party and (y) in the reasonable judgment of the Required Banks,
such Construction Credit Event of Default has not had and is not
reasonably likely to have a Material Adverse Effect; or
Section 7.6 Project Events. (a) the Borrower shall cease to have
the right to possess and use the Site; or
(b) any event shall have occurred which entitles the Borrower or
PNOC-EDC to give a notice under Section 9.1 of the Energy
Conversion Agreement; or
(c) the Borrower shall (except as permitted by Section 6.14 hereof)
sell or otherwise dispose of any of its interest in the Project; or
(d) the Disbursement Date (as defined in the Eximbank Credit
Agreement) shall not have occurred by the Date Certain; or
(e) an event or circumstance described in subclause (a), (b), (c)
or (d) of Section 14.2.1 of the Energy Conversion Agreement shall
have occurred, it being understood that for purposes of this
Section 7.6(e), (i) the words "one-hundred twenty (120)"
contained in subclauses (b), (c) and (d) of Section 14.2.1 of the
Energy Conversion Agreement shall be replaced with the words "sixty
(60)" in each place where such words appear and the words "twenty
four (24) months" and "24 months" shall be replaced by the words
eighteen (18) months" in each place in subclause (b) of Section
14.2.1 of the Energy Conversion Agreement in which such words
appear; or
(f) an event or circumstance described in subclause (a), (b) or (c)
of Section 14.2.2 of the Energy Conversion Agreement shall have
occurred, it being understood that for purposes of this Section
7.6(f), the words "one-hundred twenty (120)" contained in
subclauses (b) and (c) of Section 14.2.2 of the Energy Conversion
Agreement shall be replaced with the words "sixty (60)" in each
place where such words appear; or
(g) a failure by the Borrower described in the first sentence of
Section 14.3 of the Energy Conversion Agreement shall have
occurred, it being understood that for purposes of this Section
7.6(g), the words "sixty (60) consecutive days" contained in the
first sentence of Section 14.3 of the Energy Conversion Agreement
shall be replaced with the words "forty-five (45) consecutive
days"; or
(h) the Mortgage shall not have been entered into by the parties
thereto, become fully effective in accordance with its terms and
been registered in all places in the Republic necessary or
desirable in the opinion of counsel to the Agent on or before June
3, 1994; or
Section 7.7 Material Adverse Effect. One or more events,
conditions or circumstances (including without limitation Force
Majeure as defined in Sections 13.1(a) and 13.1(b) of the Energy
Conversion Agreement) shall exist or shall have occurred which, in
the reasonable judgment of the Required Banks, is reasonably likely
to have a Material Adverse Effect; or
Section 7.8 Project Documents; Security Documents. (a) This
Agreement or any of the other Financing Documents or any of the
Energy Conversion Agreement, the Supply Contract or the
Construction Contract, or any provision hereof or thereof (i) is or
becomes invalid, illegal or unenforceable or any party thereto
(other than any Construction Financing Secured Party) shall so
assert, or (ii) ceases to be in full force and effect, or shall
cease to give the Secured Parties the Liens, rights, powers and
privileges purported to be created thereby or hereby or any party
thereto (other than any Construction Financing Secured Party) shall
so assert; or
(b) any of the Project Documents (other than the Financing
Documents or any of the Energy Conversion Agreement, the Supply
Contract or the Construction Contract) or any material provision
thereof (i) is or becomes invalid, illegal or unenforceable or any
party thereto (other any Construction Financing Secured Party)
shall so assert, and such default shall have continued for a period
of thirty (30) days after notice thereof shall have been given to
the Borrower by the Agent, or (ii) ceases to be in full force and
effect, or shall cease to give the Secured Parties the Liens,
rights, powers and privileges purported to be created thereby such
that the interests of the Construction Financing Secured Parties
are adversely affected to a material extent; or
(c) except as permitted by Section 6.18 hereof, the Security or
any component part thereof for any reason fails to constitute a
valid and perfected first priority Lien or ceases to be in full
force and effect or the Borrower or the grantor or pledgor
thereof shall so assert; or
Section 7.9 Ownership of the Borrower. (a) CECI shall cease to
maintain Control (as defined below) of the Borrower or shall cease
to own, directly or indirectly, 66 2/3% of the shares of capital
stock of the Borrower free and clear of all Liens (it being
understood that for all purposes of this Section 7.9 (including
paragraph (b) hereof), (x) "Control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of
voting securities, by contract, or otherwise and (y) if CECI owns
shares of capital stock of the Borrower indirectly, the percentage
of its ownership in the Borrower shall be the product of the
percentage ownership it has in any intermediate subsidiary or other
entity and the percentage ownership which the subsidiary or other
entity owning shares of capital stock of the Borrower directly has
in the Borrower); or
(b) the Borrower or CE Philippines or Ormat Cebu shall, without
the prior consent of the Required Banks, issue or have
outstanding any securities convertible into or exchangeable for its
capital stock or issue or grant or have outstanding any rights to
subscribe for or to purchase, or any options or warrants for the
purchase of, or any agreements, arrangements or understandings
providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its
capital stock, other than as provided in the Board of Investments
Approval; provided, however, that a Construction Credit Event of
Default shall not be deemed to have occurred if (x) full dilution
of the capital stock of the Borrower and/or CE Philippines and/or
Ormat Cebu by the methods noted above in this Section 7.9(b) would
not have the effect of reducing below 66 2/3% CECI's direct or
indirect ownership of the shares of capital stock of the Borrower
and (y) 100% of the capital stock of the Borrower is at all times
subject to a Lien in favor of the Collateral Agent on terms
substantially similar to the terms of the Pledge Agreement; or
Section 7.10 Judgments. One or more judgments or decrees shall
be entered (a) against the Borrower, CE Philippines or Ormat Cebu
involving in the aggregate a liability (not paid or fully covered
by insurance) of $2 million or more; or (b) prior to the date on
which CECI shall cease to be an Obligor, against CECI involving in
the aggregate a liability (not paid or fully covered by
insurance) of $10 million or more; or (c) after the date on which
CECI shall cease to be an Obligor, against CECI involving in the
aggregate a liability (not paid or fully covered by insurance) of
$12 million or more, which liability, in the reasonable judgment of
the Required Banks, has had or is reasonably likely to have a
material adverse effect on the operations, business, condition
(financial or otherwise) or property of the Borrower or; (d) prior
to the date on which the Construction Contractor shall cease to be
an Obligor, against the Construction Contractor involving in the
aggregate a liability (not paid or fully covered by insurance) of
$2 million or more, which liability, in the reasonable judgment of
the Required Banks, has had or is
reasonably likely to have a Material Adverse Effect; or (e) prior
to the date on which the Construction Supplier shall cease to be an
Obligor, against the Construction Supplier involving in the
aggregate a liability (not paid or fully covered by insurance) of
$2 million or more, which liability, in the reasonable judgment of
the Required Banks, has had or is likely to have a Material Adverse
Effect; or (f) prior to the date on which Ormat
Industries shall cease to be an Obligor, against Ormat Industries
involving in the aggregate a liability (not paid or fully covered
by insurance) of $2 million or more, which liability, in the
reasonable judgment of the Required Banks, has had or is likely to
have a Material Adverse Effect; and in any such case all such
judgments or decrees shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days after the entry
thereof; or
Section 7.11 Governmental Action. (a) Any government or
Governmental Authority shall have condemned, nationalized,
seized, or otherwise expropriated all or any substantial part of
the property or other assets of the Borrower or of its capital
stock or shall have assumed custody or control of such property or
other assets or of the business or operations of the Borrower or of
its capital stock or shall have taken any action for the
dissolution or disestablishment of the Borrower or any action that
would prevent the Borrower or its officers from carrying on its
business or operations or a substantial part thereof; or
Section 7.12 Eximbank Documents. (a) The Eximbank Guarantee
Agreement shall cease to be in full force and effect or shall cease
to give the Banks the rights, privileges and powers
purported to be created thereby or any provision thereof becomes
invalid, illegal or enforceable or (b) all or any part of the
credit facility to be provided under the Eximbank Credit
Agreement is cancelled or terminated in any way or for any reason
or (c) all or any part of the credit facility to be provided under
the Eximbank Credit Agreement is suspended for any reason for more
than 30 days; or
Section 7.13 Permits. The Borrower or any Obligor shall fail to
obtain, renew, maintain or comply in all material respects with any
Governmental Approval set forth in Schedule 4.11 hereof or any
license, approval or consent referred to in Section 5.2(c); or any
such Governmental Approval or license, approval or consent shall be
rescinded, terminated, suspended, modified or withheld or shall be
determined to be invalid or shall cease to be in full force and
effect; or any proceeding shall be commenced by or before any
Governmental Authority for the purpose of rescinding, terminating,
suspending, modifying or withholding any such
Governmental Approval or license, approval or consent and such
proceeding is not dismissed within 60 days; and such failure,
rescission, determination of invalidity, termination, suspension,
modification, withholding, cessation or commencement is
reasonably likely to have a Material Adverse Effect; or
Section 7.14 Transfer of Collateral; Event of Loss; Diminution of
Property Rights. (a) Title to or any right in all or any part of
(i) the Mortgage Collateral, (ii) the Plant or (iii) any other
collateral purported to be covered by the Security
Documents (other than as permitted pursuant to this Agreement,
including Section 6.14 hereof) shall become vested in any party
other than the party named as owner and/or holder thereof in the
applicable Security Document, whether by operation of law or
otherwise, or (iv) there shall have occurred an Event of Loss; or
(b) Except as otherwise permitted pursuant to this Agreement, the
Borrower hereafter grants any easement or dedication, files any
plat, declaration or restriction or enters into any lease or sub-
lease concerning the Site, the Mortgage Collateral or the Plant and
the effect thereof is determined by the Agent, in its reasonable
discretion, to be material and adverse to the Site, the Mortgage
Collateral, the Plant or the Borrower; or
Section 7.15 Completion by Date Certain. A determination by the
Agent or the Independent Engineer, in each case in its reasonable
judgment, that (a) the Project is not reasonably likely to be
completed within the Construction Budget (taking into account any
additional commitment of funds, any payments (without
duplication) of delay liquidated damages under the Construction
Contract and/or the Supply Contract and any payments (without
duplication) of performance damages under the Construction
Contract and/or the Supply Contract, if any, that as of such time
have been determined by the Required Banks to be used to remedy the
condition that would result in a Construction Credit Event of
Default under this Section 7.15) or (b) that the Disbursement Date
(as defined in the Eximbank Credit Agreement) is not
reasonably likely to occur by the Date Certain; provided, that no
Construction Credit Event of Default shall be declared as a result
of any such determination if all of the following
conditions are met: (i) within 30 days after notice by the Agent
to the Borrower of such determination, the Borrower submits to the
Agent a plan, in form and substance acceptable to the
Required Banks, specifying the plan of action the Borrower
intends to take to remedy the condition described herein that would
result in a Construction Credit Event of Default and (ii) the
Borrower proceeds diligently in implementing such plan to the
Required Banks' reasonable satisfaction, provides periodic
reports to the Agent of the status of such implementation and from
time to time amends such plan with the Required Banks' consent
(which shall not be unreasonably withheld) so that such plan
remains likely to achieve its aims; or
Section 7.16 Funding Agreement; Supplemental Credit Agreement;
OPIC Contract of Insurance (a) The failure by CECI to cause the
Affiliated Funding Entities to make any Required Subordinated Loan
or Required Equity Contribution or the failure by CECI to pay any
amount required to be paid by it under or otherwise to comply with
any of the terms of the Funding Agreement; provided that no
Construction Credit Event of Default shall be declared as a result
of any such failure by CECI if an amount equal to the amount of all
such Required Subordinated Loans and Required Equity Contributions
and payments is available to be withdrawn from the Funding Account
on the date required; or
(b) The failure by the Supplemental Lender, in default of its
funding obligations under the Supplemental Credit Agreement and the
Intercreditor Agreement, to make available any Supplemental Loan or
portion thereof as required by the Supplemental Credit Agreement
and the Intercreditor Agreement; provided, that no Construction
Credit Event of Default shall be declared as a result of such
failure if, on or prior to the date on which the funds the
Supplemental Lender failed to disburse are required by the Borrower
for the prompt payment of Project Costs, another bank or financial
institution (other than any Construction Financing Secured Party)
shall have disbursed such funds to the Borrower on terms not
materially less favorable to the Borrower than the terms applicable
to Supplemental Loans under the Supplemental Credit Agreement or if
CECI shall, or shall have caused the Affiliated Funding Entities
to, disburse such funds to the Borrower in accordance with Section
3A of the Funding
Agreement; or
(c) the failure by CECI to obtain the OPIC Contract of
Insurance, in form and substance reasonably satisfactory to the
Agent and the proceeds of which are subject to a first priority
Lien in favor of the Collateral Agent, on or before the date sixty
(60) days after the Credit Date; or
Section 7.17 Regulatory Status. The Borrower shall fail to remain
continuously exempt from all regulation under PUHCA as a result of
being a "foreign utility company" under Section 33 of PUHCA or
otherwise; or
Section 7.18 ERISA. Any of the following events occur or exist
with respect to the Borrower or, in the case of (a) through (e)
below, any ERISA Affiliate: (a) any Termination Event with respect
to any Plan; or (b) any event or circumstance that is reasonably
likely to constitute grounds entitling the PBGC to institute
proceedings under Section 4042 of ERISA for the
imposition of liability in respect of any Pension Plan (other than
a liability to the PBGC for insurance premiums the payment of which
is not yet due); (c) any Pension Plan shall have an accumulated
funding deficiency as defined in Section 412 of the Code or Section
302 of ERISA; (d) any Plan intended to be
qualified under Section 401(a) or 401(k) of the Code shall be
disqualified; (e) any Plan shall be subject to an excise tax
pursuant to Code Section 4980B or shall fail to comply with
Sections 601-606 (inclusive) of ERISA; (f) the Borrower provides
employee welfare benefits to retirees other than statutorily
required or pursuant to Section 601 et seq. of ERISA and Section
4980B of the Code; or (g) the Borrower incurs liability under or
relating to any Plan resulting from a violation of ERISA, the Code
and/or any other applicable law, including without
limitation the Age Discrimination in Employment Act, the
Americans With Disabilities Act and Title VII of the Civil Rights
Act, each as amended; and in each case above, such event or
condition, individually or in the aggregate together with all other
such events or conditions, if any, is reasonably likely to subject
the Borrower to any tax, penalty, or other liability to a Plan, a
Multiemployer Plan, the PBGC, or otherwise (or any
combination thereof) which in the aggregate has had or is
reasonably likely to have a Material Adverse Effect; or the
Borrower or any ERISA Affiliate shall fail to pay when due an
amount or amounts which it shall have become liable to pay under
Title IV or ERISA or as a contribution to a Pension Plan and/or
Multiemployer Plan which, as a result, has had or is reasonably
likely to have a Material Adverse Effect; or
Section 7.19 Authority to Construct; Supply Contract Letters of
Credit. (a) The Cross-Over Date shall have occurred and the
Construction Contractor shall not have obtained the Authority to
Construct on terms free from conditions or requirements not
contemplated by the Construction Budget; or
(b) The Cross-Over Date shall have occurred and one or both of the
Supply Contract Letters of Credit shall not have been issued by one
or more banks or financial institutions satisfactory to the Banks
in their sole discretion and be fully effective;
then, and in any such event, and at any time thereafter, if such
event is continuing, the Agent, on behalf of the Construction
Financing Secured Parties, upon receiving the consent of the
Required Banks, may, and upon the request of the Required Banks,
shall (i) take any actions necessary to cure such Construction
Credit Event of Default, and/or declare a Construction Credit Event
of Default, (ii) declare, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived by the
Borrower, the Commitment of each Bank terminated, irrespective of
any other provision of any Financing Document, whereupon such
Commitment shall immediately terminate (provided, that if a
Construction Credit Event of Default specified in Section 7.5 shall
have occurred or a Buyout shall have occurred, all such Commitments
shall automatically be immediately terminated without any
declaration, presentment, demand, protest or notice or any act of
any kind by any of the Construction Financing Secured Parties
whatsoever), (iii) declare, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived by
Borrower, the entire amount of Borrower's outstanding Construction
Financing Secured Obligations to be immediately due and payable,
irrespective of any other provision of any Financing Document,
whereupon the same shall be and become immediately due and payable
(provided that if a Construction Credit Event of Default specified
in Section 7.5 shall have occurred or a Buyout shall have occurred,
the entire amount of Borrower's outstanding Construction Financing
Secured Obligations shall be automatically immediately due and
payable without any declaration, presentment, demand, protest or
notice or other act of any kind by any of the Construction
Financing Secured Parties whatsoever), and (iv) proceed to enforce
or cause or instruct the Collateral Agent to enforce any remedies
provided under any of the Financing Documents. In addition to any
or all of the foregoing, at any time on or after the Maturity Date,
the Agent, upon receiving the consent of the Required Banks, may,
and upon the request of the Required Banks, shall, require the
Borrower to enter into one or more interest rate swap or cap
agreements or currency swap agreements, in which event the
Borrower shall use its best efforts to enter into any and all of
such agreements as required by the Agent. In addition to any or
all of the foregoing, if a Construction Credit Event of Default
shall have occurred as a result of the Borrower's failure to
perform or observe any covenant, term or agreement contained in
Section 6.7(d) hereof, the Agent, upon receiving the consent of the
Required Banks may, and upon the request of the Required Banks
shall, require the Borrower to enter into an agreement providing
for the operation and maintenance of the Project by a third-party
operator satisfactory to the Required Banks, in which event the
Borrower shall use its best efforts to enter into such an agreement
as required by the Agent. If an event or occurrence constitutes a
Construction Credit Event of Default or Construction Credit Default
under more than one of the provisions of this Article 7, the Agent
on behalf of the Construction Financing Secured Parties may during
the continuance of such Construction Credit Event of Default take
all actions and remedies provided hereunder upon expiration of the
shortest grace period, if any, applicable to such Construction
Credit Default or Construction Credit Event of Default (subject to
any consent or request of the Required Banks). Notwithstanding
anything to the contrary herein, upon the occurrence and
continuance of a Construction Credit Event of Default, the Borrower
shall immediately reimburse the Banks for any payment made by them
to the Issuing Bank thereafter pursuant to Article 3.
ARTICLE 8. The Agent and The Issuing Bank
Section 8.1 Appointment. The Banks and the Issuing Bank hereby
designate Credit Suisse, as Agent to act as specified herein, in
the Eximbank Guarantee Agreement and in any other Financing
Document. Each Bank and the Issuing Bank hereby irrevocably
authorizes the Agent to execute on its behalf the Representative
Agreement and to take such action on its behalf under the
provisions of this Agreement, the Representative Agreement, the
Eximbank Guarantee Agreement, the other Financing Documents and any
other instruments and agreements referred to herein or
therein and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or
required of the Agent by the terms hereof and thereof and such
other powers as are reasonably incidental thereto. The Agent
hereby agrees with each Bank to provide such Bank with a copy of
all communications from Eximbank addressed to the Agent on behalf
of such Bank as contemplated by Section 11.03 of the Eximbank
Guarantee Agreement. The Agent may perform any of its duties
hereunder by or through its officers, directors, agents or
employees.
Section 8.2 Nature of Duties. The Agent shall have no duties or
responsibilities except those expressly set forth in this
Agreement, the Representative Agreement, the Eximbank Guarantee
Agreement and the other Financing Documents. Neither the Agent nor
any of its officers, directors, agents or employees shall be liable
for any action taken or omitted by it or them hereunder, under the
Eximbank Guarantee Agreement, under any other Financing Document or
under the Representative Agreement, or in connection herewith or
therewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Agent shall be
mechanical and administrative in nature; the Agent shall not have
by reason of the Representative Agreement, this Agreement, the
Eximbank Guarantee Agreement, the Letter of Credit or any other
Financing Document a fiduciary relationship in respect of any Bank
or the Issuing Bank; and nothing in the Representative Agreement,
this Agreement, the Eximbank Guarantee Agreement, the Letter of
Credit or any other Financing Document, expressed or implied, is
intended to or shall be so construed as to impose upon the Agent
any obligations in respect of the Representative Agreement, this
Agreement, the Eximbank Guarantee Agreement, the Letter of Credit
or any other Financing Document except as
expressly set forth herein or therein.
Section 8.3 Lack of Reliance on the Agent. Independently and
without reliance upon the Agent, each Bank and the Issuing Bank, to
the extent it deems appropriate, has made and shall continue to
make (i) its own independent investigation of the financial
condition and affairs of the Borrower in connection with the making
and the continuance of the Loans and the issuance of the Letter of
Credit and the taking or not taking of any action in connection
herewith and (ii) its own appraisal of the
creditworthiness of the Borrower and the Agent shall have no duty
or responsibility, either initially or on a continuing basis, to
provide any Bank or the Issuing Bank with any credit or other
information with respect thereto, whether coming into its
possession before the making of the Loans or the issuance of the
Letter of Credit or at any time or times thereafter, except that
the Agent shall provide each Bank and the Issuing Bank with copies
of material documents and other material information provided to
the Agent by the Borrower pursuant to this Agreement promptly after
the Agent's receipt thereof. The Agent shall not be responsible to
any Bank or the Issuing Bank for any recitals, statements,
information, representations or warranties herein or in any
document, certificate or other writing delivered in
connection herewith, with the Eximbank Guarantee Agreement or any
other Financing Document or the Representative Agreement or for the
execution, effectiveness, genuineness, validity,
enforceability, perfection, collectibility, priority or
sufficiency of this Agreement, the Representative Agreement, the
Eximbank Guarantee Agreement, the Letter of Credit or any other
Financing Document or the financial condition of the Borrower or be
required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this
Agreement, the Eximbank Guarantee Agreement, the Letter of Credit
or any other Financing Document or the Representative Agreement or
the financial condition of the Borrower or the existence or
possible existence of any Construction Credit
Default or Construction Credit Event of Default.
Section 8.4 Certain Rights of the Agent. If the Agent shall
request instructions from the Required Banks with respect to any
act or action (including failure to act) in connection with this
Agreement, the Eximbank Guarantee Agreement or any other
Financing Document or the Representative Agreement, the Agent shall
be entitled to refrain from such act or taking such action unless
and until the Agent shall have received instructions from the
Required Banks; and the Agent shall not incur liability to any
Person by reason of so refraining. Without limiting the foregoing,
no Bank shall have any right of action whatsoever against the Agent
as a result of the Agent acting or refraining from acting
hereunder, under any other Financing Document, the Letter of Credit
or the Eximbank Guarantee Agreement or the Representative Agreement
in accordance with the instructions of the Required Banks.
Section 8.5 Reliance. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing,
resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order or other document
or telephone message signed, sent or made by any Person that the
Agent believed to be the proper Person, and, with respect to all
legal matters pertaining to this Agreement, the Eximbank
Guarantee Agreement, the Letter of Credit or any other Financing
Document or the Representative Agreement and its duties hereunder
and thereunder, upon advice of counsel selected by it.
Section 8.6 Indemnification. To the extent the Agent is not
reimbursed and indemnified by the Borrower, the Banks will
reimburse and indemnify the Agent in proportion to their
respective Applicable Percentages of the Total Commitment for and
against any and all liabilities, obligations, losses, damages,
penalties, claims, actions, judgments, suits, costs, expenses or
disbursements of whatsoever kind or nature which may be imposed on,
asserted against or incurred by the Agent in performing its duties
hereunder, under the Eximbank Guarantee Agreement, the Letter of
Credit or under any other Financing Document or under the
Representative Agreement or in any way relating to or arising out
of this Agreement, the Eximbank Guarantee Agreement, the Letter of
Credit or any other Financing Document or the
Representative Agreement; provided that no Bank shall be liable for
any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or
willful misconduct.
Section 8.7 The Agent in its Individual Capacity. With respect to
any obligation the Agent may have to make Loans under this
Agreement, the Agent shall have the rights and powers specified
herein for a "Bank" and a Construction Financing Secured Party and
may exercise the same rights and powers as though it were not
performing the duties of the Agent specified herein; and the term
"Banks", "Required Banks", "Construction Financing Secured
Parties" or any similar terms shall, unless the context clearly
otherwise indicates, include the Agent in its individual
capacity. The Agent may accept deposits from, lend money to, and
generally engage in any kind of banking, trust or other business
with the Borrower or any Affiliate of the Borrower as if it were
not performing the duties specified herein, and may accept fees and
other consideration from the Borrower for services in
connection with this Agreement and otherwise without having to
account for the same to the Banks.
Section 8.8 Resignation by the Agent. (a) The Agent may resign
from the performance of all its functions and duties hereunder
and/or under the other Financing Documents at any time by giving
thirty (30) days' prior written notice to the Borrower and the
Banks. Such resignation shall take effect upon the appointment of
a successor Agent pursuant to clause (b) or (c) below or as
otherwise provided below.
(b) Upon any such notice of resignation, the Required Banks shall
appoint a successor Agent hereunder or thereunder who shall be a
commercial bank or trust company reasonably acceptable to the
Borrower and Eximbank.
(c) If a successor Agent shall not have been so appointed within
such thirty (30) day period, the Agent, with the consent of the
Borrower and Eximbank, may then appoint a successor Agent who shall
serve as Agent hereunder or thereunder until such time, if any, as
the Required Banks appoint a successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to clause
(b) or (c) above by the forty-fifth (45th) day after the date such
notice of resignation was given by the Agent, the Agent or any Bank
may petition any court of competent jurisdiction for the
appointment of a successor Agent. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe, appoint
a successor Agent who shall serve as Agent hereunder or thereunder
until such time, if any, as the Required Banks appoint a successor
Agent as provided above.
Section 8.9 No Amendment to Duties of Agent Without Consent. The
Agent shall not be bound by any waiver, amendment, supplement or
modification of this Agreement which affects its rights or duties
under this Agreement unless it shall have given its prior written
consent, as Agent, thereto.
Section 8.10 No Amendment to Duties of Issuing Bank Without
Consent. The Issuing Bank shall not be bound by any waiver,
amendment, supplement or modification of this Agreement which
affects its rights or duties under this Agreement or the Letter of
Credit unless it shall have given its prior written consent, as
Issuing Bank, thereto.
ARTICLE 9. Miscellaneous
Section 9.1 Notices. Except as otherwise expressly provided
herein, (a) all notices and other communications provided for
hereunder shall be provided in writing (including telegraphic,
telex, facsimile or cable communication) and shall be sent by
telecopy, telex, telegraph or cable with the original of such
communication dispatched by (if inland) overnight or (if
overseas) international courier and, if such courier service is not
available, by registered airmail (or, if inland, registered first-
class mail) with postage prepaid to the Borrower, the Agent, the
Issuing Bank and the Construction Supplier (with respect only to
notices provided for under Section 9.16 hereof) at their respective
addresses specified below and to the Banks at their respective
addresses specified in Schedule I, or at such other address as
shall be designated by such Person in a written notice to the other
parties hereto and (b) all such notices and communications shall,
when mailed, telegraphed, telexed, telecopied, or cabled or sent by
overnight courier, be effective seven (7) days after being
deposited in the mails in the manner as aforesaid, when delivered
to the telegraph company or cable company (if inland), one (1) day
or (if overseas) three (3) days after delivery to a courier in the
manner as aforesaid, as the case may be, or when sent by telex
(with the correct answer back) or telecopier:
Addresses:
If to the Borrower:
CE CEBU GEOTHERMAL POWER COMPANY, INC.
c/o Marc Ablan
Sycip Gorres Valayo & Co.
6760 Ayala Avenue
Makati, Metro Manila
Philippines
Attn: Ms. Rosario Calderon Flanagan
Tel: 011-632-819-3011
Fax: 011-632-819-0872
with copies to:
California Energy Company, Inc.
10831 Old Mill Road
Omaha, Nebraska 68154
Attn: General Counsel
with a copy to Vice President - Project
Implementation
Tel: 402-330-8900
Fax: 402-330-9888
If to the Agent or the Issuing Bank:
CREDIT SUISSE
Tower 49
12 East 49th Street
New York, New York 10017
Attn: Project Finance
Tel: (212) 238-2000
Fax: (212) 238-5390
Telex: 420149
If to Eximbank:
EXPORT-IMPORT BANK OF THE UNITED STATES
811 Vermont Avenue, N.W.
Washington, D.C. 20571
U.S.A.
Attn: Vice President Asia Division
Tel: (202) 566-8714
Fax: (202) 566-7524
Telex: RCA 248460 EXBK UR
TRT 197681 EXIM UT
WUI 64319 EXIBANK
WUT 89461 EXIBANK WSH
If to the Construction Supplier:
ORDA III, INC.
980 Greg Street
Sparks, Nevada 89431-9039
U.S.A.
Attn: Ms. Dita Bronicki
Tel: (702) 356-9029
Fax: (702) 356-9039
with copies to:
Robert E. Giles
Perkins Coie
1201 Third Avenue, 40th Floor,
Seattle, WA 98101-3099
Tel: (206) 583-8888
Fax: (206) 583-8500
Section 9.2 English Language. All documents to be furnished or
communications to be given or made under this Agreement, the Letter
of Credit or any other Financing Document shall be in the English
language or, if in another language, shall be accompanied by a
translation into English certified by a representative of the
Borrower, which translation shall be the governing version among
the Borrower, the Banks, the Issuing Bank and the Agent.
Section 9.3 Indemnities and Expenses. (a) The Borrower shall,
whether or not the transactions herein contemplated are
consummated, pay promptly following demand by the Agent, the
Issuing Bank and/or the Banks (i) all costs and expenses
(including legal fees and disbursements) incurred by or charged to
the Agent, the Issuing Bank and/or the Banks in connection with the
preparation, printing, execution, delivery,
administration, registration (where appropriate) or enforcement of
this Agreement, the Notes, the Letter of Credit and the other
Project Documents or the protection or preservation of any right or
claim of the Agent, the Issuing Bank and/or the Banks against the
Borrower arising out of this Agreement, the Letter of Credit, the
Notes or any other Financing Document, provided that the Borrower's
obligations with respect to the payment of such costs incurred in
connection with the preparation, printing, execution, delivery and
administration of this Agreement, the Notes, the Letter of Credit
and the other Project Documents shall be limited to the payment of
such costs and expenses as are reasonably incurred, (ii) the fees
of the Independent Engineer and the Insurance Consultant and (iii)
in all other cases, all reasonable costs and expenses (including
reasonable legal fees and
disbursements) incurred by or charged to the Agent, the Issuing
Bank and/or the Banks in connection with this Agreement, the Notes,
the Letter of Credit and the other Project Documents (including,
without limitation, in connection with any amendment or
modification to, preservation of rights under, or waiver in
connection with, any Financing Document or any other documents
relating thereto or in connection with the syndication, prior to
the Effective Date, of this Agreement, any of the other Financing
Documents and/or the Loans).
(b) The Borrower shall, whether or not the
transactions herein contemplated are consummated, (i) pay and hold
each of the Banks, the Issuing Bank and the Agent harmless from and
against any and all present and future stamp and other similar
taxes and documentary or registration fees with respect to the
foregoing matters and save each of the Banks, the Issuing Bank and
the Agent harmless from and against any and all
liabilities with respect to or resulting from any delay or
omission (other than to the extent attributable to the Banks and
the Issuing Bank) to pay such taxes or fees; and (ii) indemnify
each Bank, the Issuing Bank and the Agent and each of their
respective officers, directors, employees, representatives,
attorneys and agents from and hold each of them harmless against
any and all liabilities, obligations, losses, damages, penalties,
claims, actions, judgments, suits, costs, expenses and
disbursements incurred by any of them as a result of, or arising
out of, or in any way related to, or by reason of, any
investigation, litigation or other proceeding (whether or not any
Bank, the Issuing Bank or the Agent is a party thereto) related to
the entering into and/or performance of this Agreement, the Letter
of Credit or any other Project Document or the use of the proceeds
of any Loans or the consummation of any transactions contemplated
herein, in the Letter of Credit or in any other Project Document,
including, without limitation, the reasonable fees and
disbursements of counsel selected by such indemnified party
incurred in connection with any such investigation,
litigation or other proceeding or in connection with enforcing the
provisions of this Section 9.3(b) (but excluding any such
liabilities, obligations, losses, to the extent incurred by reason
of the gross negligence or willful misconduct of the Person to be
indemnified or its officers, directors, employees, representatives,
attorneys or agents, as the case may be as determined by a court of
competent jurisdiction). Without
limitation to the foregoing provisions of this paragraph, the
indemnity provided hereunder shall cover any loss, liability or
expense reasonably incurred other than by reason of gross
negligence, willful misconduct or bad faith on behalf of the Agent,
the Issuing Bank or any Bank arising out of or in
connection with claims by third parties (including without
limitation any Bank) to whom a copy of the Information Memorandum
has been distributed with the knowledge of the Borrower against the
Agent, the Issuing Bank or any other Bank relating to any alleged
inaccuracy of the factual information (taken as a whole) which, for
the avoidance of doubt shall not include any
information by way of projections, estimates or other expressions
of view as to future circumstances (provided that such
projections, estimates or other expression of view are expressed in
good faith and on the basis of assumptions that when made were
viewed by the Borrower to be reasonable) contained in, or any
alleged omission of information which will render such aforesaid
factual information (taken as a whole) inaccurate or misleading in
a material respect from, the Information Memorandum and the Project
Documents. For the purpose of the preceding sentence, the Agent,
the Issuing Bank or such Bank shall be deemed to be grossly
negligent if it fails to pass on to any person to whom it has
distributed a copy of the Information Memorandum any
information which the Borrower has notified the Agent, the
Issuing Bank or such Bank, as the case may be, in writing with the
request that such information should be disseminated to all
recipients of the Information Memorandum. The Agent, the Issuing
Bank or such Bank, as the case may be, shall (1) use its best
efforts to, upon its becoming aware of any event which may result
in the Borrower being required to perform any of its indemnity
obligations under this paragraph (b), promptly notify the
Borrower (provided that failure to so notify shall not mitigate the
obligations of the Borrower hereunder), (2) upon request from the
Borrower consult the Borrower regarding any step (including any
step which may mitigate the effect of such event) it proposes to
take in respect of such event and (3) obtain the prior written
consent of the Borrower before entering into any settlement or
compromise in relation to any such claims, actions or suits.
(c) Without limitation to the provisions of paragraph (b) above,
the Borrower agrees to defend, protect, indemnify and hold
harmless each of the Banks, the Issuing Bank and the Agent and each
of their respective officers, directors, employees,
representatives, attorneys and agents from and hold each of them
harmless against any and all liabilities (including removal and
remedial actions), obligations, losses, damages, penalties, claims,
actions, judgments, suits, costs, expenses and
disbursements (including reasonable attorneys' and consultants'
fees and disbursements) imposed on or asserted against any such
Persons directly or indirectly based on, or arising or resulting
from, (i) the actual or alleged presence of Hazardous Materials on,
under or at the Plant or the Site, (ii) any Environmental Claim
relating to the Borrower or the Project or arising out of the use
of the Plant or the Site, or (iii) the exercise of the Agent's, the
Issuing Bank's or the Banks' rights under any of the provisions of
this Section 9.3 regardless of when any such
matters arise, but excluding any matter based solely on the gross
negligence or willful misconduct of the Agent, the Issuing Bank or
any Bank or its officers, directors, employees,
representatives, attorneys or agents, as the case may be. Such
Bank, the Issuing Bank or the Agent shall (1) use its best
efforts to, upon its becoming aware of any event which may result
in the Borrower being required to perform any of its obligations
under this paragraph (c), promptly notify the Borrower (provided
that failure to so notify shall not mitigate the obligations of the
Borrower hereunder), (2) upon request from the Borrower consult the
Borrower regarding any step (including any step which may mitigate
the effect of such event) it proposes to take in respect of such
event and (3) obtain the prior written consent of the Borrower
before entering into any settlement or compromise in relation to
any such claims, actions or suits.
(c) To the extent that the undertaking in the preceding
paragraphs of this Section may be unenforceable because it is
violative of any law or public policy, the Borrower will
contribute the maximum portion that it is permitted to pay and
satisfy under Applicable Law to the payment and satisfaction of
such undertakings.
(d) All sums paid and costs incurred by the Agent, the Issuing
Bank or the Banks in respect to any matter indemnified hereunder
shall bear interest at the Base Rate plus 3.75% from the date so
paid or incurred until reimbursed by the Borrower, and all such
sums and costs shall be added to the debt and be secured by the
Security Documents and shall be immediately due and payable on
demand.
Section 9.4 Survival. All indemnities set forth herein, shall
survive the execution and delivery of this Agreement and the Notes
and the making and repayment of the Loans.
Section 9.5 Governing Law; Submission to Jurisdiction. (a) This
Agreement is a contract made under the laws of the State of New
York of the United States and shall for all purposes be governed by
and construed in accordance with the laws of such State without
regard to the conflict of law rules thereof.
(b) Any legal action or proceeding against the Borrower with
respect to this Agreement, the Letter of Credit or any Financing
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 Borrower hereby irrevocably accepts for itself and
in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. The Borrower agrees that a
judgment, after exhaustion of all available appeals, in any such
action or proceeding shall be conclusive and binding upon the
Borrower, and may be enforced in any other jurisdiction,
including without limitation the Republic, by a suit upon such
judgment, a certified copy of which shall be conclusive evidence of
the judgment. The Borrower hereby irrevocably designates, appoints
and empowers White & Case, with offices on the date hereof at 1155
Avenue of the Americas, New York, New York 10036-2787, as its
designee, appointee and agent to receive, accept and acknowledge
for and on its behalf, and in respect of its
property, service of any and all legal process, summons, notices
and documents which may be served in any such action or
proceeding. If for any reason such designee, appointee and agent
shall cease to be available to act as such, the Borrower agrees to
designate a new designee, appointee and agent in New York City on
the terms and for the purposes of this provision satisfactory to
the Agent. The Borrower further irrevocably consents to the
service of process out of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to the Borrower, at
its address set forth in Section 9.1 hereof, such service to become
effective 30 days after such mailing. Nothing herein shall affect
the right of any Construction Financing Secured Party to serve
process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Borrower in the
Republic or in any other jurisdiction.
(c) The Borrower hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection
with this Agreement, the Letter of Credit or any other Financing
Document brought in the courts referred to in clause (b) above and
hereby further irrevocably waives and agrees not to plead or claim
in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient
forum.
(d) WITH REGARD TO THIS AGREEMENT, THE BORROWER, EACH BANK, THE
ISSUING BANK, THE AGENT, THE ARRANGER AND THE CO-ARRANGER HEREBY
WAIVE THE RIGHT TO A TRIAL BY JURY.
Section 9.6 Successors and Assigns. (a) This Agreement shall be
binding upon and inure to the benefit of the respective
successors and assigns of the parties hereto, except that the
Borrower may not assign or otherwise transfer all or any part of
its rights or obligations under this Agreement without the prior
written consent of the Banks and Eximbank.
(b) Subject to the following exceptions, any Bank may at any time
sell, assign, transfer, negotiate, or otherwise dispose of, in
whole or in part, its rights and obligations under this
Agreement or the Loans.
(i) Each Bank may assign its rights and obligations under this
Agreement and/or the Loans only to a Person (A) approved by
Eximbank and the Borrower (which approval in each case shall not be
unreasonably withheld) and (B) which is eligible for the coverage
of the Guarantee (as defined in the Eximbank Guarantee Agreement)
under the laws, rules, regulations and policies of or applicable to
Eximbank; provided, that in the event of such an assignment by a
Bank to another Bank listed in Schedule I, no Eximbank or Borrower
approval shall be required for such
assignment.
(ii) The Issuing Bank's, the Borrower's and Eximbank's (in each
case except to the extent described in the proviso to clause (i)
above) prior consent (which consent in each case shall not
unreasonably be withheld) shall be required with respect to the
assignment and delegation of a Bank's obligation hereunder to (A)
reimburse the Issuing Bank for payment of drawings under the Letter
of Credit and (B) make Loans.
(iii) The exercise of such right by any Bank is subject in all
cases to the conditions that immediately thereafter such Bank shall
have given written notice of any such transfer to the Borrower and
the Agent, and the transferee shall (a) not have, or shall have
effectively waived, any right pursuant to Section 2.11 or 2.16 to
claim from the Borrower any additional amounts above and beyond
those which could have been claimed by the transferor had it
continued to own its Loans hereunder and (b) not have any right
pursuant to Section 2.11 or 2.16 not possessed by the transferor
had it continued to own its Loans hereunder.
(c) The Borrower and the Agent may treat each Bank as the owner of
any Loan made by it until written notice of transfer or
assignment shall have been received by it. Notwithstanding
anything to the contrary contained in this Section 9.6, each Bank
may grant participations, in whole or in part, in its rights and
obligations under this Agreement and the Loans without any
restriction and without notice to the Borrower; provided, that (i)
such Bank's obligations under this Agreement shall remain
unchanged, (ii) such Bank shall remain solely responsible to the
other parties hereto for the performance of such obligations and
(iii) the Borrower, the Agent, the Issuing Bank and the other Banks
shall 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 to enforce the
obligations of the Borrower relating to the Loans of such Bank.
(d) Notwithstanding anything to the contrary contained herein, the
Borrower hereby consents to any assignment made by the Banks and
the Agent to Eximbank pursuant to Section 9.02 of the
Eximbank Guarantee Agreement without any restrictions contained
herein or otherwise and the Borrower hereby agrees to cooperate
with the Agent, the Banks and the Issuing Bank, as relevant, and to
take all actions necessary, to effect any such assignment.
(e) Notwithstanding anything to the contrary contained herein, the
Issuing Bank may not assign its obligations hereunder with respect
to the Letter of Credit without the prior written consent of the
Borrower, Eximbank and the Banks.
(f) All fees and expenses which a Bank or the Issuing Bank incurs
in connection with any assignment or grant of
participations pursuant to subparagraphs (b), (c) and (e) of this
Section 9.6 shall be for the account of such Bank or the Issuing
Bank, as the case may be.
Section 9.7 Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
agreement.
Section 9.8 Right of Setoff. In addition to any rights now or
hereafter granted under Applicable Law or otherwise, and not by way
of limitation of any such rights, upon the occurrence of a
Construction Credit Event of Default, each Bank and the Issuing
Bank is hereby authorized at any time or from time to time, without
presentment, demand, protest or other notice of any kind to the
Borrower or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and apply any and
all deposits (general or special) and any other
Indebtedness at any time held or owing by such Bank or the
Issuing Bank (including without limitation by branches and
agencies of such Bank, as relevant, or the Issuing Bank wherever
located), to or for the credit or the account of the Borrower
against and on account of the Construction Financing Secured
Obligations of the Borrower under this Agreement and liabilities of
the Borrower to such Bank or the Issuing Bank as relevant, under
this Agreement, the Letter of Credit or any of the other Financing
Documents, including, without limitation, all interests in
Construction Financing Secured Obligations of the Borrower under
this Agreement purchased by such Bank pursuant to Section 9.12(b),
and all other claims of any nature or description
arising out of or connected with this Agreement, the Letter of
Credit or any other Financing Document, irrespective of whether or
not such Bank or the Issuing Bank, as relevant, shall have made any
demand hereunder and although said Construction
Financing Secured Obligations, liabilities or claims, or any of
them, shall be contingent or unmatured.
Section 9.9 No Waiver; Remedies Cumulative. No failure or delay
on the part of the Agent, the Issuing Bank or any Bank in
exercising any right, power or privilege hereunder or under the
Letter of Credit or any other Financing Document and no course of
dealing between the Borrower and the Agent, the Issuing Bank or any
Bank shall impair any such right, power or privilege or operate as
a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or under the Letter of Credit
or any other Financing Document preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder. The rights, powers and remedies
herein, in the Letter of Credit or in any other Financing Document
expressly provided are cumulative and not exclusive of any rights,
powers or remedies which the Agent, the Issuing Bank or any Bank
would otherwise have. No notice to or demand on the Borrower in
any case shall entitle the Borrower to any other or further notice
or demand in similar or other circumstances or constitute a waiver
of the rights of the Agent, the Issuing Bank or any Bank to any
other or further action in any circumstances without notice or
demand.
Section 9.10 Severability. Any provision of this Agreement, any
Note and any other Financing Document which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability but that shall not invalidate the remaining
provisions of this Agreement, any Note or any other Financing
Document or affect such provision in any other jurisdiction.
Section 9.11 Calculation. All financial calculations to be made
under, or for the purposes of, this Agreement shall be determined
in accordance with Philippines generally accepted accounting
principles, applied on a consistent basis and, except as
otherwise required to conform to the definitions contained in
Schedule X of this Agreement or any other provisions of this
Agreement, shall be calculated from the then most recently issued
quarterly financial statements which the Borrower is obligated to
furnish to the Agent from time to time, as provided hereunder;
provided, however, that (a) if the relevant quarterly financial
statements should be in respect of the last quarter of a Fiscal
Year then, at the option of the Required Banks, such calculations
may instead be made from the audited financial statements for the
relevant Fiscal Year, and (b) if there should occur any material
adverse change in the financial condition or results of
operations of the Borrower after the end of the period covered by
the relevant financial statements, then such material adverse
change shall also be taken into account in calculating the
relevant figures.
Section 9.12 Payments Pro Rata; Sharing. (a) Subject to
Section 2.9, the Agent agrees that promptly after its receipt of
each payment from or on behalf of the Borrower in respect of any
Construction Financing Secured Obligations of the Borrower to the
Banks hereunder, it shall distribute such payment to the Banks pro
rata based upon their respective shares, if any, of the
Construction Financing Secured Obligations with respect to which
such payment was received.
(b) Subject to the terms and conditions of the Intercreditor
Agreement, each of the Banks agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by
realization upon security, by the exercise of the right of setoff
or banker's lien, by counterclaim or cross action, by the
enforcement of any right under the Financing Documents, any Note or
otherwise), which is applicable to the payment of the
principal of, or interest on, the Loans or Commitment Commission,
of a sum which with respect to the related sum or sums received by
other Banks is in a greater proportion than the total amount of
such Obligation then owed and due to such Bank bears to the total
amount of such Obligation then owed and due to all the Banks
immediately prior to such receipt, then such Bank receiving such
excess payment shall purchase for cash without recourse or warranty
from the other Banks an interest in the Construction Financing
Secured Obligations of the Borrower to such Banks in such amount as
shall result in a proportional participation by all the Banks in
such amount; provided, however, that if all or any portion of such
excess amount is thereafter recovered from such Bank, such purchase
shall be rescinded and the purchase price restored to the extent of
such recovery, but without
interest.
Section 9.13 Effectiveness. This Agreement shall become
effective on the date (the "Effective Date") on which (i) each of
the Banks shall have provided to the Agent evidence of the
authority of such Bank to enter into this Agreement and the names,
specimen signatures and evidences of authority of the persons who
will sign this Agreement on behalf of such Bank and (ii) the
Borrower, the Agent, the Issuing Bank, the Arranger, the Co-
Arranger and each of the Banks shall have signed a copy hereof
(whether the same or different copies) and shall have delivered the
same to the Agent or, in the case of the Banks and the Co-Arranger,
shall have given to the Agent telephone (confirmed in writing),
written or telex notice (actually received) that the same has been
signed and mailed to it. The Agent will give the Borrower, each
Bank, the Co-Arranger and Eximbank prompt notice of the occurrence
of the Effective Date. The commitment of each Bank to make Loans
to the Borrower hereunder and of the Issuing Bank to issue the
Letter of Credit hereunder shall expire on August 1, 1994 unless
the Credit Date shall have occurred on or prior to such date.
Section 9.14 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for
convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
Section 9.15 Amendment or Waiver. Neither this Agreement nor any
terms hereof may be changed, waived, discharged or terminated
unless such change, waiver, discharge or termination is in a
writing signed by the Required Banks and the Agent; provided,
however, that no such change, waiver, discharge or termination
shall, without the consent of each Bank and the Issuing Bank, (i)
xtend the final maturity of any Loan, or reduce the rate or extend
the time of payment of interest on any Loan or any Fees, or reduce
the principal amount of any Loan, or increase the Commitment of any
Bank over the amount thereof then in effect (it being understood
that a waiver of any Construction Credit Default or Construction
Credit Event of Default shall not constitute a change in the terms
of any Commitment of any Bank), (ii) provide for the forgiveness of
the principal amount of any Loan or any interest thereon or of any
Fees or Commitment Commission or any other amounts payable by the
Borrower pursuant to this Agreement, (iii) amend, modify or waive
any provision of this Section 9.15 or Section 8.6, 9.3, 9.6, 9.8 or
9.12, (iv) reduce the percentage specified in the definition of
Required Banks set forth in
Schedule X hereto or (iv) consent to the assignment or transfer by
the Borrower of any of its rights and obligations under this
Agreement. The Agent and each of the Banks hereby agree that
neither the Eximbank Guarantee Agreement nor any of the terms
thereof may be changed, waived, discharged or terminated unless
such change, waiver, discharge or termination is in a writing
signed by the Agent and each of the Banks.
Section 9.16 Certain Notices and Cure Rights. The Banks and the
Agent hereby agree that concurrently with the delivery by any of
them of any notice to the Borrower of a Construction Credit Default
or a Construction Credit Event of Default, a copy of such notice
will be delivered to the Construction Supplier, provided that none
of the Agent or the Banks shall incur any liability to the
Construction Supplier, the Borrower or any other Person on account
of any failure to so deliver any copy of any such notice to the
Construction Supplier. The Agent and the Banks further agree that,
subject to the succeeding sentences of this Section 9.16, the
Construction Supplier may make such payments or take such other
action to or for the benefit of the Agent and the Banks as may be
required to cure a Construction Credit Default or a Construction
Credit Event of Default during the cure period or other period of
grace, if any, extended to the Borrower under Article 7 of this
Agreement with respect to such Construction Credit Default or
Construction Credit Event of Default, except that (a) in the case
of a Construction Credit Event of Default described in clause (ii)
of Section 7.1 hereof, but subject to the succeeding sentences of
this Section 9.16, the Construction Supplier may make payments to
or for the benefit of the Agent and the Banks required to cure such
Construction Credit Event of Default if such payments are made not
later than three (3)
Business Days after the expiration of the grace period extended to
the Borrower in such clause (ii) of Section 7.1 and (b) in the case
of a Construction Credit Event of Default described in Sections
7.2, 7.3(b), 7.7 or 7.15 hereof, but subject to the succeeding
sentences of this Section 9.16, the Construction Supplier shall
have a period of fifteen (15) days after the expiration of the
grace period extended to the Borrower under such Section 7.2,
7.3(b), 7.7 or 7.15, as the case may be, to cure such Construction
Credit Event of Default unless, in the reasonable judgment of the
Agent, (x) it does not appear that the Construction Supplier and
its Affiliates are capable of curing, or have the intention of
curing, such Construction Credit Event of Default or (y) extending
such cure period to the Construction Supplier is reasonable likely
to have a material adverse effect on the interests of the
Construction Financing Secured Parties. The Banks and the Agent
further agree that, subject to the succeeding sentences of this
Section 9.16, each such payment or other action shall be effective
to cure such Construction Credit Default or Construction Credit
Event of Default to the same extent as if the same had been made or
taken by the Borrower. Notwithstanding the foregoing, the
Construction Supplier shall not have any rights to make any payment
or take any other action referred to in the preceding sentences of
this Section 9.16 (a) unless and until the Construction Supplier
shall have executed an agreement in favor of the Construction
Financing Secured Parties, which agreement shall be in form and
substance reasonably satisfactory to the Agent, pursuant to which
the Construction Supplier shall have agreed (i) that
notwithstanding any payment made or other action taken by the
Construction Supplier under this Section 9.16, the Construction
Supplier shall not be entitled to be subrogated to any of the
rights of the Construction Financing Secured Parties against the
Borrower or any collateral security or guaranty held by or for the
benefit of the Construction Financing Secured Parties for the
satisfaction of any obligations under this Agreement or any other
Financing Document, nor shall the Construction Supplier be entitled
to seek any reimbursement from the Borrower in respect of any
payments made or other action taken by the Construction Supplier
under this Section 9.16, until the Construction Financing
Termination Date and (ii) that if any amount shall be paid to the
Construction Supplier on account of such subrogation rights or such
reimbursement at any time prior to the Construction Financing
Termination Date, such amount shall be held by the Construction
Supplier in trust for the Construction Financing Secured Parties,
segregated from other funds of the Construction Supplier, and shall
be turned over to the Collateral Agent for the benefit of the
Construction Financing Secured Parties, in the exact form received
by the Construction Supplier (duly endorsed by the Construction
Supplier to the Collateral Agent for the benefit of the
Construction Financing Secured Parties, if required) and (b) unless
the existence of any rights that the Construction Supplier may
acquire against the Borrower, and the existence of any liability
that the Borrower may incur to the Construction Supplier, in each
case by reason of the making of any such payment or taking of any
such other action by the Construction Supplier, shall be permitted
under the Eximbank Credit Agreement on terms which, in the judgment
of the Required Banks, cannot be expected to delay or impair the
occurrence of the Disbursement Date (as defined in the Eximbank
Credit Agreement).
Section 9.17 Disclaimer. None of the Banks, the Issuing Bank or
the Agent shall be responsible in any way for the performance of
the Purchase Contracts, and no claim against the Supplier of any
Item or any other Person with respect to the performance of the
Purchase Contracts will affect the obligations of the Borrower
under this Agreement, any other Financing Document or the Letter of
Credit.
IN WITNESS WHEREOF, the parties hereto, acting through their duly
authorized representatives, have caused this Agreement to be signed
in their respective names as of the date first above written.
CE CEBU GEOTHERMAL POWER
COMPANY, INC.
By: /s/ John G. Sylvia
Name: John G. Sylvia
Title: Vice President and
Chief Financial Officer
CREDIT SUISSE, as Arranger, as Agent,
as Issuing Bank and as a Bank
By: /s/ Jean-Daniel Borgeaud
Name: Jean-Daniel Borgeaud
Title: Associate
By: /s/ Richard Knight
Name: Richard Knight
Title: Associate
BANQUE NATIONALE DE PARIS, as Co-
Arranger, as Co-Underwriter and as a
Bank
By: /s/ T.L. Foerster
Name: T.L. Foerster
Title: Vice President
By: /s/ David J. Fiderer
Name: David J. Fiderer
Title: Assistant Vice President
THE FUJI BANK, LIMITED, CHICAGO BRANCH
B: /s/ Hidekazu Seo
Name: Hidekazu Seo
Title: Joint General Manager
Exhibit 10.97
CREDIT AGREEMENT, dated as of April 8, 1994 (this
"Agreement"), between CE CEBU GEOTHERMAL POWER COMPANY, INC., a
corporation organized and existing under the laws of the Republic
of the Philippines (together with its successors, the "Borrower")
and EXPORT-IMPORT BANK OF THE UNITED STATES ("Eximbank"), an agency
of the United States. Capitalized terms used herein shall be
defined as provided in Section 1.01 hereof.
WHEREAS, the Borrower, the Arranger, the Co-Arranger, the
Agent, the Issuing Bank and the Banks are entering into the Bank
Credit Agreement, pursuant to which the Banks have agreed,
subject to the terms and conditions set forth therein, to provide
certain financing for construction of the Project and, as a
condition to such financing, the Borrower, the Arranger, the Co-
Arranger, the Agent, the Issuing Bank and the Banks have
requested Eximbank to provide a limited guaranty of the Loans made
by the Banks under the Bank Credit Agreement;
WHEREAS, the Borrower has requested Eximbank to establish a
credit (the "Eximbank Credit") in favor of the Borrower as part of
the overall debt financing of the costs of construction of the
Project;
WHEREAS, Eximbank is prepared (i) to issue the Eximbank
Guarantee subject to the terms and conditions of the Eximbank
Guarantee Agreement and (ii) to establish the Eximbank Credit and
to make the Eximbank Credit available to the Borrower after the
Project Completion Date, subject to the terms and conditions set
forth in this Agreement;
WHEREAS, it is contemplated that the proceeds of the
Eximbank Credit shall be applied by the Borrower to repay the
construction financing to be provided by the Banks;
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
Section 1.01. General Definitions. Capitalized terms used herein
and not otherwise defined herein are used as defined in Schedule X
attached hereto. In addition, wherever used in this Agreement or
any Annex, Exhibit or Schedule hereto, unless the context otherwise
requires, the following terms shall have the following meanings:
"Bank Disbursement" shall mean each of the Loans disbursed
from time to time pursuant to Article II of the Bank Credit
Agreement.
"Bank Note" shall mean each of, and "Bank Notes" shall mean
all of, the promissory notes executed and delivered by the
Borrower pursuant to Section 2.4 of the Bank Credit Agreement.
"Business Day" shall mean any day on which the Federal Reserve
Bank of New York is open for business.
"Commitment Fee" shall have the meaning provided in Section
3.03.
"Credit Availability Date" shall mean February 27, 1997;
provided that, (i) if on or before such date, the Completion Date
(as defined in the Energy Conversion Agreement) shall have
actually occurred pursuant to Section 6.1 of the Energy
Conversion Agreement or have been deemed to have occurred
pursuant to Section 4.9(b) of the Energy Conversion Agreement or
(ii) if on February 27, 1997, Force Majeure (as defined in any of
the Energy Conversion Agreement, the Construction Contract or the
Supply Contract) or a default by PNOC-EDC under the Energy
Conversion Agreement shall exist, or shall have existed prior to
February 27, 1997 for an aggregate period in excess of 30 days, the
Credit Availability Date shall be extended for an additional period
terminating on the earlier to occur of (x) February 28, 1998, and
(y) the date on which the Eximbank Credit is canceled or disbursed.
"Credit Exposure Fee" shall have the meaning provided in
Section 3.04.
"Default" shall mean any event, act or condition which, with
notice, lapse of time, or both, or the fulfillment of any other
requirement provided for in Article IX, would constitute an Event
of Default.
"Disbursement Date" shall mean the date on which the
Eximbank Disbursement is made by Eximbank to the Borrower.
"Eximbank Credit" shall have the meaning provided in the
second WHEREAS clause hereof.
"Eximbank Disbursement" shall mean the disbursement made under
the Eximbank Credit in accordance with the terms of this Agreement
and evidenced by the Eximbank Note.
"Eximbank Note" shall have the meaning provided in Section
3.07.
"Event of Default" shall have the meaning provided in
Article IX.
"Guarantee Operative Date" shall mean the date designated by
Eximbank on or after which Utilizations may be made under the Bank
Credit Agreement.
"O&M Parameters" shall mean the parameters governing the
operation and maintenance of the Project set forth in Schedule
7.07(c) hereto.
"Payment Date" shall have the meaning provided in Section
3.01.
"Request for Eximbank Disbursement" shall mean a request for
disbursement in the form of Annex B hereto.
"Taxes" shall mean any taxes, fees, levies, imposts, duties or
charges of whatsoever nature (whether imposed by withholding or
deduction or otherwise) imposed by the Republic or any
political subdivision or taxing authority thereof, or any other
taxing jurisdiction from which payments required hereunder or under
the Eximbank Note are made.
"U.S. Treasury Rate" shall mean the rate specified for the day
which is five (5) Business Days prior to the date of
prepayment in the Federal Reserve Statistical Release, H.15 (519)
Selected Interest Rates, for the category entitled "Treasury Bills,
Secondary Market" or, if not included in such category, the
category entitled "Treasury Constant Maturities".
Section 1.02. Principles of Construction. The principles of
construction set forth in Schedule X shall apply.
ARTICLE II. AMOUNT, CASH PAYMENTS & AVAILABILITY
DATE OF EXIMBANK CREDIT
Section 2.01. Amount of the Eximbank Credit; Use of
Proceeds. Eximbank establishes the Eximbank Credit to make an
advance to the Borrower so that the Borrower may (i) refinance the
Financed Portion of the costs incurred by the Borrower after
November 9, 1992, for the purchase in the United States and export
to the Republic of the Items; (ii) refinance the Guarantee Exposure
Fee; and (iii) finance the Credit Exposure Fee. On the terms and
conditions hereof, Eximbank shall make the Eximbank Credit
available to the Borrower in a single Eximbank
Disbursement on the date upon which all of the conditions
precedent to such disbursement under Section 5.02 hereof shall have
been satisfied or waived. The Eximbank Credit shall not under any
circumstances exceed in aggregate amount the lesser of:
(a) the sum of (i) the aggregate amount of the Financed
Portion for all Items; and (ii) 100% of the Guarantee
Exposure Fee paid to Eximbank under the Eximbank Guarantee
Agreement; and (iii) 100% of the Credit Exposure Fee payable
to Eximbank under this Agreement; and
(b) the sum of (i) the aggregate outstanding principal amount
of the Bank Notes (provided that the principal amount
thereof shall not exceed $154,882,613 and (ii) 100% of the
Credit Exposure Fee payable to Eximbank under this
Agreement.
From and after the date Eximbank makes the Eximbank Credit
available to the Borrower, all amounts due to Eximbank under this
Agreement and the Eximbank Note are entitled to the benefit of the
Collateral that is held for the benefit of Eximbank by the
Collateral Agent pursuant to the terms and conditions of the
Collateral Agency Agreement. Any amount of the Eximbank Credit not
disbursed on the Disbursement Date shall automatically be canceled
upon and as of the close of business on the Disbursement Date.
Section 2.02. Cash Payments. The Borrower agrees to make
cash payments for the Items in an aggregate amount equal to not
less than 15% of the Contract Price of each of the Items.
Section 2.03. Credit Availability Date. The Eximbank Credit
will not be disbursed after, and the Eximbank Credit will terminate
upon, the close of business on the Credit Availability Date. The
Credit Availability Date may be extended only upon thirty (30)
days' prior written request of the Borrower and only if and to the
extent that Eximbank shall have given its consent to such
extension.
ARTICLE III. TERMS OF THE EXIMBANK CREDIT
Section 3.01. Repayment. The Borrower shall repay all
principal amounts disbursed under the Eximbank Credit in
approximately equal, successive quarterly installments, the first
such installment being due on the 30th day of the first March,
June, September or December occurring 180 days after the
Disbursement Date and on each succeeding March 30, June 30,
September 30 and December 30 (each such date being referred to
herein as a "Payment Date"), and ending on the Payment Date
immediately preceding the Transfer Date (as such term is defined in
the Energy Conversion Agreement as in effect on the date hereof).
Section 3.02. Interest. (a) The Borrower shall pay
interest on each Payment Date, and on the date that all amounts
disbursed under the Eximbank Credit are paid in full, on all
amounts disbursed and outstanding from time to time under the
Eximbank Credit, beginning on the first of such dates which is
after the Disbursement Date, calculated at an interest rate per
annum of 5.95%, computed on the basis of the actual number of days
elapsed (including the first day but excluding the last day), using
a 365-day year.
(b) If any amount of principal, interest or fee owing to
Eximbank under this Agreement or the Eximbank Note is not paid in
full when due, the Borrower shall pay to Eximbank on demand (to the
extent permitted by applicable law) interest on the unpaid amount
for the period from the date said amount was due until paid in
full, computed on the same basis as set forth in
paragraph (a) above, but at the per annum rate of 7.95%.
Section 3.03. Commitment Fee. The Borrower shall pay to
Eximbank a commitment fee ("Commitment Fee") of 0.5% per annum on
the uncanceled and undisbursed balance from time to time of the
Eximbank Credit, computed on the basis of the actual number of days
elapsed (including the first day but excluding the last day), using
a 365-day year, accruing from May 31, 1994 and
payable on January 15 and July 15 of each year, beginning on July
15, 1994, and on the Credit Availability Date.
Section 3.04. Credit Exposure Fee. At the time of the
Eximbank Disbursement, the Borrower shall pay or cause to be paid
to Eximbank an exposure fee ("Credit Exposure Fee") equal to 4.64%
of the amount of the Eximbank Disbursement that relates to the
Financed Portion of the Items. The Credit Exposure Fee may be
financed by the Borrower by the inclusion of the request for such
financing in the Borrower's Request for Eximbank
Disbursement.
Section 3.05. Voluntary Prepayment. The Borrower may from
time to time prepay all or any part of the outstanding principal
amount of the Eximbank Credit, provided that the Borrower shall
have given Eximbank thirty (30) days prior written notice
thereof, shall have paid in full all amounts due to Eximbank under
this Agreement and the Eximbank Note as of the date of such
prepayment, including interest which has accrued to the date of
prepayment on the amount prepaid, and shall pay to Eximbank a
prepayment premium equal to the amount by which (i) the amount of
the proposed prepayment is less than (ii) the discounted cash flow
of the installments of principal and interest thereon
represented by said prepayment. The discount rate shall be the
U.S. Treasury Rate for maturities similar to the weighted average
term of the installments of the Eximbank Credit to be prepaid, as
determined by Eximbank. Any prepayment shall be applied to the
installments of principal of the Eximbank Credit in the inverse
order of their maturity. Upon delivery of any notice pursuant to
this Section 3.05, the Borrower shall be obligated to effect
prepayment in accordance with the terms thereof.
Section 3.06. Mandatory Prepayment. On the applicable dates
set forth in Sections 3.05(a) and 3.05(d) of the
Disbursement Agreement, the Borrower shall, without demand or
notice, make prepayments to Eximbank using funds then made
available for such purpose from the Contingency Account by the
Collateral Agent pursuant to Sections 3.05(a) and 3.05(d) of the
Disbursement Agreement. In addition, on the date of receipt of
funds from any Buyout, the Borrower shall, without demand or
notice, make a prepayment to Eximbank in the amount of the then
outstanding principal amount of the Eximbank Credit, together with
all interest accrued thereon and all other amounts then payable to
Eximbank by the Borrower under any of the Financing Documents. In
the case of any partial payments, such prepayments shall be applied
to the installments of principal of the Eximbank Credit in the
inverse order of their maturity. No prepayment premium is payable
in connection with a mandatory prepayment pursuant to this Section
3.06.
Section 3.07. Eximbank Note. The Borrower agrees that to
evidence further its obligation to repay all amounts disbursed
under the Eximbank Credit, with interest thereon, it shall issue
and deliver to Eximbank a promissory note dated the Disbursement
Date in the form of Annex A hereto (together with replacements and
substitutions therefor, the "Eximbank Note"). The Eximbank Note
shall be valid and enforceable as to its principal amount at any
time only to the extent of the amount then disbursed and
outstanding under the Eximbank Credit and, as to interest, only to
the extent of the interest accrued from the date of the most recent
interest payment (if interest was then paid in full) on the
disbursed amount.
Section 3.08. Method of Payment. All payments to be made to
Eximbank under this Agreement or the Eximbank Note shall be made
without set-off or counterclaim in Dollars in immediately available
and freely transferable funds no later than 11:00 a.m. (New York
City time) on the date on which due (each such payment made after
such time shall be deemed to have been made on the next succeeding
Business Day) at the Federal Reserve Bank of New York for credit to
the following Eximbank account as identified below, or as otherwise
directed in writing by the Treasurer-Controller, Deputy Treasurer-
Controller or an Assistant
Treasurer-Controller of Eximbank:
U.S. Treasury Department
0210-3000-4
TREAS NYC/CTR/
BNF=/AC-4984 OBI=
EXPORT-IMPORT BANK
DUE ____________ ON EIB CREDIT NO. 66643 - PHILIPPINES
FROM _________________
Whenever any payment under this Agreement or the Eximbank Note
shall be stated to be due and payable 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 be included in the
computation of any interest or fee due thereon.
Section 3.09. Application of Payments. Eximbank shall
apply payments received by it under this Agreement or the
Eximbank Note (excluding prepayments and prepayment premiums) in
the following order of priority: (i) interest due pursuant to
Section 3.02(b), (ii) Commitment Fees, Guarantee Exposure Fees and
all other amounts due to Eximbank under this Agreement, (iii)
interest due pursuant to Section 3.02(a), (iv) installments of
principal due and (v) amounts due and not otherwise provided for in
this Section 3.09.
ARTICLE IV. CANCELLATION
Section 4.01. Cancellation by the Borrower. The Borrower
may cancel at any time all or any part of the undisbursed and
uncanceled amount of the Eximbank Credit, provided that thirty (30)
days' prior written notice is given to Eximbank.
Cancellation in full of the Eximbank Credit shall not terminate any
provision of this agreement other than Articles 5, 7, 8 and 9
hereof.
Section 4.02. Cancellation by Eximbank. Eximbank shall not
have the right to cancel the Eximbank Credit prior to the Credit
Availability Date, except in the case of payment default hereunder
as set forth in subsection (a) of Article IX hereof. Prior to any
such cancellation, Eximbank shall first provide the Banks with an
opportunity to cure such payment default by
providing the Agent with thirty (30) days' prior written notice of
its intent to cancel the Eximbank Credit and the amount of such
payment default.
ARTICLE V. CONDITIONS PRECEDENT
Section 5.01. Conditions Precedent to Bank Disbursement. The
applicability of the Eximbank Guarantee to any Utilization shall be
subject to the satisfaction of the following conditions on or prior
to the Guarantee Operative Date; provided that if any such
conditions shall have been satisfied on or prior to the Effective
Date then on the Guarantee Operative Date, the Borrower shall
supply such evidence indicating that such condition
continues to be satisfied as Eximbank may reasonably require,
including, without limitation, bring-down opinions and
certificates:
(a) Project Documents. Each of the Project Documents,
excluding the Mortgage, the ECA Operation Performance Bond, the
Insurance Contracts, the Governmental Approvals set forth in Part
B of Schedule 5.01(t) hereto and agreements and instruments
pertaining to Working Capital Subordinated Secured Obligations,
Third Party Subordinated Indebtedness and Senior Permitted
Indebtedness shall have been entered into by the respective parties
thereto, shall be unconditional and fully effective in accordance
with their respective terms (except for this Agreement or the
Eximbank Guarantee Agreement having become unconditional and fully
effective, if such is a condition of effectiveness of any of such
documents) and shall be in form and substance
satisfactory to Eximbank. In addition, (i) the Power Purchase
Agreement shall have been entered into by PNOC-EDC and NAPOCOR and
shall have become unconditional and fully effective in
accordance with its terms and Eximbank shall have received a copy
thereof from the Borrower and (ii) the Geothermal Fluid
Specifications (as defined in the Energy Conversion Agreement)
shall have been finalized as contemplated in Annex I to the Energy
Conversion Agreement and an agreement evidencing the finalization
of such specifications shall have been incorporated as an addendum
to the Energy Conversion Agreement.
(b) Political Risk Insurance. CECI shall have obtained a
commitment from OPIC to issue the OPIC Contract of Insurance, which
commitment shall be in form and substance satisfactory to Eximbank.
(c) Opinions of Counsel. Eximbank shall have received signed
legal opinions of counsel to each Person listed on Section A of
Schedule 5.01(c) hereto, each of which shall be in form and
substance and by counsel satisfactory to Eximbank and shall be
dated the date hereof.
(d) Corporate Documents; Proceedings.
(i) Eximbank shall have received a certificate, dated
the date hereof, signed by a Financial Officer of the
Borrower, and attested to by the Secretary or any Assistant
Secretary of the Borrower, in form and substance satisfactory to
Eximbank, together with copies of the Articles of
Incorporation and By-Laws of the Borrower and resolutions of
the Board of Directors of the Borrower reasonably requested by
Eximbank, accompanied by an accurate English translation upon
which Eximbank shall have the right to rely for all purposes
under this Agreement, the Eximbank Guarantee Agreement and the
Eximbank Note.
(ii) Eximbank shall have received a certificate,
dated the date hereof, signed by a Financial Officer of each
Obligor (other than PNOC-EDC and the ECA Operation Performance
Bond Issuer) and attested to by the Secretary or any Assistant
Secretary of the Obligor, in form and substance satisfactory to
Eximbank, together with copies of the Articles of
Incorporation and By-Laws of the Obligor and resolutions of
the Obligor reasonably requested by Eximbank.
(iii) Arrangements satisfactory to Eximbank shall
have been made for the appointment of Deloitte, Touche &
Tohmatsu International, or such other firm of independent public
accountants acceptable to Eximbank, as Auditors.
(e) Auditors. Eximbank shall have received copies of the
authorization of the Auditors referred to in Section 6.2(b) of the
Bank Credit Agreement and Section 7.02(b) hereof.
(f) Pledged Stock; Convertible Subordinated Notes. CE
Philippines and Ormat Cebu shall have delivered to the Collateral
Agent, as pledgee, (i) the share certificates representing all of
the Pledged Stock, together with executed and undated stock powers,
and (ii) the Convertible Subordinated Notes evidencing Required
Subordinated Loans, together with executed instruments of transfer,
and the Collateral Agent shall have received share certificates
representing all directors' qualifying shares of the Borrower,
together with executed and undated stock powers.
(g) Consent Letters. Eximbank shall have received a
letter, in form and substance satisfactory to Eximbank, from (i)
White & Case, presently located at 1155 Avenue of the
Americas, New York, New York 10036-2787, indicating the consent of
White & Case to its appointment by the Borrower, CECI, CE
Philippines and Ormat Cebu as their agent to receive service of
process as specified in Section 10.02 hereof, in the case of the
Borrower, in the Funding Agreement, in the case of CECI, in the
Pledge Agreement, in the case of CE Philippines and Ormat Cebu and
(ii) CT Corporation System, presently located at 1633
Broadway, New York, New York 10019, indicating the consent of CT
Corporation System to its appointment by Ormat Industries and Ormat
as their agent to receive service of process as specified in the
Ormat Industries Guaranty, in the case of Ormat
Industries, and in the Ormat Guaranty, in the case of Ormat.
(h) Environmental Matters. Arrangements shall have been made
for the Borrower and the Project to comply with applicable
Philippine law and guidelines relating to occupational health and
safety and to the environment.
(i) Energy Conversion Agreement Effectiveness. Each of PNOC-
EDC, and the Borrower shall have issued to Eximbank a
certification confirming that the Effectivity Date (as defined in
the Energy Conversion Agreement) has occurred.
(j) Certificates. Eximbank shall have received copies of
each executed Project Document, together with a certificate of a
Financial Officer of the Borrower certifying that (i) the
Borrower is not in default in the performance, observance or
fulfillment of any of its obligations, covenants or conditions
contained therein and, to the best of the Borrower's knowledge, no
other party to any such Project Document is in default in the
performance, observance or fulfillment of any of its material
obligations, covenants or conditions contained therein and
(ii) in the case of each such document to which Eximbank is not a
party, (x) that such document is in full force and effect, (y) that
to the best of the Borrower's knowledge no event of Force Majeure
(as defined in such Project Document) has occurred
thereunder and (z) that the copy thereof delivered to Eximbank is
true, correct and complete. Eximbank shall have received
evidence or copies of all Governmental Approvals set forth in
Schedule 5.01(t) hereto (other than those set forth in Part B
thereof), certified by a Financial Officer of the Borrower as being
in full force and effect and except as disclosed in such Schedule
5.01(t), not the object of a currently pending appeal.
(k) Construction Budget; Base Case Forecast. Eximbank shall
have received the Construction Budget and the Base Case Forecast,
each of which shall be in form and substance
satisfactory to Eximbank.
(l) Reports of Consultants. Eximbank shall have received the
Independent Engineer's Report.
(m) Financial Statements. Eximbank shall have received
copies of the most recent audited financial statements of CECI and
Ormat Industries and shall have received copies of the most recent
unaudited financial statements (if audited financial statements are
not otherwise available) of the Borrower, each other Obligor (other
than PNOC-EDC and the ECA Operation
Performance Bond Issuer) and CE International showing, for each
such Person, no material adverse change in the financial
condition of such Person since the date of the last financial
statements provided to Eximbank prior to the date of this
Agreement, and certificates dated the Guarantee Operative Date and
signed by a Financial Officer of each such Person stating that (x)
such financial statements are true, complete and correct and (y) no
material adverse change in the financial condition, operations,
properties, business or prospects of such Person has occurred since
the date of such financial statements.
(n) Acquisition List. The Borrower shall have delivered to
Eximbank the acquisition list of the Items, containing with respect
to each Item a brief description and the quantity and estimated
invoice cost and the estimated date of shipment, plus, for each
Item, a copy of the Purchase Contract for such Item. Such Purchase
Contracts shall not contravene any applicable statute or public
policy of the United States. The list shall include the Supplier's
DUNS numbers, and the product SIC Codes for each Item on the list.
(o) Evidence of Authority. Eximbank shall have received
evidence of the authority of the Borrower to enter into this
Agreement, the Eximbank Note, the Bank Credit Agreement, the
Disbursement Agreement, the Collateral Agency Agreement and the
Security Documents and the other documents required by this
Agreement and the Bank Credit Agreement as of the date hereof, and
the names, specimen signatures and evidences of authority of the
person signing this Agreement, the Eximbank Note, the
Eximbank Guarantee Agreement, the Bank Credit Agreement, the Bank
Notes, the Disbursement Agreement, the Collateral Agency
Agreement and the Security Documents and the other documents
required by this Agreement and the Bank Credit Agreement as of the
date hereof, or who, as of the date hereof, will otherwise act as
representatives of the Borrower in the operation of the Eximbank
Guarantee Agreement and the Eximbank Credit.
(p) Notice to Proceed and Construction Contractor's and
Construction Supplier's Representation. The Borrower shall have
delivered to Eximbank copies of the Notice to Proceed under (and as
defined in) the Construction Contract and the Notice to Proceed
under (and as defined in) the Supply Contract, each of which shall
have been issued on or prior to the date hereof. Eximbank shall
have received certificates signed by authorized representatives of
each of the Construction Contractor and the Construction Supplier
to the effect that (i) as of the date hereof the Scheduled
Completion Date is July 1, 1996 or such later date (which is
acceptable to Eximbank) as shall correspond to any extension of the
milestone date set forth in Section 4.1.1 of the Energy Conversion
Agreement for the achievement of the Completion Date (as defined in
the Energy Conversion Agreement), (ii) as of the date hereof the
Guaranteed Substantial Completion Date is the earlier of (x) the
date 90 days after the occurrence of ECA Completion and (y)
December 1, 1996, or (in case of clause (y)) such later date (which
is acceptable to Eximbank) as shall
correspond to any amended Guaranteed Substantial Completion Date
under the Construction Contract and the Supply Contract,
(iii) the Borrower is not in default under the Construction
Contract or the Supply Contract, (iv) the Construction Contractor
is not entitled to any change orders under the Construction
Contract and the Construction Supplier is not entitled to any
change orders under the Supply Contract (in each case, other than
change orders previously disclosed to Eximbank in writing) on such
date and is not then aware of any other change orders
required under the Construction Contract or the Supply Contract and
(v) to the best of the Construction Contractor's or the
Construction Supplier's (as the case may be) knowledge, after
reasonable inquiry, no Force Majeure event (as defined in each of
the Construction Contract and the Supply Contract) has occurred.
(q) Project Site. Eximbank shall have received (i) an
opinion of counsel to the Borrower to the effect that PNOC-EDC has
valid legal and registered title to, or an easement over, those
portions of the Site not owned prior to the date hereof by the
Republic or a Governmental Authority thereof free of Liens (other
than Liens of or arising through the Borrower, the
Construction Contractor or the Construction Supplier), which
opinion shall be from counsel and in form and substance
satisfactory to Eximbank, and (ii) a certificate of each of the
Borrower the Construction Contractor that PNOC-EDC has granted them
and their respective designees full access to and the
ability to use the Site, so that the Borrower and/or the
Construction Contractor and their respective designees may fully
perform the their respective obligations under the Energy
Conversion Agreement and their respective related obligations.
(r) No Default; Representations and Warranties.
Immediately before and after the initial Utilization:
(i) No Construction Credit Default or Event of Default
shall have occurred and be continuing; and
(ii) all representations and warranties made by the
Borrower and any Obligor which is an Affiliate of the Borrower
and contained herein or in the Project Documents (other than the
Insurance Contracts, Governmental Approvals or any other
agreement, commitment or understanding referred to in
subsection (xiii) of the definition of "Operating Agreements"
in Schedule X) shall be true and correct in all material
respects with the same effect as though such representations and
warranties had been made on and as of the Guarantee
Operative Date except where expressed to be made only as of an
earlier date.
(s) Security. The Security, in form and substance
satisfactory to Eximbank, shall have been duly created, perfected
and, where appropriate, registered, to create a first priority
security interest and charge over the Collateral in existence at
the date hereof. Without limitation to the preceding sentence, the
Borrower shall have duly authorized, executed and delivered or, as
the case may be, provided:
(i) acknowledgment copies of proper financing statements
or other instruments duly filed under the Applicable Law of
each jurisdiction as may be necessary or, in the reasonable
opinion of Eximbank, desirable to perfect the charges and
security interests purported to be created by the Security
Documents;
(ii) certified copies of requests, for information or
copies, or equivalent reports, listing the financing
statements and instruments referred to in clause (i) above and
all other effective financing statements that name the
Borrower as debtor and that are filed in the jurisdictions
referred to in said clause (i), together with copies of such
other financing statements and instruments (none of which shall
cover the Collateral except to the extent evidencing
Construction Period Permitted Liens);
(iii) evidence of the completion of all other recordings
and filings of, or with respect to, the Security Documents as
may be necessary or, in the reasonable opinion of Eximbank,
desirable to perfect the security interests purported to be
created by the Security Documents; and
(iv) evidence that all other actions necessary or, in
the reasonable opinion of Eximbank, desirable to perfect and
protect the security interests purported to be created by the
Security Documents have been taken.
(t) Consent and Approvals. There shall have been obtained,
or there shall have been made arrangements, satisfactory to
Eximbank, for obtaining during the period prior to the Project
Completion Date, in addition to the Project Documents, the
governmental, corporate, creditors', shareholders' and other
licenses, approvals or consents listed in Schedule 5.01(t) hereto
and all other governmental, corporate, creditors, shareholders' and
other necessary licenses, approvals or consents (other than with
respect to Eximbank) for: (i) the financing by each of the Banks
and the Issuing Bank under the Bank Credit Agreement; (ii) the
carrying on of the business of the Borrower as it is
presently carried on and is contemplated to be carried on; (iii)
the carrying out of the Project; (iv) the due execution and
delivery of, and performance under, each Project Document which has
been entered into at the date hereof, the Security, and any
documents in implementation of any thereof; and (v) the
remittance to Eximbank and the Collateral Agent and by the
Collateral Agent to the Secured Parties or their respective
assignees, in Dollars, of all monies payable pursuant to each
Project Document which has been entered into on the date hereof,
and any documents in implementation of any thereof.
(u) No Project Document Default; Governmental Approvals.
Each of the Project Documents which has been entered into or which
is required to have been entered into on the Guarantee Operative
Date shall be in full force and effect and no material breach or
default shall have occurred under such Project
Document. No event of Force Majeure (as defined in any of the
Energy Conversion Agreement, the Supply Contract and the
Construction Contract) shall have occurred which has had, or in the
reasonable judgment of Eximbank is reasonably likely to have, a
Material Adverse Effect. No events shall have occurred
pursuant to which a claim could be made by the Agent on behalf of
the Banks under the Eximbank Guarantee Agreement.
(v) Costs; Construction Progress. Eximbank and the
Independent Engineer shall be satisfied that (i) the costs and
expenses theretofore incurred by the Borrower and to be incurred by
the Borrower prior to the latest date on which the Maturity Date
can be expected to occur will not exceed $217,268,000 and (ii) the
Financed Portion of the costs incurred by the Borrower after
November 9, 1992 and before the Maturity Date for the purchase in
the United States and export to the Republic of the Items will
equal the difference between (x) the Total Commitment and (y) 100%
of the Guarantee Exposure Fee.
(w) Insurance. Eximbank shall have received a certificate
from the Insurance Consultant stating that the insurance policies
required pursuant to Section 7.03 hereof to be in effect on the
date hereof are in full force and effect.
(x) Fees and Expenses. The Borrower shall have paid or
arranged for payment of fees, expenses and other charges then due
and payable by it under this Agreement.
(y) Ormat Waiver. The Borrower shall have delivered to
Eximbank evidence, satisfactory to Eximbank, that Ormat has waived
any and all rights to indemnification from PNOC-EDC under the Site
Agreement, whether then existing or thereafter arising.
Section 5.02. Conditions Precedent to Eximbank
Disbursement. As conditions precedent to Eximbank's obligation to
disburse the Eximbank Credit, the documents described in paragraphs
(a) through (d) below shall have been received by Eximbank, each in
form and substance satisfactory to Eximbank and dated no earlier
than five (5) Business Days prior to the
proposed Disbursement Date, and the conditions described in
paragraphs (e) through (k) shall have been fulfilled on or before
the Disbursement Date, in a manner satisfactory to Eximbank:
(a) Eximbank Note. The executed Eximbank Note in the
principal amount of the requested Eximbank Disbursement.
(b) Opinions of Counsel. Signed legal opinions of counsel to
each Person listed on Section B of Schedule 5.01(c) hereto, each of
which shall be in form and substance and by counsel satisfactory to
Eximbank and shall be dated the Disbursement Date. The opinions of
White & Case, special New York counsel to the Borrower and CECI,
Castillo Laman Tan & Pantaleon, special Philippine counsel to the
Borrower and its Affiliates, Conyers, Dill and Pearman, special
Bermuda counsel to the Pledgors, shall be in the forms attached
hereto as, respectively, Annex C-1, Annex C-2 and Annex C-3.
(c) Evidence of Authority. Evidence of the authority of the
Borrower to enter into the Eximbank Note and the other
documents required by this Agreement, and the names, specimen
signatures and evidences of authority of the persons who will sign
this Agreement, the Eximbank Note and the other documents required
by this Agreement, or will otherwise act as
representatives of the Borrower in the operation of the Eximbank
Credit.
(d) Energy Conversion Agreement. A certification signed by
an authorized representative of the Borrower and expressed to be
effective as of the Disbursement Date, stating that the Borrower is
in compliance with the Energy Conversion Agreement.
(e) Security. The Security shall have been duly created,
perfected and, where appropriate, registered, to create a first
priority security interest and charge over the Collateral in
existence on the Disbursement Date in favor of the Collateral Agent
for the benefit of Eximbank.
(f) Project Completion. The Project Completion Date shall
have occurred.
(g) No Event of Default. No Default Event or Incipient
Default Event exists or will exist after giving effect to the
requested Eximbank Disbursement that has not been cured or
waived.
(h) Representations and Warranties. All the
representations and warranties made by the Borrower in Section 6.02
shall be true and correct in all material respects.
(i) Fees and Costs. The Commitment Fee due pursuant to
Section 3.03 and all costs and expenses required to be paid
pursuant to Section 11.07 and 11.08 shall have been paid by the
Borrower, and arrangements satisfactory to Eximbank shall have been
entered into for providing payment to Eximbank of the Credit
Exposure Fee required under Section 3.04. For the purposes of the
foregoing sentence, "arrangements satisfactory to Eximbank" shall
include, without limitation, (i) the direct payment of the Credit
Exposure Fee by the Borrower to Eximbank on or prior to the
Disbursement Date or (ii) the submission to Eximbank by the
Borrower of a Request for Eximbank Disbursement that includes a
request for Eximbank financing of the Credit Exposure Fee in the
form provided in Annex B hereto.
(j) Debt Reserve Cash Collateral Account. The Debt Reserve
Account shall be funded in an amount equal to at least
$5,000,000.
(k) Unforeseen Events. No event now unforeseen has
occurred which, in the reasonable judgment of Eximbank, would
render unlikely the performance by the Borrower of its
obligations under this Agreement and the other Financing
Documents.
Section 5.03. No Waivers. No course of dealing or waiver by
Eximbank in connection with any condition to the Eximbank
Disbursement under this Agreement shall impair any right, power or
remedy of Eximbank with respect to any other condition of the
Eximbank Disbursement, or be construed to be a waiver thereof.
Section 5.04. Representation and Warranty. The acceptance of
the benefits of the Eximbank Disbursement shall constitute a
representation and warranty by the Borrower to Eximbank that all
the conditions specified in Section 5.02 hereof have been
satisfied or waived as of that time.
Section 5.05. Request for Eximbank Disbursement. The
Borrower may, no earlier than five (5) Business Days prior to the
proposed Disbursement Date, submit to Eximbank a completed and duly
executed Request for Eximbank Disbursement; provided,
however, that no Eximbank Disbursement shall be made in respect of
such Request for Eximbank Disbursement until the conditions set
forth in Article V have been fulfilled or waived. The
Request for Eximbank Disbursement shall be executed by an
authorized representative of the Borrower, and shall be
accompanied by (i) true, correct and complete copies of all the
Eximbank Certificates and (ii) a written undertaking from the Agent
in the form of Exhibit 1 to Annex B hereto. In no event shall the
maximum amount of the Eximbank Disbursement exceed the aggregate of
the Dollar amounts certified by Eximbank in the accompanying
Eximbank Certificates as amounts eligible for
Eximbank support and 100% of the Credit Exposure Fee.
Notwithstanding anything to the contrary contained herein, the
Borrower may only submit one (1) Request for Eximbank
Disbursement under this Agreement.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES
Section 6.01. Representations and Warranties with Respect to
Guarantee Operative Date. In order to induce Eximbank to enter
into this Agreement and each of the other Financing
Documents to which it is a party, to issue the Eximbank Guarantee
Agreement and to establish the Eximbank Credit, the Borrower makes
the following representations, warranties and agreements as of the
date hereof and as of the Guarantee Operative Date, which shall
survive the execution and delivery of this Agreement and the other
Financing Documents to which Eximbank is a party and the
disbursement and repayment of the Eximbank Credit:
(a) Corporate Status. The Borrower (i) is a duly organized
and validly existing corporation in good standing under the laws of
the Republic, (ii) is duly qualified to do business as a foreign
corporation under the laws of each jurisdiction in which the
character of the properties owned or leased by it or in which the
transaction of its business as presently conducted or
proposed to be conducted makes such qualification necessary and
(iii) has full power and authority to own the property and assets
owned by it and to lease the properties leased by it and to
transact the business in which it is engaged or proposes to be
engaged and to do all things necessary or appropriate in respect of
the Project and to consummate the transactions contemplated by the
Project Documents in effect or required to be in effect as of each
date this representation is made or deemed made.
(b) Corporate Power and Authority. The Borrower has the
corporate power and authority to execute and deliver, and to
perform the terms and provisions of, each of the Project
Documents to which it is party and has taken all necessary
corporate action to authorize the execution, delivery and
performance by it of each of such Project Documents as have been
executed and delivered as of each date this representation and
warranty is made. The Borrower has, or in the case of the
Project Documents other than this Agreement, by the Guarantee
Operative Date will have, duly executed and delivered each of the
Project Documents to which it is party, and each of such Project
Documents constitutes or, in the case of each such other Project
Document when executed and delivered, will constitute, the legal,
valid and binding obligations of the Borrower and enforceable in
accordance with its respective terms, except as the
enforceability thereof may be limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' tights generally and
(b) general equitable principles, regardless of whether the issue
of enforceability is considered in a proceeding in equity or at
law.
(c) No Violation. Neither the execution and delivery by the
Borrower of the Project Documents to which it is a party, nor the
Borrower's compliance with or performance of the terms and
provisions thereof, nor the use of the proceeds of the Loans or the
Eximbank Credit as contemplated by the respective Financing
Documents (i) will contravene or violate any provision of any
Applicable Law to which the Borrower, any of its assets or the
Project is subject, (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 (except any Permitted Liens) upon any of the property or
assets of the Borrower pursuant to the terms of any indenture,
mortgage, deed of trust, credit agreement, loan agreement or any
other agreement, contract or instrument to which the Borrower is a
party or by which it or any of its property or assets is bound or
to which it may be subject, (iii) will violate any provision of the
Articles of Incorporation or By-Laws of the Borrower or (iv) will
require any consent or approval of any Governmental Authority or
any creditor, shareholder, director or officer of the Borrower
which has not been obtained.
(d) Capitalization. (i) The authorized capital stock of the
Borrower consists of 2,200,000 shares of common stock, par value
P28 per share, of which 550,000 shares are duly and validly issued,
outstanding, fully paid and non-assessable; (ii) 263,996 of such
issued shares of common stock (representing approximately 48% of
such 550,000 issued shares) are owned and held by CE Philippines,
a wholly-owned subsidiary of CE International (a wholly-owned
subsidiary of CECI); (iii) 285,996 of such issued shares of common
stock (representing approximately 52% of such 550,000 issued
shares) are owned and held by Ormat Cebu; and (iv) eight (8) of
such issued shares of common stock are
directors' qualifying shares. Except as described in the
Shareholder's Agreement, the Funding Agreement and the
Convertible Subordinated Notes, the Borrower does not have out-
standing (i) any securities convertible into or exchangeable for
its capital stock or (ii) any rights to subscribe for or to pur-
chase, or any options for the purchase of, or any agreements,
arrangements or understandings providing for the issuance (con-
tingent or otherwise) of, or any calls, commitments or claims of
any character relating to, its capital stock.
(e) Subsidiaries. The Borrower has no Subsidiaries and owns
no equity interest in any other Person.
(f) Single-Purpose Borrower. The Borrower has not incurred
any liabilities other than in connection with its participation in
the transactions contemplated by the Project Documents. The
Borrower (i) has not engaged in any business other than the design,
development, ownership, financing, construction and operation of
the Project and (ii) is not a party to any
agreement, contract or commitment (other than (w) the agreements
identified in clauses (i) through (xiii) of the definition of the
term Operating Agreements set forth in Schedule X hereto, (x) the
Financing Documents, (y) agreements, contracts or commitments
contemplated by the O&M Parameters (including those relating to
employee training, secondment of employees and vehicle rentals),
the then-current Construction Budget or the then-current Annual
Budget and (z) agreements, contracts and commitments in respect of
Permitted Indebtedness) which, individually, creates an annual
financial obligation of the Borrower in excess of $100,000 (or the
equivalent in other currency) or which would cause the
aggregate annual financial obligations of the Borrower under all
agreements, contracts and commitments (other than those specified
in clauses (w) through (z) immediately above) to which the
Borrower is a party to exceed $300,000 (or the equivalent in other
currency).
(g) Financial Statements; Financial Condition; Undisclosed
Liabilities; Etc.
(i) The statements of financial condition of the Borrower
most recently furnished to Eximbank present fairly the
financial condition of the Borrower at the date of such
statements of financial condition and the results of the
operations of the Borrower for such fiscal year. Such
financial statements have been prepared in accordance with
Philippine generally accepted accounting principles and
practices consistently applied. Since the date of such
financial statements, no event, condition or circumstance
(including without limitation Force Majeure as defined in
Articles 13.1(a) and 13.1(b) of the Energy Conversion
Agreement) has existed or has occurred which is reasonably
likely to have a Material Adverse Effect.
(ii) Except as fully reflected in the financial statements
referred to in Section 6.01(g)(i), there are no liabilities or
obligations with respect to the Borrower of any nature
whatsoever (whether absolute, accrued, contingent or otherwise
and whether or not due) for the period to which such financial
statements relate which, either individually or in the
aggregate, is reasonably likely to have a Material Adverse
Effect. The Borrower does not know of any reasonable basis for
the assertion against the Borrower of any liability or
obligation of any nature whatsoever for such relevant period
that is not fully reflected in the financial statements
referred to in Section 6.01(g)(i) which, either individually
or in the aggregate, is reasonably likely to have a Material
Adverse Effect.
(h) Litigation. Except as disclosed in Schedule 6.01(h)
hereto, there is no action, suit, investigation or proceeding by or
before any court, arbitrator, administrative agency or other
Governmental Authority (including without limitation any appeal by
any Person of a Governmental Approval) pending or, to the best of
the Borrower's knowledge, threatened against or affecting the
Borrower or any of its properties, revenues or assets or the
Project or the Site which has had or is reasonably likely to have
a Material Adverse Effect. The Borrower is not in default with
respect to any order of any court, arbitrator, administrative
agency or other Governmental Authority. There is no injunction,
writ, preliminary restraining order of any nature issued by an
arbitrator, court of other Governmental Authority directing that
any of the material transactions provided for in any of the Project
Documents not be consummated as herein or therein
provided. To the best of the Borrower's knowledge, there is no
action, suit, investigation or proceeding by or before any court,
arbitrator, administrative agency or other Governmental Authority
(including without limitation any appeal by any Person of a
Governmental Approval) pending or threatened against or affecting
any party to any Project Document which is an Affiliate of the
Borrower or any of their properties, revenues or assets, and the
Borrower does not have knowledge of any such action, suit,
investigation or proceeding pending or threatened against or
affecting any other party to any Project Document or any of their
properties, revenues or assets, in each case described in this
sentence which has had or is reasonably likely to have a Material
Adverse Effect.
(i) True and Complete Disclosure. All factual information
(taken as a whole, which, for the avoidance of doubt (i) shall not
include any information by way of projections, estimates or other
expressions of view as to future circumstances provided that such
projections, estimates or other expressions of view are expressed
in good faith and on the basis of reasonable
assumptions and (ii) shall be qualified by any disclaimers with
respect to such factual information provided by the Borrower to
Eximbank, provided, however, that for purposes of this Section
6.01(i) the first sentence of the third paragraph of the
disclaimer on the third page of the Information Memorandum shall be
deemed to read as set forth in Schedule 6.01(i) hereto)
heretofore or contemporaneously furnished by or on behalf of the
Borrower, CECI or any Affiliate of the Borrower in writing to
Eximbank (including without limitation such factual information as
contained in the Information Memorandum and the Project
Documents), and all other such factual information (taken as a
whole) hereafter furnished by or on behalf of the Borrower or CECI
in writing to Eximbank will be, true and accurate in all material
respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any fact
necessary to make such information (taken as a whole) not
misleading in any material respect at such time in light of the
circumstances under which such information was provided. There are
in existence no documents or agreements which have not been
disclosed to Eximbank which are material in the context of the
Project Documents or which have the effect of varying any of the
Project Documents.
(j) Tax Returns and Payments. The Borrower has filed all tax
returns required by Applicable Law to be filed by it and has paid
all income taxes payable by it which have become due
pursuant to such tax returns and all other taxes and assessments
payable by it which have become due, other than those not yet
delinquent and except for those contested in good faith and for
which adequate reserves have been established. The Borrower has
paid, or has provided adequate reserves (in the good faith
judgment of the management of the Borrower) for the payment of, all
national, regional or local income taxes applicable for all prior
Fiscal Years and for the current Fiscal Year to the date hereof.
(k) Governmental Approvals. All Governmental Approvals
necessary under Applicable Law in connection with (i) the due
execution and delivery of, and performance by the Borrower of its
obligations and the exercise of its rights under, the Project
Documents in effect or required to be in effect as of each date
this representation is made or deemed made, (ii) the grant by each
of the Borrower, CECI, CE Philippines and Ormat Cebu of the Liens
created pursuant to the Security Documents and the Funding
Agreement and the validity, enforceability and perfection thereof
and the exercise by Eximbank or the Collateral Agent of its rights
and remedies thereunder and (iii) the construction and operation of
the Project as contemplated by the Project Documents, to be
obtained by the Borrower are, and to be obtained by any other
Person (to the best knowledge of the Borrower) are, set forth in
Schedule 5.01(t). Each of the Governmental Approvals set forth in
Part A of Schedule 5.01(t) and each other Governmental Approval
obtained by the Borrower after the date of this Agreement but on or
prior to the date this representation is made, has been duly
obtained or made, is validly issued, is in full force and effect,
is not the object of a currently pending appeal, is held in the
name of the Person identified in Schedule 5.01(t) and is free from
any condition or requirement compliance with which is reasonably
likely to have a Material Adverse Effect or which the Borrower does
not reasonably expect to be able to satisfy. There is no
proceeding (including without limitation any appeal by any Person)
pending or, to the best knowledge of the Borrower, threatened which
is reasonably likely to result in the rescission, termination,
material modification, suspension or determination of invalidity or
lack of effectiveness of any such Governmental Approval. The
information set forth in each application and other written
material submitted by the Borrower to the applicable Governmental
Authority in connection with each such Governmental Approval is
accurate and complete in all material respects. The Governmental
Approvals set forth in Part B of Schedule 5.01(t) are required
solely in connection with later stages of construction and
operation of the Project. The Borrower has no reason to believe
that any Governmental Approval that has not been obtained by the
Borrower, but which will be required in the future, will not be
granted to it in due course, on or prior to the date when required
and free from any condition or requirement compliance with which is
reasonably likely to have a Material Adverse Effect or which the
Borrower does not reasonably expect to be able to satisfy. The
Project, if constructed in accordance with the Construction
Contract, the Supply Contract and the other Project Documents, will
conform to and comply with all covenants, conditions, restrictions
and reservations in the Governmental Approvals and the Project
Documents applicable thereto and all Applicable Laws. The
Borrower has no reason to believe that the Collateral Agent will
not be entitled, without undue expense or delay, to the benefit of
each Governmental Approval set forth on Schedule 5.01(t) upon the
exercise of remedies under the Security Documents. Eximbank has
received a true and complete copy of each Governmental
Approval heretofore obtained or made by the Borrower.
(l) Compliance with Statutes, Etc.
(i) The Borrower is in compliance with all Applicable
Laws in respect of the conduct of its business and the
ownership of its property (including, without limitation,
Applicable Laws relating to environmental standards and
controls and resettlements and Applicable Laws relating to the
maintenance of debt to equity ratios).
(ii) Without limitation to the foregoing clause (i), the
Borrower's business and the Project are being carried out in
compliance with (x) applicable Philippine environmental
guidelines and (y) applicable Philippine law regarding
resettlement.
(m) Environmental Matters. To the best of the Borrower's
knowledge, neither the Site nor the Plant (nor any other property
with respect to which the Borrower has retained or assumed
liability either contractually or by operation of the law) has been
affected by any Hazardous Material in a manner that is reasonably
likely to give rise to any material liability of the Borrower under
any Environmental Law or which has had or is reasonably likely to
have a Material Adverse Effect.
(n) Patents, Licenses, Franchises and Formulas. The
Borrower owns or has the right to use all the patents, trade-marks,
permits, service marks, trade names, copyrights, licenses,
franchises and formulas, or rights with respect thereto, and has
obtained assignments of all leases and other rights of whatever
nature, necessary for the present and proposed conduct of its
business and the carrying out of the Project in the manner
contemplated by the Project Documents, without any known conflict
with the rights of others which, or the failure to obtain which, as
the case may be, is reasonably likely to result in a Material
Adverse Effect.
(o) Submission to Law and Jurisdiction. As of the
Guarantee Operative Date, the choice of governing law for each of
the respective Project Documents in effect or required to be in
effect as of the Guarantee Operative Date will be recognized in the
courts of the Republic, and those courts will recognize and give
effect to any judgment in respect of such Project Document obtained
by or against the Borrower in the courts of the
jurisdictions to which the Borrower has submitted.
(p) Status of the Loans and the Eximbank Credit. The
Construction Financing Secured Obligations constitute, and the
Eximbank Secured Obligations will constitute, direct,
unconditional, and general obligations of the Borrower and rank
senior as to priority of payment to all Subordinated Secured
Obligations and all Indebtedness of the Borrower described in
Section 8.05(i)(j) and not less than pari passu as to priority of
payment to all other Indebtedness of the Borrower. Except as
permitted by Section 8.01 of this Agreement, the Borrower has not
secured or agreed to secure any such other Indebtedness by any Lien
upon any of its present or future revenues or assets or capital
stock.
(q) Documents; Sufficiency of Project Documents.
(i) Eximbank has received a complete copy of each Project
Document in effect or required to be in effect as of each date
this representation is made or deemed made (including all
exhibits, schedules and disclosure letters referred to therein
or delivered pursuant thereto, if any) executed and delivered
prior to the date as of which this representation is made or
deemed made.
(ii) To the best of the Borrower's knowledge, the services
to be performed, the materials to be supplied and easements,
licenses and other rights granted or to be granted to the Borrower
pursuant to the terms of the Project Documents provide or will
provide the Borrower with all rights and property interests
required to enable the Borrower to obtain all services, materials
or rights (including access) required for the design, construction,
start-up, operation and maintenance of the Project, including the
Borrower's full and prompt performance of its obligations, and full
and timely satisfaction of all conditions precedent to the
performance by others of their obligations, under the Project
Documents, other than those services, materials or rights that
reasonably can be expected to be obtainable in the ordinary course
of business without material additional expenses or material
delay.
(r) Fees and Enforcement. Other than amounts that have been
paid in full or will have been paid in full by the Guarantee
Operative Date (or, for the purposes of Section 6.02 hereof, the
Disbursement Date), no fees or taxes, including without
limitation stamp, transaction, registration or similar taxes, are
required to be paid for the legality, validity, or enforceability
of this Agreement or any of the other Project Documents in effect
or required to be in effect as of each date this representation is
made or deemed made. This Agreement and each of such Project
Documents executed and delivered as of the date this representation
is made or deemed made are each in proper legal form under the laws
of the Republic, and under the respective governing laws selected
in such Project Documents, for the enforcement thereof in such
jurisdiction without any further action on the part of the
Collateral Agent or Eximbank.
(s) Utility Availability. Arrangements reflected
accurately and completely in the Construction Budget have been made
under the Construction Contract, the Supply Contract, the Energy
Conversion Agreement or otherwise on commercially reasonable terms
for the provision of all services, materials and utilities
reasonably necessary for the construction of the Project.
(t) Availability and Transfer of Foreign Currency. Except as
disclosed in Schedule 6.01(t) to this Agreement, all requisite
foreign exchange control approvals and other authorizations, if
any, by the Republic or any department or agency thereof have been
validly obtained and will be kept current and in full force and
effect to assure (i) the ability of the Borrower to receive, and
the ability of any other party to make, any and all payments to the
Borrower contemplated by the Project Documents, (ii) the
availability of Dollars to enable the Borrower to perform all of
its obligations under the Financing Documents or any of the other
Project Documents, as the case may be, in accordance with their
respective terms, and (iii) the ability of the Borrower to
convert all sums received in Peso amounts from PNOC-EDC under the
Energy Conversion Agreement and the PNOC-EDC Consent Agreement and
from the Republic under the Performance Undertaking and the
Republic Consent Agreement, including any Peso amounts
representing SFRI Fees, from Pesos to Dollars, immediately upon
receipt thereof, and to use the Dollars as necessary to perform all
of its obligations under the Project Documents, in accordance with
their respective terms. Except as disclosed in Schedule 6.01(t) to
this Agreement, there are no restrictions or requirements which
limit the availability or transfer of foreign exchange, or the
conversion to a foreign exchange, for the purpose of the
performance by the Borrower of its obligations under the Financing
Documents, this Agreement or under any of the other Project
Documents.
(u) Construction Budget. (i) The Construction Budget as
in effect on the date hereof is attached as Schedule 6.01(u) to
this Agreement. The Construction Budget accurately specifies all
costs and expenses incurred and, to the best of the Borrower's
knowledge, anticipated to be incurred, prior to the latest date on
which the Maturity Date can be expected to occur to construct and
finance the construction of the Project in the manner contemplated
by the Project Documents. In addition, to the best of the
Borrower's knowledge, the amount of all costs and expenses required
to be paid or incurred prior to the latest date on which the
Maturity Date can be expected to occur to construct and finance the
construction of the Project in the manner contemplated by the
Project Documents does not exceed the amount reflected in the
Construction Budget.
(ii) To the best of the Borrower's knowledge, all
projections and budgets (including the Construction Budget and
the Base Case Forecast) furnished or to be furnished to the
Agent, the Collateral Agent, the Issuing Bank, the Banks or
Eximbank by or on behalf of the Borrower and the summaries of
significant assumptions related thereto (w) have been and will
be prepared with due care, (x) fairly present, and will fairly
present, the Borrower's expectations as to the matters covered
thereby as of their date, (y) are based on, and will be based
on, reasonable assumptions as to all factual and legal matters
material to the estimates therein (including interest rates and
costs) and (z) are in all materials respects consistent with, and
will be in all material respects consistent with, the provisions of
the Project Documents.
(v) Title; Liens. The Borrower has good and valid title to
all of its other properties and assets, in each case, free and
clear of all Liens other than Permitted Liens. No mortgage or
financing statement or other instrument or recordation covering all
or any part of the property or assets of the Borrower is on file in
any recording office, except such as relate to Liens described in
paragraphs (a) and (b) of Section 8.01 hereof.
(w) Transactions with Affiliates. The Borrower is not a
party to any contracts or agreements with, or any other commitments
to, whether or not in the ordinary course of business, any
Affiliate, which are individually valued in excess of $100,000 or
in the aggregate valued in excess of $300,000, except for the
Funding Agreement (and the agreements for the transactions
contemplated therein), the Pledge Agreement, the Supply Side
Agreement and any other contracts, agreements or commitments that
are contemplated in the O&M Parameters (including those relating to
employee training, vehicle rentals and secondment of employees) or
in the Funding Agreement.
(x) No Additional Fees. Other than as expressly set forth in
the Base Case Forecast and the Construction Budget, the Borrower
has not paid or become obligated to pay any fee or commission to
any broker, finder or intermediary for or on account of arranging
the financing of the transactions contemplated by the Project
Documents.
(y) Regulation of Parties. None of the Borrower, its
Affiliates nor any of the Secured Parties or Eximbank is or will
be, solely as a result of the participation by such parties
separately or as a group in the transactions contemplated hereby or
by any other Project Document, or as a result of the ownership, use
of operation of the Project, subject to regulation by any
Governmental Authority of the United States as a "public utility",
an "electric utility", an "electric utility holding company", a
"public utility holding company", a "holding company", or an
"electrical corporation" or a subsidiary or affiliate of any of the
foregoing under any Applicable Law of the United States (including,
without limitation, PUHCA and FPA) or by any Governmental Authority
of the Republic as a "public utility" under any Applicable Law of
the Republic. So long as the owner and operator of the Project is
an "exempt wholesale generator" under Section 32 of PUHCA or a
"foreign utility company" under Section 33 of PUHCA, none of the
Secured Parties will by reason of its or their ownership or
operation of the Project upon the exercise or remedies under the
Security Documents be subject to regulation by any Governmental
Authority of the United States as a "public utility", an "electric
utility", an "electric utility", an "electric utility holding
company", a "holding company", or an "electric corporation" or a
subsidiary or affiliate of any of the foregoing under any
Applicable Law of the United States (including, without
limitation, PUHCA and FPA).
(z) Regulatory Status. The Borrower is not subject to
regulation as a "subsidiary company" of a holding company under
PUHCA.
(aa) ERISA and Employees. The Borrower does not sponsor,
maintain, administer, contribute to, participate in, or have any
obligation to contribute to or any liability under, any Plan nor
since the date which is six years immediately preceding the
Guarantee Operative Date has the Borrower established, sponsored,
maintained, administered, contributed to, participated in, or had
any obligation to contribute to or liability under, any Plan. A
Termination Event has not occurred with respect to any Plan the
occurrence of which has had or to the Borrower's knowledge is
reasonably likely to result in a Material Adverse Effect.
Neither the Borrower nor any ERISA Affiliate has failed to make a
required contribution or payment to a Multiemployer Plan when due,
the failure of which has had or to the Borrower's knowledge is
reasonably likely to result in a Material Adverse Effect. To the
Borrower's knowledge, no accumulated funding deficiency as defined
in Section 412 of the Code has been incurred nor has any funding
waiver from the Internal Revenue Service been received or requested
with respect to any Pension Plan, nor has the Borrower or any ERISA
Affiliate failed to make any contribution or to pay any amount due
and owing as required by Section 412 of the Code, Section 302 of
ERISA or the terms of any Pension Plan, nor has there been any
event requiring disclosure under Section 4041(c)(3)(C) or Section
4063 of ERISA with respect to any Pension Plan, the event or
occurrence of which has had or to the Borrower's knowledge is
reasonably likely to result in a Material Adverse Effect. To the
Borrower's knowledge, the Borrower and each ERISA Affiliate has met
its minimum funding requirements under ERISA and the Code with
respect to the Plans and all benefit liabilities under each Pension
Plan are being funded in accordance with applicable legal
requirements and reasonable actuarial assumptions and methods as
set forth in ERISA and the Code. To the Borrower's knowledge, no
material proceeding, claim, lawsuit and/or investigation exists or,
to the best of the Borrower's knowledge, is threatened concerning
any (i) Pension Plan, or (ii) Multiemployer Plan, the occurrence of
which has had or is reasonably likely to result in a Material
Adverse Effect. Neither the Borrower nor, to the Borrower's
knowledge, any ERISA Affiliate has incurred any liability to the
PBGC other than for insurance premiums with respect to a Pension
Plan, the payment of which is not yet due.
(bb) Investment Company Act. Neither the Borrower nor any of
its Affiliates is an "investment company" or a company "controlled"
by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended.
(cc) No Re-Export of Items. To the best of the Borrower's
knowledge, no Items will be re-exported from the Republic
(whether as discrete Items, components of another product or part
of a project), nor will any Item be used or sold to any Person in
any Excluded Country.
(dd) Special Representation, Warranty and Covenant. The
Borrower represents, warrants and covenants that it has not
employed, does not employ and will not employ (i) as an agent or
attorney in connection with the Eximbank Credit any person who as
an employee of Eximbank had participated personally and
substantially in the Eximbank Credit or (ii) as an agent or
attorney to appear personally in connection with the Eximbank
Credit any person who had been an employee of Eximbank within two
years of being employed by the Borrower and had official
responsibility for the Eximbank Credit at any time during the last
year of that person's employment by Eximbank.
Section 6.02 Representations and Warranties with Respect to
the Disbursement Date. In order to induce Eximbank to make the
Eximbank Credit available to the Borrower on the Disbursement Date,
the Borrower confirms the representations and warranties set forth
in Section 6.01 as if made as of the Disbursement Date (except
where specified to be made as of a specified date).
Section 6.03 Acknowledgment. The Borrower acknowledges that
it has made the foregoing representations and warranties with the
intention of persuading Eximbank to enter into this Agreement and
the Eximbank Guarantee Agreement and to make the Eximbank Credit
available and that Eximbank has entered into this Agreement and the
Eximbank Guarantee Agreement on the basis of, and in full reliance
on, each of such representations and
warranties. The Borrower warrants to Eximbank that each of such
representations is true and correct in all material respects as of
the date of this Agreement and that none of them omits any matter
necessary to make such representation not misleading in any
material respect. The rights and remedies of Eximbank in relation
to any misrepresentations or breach of warranty on the part of the
Borrower shall not be prejudiced by any investigation by or on
behalf of Eximbank into the affairs of the Borrower, by the
execution, delivery or performance of this Agreement or any other
Financing Document or by any other act or thing which may be done
by or on behalf of Eximbank in connection with this Agreement or
any other Financing Document and which might, apart from this
Section, prejudice such rights or remedies.
ARTICLE VII. AFFIRMATIVE COVENANTS.
With respect to provisions of this Article VII so
specifying, from and after the Disbursement Date and, with
respect to all remaining provisions of this Article VII, from and
after the execution and delivery of this Agreement, in each case
until the Eximbank Credit is paid in full, except as otherwise
waived pursuant to the next two succeeding sentences, the
Borrower covenants and agrees as provided in this Article VII.
Provisions of this Article VII specifying effect from and after the
Disbursement Date and provisions requiring consultations with or
the furnishing of documents or other information to Eximbank or
requiring the consent or approval of Eximbank to the taking or
omission of any action may only be waived by Eximbank and in
writing. All other provisions of this Article VII may be waived
with effect during the period prior to the Disbursement Date by the
Required Secured Parties and in writing and, thereafter, by
Eximbank and in writing.
Section 7.01. Information Covenants. The Borrower shall
furnish to Eximbank:
(a) Quarterly Financial Statements. As soon as available
but, in any event, within 60 days (or 120 days in the case of the
fourth quarterly accounting period) after the close of each
quarterly accounting period in each Fiscal Year,
(i) two copies of complete unaudited statements of
financial condition of the Borrower as at the end of such
quarterly period with related statements of income and
retained earnings and statements of changes in financial posi-
tion for such quarterly period and for the elapsed portion of
the Fiscal Year ended with the last day of such quarterly per-
iod, in each case setting forth comparative figures for the
related periods in the prior Fiscal Year, all of which shall be
in form satisfactory to Eximbank and certified by the chief
financial officer of the Borrower, subject to normal year-end
audit adjustments;
(ii) a report on any event or condition materially and
adversely affecting or which is reasonably likely to have a
Material Adverse Effect; and
(iii) a statement of all financial transactions in such
Quarter between the Borrower and any Affiliate of the
Borrower, including a certification that such transactions
were on ordinary commercial terms negotiated on an arms-length
basis.
(b) Annual Financial Statements. As soon as available but,
in any event, within 120 days after the close of each Fiscal Year,
two copies of the following, all in form satisfactory to Eximbank:
(i) statements of financial condition of the Borrower as at the end
of such Fiscal Year with the related statements of income and
retained earnings and statements of changes in finan-cial position
for such Fiscal Year, in each case setting forth comparative
figures for the preceding Fiscal Year and certified by the Auditors
(all such statements being in agreement with the Borrower's books
of account and prepared in accordance with Philippine generally
accepted accounting principles consistently applied), and (ii) a
report of the Auditors (x) stating that in the course of its
regular audit of the financial statements of the Borrower, which
audit was conducted in accordance with
Philippine generally accepted auditing standards, the Auditors
obtained no knowledge of any Incipient Default Event or Default
Event which has occurred and is continuing or, if in the opinion of
the Auditors such an Incipient Default Event or Default Event has
occurred and is continuing, a statement as to the nature thereof
and (y) certifying that, based on said financial
statements, the Borrower was in compliance with the financial
covenants contained in Section 8 as of the end of the relevant
Fiscal Year or, as the case may be, detailing any non-compliance
therewith.
(c) Financial Statements of CECI and Other Affiliates.
Within 30 days after the filing of the same with the United States
Securities and Exchange Commission, copies of the annual and
quarterly financial statements (consisting of a balance sheet and
the related statements of income, equity and cash flows) of CECI
and, concurrently therewith, copies of the annual and
quarterly financial statements (consisting of a balance sheet and
the related statements of income, equity and cash flows),
unaudited if audited are not available, of CE International, Ormat
Cebu and CE Philippines, certified by the chief financial officer
of CE International, Ormat Cebu or CE Philippines, as the case may
be; provided, however, that so long as CE International, Ormat Cebu
or CE Philippines engage in no business other than the holding of
their respective direct or indirect ownership
interests in the Borrower, the Borrower shall be deemed to have
complied with this Section 7.01(c) if on each date the Borrower
would otherwise be required to furnish financial statements of any
such Persons pursuant to this Section 7.01(c), the Borrower instead
furnishes a certificate of the chief financial officer of each such
Person certifying that such Person is engaged in no other business.
(d) Management Letters. Promptly after the Borrower's
receipt thereof, a copy of any "management letter" or other similar
communication received by the Borrower from the Auditors in
relation to the Borrower's financial, accounting and other systems,
management and accounts.
(e) Annual Operating Budget. As soon as available but, in
any event, within 60 days prior to (i) the Operation Date and,
thereafter, (ii) the commencement of each Fiscal Year, an annual
operating budget (the "Annual Budget") (including budgeted state-
ments of income and sources and uses of cash and balance sheets)
prepared by the Borrower and accompanied by a statement of the
chief financial officer of the Borrower to the effect that, to the
best of his or her knowledge, the budget is a reasonable estimate
for the period covered thereby. The first Annual Budget shall
cover the period from the Operation Date through the end of the
Fiscal Year in which the Operation Date occurs, and, if such period
consists of less than six (6) months, for the immediately
succeeding Fiscal Year. Each Annual Budget shall contain
complete, fair and accurate estimates (by principal components) of
Sales Proceeds, Operating and Maintenance Costs and Debt Service
for each Month covered by such Annual Budget based on the
Borrower's best projections at such time. Unless otherwise
consented to by Eximbank, the Annual Budget from year to year shall
be based on the same format as the Base Case Forecast, including
any amounts allocated for contingencies, and be
maintained on the same basis and provide sufficient detail to
permit a meaningful comparison. For each Annual Budget that is
expected to cover any period occurring after the Disbursement Date,
Eximbank (in consultation with the Independent Engineer) shall
review such Annual Budget, and Eximbank's response shall not be
unreasonably delayed. If Eximbank does not approve an Annual
Budget, Eximbank shall notify the Borrower of the items which are
disapproved and the reason for such disapproval. Until such Annual
Budget is so approved, the Annual Budget most
recently in effect shall continue to apply, except that any items
of the then proposed Annual Budget that have been approved shall
also be given effect. From time to time, but not more frequently
than once per Quarter, the Borrower may propose amendments to an
Annual Budget, and Eximbank (in consultation with the Independent
Engineer) may reject such proposal within thirty (30) Business Days
from the date the Borrower submits such proposal if in Eximbank's
reasonable judgment such amendment is not reasonably necessary or
advisable for operation of the Project and, if no such rejection is
made, such amendments shall become effective. Not later than three
(3) Business Days after the effective date of each Annual Budget
and of any amendment thereto, the Borrower shall provide a copy of
the same to the Collateral Agent.
(f) Officer's Certificates. At the time of the delivery of
the financial statements provided for in Section 7.01(a) and (b),
a certificate of a Financial Officer of the Borrower to the effect
that, to the best of his or her knowledge, no Incipient Default
Event or Default Event has occurred and is continuing or, if any
Incipient Default Event or Default Event has occurred and is
continuing, specifying the nature and extent thereof and what
action the Borrower is taking or proposes to take in response
thereto, which certificate shall, from and after the Disbursement
Date, set forth the calculations required to establish whether the
Borrower was in compliance with the provisions of Section 7.14,
8.03, 8.19 and 8.20.
(g) Notice of Default, Litigation, etc. (i) Immediately upon
the Borrower obtaining knowledge thereof, notice, by
facsimile, cable or telex, of any event which constitutes an
Incipient Default Event or Default Event, specifying the nature of
such Incipient Default Event or Default Event and any steps the
Borrower is taking to remedy the same; and (ii) promptly, and in
any event within 20 Business Days after an officer of the Borrower
obtains knowledge thereof:
(A) notice of any litigation or governmental proceeding
pending (x) against the Borrower (i) involving a claim in excess
of $500,000 (or the equivalent thereof in other
currency) or (ii) which is reasonably likely to have a
Material Adverse Effect or (y) with respect to any Project
Document;
(B) notice of any proposal by any Governmental Authority
to acquire compulsorily the Borrower, any of the Collateral or
a substantial part of the Borrower's business or assets;
(C) notice of any substantial dispute between the
Borrower or the Sponsor and any Governmental Authority
relating to the Project;
(D) notice of any change in the authorized officers or
directors referred to in Section 5.01(p) above, giving
certified specimen signatures of any new officer or director
so appointed and, if requested by Eximbank, satisfactory
evidence of the authority of such new officer or director;
(E) notice of any actual or proposed termination,
rescission, discharge (otherwise than by performance),
amendment or waiver or indulgence under, any material
provision of any Project Document (other than by Eximbank);
(F) copies of any material notice or correspondence
received or initiated by the Borrower relating to a
Governmental Approval or other license or authorization
necessary for the performance by the Borrower of its
obligations under the Project Documents;
(G) notice of any Lien (other than a Permitted Lien)
becoming enforceable over any of the Borrower's assets;
(H) notice of any proposed material change in the nature
or scope of the Project or the business or operations of the
Borrower and any one or more events, conditions or
circumstances (including without limitation Force Majeure as
defined in Sections 13.1(a) and 13.1(b) of the Energy
Conversion Agreement) that exist or have occurred which are
reasonably likely to have a Material Adverse Effect;
(I) until the Eximbank Guarantee Agreement has terminated
in accordance with its terms, notice of the occurrence of any
event or act which could reasonably qualify as a Political Risk
(as defined in the Eximbank Guarantee Agreement);
(J) notice of or (in the case of items described in
clause (x)) copies of: (x) each funding waiver request filed
with respect to any Pension Plan and all communications
received or sent by the Borrower or any ERISA Affiliate with
respect to such request; and (y) the failure of the Borrower or
any ERISA Affiliate to make a required installment or payment
under Section 412 of the Code, Section 302 of ERISA or the terms
of any Pension Plan by the due date (other than the quarterly
contributions described in Section 302(e) of ERISA or Section
412(m) of the Code);
(K) notice of the occurrence of any Termination Event
which has had or is reasonably likely to result in a Material
Adverse Effect in connection with any Pension Plan or any trust
thereunder, specifying the nature thereof, what action the
Borrower or the ERISA Affiliate has taken, is taking or proposes
to take with respect thereto and, when known, any action taken
or threatened by the United States Internal Revenue Service, the
United States Department of Labor or the PBGC with respect
thereto;
(L) copies of: (x) all notices of the PBGC's intent to
terminate any Pension Plan or to have a trustee appointed to
administer any Pension Plan; and (y) all notices from a
Multiemployer Plan sponsor concerning the imposition or amount
of withdrawal liability pursuant to Section 4202 of ERISA; or
(M) notice of the filing of an intent to terminate any
Pension Plan under a distress termination within the meaning of
Section 4041(c) of ERISA; or
(N) a copy of each agreement, commitment or understanding
(whether or not subject to the approval of Eximbank pursuant
to any other provision of this Agreement) executed by or on
behalf of the Borrower (excluding (x) the agreements set forth
in clauses (i) through (xi) of the definition of the term
"Operating Agreements" in Schedule X hereto but including
replacements thereof and (y) ordinary course agreements,
commitments or understandings entered into in the ordinary
course of business which are required to perform the O&M
Parameters and which (1) do not, individually, create a
financial obligation of the Borrower in excess of $200,000 and
(2) would not, in the aggregate, result in the expenditure of
funds in any Fiscal Year in excess of the amount budgeted for
Operating and Maintenance Costs (including the Contingent O&M
Amount) in the then-current Annual Budget for such Fiscal Year)
in connection with the Project, which notice shall specifically
refer to Section 7.01(g)(ii)(N) and, with respect to any such
agreement, commitment or understanding extending by its terms
beyond the Disbursement Date, request that
Eximbank confirm (prior to the Disbursement Date, after
consultation with the Agent) whether or not such agreement,
commitment or understanding shall constitute an Operating
Agreement, in which case such agreement, commitment or
understanding shall only constitute an Operating Agreement if
Eximbank shall so designate it as an Operating Agreement in a
writing delivered to the Borrower within 60 days of Eximbank's
receipt thereof.
(h) Implementation Reports. Prior to the Project
Completion Date, within 21 days of the end of each Month, a report,
in a form satisfactory to Eximbank, on the implementation and
progress of the Project, including (i) any factors materially and
adversely affecting or which are reasonably likely to materially
and adversely affect the carrying out of the Project and (ii)
copies of any reports received by the Borrower from any outside
technical consultant identifying any matter that is of material
adverse significance to the operation of the Plant.
(i) Operation Date Notice. The Borrower shall notify
Eximbank, within two Business Days, of the occurrence of each of
(i) the Operation Date and (ii) satisfaction of the conditions
precedent to Eximbank Disbursement specified in Section 5.02
hereof.
(j) Other Information. From time to time, such other
information or documents (financial or otherwise) as Eximbank may
reasonably request including, without limitation, (1) advance
notice of the commencement of all performance tests under the
Construction Contract and (2) if the Completion Date (as defined in
the Energy Conversion Agreement) shall have been deemed to have
occurred pursuant to Section 4.9(b) of the Energy Conversion
Agreement, information as to the circumstances giving rise to the
same, the action(s) which the Borrower (and, to the extent known by
the Borrower, PNOC-EDC) is taking or proposes to take with respect
to the same and periodic reports of the status of such actions and
the implementation thereof.
Section 7.02. Books, Records and Inspections; Accounting and
Audit Matters. (a) The Borrower will keep proper books of record
and account adequate to reflect truly and fairly the financial
condition and results of operations of the Borrower (including the
progress of the Project) in which full, true and correct entries in
conformity with Philippine generally accepted accounting principles
consistently applied and all Applicable Laws shall be made of all
dealings and transactions in relation to its business and
activities. The Borrower will permit
officers and designated representatives of Eximbank to visit and
inspect, under guidance of officers of the Borrower, any of the
properties of the Borrower, and to examine and make copies of the
books of record and account of the Borrower and discuss the
affairs, finances and accounts of the Borrower with, and be advised
as to the same by, its and their officers, all at such reasonable
times and intervals and to such reasonable extent as Eximbank may
request.
(b) The Borrower shall authorize the Auditors (whose fees and
expenses shall be for the account of the Borrower) to
communicate directly with Eximbank at reasonable intervals, but if
a Incipient Default Event or a Default Event has occurred or is
continuing, then at any time, regarding the Borrower's
accounts and operations and furnish to Eximbank a copy of such
authorization, which shall be in form and substance satisfactory to
Eximbank; provided, however, that Eximbank will (i) provide the
Borrower with copies of any correspondence between Eximbank and the
Auditors; and (ii) provide the Borrower with reasonable notice of
any meeting between Eximbank and the Auditors, with a description
of the matters to be discussed at such meeting, and allow the
Borrower to attend any such meeting.
(c) The Borrower will at all times cause a complete set of
the current and (when available) as-built plans (and all
supplements thereto) relating to the Plant to be maintained at the
Plant or the Construction Contractor's office for inspection by the
Independent Engineer and Eximbank.
Section 7.03. Maintenance of Property, Insurance. (a) The
Borrower will (i) keep all property useful and necessary in its
business in good working order and condition and (ii) keep its
present and future properties and business insured with
financially sound and reputable insurers satisfactory to Eximbank
against loss or damage in such manner and to the same extent as
required in Section A of Schedule 7.03 hereto until the
expiration of such policies and immediately thereafter as
required in Section C of Schedule 7.03 hereto, including in each
case pursuant to policies naming the Collateral Agent as sole loss
payee thereunder and containing cut-through endorsements to
reinsurers, provisions requiring that the Collateral Agent and
Eximbank shall receive notices of any non-payment of premiums and
that such policy may only be canceled for non-payment of
premiums, if cancelable, upon sixty (60) days prior notice to the
Collateral Agent and Eximbank and with the Collateral Agent
endorsed on each such insurance policy as the sole loss payee or
beneficiary, as applicable. On or prior to the dates required
pursuant to Section A or Section C, as the case may be, of
Schedule 7.03, the Borrower will submit to Eximbank certificates of
insurance relating to the insurances required by Section A and
Section C of Schedule 7.03 (together with copies of such
insurance policies if then available) from the Borrower's
insurers and insurance brokers (including confirmation of premium
payments), which certificates shall indicate the properties
insured, amounts and risks covered, names of the beneficiaries,
expiration dates, names of the insurers and special features of the
insurance policies. The Borrower shall provide Eximbank with
copies of insurance policies relating to the insurances required by
Section A and Section C of Schedule 7.03 hereto on or prior to the
date such policies are required to be delivered to Eximbank in
accordance with such Section A or Section C, as the case may be.
Prior to the Disbursement Date, the Borrower shall provide Eximbank
with copies of the insurance policies relating to the insurances
required by Section C of Schedule 7.03 hereto, such policies to be
in form and substance, and issued by companies, satisfactory to
Eximbank (in consultation with the Insurance Consultant).
(b) The Borrower will cause the Construction Contractor and
the Construction Supplier, as applicable, to (i) keep the
insurances described in Section B of Schedule 7.03 hereto with
financially sound and reputable insurers satisfactory to, prior to
the Disbursement Date, the Agent and, thereafter, Eximbank, in each
case against loss or damage in such manner and to the same extent
as so described in each case pursuant to policies naming the
Collateral Agent as sole loss payee thereunder and containing cut-
through endorsements to reinsurers and provisions requiring that
the Collateral Agent and Eximbank shall receive notices of any non-
payment of premiums and that such policy may only be canceled (x)
as provided in Section B of Schedule 7.03 hereto or (y) if not
therein provided, for non-payment of premiums, if cancelable, upon
sixty (60) days prior written notice to the Collateral Agent and
Eximbank. On or prior to the dates required pursuant to Section B
of Schedule 7.03, the Borrower will cause the Construction
Contractor or the Construction Supplier, as applicable, to submit
to Eximbank certificates of insurance relating to the insurances
required by Section B of Schedule 7.03 (together with copies of
such insurance policies if then
available) from the insurers or insurance brokers for such
insurances (including confirmation of premium payments), which
certificates shall indicate the type of insurance, amounts and
risks covered, names of the beneficiaries, expiration dates, names
of the insurers and special features of the insurance policies.
The Borrower will cause the Construction Contractor or the
Construction Supplier, as applicable, to provide Eximbank with
copies of insurance policies relating to the insurances described
in Section B of Schedule 7.03 hereto on or prior to the date such
policies are required to be delivered to Eximbank in accordance
with such Section B of Schedule 7.03 hereto, such policies to be in
form and substance, and issued by companies, satisfactory to
Eximbank in consultation with the Insurance Consultant. The
Borrower will cause the Construction Contractor to establish the
ECA Construction Performance Bond in favor of PNOC-EDC within the
time required by PNOC-EDC in connection with the Energy Conversion
Agreement and will deliver evidence
reasonably satisfactory to Eximbank of PNOC-EDC's acceptance of the
ECA Construction Performance Bond within fifteen (15)
calendar days after the same is so established.
(c) In the event any insurance (including the limits or
deductibles thereof) hereby required to be maintained by the
Borrower or for which the Borrower is responsible, or required to
be maintained by the Construction Supplier or the Construction
Contractor or for which the Construction Supplier or the
Construction Contractor is responsible, other than insurance
required by Applicable Law to be maintained, shall not be
available and commercially feasible in the commercial insurance
market, the Agent, prior to the Construction Financing
Termination Date, or, thereafter, Eximbank, shall not
unreasonably withhold its consent to waive such requirement to the
extent the maintenance thereof is not so available; provided,
however, that (i) the Borrower shall first request any such waiver
in writing, which request shall be accompanied by a
written report prepared by the Borrower's insurance adviser
certifying that such insurance is not reasonably available and
commercially feasible in the commercial insurance market for
electric generating plants of similar type and capacity, and (ii)
the Insurance Consultant shall confirm in writing the conclusions
contained in such report. The failure at any time to satisfy the
condition to any waiver of an insurance requirement set forth in
the proviso to the preceding sentence shall not impair or be
construed as a relinquishment of the Borrower's ability to obtain
a waiver of an insurance requirement pursuant to the preceding
sentence at any other time upon satisfaction of such conditions.
(d) The provisions of this Section 7.03 shall be deemed to be
supplemental to, but not duplicative of, the provisions of any of
the Security Documents that require the maintenance of insurance.
In the event that any insurance whatsoever is purchased, taken or
otherwise obtained by the Borrower with respect to the Project
taken otherwise than as required hereunder or if not properly
endorsed to the Collateral Agent as the sole loss payee or
beneficiary or otherwise made upon the terms required in this
Section 7.03, without limitation to any provision of the Assignment
and Security Agreement, such insurance shall be considered assigned
hereunder to the Collateral Agent with the right of the Collateral
Agent to make, settle, compromise and liquidate any and all claims
thereunder, without prejudice to the exercise of any other rights
and remedies that the Collateral Agent may have under any of the
Financing Documents, or under any Applicable Law.
Section 7.04. Maintenance of Existence; Privileges; Etc. The
Borrower shall at all times (a) preserve and maintain in full force
and effect (i) its existence as a corporation and good standing
under the laws of the Republic, (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 and (iii) all of its
powers, rights, privileges and franchise necessary for the
construction, ownership, maintenance and operation of the Project
and the maintenance of its existence, (b) obtain in a timely manner
and maintain in full force and effect (or where
appropriate, renew) all Governmental Approvals (including,
without limitation, those under Environmental Laws) and all other
licenses, registrations, waivers, consents and approvals required
at any time in connection with the construction, maintenance,
ownership or good and orderly operation of the Project and all
licenses, consents and approvals necessary for the conversion to
Dollars of all Peso amounts (including, without limitation, Peso
amounts representing SFRI Fees) payable under the Energy
Conversion Agreement, the PNOC-EDC Consent Agreement, the
Performance Undertaking and the Republic Consent Agreement and for
the remission to the United States in Dollars of any amounts paid
or payable to the Secured Parties in connection with any Financing
Document or the transactions contemplated thereby or the shares of
common stock of the Borrower and (c) preserve and maintain good and
marketable title to its properties and assets (it being understood
that the Borrower's rights with respect to the Site are solely as
set forth in the Energy Conversion
Agreement and the Accession Undertaking) subject to no Liens other
than Permitted Liens.
Section 7.05. Compliance with Statutes. The Borrower will
comply with all Applicable Laws in respect of the conduct of its
business and the ownership, operation and use of its property
(including, without limitation, Applicable Laws relating to
environmental standards and controls and Applicable Laws relating
to the maintenance of debt to equity ratios).
Section 7.06. Consultations Regarding Independent
Engineer's Report. The Borrower agrees that (i) in addition to any
other consultation required hereunder, following the end of each
Month, upon the request of the Agent or Eximbank, the
Borrower shall consult with such Person regarding any materially
adverse event or condition identified by the Independent Engineer
in the reports provided by the Independent Engineer for such Month
pursuant the Representative Agreement, and (ii) in the event the
Borrower fails to hold such consultations within 30 days of such
request, such event or condition shall be deemed to have a Material
Adverse Effect.
Section 7.07. Project Implementation; Use of Proceeds.
(a) The Borrower shall (i) carry out the Project and
conduct its business with due diligence and efficiency and in
accordance with sound engineering, financial, and business
practices and in accordance with the Annual Budget as specified in
Section 7.01(e); and (ii) use the proceeds of the Loans and the
Eximbank Credit only for the purpose set forth in Section 2.01.
(b) Without limiting the generality of the preceding clause
(a), the Borrower will cause the construction of the Project to be
prosecuted and completed with due diligence and continuity (except
for interruptions due to events of force majeure, which the
Borrower will use its best efforts to mitigate), in good and
workmanlike manner and in accordance with (i) sound generally
accepted building and engineering practices, (ii) all
Governmental Approvals and Applicable Laws applicable to the Site,
the Plant or the Borrower, (iii) the Construction Contract, (iv)
the Supply Contract and (v) the Construction Budget.
(c) Without limiting the generality of clause (a) of this
Section 7.07, from and after the Disbursement Date, the Borrower
will operate and maintain the Project, and retain and maintain the
staff sufficient to operate and maintain the Project, in accordance
with the O&M Parameters and will otherwise comply with and satisfy
the requirements of the O&M Parameters.
(d) The Borrower shall use reasonable efforts to become a
member of the multi-partite monitoring team described in
paragraph 1 of Section IV of the Environmental Compliance
Certificate; provided, however, that the Borrower need not become
a member of such monitoring team if, in the reasonable judgment of
the Borrower, after consultation with its counsel, the
Borrower's participation in the activities conducted by such
monitoring team could reasonably be expected to expose the
Borrower to additional liability under Applicable Laws of the
Republic.
(e) Without limiting the generality of clauses (a) and (b) of
this Section 7.08, in order to avoid a deemed abandonment under
Section 14.2.1(d) of the Energy Conversion Agreement, if the
conditions precedent specified in clauses (a) and (b) of Section
13.3 of the Construction Contract have been satisfied the Borrower
shall, within ten (10) Business Days prior to the date of potential
abandonment under the Energy Conversion Agreement, exercise the
right granted to it under the last sentence of Section 13.3 of the
Construction Contract and certify to PNOC-EDC that the Power Plant
(as defined in the Construction Contract) has achieved ECA
Completion in accordance with Section 6.1(b) of the Energy
Conversion Agreement.
(f) The Borrower shall provide Eximbank with notice
immediately upon becoming aware that conditions to (i) drawdown
have been met permitting the drawdown of any amount under either or
both of the Supply Contract Letters of Credit and/or (ii) the
enforcing of either or both of the Ormat Industries Guaranty and
the Ormat Guaranty have been met.
Section 7.08. Auditors. In the event that Deloitte, Touche
& Tohmatsu International should cease to be the Auditors of the
Borrower for any reason, the Borrower shall appoint and maintain as
the Auditors another firm of independent public accountants
approved by Eximbank.
Section 7.09. Taxes, Duties, Proper Legal Form. The
Borrower will pay and discharge all taxes, duties, fees,
assessments or other governmental charges imposed on it, on its
income or profits, on any of its property, or in connection with
the execution, issue, delivery, registration, notarization,
assignment or transfer of any interest in or for the legality,
validity, or enforceability, of any Project Document prior to the
date on which penalties attach thereto, and all claims, levies or
liabilities (including, without limitation, claims for labor,
services, materials and supplies) for sums which have become due
and payable and which have or, if unpaid, might become a Lien upon
the property of Borrower (or any part thereof). The
Borrower shall have the right, however, to contest in good faith
the validity or amount of any such tax, assessment, governmental
charge or claim by proper proceedings timely instituted, and may
permit the taxes, assessments, governmental charges or claims so
contested to remain unpaid during the period of such contest if (i)
the Borrower diligently prosecutes such contest, (ii) during the
period of such contest the enforcement of any contested item is
effectively stayed, (iii) the Borrower sets aside on its books
adequate reserves with respect to the contested items and (iv) such
contest does not, in the reasonable discretion of, prior to the
Disbursement Date, the Agent and thereafter, Eximbank,
involve a material risk of the sale, forfeiture or loss of any of
the Collateral. The Borrower will promptly pay or cause to be paid
any valid, final judgment enforcing any such tax, duty, fee,
assessment, other governmental charge or claim and cause the same
to be satisfied of record.
Section 7.10. Independent Engineer; Insurance Consultant.
The Borrower (i) agrees to the Independent Engineer carrying out
the role described in the Representative Agreement, (ii) confirms
and agrees to the terms of its Acknowledgment appended to the
Representative Agreement, which terms are incorporated herein by
reference as if fully set forth herein and (iii) will ensure that
the Insurance Consultant will be provided with all information
reasonably required by the Insurance Consultant and will exercise
due care to ensure that any information which it may supply to the
Insurance Consultant is materially accurate and not, by omission of
information or otherwise, misleading in any material respect.
Section 7.11. Performance of Obligations. The Borrower will
perform all of its material obligations under the terms of each
mortgage, indenture, security agreement and other debt instrument
by which it is bound and will perform (i) all of its obligations
under the terms of the Financing Documents and the Energy
Conversion Agreement and (ii) such of its obligations under the
terms of the Project Documents (other than the
Financing Documents and the Energy Conversion Agreement) the non-
performance of which is reasonably likely to have a Material
Adverse Effect. The Borrower will maintain in full force and
effect each of the Project Documents to which it is a party. The
Borrower will preserve, protect, defend and enforce the rights
granted to it under or in connection with the Project Documents.
The Borrower shall take all action within its control required or
in the reasonable opinion of Eximbank advisable to ensure that,
unless otherwise consented to in writing by Eximbank, each of the
Energy Conversion Agreement, the Construction Contract, the Supply
Contract, the Performance Undertaking, the Ormat Guaranty, the
Ormat Industries Guaranty, the Funding Agreement and the Supply
Contract Letters of Credit are in proper legal form under the laws
of the Republic or under the respective governing laws selected in
such Project Documents, for the enforcement thereof in such
jurisdictions without any further action on the part of Eximbank.
Section 7.12. Additional Documents; Filings and Recordings.
The Borrower shall execute and deliver, from time to time as
reasonably requested by Eximbank or the Collateral Agent, at the
Borrower's expense, such other documents as shall be necessary or
advisable or that Eximbank or the Collateral Agent may reasonably
request in connection with the rights and remedies of the Secured
Parties granted or provided for by the Project Documents, as
applicable, and to consummate the transactions contemplated
therein. The Borrower shall, at its own expense, take all
reasonable actions that have been or shall be requested by
Eximbank or the Collateral Agent or that the Borrower knows are
necessary to establish, maintain, protect, perfect and continue the
perfection of the first priority security interests of the Secured
Parties created by the Security Documents and shall furnish timely
notice of the necessity of any such action, together with such
instruments, in execution form, and such other information as may
be required to enable Eximbank and any other appropriate Secured
Party to effect any such action. Without limiting the generality
of the foregoing, the Borrower shall (a) execute or cause to be
executed and shall file or cause to be filed such financing
statements, continuation statements, fixture filings and mortgages
or deeds of trust in all places necessary or advisable (in the
opinion of counsel for Eximbank or the Collateral Agent) to
establish, maintain and perfect such security interests and in all
other places that Eximbank or the Collateral Agent shall reasonably
request and (b) do everything necessary in the reasonable judgement
of Eximbank or the Collateral Agent to (i) create and perfect the
Security with respect to future assets covered by the Mortgage,
(ii) maintain the Security in full force and effect at all times
and (iii) preserve and protect the Collateral and protect and
enforce its rights and title and the rights and title of the
Secured Parties to the Collateral.
Section 7.13 Bank Accounts. The Borrower shall maintain all
its bank accounts with the Collateral Agent, except that the
Borrower may maintain, in accordance with the Disbursement
Agreement, (a) the Service Fee Account, (b) the Philippines Peso
Account and (c) the Dollar Operating Cost Account.
Section 7.14 Debt Reserve Cash Collateral Account. On or
before the date 90 days after the Disbursement Date, the Debt
Reserve Cash Collateral Account shall be fully funded in an amount
equal to at least the Senior Debt Service due and payable during
the next succeeding six months, in addition to all amounts required
to be deposited at such time in accordance with clause "FOURTH" of
3.02(d)(ii) of the Disbursement Agreement.
ARTICLE VIII. NEGATIVE COVENANTS.
With respect to provisions of this Article VIII so
specifying, from and after the Disbursement Date and, with
respect to all remaining provisions of this Article VIII, from and
after the execution and delivery of this Agreement, in each case
until the Eximbank Credit is paid in full, except as
otherwise waived pursuant to the next two succeeding sentences, the
Borrower covenants and agrees as provided in this Article VIII.
Provisions of this Article VIII specifying effect from and after
the Disbursement Date and provisions requiring
consultations with or the furnishing of documents or other
information to Eximbank or requiring the consent or approval of
Eximbank to the taking or omission of any action may only be waived
by Eximbank and in writing. All other provisions of this Article
VIII may be waived with effect during the period prior to the
Disbursement Date by the Required Secured Parties and in writing
and, thereafter, by Eximbank and in writing.
Section 8.01. Liens. The Borrower will not, and will not
agree to, create, incur, assume or suffer to exist any Lien upon or
with respect to any property or assets (real, personal or mixed,
tangible or intangible) of the Borrower, whether now owned or
hereafter acquired, provided that the provisions of this Sec-tion
8.01 shall not prevent the creation, incurrence, assumption or
existence of, prior to the Disbursement Date, Construction Period
Permitted Liens and, thereafter, the following Liens (each, a
"Post-Completion Permitted Lien"):
(a) any tax or other statutory Lien, provided that such lien
shall be discharged within sixty (60) days after the
Borrower becomes aware or reasonably should have been aware of such
Lien (unless contested in good faith by the Borrower, in which case
it shall be discharged within thirty (30) days after final
adjudication, and provided that during the period of such contest
the Borrower sets aside on its books adequate reserves with respect
to the contested items);
(b) Liens created pursuant to the Security Documents;
(c) purchase-money Liens on any property acquired after the
Operation Date, provided, however, that (i) any property subject to
such purchase-money Lien is acquired by the Borrower in the
ordinary course of its business and such purchase-money Lien
attaches to such property concurrently or within ninety days after
the acquisition thereof; (ii) the Indebtedness secured by such
purchase-money Lien shall not exceed 90% of the lesser of the cost
or the fair market value as of the time of the
acquisition of the property covered thereby by the Borrower; (iii)
each such purchase-money Lien shall attach only to the property so
acquired and fixed improvements thereon; (iv) the Indebtedness
secured by all such purchase-money Liens shall not at any time
exceed $2 million (or an equivalent amount in other currency); and
(v) the Indebtedness secured by such
purchase-money Lien is not otherwise prohibited by the provisions
of Section 8.05;
(d) Liens on property and equipment constituting leases
permitted by Section 8.04; and
(e) mechanics', materialmen's, carrier's and similar Liens
securing obligations incurred in the ordinary course of business
which (i) are not past due or which are the subject of a Good Faith
Contest by the Borrower (unless during the pendency of such contest
or as a result thereof the Liens of the Security Documents could
reasonably be expected to be materially endangered or any material
portion of the Site, the Plant or the Project could reasonably be
expected to become subject to loss or forfeiture) and (ii) which do
not in the aggregate materially detract from the value of the Site,
the Plant or the Project or other assets of the Borrower or
materially impair the use thereof; provided that, upon the
commencement of any proceeding to foreclose or enforce any such
Post-Completion Permitted Lien, Eximbank or the Collateral Agent
may take such action as it reasonably deems necessary to protect
its interest in the Site, the Plant or the Project including,
without limitation, payment of amounts reasonably necessary to
release any such Lien, and in such event the Borrower shall
reimburse Eximbank or the Collateral Agent, as the case may be,
upon demand for the cost thereof together with interest thereon at
a rate per annum equal to 7.95%
Section 8.02. Consolidation, Merger, Sale of Assets, Etc.
The Borrower will not (a) wind up, liquidate or dissolve its
affairs or enter into any transaction of merger or consolidation;
(b) convey, sell, lease or otherwise dispose of (or agree to do any
of the foregoing at any future time) all or any part of its
property or assets (other than electricity and any chemical by-
products produced by the Plant) except in the ordinary course of
business, or sales of equipment which is uneconomic or obsolete or
sales of assets that are no longer used by or useful to the
Borrower and which are promptly replaced (if applicable) by
adequate substitutes of substantially equivalent utility to the
replaced assets; or (c) purchase or otherwise acquire (in one or a
series of related transactions) any part of the property or assets
of any Person (other than purchases or other acquisitions of
inventory or materials or capital expenditures, each in the
ordinary course of business).
Section 8.03. Dividends; Restricted Payments. (a) The
Borrower will not declare or pay any dividends, or return any
capital, to its stockholders or authorize or make any other
distribution, payment or delivery of property or cash to its
stockholders as such, or redeem, retire, purchase or otherwise
acquire, directly or indirectly, for consideration, any shares of
any class of its capital stock now or hereafter outstanding (or any
options or warrants issued by the Borrower with respect to its
capital stock), or set aside any funds for any of the
foregoing purposes (collectively, "Restricted Payments"), other
than as provided in paragraph (b) below, unless:
(i) such Restricted Payment is permitted by Applicable
Law;
(ii) no Default or Event of Default is then in existence
(or would be in existence after giving effect to such
Restricted Payment);
(iii) such Restricted Payment is made in accordance with
the provisions of Section 3.02(d)(ii) of the Disbursement
Agreement; and
(iv) such Restricted Payment is made only after the
Disbursement Date.
(b) Payments of principal of, interest on and redemption,
purchase and retirement of Affiliated Subordinated Loans shall be
governed by, and permitted only in accordance with, Section 8.20.
Section 8.04. Leases. The Borrower will not enter into any
agreement or arrangement to acquire by lease the use of any
property or equipment of any kind, except leases as contemplated by
the O&M Parameters, the Construction Budget or the Annual Budget
(in each case as then in effect), of operating equipment and
premises under which the aggregate rental payments
(including, without limitation, any property taxes paid as
additional rent or lease payments) do not exceed the equivalent of
$1,750,000 in any Fiscal Year.
Section 8.05. Indebtedness. (i) The Borrower will not
contract, create, incur, assume or suffer to exist any Indebt-
edness, except for, prior to the Disbursement Date, Construction
Period Permitted Indebtedness and, thereafter, the following types
of Indebtedness ("Post-Completion Permitted Indebtedness"):
(a) Indebtedness of the Borrower incurred under this
Agreement;
(b) Supplemental Loans outstanding on the Disbursement Date,
to the extent that the sum of (x) the aggregate principal amount of
the Eximbank Credit disbursed hereunder and (y) the aggregate
principal amount of the Supplemental Loans outstanding on the
Disbursement Date do not exceed $168,695,703;
(c) Unsecured Senior Working Capital Indebtedness or
Subordinated Secured Working Capital Indebtedness incurred after
the Operation Date, which when aggregated with the Borrower's
contingent liability arising from the discounting of trade
receivables relating to the sale of chemical by-products would not
exceed at any one time outstanding the equivalent of
$5,000,000; provided that (i) any and all Subordinated Working
Capital Indebtedness shall be subordinated to the payment of the
Eximbank Credit in accordance with the provisions of Schedule
8.05(i)(c), (ii) any and all Subordinated Working Capital Lenders
shall, prior to the date on which any Subordinated Secured
Working Capital Indebtedness is incurred, become party to the
Collateral Agency Agreement and deliver to each of the Collateral
Agent and Eximbank an opinion of counsel to such Subordinated
Working Capital Lender reasonably satisfactory to Eximbank to the
effect that the Collateral Agency Agreement and the subordination
terms set forth in Schedule 8.05(i)(c) hereto constitute the
binding obligations of such Subordinated Working Capital Lender
enforceable in accordance with their respective terms (subject to
customary qualifications) and (iii) any and all Senior Working
Capital Lenders shall, prior to the date on which any Unsecured
Senior Working Capital Indebtedness is incurred, become party to
the Intercreditor Agreement;
(d) Third Party Subordinated Indebtedness in an outstanding
principal amount not to exceed $10,000,000 at any time; provided,
however, that (i) any and all Third Party Subordinated
Indebtedness shall be subordinated to the payment of the Eximbank
Credit in accordance with the provisions of Schedule 8.05(i)(c) and
(ii) any and all Third Party Subordinated Lenders shall, prior to
the date on which such Indebtedness is incurred, become party to
the Collateral Agency Agreement and deliver to each of the
Collateral Agent and Eximbank an opinion of counsel to such Third
Party Subordinated Lender reasonably satisfactory to
Eximbank to the effect that the Collateral Agency Agreement and the
subordination terms set forth in Schedule 8.05(i)(c) hereto
constitute the binding obligations of such Third Party
Subordinated Lender enforceable in accordance with their
respective terms (subject to customary qualifications);
(e) Indebtedness incurred after the Operation Date which is
not in a principal amount in excess, in the aggregate, of $2
million, at any time and is accrued expenses or current trade
accounts payable incurred in the ordinary course of business, which
are to be repaid in full not more than ninety days after the date
on which such Indebtedness is originally incurred to finance the
purchase of goods by the Borrower;
(f) Indebtedness secured by purchase money Liens incurred
after the Operation Date and otherwise permitted under Section
8.01(c);
(g) Indebtedness constituting lease obligations permitted
under Section 8.04;
(h) Optional Subordinated Loans in an outstanding principal
amount not to exceed $25,000,000 at any time and which bear
interest at a rate not in excess of 12.5% per annum; provided,
however, that any and all Optional Subordinated Loans shall be
subordinated to the payment of the Eximbank Credit in accordance
with the provisions of Schedule 8.05(i)(c);
(i) Affiliated Reimbursement Obligations; and
(j) Contingent Obligations permitted under Section 8.06.
(ii) The Borrower agrees that it will not obligate itself
to make regularly scheduled payments during the period when the
Eximbank Credit is outstanding of or on any Permitted
Indebtedness that is Indebtedness for Borrowed Money other than
quarterly and other than on a Permitted Payment Date or a date
occurring no earlier than eight (8) days after and no later than
fifteen (15) days after a Permitted Payment Date.
Section 8.06. Guarantees. Without limitation to the
restrictions of Section 8.05 hereof, from and after the
Disbursement Date, the Borrower will not enter into or have
outstanding any Contingent Obligations, including without
limitation any agreement or arrangement to guarantee or, in any way
or under any condition, become obligated for all or any part of any
Indebtedness or other obligation of another Person, except that,
notwithstanding the restrictions of this Section 8.06 or Section
8.05 hereof, the Borrower may enter into (a) the
Accession Undertaking, (b) Contingent Obligations set forth in the
then-current Construction Budget or Annual Budget and
identified as Contingent Obligations in any such budget so as to
permit a determination of the Borrower's compliance with this
Section 8.06, (c) an obligation, not secured by any Lien to (i)
reimburse the ECA Operation Performance Bond Issuer for amounts
paid to PNOC-EDC under the ECA Operation Performance Bond,
provided that such obligation is subordinated to the prior
payment in full of the Eximbank Secured Obligations on terms set
forth in Schedule 8.05(c), or (ii) reimburse CECI or one or both of
the Affiliated Funding Entities for Affiliated Reimbursement
Obligations, provided that such obligation is subordinated to the
prior payment in full of the Eximbank Secured Obligations on terms
set forth in Schedule 8.05(c), and payment is made solely out of
funds available to the Borrower for the payment of
Affiliated Reimbursement Obligations as set forth in Section
3.02(d)(ii) of the Disbursement Agreement, and (d) other
Contingent Obligations to the extent that the amount of all such
other Contingent Obligations does not exceed, in the aggregate,
$100,000 (or the equivalent in other currency).
Section 8.07. Subsidiaries; Advances, Investments and Loans.
The Borrower will not form or have any Subsidiaries, lend money or
credit or make deposits (other than deposits in relation to the
payment for goods and equipment in the ordinary course of business)
with or advances (except as specifically required by the
Construction Contract or the Supply Contract) to any Person, or
purchase or acquire any stock, obligations or securities of, or any
other interest in, or make any capital contribution to, any other
Person, except that the Borrower may use idle cash to acquire and
hold Cash Equivalents solely to give employment to its idle
resources in accordance with the Disbursement Agreement; and
provided that the Borrower may make loans and advances to, or
investments in, Affiliates of the Borrower from funds available to
the Borrower pursuant to payment of priority "NINTH" of
Section 3.02(d)(ii) of the Disbursement Agreement.
Section 8.08. Transactions. From and after the
Disbursement Date, the Borrower will not (a) enter into or have in
effect any transaction or series of related transactions with any
Person other than in the ordinary course of business and on an
arm's-length basis or (b) establish or have in effect any sole and
exclusive purchasing or sales agency, or enter into any transaction
whereby the Borrower might receive less than the full ex-works
commercial price (subject to normal trade discounts) for
electricity or sulphur or pay more than ex-works commercial price
for products of others, provided, however, that nothing in this
Section 8.08 shall be deemed to prohibit the execution, delivery,
declaring effective and performance by the Borrower of the Energy
Conversion Agreement, the Construction Contract or the Supply
Contract, contracts contemplated by the O&M Parameters (including
those relating to employee training and secondment of employees) or
the Funding Agreement.
Section 8.09. Other Transactions. From and after the
Disbursement Date, the Borrower will not enter into or have in
effect any partnership, profit-sharing, or royalty agreement or
other similar arrangement whereby the Borrower's income or
profits are, or might be, shared with any other Person, or enter
into or have in effect any management contract or similar
arrangement whereby its business or operations are managed by any
other Person, provided, however, that nothing in this Section 8.09
shall be deemed to prohibit the execution, delivery,
declaring effective and performance by the Borrower of the
contracts contemplated by the O&M Parameters and the Funding
Agreement.
Section 8.10. Modifications of Articles of Incorporation, By-
Laws; Additional Agreements; Assignments and Modifications of
Agreements; Etc.
(a) The Borrower will not (i) amend or modify its Articles of
Incorporation or By-Laws, (ii) change its Fiscal Year or (iii)
materially change the nature of its present business.
(b) The Borrower will not, on or after the Disbursement Date,
become a party to any agreement, contract or commitment (other than
(w) the agreements identified in clauses (i) through (xi) of the
definition of the term Operating Agreements set forth in Schedule
X hereto, but not replacements thereof, (x) the Financing
Documents, (y) agreements, contracts or commitments contemplated by
the O&M Parameters (including those relating to employee training,
secondment of employees and vehicle rentals), the then-current
Construction Budget, the then- current Annual Budget or the Funding
Agreement and (z) agreements, contracts or commitments in respect
of Post-Completion Permitted Indebtedness) which, individually,
creates an annual financial obligation of the Borrower in excess of
$100,000 (or the equivalent in other currency) or which would cause
the aggregate annual financial obligations of the Borrower under
all agreements, contracts and commitments (other than those
specified in clauses (w) through (z) immediately above) to which
the Borrower is a party to exceed $300,000 (or the equivalent in
other currency).
(c) The Borrower shall not, directly or indirectly,
terminate, cancel or suspend, or permit or consent to any
termination, cancellation or suspension of, or enter into or
consent to or permit the assignment of the rights or obligations of
any party to, any of the Project Documents; provided, however, that
prior to the Disbursement Date and without the prior written
consent of the Required Secured Parties the Borrower may do, permit
to be done or consent to any of the foregoing if (i) the Project
Document which is the subject of the proposed termination,
cancellation, suspension or assignment is an Insurance Contract and
the Agent, after consultation with the Insurance Consultant, shall
have consented thereto or (ii) the Project Document which is the
subject of the proposed termination, cancellation, suspension or
assignment is a non-material Governmental Approval or an agreement,
commitment or understanding described in clause (xv) of the
definition of the term "Operating Agreements" set forth in Schedule
X hereto and, in each case, the Agent shall have reasonably
determined that such termination, cancellation, suspension or
assignment is not reasonably likely to have a Material Adverse
Effect and so notified Eximbank. The Borrower shall not, directly
or indirectly amend, modify, supplement or waive, or permit or
consent to the amendment, modification, supplement or waiver of,
any of the provisions of, or give any consent under, any of the
Project Documents, except for change orders under the Construction
Contract or the Supply Contract or Change in the Work (provided
that the provisions of clause (c) of this Section 8.10 are complied
with in each case), without (i) first submitting to Eximbank a copy
of such proposed amendment,supplement, waiver, or consent and (ii)
from and after the Disbursement Date, prior written consent thereto
of Eximbank (provided, however, that if in any Project Document,
the consent of the Borrower to an assignment by the other party
thereto cannot be unreasonably withheld, the consent of Eximbank to
such an assignment shall not be unreasonably withheld).
(d) Other than the assignment as security of the Project
Documents to the Collateral Agent as security for the benefit of
the Secured Parties, the Borrower will not assign (except with
respect to Permitted Liens) any of its rights or obligations under
any Project Document without the prior written consent of Eximbank.
(e) The Borrower will not take any action under Article 9 of
the Energy Conversion Agreement to require a Buyout without the
prior written consent of Eximbank.
(f) From and after the Disbursement Date, without the prior
written consent of Eximbank, the Borrower will not refund to PNOC-
EDC (but may credit to PNOC-EDC) any amount described in the last
sentence of Section 4.9 of the Energy Conversion Agreement.
(g) From and after the Disbursement Date, the Borrower shall
not claim for itself Force Majeure as provided in Article 13 of the
Energy Conversion Agreement, Section 22 of the Construction
Contract or Section 20 of the Supply Contract without the prior
written consent of Eximbank (in consultation with the Independent
Engineer).
Section 8.11. No Other Business. Without the prior written
consent of Eximbank, and except as contemplated by Section 8.07
hereof, the Borrower will not carry on any business other than in
connection with the completion and operation of the Project and
will take no action whether by acquisition or otherwise which would
constitute or result in any material alteration to the nature of
that business or the nature or scope of the Project.
Section 8.12. Abandonment. From and after the Disbursement
Date, the Borrower will not abandon or agree to abandon the Project
or place it or agree to place it on a "care and maintenance" basis
for more than 14 days in any calendar year, provided, however, that
(i) nothing in this Section shall prevent the Borrower from shut-
downs necessary for repairs and maintenance at the Plant or from
putting the Plant on a "care and maintenance basis" during any
Force Majeure (as defined in the Energy Conversion Agreement) not
within the control of the Borrower which Force Majeure prevents the
Borrower from developing, constructing or operating the Plant; and
(ii) nothing in this Section 8.12 shall be deemed to waive or limit
in any way the right of Eximbank to declare an Event of Default as
provided in Article IX hereof, including without limitation
Sections 9.06 and 9.07 hereof.
Section 8.13. Improper Use. The Borrower will not use,
maintain, operate or occupy, or allow the use, maintenance,
operation or occupancy of, any portion of the Site or Project for
any purpose:
(a) which may be dangerous, unless safeguarded as required by
Applicable Law (provided, however, that this clause (i) shall not
be deemed to prohibit the Borrower from carrying out the Project in
accordance with the terms of the Energy Conversion Agreement and
the Construction Contract in a reasonable and prudent manner);
(b) which violates any Applicable Law in any material
respect;
(c) which may constitute a public or private nuisance
resulting in a Material Adverse Effect;
(d) which may make void, voidable, or cancelable, or
increase the premium of, any insurance then in force with respect
to the Site or Project or any part thereof unless, in the case of
an increase in premium, the Borrower gives proof of payment of such
increase; or
(e) otherwise than for the intended purpose thereof in the
construction, operation and maintenance of the Plant.
Section 8.14. Budgets. From and after the Disbursement Date
the Borrower will not make expenditures in any Fiscal Year in
excess of the projected annual Operating and Maintenance Costs
(including Contingent O&M Amount) set forth in the Annual Budget
for such Fiscal Year except for:
(a) emergency operating costs amounts funded with (i) funds
available to the Borrower pursuant to payment of priority "NINTH"
of Section 3.02(d)(ii) of the Disbursement Agreement and, to the
extent that such funds are not sufficient for such purpose; (ii)
proceeds of Unsecured Senior Working Capital Indebtedness or
Subordinated Secured Working Capital Indebtedness or Subordinated
Secured Working Capital Indebtedness permitted under Section 8.05;
or (iii) proceeds of Optional Subordinated Loans or Third Party
Subordinated Loans;
(b) provided no Event of Default has occurred and is
continuing, expenditures not to exceed in any Fiscal Year in the
aggregate $1.5 million (or the equivalent in other currency)
required as a result of casualties for which the Borrower is, in
its good faith judgment, insured; provided that (A) the Borrower
promptly files a claim or claims for reimbursement under such
insurance for any such casualty, (B) the Borrower uses its best
efforts to expedite payment of such claims, and (C) the proceeds
from any such insurance claims shall be paid into the Contingency
Account; and
(c) provided no Event of Default has occurred and is
continuing, non-budgeted payments of amounts for which the
Borrower is liable to PNOC-EDC under Article 4.10 of the Energy
Conversion Agreement, not to exceed, without the consent of the
Required Secured Parties, $11,800,000.
Section 8.15. Capital Stock. Without the prior written
consent of Eximbank, the Borrower shall not allow the capital stock
of the Borrower to be other than as follows: (a) the
authorized capital stock of the Borrower shall consist of
2,200,000 shares of common stock, par value P28 per share, of which
(i) 550,000 shares will be issued, outstanding and fully paid until
the day immediately prior to the commencement of the Cooperation
Period (as defined in the Energy Conversion
Agreement) and (ii) commencing on the day immediately prior to the
commencement of the Cooperation Period (as defined in the Energy
Conversion Agreement) 550,000 shares, plus the amount of shares
into which the Convertible Subordinated Notes evidencing Required
Convertible Subordinated Loans shall have been converted as of such
date, will be issued, outstanding and fully paid; and (b) all such
outstanding shares will be duly and validly issued, fully paid and
non-assessable.
Section 8.16. Press Releases; Advertising. If the Borrower
shall issue, or if the Borrower shall obtain knowledge that any
other Person has issued, any press release or other announcement or
advertisement that refers to the provision of financing or other
support by Eximbank for the Project, the Borrower shall promptly
notify Eximbank thereof and promptly deliver to Eximbank a copy of
such press release or other announcement or
advertisement.
Section 8.17. Employees and Employee Plan. The Borrower
shall not adopt, establish, maintain, sponsor, administer,
contribute to, participate in, or incur any liability under or
obligation to contribute to, any Plan or incur any liability to
provide post-retirement welfare benefits, except such liability to
provide post-retirement welfare benefits as required by
Applicable Law.
Section 8.18 Name Changes; Etc. The Borrower shall not
change its name without the prior written consent of Eximbank. The
Borrower shall not adopt or change any trade name or
fictitious business name without the prior written consent of
Eximbank. The Borrower shall execute and deliver to Eximbank and
the Collateral Agent any additional documents or certificates
necessary or advisable to reflect any permitted adoption of or
change in its name, trade name or fictitious business name.
Section 8.19. Payments on Subordinated Debt. Without the
prior written consent of Eximbank, the Borrower will not make any
payment or delivery of property or cash to any Person on account of
any Subordinated Secured Obligations or other subordinated debt or
redeem, retire, purchase or otherwise acquire, directly or
indirectly, for consideration, any Subordinated Secured
Obligations or other subordinated debt now or hereafter
outstanding, or set aside any funds for any of the foregoing
purposes (collectively, "Subordinated Debt Payments") unless:
(i) such Subordinated Debt Payment is permitted by
Applicable Law;
(ii) no Default or Event of Default is then in existence
(or would be in existence after giving effect to such
Subordinated Debt Payment);
(iii) such Subordinated Debt Payment is made only after the
Disbursement Date; and
(iv) such Subordinated Debt Payment is made in accordance
with the provisions of Section 3.02(d)(ii) of the Disbursement
Agreement.
Section 8.20 Equity Ratio. On and after the Disbursement
Date, the Borrower shall not permit the Equity Ratio at any time to
be less than 1:4 (which, for the avoidance of doubt, shall be
calculated in accordance with generally accepted accounting
principles in conformity with those used in the preparation of the
financial statements referred to in Section 7.01).
ARTICLE IX. EVENTS OF DEFAULT
Notwithstanding anything herein or in any of the Financing
Documents or elsewhere to the contrary, upon the occurrence of any
of the following events (each of the following events, an "Event of
Default"):
Section 9.01. Payments. The Borrower shall (i) default in
the payment when due of any principal of or interest on the
Eximbank Note or any other amount owing under this Agreement or the
Eximbank Note, (ii) default in the payment when due (after giving
effect to any grace periods providing in the relevant Financing
Document) of any principal of or interest on, or any other amount
owing under, any other Financing Document save for any default
arising by reason of a failure of the Collateral Agent to make any
payment where funds are available and payable pursuant to the
Disbursement Agreement to meet such payment; or
Section 9.02. Representations, Etc. Any representation or
warranty confirmed or made in any Project Document by the
Borrower or any Affiliate of the Borrower, or in any writing
provided by any of them in connection with the execution and
delivery of, or in connection with any disbursement under any of
the Bank Credit Agreement or this Agreement or for a payment of
monies from any Account by the Collateral Agent, shall be found to
have been incorrect in any material respect when made or deemed to
be made and shall continue to be incorrect for a period of thirty
(30) days after notice thereof shall have been given to the
Borrower by Eximbank; or
Section 9.03. Covenants. (a) The Borrower shall fail to
perform or observe any covenant, term or agreement contained in
Sections 2.01 (Amount of the Eximbank Credit; Use of Proceeds),
7.03 (Maintenance of Property; Insurance), 7.14 (Debt Reserve Cash
Collateral Account), 8.01 (Liens), 8.02 (Consolidation, Merger,
Sale of Assets, Etc.), 8.03 (Dividends; Restricted
Payments), 8.04 (Leases), 8.05 (Indebtedness), 8.06 (Guarantees),
8.07 (Subsidiaries; Advances, Investments and Loans), 8.10(a), (f)
and (g) (Modifications of Articles of Incorporation and By-Laws;
Additional Agreements; Assignments and Modifications of Agreements;
Etc.), 8.11 (No Other Business); 8.19 (Payments on Subordinated
Debt); 8.20 (Equity Ratio); or
(b) The Borrower or any Obligor which is an Affiliate of the
Borrower shall fail to perform or observe any other covenant, term
or agreement contained in this Agreement or any other
Project Document and such failure shall not be remediable or, if
remediable, shall continue unremedied for a period of 30 days after
the earlier of (i) the date on which such failure shall have first
become known to the Borrower and (ii) the date on which written
notice thereof shall have been received by the Borrower from
Eximbank; provided that if (A) such failure cannot be cured within
such 30-day period, (B) such failure is
susceptible of cure, (C) the Borrower is proceeding with
diligence and in good faith to cure such failure, (D) the
existence of such failure in the reasonable judgment of Eximbank
has not had and is not reasonably likely to have a Material Adverse
Effect and (E) Eximbank shall have received an officer's
certificate signed by a Financial Officer of the Borrower to the
effect of clauses (A), (B) and (C) above, certifying that the
existence of such failure has not had and is not reasonably likely
to have a Material Adverse Effect and stating what action the
Borrower is taking to cure such failure, then, such 30-day cure
period shall be extended by up to an additional 60 days as shall be
necessary for the Borrower diligently to cure such failure; or
Section 9.04. Default Under Other Agreements. (a) The
Borrower shall (i) default in any payment of any Indebtedness For
Borrowed Money (other than as provided in Section 9.01) beyond the
period of grace, if any, provided in the instrument or
agreement under which such Indebtedness For Borrowed Money was
created or (ii) default (other than in the manner referred to in
clause (i)) in the observance or performance of any agreement or
condition relating to any Indebtedness For Borrowed Money (other
than as provided in Section 9.01) or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which such
default or other event or condition is to (x) cause any such
Indebtedness For Borrowed Money to become due prior to its stated
maturity or (y) if such Indebtedness For Borrowed Money ranks pari
passu in right of payment with the Eximbank Secured
Obligations, permit the Person to whom such Indebtedness For
Borrowed Money is owed to declare the same due and payable prior to
the stated maturity thereof; or
(b) any Indebtedness For Borrowed Money of the Borrower shall
be declared to be due and payable, or required to be
prepaid other than by a regularly scheduled required prepayment,
prior to the stated maturity thereof; or
(c) any Obligor (other than PNOC-EDC, the ECA Operation
Performance Bond Issuer and CECI) shall (i) default in any
payment of any Indebtedness For Borrowed Money in an aggregate
principal amount exceeding the equivalent of $2 million beyond the
period of grace, if any, provided in the instrument or
agreement under which such Indebtedness For Borrowed Money was
created or (ii) default in the observance or performance of any
agreement or condition relating to any Indebtedness For Borrowed
Money in an aggregate principal amount exceeding the equivalent of
$2 million or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other
event or condition is to cause any such Indebtedness For Borrowed
Money to become due prior to its stated maturity; or
(d) CECI shall (i) default in any payment of any
Indebtedness For Borrowed Money in an aggregate principal amount
exceeding $10 million beyond the period of grace, if any,
provided in the instrument or agreement under which such
Indebtedness For Borrowed Money was created or (ii) default in the
observance or performance of any agreement or condition relating to
any Indebtedness for Borrowed Money in an aggregate principal
amount exceeding $10 million or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default
or other event or condition is to cause any such Indebtedness For
Borrowed Money to become due prior to its stated maturity;
provided, however, that if one or more of the events described in
this clause (d) shall occur after the date on which CECI shall
cease to be an Obligor, the occurrence of such event or events
shall not be deemed an Event of Default unless, in the reasonable
judgment of the Required Secured Parties, the occurrence of such
event or events has had or is reasonably likely to have a material
adverse effect on the operations, business, condition (financial or
otherwise) or property of the Borrower; or
(e) any Indebtedness For Borrowed Money in an aggregate
principal amount exceeding the equivalent of $2 million of any
Obligor (other than PNOC-EDC, the ECA Operation Performance Bond
Issuer and CECI) or any Indebtedness For Borrowed Money in an
aggregate principal amount exceeding $10 million of CECI, shall be
declared to be due and payable, or required to be prepaid other
than by a regularly scheduled required prepayment, prior to the
stated maturity thereof, and, if such Obligor is Ormat
Industries, the existence of such Indebtedness For Borrowed Money
that has been declared due and payable prior to the stated
maturity thereof, in the reasonable judgment of Eximbank, has had
or is reasonably likely to have a Material Adverse Effect;
provided, however, that if one or more of the events described in
this clause (e) with respect to Indebtedness For Borrowed Money of
CECI shall occur after the date on which CECI shall cease to be an
Obligor, the occurrence of such event or events shall not be deemed
an Event of Default unless, in the reasonable judgment of the
Required Secured Parties, the occurrence of such event or events
has had or is reasonably likely to have a Material
Adverse Effect; or
(f) a default shall have occurred in the performance of any
material obligation by (i) any Obligor (other than the ECA
Operation Performance Bond Issuer) or the Republic under any of the
Project Documents to which such Person is a party and such default
shall continue unremedied beyond the period of grace, if any,
extended to such Person with respect to such default, as specified
in the Project Document under which such obligation was created or
(ii) any other party (other than the Persons referred to in clause
(i) of this Section 9.04(f)) under any of the
Project Documents and the existence of such default in the
reasonable judgment of Eximbank has had or is reasonably likely to
have a Material Adverse Effect (and has not been cured within 60
days); or
Section 9.05. Bankruptcy, Etc. There shall have been entered
against the Borrower or any Obligor (other than the ECA Operation
Performance Bond Issuer or PNOC-EDC) a decree or order by a court
adjudging the Borrower or such Obligor bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the
Borrower or such Obligor under any Applicable Law; or appointing a
receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Borrower or such
Obligor or of any substantial part of its property or other assets,
or ordering the winding up or liquidation of its affairs; or the
institution by the Borrower or such Obligor of proceedings to be
adjudicated bankrupt or insolvent, or the consent by it to the
institution of bankruptcy or insolvency proceedings against it; or
the filing by it of a petition or answer or consent
seeking reorganization or debt relief under any Applicable Law; or
the consent by it to the filing of any such petition or to the
appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Borrower or any
such Obligor or of any substantial part of its property; or the
making by it of an assignment for the benefit of creditors; or the
admission by it in writing of its inability to pay its debts
generally as they become due; or any other event shall have
occurred which under any Applicable Law would have an effect
analogous to any of those events listed above in this subsection
with respect to the Borrower or any such Obligor; or any
corporate action is taken by the Borrower or any such Obligor for
the purpose of effecting any of the foregoing; provided that any
reorganization or reconstruction of a company while solvent with
the prior consent of Eximbank shall not be held to constitute any
event mentioned in this paragraph; and provided, further, that in
connection with any Obligor, no Event of Default shall be
declared under this Section 9.05 if (x) such Person has fully
complied and continues to fully comply with all of its
obligations under all Project Documents to which such Person is a
party and (y) in the reasonable judgment of the Required Secured
Parties, such Event of Default has not had and is not reasonably
likely to have a Material Adverse Effect; or
Section 9.06. Project Events. (a) The Borrower shall cease
to have the right to possess and use the Site; or
(b) any event shall have occurred which entitles the
Borrower or PNOC-EDC to give a notice under Section 9.1 of the
Energy Conversion Agreement; or
(c) the Borrower shall (except as permitted by Section 8.02
hereof) sell or otherwise dispose of any of its interest in the
Project; or
(d) an event or circumstance described in subclause (a), (b),
(c) or (d) of Section 14.2.1 of the Energy Conversion
Agreement shall have occurred, it being understood that for
purposes of this Section 9.06(d), (i) the words "one-hundred twenty
(120)" contained in subclauses (b), (c) and (d) of
Section 14.2.1 of the Energy Conversion Agreement shall be
replaced with the words "sixty (60)" in each place where such words
appear and the words "twenty four (24) months" and
"24 months" shall be replaced by the words "eighteen (18) months"
in each place in subclause (b) of Section 14.2.1 of the Energy
Conversion Agreement in which such words appear; or
(e) an event or circumstance described in subclause (a), (b)
or (c) of Section 14.2.2 of the Energy Conversion Agreement shall
have occurred, it being understood that for purposes of this
Section 9.06(e), the words "one-hundred twenty (120)"
contained in subclauses (b) and (c) of Section 14.2.2 of the Energy
Conversion Agreement shall be replaced with the words "sixty (60)"
in each place where such words appear; or
(f) a failure by the Borrower described in the first
sentence of Section 14.3 of the Energy Conversion Agreement shall
have occurred, it being understood that for purposes of this
Section 9.06(f), the words "sixty (60) consecutive days"
contained in the first sentence of Section 14.3 of the Energy
Conversion Agreement shall be replaced with the words "forty-five
(45) consecutive days"; or
Section 9.07. Material Adverse Effect. One or more
events, conditions or circumstances (including without limitation
Force Majeure as defined in Sections 13.1(a) and 13.1(b) of the
Energy Conversion Agreement) shall exist or shall have occurred
which, in the reasonable judgment of the Required Secured
Parties, is reasonably likely to have a Material Adverse Effect; or
Section 9.08. Project Documents; Security Documents. (a)
This Agreement or any of the other Financing Documents or any of
the Energy Conversion Agreement, the Supply Contract or the
Construction Contract, or any provision hereof or thereof (i) is or
becomes invalid, illegal or unenforceable or any party thereto
(other than Eximbank) shall so assert, or (ii) ceases to be in full
force and effect, or shall cease to give the Secured Parties the
Liens, rights, powers and privileges purported to be created
thereby or hereby or any party thereto (other than Eximbank) shall
so assert; or
(b) any of the Project Documents (other than the Financing
Documents or any of the Energy Conversion Agreement, the Supply
Contract or the Construction Contract) or any material provision
thereof (i) is or becomes invalid, illegal or unenforceable or any
party thereto (other than Eximbank) shall so assert, and such
default shall have continued for a period of thirty (30) days after
notice thereof shall have been given to the Borrower by Eximbank,
or (ii) ceases to be in full force and effect, or shall cease to
give the Secured Parties the Liens, rights, powers and privileges
purported to be created thereby such that the interests of the
Secured Parties are adversely affected to a material extent; or
(c) except as permitted by Section 8.01 hereof, the
Security or any component part thereof for any reason fails to
constitute a valid and perfected first priority Lien or ceases to
be in full force and effect or the Borrower or the grantor or
pledgor thereof shall so assert; or
Section 9.09. Ownership of the Borrower. (a) CECI shall
cease to maintain Control (as defined below) of the Borrower or,
without the prior written consent of Eximbank, one or more sales or
other transfers, directly or indirectly, of shares of capital stock
of the Borrower shall have occurred such that, after giving effect
thereto, either (x) CECI would own, directly or
indirectly, less than 66-2/3% of the shares of capital stock of the
Borrower free and clear of all Liens (other than the Liens created
by the Security Documents) or (y) CECI and its
subsidiaries would have received aggregate gross proceeds on
account of the sale or other transfer of shares of capital stock of
the Borrower exceeding an amount equal to 40% of paid-in capital as
at the Disbursement Date (for purposes of this Section 9.09,
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of a Person, including operating and maintenance
decisions, whether through ownership of voting securities, by
contract, or otherwise); or
(b) the Borrower or CE Philippines or Ormat Cebu shall,
without the prior consent of Eximbank, issue or have outstanding
any securities convertible into or exchangeable for its capital
stock or issue or grant or have outstanding any rights to
subscribe for or to purchase, or any options or warrants for the
purchase of, or any agreements, arrangements or understandings
providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its
capital stock, other than as provided in the Board of Investments
Approval; provided, however, that an Event of Default shall not be
deemed to have occurred if (x) full dilution of the capital stock
of the Borrower and/or CE Philippines and/or Ormat Cebu by the
methods noted above in this Section 9.09(b) would not have the
effect of reducing below 66 2/3% CECI's direct or indirect
ownership of the shares of capital stock of the Borrower and (y)
100% of the capital stock of the Borrower is at all times subject
to a Lien in favor of the Collateral Agent on terms substantially
similar to the terms of the Pledge Agreement; or
Section 9.10. Judgments. One or more judgments or decrees
shall be entered (a) against the Borrower, CE Philippines or Ormat
Cebu involving in the aggregate a liability (not paid or fully
covered by insurance) of the equivalent of $2 million or more; or
(b) prior to the date on which CECI shall cease to be an Obligor,
against CECI involving in the aggregate a liability (not paid or
fully covered by insurance) of the equivalent of $10 million or
more; or (c) after the date on which CECI shall cease to be an
Obligor, against CECI involving in the aggregate liability (not
paid or fully covered by insurance) of the equivalent of $12
million or more, which liability in the reasonable judgment of the
Required Secured Parties, has had or is reasonably likely to have
a material adverse effect on the operations, business, condition
(financial or otherwise) or property of the Borrower; or (d) prior
to the date on which the Construction Contractor shall cease to be
an Obligor, against the Construction Contractor involving in the
aggregate a liability (not paid or fully covered by insurance) the
equivalent of $2 million or more, which liability, in the
reasonable judgment of the Required Secured Parties, has had or is
reasonably likely to have a Material Adverse Effect; (e) prior to
the date on which the Construction Supplier shall cease to be an
Obligor, against the Construction Supplier involving in the
aggregate a liability (not paid or fully covered by insurance) the
equivalent of $2 million or more, which liability, in the
reasonable judgment of the Required Secured Parties, has had or is
reasonably likely to have a Material Adverse Effect; (f) prior to
the date on which Ormat Industries shall cease to be an Obligor,
against Ormat Industries involving in the aggregate a liability
(not paid or fully covered by insurance) the equivalent of $2
million or more, which liability, in the reasonable judgment of the
Required Secured Parties, has had or is likely to have a Material
Adverse Effect; and in any such case all such judgments or decrees
shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days after the entry thereof; or
Section 9.11. Governmental Action. Any government or
Governmental Authority shall have condemned, nationalized,
seized, or otherwise expropriated all or any substantial part of
the property or other assets of the Borrower or of its capital
stock or shall have assumed custody or control of such property or
other assets or of the business or operations of the Borrower or of
its capital stock or shall have taken any action for the
dissolution or disestablishment of the Borrower or any action that
would prevent the Borrower or its officers from carrying on its
business or operations or a substantial part thereof; or
Section 9.12. Permits. The Borrower or any Obligor shall
fail to obtain, renew, maintain or comply in all material
respects with any Governmental Approval set forth in Schedule
5.01(t) hereof or any license, approval or consent referred to in
Section 5.2(c) of the Bank Credit Agreement; or any such
Governmental Approval or license, approval or consent shall be
rescinded, terminated, suspended, modified or withheld or shall be
determined to be invalid or shall cease to be in full force and
effect; or any proceeding shall be commenced by or before any
Governmental Authority for the purpose of rescinding,
terminating, suspending, modifying or withholding any such
Governmental Approval or license, approval or consent and such
proceeding is not dismissed within 60 days; and such failure,
rescission, determination of invalidity, termination, suspension,
modification, withholding, cessation or commencement is
reasonably likely to have a Material Adverse Effect; or
Section 9.13. Transfer of Collateral; Event of Loss;
Diminution of Property Rights. (a) Title to or any right in all
or any part of (i) the Mortgage Collateral, (ii) the Plant or (iii)
any other collateral purported to be covered by the Security
Documents (other than as permitted pursuant to this Agreement,
including Section 8.02 hereof) shall become vested in any party
other than the party named as owner and/or holder thereof in the
applicable Security Document, whether by operation of law or
otherwise, or (iv) there shall have occurred an Event of Loss; or
(b) Except as otherwise permitted pursuant to this
Agreement, the Borrower hereafter grants any easement or
dedication, files any plat, declaration or restriction or enters
into any lease or sub-lease concerning the Site, the Mortgage
Collateral or the Plant and the effect thereof is determined by
Eximbank, in its reasonable discretion, to be material and
adverse to the Site, the Mortgage Collateral, the Plant or the
Borrower; or
Section 9.14. Funding Agreement, Supplemental Credit
Agreement, OPIC Contract of Insurance. (a) The failure by the
Supplemental Lender, in default of its funding obligations under
the Supplemental Credit Agreement and the Intercreditor
Agreement, to make available any Supplemental Loan or portion
thereof as required by the Supplemental Credit Agreement and the
Intercreditor Agreement; provided, that no Event of Default shall
be declared as a result of such failure if, on or prior to the date
on which the funds the Supplemental Lender failed to
disburse are required by the Borrower for the prompt payment of
Project Costs, another bank or financial institution (other than
any Construction Financing Secured Party) shall have disbursed such
funds to the Borrower on terms not materially less favorable to the
Borrower than the terms applicable to Supplemental Loans under the
Supplemental Credit Agreement or if CECI shall, or shall have
caused the Affiliated Funding Entities to, disburse such funds to
the Borrower in accordance with Section 3A of the Funding
Agreement; or
(b) the failure by CECI to obtain the OPIC Contract of
Insurance, in form and substance reasonably satisfactory to
Eximbank and the proceeds of which are subject to a first
priority Lien in favor of the Collateral Agent, on or before the
date sixty (60) days after the Guarantee Operative Date; or
Section 9.15. Regulatory Status. The Borrower shall fail to
remain continuously exempt from all regulation under PUHCA as a
result of being a "foreign utility company" under Section 33 of
PUHCA or otherwise; or
Section 9.16. ERISA. Any of the following events occur or
exist with respect to the Borrower or, in the case of (a) through
(e) below, any ERISA Affiliate: (a) any Termination Event with
respect to any Plan; (b) any event or circumstance that is
reasonably likely to constitute grounds entitling the PBGC to
institute proceedings under Section 4042 of ERISA for the
imposition of liability in respect of any Pension Plan (other than
a liability to the PBGC for insurance premiums the payment of which
is not yet due); (c) any Pension Plan shall have an accumulated
funding deficiency as defined in Section 412 of the Code or Section
302 of ERISA; (d) any Plan intended to be
qualified under Section 401(a) or 401(k) of the Code shall be
disqualified; (e) any Plan shall be subject to an excise tax
pursuant to Code Section 4980B or shall fail to comply with
Sections 601-606 (inclusive) of ERISA; (f) the Borrower provides
employee welfare benefits to retirees other than statutorily
required or pursuant to Section 601 et seq. of ERISA and Section
4980B of the Code; or (g) the Borrower incurs liability under or
relating to any Plan resulting from a violation of ERISA, the Code
and/or any other applicable law, including without
limitation the Age Discrimination in Employment Act, the
Americans With Disabilities Act and Title VII of the Civil Rights
Act, each as amended; and in each case above, such event or
condition, individually or in the aggregate, together with all
other such events or conditions, if any, is reasonably likely to
subject the Borrower to any tax, penalty, or other liability to a
Plan, a Multiemployer Plan, the PBGC, or otherwise (or any
combination thereof) which in the aggregate has had or is
reasonably likely to have a Material Adverse Effect; or the
Borrower or any ERISA Affiliate shall fail to pay when due an
amount or amounts which it shall have become liable to pay under
Title IV or ERISA or as a contribution to a Pension Plan and/or
Multiemployer Plan which, as a result, has had or is reasonably
likely to have a Material Adverse Effect;
then, (a) in the event that an Event of Default described in
Section 9.01(i) with respect to any amount owing to Eximbank shall
occur and be continuing on or prior to the Disbursement Date,
Eximbank shall have the right to declare, without
presentment, demand, protest or notice of any kind, all of which
are hereby expressly waived by Borrower, the Eximbank Credit to be
terminated, irrespective of any other provision of any
Financing Document, whereupon the same shall be and become
terminated immediately, and (b) in the event that any Event of
Default (including any Event of Default described in Section
9.01(i) with respect to any amount owing to Eximbank) shall occur,
and at any time thereafter, if such Event of Default is continuing
on and/or after the Disbursement Date, Eximbank shall have the
right to (i) take any actions necessary to cure such Event of
Default and/or declare an Event of Default, (ii)
declare, without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived by Borrower, the
entire amount of Borrower's outstanding Eximbank Secured
Obligations to be immediately due and payable, irrespective of any
other provision of any Financing Document, whereupon the same shall
be and become immediately due and payable (provided that if an
Event of Default specified in Section 9.05 shall have occurred or
a Buyout shall have occurred, the entire amount of Borrower's
outstanding Eximbank Secured Obligations shall be automatically
immediately due and payable without any declaration, presentment,
demand, protest or notice or other act of any kind by Eximbank or
any of the other Secured Parties whatsoever), and (iii) proceed to
enforce or cause or instruct the Collateral Agent to enforce any
remedies provided under any of the Financing Documents. If an
event or occurrence constitutes an Event of Default or Default
under more than one of the provisions of this Article IX,
Eximbank may during the continuance of such Event of Default take
all actions and remedies provided hereunder upon expiration of the
shortest grace period, if any, applicable to such Default or Event
of Default.
ARTICLE X. GOVERNING LAW AND JURISDICTION
Section 10.01. Governing Law. THIS AGREEMENT IS A CONTRACT
MADE UNDER THE LAWS OF THE STATE OF NEW YORK OF THE UNITED STATES
OF AMERICA AND SHALL FOR ALL PURPOSES BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE WITHOUT REGARD
TO THE CONFLICT OF LAWS RULES THEREOF.
Section 10.02. Submission to Jurisdiction; Service of
Process. (a) Any legal action or proceeding against the
Borrower with respect to this Agreement or any Financing 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
Borrower hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of
the aforesaid courts. The Borrower agrees that a judgment, after
exhaustion of all available appeals, in any such action or
proceeding shall be conclusive and binding upon the Borrower, and
may be enforced in any other jurisdiction,
including without limitation the Republic, by a suit upon such
judgment, a certified copy of which shall be conclusive evidence of
the judgment. The Borrower hereby irrevocably designates, appoints
and empowers White & Case, with offices on the date hereof at 1155
Avenue of the Americas, New York, New York 10036-2787, as its
designee, appointee and agent to receive, accept and acknowledge
for and on its behalf, and in respect of its
property, service of any and all legal process, summons, notices
and documents which may be served in any such action or
proceeding. If for any reason such designee, appointee and agent
shall cease to be available to act as such, the Borrower agrees to
designate a new designee, appointee and agent in New York City on
the terms and for the purposes of this provision satisfactory to
Eximbank, advise Eximbank thereof, and deliver to Eximbank evidence
in writing of the successor agent's acceptance of such appointment.
The Borrower further irrevocably consents to the service of process
out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to the Borrower, at its address
set forth opposite its signature below, such service to become
effective 30 days after such mailing. The foregoing provisions
constitute, among other things, a special arrangement for service
between the parties to this Agreement for the purposes of 28 U.S.C.
U 1608. Nothing herein shall affect the right of the Collateral
Agent or Eximbank to serve process in any other manner permitted by
law or to commence legal proceedings or otherwise proceed against
the Borrower in the Republic or in any other jurisdiction.
(b) The Borrower hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in
connection with this Agreement or any other Financing Document
brought in the courts referred to in clause (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.
Section 10.03. Waiver of Sovereign Immunity. The Borrower
acknowledges and agrees that the activities contemplated by the
provisions of the Financing Documents are commercial in nature
rather than governmental or public, and therefore acknowledges and
agrees that it is not entitled to any right of immunity on the
grounds of sovereignty or otherwise with respect to such activities
or in any legal action or proceeding arising out of or relating to
the Financing Documents. The Borrower, in respect of itself, its
process agents, and its properties and revenues, expressly and
irrevocably waives any such right of immunity which may now or
hereafter exist (including any immunity from any legal process,
from the jurisdiction of any court or from any execution or
attachment in aid of execution prior to judgment or otherwise) or
claim thereto which may now or hereafter exist, and agrees not to
assert any such right or claim in any such action or
proceeding, whether in the United States or otherwise.
ARTICLE XI. MISCELLANEOUS
Section 11.01. Transportation. All Items which are
financed under the Eximbank Credit and which are exported by ocean
vessel must be transported from the United States in
vessels of U.S. Registry as required by 46 U.S.C. U 1241-1 (Public
Resolution No. 17 of the 73rd Congress of the United States, as
amended), except to the extent that a waiver of this requirement is
obtained from the U.S. Maritime Administration ("MARAD"). If
shipments are made on non-U.S. vessels without a waiver or contrary
to the provisions of the waiver, the Items will not be eligible for
financing under the Eximbank Credit or for coverage under the
Eximbank Guarantee Agreement.
Section 11.02. Transportation Costs. The costs of ocean or
air freight for shipment of any Item on a vessel or aircraft of
non-U.S. registry pursuant to a waiver from MARAD will constitute
Foreign Cost associated with such Item if such costs are included
in the Contract Price of such Item. If such freight costs are for
shipment of an Item on a vessel or aircraft of U.S. registry, such
costs will constitute U.S. Content.
Section 11.03. Insurance. The Borrower shall obtain
insurance against marine and transit hazards on all shipments of
the Items in an amount not less than the amount of the
Disbursements made with respect to those shipments. United States
insurers shall be given a nondiscriminatory opportunity to bid for
such insurance business related to the Items. The cost of the
premiums for such insurance may be included in the U.S. content of
the insured Item if the insurance is placed in the United States
with a United States company. In all other cases, the cost of the
premiums shall be included in the Foreign Cost associated with the
Item.
Section 11.04. Disposition of Indebtedness. Eximbank may
sell, transfer, pledge, negotiate, grant participations in or
otherwise dispose of all or any part of the Borrower's
indebtedness under this Agreement and the Eximbank Note to any
party, and any such party shall enjoy all the rights and
privileges of Eximbank under this Agreement and the Eximbank Note.
The Borrower shall, at the request of Eximbank, execute and deliver
to Eximbank or to any party that Eximbank may
designate any such further instruments as may be necessary or
desirable to give full force and effect to the disposition by
Eximbank. Notwithstanding anything to the contrary contained
herein, the Borrower may not assign or otherwise transfer any of
its rights or obligations under this Agreement without the prior
written consent of Eximbank.
Section 11.05. Taxes. The Borrower agrees to pay all amounts
owing by it under this Agreement, the Eximbank Guarantee Agreement
or the Eximbank Note free and clear of and without deduction for
any Taxes. The Borrower further agrees:
(a) that if it is prevented by operation of law from paying
any such Taxes, then the interest rate or fees required to be paid
under this Agreement, the Eximbank Guarantee Agreement or the
Eximbank Note shall be increased by the amount necessary to yield
to Eximbank interest, fees or expenses in the amounts provided for
in this Agreement, the Eximbank Guarantee Agreement or the Eximbank
Note after provision for the payment of all such Taxes;
(b) that it shall at the request of Eximbank execute and
deliver to Eximbank such further instruments as may be necessary or
desirable to effect the increased amounts as provided for in clause
(a) immediately above, including a new Eximbank Note to be issued
in exchange for any Eximbank Note theretofore issued;
(c) that it shall hold Eximbank harmless from and against any
liabilities with respect to any such Taxes (whether or not properly
or legally asserted); and
(d) to provide Eximbank with the original or a certified copy
of evidence of the payment of any such Taxes by the Borrower as
Eximbank may reasonably request, or, in the event of a non-payment
of any such Tax being asserted against Eximbank, to provide
Eximbank with a certificate from the appropriate taxing authority
or an opinion of counsel acceptable to Eximbank stating that such
asserted Tax is not payable.
In the event that it is necessary for Eximbank to cooperate with
the Borrower in order for the Borrower to fulfill its obligations
under this Section 11.05, Eximbank shall cooperate to the extent
necessary, provided Eximbank shall incur no expense or other
liability in connection therewith. In the event Eximbank assigns
or transfers its rights, title and interest under this Agreement to
a Person which is not a Person entitled to tax exemptions on its
assets, revenues and operations substantially similar to the tax
exemptions applicable to Eximbank, then the definition of "Taxes"
applicable to such Person for purposes of this Agreement shall be
the definition of "Taxes" set forth in Schedule X
attached hereto.
Section 11.06. Disclaimer. Eximbank shall not be
responsible in any way for the performance of the Purchase
Contracts, and no claim against the supplier of any Item or any
other person with respect to the performance of the Purchase
Contracts will affect the obligations of the Borrower under this
Agreement, the Eximbank Note or any Financing Document.
Section 11.07. Indemnities and Expenses. (a) The Borrower
shall, whether or not the transactions herein contemplated are
consummated, pay the reasonable fees and expenses of the
Independent Engineer, the Insurance Consultant, Milbank, Tweed,
Hadley & McCloy, special New York counsel to Eximbank, and SyCip
Salazar Hernandez & Gatmaitan, special Philippine counsel to
Eximbank and the law firms referred to in 5.01(c) and 5.02(b), and
all reasonable costs and expenses incurred by Eximbank, incurred in
connection with (i) the preparation, printing,
execution, delivery, administration, registration (where
appropriate) or enforcement of this Agreement, the Eximbank Note,
the Eximbank Guarantee Agreement and the other Financing
Documents and any other documents related thereto (including the
Legal Opinions); (ii) any amendment or modification to,
preservation of rights under, or waiver in connection with, the
Financing Documents or any such other document; and (iii) the
registration (where appropriate) and the delivery of the
evidences of Indebtedness relating to the Eximbank Credit and the
Disbursement thereof.
(b) The Borrower shall, whether or not the transactions
herein contemplated are consummated, (i) pay and hold Eximbank
harmless from and against any and all present and future stamp and
other similar taxes and documentary or registration fees with
respect to the matters referred to in the foregoing clause (a) and
save Eximbank harmless from and against any and all liabili-ties
with respect to or resulting from any delay or omission (other than
to the extent attributable to Eximbank) to pay such taxes or fees;
and (ii) indemnify Eximbank and each of its
respective officers, directors, employees, representatives,
attorneys and agents from and hold each of them harmless against
any and all liabilities incurred by any of them as a result of, or
arising out of, or in any way related to, or by reason of, any
investigation, litigation or other proceeding (whether or not
Eximbank is a party thereto) related to the entering into and/or
performance of this Agreement, the Eximbank Note, the Eximbank
Guarantee Agreement or any other Project Document or the use of the
proceeds of the Eximbank Credit or the consummation of any
transactions contemplated herein or in any other Project
Document, including, without limitation, the reasonable fees and
disbursements of counsel selected by such indemnified party
incurred in connection with any such investigation, litigation or
other proceeding or in connection with enforcing the provisions of
this Section 11.08(b) (but excluding any such liabilities,
obligations, losses, to the extent incurred by reason of the gross
negligence or willful misconduct of the Person to be indem-nified
or its officers, directors, employees, representatives, attorneys
or agents, as the case may be as determined by a court of competent
jurisdiction). Without limitation to the foregoing provisions of
this paragraph, the indemnity provided hereunder shall cover any
loss, liability or expense reasonably incurred other than by reason
of gross negligence or wilful misconduct on behalf of Eximbank
arising out of or in connection with claims by third parties
(including without limitation any Bank or the Agent) to whom a copy
of the Information Memorandum has been distributed with the
knowledge of the Borrower against Eximbank relating to any alleged
inaccuracy of the factual information (taken as a whole) which, for
the avoidance of doubt shall not include any information by way of
projections, estimates or other expressions of view as to future
circumstances (provided that such projections, estimates or other
expression of view are expressed in good faith and on the basis of
assumptions which when made were viewed by the Borrower in good
faith to be
reasonable) contained in, or any alleged omission of information
which will render such aforesaid factual information (taken as a
whole) inaccurate or misleading in a material respect from, the
Information Memorandum and the Project Documents. Eximbank shall
(1) use reasonable efforts to, upon its becoming aware of any event
which may result in the Borrower being required to perform any of
its indemnity obligations under this paragraph (b),
promptly notify the Borrower (provided that failure to so notify
shall not mitigate the obligations of the Borrower hereunder), (2)
upon request from the Borrower consult with the Borrower regarding
any step (including any step which may mitigate the effect of such
event) it proposes to take in respect of such event and (3) consult
with the Borrower before entering into any settlement or compromise
in relation to any such claims, actions or suits.
(c) Without limitation to the provisions of paragraph (b)
above, the Borrower agrees to defend, protect, indemnify and hold
harmless Eximbank and each of its officers, directors, employees,
representatives, attorneys and agents from and hold each of them
harmless against any and all liabilities (including removal and
remedial actions), obligations, losses, damages, penalties, claims,
actions, judgments, suits, costs, expenses and disbursements
(including reasonable attorneys' and consultants' fees and
disbursements) imposed on or asserted against any such Persons
directly or indirectly based on, or arising or resulting from, (i)
the actual or alleged presence of Hazardous Materials on, under or
at the Plant or the Site, (ii) any Environmental Claim relating to
the Borrower or the Project or arising out of the use of the Plant
or the Site, or (iii) the exercise of Eximbank's rights under any
of the provisions of this Section regardless of when any such
matters arise, but excluding any matter based solely on the gross
negligence or willful misconduct of Eximbank or its officers,
directors, employees, representatives, attorneys or agents, as the
case may be. Eximbank shall (1) use reasonable efforts to, upon
its becoming aware of any event which may result in the Borrower
being required to perform any of its obligations under this
paragraph (c), promptly notify the Borrower (provided that failure
to so notify shall not mitigate the obligations of the Borrower
hereunder), (2) upon request from the Borrower consult with the
Borrower regarding any step (including any step which may
mitigate the effect of such event) it proposes to take in respect
of such event and (3) consult with the Borrower before entering
into any settlement or compromise in relation to any such claims,
actions or suits.
(d) To the extent that the undertaking in the preceding
paragraphs of this Section may be unenforceable because it is
violative of any law or public policy, the Borrower will
contribute the maximum portion that it is permitted to pay and
satisfy under applicable law to the payment and satisfaction of
such undertakings.
(e) All sums paid and costs incurred by Eximbank with respect
to any matter indemnified hereunder shall bear interest at the
default rate applicable to the Eximbank Credit from the date so
paid or incurred until reimbursed by the Borrower, and all such
sums and costs shall be added to the debt and be secured by the
Security Documents and shall be immediately due and
payable on demand.
Section 11.08. Right of Setoff. In addition to any rights
now or hereafter granted under applicable law or otherwise, and not
by way of limitation of any such rights, upon the occurrence of an
Event of Default, Eximbank is hereby authorized at any time or from
time to time, without presentment, demand, protest or other notice
of any kind to the Borrower or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any other
Indebtedness at any time held or owing by Eximbank to or for the
credit or the account of the Borrower against and on account of the
Eximbank Secured Obligations and liabilities of the Borrower to
Eximbank under this Agreement or under any of the other Financing
Documents, and all other claims of any nature or description
arising out of or connected with this Agreement or any other
Financing Document, irrespective of whether or not Eximbank shall
have made any demand with respect thereto.
Section 11.09. Benefit of Agreement. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto, except
that the Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of
Eximbank.
Section 11.10. No Waiver; Remedies Cumulative. No failure or
delay on the part of Eximbank in exercising any right, power or
privilege hereunder or under any other Financing Document and no
course of dealing between the Borrower and Eximbank shall impair
any such right, power or privilege or operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Financing
Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or
thereunder. The rights, powers and remedies herein or in any other
Financing Document expressly provided are cumulative and not
exclusive of any rights, powers or remedies which Eximbank would
otherwise have. No notice to or demand on the Borrower in any case
shall entitle the Borrower to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the
rights of Eximbank to any other or further action in any
circumstances without notice or demand.
Section 11.11. Severability. Any provision of this
Agreement, the Eximbank Note and any other Financing Document which
is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability but that shall not invalidate the remaining
provisions of this Agreement, the Eximbank Note or any Financing
Document or affect such provision in any other
jurisdiction.
Section 11.12. English Language. All documents to be
furnished or communications to be given or made under this
Agreement or any other Financing Document shall be in the English
language.
Section 11.13. Calculations; Computations. All financial
calculations to be made under, or for the purposes of, this
Agreement shall be determined in accordance with Philippine
generally accepted accounting principles, applied on a consistent
basis and, except as otherwise required to conform to the
definitions contained in Schedule X or any other provisions of this
Agreement, shall be calculated from the then most recently issued
quarterly financial statements which the Borrower is obligated to
furnish to Eximbank from time to time, as provided hereunder;
provided, however, that (a) if the relevant quarterly financial
statements should be in respect of the last quarter of a Fiscal
Year then, at the option of Eximbank, such calculations may instead
be made from the audited financial statements for the relevant
Fiscal Year, and (b) if there should occur any material adverse
change in the financial condition or results of
operations of the Borrower after the end of the period covered by
the relevant financial statements, then such material adverse
change shall also be taken into account in calculating the
relevant figures.
Section 11.14. Survival. All indemnities set forth herein
shall survive the execution and delivery of this Agreement and the
Eximbank Note, the execution, delivery and termination of the
Eximbank Guarantee Agreement, and the making and repayment of the
Eximbank Credit.
Section 11.15. Amendments. No term or provision of this
Agreement may be amended, changed, modified or waived except by an
instrument in writing signed by the party against whom such
amendment, change, modification or waiver is sought to be
enforced.
Section 11.16. Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same agreement.
Section 11.17. Notices. Except as otherwise expressly
provided herein, (a) all notices and other communications
provided for hereunder shall be provided in writing (including
telegraphic, telex, facsimile or cable communication) and shall be
sent by telecopy, telex, telegraph or cable with the original of
such communication dispatched by (if inland) overnight or (if
overseas) international courier and, if such courier service is not
available, by registered airmail (or, if inland, registered first-
class mail) with postage prepaid to the Borrower, the Collateral
Agent and Eximbank at their respective addresses specified below,
or at such other address as shall be designated by such party in a
written notice to the other parties hereto and (b) all such notices
and communications shall, when mailed, telegraphed, telexed,
telecopied, or cabled or sent by overnight courier, be effective
seven (7) days after being deposited in the mails in the manner as
aforesaid, when delivered to the telegraph company or cable company
(if inland), one (1) day or (if
overseas) three (3) days after delivery to a courier in the manner
as aforesaid, as the case may be, or when sent by telex (with the
correct answer back) or telecopier:
Addresses:
If to the Borrower:
CE CEBU GEOTHERMAL POWER COMPANY, INC.
c/o Marc Ablan
Sycip Gorres Valayo & Co.
6760 Ayala Avenue
Makati, Metro Manila
Philippines
Tel: 011-632-819-3011
Fax: 011-632-819-0872
Attention: Ms. Rosario Calderon Flanagan
with copies to:
California Energy Company, Inc.
10831 Old Mill Road
Omaha, Nebraska 68154
Tel: 402-330-8900
Fax: 402-330-9888
Attention: General Counsel
with a copy to Vice President - Project Implementation
If to the Collateral Agent:
CREDIT SUISSE
Tower 49
12 East 49th Street
New York, New York 10017
Attn: Project Finance
Tel: (212) 238-2000
Fax: (212) 238-5390
Telex: 420149
If to Eximbank:
EXPORT-IMPORT BANK OF THE UNITED STATES
811 Vermont Avenue, N.W.
Washington, D.C. 20571
U.S.A.
Attn: Vice President
Asia Division
Tel: (202) 566-8714
Fax: (202) 566-7524
Telex: RCA 248460 EXBK UR
TRT 197681 EXIM UT
WUI 64319 EXIBANK
WUT 89461 EXIBANK WSH
Section 11.18. Currency of Payment. The obligation of the
Borrower to pay in Dollars the aggregate amount of the sums due
under this Agreement or the Eximbank Note shall not be deemed to
have been novated, discharged or satisfied by any tender of (or
recovery under judgment expressed in) any currency other than
Dollars, except to the extent which such tender (or recovery) shall
result in the effective payment of such aggregate amount in Dollars
at the place where such payment is to be made and,
accordingly, the amount (if any) by which any such tender (or
recovery) shall fall short of such aggregate amount shall be and
remain due to Eximbank as a separate obligation, unaffected by
judgment having been obtained (if such is the case) for any other
amounts due under or in respect of this Agreement or the Eximbank
Note.
Section 11.19. Headings Descriptive. The headings of the
several sections and subsections of this Agreement are inserted for
convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
Section 11.20. Prior Agreements Superseded. This
Agreement, and the Eximbank Guarantee Agreement and the other
Financing Documents to which the Borrower is a party shall
completely and fully supersede all prior understandings or
agreements, both written and oral, among the parties hereto
regarding the Eximbank Credit and the Eximbank Guarantee
Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have caused
this Agreement to be duly executed and delivered in the United
States as of the date first above written.
CE CEBU GEOTHERMAL POWER EXPORT-IMPORT BANK OF THE
COMPANY, INC. UNITED STATES
By /s/ John G. Sylvia By /s/ Terrence J. Hulihan
(Signature) (Signature)
Name John G. Sylvia Name Terrence J. Hulihan
(Print) (Print)
Title Vice President & Title Vice President - Asia
Chief Financial Officer (Print)
(Print)
Eximbank Credit No. 66643 - Philippines
Exhibit 10.98
Reserved
Exhibit 10.99
Form 234 KGT 12-85 (Second Revised) NS
OPIC Contract of Insurance No. N972
OVERSEAS PRIVATE INVESTMENT CORPORATION
CONTRACT OF INSURANCE
Against
Inconvertibility
Exprorpriation
Polictical Violence
as defined below,
between the Overseas Private Investment Corporation ("OPIC") and
California Energy Company, Inc.
10831 Old Mill Road
Omaha, Nebraska 68154
a corporation organized and existing under the laws of the State of
Delaware
through its subsidiaries CE International Ltd., CE Philippines
Ltd., and
Ormat-Cebu Ltd., all corporatrions organized and existing under the
laws of
Bermuda
(together, the "Investor").
Article I - Subject of Insurance and Exchange of Promises.
1.01 Subject.
1. Investment. The Investor promises that the Investor
contributed or will contribute up to $55,555,555 in United States
dollars
to
CE Cebu Geothermal Power Company, Inc.
c/o Sycip Gorres Valayo & Co.
6760 Ayala Avenue
Makati, Manila Philippines
a corporation organized under the laws of Philippines
(the "foreign enterprise")
for which the Investor has acquired or will acquire
(a) 550,000 common shares; and
(b) subordinated convertible notes that will convert to
56,010,000 shares of redeemable preferred stock upon commencement
of commercial operations,
together representing a 99 percent interest in it
(together "the investment").
Ninety percent of each of these interests acquired by the
Investor is insured under this contract (the "insured
investment").
2. Project. The investment will be applied to
a 118.5 net megawatt geothermal electric power generating
facility in the Philippines
(the "project").
3. Foreign governing authority means the governmental
authority(ies) in effective control in all or part of
Philippines.
I-2
1.02 Promises.
OPIC promises that if acts occur during the term of this contract
which satisfy the requirements for coverage in Article II, IV or
VI, OPIC will pay the Investor the amount of compensation
provided in Article III, V or VII, in accordance with the
procedures in Article VIII.
The Investor promises to comply with the duties in Article IX. If
the Investor violates any of those duties, the Investor may lose
rights, including the right to compensation.
Amendments to Articles I through IX may be contained in Article X.
1.03 Maximum Aggregate Compensation.
OPIC will not pay compensation under this contract in an
aggregate amount that exceeds $70,000,000.
1.04 Full Faith and Credit.
The full faith and credit of the United States of America is
pledged to secure the full payment by OPIC of its obligations under
this contract.
1.05 Term.
This contract shall enter into force on the date it has been signed
by OPIC and the Investor and shall terminate 15 years afterward
unless terminated earlier (Section 8.07; Section 9.02).
1.06 Premium and Active Amount Elections.
The Investor shall elect amounts of coverage (Section 8.06) and pay
premiums on or before each annual anniversary of the
effective date of the contract.
The coverages and premiums for the first period shall be as
follows:
Equity securities:
Inconvertibility Expropriation Political
Violence
Coverage Ceiling $70,000,000 $70,000,000 $70,000,000
Active Amount $35,000,000 $35,000,000 $35,000,000
Premium Rate is x115,500.00 x0.63000% x 0.55000% Total
premium is: $115,500.00 +$220,500.00 +$192,500.00
=$528,500.00
The premium for the first half of the first contract period
(Section 10.07) is $264,250.00.
1.07 Administrative Fee. The Investor will pay an annual fee for
contract administration of .25% of the Investment amount (Section
1.01.1) on or before the contract effective date and on or before
each annual anniversary of the contract effective date, but only if
the administrative fee exceeds the premium due for the contract for
that period. If the administrative fee exceeds the premium due for
that period, the premium will be waived.
Article II - Inconvertibility - Scope of Coverage.
2.01 Inconvertibility of Local Currency. Local currency shall be
deemed inconvertible and compensation shall be payable,
subject to the exclusions (Section 2.02) and limitation (Section
3.02), if neither the Investor nor the foreign enterprise is able
legally
(a) to convert earnings from or returns of the insured
investment into United States dollars through any channel during
the 90 days immediately prior to a claim to OPIC, except at an
exchange rate that is less favorable than the then-prevailing
exchange rate described under Section 3.01.2, or
(b) to transfer such converted earnings to the United States
during such period.
2.02 Exclusions. No compensation for inconvertibility shall be
payable if
(a) Pre-existing Restrictions.
(1) An investor in comparable circumstances would have been unable
legally (a) to convert local currency into United States dollars on
the date of this contract or (b) to transfer such dollars to the
United States on the date of this contract; and
(2) The Investor knew or should have known about the
restriction; or
(b) Investor Diligence. The Investor has not made all
reasonable efforts to convert the local currency into United States
dollars or to transfer such dollars to the United States through
all direct and indirect legal mechanisms reasonably available; or
(c) Reconversions. The local currency represents funds which were
previously converted into another currency; or
(d) Provocation. The preponderant cause is unreasonable action
attributable to the Investor, including corrupt practices.
(e) Use Restricted by Expropriation. The use of such local
currency is restricted by an expropriatory action (Section 4.02).
III-1
Article III - Inconvertibility - Amount of Compensation
3.01 Rate of Compensation for Inconvertibility.
1. Date. If the requirements of inconvertibility are satisfied
(Article II), subject to the limitation (Section 3.02), OPIC shall
pay compensation
(a) against prior delivery of the inconvertible local currency, or
(b) if the Investor is unable legally to deliver the local
currency or if OPIC so requests, against prior assignment of the
Investor's right to receive the payment that is the subject of the
claim.
If the Investor delivers local currency or an assignment of rights
denominated in local currency, compensation shall be the United
States dollar equivalent of the local currency at the exchange rate
in effect 90 days before OPIC receives the
completed application for compensation.
If the Investor delivers an assignment of rights denominated in
United States dollars, compensation shall be the United States
dollar amount of the rights so assigned.
2. Exchange Rate.
(a) The exchange rate shall be the official exchange rate
applicable to the type of remittance involved.
(b) If, however,
(1) United States dollars were not generally available at the
applicable official exchange rate; and
(2) exchanges of local currency for United States dollars were
effected legally and customarily through another channel;
then the exchange rate shall be the effective rate obtained through
that channel.
(c) In either case, the exchange rate shall be net of all
deductions for governmentally imposed charges, such as taxes and
commissions.
3.02 Limitation. Compensation shall not exceed the Active Amount
(Section 8.06 in effect 90 days before OPIC receives the
application for compensation.
Article IV - Expropriation - Scope of Coverage.
4.01 Total Expropriation. Compensation is payable for total
expropriation (Section 5.01), subject to the exclusions (Section
4.03) and limitations (Section 5.04), if an act or series of acts
satisfies all of the following requirements:
(a) the acts are attributable to a foreign governing authority
which is in de facto control of the part of the country in which
the project is located;
(b) the acts are violations of international law (without regard
to the availability of local remedies) or material breaches of
local law;
(c) the acts directly deprive the Investor of fundamental rights
in the insured investment (Rights are "fundamental" if without them
the Investor is substantially deprived of the benefits of the
investment.); and
(d) the violations of law are not remedied (Section 9.01.9) and
the expropriatory effect continues for six months.
4.02 Expropriation of Funds. Compensation is payable for an
expropriation of funds that constitute a return of the insured
investment or earnings on the insured investment (Section 5.02) if
an act or series of acts
(a) satisfies the governmental action, illegality and duration
requirements (Section 4.01(a), (b) and (d)); and
(b) directly results in preventing the Investor from
(1) repatriating the funds; and
(2) effectively controlling the funds in the country in which the
project is located.
4.03 Exclusions. No compensation for expropriation shall be
payable if
(a) Provocation. The preponderant cause is unreasonable action
attributable to the Investor including corrupt practices.
(b) Government Action. The action is taken by the foreign
governing authority in its capacity or through its powers as a
purchaser, supplier, creditor, shareholder, director or manager of
the foreign enterprise.
Article V - Expropriation - Amount of Compensation.
5.01 Total Expropriation. For total expropriation (Section 4.01),
OPIC shall pay compensation in United States dollars in the amount
of the book value of the insured investment, subject to adjustments
(Section 5.03) and limitations (Section 5.04).
Compensation is computed as of the date the expropriatory effect
commences (Section 4.01(c)) and is based on financial statements
maintained in accordance with Section 9.01.6 for the foreign
enterprise. However, OPIC may
(1) conform the financial statements to principles of accounting
generally accepted in the United States; and
(2) make adjustments (Section 5.03).
OPIC shall be bound by the Investor's choice among generally
accepted accounting principles, if the choice is consistent with
the Investor's own accounting, unless such choice results in a
substantial overstatement of the fair market value of the insured
investment or the foreign enterprise as an independent entity.
5.02 Expropriation of Funds. For expropriation of funds
(Section 4.02), OPIC shall pay compensation in the amount of the
United States dollar equivalent of the expropriated funds at the
exchange rate determined in accordance with Section 3.01.2,
computed as of the date the expropriation begins. Compensation for
expropriation of funds shall be subject to the adjustments and
limitations (Section 5.03 and Section 5.04).
5.03 Adjustments.
1. Investments of Property. Non-cash items contributed as part of
the investment shall be adjusted if necessary to reflect the fair
market value of the items furnished at the time of
contribution to the project, plus freight, installation and other
reasonable direct costs incurred in furnishing the items to the
project.
2. Non-Insured Contribution. Any direct or indirect
contribution (and retained earnings thereon) by the Investor after
the insured investment is made shall be deducted from the book
value of the foreign enterprise.
3. Special Accounting Rules. Dealings among related parties shall
be adjusted if necessary to reflect transactions as they would have
occurred had they been at arm's length, and
forgiveness of obligations shall be disregarded. Each entity shall
be accounted for as if it were a separate person for income tax
purposes, and the effect of tax shifting arrangements shall be
disregarded. Obsolescence or
V-2
permanent reduction in recoverable values shall be recognized by
adjusting the book value of assets to realizable value. OPIC may
adjust financial statements to reflect the effect of events that
occur before the expropriatory effect commences, such as events of
loss which are later confirmed.
4. Other Compensation and Retained Property. OPIC may reduce
compensation by the amount of
(a) compensation received from other sources on account of the
loss (excluding compensation payable under other insurance
policies, except to the extent necessary to prevent the Investor
from recovering more than the amount of the loss as recognized
under any of the policies under which compensation is due,
without regard to policy limits); and
(b) the book value of commercially viable property which remains
subject to the Investor's effective disposition and control after
the expropriatory effect commences (unless OPIC requires the
Investor to assign the property (Section 8.02)); and
(c) any obligation the Investor is relieved of by the
expropriation.
The reduction shall be proportionate to the extent that these items
are attributable to the insured investment.
5. Start-up Expenses. If the book value of the insured investment
of a new foreign enterprise in the development stage is less than
the insured amount originally contributed, the accumulated loss
will be disregarded if
(a) the foreign enterprise is newly formed for the principal
purpose of undertaking the project,
(b) the foreign enterprise is a going concern as of the date the
expropriatory effect commences,
(c) that date is within three years of the date this contract is
issued, and
(d) it is clear that no adjustment to book value is necessary by
reason of obsolescence or permanent reduction in recoverable values
of productive facilities or assets.
5.04 Limitations. Compensation shall not exceed any of the
following limitations:
(a) Active Amount. The Active Amount (Section 8.06) on the date
the expropriatory effect commences;
V-3
(b) Insolvency. If the liabilities of the foreign enterprise
exceed its assets as of the date the expropriatory effect
commences, the amount that the Investor would have been entitled to
receive an insolvency proceedings with respect to the insured
investment if assets had been liquidated at book value on that
date;
(c) Self-Insurance. The maximum amount which could be received by
the Investor from OPIC without breaching Section 9.01.3.
VI-1
Article VI - Political Violence - Scope of Coverage.
6.01 Loss Due to Political Violence. Compensation is payable,
subject to the exclusions (Section 6.02) and limitations (Section
7.02), if political violence is the direct and immediate cause of
the permanent loss (including loss of value by damage or
destruction) of tangible property of the foreign enterprise used
for the project.
"Political violence" means a violent act undertaken with the
primary intent of achieving a political objective, such as
declared or undeclared war, hostile action by national or
international armed forces, civil war, revolution, insurrection,
civil strife, terrorism or sabotage. However, acts undertaken
primarily to achieve labor or student objectives are not covered.
6.02 Exclusions. No compensation for political violence shall be
payable
(a) Excluded Property. For loss of precious metals, gems, works
of art, money or documents;
(b) Minimum loss. If the amount of compensation payable would be
less than $5,000;
(c) Reasonable Protective Measures. If the loss results from the
failure to take reasonable measures to protect or preserve the
property; or
(d) Provocation. If the preponderant cause of the loss is
unreasonable action attributable to the Investor, including corrupt
practices.
VII-1
Article VII - Political Violence - Amount of Compensation.
7.01 Basis of Compensation. If the requirements of Article VI are
satisfied, and subject to the limitations (Section 7.02), OPIC
shall pay compensation for a loss in United States dollars in the
amount of
(a) Adjusted Cost. Adjusted cost is the Investor's share
(Section 7.03) of the lowest of
(1) the original cost;
(2) fair market value; or
(3) the reasonable cost of repair;
less anything of value received by the Investor on account of the
property lost and less the Investor's share of any such receipts by
the foreign enterprise; or
(b) Replacement Cost. If the Investor so elects, OPIC will pay
the reasonable cost to repair any item of lost property or to
replace it with equivalent new property, less anything of value
received by the Investor or the foreign enterprise on account of
the property lost. Such compensation shall not exceed 200% of the
original cost of the item. To receive such compensation, the
Investor must repair or replace the lost property to the project
within three years of the loss.
OPIC shall not reduce the compensation payable under subsections
(a) or (b) above by the amount of compensation payable under other
insurance policies on account of the property lost, except to the
extent necessary to prevent the Investor from recovering more than
the amount of the loss as recognized under any of the policies
under which compensation is due, without regard to policy limits.
7.02 Limitations. Compensation shall not exceed any of the
following limitations:
(a) Active Amount. The Active Amount (Section 8.06) on the date
of the loss.
(b) Self-insurance. The maximum amount which could be recovered
by the Investor from OPIC without breaching Section 9.01.3.
(c) Aggregate Adjusted Cost Compensation. Aggregate
compensation for property compensated at adjusted cost shall not
exceed the book value of the insured investment (Section 7.04) at
the time of loss.
7.03 Investor's Share. "Investor's share" means the ratio that
the equity owned by the Investor bears to the total equity of the
foreign enterprise.
7.04 Book Value of Insured Investment.
(a) Book Value. Book value is based on financial statements
maintained by the Investor in accordance with Section 9.01.6 for
the foreign enterprise. However, OPIC may
(1) conform the financial statements to principles of accounting
generally accepted in the United States; and
(2) make adjustments (Section 7.04(b)).
OPIC shall be bound by the Investor's choice among generally
accepted accounting principles, if the choice is consistent with
the Investor's own accounting, unless such choice results in a
substantial overstatement of the fair market value of the insured
investment or the foreign enterprise as an independent entity.
(b) Adjustments.
(1) Investments of Property. Non-cash items contributed to the
investment shall be adjusted if necessary to reflect the fair
market value of the items furnished at the time of contribution to
the project, plus freight, installation and other reasonable direct
costs incurred in furnishing the items to the project.
(2) Non-Insured Contribution. Any direct or indirect
contribution (and retained earnings thereon) by the Investor after
the insured investment is made shall be deducted from book value of
the foreign enterprise.
(3) Special Accounting Rules. Dealings among related parties
shall be adjusted if necessary to reflect transactions as they
would have occurred had they been at arm's length, and
forgiveness of obligations shall be disregarded. Each entity shall
be accounted for as if it were a separate person for income tax
purposes, and the effect of tax shifting arrangements shall be
disregarded. Obsolescence or permanent reduction in
recoverable values shall be recognized by adjusting the book value
of assets to realizable value. OPIC may adjust financial
statements to reflect the effect of events that occur before the
loss of property, such as events of loss which are later
confirmed.
VII-3
(4) Start-up Expenses. If the book value of the insured
investment of a new foreign enterprise in the development stage is
less than the insured amount originally contributed, the
accumulated loss will be disregarded if
(a) the foreign enterprise is newly formed for the principal
purpose of undertaking the project,
(b) the foreign enterprise is a going concern as of the date of
the loss,
(c) that date is within three years of the date this contract is
issued, and
(d) it is clear that no adjustment to book value is necessary by
reason of obsolescence or permanent reduction in recoverable values
of productive facilities or assets.
(c) Insolvency. If the liabilities of the enterprise exceed its
assets as of the date of the loss, book value of the insured
investment shall not exceed the amount that the Investor would have
been entitled to receive in insolvency proceedings with respect to
the insured investment if assets had been liquidated at book value
on the day prior to the loss.
7.05 Appraisal. If OPIC determines that compensation is payable
but OPIC and the Investor are unable to agree on a question of
valuation, either may demand the appointment of an impartial
appraiser. If the parties are unable to agree on the appraiser,
the appointment shall be made by the American Arbitration
Association. The appraiser's itemized appraisal shall be
binding. Appraisal costs shall be borne equally by OPIC and
Investor.
7.06 Estimated Compensation. If OPIC determines that
compensation is payable but conditions in the project country
preclude reasonable efforts by OPIC to determine the precise amount
due, OPIC may pay estimated compensation based on the information
then available. OPIC may revise its estimate and recover any
excess or pay any additional amount due upon receipt of additional
information.
VIII-1
Article VIII - Procedures.
8.01 Application for Compensation. An application for
compensation shall demonstrate the Investor's right to
compensation in the amount claimed. The Investor shall provide
such additional information as OPIC may reasonably require to
evaluate the application. The Investor may amend or withdraw an
application for compensation at any time, but the right to
recover compensation will be lost for any acts covered by a
withdrawn application.
(a) There is no time limit on application for inconvertibility
compensation (Article III); however, compensation shall not exceed
the Active Amount applicable in accordance with Section 3.02.
(b) An application for expropriation compensation (Article V) must
be filed within six months after the Investor has reason to believe
that all requirements of Article IV have been satisfied.
(c) A notice demonstrating the Investor's entitlement to
political violence compensation for loss of assets (Article VI)
must be filed within six months of the loss. The notice together
with proof of the amount of compensation due will be considered a
completed application, which must be filed within three years of
the loss. The Investor may request adjusted cost compensation
(Section 7.01(a)) and later amend the application within three
years of the loss to elect replacement cost compensation (Section
7.01(b)).
(d) OPIC shall have a reasonable time in which to complete
processing of any application for compensation.
8.02 Assignment to OPIC. Within sixty days after OPIC notifies
the Investor of the amount of compensation OPIC will pay under
expropriation or political violence coverage, and concurrent with
payment, the Investor shall transfer to OPIC (a) for
expropriation, all interests attributable to the insured
investment (Section 4.01) or funds (Section 4.02) as of the date
the expropriatory effect commences, including claims arising out of
the expropriation, or (b) for political violence, claims arising
out of the loss due to political violence (Section 6.01). The
Investor shall transfer the interests and claims free and clear of,
and shall agree to indemnify OPIC against, claims, defenses,
counterclaims, rights of setoff and other encumbrances (except
defenses relating to the expropriation).
VIII-2
In connection with an inconvertibility claim, immediately upon
receipt of instructions from OPIC together with notification that
it intends to pay such claim, the Investor shall deliver the local
currency to OPIC by draft subject to collection (or, at OPIC's
option, in cash), or, if the Investor is unable legally to deliver
the local currency or if OPIC so requests, shall instead deliver an
assignment of the Investor's rights with respect to the payment
that is the subject of the claim.
OPIC may decline all or any portion of the Investor's interests or
claims; if so, the Investor's right to compensation shall be
affected only as provided in Section 5.03.4(b).
8.03 Security. As a condition for paying compensation
(including estimated compensation (Section 7.06)) prior to a final
determination of its liability, OPIC may require the
Investor to provide security, satisfactory to OPIC in its
reasonable judgment, for repayment pursuant to Section 9.02(b).
8.04 Excess Salvage Value. With respect to compensated
expropriation and political violence claims, OPIC shall pay to the
Investor any amounts OPIC realizes in United States dollars from
the rights transferred (Section 8.02) in excess of
(a) the compensation paid by OPIC; plus
(b) reasonable interest; plus
(c) OPIC's out-of-pocket expenses in maintaining and realizing
funds from the transferred property.
However, this provision shall not in any way restrict OPIC's
discretion to deal with the rights transferred. OPIC shall have no
obligation to take action with respect to the rights
transferred and shall incur no liability to the Investor for any
actions taken or not taken after the transfer.
8.05 Arbitration. Any controversy relating to this contract shall
be settled by arbitration in Washington, D.C. according to the then
prevailing Commercial Arbitration Rules of the American Arbitration
Association. Unless the Investor initiates
arbitration, OPIC's liability shall expire one year after OPIC
notifies the Investor of its determination concerning an
application for compensation. A decision by arbitrators shall be
final and binding, and any court having jurisdiction may enter
judgment on it.
8.06 Election of Active Amounts and Coverage Ceilings. By prior
notice to OPIC effective as of the next due date for premiums
(Section 1.06), the Investor may increase or decrease the Active
Amount for any coverage for the remainder of the contract term,
subject to the following limitations:
(a) Active Amount shall not exceed the Coverage Ceiling (Section
1.06);
(b) The Coverage Ceiling shall be reduced automatically by
compensation paid by OPIC; Active Amount shall also be reduced
automatically by compensation paid by OPIC; Active Amount shall
also be reduced for the remainder of the annual election period to
which the claim relates (Section 3.02, Section 5.04(a), or Section
7.02(a));
(c) For inconvertibility, expropriation, and political violence
coverages, Active Amount shall not be less than the lesser of book
value (Section 5.01) or the Coverage Ceiling for that
coverage.
8.07 Termination. The Investor may terminate this contract
effective as of any premium due date unless the premium is
already paid. However, termination shall not affect any rights or
obligations of either party relating to prior periods.
8.08 Legal and Miscellaneous. This contract shall be governed by
the law of the District of Columbia, its conflict of law rules
excepted. This contract constitutes the complete agreement between
the parties, superseding any prior understandings. This contract
may be modified, or its terms waived, only in writing.
8.09 Notices. Notices must be in writing and shall be effective
when received. Notices may be given to the Investor at the address
on the title page (unless changed in writing), and to OPIC at
Overseas Private Investment Corporation
Washington, D.C. 20527
Attention: Vice-President, Insurance.
8.10 Refund of Premiums. Upon timely written request, OPIC will
refund premiums pro rata if
(a) excess coverage is elected while a valid claim for
compensation is pending; or
(b) the Investor becomes ineligible for coverage or ceases to hold
all or a portion of the insured investment, in which case any
refund shall be calculated from the later of (i) the date the
Investor becomes ineligible or ceases to hold the insured
investment, or (ii) the date OPIC receives such written request.
IX-1
Article IX - Investor's Duties.
9.01 Duties.
1. Representations and Project Execution. The Investor
understands that OPIC has issued this contract based on statutory
policy goals (22 U.S.C. Section 2191) as well as underwriting
considerations. All statements made by the Investor to OPIC in
connection with this contract are true and complete, and the
investment and the project shall be carried out as described.
2. Ownership and Eligibility. The Investor shall at all times
remain the beneficial owner of the insured investment and shall
remain eligible for OPIC insurance as
(a) a citizen of the United States; or
(b) a corporation or other association created under the laws of
the United States, its states or territories, of which more than
50% of both the total interest and of each class of shares is
beneficially owned by citizens of the United States; or
(c) an entity created under foreign law in which a 95% interest is
owned by entities eligible under (a) or (b).
3. Self-Insurance. The Investor shall continue to bear the risk
of loss of at least 10% of the book value of its interest in the
foreign enterprise.
4. Assignment. The Investor shall not assign this contract, or
any of its rights, without OPIC's written consent, which will not
be withheld unreasonably.
5. Premiums. The Investor shall pay the premiums for this
contract in accordance with Article I. In the event that
premiums are not paid when due, the Investor shall be in default
but may cure this default within sixty days by paying the
premiums plus interest at a rate of 12% per annum.
6. Accounting Records.
(a) The Investor shall maintain the United States true and
complete copies of the records, books of account and current
financial statements for the foreign enterprise necessary to
compute and substantiate compensation, including
(1) records documenting the investment;
(2) annual balance sheets;
IX-2
(3) annual statements of income, retained earnings, cash flow and
related footnotes.
(b) Accounting records shall be maintained and financial
statements prepared in United States dollars in accordance with
principles of accounting generally accepted in the United States
(including principles of currency translation), as modified by the
special accounting rules (Section 5.03.3 and Section
7.04(b)(3)).
(c) Subject to the obligations of the Investor under Section
9.01.6, the Investor or the foreign enterprise shall retain all
accounting records until
(1) the deadline for filing an application for compensation has
expired (Section 8.01); or
(2) final action has been taken on an application for
compensation (including arbitration and judicial appeals).
However, if compensation has been paid, the accounting records
shall be retained for three years after the Investor receives the
compensation.
7. Reports and Access to Information. In order that OPIC may
perform its statutory duties, including settling claims and
reporting to the Congress 22 U.S.C. Section 2200a), the Investor
shall furnish OPIC with such information as OPIC may reasonably
request, including
(a) making available for interviews any persons subject to the
Investor's practical control (including employees of the project
and independent accountants);
(b) making available for inspection and copying of all documents
and accounting records relating to the project (including
workpapers of independent accountants if available);
(c) permitting OPIC to inspect the project; and
(d) furnishing available information concerning the effects of the
project on the economy of the United States, the environment, and
the economic and social development of the country in which the
project is located.
The Investor's duties under this paragraph shall continue for the
periods specified for retention of accounting records (Section
9.01.6(c)).
8. Compulsory Notice. The Investor shall notify OPIC promptly if
it has reason to believe that the Investor or the foreign
enterprise will not be able to convert or transfer local currency
during the waiting period (Article II). The Investor shall notify
OPIC promptly of any acts or threats to act in a manner which may
come within the scope of the expropriation or political violence
coverage (Articles IV and VI) and shall keep OPIC
informed as to all relevant developments,
IX-3
9. Preservation, Transfer and Continuing Cooperation. At OPIC's
request, the Investor shall promptly assign rights with respect to
the investment, as required by Section 8.02. Prior to the
assignment of rights required by Section 8.02, the Investor shall,
in consultation with OPIC, take all reasonable measures to preserve
property, to pursue available administrative and
judicial remedies, and to negotiate in good faith with the
governing authority of the country in which the project is
located and other potential sources of compensation. After a
transfer of rights or delivery of local currency, in exchange for
reimbursement of reasonable out-of-pocket expenses, the Investor
shall take all actions reasonably requested by OPIC to assist OPIC
in preserving the property and rights transferred to OPIC and in
prosecuting related claims.
10. Other Agreements. The Investor shall not enter into any
agreement with any foreign governing authority with respect to
compensation for any acts within the scope of coverage (Article II,
IV or VI) without OPIC's prior written consent.
9.02 Default. Material breach or misrepresentation by the
Investor shall constitute default, and OPIC may:
(a) refuse to make payments to the Investor;
(b) recover payments made; and
(c) terminate this contract effective as of the date of the breach
by giving notice to the Investor.
9.03 Non-Waiver. Neither OPIC's failure to invoke its rights, nor
its acceptance of premiums, shall constitute waiver of any of its
rights, even though OPIC knows of the Investor's breach.
9.04 Cure. OPIC may permit the Investor to cure a breach in a
manner satisfactory to OPIC, but shall have no obligation to allow
breaches to be cured.
X-1
The following amendment is hereby incorporated as part of this
Contract of Insurance No. D972:
10.01 Notwithstanding any other provision of this Contract to the
contrary, OPIC shall have no liability for claims related to or
arising out of the improper or insufficient documentation of the
assignment to the Investor of the rights of ORMAT, Inc. in the
Energy Conversion Agreement and other major project
documents. The Investor shall deliver to OPIC within 90 days of
the date of this Contract copies of the executed major project
documents. Failure to deliver the foregoing documents shall
constitute a material breach (Section 9.02) of this Contract.
10.02 Notwithstanding any other provision of this Contract to the
contrary, the Investor shall not file applications for
compensation hereunder and OPIC shall have no liability for claims
under inconvertibility coverage (Articles II and III) in excess of
$4,500,000 in any 91-day period.
10.03 Notwithstanding any other provision of this Contract to the
contrary, the failure of the foreign governing authority, the
Philippine National Oil Company-Energy Development Corporation or
the National Power Corporation or any of their affiliates,
assigns and successors in interest to honor their obligations under
any agreement, contractual guaranty or undertaking in favor of the
Investor, the foreign enterprise and its affiliates, assigns and
successors in interest to honor their obligations under any
agreement, contractual guaranty or undertaking in favor of the
Investor, the foreign enterprise and its affiliates, assigns and
successors in interest (the "Agreements") shall not constitute a
basis for a claim of expropriation under this
Contract unless the Investor has exhausted remedies under the
Agreements and the requirements of Article IV are satisfied.
10.04 Notwithstanding any other provision of this Contract to the
contrary, OPIC shall have no liability for claims related to the
wrongful calling of any standby guaranty or bond posted by the
Investor in favor of the Philippine National Oil Company-Energy
Development Corporation, its affiliates and assigns or the foreign
governing authority or any of its agencies.
10.05 Notwithstanding any other provision of this Contract to the
contrary, OPIC shall have no liability for claims related to the
actions or inactions of any partner, shareholder of the foreign
enterprise or the general contractor, ORMAT, Inc. or any of its
affiliates and successors in interest.
10.06 Section 1.05, "Term", is amended in its entirety to read as
follows:
"1.05 Term. This Contract shall enter into force on the date it
has been signed by OPIC and the Investor and shall terminate 15
years afterward; provided, however, that the term may be extended
by OPIC, in its sole discretion, on such terms and conditions as
OPIC may determine for an additional period not to exceed five
additional years, provided that the Investor requests, and OPIC
agrees in writing to, such an extension at least six months prior
to the termination of the initial term."
10.07 Section 1.06, "Premiums and Coverage Election", is amended
by deleting the first sentence and substituting the following
therefor:
"The Investor shall elect amounts of coverage pursuant to Section
8.06 and pay premiums on or before (a) April 8, 1994, the
effective date of this contract, to cover the first half of the
first contract period, (b) September 8, 1994, to cover the second
half of the first contract period, and (c) each April 8, which is
the anniversary of the effective date of this contract, to cover
each period thereafter."
X-2
10.08 Section 5.03, "Adjustments", is amended by adding the
following at the end thereof:
"6. Unearned Payments. Whether or not permitted under generally
accepted accounting principles (Section 9.01.6), the book value of
the insured investment shall not include any amounts payable under
the project agreements, however described, that had not been earned
and accrued as of the date of expropriation."
10.09 Section 9.01, "Duties", is amended by adding the following
at the end thereof:
"11. Modification of Project Agreements. The Investor or the
foreign enterprise shall not agree to the modification or
amendment of any material project agreement, which modification or
amendment would have a material adverse effect on the risks borne
by OPIC, without OPIC's prior written consent.
12. Worker Rights. The Investor agrees not to take actions to
prevent employees of the foreign enterprise from lawfully
exercising their right to free association and their right to
organize and bargain collectively. The Investor further agrees to
observe applicable laws relating to a minimum age for
employment of children, acceptable conditions of work with
respect to minimum wages, hours of work, and occupational health
and safety, and not to use forced labor. The Investor is not
responsible under this paragraph for the actions of a foreign
government."
INVESTOR
By: /s/ John G. Sylvia Date: 4/8/94
John G. Sylvia, Vice President
Print Name and Title
OVERSEAS PRIVATE INVESTMENT CORPORATION
By: /s/ Julie A. Martin Date: 4/8/94
Julie A. Martin, Acting Vice President
Print Name and Title
Exhibit 10.100
AGREEMENT
This Agreement made and executed on this eighteenth day of
September, 1993, at Makati, Metro Manila, Philippines by and
between:
1.PNOC-ENERGY DEVELOPMENT CORPORATION, hereinafter referred to as
PNOC-EDC, a wholly-owned subsidiary of the Philippine National Oil
Company, a corporation created and organized under
Presidential Decree No. 334, as amended, with principal office
address at Petron Building, 7901 Makati Avenue, Makati, Metro
Manila, Philippines, herein represented by its President Mr. MONICO
V. JACOB, who is duly authorized to represent it in this Agreement.
2.CE PHILIPPINES LTD., a corporation organised and existing under
the laws of Bermuda and CALIFORNIA ENERGY COMPANY, INC., a
corporation organised and existing under the laws of the State of
Delaware, hereinafter collectively referred to as the Operator,
represented herein by their President and Vice President
respectively, Mr. Donald M. O'Shei, who is duly authorized to
represent them in this Agreement.
WITNESSETH THAT
WHEREAS, Republic Act No. 6957 dated July 9, 1990 (BOT Law)
authorized government infrastructure agencies, including PNOC-EDC,
to enter into contracts with private contractors for the financing,
construction, operation and maintenance of
infrastructure projects;
WHEREAS, NAPOCOR and PNOC-EDC have previously executed a Memorandum
of Understanding for the Development of Geothermal Power Plant in
PNOC-EDC Projects, including the geothermal resources of the
Greater Tongonan area of Leyte, comprising the Upper and Lower
Mahiao, Sambaloran, Malitbog and Mahanagdong sectors, where PNOC-
EDC holds an existing Geothermal Service Contract;
WHEREAS, NAPOCOR intends to proceed with the installation of
electric power transmission links from Leyte to Cebu, Luzon and to
other areas of the Philippines;
WHEREAS, NAPOCOR and PNOC-EDC intend to execute a Power Purchase
Agreement for the purchase by NAPOCOR of electric power capacity
and electric energy produced by PNOC-EDC from the geothermal
resources of the Greater Tongonan area of Leyte;
WHEREAS, PNOC-EDC had invited several contractors to submit
proposals for the design, construction, operation and maintenance
of a geothermal power plant on a build-operate-transfer (BOT) basis
for the Mahanagdong portion of the said Geothermal Service Contract
area, which power plant will convert PNOC-EDC's
geothermal energy into electricity for sale to NAPOCOR;
WHEREAS, the Operator has submitted a proposal, which PNOC-EDC has
accepted, to finance, design, construct, own and operate a
geothermal electricity generating plant utilizing the geothermal
resources of the Greater Tongonan area and with an installed
capacity of approximately one hundred eighty (180) MW, installed on
the Site, and to deliver electricity exclusively to PNOC-EDC on
such terms and conditions as are set forth herein;
NOW, THEREFORE, for and in consideration of the foregoing
presents and the mutual covenants as hereinafter set forth, the
Operator and PNOC-EDC have agreed as follows:
ARTICLE 1 DEFINITION OF TERMS
1.1DEFINITIONS
When used in this Agreement, the terms below shall have the
following meanings:
Accession Undertaking: The accession undertaking to be executed in
accordance with Subsection 18(b) and substantially in the form of
Annex H.
Agreement: This Agreement, including Annexes, as may be amended
from time to time.
Atmospheric Conditions: The atmospheric conditions specified in
the Interface Data attached hereto as Annex I.
Authorities: The Government of the Republic of the Philippines
including all its political subdivisions, agencies and
instrumentalities.
Bid Bond: The bid bond required by the Leyte A Geothermal
Project Bid Documentation for 450 MW Leyte-Luzon Project, issued on
January 28, 1993, prepared by PNOC-EDC.
Billing Period: The time interval from 10:00 AM on the twenty
fifth (25th) day of the current month to 10:00 AM on the twenty
fifth (25th) day of the following month where the Operator shall
read meters and accumulate data needed for the purpose of billing
NAPOCOR Power and Steamfield Power.
Capacity Fee: The basic capacity payments per kilowatt (kW) per
month for electric power nominated by the Operator, equal to the
sum of (i) the Capital Cost Recovery Fee, plus (ii) the Fixed
Operating Cost Recovery Fee, and plus (iii) the Service Fee Rate to
reflect Return on Investments, each calculated in accordance with
Subsection 8.4.1.
Commercial Operation Date: The first day of the Billing Period
following the Completion Date.
Commissioning Period: The period of three months prior to the
scheduled Completion Date.
Completion Date: The day upon which the Operator certifies to
PNOC-EDC that the Power Plant is capable of operating in
accordance with the Operating Parameters and has successfully
completed testing in accordance with Article 5, or the date it is
deemed completed in accordance with Section 4.9(b).
Contracted Capacity: The guaranteed capacity for each year of the
Cooperation Period, as set forth in Annex E. Contracted Capacity
contemplates availability for the duration of the
Cooperation Period, and assumes continuous delivery and removal of
Geothermal Fluids by PNOC-EDC as specified in the Geothermal Fluid
Specifications. Said power shall be measured at (a) the Point of
Interconnection MP1 for NAPOCOR Power and (b) the Point of
Interconnection MP2 for Steamfield Power, each as indicated in
Figure I-1 in Annex I.
Control: The establishment of the electrical output of the Power
Plant through dispatching procedures including shut-down and start-
up.
Cooperation Period: The period of ten (10) years of commercial
operation of the Power Plant by the Operator, commencing from the
Commercial Operation Date unless earlier terminated in accordance
with this Agreement.
Correction Curves: The curves, set forth in Annex F, used to
adjust the Power Plant performance for variation in the
Geothermal Fluid Specifications and Atmospheric Conditions.
Effectivity Date: The date upon which PNOC-EDC and the Operator
agree that all of the conditions precedent contained in Article 25
have been fulfilled or waived to the satisfaction of the relevant
Party.
Effective Modification: A modification to the Operator's design of
the Power Plant requested by PNOC-EDC that is not solely for the
purpose of correcting design errors made by the Operator in its
design of the Power Plant.
Emergency: A condition of situation which NAPOCOR's sole
judgement affects NAPOCOR's ability to maintain safe, adequate and
continuous electrical service.
Energy Delivered: NAPOCOR Power plus Steamfield Power, expressed
in kilowatt hours (kWh).
Energy Fee: Is defined in Subsection 8.4.2.
Environmental Compliance Certificate: The Environmental
Compliance Certificate issued by the Department of Environment and
Natural Resources for the 700 MW Leyte A Geothermal Power Project,
dated May 20, 1993.
Force Majeure: Each of the events set forth in Section 13.1.
Geothermal Fluid: The geothermal steam to be supplied to the
Operator by PNOC-EDC and the condensed steam to be received from
the Operator by PNOC-EDC.
Geothermal Fluid Prices: The prices for steam and other
geothermal fluids set forth in the Geothermal Fluid
Specifications.
Geothermal Fluid Specifications: The design point specifications
for and quantities of Geothermal Fluid set forth in Annex I
including, without limitation, PNOC-EDC's undertakings to remove
spent geothermal fluid from the Power Plant for reinjection or
other proper disposal.
Guaranteed Net Plant Steam Rate: Is the Net Plant Steam Rate for
each year of the Cooperation Period, obtainable using steam
supplied in accordance with the Geothermal Fluid Specifications and
at the design ambient temperature as stated in Annex I and
guaranteed by the Operator for the Cooperation Period, as set forth
in Annex E.
Interconnection Failure: Any event, circumstances or state of
facts located beyond the Power Plant side of the Points of
Interconnection which curtails or eliminates the ability of NAPOCOR
or PNOC-EDC to request and utilize power from the Power Plant
including, without limitation, problems in interconnection or
transmission equipment located beyond the Points of Interconnection
described in Annex I or any dispute which might arise between PNOC-
EDC and NAPOCOR (under the Power Purchase Agreement or otherwise)
which did not arise from any default of the Operator under this
Agreement.
Material Shortfall: A variation in the quantity or other
property of the Geothermal Fluid which is such as to materially
prevent the Operator from meeting its obligations under this
Agreement.
NAPOCOR: The National Power Corporation.
NAPOCOR Electric System Integrity: Operation of NAPOCOR's
electric system in a manner which minimizes risks of injury to
persons and/or property and enables NAPOCOR to provide adequate and
reliable electric service to its customers.
NAPOCOR Power: An amount of energy (in kWh) delivered to
NAPOCORon behalf of PNOC-EDC measured at the high voltage side of
the transformer (MP1) at the relevant Point of Interconnection as
indicated in Figure I-1 in Annex I.
Net Plant Steam Rate: Is the ratio between the steam flow into the
Power Plant over a given period of time, expressed in kilograms
(kg), and that portion of NAPOCOR Power and Steamfield Power,
expressed in kilowatt hours (kWh), derived from that steam flow,
over the same period, the ratio expressed in kilograms per kilowatt
hour (kg/kWh). Any measurement of Net Plant Steam Rate shall be
corrected for variations in ambient temperature and steam quantity
and other properties from the design ambient temperature as
specified in the Interface Data in Annex I and the Geothermal Fluid
Specifications using the Correction Curves of Annex F. During any
period in which actual geothermal steam as delivered and the volume
of spent fluids removed by PNOC-EDC for disposal are subject to a
Material Shortfall the Operator shall be excused from any guarantee
of actual Net Plant Steam Rate.
NEWCO: NEWCO means a company organized under the laws of the
Republic of the Philippines, which will be a party to this
Agreement by and under the terms of the Accession Undertaking.
Nominated Capacity: The capacity that the Operator guarantees in
accordance with Article 6.13 for each given year of the
Cooperation Period, as NAPOCOR Power and Steamfield Power under
Geothermal Fluid Specifications, terms and conditions as defined
for Contracted Capacity.
Operating Parameters: The parameters set forth in Annex B4.
Operating Representative: Individual(s) appointed by each Party
and by NAPOCOR for the purpose of securing effective cooperation
and interchange of information between the Parties and NAPOCOR in
connection with administration and technical matters related to
this Agreement and the Power Purchase Agreement.
Outage: The inability of the Operator to meet a capacity up to the
Nominated Capacity when requested by NAPOCOR, provided, that no
Outage shall occur if:
(a) the Operator makes available to NAPOCOR capacity adjusted per
the Correction Curves at least equal to current Nominated Capacity
less Steamfield Power; or
(b) geothermal fluids delivered to the Site or the volume of spent
geothermal fluids removed by PNOC-EDC from the Site are subject to
a Material Shortfall; or
(c) an Interconnection Failure has occurred; or
(d) the inability of the Operator is due to Force Majeure; or
(e) the inability of the Operator is due to Scheduled
Maintenance.
Outage Hour: Any hour in which, due to Outage, the Operator
failed, for a continuous period of thirty (30) minutes, to
deliver power adjusted per the Correction Curves at a level of at
least ninety five percent (95%) of the amount of kilowatts (kW)
requested by NAPOCOR. For the purpose of defining Outage Hour, if
NAPOCOR requests dispatch of capacity in excess of the amount
defined in Subsection (a) of the definition of Outage, failure to
deliver such excess amount shall not constitute an Outage Hour.
For purpose of calculating the total Outage Hours (OH) for any
given period, partial outages of the Power Plant shall be
computed as follows:
(a) For any hour during which the total delivered power adjusted
per the Correction Curves is less than ninety-five (95%) percent of
the Nominated Capacity (NC), but not less than sixty-three point
three percent (63.3%) of NC, one third of one hour will be
cumulated as outage time for billing purposes.
(b) For any hour during which the total delivered power adjusted
per the Correction Curves is less than sixty-three point three
percent (63.3%) of the Nominated Capacity (NC), but not less than
thirty one point seven percent (31.7%) of NC, two thirds of one
hour will be cumulated as outage time for billing purposes.
(c) For any hour during which the total delivered power adjusted
per the Correction Curves is less than thirty one point seven
percent (31.7%) of the Nominated Capacity (NC), one hour will be
cumulated as outage time for billing purposes.
Parties: The contracting parties in this Agreement, referring to
the Operator and PNOC-EDC.
Point of Interconnection: The point at the interconnection
facilities where the transfer and metering of NAPOCOR Power and
Steamfield Power takes place as indicated in Figure I1 of Annex I.
Power Plant: The Operator's generating equipment located at the
Site including all of the step-up transformers and all protective
and other associated equipment and improvements as described in
Annex B and Annex I, necessary to produce electrical energy at the
Point of Interconnection, generally conforming to the
technical specifications set forth in the Operator's bid document
Volumes A and B submitted as part of its bid for BOT 450 MW Leyte-
Luzon Project, Leyte A Geothermal Project, Mahanagdong A and B
Project Area, dated April 23, 1993, with such reasonable
substitution as the Operator deems necessary, excluding
associated land, land rights and interests in land.
Power Purchase Agreement: The agreement to be entered into between
NAPOCOR and PNOC-EDC for the sale by PNOC-EDC of electric power
energy from the Project to NAPOCOR.
Project: The geothermal wells, geothermal fluid collection and
disposal system, the Power Plant, facilities, and metering
equipment required to permit generation of electric power by the
Operator in parallel with NAPOCOR's electric system.
Protective Apparatus: The equipment and apparatus installed by the
Operator or PNOC-EDC or NAPOCOR to protect PNOC-EDC or
NAPOCOR from disturbances or upsets occurring within the Power
Plant.
Scheduled Maintenance: Is defined in Section 6.14.
Site: The two separate parcels of land located at Mahanagdong to
be provided by PNOC-EDC for the construction of the Power Plant, as
more particularly described in Annex A.
Steamfield Power: An amount of energy (in kWh) delivered to PNOC-
EDC and measured at the relevant Points of Interconnection as
indicated in Figure I1 of Annex I for use in operating
geothermal wells, pipelines, fluid recovery and otherwise in
operating the steamfield. PNOC-EDC shall use its best efforts to
nominate and abide by a maximum capacity, but shall in any event be
entitled to all power reasonably required within the technical
limits of the interconnections described in Annex I.
Termination Date: The date upon which this Agreement is
terminated pursuant to Article 9 or 14.
Transfer Date: The day following the last day of the Cooperation
Period provided, however, that in case of termination of this
Agreement pursuant to Article 9, the Transfer Date shall be the day
following full payment of the Buyout Price as defined in Section
9.2.
1.2 INTERPRETATION
In this Agreement:
(a) any reference to an "Article", a "Section" or "Subsection", an
"Annex" or a "Clause" is a reference to an article, section or
subsection hereof or an annex hereto or a clause in an annex
hereto:
(b) the headings and sub-headings appear as a matter of
convenience and shall not affect the construction of this
Agreement;
(c) the singular includes the plural and vice versa, and words
importing any gender include the other genders;
(d) a reference to a person includes a reference to a body
corporate and to an unincorporated body of persons; and
(e) references to any party include the successors and any
permitted assigns of that party.
1.3 ABBREVIATIONS
In this Agreement:
(a) "$" and "Dollar(s)" denote lawful currency of the United
States of America;
(b) "Ps" and "peso(s)" denote lawful currency of the Republic of
the Philippines;
(c) "MW" denotes a megawatt;
(d) "MWh" denotes a megawatt hour;
(e) "kW" denotes a kilowatt;
(f) "GWh" denotes a gigawatt hour;
(g) "kWh" denotes a kilowatt hour;
(h) "kV" denotes a kilovolt;
(i) "DC" denotes direct current; and
(j) "AC" denotes alternating current.
ARTICLE 2 PROJECT
2.1 POWER FACILITY
The Operator shall be responsible for the finance, design, supply,
construction, testing, operation and maintenance of an
approximately one hundred eighty (180) MW geothermal Power Plant,
to be installed at the Site, whose net generation shall be
delivered to NAPOCOR on behalf of PNOC-EDC and to PNOC-EDC for
steamfield use during the Cooperation Period. The Power Plant
shall be located on the Site which shall be made available by PNOC-
EDC at no cost to the Operator and subject to the provisions of
Subsection 4.2.1.
2.2 ENERGY CONVERSION
In accordance with the specifications herein provided, PNOC-EDC
shall supply and deliver all Geothermal Fluid required by the
Operator necessary for the Power Plant to generate NAPOCOR Power
and Steamfield Power, and shall sell all electricity generated by
the Power Plant to NAPOCOR less that required for auxiliary
purposes by the Operator and PNOC-EDC for Steamfield Power. PNOC-
EDC shall pay to the Operator the Capacity Fee and the Energy Fee
as provided in this Agreement.
2.3 OWNERSHIP
From the Effectivity Date until the Transfer Date, the Operator
shall own the Power Plant and all the fixtures, fittings,
machinery and equipment on the Site and used in connection with the
Power Plant which have been supplied by it or at its cost, and
operate and manage the Power Plant for the purpose of
converting Geothermal Fluid of PNOC-EDC into electricity.
On the Transfer Date, ownership, management and operation of the
Power Plant shall be transferred in accordance with the terms and
conditions of Article 9 or 12, as the case may be, by the
Operator to PNOC-EDC.
Ownership of the Site shall remain with PNOC-EDC.
2.4 COMMENCEMENT & PROSECUTION OF THE POWER PLANT
2.4.1 COMMENCEMENT OF THE POWER PLANT
The Operator shall commence work in accordance with Subsection
4.1.1
2.4.2 PROSECUTION OF THE POWER PLANT
The Operator shall prosecute the Power Plant, or parts thereof,
with such resources, construction equipment and temporary
facilities as, in the reasonable judgement of the Operator, are
sufficient to complete the Power Plant in accordance with Annex B.
The capacity of the construction equipment and temporary
facilities, sequence of operations, method of operations, and
resources employed shall be such as to insure the completion of the
Power Plant within the stipulated time.
ARTICLE 3 GENERAL RESPONSIBILITIES OF THE OPERATOR
3.1 PERFORMANCE BOND
To guarantee the faithful performance by the Operator of its
obligation to completely construct the Power Plant in accordance
with the terms and conditions of this Agreement, the Operator shall
post a construction performance bond (the "Construction Performance
Bond") in the form of a surety bond or standby letter of credit and
in a sum equivalent to One Hundred dollars (US$100) per kilowatt
(kW) of Contracted Capacity or its equivalent in Philippine Pesos
or other currencies. The Construction
Performance Bond shall be delivered within ten (10) calendar days
from the Effectivity Date. Prior thereto, the Operator shall
ensure that the Bid Bond shall be extended until and shall be
released only on the date that the Construction Performance Bond is
posted by the Operator, provided that, in the event that the
Effectivity Date does not occur on or before July 1, 1994, the
Parties shall discuss and agree on any further extension of the Bid
Bond. As more fully described in Subsection 14.2.1 PNOC-EDC shall
have recourse to the Construction Performance Bond to satisfy the
final judgement in an arbitral proceeding in
accordance with Article 20.
The Construction Performance Bond shall have a stated termination
date of not earlier than six (6) months after the scheduled
Completion Date. On or within thirty (3) days after the
Completion Date, the Operator shall convert the Construction
Performance Bond into an operation performance bond (the
"Operation Performance Bond") which may be in the same form as the
Construction Performance Bond and in the amount equivalent to Sixty
Six US Dollars (US$66) per kilowatt (kW) of Contracted Capacity, or
its equivalent in Philippine Pesos or in other currencies, to cover
the faithful performance of its obligation during the Cooperation
Period. As more fully described in
Subsection 14.2.2, PNOC-EDC shall have recourse to the Operation
Performance Bond to satisfy the final judgement in an arbitral
proceeding in accordance with Article 20.
If any surety bond furnished in connection with the Agreement
becomes unacceptable to PNOC-EDC (in its reasonable discretion), or
if any such surety company fails to furnish reports as to its
financial condition from time to time as requested by PNOC-EDC, the
Operator shall promptly furnish such additional security or
replacement security as may be required to protect the interests of
PNOC-EDC in the prosecution of the Project.
3.2 RESPONSIBILITY FOR DAMAGE & LOSSES
(a) The Operator shall be responsible for all damages to any
property belonging to PNOC-EDC, NAPOCOR, private parties or the
Authorities, to the extent that such damages arise from the
negligent acts or omissions of the Operator, and all
deteriorations and/or damages to permanent work due to accident or
exposure during and after construction activities and
operations, shall be restored by the Operator without any expense
to PNOC-EDC.
3.3 ENVIRONMENT
(a) The Operator shall keep the Site in a sanitary condition and
in compliance with the environmental requirements and mitigation
measures specified in the Environmental Compliance Certificate and
in accordance with the environmental laws rules and
regulations (including official interpretations thereof) of the
Philippines in effect at the date of this Agreement. The
Operator shall comply with any changes in such laws and rules and
with any new laws, rules and regulations (and official
interpretations thereof), provided that if such compliance would:
(i) result in the Power Plant being unable to operate at the
Guaranteed Net Plan Steam Rate, in accordance with the Operating
Parameters, or otherwise in accordance with the specifications set
forth in this Agreement; or
(ii) result in the interest of the Operator in the Power Plant
and/or the Operator's expectation of its economic return (net of
tax or other imposition) on its investment being materially reduced
or otherwise adversely affected;
then the Parties shall meet and endeavous to agree on amendments to
this Agreement and if after sixty (60) days no such agreement has
been reached, then the provisions of Article 9 shall apply.
(b) If it is necessary for the Operator, in the prosecution of the
Power Plant, to interrupt or obstruct the natural flow of rivers or
streams, the drainage of the surface, or the flow of artificial
drains, the Operator shall provide adequate measures to prevent
damage to either public or private properties. The Operator shall
be liable for damages that may occur to the extent that such
damages arise for reasons directly attributable to the Operator or
its agents.
(c) Subject to Section 3.3(a), the Operator shall assume
responsibility for any costs and liabilities arising from any
adverse environmental damage or health impacts that may be caused
by the Operator's negligence in constructing and operating the
Power Plant.
3.4 ORGANISATION
The Operator shall maintain at the Site an efficient and capable
organisation with adequate capacity and numbers of construction,
operating and maintenance personnel, equipment and facilities to
satisfactorily execute the Project in a safe, efficient,
environmentally sound and professional manner at the rate of
progress specified in the outline construction schedule in Annex G.
The Operator shall assign at the Site English-speaking personnel.
Any interpreters required shall be provided by the Operator at its
expense.
The Operator must have in its employ one or more engineer(s)
appropriately licensed to practice in the Philippines who shall
certify to the Project's construction and operation.
ARTICLE 4 CONSTRUCTION OF THE FACILITY
4.1 TIMING
4.1.1 PROJECT MILESTONE DATES
The Operator shall in good faith use all reasonable efforts to
construct the Power Plant in accordance with the following
schedule:
Activity Date
Ordering of long lead items (turbo generators) the later of:
(i) January 1, 1995; or
(ii) 120 days after the
Effectivity Date
Start of Commissioning Period April 1, 1997
Completion Date July 1, 1997
Commercial Operation Date July 25, 1997
The date of January 1, 1995, as the deadline for ordering the long
lead items is the bench mark for the Operator to achieve the
Completion Date and the Commercial Operation Date on schedule as
provided in this Subsection 4.1.1. In the event that 120 days
after Effectivity Date will occur later than January 1, 1995, (i)
the Completion Date and the Commercial Operation Date shall be
extended day for day by the delay beyond January 1, 1995 and (ii)
if such extension results in the Completion Date being extended
past the 25th day of any month, the Commercial Operation Date shall
be extended to the 25th day of the month immediately
succeeding the Completion Date.
4.1.2 TRANSMISSION LINE INTERCONNECTION & AVAILABILITY OF
GEOTHERMAL FUND
(a) PNOC-EDC shall use good faith efforts to ensure that, on or
before April 1, 1997, a 230 kV transmission line, including all
interconnection facilities up to and including the Point of
Interconnection on the side of the transmission line (collectively,
the "Transmission Line"), is installed and is capable of being
connected to the Power Plant and of receiving all power generated
by the Power Plant.
(b) PNOC-EDC shall likewise ensure that, on or before April 1,
1997, Geothermal Fluid complying with the Geothermal Fluid
Specifications is made available to the Operator.
(c) The Operator shall construct and maintain all interconnection
facilities on the Power Plant's side of the Point of
Interconnection.
4.2 SITE PROVISION
(a) PNOC-EDC, at no cost to the Operator, shall make the Site as
described in Annex A available to the Operator for the purpose of
building and operating the Power Plant, and the Operator shall have
the right to possess, use and enjoy the Site, from the Effectivity
Date until the Transfer Date. Use of the Site shall not confer
ownership rights on the Operator. PNOC-EDC shall be responsible
for, and hold the Operator harmless from, all claims by third
parties relating to the land provided for the Site, including,
without limitation, claims under colour of ownership of any
interest in such land, real estate and other taxes or other claims
that might give rise to any lien on the land or any improvements to
it (other than the Power Plant). If PNOC-EDC fails to duly satisfy
such claims on a timely basis, the Operator may do so (at its sole
discretion) and PNOC-EDC shall promptly reimburse such expenses.
(b) The Operator shall not obstruct any existing road or
drainage or disturb existing structures and facilities on the land
so furnished for construction purposes unless and until given
written permission by appropriate Authorities. Withholding or
delay of such permission shall constitute Force Majeure of the type
described in Section 13.1(b).
(c) The acquisition of all other lands, easements, and rights-of-
way which the Operator reasonably believes necessary for the
construction, operation and maintenance of the Power Plant,
including areas for the disposal of spoils, shall be negotiated
and/or undertaken by the Operator and all costs incident thereto
shall be for the account of PNOC-EDC.
4.3 INGRESS & EGRESS RIGHTS OF OPERATOR
PNOC-EDC shall ensure that all necessary access to and from the
Site is made available to the Operator, its employees,
contractors, sub-contractors and advisers.
4.4 EQUIPMENT IMPORTATION
The Operator shall be responsible for the importation and
transportation of all equipment for the Power Plant to the site
including duties, taxes and fees in connection therewith.
It is the responsibility of the Operator to secure from the
Authorities the necessary permits, licenses, and other documents
for the importation of the Operator owned construction or
maintenance equipment that it may decide to bring into the
country for use in connection with the Agreement. PNOC-EDC shall
assist the Operator in obtaining such permits, licenses and other
documents on a best effort basis.
Any delays caused by meeting customs procedures for material
quipment and supplies or in obtaining necessary permits, licenses
and other documents to the extent not attributable to the
Operator and to the extent that they affect the Operator's
ability to undertake its performance under this Agreement shall
extend the project milestone dates set forth in Subsection 4.1.1
equivalent to the period of the delay in obtaining such permits,
licenses and other documents. The Operator of PNOC-EDC shall
promptly notify the other Party of each such delay, and the Parties
shall cooperate to promptly satisfy the relevant
Authority and remove the cause of the delay. Any delay in excess
of sixty (60) days after notification by the Operator to PNOC-EDC
shall cause Article 9 to apply. The Operator shall not be
subject to delay penalties as a result of such a delay.
The Capacity Fees do not include import taxes and duties on the
importation of Power Plant equipment and spare parts during the
period of construction and the Cooperation Period and are based on
the assumption that (i) incentives will be granted to the Operator
exempting it from such taxes and duties and (ii) the Operator will
not bear the cost of such import taxes and duties. In the event
that there is an increase in the cost of importing Power Plant
equipment and spare parts by reason of the aforesaid taxes and
duties, either (a) PNOC-EDC shall promptly reimburse the Operator
for all such increased costs, or (b) the Parties shall negotiate in
good faith with a view to make the appropriate adjustments in the
Capacity Fees. If no agreement can be reached after ninety (90)
days, clause (a) of the foregoing sentence shall prevail.
4.5 PERMITS
Following the Effectivity Date, the Operator, at no cost to PNOC-
EDC, shall be responsible for security from the Authorities all
requisite authorizations, licenses and permits not previously
provided under the provisions of Article 25 for the construction
and operation of the Power Plant, except the Environmental
Compliance Certificate, which shall be obtained by PNOC-EDC. PNOC-
EDC shall cooperate with and use its best efforts to assist the
Operator in obtaining such authorizations, licenses and permits.
Any delays, to the extend not attributable to the Operator and to
the extent that they affect the Operator's ability to undertake its
performance under this Agreement, in obtaining requisite
authorizations, licenses and permits shall extend the Completion
Date and other dates set forth in Subsection 4.1.1 day for day.
The Operator or PNOC-EDC shall promptly notify the other Party of
each such delay, and the Parties shall cooperate to promptly
satisfy the relevant Authority and remove the cause of the delay.
Any delay in excess of sixty (60) days after notification shall
cause Article 9 to apply. The Operator shall not be subject to
delay penalties as a result of such a delay.
4.6 DRAWINGS, DOCUMENTS, DATA & INSTRUCTIONS
The Operator shall comply with the following on matters of
drawings and other documentary information and PNOC-EDC rights
thereto:
4.6.1 SUBMISSION OF DRAWINGS AND DATA
The Operator shall submit to PNOC-EDC copies of all drawings,
plans, calculations, operating and maintenance instructions and, in
general, copies of all material documents related to the Power
Plant for reference and information. Prior to the start of
construction, within thirty (30) working days following receipt
thereof, PNOC-EDC shall describe to the Operator in writing any
flaws perceived by PNOC-EDC in the design. Failure by PNOC-EDC to
describe any flaws in such designs within such thirty (30) working
day period shall be deemed to be a waiver of PNOC-EDC's right to
describe such flaws.
The Operator shall also advise PNOC-EDC of the names of potential
suppliers of material components or services who have been
shortlisted by the Operator. Within thirty (30) working days
following receipt of such advice, PNOC-EDC shall advise the
Operator of any such potential suppliers to which PNOC-EDC
objects, together with the reasons for objection and may request
the Operator to exclude such suppliers from the shortlist. The
Operator shall comply with such request by PNOC-EDC as it shall
deem reasonable.
Following the start of construction by the Operator on the Site,
the above mentioned thirty (30) working days periods shall be
reduced to fifteen (15) working days.
4.6.2 MODIFICATION RIGHTS
(a) During the same thirty (30) or fifteen (15) working day period
following the receipt of the documents or list of such suppliers
under Subsection 4.6.1, PNOC-EDC shall have the right to require
modifications to the design as it deems necessary for proper and
safe operation of the Power Plant as it affects the operation of
the PNOC-EDC geothermal fluid collection and disposal system and
the NAPOCOR power system.
(b) PNOC-EDC may, from time to time, request Elective
Modifications. In the event PNOC-EDC requests any Elective
Modifications, then the Parties shall negotiate in good faith (i)
to make any equitable adjustment to the Capacity Fee or otherwise
make appropriate compensation and (ii) adjust the dates set forth
in Subsection 4.1.1 to reflect any delays in designing such
Elective Modifications and any additional time required by the
Operator to complete such Elective Modifications. In the event the
Parties are unable to reach agreement on such adjustments within
sixty (60) days following PNOC-EDC's request, PNOC-EDC may withdraw
such request. Thereafter, if such request is not
withdrawn, either Party may terminate this Agreement by giving
written notice of termination to the other Party and the
provisions of Article 9 shall apply; provided, however, that if the
Operator gives such a written notice of termination to PNOC-EDC,
PNOC-EDC shall have five (5) working days following delivery of
such notice of termination to again withdraw its request. If such
request is withdrawn by PNOC-EDC such written notice of termination
will be of no effect. If, following the process as described in
this Section 4.6.2, in the Operator's reasonable judgement a delay
has been caused to its construction schedule, the dates set forth
in Section 4.1.1 shall be extended and
adjusted proportionally to such a delay.
4.6.3 FUTURE MODIFICATION
Changes in the design of the Power Plant after the Completion Date
shall be subject to review and comment by PNOC-EDC, provided,
however, that any changes in the design that are necessary for
proper and safe operation of the Power Plant as it affects the
operation of the PNOC-EDC geothermal fluid collection and disposal
system and the NAPOCOR power system shall be subject to review and
approval of PNOC-EDC and such approval shall not be unreasonably
withheld.
4.6.4 CONSTRUCTION SCHEDULE
The Operator shall submit to PNOC-EDC a detailed construction
schedule of the Power Plant within three (3) months following the
Effectivity Date. This schedule shall contain, in particular,
dates for the submission of all drawings, documents and data,
acceptance thereof, witnessing of tests and the overall
procurement schedule. PNOC-EDC shall have the right to review and
approve, which approval shall not be unreasonably withheld, the
construction schedule of the Power Plant.
4.6.5 MONITORING RIGHTS
PNOC-EDC shall be entitled at its own cost to monitor the
progress and quality of the construction and installation work.
For this purpose, the Operator shall:
(a) submit to PNOC-EDC a monthly progress report in such detail
and format as may be reasonably requested by PNOC-EDC;
(b) ensure that PNOC-EDC and any experts appointed by PNOC-EDC in
connection with the Project are afforded reasonable access to the
site at times to be agreed with PNOC-EDC provided that such access
does not materially interfere with the works or expose any person
on the Site to any danger; and
(c) make available for inspection at the Site copies of all plans
and designs.
4.6.6 DRAWINGS AND DOCUMENTS TO BE PROVIDED
The Operator shall furnish PNOC-EDC drawings and technical
details in accordance with the construction schedule as submitted
and approved in accordance with Subsection 4.6.4, such as, but not
limited to, the following:
(a) Arrangement plans for the general layout of machinery and
equipment.
(b) General and detailed drawings and specifications for
electro-mechanical works.
(c) General and detailed drawings and specifications for civil and
architectural works.
(d) Test procedures.
(e) Operation and maintenance manuals.
The Operator shall, within six months after the Completion Date,
supply PNOC-EDC with three (3) copies of all "as built" plans,
drawings, design calculations and quality assurance records, one of
which copies shall be reproducible.
4.7 DISCLAIMER
The following disclaimer shall be recognized in this Agreement:
(a) Any engineering review by PNOC-EDC of the Power Plant is
solely for its information. By making such review, PNOC-EDC makes
no representation as to the engineering soundness of the Power
Plant.
(b) The Operator shall in no way represent to any third party the
engineering soundness of the Power Plant as a result of the review
made by PNOC-EDC.
(c) The Operator is solely responsible for the economic and
technical feasibility, operational capability and reliability of
the Power Plant.
(d) PNOC-EDC shall not be liable to the Operator for, and the
Operator shall defend, hold harmless, and indemnify PNOC-EDC from,
any claim, cost, loss, damage, or liability arising from any
contrary representation by the Operator concerning the effect of
PNOC-EDC's engineering review of the Power Plant.
4.8 RESPONSIBILITY FOR UTILITIES
The Operator and PNOC-EDC shall each be responsible for the
provision of needed utilities, such as electric service, water,
communications and the like, necessary during the construction and
operation of the Power Plant according to the requirements of Annex
B2.3 and Annex B3 respectively.
4.9 DELAYS
(a) Should the Operator be obstructed or delayed at any time in
the progress of the construction work due to any of the following
causes:
(i) Failure of the Operator to obtain the necessary access to the
Site or failure of PNOC-EDC to deliver and remove geothermal fluid
meeting the Geothermal Fluid Specifications; or the failure of
PNOC-EDC to obtain the Environmental Compliance Certificate; or the
failure of the Operator, for reasons not solely
attributable to the Operator, to obtain the Authorization to
Construct and Permit to Operate; or
(ii) Any delay described in Sections 4.4 and 4.5, or any delay
caused by a PNOC-EDC directed modification in accordance with
Subsection 4.6.2; or
(iii) Delays due to Force Majeure conditions;
the Operator shall promptly notify PNOC-EDC of such delay,
including details and supporting documents reasonably calculated to
describe the problem, steps taken to resolve it and any
proposed cooperative solution. Any delay under the terms of this
Section 4.9 shall extend day for day, unless otherwise agreed
between the Parties, the scheduled Completion Date and all other
dates set forth in Subsection 4.1.1.
(b) Notwithstanding any other term or provision of this
Agreement, if the Operator is unable to commence testing of the
Power Plant (on a date nominated by the Operator) as a result of:
(i) an Interconnection Failure; or
(ii) PNOC-EDC's failure to deliver and remove geothermal fluids as
specified in the Geothermal Fluid Specifications; or
(iii) the Operator's or PNOC-EDC's failure to receive all
permits, licenses, other governmental approvals and utilities
required for operation of the Power Plant, notwithstanding its
reasonable efforts to obtain the same, and, in the case of the
Operator, assuming the Operator has complied with the scope of work
set forth in Annex B; or
(iv) PNOC-EDC or NAPOCOR's failure to provide any personnel or
resource necessary to witness and approve such testing;
then, in any such events, the Completion Date shall be deemed to
have occurred on the date on which the Operator would have
commenced testing, but for the occurrence of the events described
in clauses (i) through (iv) and PNOC-EDC shall be obligated to
commence payments of the Capacity Fee and the Energy Fee to the
Operator on and from the Completion Date. The capacity for
purposes of calculating the Capacity Fee payable under this
Subsection shall be deemed to be the Contracted Capacity.
In the event that after Capacity Fee payments have commenced
pursuant to this Subsection and no event described in sub
paragraphs (i), (ii), (iii), (iv) above shall be continuing, the
Operator is subsequently unable to pass all of the Power Plant's
performance tests as set forth herein, the Operator will be
obligated to refund or credit against future capacity made
available and actually delivered to PNOC-EDC that amount of
Capacity Fee actually received by the Operator prior to and during
such tests which exceed the amount of Capacity Fee which the
Operator would have been paid at the lower capacity rating actually
demonstrated in testing the Power Plant.
4.10 PENALTY DUE TO DELAYS
The Operator shall pay PNOC-EDC an amount as defined in Annex C for
any delay in the Commercial Operation Date of the Power Plant
except as provided in Section 4.9, provided, however, that in no
case shall the aggregate amount of the penalty for delay exceed the
amount of the Construction Performance Bond. Each payment of
liquidated damages shall reduce pro tanto the amount available
under the Construction Performance Bond. Additionally, in the
event that the Commercial Operation Date does not occur within one
hundred twenty (120) calendar days after the Commercial Operation
Date as specified in Subsection 4.1.1 (including any extension
thereof), the balance of the Construction Performance Bond shall be
forfeited in favour of PNOC-EDC.
4.11 LIGHTS & BARRIERS
During construction, the Operator shall put up and maintain at the
Site such danger lights and barriers as shall effectively prevent
any accident in consequence of the Power Plant. If work is done at
night, the Operator shall maintain from sunset to sunrise such
adequate lighting on or about the Power Plant and on the work area
as deemed necessary for the safety of the construction crew and for
the proper observance and inspection of the construction and
erection activities.
ARTICLE 5 TESTING OF THE FACILITY
5.1 TESTING PROCEDURES
The Parties shall agree on the procedures for testing of the Power
Plant as outlined in Annex D. Such procedures shall be followed by
the Operator.
5.2 TEST SCHEDULES
The Operator and PNOC-EDC shall agree prior to the Effectivity Date
on test schedules for the Power Plant. The schedules shall take
into consideration the operational requirements of PNOC-EDC and
NAPOCOR.
5.3 NOTICE OF TESTS
The Operator shall notify PNOC-EDC at least fifteen (15) calendar
days prior to carrying out any tests on the Power Plant and prior
to:
(a) the initial parallel operation of each of the Operator's
generating units; and,
(b) all testing of the Operator's Protective Apparatus.
PNOC-EDC shall have the right to have a representative present at
all tests. NAPOCOR shall have the right to have a representative
present at all tests of Protective Apparatus.
5.4 TESTS BEFORE COMPLETION
PNOC-EDC reserves the right to witness equipment tests at the
Operator's or other sub-contractor's or equipment supplier's
premises during the course of this Agreement.
The following provisions shall apply in testing the Power Plant
prior to completion:
(a) All costs, excluding Geothermal Fluid, incurred during the
testing of the Power Plant shall be borne by the Operator.
Electricity generated prior to the Completion Date shall be
delivered to NAPOCOR on behalf of PNOC-EDC and paid for by PNOC-EDC
at fifty percent (50%) of the rate actually received by PNOC-EDC
from NAPOCOR for this energy.
(b) The representatives of PNOC-EDC shall be present during any
test activity done by the Operator on the Power Plant. Tests
conducted without the required fifteen (15) day prior notice to
PNOC-EDC shall not be valid for the purposes of this Agreement.
Upon completion of any performance of efficiency test, the
Operator and PNOC-EDC shall jointly issue a certificate that
testing has been done on the Power Plant and that agreed testing
procedures shown in Annex D had been followed. No later than two
(2) days after the completion of the performance and efficiency
tests, the Operator shall notify PNOC-EDC of the Nominated
Capacity of the Power Plant for the first year of operation.
(c) The Operator shall be entitled to repeat any test, including
those tests to establish the Completion Date.
(d) The Operator shall give PNOC-EDC written notice at least sixty
(60) but not more than ninety (90) days before it
anticipates conducting the tests to establish the Completion Date.
When it determines the actual date, it shall give PNOC-EDC at least
fifteen (15) days prior written notice thereof. If PNOC-EDC is
unable to provide a representative to witness the tests, the
Operator shall offer to repeat the tests on a date selected by
PNOC-EDC at least five (5) but not more than ten (10) days
following the first completion tests.
5.5 TESTS DURING COOPERATION PERIOD
The Net Plant Steam Rate and net capacity shall be tested every
year in the presence of PNOC-EDC personnel following agreed
procedures as per Annex D. This test shall be performed
approximately six (6) months after completion of the annual
maintenance on each individual generating unit of the Power Plant
and shall be a reference for the Nominated Capacity for the
following year as defined by the Operator under section 6.13. The
Operator shall be entitled to repeat any of the aforesaid tests.
ARTICLE 6 OPERATION OF THE FACILITY
6.1 COMPLETION DATE
(a) The Operator has undertaken to achieve the Completion Date on
or before July 1, 1997, subject to Subsection 4.4.1 and to possible
extensions under the terms of this Agreement.
(b) Upon the substantial completion of the Power Plant and subject
to confirmation by PNOC-EDC (which confirmation shall not be
unreasonably withheld), the Operator may certify that the
completion Date has occurred notwithstanding that the Power Plant
is unable to produce the Contracted Capacity adjusted per
Correction Curves or to achieve the Guaranteed Net Plant Steam
Rate, but in that event adjustments shall be made to the Capacity
Fee in accordance with the penalty provisions of Subsection 8.4.1;
provided, however, that such certification may not be made if the
Power Plant, for reasons solely due to the Operator, is unable to
produce at least seventy percent (70%) of the Contracted Capacity,
after application of the Correction Curves.
(c) In the event there is a difference of opinion about test
results, which cannot be resolved by the Parties within seven (7)
days, the controversy shall be resolved by a reputable
engineering firm. The Operator shall propose the engineering firm,
acceptable to PNOC-EDC, and the Parties will agree on such
engineering firm not later than six (6) months prior to the start
of the Commissioning Period. The Parties shall equally share any
costs associated with this procedures.
6.2 COMMERCIAL OPERATION DATE
No later than the Commercial Operation Date, the Operator shall
commence the delivery of electric power and energy to NAPOCOR on
behalf of PNOC-EDC in accordance with contracted levels. All other
related provisions on the operation of the Power Plant and the
tariffs, discounts, bonuses, and penalties on the regular sale of
power and energy shall also take effect on this date.
6.3 POWER RATES FOR INITIAL DELIVERY
In the event that the Completion Date of the Power Plant falls on
a date other than the start of a monthly Billing Period, PNOC-EDC
shall be billed by the Operator and shall pay the Capacity Fee on
a pro-rata basis and the Energy Fee for energy actually
delivered.
6.4 OPERATING PARAMETERS
The Operator shall operate the Power Plant following the
Operating Parameters as stipulated in Annex B4.
6.5 DISPATCH PROCEDURES
The Operator shall control and operate the Power Plant consistent
with NAPOCOR's dispatch requirements.
6.6 ENGINEERING STANDARDS
The Power Plant shall be designed, operated and maintained by the
Operator in accordance with applicable prudent utility industry
standards and good engineering practices.
6.7 ENVIRONMENTAL STANDARDS
The Power Plant shall be designed, constructed, operated and
maintained by the Operator in accordance with applicable
environmental standards and regulations, and in particular with the
requirements of the Environmental Compliance Certificate, Authority
to Construct and Permit to Operate. In case of any changes in law
and interpretation of law, Section 3.3 shall apply.
6.8 PROTECTIVE APPARATUS
The Power Plant shall be operated by the Operator with all of its
Protective Apparatus in service whenever it is connected to or is
operated in parallel with the NAPOCOR electric system.
6.9 INTEGRITY LOSS
If, at any time, NAPOCOR has reasonable basis to doubt the
integrity of any of the Operator's Protective Apparatus and to
believe that such loss of integrity would be hazardous to the
integrity of the NAPOCOR electric system, the Operator shall
demonstrate, to NAPOCOR's and PNOC-EDC's satisfaction, the
correct calibration and operation of the equipment in question. If
not so satisfied, NAPOCOR shall have the right to disconnect the
Operator and refuse to receive the power delivered by the Power
Plant and PNOC-EDC shall consider the Power Plant to be in Outage
for billing purposes. The inability of the Operator to meet
capacity by reason of any demonstration made by the Operator under
this Section 6.9 shall not be an Outage if the Operator is able to
show correct calibration and operation of its Protective Apparatus.
6.10 SETTINGS OF PROTECTIVE APPARATUS
All settings of all Protective Apparatus shall be subject to the
approval of NAPOCOR. Tests and calibration of this Protective
Apparatus shall be at the expense of the Operator.
6.11 SERVICE COMMITMENT
At NAPOCOR's request, the Operator shall make all reasonable
efforts on behalf of PNOC-EDC to deliver energy during periods of
Emergency.
6.12 MAINTENANCE DURING EMERGENCY
In the event that the Scheduled Maintenance coincides with an
Emergency, the Operator shall make all reasonable efforts to
reschedule such maintenance.
6.13 ANNUAL CAPACITY NOMINATION
The Nominated Capacity of the Power Plant shall be specified by the
Operator for the second year and each subsequent year of the
Cooperation Period no later than thirty (30) calendar days prior to
the anniversary of the Commercial Operation Date. PNOC-EDC shall
advise the Operator no later than thirty-five (35) calendar days
prior to the anniversary of the Commercial Operation Date of the
maximum amount of power expressed in kilowatts (kW) of
Steamfield Power which PNOC-EDC shall require to be provided with
for the following year.
If, for a particular year, the Operator fails to specify a
Nominated Capacity, then the lower of the Contracted Capacity, the
last Nominated Capacity and the last test capacity adjusted per the
Correction Curves shall be the Nominated Capacity for the
particular year.
6.14 MAINTENANCE SCHEDULE
The Operator shall submit a written schedule for the necessary
overhaul, maintenance, inspection and repair of the Power Plant
("Scheduled Maintenance") one hundred (100) calendar days prior to
the start of each calendar year during the Cooperation Period.
Such Scheduled Maintenance for each generating unit of the Power
Plant shall not exceed forty-five (45) days per year.
6.15 APPROVAL OF MAINTENANCE SCHEDULE
PNOC-EDC shall notify the Operator within forty-five (45)
calendar days after receipt of the maintenance schedule from the
Operator whether the requested maintenance schedule is approved,
which approval shall not be unreasonably withheld. In the event
that the proposed schedule is not approved, the Parties shall
promptly and in good faith negotiate an alternative maintenance
schedule.
6.16 COMPLIANCE WITH APPROVED MAINTENANCE SCHEDULE
The Operator shall perform scheduled maintenance work on the Power
Plant during the periods approved by PNOC-EDC in accordance with
Section 6.15.
6.17 UNSCHEDULED OUTAGE
The Operator shall immediately notify PNOC-EDC, and NAPOCOR on
behalf of PNOC-EDC, of any Outage and specify the estimated
duration of such Outage.
6.18 DAILY OPERATING REPORT
For record purposes, the Operator shall keep PNOC-EDC and NAPOCOR's
Power Management Centre informed as to the daily results of
operation and generation capability of the Power Plant, including,
without limitation, any Outages.
6.19 OPERATING RECORDS
The Operator shall maintain an operating log for each generating
unit of the Power Plant with records of:
(a) real and reactive power production,
(b) changes in operating status,
(c) Outages,
(d) Protective Apparatus operations,
(e) any unusual conditions found during inspections, etc.
Changes in the setting of Protective Apparatus shall also be
logged. In addition, the Operator shall maintain records
applicable to the Power Plant, including maintenance and overhaul
records, the electrical characteristics of the generator and
settings or adjustments of the generator control equipment and
Protective Apparatus. At the end of the Cooperation Period, such
records shall be turned over to PNOC-EDC at no cost.
ARTICLE 7 GEOTHERMAL FLUIDS
7.1 FLUID SUPPLY
(a) PNOC-EDC shall deliver at no cost to the Operator at the Site
the total Geothermal Fluid requirements for the Power Plant.
(b) If either Party shall have reason to believe that a Material
Shortfall shall then exist or be continuing, that Party shall
promptly notify the other Party. Such notice shall be reasonably
detailed and include a description of possible solutions to the
problem.
(c) If the Operator certifies to PNOC-EDC that a Material
Shortfall has occurred and is continuing, the Energy Fee shall be
modified as follows for so long as such Material Shortfall
continues. If the Operator operates the Power Plant and the
Material Shortfall is within the adjustment range of the
Correction Curves, the net capacity shall be deemed reduced for the
purpose of adjusting the Base Energy Rate only to the
applicable, normative capacity per the Correction Curve
("Normative Capacity"), and the Base Energy Rate shall be
increased by the following factor:
Contracted Capacity
Normative Capacity
using actual Energy Delivered so long as the Material Shortfall
shall continue within the bounds of a Correction Curve.
If the Material Shortfall is outside the adjustment range of the
Correction Curves then, for as long as the Material Shortfall
continues, the Energy Fee shall be calculated based on the Base
Energy Rate and the Nominated Capacity.
(d) The Operator shall use its best efforts to operate the Power
Plant with a Material Shortfall at the Normative Capacity
indicated by any relevant Correction Curves but shall not
continue operation of the power Plant if such operation would
adversely affect the Power Plant or its operation.
7.2 FLUID DISPOSAL
The Operator shall deliver to PNOC-EDC and PNOC-EDC shall accept
for disposal at no cost to the Operator all steam condensate
discharged from the Power Plant which complies with the
specifications stated in Annex I.
7.3 BY-PRODUCTS & EFFLUENTS
The Operator shall be responsible for the disposal of all waste
arising from the construction, operation or maintenance of the
Power Plant, including non-condensible gases, except for fluids
returned to PNOC-EDC in accordance with Section 7.2 and such non-
condensible gases as may be accepted by PNOC-EDC for re-
injection. Subject to the provisions of Section 3.3(a), the Power
Plant shall be designed to meet the environmental standards
provided for in Philippine laws as implemented by the Department of
Environment and Natural Resources and all waste disposal shall be
in accordance with such laws and with requirements of the
Environmental Compliance Certificate.
7.4 ENERGY MANAGEMENT
The Operator shall ensure that steam and electricity use is
optimized and shall exercise due diligence in the operation and
management of main and auxiliary machinery so as to minimize energy
consumption and wastage.
ARTICLE 8 DELIVERY OF CAPACITY AND ENERGY
8.1 OBLIGATIONS OF THE PARTIES
The Operator hereby agrees to convert PNOC-EDC's geothermal fluid
into electric energy and PNOC-EDC hereby agrees to sell to
NAPOCOR, at the Point of Interconnection, the electric capacity and
energy delivered by the Operator to NAPOCOR on behalf of PNOC-EDC
during the Cooperation Period. PNOC-EDC agrees to pay the Operator
for the electric capacity and energy delivered by the Operator at
the Point of Interconnection plus any deliveries made to PNOC-EDC
for its own use.
The Operator shall make available electric capacity and energy on
and from the Completion Date. The mutually agreed capacity and
energy charges shall be paid for by PNOC-EDC pursuant to the terms
and conditions of this Agreement.
8.2 ENERGY DELIVERY
PNOC-EDC may temporarily suspend receipt of electricity from the
Operator for:
(a) Tampering with meters by the Operator; or
(b) A condition on the Operator's side of the Point of
Interconnection dangerous to life or property.
Such condition shall be subject to confirmation by an independent
third party expert satisfactory to both Parties. If so
confirmed, PNOC-EDC shall be excused from payment of capacity and
energy charges for the duration of such suspension and such
suspension shall cease on rectification of the initiating
condition.
8.3 METERING
8.3.1 METER MAINTENANCE AND OWNERSHIP
(a) PNOC-EDC shall supply, own and maintain as part of the
interconnection facilities, meters and related equipment to be
utilized for the measurement of electric power and energy.
(b) NAPOCOR may also supply, own and maintain as part of the
interconnection facilities, meters and related equipment to be
utilized for the measurement of electric power and energy.
(c) PNOC-EDC shall supply, own and maintain meters and related
equipment to be utilized for the measurement of geothermal fluid
flow.
(d) The Operator shall supply, own and maintain equipment for the
measurement, calculation and recording of the theoretical steam
consumption of the Power Plant.
8.3.2 METER LOCATION
(a) The equipment used for metering NAPOCOR Power shall be located
at the high voltage side of the step-up transformer.
(b) The equipment used for metering geothermal fluid flow shall be
located in the geothermal fluid piping upstream of the point of
interconnection of the geothermal fluid supply from PNOC-EDC to the
Operator.
(c) The equipment used for metering Steamfield Power shall be
located on the 4.16 kV side of the auxiliary transformer.
8.3.3 PLANT MONITORING EQUIPMENT
For the purpose of monitoring the Power Plant operation, the
Operator shall make reasonable provision for the installation of
other metering and telemetering devices at the generation side of
the step-up transformer as part of the PNOC-EDC Supervisory Control
and Data Acquisition (SCADA) system.
8.3.4 METER SEALS AND INSPECTIONS
PNOC-EDC's meters shall be sealed and the seals shall be broken
only when the meters are to be inspected or tested by PNOC-EDC.
The Operator shall be given reasonable notice of such occasions and
shall have the right to have its representative present.
8.3.5 METER TESTS
PNOC-EDC's electricity meters, installed pursuant to this
Agreement, shall be tested by PNOC-EDC at its own expense every six
months. Other tests may be conducted at any reasonable time upon
request by either Party, at the requesting Party's expense. If the
Operator makes such request, the Operator shall reimburse said
expense to PNOC-EDC within thirty (30) days after
presentation of a bill therefor. PNOC-EDC's meter test results
shall be deemed final and conclusive.
The Operator's equipment for the calculation and recording of
theoretical steam consumption shall be tested by the Operator at
its own expense, in the presence of PNOC-EDC, every six months.
8.3.6 METER ACCURACY
Electric metering equipment found to be inaccurate shall be
repaired, adjusted, or replaced by PNOC-EDC such that the
accuracy of said equipment shall be within 100% plus or minus one
percent (1%). Should the inaccuracy exceed plus or minus one
percent (1%), the correct amount of power energy delivered during
the previous billing period shall be estimated by PNOC-EDC and
agreed by the Parties. Adjustment for meter inaccuracy shall cover
only the current Billing Period and the Billing Period immediately
preceding it except when such meter inaccuracy is due to fraud.
8.4 TERMS OF PAYMENT
8.4.1 CAPACITY FEE
The Capital Cost Recovery Fee, the Fixed Operating Cost Recovery
Fee, and the Service Fee to reflect Return on Investment for each
Billing Period shall be computed on the basis of the following
formulae:
(a) Capital Cost Recovery Fee, to be paid in Dollars,
= [(CCR x NC)(1 - TOH/Nh)] - [(y x 1.2(CCR)(CC-NC)]
(b) Fixed Operating Cost Recovery Fee, to be paid in Dollars,
= [(OCR x NC)(1 - TOH/Nh)] - [(y x 1.2)(OCR)(CC - NC)]
(c) Service Fee for Return on Investment to be paid in
Philippine Pesos using the prevailing exchange rate at time of
payment, which shall in no case be lower than 8% of the sum of the
Capital Cost Recovery Fee and the Fixed Operating cost
Recovery Fee,
= {[(SFR x NC)(1 - TOH/Nh)] - [(y x 1.2)(SFR)(CC - NC)]} x Px
Where
CCR = $20.78 per kW per month.
OCR = $1.81 per kW per month.
SFR = $16.75 per kW Per month.
CC = Contracted Capacity, in kW.
TOH - Total Outage Hours in Billing Period.
Nh = Total number of hours in the Billing Period.
NC = Nominated Capacity for the year, in kW.
Px = Conversion factor of payments to Philippine Peso quoted by the
Philippine National Bank.
y = variable, defined as follows:
if 0.95 x CC < NC < 1.05 x CC, then y = 0, otherwise, y = 1
8.4.2 ENERGY FEE
The Energy Fee payable to the Operator, which reflects the
variable costs to be paid by PNOC-EDC to the Operator for
variable expenses incurred by the Operator in the generation of
electricity by its Power Plant, shall be computed for each
Billing Period as follows and be paid in Philippine Pesos.
Energy Fee
= (BER x ED) = US(Vgs - Vts) x ZS
where:
BER = Base Energy Rate Ps 0.028 per kilowatt-hour delivered during
the Billing Period.
ED = Energy Delivered during the Billing Period expressed in
kilowatt
hours (kWh).
US = 114.1 Peso/tonne.
Vgs = Cumulative theoretical steam consumption for the Billing
Period
in metric tons computed on the basis of the Guaranteed Net Plant
Steam Rate for each hour (SRg), using the formula:
n
Vgs = EDsixSRgi
i=1
where:
n = number of hours in the Billing Period
EDsi = Energy Delivered in hour i
SRgi = Guaranteed Net Plant Steam Rate for each hour i adjusted for
variations from the Geothermal Fluid Specifications and Atmospheric
Conditions using the formula
SRgi = Guaranteed Net Plant Steam Rate
FS1 x FS2 x Fsa x Fsg
where:
FS1 = Steam pressure correction factor per the Correction Curves.
FS2 = Steam flow correction factor per the Correction Curves.
Fsa = Ambient temperature correction factor per the Correction
Curves.
Fsg = NCG content in steam flow correction factor per the
Correction Curves.
ts = Measured steam consumption for the Billing Period in metric
tons.
ZS = Variable, defined as follows:
If 0.97 x Vgs < Vts < 1.03 x Vgs, then ZS = 0, otherwise ZS = 1
8.4.3 (RESERVED)
8.4.4 ESCALATION ADJUSTMENTS
In the billing months of January and July of each year (using the
indices for the prior months of December and June, respectively),
then figure for:
(i) OCR; and
(ii) SFR; and
(iii) BER; and
(iv) US
shall be adjusted proportionately by the change in the index
applicable to each component, as specified in Annex M, as from the
levels of such indices prevailing in June 1993.
8.5 BILLING PROCEDURES
The Operator shall bill PNOC-EDC for the delivery of electric power
and energy as adjusted on a monthly basis until the
termination of this Agreement.
The Operator shall arrange its billing schedule in accordance with
the billing system of PNOC-EDC. The Billing Period shall cover the
period from 10:00 AM of the twenty-fifth (25) day of the current
month to 10:00 AM of the twenty-fifth (25th) day of the following
month. Any changes in the billing system of PNOC-EDC shall be
followed by the Operator in billing PNOC-EDC. The Operator shall
send PNOC-EDC its bills within five (5) days reckoned from the last
day of the Billing Period. PNOC-EDC shall be required to settle
its monthly bills without penalty to
Operator within thirty (30) days from receipt of billing.
If PNOC-EDC disputes the amount specified in any invoice, it shall
so inform the Operator within seven (7) days following the receipt
of such invoice. If the dispute is not resolved by the due date,
PNOC-EDC shall pay the undisputed amount on or before such date and
the disputed amount shall be resolved as soon as is reasonably
practicable following the due date for such invoice.
8.6 PAYMENTS NET OF VALUE ADDED TAX & OTHER TAXES
All amounts payable to the Operator shall be made free and clear of
all present and future taxes, levies, imposts, stamp, duties or
other fees or charges imposed thereon by the Authorities except
that any such amounts shall be paid without the applicable Value
Added Tax thereon which the Operator shall bill separately and the
amount of which shall be paid by PNOC-EDC. Each sum payable shall
be increased so as to ensure that after PNOC-EDC has deducted
therefrom any and all taxes or charges required to be deducted
therefrom by PNOC-EDC there remains a sum equal to the amount that
would have been payable to the Operator had there been no
requirement to deduct or withhold such taxes or other charges.
PNOC-EDC shall be responsible for the payment of all taxes imposed
by the Authorities on the Operator or the Power Plant, including
real estate taxes in respect of the Site and the buildings and
other improvements thereon including the Power Plant, but not (i)
corporate income tax on the Operator, (ii) taxes on dividends or
profits remitted from the Philippines by the Operator, and (iii)
reasonable construction and permit fees and charges not exceeding
$50,000.
ARTICLE 9 BUYOUT
9.1 BUYOUT CONDITIONS
If,
(a) during the Cooperation Period in the reasonable opinion of
PNOC-EDC or the Operator, material changes in policies, laws and
regulations, including taxes, of the Authorities adversely affect
the operation of the Power Plant or the after-tax cash flow of the
Operator; or
(b) prior to the Cooperation Period, the provisions of
Subsections 3.3(a), 4.4, 4.5, 4.6.2 or 13.4 make this Article 9
applicable; or
(c) PNOC-EDC fails to make any payments when due of the Capacity
Fee or Energy Fee; or
(d) during the Cooperation Period, a Material Shortfall causes the
alternate pricing provisions described in Section 7.1(c), or a
Material Shortfall or an Interconnection Failure causes the
exclusions of certain outages from the definitions of Outage and
Outage Day, which effects account for 25% or more of billings
during three or more consecutive Billing Periods or the Parties
fail to agree on the terms under which this Agreement may be
continued in accordance with the provisions of Section 13.4; or
(e) at any time during the effectivity of this Agreement, PNOC-EDC
or NAPOCOR is privatized in whole or in part or reorganized, or the
events defined in Article 19 shall occur,
then PNOC-EDC or the Operator as the case may be shall notify the
other Party of the occurrence of any of the forgoing events and the
Parties shall promptly meet and endeavour to make amendments to the
Agreement and agree to such amendments. If, after ninety (90)
calendar days, or sixty (60) calendar days in case of Section
9.1(c), since such changes become effective, no such agreement has
been reached, either Party may require a buyout of the Operator's
Power Plant by PNOC-EDC. If either Party determines that such an
impasse has been reached, that Party may deliver written notice to
the other Party requiring a buyout under this Article 9 provided
that for purposes of Section 9.1(a) above an adverse effect on the
Operator's after-tax cash flow shall refer to any adverse change in
the Operator's cash flow (after taxes) for any taxable year, as
confirmed by an independent auditor agreeable to both Parties and
provided that in case of Section 9.1(c) above only the Operator
shall have the right to require a buyout. If the Parties cannot
promptly reach a definitive, written agreement embodying the terms
of a buyout (notably the Buyout Price and payment terms), Article
20 shall apply.
9.2 BUYOUT PRICE
The purchase price (Buyout Price), in Dollars, of the Power Plant
as a result of the buyout shall be
(a) prior to the Cooperation Period, the Operator's actual costs
and disbursements in performing its obligations under this
Agreement, as estimated by an independent accountant jointly
appointed by the Parties, including, without limitation,
commitment fees, interest and other amounts paid to or owed to
lenders or vendors, plus ten percent (10%) return on equity; or
(b) during the Cooperation Period, the sum of:
(i) the net present value of the stream of payments for the
Service Fee for Return on Investment (as at the date of the buyout)
for the remaining term of the Cooperation Period,
multiplied by the SFR Factor set forth in the following table:
If the buyout occurs during Project Year:
SFR FACTOR:
1
1.0
2
0.9
3
0.8
4
0.7
5
0.6
6
0.5
7
0.4
8
0.3
9
0.2
10
0.1
(Where Project Year means the twelve-month period from the
anniversary of the Commercial Operation Date in one year until, but
not including, the anniversary date of the Commercial
Operation Date in the following year. Project Year 1 commences on
the Commercial Operation Date and Project Year 10 ends on the
Transfer Date.)
plus
(ii) the net present value of the stream of payments for the
Capital Cost Recovery Fee for the remaining term of the
Cooperation Period,
in the case of both clauses (i) and (ii) on the basis of the last
Nominated Capacity, and using a discount rate equal to the
Commercial Interest Reference Rate (CIRR) for the Dollar
published by the Organization for Economic Cooperation and
Development (OECD) in effect on the Effectivity Date.
In calculating disbursements in accordance with clause (a), amounts
disbursed by lenders shall be prima facie evidence of actual
disbursements and interest accrued (whether or not paid) shall be
deemed actual disbursements. The actual rates of
interest payable to lenders shall be the interest rate
attributable to that portion of the Buyout Price.
9.3 PAYMENT TERMS
The Buyout Price shall be payable by PNOC-EDC within sixty (60)
calendar days after either Party requires a Buyout pursuant to
Section 9.1.
9.4 TRANSFER PROVISION
In respect of any transfer of ownership of the Power Plant
pursuant to the conditions stated above, the provisions on
transfer of ownership in Article 12 hereof shall apply thereto.
ARTICLE 10 REPRESENTATIONS & WARRANTIES OF THE
PARTIES
10.1 CORPORATE EXISTENCE
CE Philippines Ltd. represents that it is a corporation duly
organized and existing under the laws of Bermuda and that it has
the corporate power and authority to execute, deliver and carry out
the terms and conditions of this Agreement.
California Energy Company Inc. represents that it is a
corporation duly organized and existing under the laws of the State
of Delaware and that it has the corporate power and
authority to execute, deliver and carry out the terms and
conditions of this Agreement.
10.2 GOVERNMENT AUTHORISATIONS
The Operator represents and warrants that by the Effectivity Date
it will take all necessary corporate action and will secure or
cause to be secured all orders, consents or approvals, permits and
licenses (other than the Environmental Compliance
Certificate) required by the Authorities to construct and own the
Power Plant, except for certain items notified to PNOC-EDC in
writing (which writing shall summarize in reasonable detail the
Operator's actions, those requested of PNOC-EDC, and the current
status of the application or similar proceeding).
10.3 INDEMNIFICATION
10.3.1 INDEMNITY BY THE OPERATOR
(a) The Operator shall hold free and harmless and defend PNOC-EDC
from any and all actions, claims, liabilities and suits for losses
and damages to properties of other contractors and/or third parties
arising in the prosecution of the Agreement and caused by the
Operator's negligence.
(b) The Operator shall hold free an harmless, and defend PNOC-EDC,
its officers, agents and employees, from liability, damages or
obligations of any nature or kind, including costs and
expenses, on account of any copyrighted or uncopyrighted
composition, secret process, patented or unpatented invention,
article, method or appliance manufactured or used by the Operator
in the performance of the Agreement.
(c) Any fines or other penalties related to the Project incurred
by the Operator or its agents, employees or subcontractors for non-
compliance by the Operator or its employees, agents or
subcontractors with the laws, rules, regulations or ordinances
shall be the exclusive responsibility of the Operator. If fines,
penalties, or legal costs are assessed against PNOC-EDC by the
Authorities or any court due to willful or negligent non-
compliance by the Operator with any laws, rules, regulations or
ordinances with which compliance is required herein, or if the
operation of the Power Plant is suspended or stopped by order of
any Authority or court due to the Operator's willful non-
compliance with any such laws, rules, regulations or ordinances,
the Operator shall indemnify and hold harmless PNOC-EDC against any
and all losses, liabilities, damages, and claims (other than
consequential damages not paid to third parties) suffered or
incurred by PNOC-EDC because of the willful failure of the
Operator to comply therewith. The Operator shall also reimburse
PNOC-EDC for any and all legal or other expenses (including
reasonable attorney's fees) reasonably incurred by PNOC-EDC in
connection with such willful losses, liabilities, damages or
claims.
10.3.2 INDEMNITY BY PNOC-EDC
PNOC-EDC shall hold free and harmless and defend the Operator, its
officers and employees harmless against any claims of any person
who directly or indirectly suffers or is injured by the performance
by the Operator of the obligations under this
Agreement, including damage or injury as a result of an
interruption of electricity supply or any other disruption or surge
of electricity supply and the Operator's, its officers', agents' or
employees' actions or omissions in connection
therewith, not arising solely out of the Operator's negligence.
10.4 WARRANTY AGAINST CORRUPTION
The Operator hereby warrants that it or its representatives
has/have not given or promised to give any money or gift to any
employees/official of PNOC-EDC to influence the decision
regarding the awarding of this Agreement nor has the Operator
and/or its representatives exerted or utilized any unlawful
influence to solicit or secure this Agreement through an
agreement to pay a commission, percentage, brokerage, or
contingent fee. The Operator agrees that breach of this warranty
shall be sufficient ground for the Philippine National Oil
Company or its affiliate to deduct, at its/their discretion, such
commission, percentage, brokerage, or contingent fees from the
contract price without prejudice to the Operator or any person's
civil or criminal liability under the Anti-Graft and Corrupt
Practices Act and other applicable laws.
ARTICLE 11 INSURANCE
The Operator shall, at its own expense, obtain and maintain in
force insurance as specified in Sections 11.1 and 11.2. The
Operator shall provide to PNOC-EDC evidence of this insurance. In
particular, evidence of the insurance required to be held during
the Cooperation Period shall be furnished prior to
commencing initial performance testing of the Power Plant.
11.1 INSURANCE DURING CONSTRUCTION
From the Effectivity Date until the commissioning of the Power
Plant, the Operator shall, at its own expense, obtain and
maintain in force the following insurance:
(a) All Risk Marine Insurance in respect of plant and equipment to
be imported into the Philippines;
(b) All Risks "Builder's Risk Insurance" to cover the entire works
from any and all kinds of damages customarily covered; and
(c) "Third Party Liability Insurance" to cover injury to or death
of persons including those of PNOC-EDC or damages to
property including those of PNOC-EDC caused by the works or by the
Operator's vehicles, tools and/or equipment or personnel including
its subcontractors;
11.2 INSURANCE DURING COOPERATION PERIOD
The Operator, at its own expense, shall keep the Power Plant
insured against accidental damage from all normal risks and to a
level normal for prudent operators of facilities similar to the
Power Plant. In addition, the Operator shall secure adequate
insurance cover for its employees as may be required by law.
ARTICLE 12 TRANSFER OF OWNERSHIP
12.1 TRANSFER OF TITLE
Title to the Power Plant shall automatically vest in PNOC-EDC on
the Transfer Date, subject to performance by PNOC-EDC of all of its
obligations under this Agreement. The Power Plant shall be
transferred free and clear of any liens or encumbrances except
those caused by PNOC-EDC. The Operator shall execute such
documents as may be reasonably necessary to effect the transfer of
the title to PNOC-EDC.
12.2 COSTS & EXPENSES
The Operator shall pay for all costs and expenses including but not
limited to documentation, fees and taxes incurred in
connection with the transfer referred to in Section 12.1 hereof not
to exceed $50,000.00 in the aggregate.
12.3 TRAINING OF PNOC-EDC STAFF
During a minimum period of twelve (12) months prior to the
Transfer Date, the Operator shall provide training in operation and
maintenance of the Power Plant for PNOC-EDC staff. This training
shall be provided in accordance with a programme to be agreed
between PNOC-EDC and the Operator and shall be provided at no cost
to PNOC-EDC.
PNOC-EDC may offer to the Operator to take over the employment of
such of the Operator's operating and maintenance staff employed on
the Power Plant at the end of the Cooperation Period as PNOC-EDC
may, at its own sole discretion, consider suitable for
employment with PNOC-EDC.
12.4 CONDITION OF POWER PLANT ON TRANSFER
Within a period of six (6) months prior to the Transfer Date, the
Operator shall undertake performance and efficiency testing of the
Power Plant as specified in Annex D to demonstrate to the
reasonable satisfaction of PNOC-EDC the satisfactory condition of
the Power Plant for continued operation for the remaining
duration of the specified design life.
Subject to the provisions of Article 13, if the total tested
capacity of all generating units (receiving the appropriate
Geothermal Fluid complying with the Geothermal Fluid
Specifications) shall prove to be less than the Contracted
Capacity, or if the Net Plant Steam Rate shall prove to be more
than the Guaranteed Net Plant Steam Rate, PNOC-EDC shall be
entitled to claim a portion of the Operation Performance Bond to
collect a final arbitral decision pursuant to Article 20, in an
amount equal to the percentage variance of such total tested
capacity from the Contracted Capacity and actual Net Plan Steam
Rate from the Guaranteed Net Plant Steam Rate, in each case,
multiplied by the amount of the Operation Performance Bond, without
prejudice to other remedies available.
The provisions of the immediately preceding paragraph shall not
apply in the event that the guaranteed performance is not
achieved during the above six (6) month period due to an event of
Force Majeure. In that event, the Operator shall remit to PNOC-EDC
all proceeds to insurance paid on the Power Plant less costs
related to such event.
ARTICLE 13 FORCE MAJEURE
13.1 FORCE MAJEURE
Subject to the provisions of Section 13.3 no failure or omission to
carry out or observe any of the terms, provisions or
conditions of this Agreement shall give rise to any claim by any
Party against any other Party hereto, or be deemed to be a breach
or default of this Agreement if the same shall be caused by or
arise out of:
(a) (other than as referred to in subparagraph (b) below), any
war, declared or not, or hostilities, or belligerence, blockade,
revolution, insurrection, riot, public disorder, expropriation,
requisition, confiscation, or nationalization, export or import
restrictions by any Authorities, closing of harbours, docks,
canals, or other assistances to or adjuncts of the shipping or
navigation of or within any place, rationing or allocation, whether
imposed by law, decree or regulation by, or by compliance of
industry at the insistence of any governmental authority, or fire,
unusual flood, earthquake, storm, lightning, tide, (other than
normal tides), tidal wave, perils of the sea, accidents of
navigation or breakdown or injury of vessels, accidents to
harbours, docks, canals or other assistance to or adjuncts of the
shipping or navigation, epidemic, quarantine, strikes or
combination of workmen, lockouts or other labour disturbances, or
any other event, matter of thing, wherever occurring, which shall
not be within the reasonable control of the Party affected
thereby; or
(b) war, declared or not, or hostilities involving the
Authorities, or belligerence, blockade, revolution, insurrection,
riot, public disorder, expropriation, requisition, confiscation or
nationalization by or involving the Authorities, export or import
restrictions by the Authorities, closing of harbours, docks,
canals, or other assistances to or adjuncts of the
shipping or navigation of or within the Republic of the
Philippines, rationing or allocation, whether imposed by law,
decree or regulation by, or by compliance of industry at the
insistence of the Authorities, or any other event, matter or thing,
wherever occurring, which shall be within the reasonable control of
PNOC-EDC or the Authorities.
each of the foregoing events, matters or things being called "Force
Majeure" in this Agreement; provided that,
(i) The affected Party gives the other Party within forty eight
(48) hours a written notice describing the particulars of the
occurrence;
(ii) The suspension of performance is of no greater scope and of
no longer duration than is required by the Force Majeure;
(iii) The affected Party uses its best efforts to remedy its
inability to perform; and
(iv) When the affected Party is able to resume performance of its
obligations under this Agreement, that Party shall give the other
Party written notice to that effect.
13.2 RESPONSIBILITY FOR DAMAGES
Damages or injuries to persons or properties resulting from a Force
Majeure event during the performance of the obligations provided
for in this Agreement shall not relieve the Operator of the
responsibility to bear the cost of the damage or injuries caused by
the Operator's negligence.
13.3 OBLIGATION OF PNOC-EDC
Except in respect of Force Majeure referred to in Section
13.1(a), (other than Force Majeure causing an Interconnection
Failure or affecting the ability of PNOC-EDC to deliver the
Geothermal Fluid), Force Majeure shall not excuse PNOC-EDC from its
obligation to pay the Capacity Fee.
13.4 REMEDIES
Except as otherwise provided, in no event shall any condition of
Force Majeure extend this Agreement beyond its stated term. If any
condition of Force Majeure delays a Party's performance for a
period greater than ninety (90) days, the Party affected by such
Force Majeure may suspend this Agreement. If the Force Majeure
prevents a Party's performance for a period greater than one
hundred eighty (180) days, the Parties hereto shall meet to discuss
the basis and terms upon which the arrangements set out in this
Agreement may be continued. The Parties hereto shall consult with
each other and take all reasonable steps to minimize the losses of
either Party resulting from Force Majeure. If no mutually
acceptable agreement is reached or implemented within ninety (90)
days from the date of first meeting, the provisions of Article 9
shall apply.
ARTICLE 14 SUSPENSION, ABANDONMENT AND TERMINATION
14.1 SUSPENSION OF PAYMENT
Subject to the provisions of Article 13, payments under this
Agreement, upon written request of the Operator, and for a period
reasonably required to replace or repair the Power Plant, may be
suspended if the Operator is temporarily unable to produce the
electricity contracted for due to physical destruction of or damage
to the Power Plant.
14.2 ABANDONMENT
14.2.1 ABANDONMENT DURING CONSTRUCTION
The construction of the Power Plant shall be deemed abandoned under
any of the following circumstances:
(a) the Operator, through a written notice to PNOC-EDC,
terminates construction of the Power Plant other than by reason of
Force Majeure or for reasons not attributable to the Operator; or
(b) the Operator fails (other than by reason of Force Majeure or
for reasons not attributable to the Operator) to place an order for
the long lead items (turbo-generators) on the date which is thirty
(30) months prior to the Completion Date, provided however that
such date is not earlier than one hundred twenty (120) days from
the Effectivity Date, in accordance with and subject to any
extensions provided in Subsection 4.1.1; or
(c) the Operator fails (other than by reason of Force Majeure or
for reasons not attributable to the Operator) to resume work (i)
within one hundred twenty (120) calendar days following receipt of
insurance proceeds relating to, and in amounts sufficient to cover
loss or damage arising from, Force Majeure, or (ii) if there is no
material damage to the Power Plant, within 120
calendar days following the termination or cessation of a Force
Majeure situation, provided that a notice of such termination or
cessation was given by PNOC-EDC to the Operator; or
(d) subject to the provisions of Article 13 and except for reasons
not attributable to the Operator, the Commercial
Operation Date does not occur within one hundred twenty (120)
calendar days following the Commercial Operation Date as
specified in Subsection 4.1.1, as the same may be adjusted in
accordance with this Agreement.
If construction of the Power Plant is deemed abandoned in
accordance with this Subsection 14.2.1, PNOC-EDC may terminate this
Agreement by giving the Operator not less than fifteen (15) days
prior written notice of its intention to so terminate this
Agreement, which notice shall specify the reason for such
termination. If the Operator has not commenced performance under
paragraphs (a), (b) or (d) or work under paragraph (c) of this
Subsection 14.2.1 before the expiration of such fifteen (15) day
period, this Agreement shall immediately and automatically
terminate. In case of termination under this Subsection 14.2.1 the
Operator shall forfeit the Construction Performance Bond to PNOC-
EDC and transfer, at no cost to PNOC-EDC, all of the
Operator's right, title and interest in the Power Plant to PNOC-
EDC, subject to any liens existing thereon on the date of such
transfer. Upon such termination, forfeiture and transfer, the
Operator shall have no further liability hereunder.
14.2.2 ABANDONMENT DURING COOPERATION PERIOD
The Power Plant shall be deemed abandoned during the Cooperation
Period under the following circumstances:
(a) the Operator, through a written notice to PNOC-EDC,
terminates operation of the Power Plant except (i) for Force
Majeure or (ii) for reasons not attributable to the Operator; or
(b) the Operator fails to deliver energy to NAPOCOR on behalf of
PNOC-EDC for a period of one hundred twenty (120) consecutive
calendar days except (i) for Force Majeure or (ii) for reasons not
attributable to the Operator; or
(c) subject to the provisions of Article 13 and except for reasons
not attributable to the Operator, the Operator fails to commence
reconstruction of the damaged Power Plant within one hundred twenty
(120) calendar days following receipt of insurance proceeds
relating to, and in amounts sufficient to cover loss or damage
arising from, Force Majeure or, if there is no material damage to
the Power Plant, the Operator fails to resume delivery of energy to
NAPOCOR on behalf of PNOC-EDC within one hundred twenty (120) days
following the termination or cessation of Force Majeure; provided
that a notice of such termination or cessation shall have been
given by PNOC-EDC to the Operator.
If the Power Plant is deemed abandoned during the Cooperation
Period in accordance with this Subsection 14.4.2, PNOC-EDC may
terminate this Agreement by giving the Operator not less than
fifteen (15) days prior written notice of its intention to so
terminate this Agreement, which notice shall specify the reason for
such termination. If the Operator has not commenced performance
under paragraphs (a) or (b) or work under paragraph (c) of this
Subsection 14.2.2 before the expiration of such fifteen (15) day
period, this Agreement shall immediately and automatically
terminate. Upon such termination, the Operator shall forfeit the
Operation Performance Bond to PNOC-EDC and shall transfer, at not
cost to PNOC-EDC, all of the Operator's right, title and interest
in the Power Plant to PNOC-EDC, subject to any liens existing
thereon on the date of such transfer, and the Operator shall have
no further liability hereunder.
14.3 TERMINATION FOR FAILURE TO DELIVER ENERGY
From and after the Completion Date, in the event that, during any
period of sixty (60) consecutive days, the Operator fails to
deliver energy which is equal to at least seventy percent (70%) of
the Contracted Capacity multiplied by the number of hours in the
aforesaid period (as adjusted with the applicable Correction Curves
and under Subsection 8.3.6) (the "Threshold Energy"), for any
reason other than those events where no Outage is deemed to occur
as enumerated in the definition of "Outage" under Section 1.1 of
this Agreement (as confirmed by an independent third party expert
appointed by PNOC-EDC and acceptable to the Operator), PNOC-EDC
shall give the Operator written notice of such failure requiring
the Operator to cure the failure within thirty (30) days following
such notice (the "Notice Period"). If, during the Notice Period,
the Operator still continuously fails to deliver the Threshold
Energy for any reason other than those events referred to in the
immediately preceding sentence, PNOC-EDC may, subject to the prior
written consent of the lenders for the Project - which consent
shall not
be unreasonably withheld and provided that any lender with vested
interest in the Operator (except where such interest is solely as
lender to the Operator) shall not be entitled to withhold consent -
terminate this Agreement by giving written notice thereof to the
Operator, subject to the Operator's right to question such
termination in accordance with Section 20(b); provided however that
PNOC-EDC shall have no termination rights under this Section 14.3
if:
(a) the Operator has commenced to cure the shortfall in the
Threshold Energy within the Notice Period and continues his efforts
to cure, or
(b) the Operator elects, by written notice to PNOC-EDC, to keep
this Agreement in full force and effect by payment to PNOC-EDC of
(i) any amount that PNOC-EDC is obligated to pay to NAPOCOR as a
result of the Operator's inability to meet the energy requested by
NAPOCOR from the Power Plant during any Billing Period and (ii) the
cost of the steam corresponding to the energy shortfall from the
Nominated Capacity times the number of hours in the same Billing
Period using the steam price set forth in Subsection 8.4.2 as
escalated in accordance with Subsection 8.4.4 and using the
Guaranteed Net Plant Steam Rate, such payments to be invoiced by
PNOC-EDC on a monthly basis and paid for by the Operator not later
than five (5) working days after the end of the Billing Period.
If, at any time, the Operator fails to remit amounts in accordance
with Section 14.3 (b) to PNOC-EDC, then PNOC-EDC shall have the
right to terminate this Agreement on the fifteenth (15th) day next
succeeding the day on which such amounts are due. Notwithstanding
the foregoing, if PNOC-EDC has not given the Operator not less than
five (5) working days' prior written notice of any amoun due, then
the Operator shall have no obligation to pay such amounts to PNOC-
EDC and PNOC-EDC shall have no right to terminate this Agreement if
the Operator fails to pay.
Upon such termination, the Operator shall forfeit the Operation
Performance Bond to PNOC-EDC and shall transfer, at no cost to
PNOC-EDC, all of the Operator's right, title and interest in the
Power Plant to PNOC-EDC, subject to any liens existing thereon on
the date of such transfer, and the Operator shall have no further
liability hereunder.
14.4 IMPROPER TERMINATION
In the event that an arbitration tribunal finds that any
termination of this Agreement and the forfeiture by PNOC-EDC of the
Construction Performance Bond or the Operation Performance Bond, as
the case may be, is improper, PNOC-EDC shall immediately pay to the
Operator the Buyout Price set forth Section 9.2(a) or 9.2(b), as
the case may be, determined as of the date on which this Agreement
was terminated.
ARTICLE 15 SEVERAL OBLIGATIONS
Except where specifically stated in the Agreement to be
otherwise, the duties, obligations, and liabilities of the
Parties 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 among
the Parties. Each Party shall be liable individually and
severally for its own obligations under this Agreement.
ARTICLE 16 COMMUNICATIONS AND NOTICES
16.1 COORDINATION MEETINGS
Coordination meetings between the Operator, PNOC-EDC and NAPOCOR
personnel shall be conducted for purposes of clarifying problems
that may arise during prosecution of the work and throughout the
Cooperation Period.
In addition, throughout the term of this Agreement representatives
of PNOC-EDC and the Operator shall meet regularly at not less than
yearly intervals to discuss the progress of the Project and the
operation of the Power Plant in order to ensure that the
arrangements between the Parties proceed on a mutually satisfactory
basis. Representatives of NAPOCOR may be invited to attend any
such meeting.
The site of such meetings shall be mutually agreed upon by both
Parties. All expenses to be incurred by each of the Parties and
NAPOCOR shall be for its own account.
16.2 COMMUNICATIONS AMONG PARTIES
All formal communications shall be made in writing.
Any communication made by PNOC-EDC to the Operator's designated
representative at the Site will be considered as made to the
Operator.
16.3 NOTICES
Any notice or communication required to be in writing hereunder
shall be given by any of the following means: registered mail,
telex or telefax, courier or personal delivery. Such notice or
communication shall be sent to the respective Parties at the
address listed below. Any notice given by registered mail or
courier shall be considered sent upon posting and the same shall be
considered received upon its acknowledgement.
In the case of Operator to:
The President
CE International
c/o California Energy Company
10831 Old Mill Road
Omaha, Nebraska 68154
USA
Telefax+1-402-334-3746
In the case of PNOC-EDC to:
Executive Vice President
PNOC-Energy Development Corporation
Merritt Road
Fort Bonifacio
Makati, Metro Manila
Philippines
Telex No.22666 EDC PH
Telefax.+63-2-815 2747
Either Party may, by written notice to the other, change the
representative or the address to which such notices and
communications are to be sent.
ARTICLE 17 NON-WAIVER
None of the provisions of this Agreement shall be considered waived
by either Party except when such waiver is given in
writing. The failure of either Party to insist, in any one or more
instances, upon strict performance of any of the provisions of this
Agreement or to take advantage of any of its rights hereunder shall
not be construed as a waiver of any such
provisions or the relinquishment of any such rights for the future,
but the same shall continue and remain in full force and effect.
ARTICLE 18 ASSIGNMENT
(a) Except as provided under Section 18(b), the Operator shall not
assign or transfer any or all of its rights and obligations under
this Agreement without the prior written consent of PNOC-EDC. Any
such assignment or transfer made without such prior written consent
shall be null and void. Consent for such assignment or transfer
may not be unreasonably withheld, provided that, in the reasonable
opinion of PNOC-EDC, the assignee or transferee possesses all the
legal, financial and technical qualification required to operate
and maintain the Power Plant. Notwithstanding any of the
foregoing, the Operator may assign all of its right, title and
interest in and to or arising out of or in connection with this
Agreement as security for the financing of the Power Plant subject
to the consent of PNOC-EDC, which consent shall not be unreasonably
withheld.
(b) All obligations under this Agreement which the Operator agrees
to be responsible for hereunder shall be assumed by Newco which
shall undertake to perform the Operator's obligations to perform
such work and in consideration of which shall be paid all fees
payable to the Operator under this Agreement. Newco, in carrying
out such work and receiving the fees payable to the Operator under
this Agreement, shall act on its own behalf and for its own
benefit, and not as an agent or representative of the Operator.
For such purpose, PNOC-EDC, the Operator and Newco shall execute
and deliver the Accession Undertaking, upon the effectiveness of
which Newco shall become a party hereto without the need of any
further action on the part of the Operator and, the rights and
obligations of PNOC-EDC and the Operator under this Agreement shall
be transferred and amended in accordance with the terms of the
Accession Undertaking, as fully as if Newco had executed this
Agreement as amended by the terms of the
Accession Undertaking.
ARTICLE 19 PRIVATISATION ASSURANCES
In the event that either of the common stock or other equity
interests in PNOC-EDC or NAPOCOR, or any other portion of their
assets or business activities are sold or otherwise transferred or
announced to be sold or otherwise transferred, or any merger or
other corporate reorganization (or a series of any of the above)
occurs, and:
(i) results in a real or purported assignment of rights or
assumption of obligation under this Agreement; or
(ii) substantially and adversely changes the net assets,
projected profits, projected net cash flow from operations, or
otherwise would prompt a reasonable person to conclude that the
ability of the relevant entity to duly perform its obligations
hereunder on a timely basis had been materially and adversely
affected;
then the Operator shall have the right to request reasonable
assurances from PNOC-EDC, NAPOCOR and the Authorities that the
Operator's rights and net economic returns under this Agreement are
preserved and that PNOC-EDC's ability to fully and
satisfactorily comply with its obligations under this Agreement is
not impaired. If so mutually agreed, written resolution of the
issues is reached within ninety (90) days, then the
provisions of Article 9 shall apply. If the ability of PNOC-EDC to
fund any resulting buyout is in question, PNOC-EDC shall exercise
any rights it may have to cause NAPOCOR or other third-party to
buyout PNOC-EDC paying the proceeds directly to the Operator.
ARTICLE 20 DISPUTE RESOLUTION
As much as possible, disputes shall be settled amicably between the
Parties. The Parties each hereby elect binding arbitration as
their sole and exclusive remedy for any claim arising under this
Agreement or in any way related to the Project.
(a) The Parties agree that in the event that there is any
dispute or difference between them arising out of this Agreement or
in the interpretation of any of the provisions hereof, they shall
endeavour to meet together in an effort to resolve such dispute by
discussion between them. But failing such resolution, the Chief
Executives of PNOC-EDC and the Operator shall meet to resolve such
dispute or difference, and the joint decision of such Chief
Executives shall be binding upon the parties hereto. In the event
that a settlement of any such dispute or difference is not reached
pursuant to this subclause, then arbitration under the next
following subclause shall apply.
(b) Where any dispute is not resolved as provided for in the
preceding subclause, then the Parties shall enter into binding
arbitration procedures under the rules of conciliation and
arbitration of the International Chamber of Commerce. Such
arbitration shall take place in Singapore before a tribunal of
three English speaking arbitrators, one to be chosen by each of the
Operator and PNOC-EDC, and the third to be chosen by the two first
selected. The arbitration proceedings shall be conducted in the
English language.
(c) To the extent that PNOC-EDC may in any jurisdiction claim for
itself or its assets or revenues immunity from suit,
execution, attachment (whether in aid of execution, before
judgement or otherwise) or other legal process, and to the extent
that in any such jurisdiction there may be attributed to itself or
its assets any immunity (whether or not claimed) PNOC-EDC agrees
not to claim and irrevocably waives such immunity to the full
extent permitted by the laws of such jurisdiction.
(d) This Article 20 shall survive the termination of this
Agreement.
ARTICLE 21 (RESERVED)
ARTICLE 22 GOVERNING LAW
This Agreement shall be governed by and construed in accordance
with Philippine Law.
ARTICLE 23 SEPARABILITY
If any part or parts of this Agreement shall be declared invalid by
competent courts, the other parts hereof shall not thereby be
affected or impaired.
ARTICLE 24 DURATION OF THE AGREEMENT
Except as otherwise provided herein, this Agreement shall be from
the Effectivity Date up to the earlier of the Transfer Date or
Termination Date.
ARTICLE 25 EFFECTIVITY
25.1 PNOC-EDC CONDITIONS ON THE OPERATOR
It shall be a condition precedent to the effectivity of this
Agreement that the following are submitted by or on behalf of the
Operator to PNOC-EDC (except for such documents the submission of
which is waived by PNOC-EDC).
(a) a copy of the certificate of registration of NEWCO with the
Board of Investments, as certified by an authorized officer of the
Operator in a manner satisfactory to PNOC-EDC.
(b) a copy of the Articles of Incorporation of NEWCO established
by CE Philippines Ltd. and by California Energy Company Inc. as
registered with the Philippine Securities and Exchange
Commission, certified by the corporate secretary of Newco in a
manner satisfactory to PNOC-EDC.
(c) a copy of the Articles of Incorporation of CE Philippines
Ltd., and evidence that it is a wholly owned subsidiary of
California Energy Company, Inc.
25.2 OPERATOR CONDITIONS ON PNOC-EDC
It shall be a condition precedent to the effectivity of this
Agreement that the following are submitted by or on behalf of PNOC-
EDC to the Operator (except for such documents the
submission of which is waived by the Operator).
(a) copies of the Articles of Incorporation and By-Laws of PNOC-
EDC, and of resolutions of its Board of Directors authorizing the
execution, delivery and performance by PNOC-EDC of this Agreement
and the Accession Undertaking, each certified by the corporate
secretary of PNOC-EDC in a manner satisfactory to the Operator;
(b) a certificate of the corporate secretary of PNOC-EDC
confirming that all necessary corporate and other approvals and
action have been duly obtained and taken for the execution,
delivery and performance by PNOC-EDC of this Agreement and the
Accession Undertaking;
(c) a true copy of the Memorandum of Understanding and Power
Purchase Agreement executed between PNOC-EDC and NAPOCOR, less such
sections that PNOC-EDC deems to be of a confidential nature and do
not relate or pertain to the rights of the Operator under this
Agreement;
(d) copies of resolutions of the Board of Directors of each of
PNOC-EDC and NAPOCOR authorizing the execution, delivery and
performance by each of PNOC-EDC and NAPOCOR of the Power Purchase
Agreement;
(e) confirmation that from the Effectivity Date to the Transfer
Date (i) PNOC-EDC has ownership of or the right to use the Site and
(ii) that the Operator has the right to use the Site on terms and
conditions satisfactory to the Operator.
(f) copies of such consents, licenses, permits, approvals and
registration by or with the Authorities as may be necessary to
ensure the validity and enforceability of this Agreement and to
permit PNOC-EDC and the Operator to perform its obligations of this
Agreement, including
(i) a Performance Undertaking executed in behalf of the Republic
of the Philippines by the Secretary or any of the
Undersecretaries of Finance named in the President of the
Republic of the Philippines' Full Power Authorization, to
guarantee the performance by PNOC-EDC of its obligations under this
Agreement, such Performance Undertaking to be substantially in the
form of Annex K (together with any changes requested by financial
institutions lending funds for the financing of the Power Plant)
and acceptable to the Operator;
(ii) an opinion by the Department of Justice confirming the
validity, enforceability and binding effect of the Performance
Undertaking;
(iii) Central Bank approval for PNOC-EDC to make foreign
currency payments to the Operator and for any foreign currency
loans to be made by financial institutions for the purpose of
repaying any loans extended to the Operator and for meeting the
capital requirements of the Project;
(iv) the Environmental Compliance Certificate issued by the
Department of Environment and Natural Resources;
(v) registration of PNOC-EDC as a Block Power Production
Facility under Executive Order No. 215;
(vi) an opinion by the National Electrification Administration and
the Energy Regulatory Board confirming that the operation by the
Operator of the Power Plant will not constitute a public utility so
as to require a franchise, certificate of public convenience and
other similar license;
(vii) National Economic Development Authority certification that
the project is a high priority economic project for power
development which is financed by or through foreign funds, and
Investment Coordinating Committee approval of the Project; and
(viii) an endorsement by the City or Regional Development
Council for the City or Region of the Project to the National
Economic Development Authority; and approval of the Project by the
Provincial Government of Leyte and, if applicable, the
Municipal Government where the Site is located.
25.3 OTHER CONDITIONS
It shall be a condition precedent to the effectivity of this
Agreement that the following is obtained or delivered by the
Operator:
(a) Board of Investments registration of NEWCO as a pioneer
enterprise, approval for the incentives set forth in Annex J and
endorsement to by the Department of Justice for foreign nationals
to be employed in supervisory, technical and advisory positions in
the Project.
(b) confirmation by the Operator of the availability of
financing or funding at terms and conditions acceptable to the
Operator, such as written commitments or letters of intent, in
accordance with the practice of each lender and of insurance for
the Operator's equity investments.
(c) agreement between the Parties regarding testing procedures in
accordance with Section 5.1 and Annex D.
25.4 MUTUAL COMMITMENT
The Parties mutually commit to do all things and to execute all
documents necessary to achieve the Effectivity Date on July 1,
1994.
25.5 FULFILLMENT OF WAIVER
Upon the fulfillment or waiver of each individual condition
precedent enumerated in Sections 25.1, 25.2 and 25.3, each of PNOC-
EDC and the Operator shall certify in writing within seven (7) days
the fulfillment or waiver of such a condition precedent.
Upon fulfillment or waiver of all the conditions precedent
enumerated in Sections 25.1, 25.2 and 25.3, each of PNOC-EDC and
the Operator shall certify in writing that all the conditions
enumerated in Section 25.1 (in the case of PNOC-EDC) and Sections
25.2 and 25.3 (in the case of the Operator) have been fulfilled or
waived. If by July 1, 1994, one or more conditions in
Sections 25.1, 25.2 and 25.3 have not been fulfilled or waived by
PNOC-EDC or the Operator, as the case may be, the Parties shall
consult each other in good faith with the view to achieving the
Effectivity Date. If a mutually acceptable arrangement is not
reached and implemented on or prior to July 15, 1994, either Party
may terminate its commitments under this Agreement, and such Party
shall reimburse the other Party for all costs and expenses incurred
by the latter in respect of this Agreement. Upon termination of
this Agreement PNOC-EDC shall return the Bid Bond to the Operator.
IN WITNESS WHEREOF, the parties hereto have set their hands this
eighteenth day of September, 1993 at Makati, Metro Manila,
Philippines.
CE PHILIPPINES LTD. CALIFORNIA ENERGY PNOC-Energy
Development COMPANY INC. Corporation
/s/ Donald M. O'Shei /s/ Donald M. O'Shei /s/ Monico V. Jacob
President Vice President President
Signed in the presence of:
/s/ James D. Stallmeyer /s/ James D. Stallmeyer
/s/ Nazario C. Vasquez
Exhibit 10.100 (Cont.)
FIRST AMENDMENT TO 180 MW POWER PLANT - MAHANAGDONG AGREEMENT
THIS FIRST AMENDMENT TO 180 MW POWER PLANT - MAHANAGDONG
AGREEMENT (this "Amendment") is made as of June 22, 1994, between
PNOC-EDC ENERGY DEVELOPMENT CORPORATION, a wholly owned
subsidiary of the Philippine National Oil Company, organized and
existing under Philippine law ("PNOC-EDC"), CE PHILIPPINES LTD., a
Bermuda corporation and CALIFORNIA ENERGY COMPANY, INC., a Delaware
corporation (collectively, the "Operator").
A. PNOC-EDC and the Operator are the parties to that certain
180 MW Power Plant - Mahanagdong Agreement dated September 18, 1993
(the "Original Agreement"), concerning the development and
operation of a 180 MW (gross) geothermal power production
facility in Leyte Province, the Philippines. All capitalized terms
not defined herein shall have the meanings given them in the
Original Agreement.
B. PNOC-EDC and the Operator each acknowledge that some but
not all of the conditions to "Effectivity" of the Original
Agreement set forth in Sections 25.1, 25.2 and 25.3 of the
Original Agreement have been fulfilled.
C. PNOC-EDC and the Operator recognize that additional time is
needed in order to fulfill the remaining conditions to
Effectivity set forth in Sections 25.1, 25.2 and 25.3 of the
Original Agreement.
D. Section 25.5 of the Original Agreement provides, inter
alia, that if by July 1, 1994, one or more of the conditions set
forth in Sections 25.1, 25.2 and 25.3 have not been fulfilled or
waived by PNOC-EDC or the Operator, as the case may be, PNOC-EDC
and the Operator shall consult in good faith with a view to
achieving Effectivity.
E. PNOC-EDC and the Operator wish to amend the Original
Agreement as more fully set forth in this Amendment.
NOW THEREFORE, the parties hereto, intending to be legally
bound, and to bind their successors and assigns, agree as
follows:
1. Amendment of Section 25.4 of the Original Agreement.
Section 25.4 of the Original Agreement is hereby amended to read in
its entirety as follows:
The Parties mutually commit to do all things and to execute all
documents necessary to achieve the Effectivity Date on or before
July 31, 1994.
2. Amendment of Section 25.5 of the Original Agreement. The
second paragraph of Section 25.5 of the Original Agreement is
hereby amended to read in its entirety as follows:
Upon the fulfillment or waiver of all the conditions precedent
enumerated in Sections 25.1, 25.2 and 25.3, each of PNOC-EDC and
the Operator shall certify in writing that all the conditions
enumerated in Section 25.1 (in the case of PNOC-EDC) and Sections
25.2 and 25.3 (in the case of the Operator) have been fulfilled or
waived. If by July 31, 1994 one or more conditions in
Sections 25.1, 25.2 and 25.3 have not been fulfilled or waived by
PNOC-EDC or the Operator, as the case may be, the Parties shall
consult with each other in good faith with the view to achieving
the Effectivity Date. If a mutually acceptable arrangement is not
reached and implemented by August 15, 1994, either Party may
terminate its commitments under this Agreement, and such Party
shall reimburse the other Party for all costs and expenses
incurred by the latter in respect of this Agreement. Upon
termination of this Agreement, PNOC-EDC shall return the Bid Bond
to the Operator.
3. General Ratification. Except as expressly amended hereby, all
the terms and provisions of the Original Agreement are hereby
ratified and confirmed and remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this First
Amendment to 180 MW Power Plant - Mahanagdong Agreement as of the
date first above written.
PNOC-ENERGY DEVELOPMENT CORPORATION,
a wholly-owned subsidiary of the
Philippine National Oil Company
By: /s/ NV
Name: Nazario C. Vasquez
Title: President
CE PHILIPPINES LTD.
a Bermuda corporation
By: /s/ Donald M. O'Shei
Name: Donald M. O'Shei
Title: President
CALIFORNIA ENERGY COMPANY, Inc.
a Delaware corporation
By: /s/ Donald M. O'Shei
Name: Donald M. O'Shei
Title: Vice President
CONSENT OF CE LUZON GEOTHERMAL POWER COMPANY, INC.
CE Luzon Geothermal Power Company, Inc., as the party to whom CE
Philippines Ltd. and California Energy Company , Inc. will assign
their rights and obligations as Operator under the Original
Agreement pursuant to the Accession Undertaking, hereby consents to
the terms of the foregoing First Amendment to 180 MW Power Plant -
Mahanagdong Agreement.
CE LUZON GEOTHERMAL POWER COMPANY, INC.
By: Donald M. O'Shei
Name: Donald M. O'Shei
Title: President
ACKNOWLEDGMENT
REPUBLIC OF THE PHILIPPINES)
MAKATI, METRO MANILA ) S.S.
BEFORE ME, this __ day of June, 1994, in Makati, Metro Manila,
Philippines, personally appeared Nazario C. Vasquez with
Residence Certificate No. 1326A779 issued on April 12, 1994 at
Makati, Metro Manila, (and Donald M. O'Shei with United States of
America Passport No. ____ issued on _______________ at
____________________, representing their respective companies)
known to me to be the same persons who executed the foregoing
agreement and they acknowledged to me that the same is their free
corporate act and deed.
This instrument, consisting of three (3) pages plus this
acknowledgment page, has been signed above their respective names
on page 3 by the parties and initialed on the left hand margin of
the other pages.
IN WITNESS WHEREOF, I have hereunto set my hand, the day, year and
place above written.
Doc. No.______
Page No.______
Book No.______
Series of 1994.
July 12, 1994
Leyte Geothermal Project
180 MW Mahanagdong Power Plant
The President
CE Luzon Geothermal Power Company Inc.
10831 Old Mill Road
Omaha
Nebraska 68154
USA
Attn: Mr. Donald M. O'Shei, Sr.
Dear Mr. O'Shei:
This letter is to confirm our agreement with CE Luzon Geothermal
Power Company Inc. (the "Operator") regarding land for the above
project.
1. In the 180 MW Power Plant - Mahanagdong Agreement, dated
September 18, 1993, as amended, (the "Agreement") between
ourselves, the drawings in Annex A shall be replaced with the
attached drawing No. 440-A4-CE-400, dated July 11, 1994, which sets
forth the general location of the A and B sites within which the
Mahanagdong Power Plant will be sited. This amendment shall not
result in any additional charges under the Agreement from either
Party to the other.
2. PNOC-Energy Development Corporation ("PNOC-EDC") shall assist
the Operator and use its best efforts in locating public land of
reasonable size and within a reasonable proximity to the Power
Plant Site, at no cost to the Operator, for siting the
residential village for the Operator's staff. If,
notwithstanding PNOC-EDC's best efforts, no such public land is
available, PNOC-EDC shall cooperate and use its best efforts to
make available such other land for siting the residential village
for the Operator's staff at a reasonable cost, which cost shall be
to the Operator's account.
Please acknowledge your agreement with the foregoing in the space
provided below, whereupon this letter shall be deemed to be an
amendment to the Agreement.
Very truly yours,
/s/ Nazario C. Vasquez
NAZARIO C. VASQUEZ
President
Acknowledged and agreed to this 12th day of July, 1994, for CE
Luzon Geothermal Power Company Inc.
/s/ Donald M. O'Shei, Sr.
DONALD M. O'SHEI, Sr.
President
July 29, 1994
Nazario C. Vasquez
President
PNOC-Energy Development Corporation
PNPC Complex
Merritt Road, Fort Bonifacio
Makati, Metro Manila
Philippines
Re: 180 MW Power Plant - Mahanagdong Agreement (ECA)
Test Procedures and Revised Interface Conditions
Dear Mr. Vasquez:
In accordance with the terms of the 180 MW Power Plant -
Mahanagdong Agreement, dated September 18, 1993, as amended (the
"ECA"), between ourselves, and in order to satisfy certain
conditions to Effectivity, enclosed please find the following
items:
1. Test Procedures, in accordance with Annex D to the ECA
(attached hereto as Exhibit A);
2. ECA Interface Parameters, reflecting agreed upon revisions to
the interface parameters of ECA Annex I (attached hereto as Exhibit
B); and,
3. Correction Curves, to replace in total the correction curves
currently provided in the ECA, in accordance with Annex F to the
ECA and consistent with the Interface Data, plus an amendment to
Annex E, Contracted Capacity and Net Plant Steam Rate, subclauses
E2.1 and E2.2 to correspond with the new correction curves
(attached hereto as Exhibit C).
Items 2 and 3 (Exhibits B and C) represent the current reference
points of understanding between the Parties, and may be modified by
mutual agreement between the Parties during the detailed design
phase of the Power Plant.
If the enclosed modifications reflect our mutual agreement, please
acknowledge in the space provided below and initial each of the
attached pages.
Sincerely,
CE Luzon Geothermal Power Company, Inc.
/s/ Donald M. O'Shei
Donald M. O'Shei, Sr., President
Acknowledged and agreed to this 29th day of July, 1994;
PNOC-Energy Development Corporation
/s/ Nazario C. Vasquez
Nazario C. Vasquez, President
FOURTH AMENDMENT TO 180 MW POWER PLANT - MAHANAGDONG AGREEMENT
This Fourth Amendment, dated March 3, 1995 ("Fourth Amendment"), is
by and between CE Luzon Geothermal Power Company, Inc. ("CE
Luzon"), a Philippine corporation, represented herein by its
President, Mr. Donald M. O'Shei, Sr., who is duly authorized to
represent it with respect to this Fourth Amendment, and PNOC-Energy
Development Corporation ("PNOC-EDC"), a wholly owned subsidiary of
the Philippine National Oil Company, a corporation created and
organized under Presidential decree No. 334, as amended,
represented herein by its President, Mr. Nazario C. Vasquez, who is
duly authorized to represent it with respect to this Fourth
Amendment.
WHEREAS, CE Philippines Ltd., California Energy Company, Inc. and
PNOC-EDC have previously entered into that certain 180 MW Power
Plant - Mahanagdong Agreement, dated as of September 18, 1993 (the
"Original Agreement"), as amended by the First Amendment to 180 MW
Power Plant - Mahanagdong Agreement dated June 22, 1994, that
certain letter agreement between CE Luzon and PNOC-EDC dated July
12, 1994, and that certain letter agreement between CE Luzon and
PNOC-EDC dated July 29, 1994 (collectively, the "ECA").
WHEREAS, the ECA was assigned to CE Luzon, as Operator, pursuant to
that certain Accession Undertaking dated June 3, 1994, between CE
Luzon, CE Philippines Ltd., California Energy Company, Inc., and
PNOC-EDC.
WHEREAS, PNOC-EDC has requested by letter to CE Luzon dated
December 12, 1994 an Elective Modification to provide for an
increase in the maximum non-condensable gas concentration in the
steam flow from 2.0% of total steam flow to 2.9% of total steam
flow.
WHEREAS, PNOC-EDC and CE Luzon now desire to amend further the ECA
to provide for an increase in the maximum non-condensable gas
concentration in the steam flow from 2.0% of total steam flow to
2.9% of total steam flow and to provide for the elimination of the
hydrogen sulphide (H2S) abatement system.
NOW THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
Section 1. Definitions.
Any capitalized terms not defined herein shall have the
respective meanings given to them in the ECA unless the context
otherwise requires.
Section 2. Amendment of Interface Data.
The Interface Data, attached to the ECA as Annex I, is hereby
amended as follows:
(a) The reference in section I3.1 Steam Supply to
"Flow 1,354.32 tonne/hr"
is deleted and replaced with
"Flow 1,417.973 tonne/hr"
(b) The reference in section I3.1 Steam Supply to
"Non-Condensable Gas Maximum 2.0% of total steam flow"
is deleted and replaced with
"Non-Condensable Gas Maximum 2.9% of total steam flow"
(c) The reference in section I3.2 Condensate Return to
"Pressure Normal 0.95 kg/cm2 abs
Maximum 3.13 kg/cm2 abs"
and the associated two footnotes are deleted and replaced
with
"Pressure Normal 1.5 kg/cm2 gauge
Maximum 2.13 kg/cm2 gauge"
Section 3 Guaranteed Net Plant Steam Rate.
Annex E of the ECA is revised by striking Section E2 thereof and
replacing it with a new Section E2.2 as attached in Annex A hereof
and a new Section E2.1 which will be provided by the Operator in
accordance with Section 9 of this Fourth Amendment.
Section 4 Modification to Design.
The Power Plant shall be designed consistent with the terms of the
ECA, as modified by this Fourth Amendment, including the following
modifications to the general design criteria subject to PNOC-EDC's
rights under Article 4.6.2 of the ECA.
(a) The H2S abatement system provided for in the ECA is
eliminated. Notwithstanding any provision of the Original
Agreement to the contrary, no H2S abatement will be designed into
the Power Plant, and all of the H2S from the Power Plant will be
vented into the cooling tower plumes and/or through the vent
silencer. All references to inclusion of an H2S abatement system
as part of the Power Plant (except as provided in this Fourth
Amendment) are hereby deleted.
(b) The non-condensate gas handling capability of the Power Plant
will be designed to accommodate a maximum non-condensable gas
concentration of 2.9% of total steam flow. The Power Plant will be
designed so that ejector trains that are not required can be taken
out of service when the non-condensable gas concentrations vary
between 2.9% and 0%.
(c) The Guaranteed Net Plant Steam Rate at the 100% load case
shall be as shown in Annex E of the ECA as modified in accordance
with Section 3 hereof.
(d) The Power Plant shall incorporate the equipment and features
specified in Annex B. Any changes in the equipment and features
specified in Annex B shall only be made with the prior approval of
PNOC-EDC, which approval shall not unreasonably be withheld.
(e) CE Luzon shall submit to PNOC-EDC on or before the 30th day
after the date hereof an anticipated output curve for the Power
Plant, showing anticipated Power Plant output for a range of non-
condensable gas concentrations from 0% to 4% of total steam flow,
it being agreed that the limit of normal operation of the Power
Plant shall be at a non-condensable gas concentration of 2.9% of
total steam flow and it being further agreed that the output shall
not be guaranteed for operation at non-condensable gas
concentrations greater than 2.9%. The anticipated output curve
shall clearly indicate the effects of running different
combinations of vacuum plant modules, including the effects of
shutting down modules at non-condensable gas levels lower than 2.9%
of total steam flow.
Section 5 Indemnity Regarding H2S.
Notwithstanding any provision of the ECA to the contrary, PNOC-EDC
shall indemnity, defend and save harmless Ce Luzon, its affiliates
and lenders and their respective shareholders, directors, officers,
employees and agents, (collectively, the "Indemnified Parties")
from and against any and all liabilities, damages, losses, claims,
costs, expenses (including without limitation attorneys fees and
expenses) and proceedings of any nature whatsoever that result from
or arise out of the elimination of the H2S abatement system from
the Power Plant and the venting of the H2S from the Power Plant in
accordance with Section 4(a) hereof, including without limitation
any personal injury, death, property damage, environmental
remediation, fines, penalties, and the cost of installing an H2S
abatement system in the future if required by any of the
Authorities or applicable laws and regulations, including any
change in said laws or regulations, provided that such
indemnification shall not apply with respect to an Indemnified
Party to the extent the indemnification shall not apply with
respect to an Indemnified Party to the extent that indemnification
arises as a result of the negligence or willful misconduct of such
Indemnified Party, it being agreed that removal of the H2S
abatement system and venting of the H2S in accordance with Section
4(a) hereof shall not be considered negligence or willful
misconduct on the part of the Indemnified Parties.
Section 6 No Cost or Schedule Change.
The modifications to the rights and obligations of CE Luzon and
PNOC-EDC under the ECA set forth in this Fourth Amendment shall be
without any change in the CCR, OCR or SFR set forth in Section
8.4.1 of the ECA or in the BER set forth in Section 8.4.2 of the
ECA, and there shall be no adjustment to the "Milestone Dates" set
forth in Section 4.1.1 of the ECA as a direct result of such
modifications.
Section 7 ECA to Remain in Effect.
Any references in the ECA that are inconsistent with the
modifications to the interface data contained in Section 2, or with
the deletion of the H2S abatement plant, are hereby amended to be
consistent with these modifications.
Except as expressly amended hereby, all of the terms and
provisions of the ECA remain in full force and effect, including
without limitation the performance undertaking.
Section 8 References to ECA.
Any and all notices, requests, certificates and other instruments
executed and delivered concurrently with or after the execution of
this Fourth Amendment may refer to the ECA without making specific
reference to this Fourth Amendment, but nevertheless all such
references shall be deemed to include this Fourth Amendment unless
the context shall otherwise require.
Section 9 Conditions Precedent to Effectivity
It is understood and agreed that this Fourth Amendment shall become
effective upon compliance by the Operator and PNOC-EDC with the
following conditions:
(a) Submission on or before the 15th day after the date hereof by
CE Luzon to PNOC-EDC of revised gross output turbine
correction curves for non-condensable gas provided for in the ECA
based on the Power Plant as modified pursuant to this Fourth
Amendment, it being agreed that the limit of normal operation of
the Power Plant shall be at a non-condensable gas concentration of
2.9% of total steam flow and it being further agreed that the
output shall not be guaranteed for operation at non-condensable gas
concentrations greater than 2.9%.
(b) Submission on or before the 15th day after the date hereof by
CE Luzon to PNOC-EDC for review in accordance with the terms of the
Original Agreement of heat balance diagrams for 100% load under
conditions of 2.0% and 2.9% non-condensable gas
concentration.
(c) Submission on or before the 15th day after the date hereof by
CE Luzon to PNOC-EDC for review and approval of a revised Section
E2.1 of Annex E of the ECA, as required by Section 3 of this Fourth
Amendment.
(d) Submission on or before the 15th day after the date hereof by
CE Luzon to PNOC-EDC for review and approval of a revised figure
for flow in Section I3.2 Condensate Return of Annex I of the ECA,
as amended.
(e) Approval of this Fourth Amendment by the financing entities
providing construction and term financing for the Power Plant, in
accordance with the terms of the financial documents.
PNOC-EDC's approval, in the case of paragraphs (c) and (d) above,
of the submitted material shall not be unreasonably withheld and
shall be deemed to have been given on the 15th day after
submittal if no comments shall have been received by CE Luzon on or
prior to such date. CE Luzon shall promptly respond to
reasonable requests for clarification. Both parties shall
cooperate in good faith and respond to reasonable requests to reach
agreement on any issues that may arise related to
satisfying any of the conditions to effectivity of this Fourth
Amendment. If the parties are unable to reach agreement on any
matter requiring PNOC-EDC's approval, or if the above conditions
precedent have not been satisfied on or before the 30th day after
the date hereof, then this shall be deemed a failure to reach
agreement and the parties are free to pursue their remedies under
the terms of the ECA.
IN WITNESS WHEREOF, CE Luzon and PNOC-EDC have executed this Fourth
Amendment as of the date set forth above.
CE LUZON GEOTHERMAL POWER COMPANY, INC.
By: /s/ Donald M. O'Shei
Its: President
PNOC-ENERGY DEVELOPMENT CORPORATION
By: /s/ Nazario C. Vasquez
Its: President
Exhibit 10.101
CREDIT AGREEMENT
CREDIT AGREEMENT (this "Agreement"), dated as of June 30, 1994,
among CE LUZON GEOTHERMAL POWER COMPANY, INC., a corporation
organized and existing under the laws of the Republic of the
Philippines (the "Borrower"), AMERICAN PACIFIC FINANCE COMPANY, as
a Tranche 1 Lender, BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION and the other financial institutions listed in
Schedule I hereto as Tranche 2 Lenders, BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, as Administrative Agent for the
Issuing Bank and the Lenders and as Issuing Bank, and BA
SECURITIES, INC., as the Arranger.
W I T N E S S E T H :
WHEREAS, the Borrower has requested the Lenders to make a credit
facility (the "Construction Credit") available to it on the terms
and subject to the conditions set forth in this Agreement, for the
purpose of financing a portion of the costs of construction of the
Project;
WHEREAS, (a) the Borrower and Eximbank are entering into the
Eximbank Credit Agreement, pursuant to which Eximbank has agreed,
subject to the terms and conditions set forth therein, to provide
certain term financing for the Project, (b) Eximbank, the
Administrative Agent, the Lenders and the Collateral Agent are
entering into the Eximbank Guarantee Agreement, pursuant to which
Eximbank has agreed, subject to the terms and conditions set forth
therein, to provide a guaranty of the Loans made by the Lenders
under this Agreement, (c) the Borrower and OPIC are entering into
the OPIC Finance Agreement, pursuant to which OPIC has agreed,
subject to the terms and conditions set forth therein, to provide
certain construction and term financing for the Project and (d) the
Borrower, the Affiliated Funding Entities, the Administrative Agent
and the Collateral Agent are entering into the Funding Agreement,
pursuant to which the Affiliated Funding Entities have agreed to
make the Required Subordinated Loans and/or the Required Equity
Contributions and the parties thereto have made provision to permit
the making by the Affiliated Funding Entities of the Optional
Subordinated Loans; and
WHEREAS, the Lenders are willing to make Loans to the Borrower and
the Issuing Bank is willing to issue the Letters of Credit, in each
case on the terms and subject to the conditions set forth in this
Agreement, for the purpose described above;
WHEREAS, the Arranger and the Co-Arranger have been instrumental in
structuring the transactions contemplated by the Financing
Documents;
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE 1. Defined Terms and Principles of Construction
Section 1.1 Defined Terms and Principles of Construction. For all
purposes of this Agreement, (a) capitalized terms used but not
otherwise defined herein shall have the meanings set forth in
Schedule X attached hereto and (b) the principles of construction
set forth in Schedule X shall apply.
ARTICLE 2. Amount and Terms of Construction Credit
Section 2.1 The Commitments. (a) Subject to the terms and
conditions of this Agreement, each Tranche 1 Lender severally
agrees for its own account to make available to the Borrower,
during the Availability Period, such Tranche 1 Lender's
Applicable Percentage of one or more Tranche 1 Loans either
directly pursuant to Section 2.2 or in connection with the
reimbursement of drawings under the Letters of Credit pursuant to
Article 3; provided that (i) it is understood and agreed that upon
the issuance of any of the Letters of Credit pursuant to the terms
of this Agreement, each Tranche 1 Lender's L/C Commitment shall not
be terminated or suspended; and (ii) the aggregate principal amount
of Tranche 1 Loans outstanding from any Tranche 1 Lender plus the
amount of such Tranche 1 Lender's L/C Commitment shall at no time
exceed the Commitment of such Tranche 1 Lender at such time.
Subject to the terms and conditions of this Agreement, each Tranche
2 Lender severally agrees for its own account to make available to
the Borrower, during the Availability Period, such Tranche 2
Lender's Applicable Percentage of one or more Tranche 2 Loans
either directly pursuant to Section 2.2 or in connection with the
reimbursement of drawings under the Letters of Credit pursuant to
Article 3; provided that (i) it is understood and agreed that upon
the issuance of the Letters of Credit pursuant to the terms of this
Agreement, each Tranche 2 Lender's L/C Commitment shall not be
terminated or suspended; and (ii) the aggregate principal amount of
Tranche 2 Loans outstanding from any Tranche 2 Lender plus the
amount of such Tranche 2 Lender's L/C Commitment shall at no time
exceed the Commitment of such Tranche 2 Lender at such time.
(b) The Loans are not revolving in nature, and any amounts repaid,
prepaid or canceled pursuant to the terms of this
Agreement may not be reborrowed. The Loans shall be funded by the
Tranche 1 Lenders and the Tranche 2 Lenders on a pro rata basis
based on their respective Applicable Percentage.
(c) Any and all amounts due to the Lenders, the Issuing Bank, the
Administrative Agent and the Collateral Agent pursuant to the
Loans, the Notes, the Letters of Credit, this Agreement and the
other Financing Documents are entitled to the benefit of the
Collateral which is held for the benefit of the Secured Parties
through the Collateral Agent pursuant to the terms of the
Security Documents and the Funding Agreement.
(d) The Borrower agrees that the proceeds of the Loans will be
applied only to finance (i) the Financed Portion of the costs
incurred by the Borrower after January 1, 1993 for the purchase in
the United States and export to the Republic of the Items (ii) the
Local Cost Financed Portion of the costs incurred by the Borrower
after January 1, 1993 for the purchase in the Republic of the Local
Cost Items, (iii) the IDC Financed Portion of IDC and (iv) 100% of
the Guarantee Exposure Fee. The aggregate amount of the Loans
shall not exceed in aggregate amount the lesser of (i) $191,835,000
and (ii) the sum of (w) the aggregate amount of the Financed
Portion for all of the Items, (x) the aggregate amount of the Local
Cost Financed Portion for all Local Cost Items, (y) the aggregate
amount of the IDC Financed Portion for all IDC and (z) 100% of the
Guarantee Exposure Fee. The Borrower agrees to make cash payments,
for (A) each of the Items in an aggregate amount equal to not less
than 15% of the Contract Price of each such Item.
Section 2.2 Procedures for Fundings. (a) From time to time, but
not more frequently than once per Month (except with respect to an
Application for Funding requesting a disbursement of funds from the
Dollar Disbursement Account which may be submitted more frequently
than once per Month), the Borrower may submit an Application for
Funding to the Administrative Agent and to the Collateral Agent,
properly executed, (i) requesting a Loan, (ii) requesting the
Administrative Agent to issue to the Issuing Bank an approval of a
drawing under any of the Letters of Credit in the form of Schedule
2.2(a)(i) (a "Drawing Approval"), (iii) requesting the
Administrative Agent's approval of a request for an OPIC
Disbursement and/or (iv) requesting the Administrative Agent's
approval of a Progress Equity Contribution, a Progress Subordinated
Loan and/or a payment from interest income or
reimbursement proceeds from the Dollar Disbursement Account which
are not committed for another purpose, in each case for the payment
of Project Costs specified in the Construction Budget which are
then due and payable or which shall become due and payable (x) in
the case of a Loan or Drawing Approval, no later than the date
requested in such Application for Funding for disbursement of such
Loan or issuance of such Drawing Approval, as the case may be, or
(y) in the case of an OPIC Disbursement, a Project Equity
Contribution, a Progress Subordinated Loan and/or a disbursement of
funds from the Dollar Disbursement Account, within the 30-day
period following the date requested in such Application for Funding
for disbursement thereof.
Notwithstanding the provisions of clause (iv) of the immediately
preceding sentence, (i) no Progress Subordinated Loans shall be
made on or at any time after, and the Borrower shall not request
the Administrative Agent's approval of a Progress Subordinated Loan
to be made on or at any time after, the Cooperation Period
Commencement Date and (ii) any Application for Funding requesting
the Administrative Agent's approval of a Progress Subordinated Loan
to be made on or at any time after the Cooperation Period
Commencement Date shall be deemed to be a request for the
Administrative Agent's approval of a Progress Equity
Contribution. The form of Application for Funding attached hereto
as Schedule 2.2(a) shall be used by the Borrower for requesting
Loans, the Administrative Agent's approval of a request for a Loan,
an OPIC Disbursement, a Progress Subordinated Loan, a Progress
Equity Contribution and/or a disbursement of funds from the Dollar
Disbursement Account. Each such Application for Funding shall be
submitted to the Administrative Agent, with a copy to the
Independent Engineer and the Collateral Agent, at least twelve (12)
Business Days prior to the date on which the Loan, the issuance of
a Drawing Approval, the OPIC Disbursement, the Progress Equity
Contribution, the Progress Subordinated Loan and/or the
disbursement of funds from the Dollar Disbursement Account is
desired. An Application for Funding for a Loan (i) shall in no
event request a Loan in excess of the then Total Unutilized
Commitment (and the aggregate amount of the Tranche 1 Loans shall
in no event exceed the Tranche 1 Commitment, and the aggregate
amount of the Tranche 2 Loans shall in no event exceed the Tranche
2 Commitment) and (ii) shall (except with respect to the final
unused portion of the Total Unutilized Commitment) request a Loan
in an amount of at least $100,000. An Application for Funding for
the issuance of a Drawing Approval shall in no event (except with
respect to the final undrawn portion of each of the Letters of
Credit) request the Administrative Agent to issue a Drawing
Approval in respect of a drawing under any Letter of Credit in an
amount less than $100,000. For the avoidance of doubt, the
Borrower may submit an Application for Funding for the issuance of
a Drawing Approval in respect of the first drawing under any of the
Letters of Credit concurrently with the Borrower's request for the
issuance of such Letter of Credit by the Issuing Bank pursuant to
Article 3 hereof. In requesting a Loan (excluding a Loan to
reimburse any drawings under any of the Letters of Credit), (i) to
cover the Financed Portion of Items, the Borrower shall also comply
with the procedures, conditions and requirements specified in Part
B of Annex B-1 hereto and shall deliver to the Administrative Agent
and Eximbank, at least twelve (12) Business Days prior to the
proposed date of the Loan, a Request for Disbursement to Account of
Borrower, substantially in the form of Exhibit 1 to Annex B-1,
appropriately completed and accompanied by all documents required
under items (1) through (5) of Part B of Annex B-1, (ii) to cover
the Local Cost Financed Portion of Local Cost Items, the Borrower
shall also comply with the procedures, conditions and requirements
specified in Part B of Annex B-2 hereto and shall deliver to the
Administrative Agent and Eximbank, at least twelve (12) Business
Days prior to the proposed date of the Loan, a Request for
Disbursement to Account of Borrower, substantially in the form of
Exhibit 1 to Annex B-2, appropriately completed and accompanied by
all documents required under items (1) through (4) of Part B of
Annex B-2 and (iii) to cover the IDC Financed Portion of IDC, the
Borrower shall also comply with the procedures, conditions and
requirements specified in Part B of Annex B-3 hereto and shall
deliver to the Administrative Agent and Eximbank, at least twelve
(12) Business Days prior to the proposed date of the Loan, an
Interest Cost Credit Request for Disbursement, substantially in the
form of Exhibit 1 to Annex B-3, appropriately completed and
accompanied by a copy of the invoice(s) required under Part B of
Annex B-3. The Borrower will calculate the amount of any Guarantee
Exposure Fee set forth in any Application for Funding, and the
Administrative Agent has no obligation to calculate or confirm the
amount of such Fee (except to the extent set forth in the Letters
of Credit).
For the avoidance of doubt, Default Subordinated Loans and
Default Equity Contributions shall be made by the Affiliated
Funding Entities and incurred by the Borrower at the time and in
the amount specified in the Funding Agreement and it shall not be
necessary for the Borrower to submit an Application for Funding in
connection therewith.
Without restricting the Borrower's ability to amend the
Construction Budget from time to time in accordance with Section
6.29 hereof, no Application for Funding may request Loans for, the
issuing of a Drawing Approval for a drawing under any of the
Letters of Credit for, or approvals of requests for OPIC
Disbursements, Progress Subordinated Loans and/or Progress Equity
Contributions for, any amounts with respect to any Budget
Category which, together with all prior Loans, drawings under the
Letters of Credit, OPIC Disbursements, Progress Subordinated Loans
and Progress Equity Contributions with respect to such Budget
Category, are in excess of the amount set forth for such Budget
Category (plus any applicable contingency) in the
Construction Budget as then in effect.
The Administrative Agent shall not be required to disburse all or
any part of a Loan, issue a Drawing Approval in respect of all or
any part of a proposed drawing under any of the Letters of Credit
or approve all or any part of a request for an OPIC Disbursement,
a Progress Subordinated Loan and/or a Progress Equity
Contribution requested in an Application for Funding (i) for which
all conditions precedent for the making of such Loan or OPIC
Disbursement or for the issuance of such Drawing Approval have not
been satisfied or waived pursuant to this Agreement or the OPIC
Finance Agreement, as the case may be, or (ii) as to which
documentation required to be delivered to the
Administrative Agent has not been timely delivered; provided,
however, that clauses (i) and (ii) shall not apply to Loans made to
reimburse drawings under any of the Letters of Credit. The making
or approving of any Loan, the issuance of any Drawing Approval or
the approving of any request for an OPIC
Disbursement, a Progress Subordinated Loan or a Progress Equity
Contribution on the specified day on which such Loan, issuance of
a Drawing Approval or approval of request for an OPIC
Disbursement, a Progress Subordinated Loan or a Progress Equity
Contribution is requested shall be contingent on the
Administrative Agent's receipt of the Independent Engineer's
approval of such matters expressly delegated to the Independent
Engineer in the form of Application for Funding and Article 5
hereof by at least 11:00 a.m. New York time (i) one (1) Business
Day before (x) in the case of a Loan, the day on which the
Borrower selects the Interest Rate and the Interest Period with
respect to such Loan (or at least two (2) Business Days before the
specified day on which the Loan is requested to be made if the
Borrower does not select an Interest Rate and Interest Period with
respect to such Loan), in accordance with Section 2.5(a) hereof,
(y) in the case of a Drawing Approval, the specified day on which
the Drawing Approval is requested to be issued and (z) in the case
of a request for approval of an OPIC
Disbursement, any period preceding the making of a request for an
OPIC Disbursement which is the subject of the Application for
Funding pursuant to the OPIC Finance Agreement and (ii) in the case
of a request for approval of a Progress Subordinated Loan and/or a
Progress Equity Contribution, two (2) Business Days before the
specified day on which the Progress Subordinated Loan and/or
Progress Equity Contribution is requested to be made. The
Administrative Agent shall apply the same standards with respect to
review and approval of any Application for Funding for a Progress
Subordinated Loan and/or a Progress Equity Contribution as the
Administrative Agent would apply to review and approval of an
Application for Funding for a Loan, including, without limitation,
determining whether all conditions precedent set forth in Section
5.2 hereof have been satisfied, except that, subject to the terms
of the Intercreditor Agreement, the Required Lenders may waive any
and all such conditions precedent in connection with approving any
Application for Funding for a Progress Subordinated Loan and/or a
Progress Equity Contribution; provided that notwithstanding the
foregoing, the Borrower acknowledges that the Administrative Agent
is not an agent of, or has any fiduciary duty or any other
obligation (other than the express duties stated herein) to, the
Borrower, without limiting any express obligation the
Administrative Agent has to the Borrower hereunder.
For the avoidance of doubt, with respect to Loans made in
connection with the reimbursement of drawings under any of the
Letters of Credit pursuant to Article 3 hereof, it shall only be
necessary for the Borrower to submit an Application for Funding
requesting the issuance of a Drawing Approval therefor and
neither the obligations of the Lenders to reimburse the Issuing
Bank for the amount of any drawing set forth in an L/C Notice nor
the incurrence by the Borrower of Loans in connection with any such
reimbursement shall be contingent on the Borrower's
submission of an Application for Funding for a Loan or the
satisfaction of the conditions set forth in Article 5. If the
Administrative Agent shall approve an Application for Funding
requesting the issuance of a Drawing Approval, the Administrative
Agent shall, subject to the satisfaction of the conditions
precedent set forth in Section 5.2 hereof, issue such Drawing
Approval to the Issuing Bank. If the Administrative Agent shall
determine not to approve an Application for Funding requesting the
issuance of a Drawing Approval, the Administrative Agent shall
promptly notify the Borrower of the reason(s) for such disapproval.
If any Application for Funding shall be disapproved in whole or in
part on the basis of errors contained therein or on the basis of
incompleteness of such Application for Funding, the Administrative
Agent will cooperate in good faith with the Borrower in the
Borrower's efforts to correct any and all such errors or
incompleteness so as to permit the making of a Loan, a Progress
Equity Contribution, a Progress Subordinated Loan, an OPIC
Disbursement, the issuance of a Drawing Approval and/or a
disbursement of funds from the Dollar Disbursement Account in a
timely manner (taking into account the due date for the payment of
Project Costs which are the subject of such Application for
Funding), and the Borrower acknowledges that as a result of any
such disapproval of an Application for Funding, the date on which
a Loan, a Progress Equity Contribution, Progress Subordinated Loan,
an OPIC Disbursement, the issuance of a Drawing Approval and/or a
disbursement of funds from the Dollar Disbursement Account is
actually approved and/or proceeds actually disbursed may be later
than the date requested in such Application for Funding.
(b) The Administrative Agent shall promptly, but in no event later
than three (3) Business Days prior to the proposed date of a
requested Loan, give each Lender notice of such requested Loan, of
the amount of funds such Lender will have to disburse with respect
thereto (which shall be based on such Lender's Applicable
Percentage of Tranche 1 Loans or Tranche 2 Loans, as the case may
be) and the proposed date of the requested Loan. Subject to the
satisfaction of the conditions precedent set forth in Article 5,
including, without limitation, in Section 5.2(k), no later than
10:00 a.m. New York time on the applicable date specified in each
Application for Funding for a Loan, each Lender will make
available its specified portion of such Loan, in Dollars and in
immediately available funds to the Administrative Agent Account,
and upon confirmation of receipt thereof the Administrative Agent
shall pay to the Dollar Disbursement Account in immediately
available funds the aggregate of the amounts so made available by
the Lenders (other than such portion thereof which relates to the
Guarantee Exposure Fee which shall be paid directly to Eximbank by
the Issuing Bank as specified in the related Application for
Funding). If APFC fails to make available its portion of such
Loan, the Administrative Agent may obtain the funds necessary to
fund such portion of such Loan by withdrawing funds from the APFC
Funding Account pursuant to the APFC Escrow and Security
Agreement. Notwithstanding any other provision of this
Agreement, including, without limitation, Section 9.8 hereof, or
any other Financing Document to the contrary, subject only to the
terms of the APFC Escrow and Security Agreement, amounts
deposited in the APFC Funding Account may be used solely to fund
Tranche 1 Loans requested by the Borrower pursuant to an approved
Application for Funding. As promptly as practicable following the
disbursement of a Loan to the Borrower, the Administrative Agent
shall provide written notice thereof to Eximbank, which notice
shall indicate the amount of such Loan.
(c) The Administrative Agent may assume that each Lender will make
available to the Administrative Agent such Lender's portion of any
Loan to be made on the proposed date of a Loan and the
Administrative Agent may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the
Administrative Agent by such Lender, the Administrative Agent shall
be entitled to recover such corresponding amount from such Lender
on demand. If such Lender does not pay such corresponding amount
forthwith upon the Administrative Agent's demand therefor, the
Administrative Agent shall promptly notify the Borrower, and the
Borrower shall pay such corresponding amount to the Administrative
Agent within such period of time as the Administrative Agent deems
reasonable in the circumstances. The Administrative Agent shall
also be entitled to recover on demand from such Lender or the
Borrower, as the case may be, interest on such corresponding amount
in respect of each day from the date such corresponding amount was
made available by the Administrative Agent to the Borrower until
the date such corresponding amount is recovered by the
Administrative Agent at the following interest rates: (i) with
respect to interest from the Borrower, in respect of Tranche 2
Loans, at the applicable Interest Rate selected by the Borrower
with respect to such amount pursuant to Section 2.5 and with
respect to Tranche 1 Loans, at the Fixed Rate and (ii) with respect
to interest from such Lender, at the Federal Funds Rate until the
3rd Business Day, and at the Base Rate plus 1.50% thereafter.
Nothing in this Section 2.2(c) shall be deemed to relieve any
Lender from its obligation to make Loans hereunder or to prejudice
any rights which the Borrower may have against any Lender as a
result of any failure by such Lender to make Loans hereunder. The
amount of any repayment by the Borrower to the Administrative Agent
pursuant to the third sentence of this Section 2.2(c) shall not be
considered a Loan hereunder and such repayment shall not be deemed
to be a prepayment of a Loan for purposes of this Agreement and the
other Financing Documents. In addition, in the event a Lender
fails to make its pro rata share of any Loan available to the
Administrative Agent as required pursuant to the terms of this
Section 2.2(c) and the Borrower has not reimbursed the
Administrative Agent with respect to such pro rata share pursuant
to the third sentence of this Section 2.2(c), any Person that the
Administrative Agent may designate in writing to such Lender may
reimburse the Administrative Agent in lieu of such defaulting
Lender and for all purposes of this Agreement such reimbursement
shall be treated as though made in accordance with an assignment of
all of the defaulting Lender's right, title and interest and a
delegation of all of the defaulting Lender's obligations with
respect to such defaulted obligation to such Person, except that
such Person shall have all of the rights that the Administrative
Agent would otherwise have hereunder to reimbursement from such
defaulting Lender, such assignment and delegation to take effect
from the date such designated Person accepts such assignment and
delegation; provided, that if the Administrative Agent so
designates a Person other than one of the Lenders listed in
Schedule I, the prior approval of Eximbank (which shall not be
unreasonably withheld) shall be required for such designation. In
any event, such Person that the Administrative Agent may designate
in accordance with the immediately preceding sentence shall be a
Person eligible for the coverage of the Guarantee (as defined in
the Eximbank Guarantee Agreement) under the laws, rules,
regulations and policies of or applicable to Eximbank. Such
defaulting Lender hereby agrees to cooperate with the
Administrative Agent and the designated assignee and to take all
actions necessary, in each case to effect such assignment and
delegation.
Section 2.3 Failure to Make Loans. No Lender shall be
responsible for any default by any other Lender of its obligation
to make Loans hereunder and each Lender shall be obligated to make
the Loans provided to be made by it hereunder (but not the Loans to
be made by any other Lender) regardless of the failure of any other
Lender to make its Loans hereunder.
Section 2.4 Notes. (a)(i) The Borrower's obligation to pay the
principal of, and interest on, each Tranche 1 Lender's Applicable
Percentage of Tranche 1 Loans shall be evidenced by one separate
promissory note for each such Lender, substantially in the form of
Schedule 2.4(i) with blanks appropriately completed in
conformity herewith (individually, a "Tranche 1 Note" and,
collectively, the "Tranche 1 Notes") and (ii) the Borrower's
obligation to pay principal of, and interest on, each Tranche 2
Lender's Applicable Percentage of Tranche 2 Loans shall be
evidenced by one separate promissory note for each such Lender,
substantially in the form of Schedule 2.4(ii) hereto with blanks
appropriately completed in conformity herewith (individually, a
"Tranche 2 Note", and collectively with the Tranche 1 Notes, the
"Notes"), payable to the order of such Lender. All Loans made by
each Lender, and all payments and prepayments made on account of
the principal thereof, shall be recorded by such Lender on the
schedule attached to its respective Note, it being understood
however that failure by any Lender to make any such endorsement or
any error therein shall not affect the obligations of the Borrower
hereunder in respect of such Loans evidenced thereby.
(b) Each of the Notes shall (i) be dated the Effective Date, (ii)
be in a stated principal amount equal to the Commitment of the
Lender to whom the Note is payable, and be payable in the principal
amount of the Loans evidenced thereby, (iii) mature on the Maturity
Date, (iv) be subject to prepayment as provided in this Agreement,
(v) bear interest as provided herein and (vi) be entitled to the
benefits of this Agreement, the Security
Documents and the Eximbank Guarantee Agreement.
(c) The Borrower's obligation to pay the principal of, and
interest on, each Tranche 1 Lender's and Tranche 2 Lender's
Applicable Percentage of the Tranche 1 Loans and Tranche 2 Loans,
respectively, may be evidenced by one or more loan accounts or
records maintained by such Lender in the ordinary course of
business. The loan accounts or records maintained by each
Lender, together with the Notes of such Lender, shall be
conclusive absent manifest error of the amount of the Tranche 1
Loans or Tranche 2 Loans, as applicable, made by such Lender to the
Borrower and any interest and payments thereon. Any failure to so
record or any error in doing so shall not, however, limit or
otherwise affect the obligations of the Borrower hereunder to pay
any amount owing with respect to the Loans.
Section 2.5 Interest. (a) All Tranche 1 Loans shall bear
interest at the Fixed Rate. With respect to Tranche 2 Loans, the
Borrower shall select each Interest Period and the Interest Rate
therefor by giving written notice in the form of Schedule 2.5 of
such selection to the Administrative Agent by 12:00 noon (New York
time) at least three (3) Business Days before the first day of such
Interest Period, in the case of an Interest Period based on LIBOR,
and by 12:00 noon (New York time) at least one (1) Business Day
before the first day of such Interest Period, in the case of an
Interest Period based on the Base Rate; provided that:
(i)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, in the case of an Interest Period using LIBOR,
such Business Day falls in another Month, in which case such
Interest Period shall end on the immediately preceding Business
Day;
(ii) any Interest Period using LIBOR which begins on the last
Business Day of a Month (or on a day for which there is no
numerically corresponding day in the Month in which such Interest
Period ends) shall, subject to clause (iv) below, end on the last
Business Day of a Month;
(iii) no Loan upon first being made shall be divided into or
allocated among more than two (2) Interest Periods;
(iv) no Interest Period for any Loan shall extend beyond the
Maturity Date or any date thereafter that the Lenders shall, in
their sole discretion, deem reasonable, nor shall it extend beyond
the Determination Date (as defined in Section 2.20(d) if and when
Section 2.20(d)) is in effect; and
(v)unless otherwise consented to by the Administrative Agent, at no
time shall the outstanding principal amounts of the Loans accrue
interest pursuant to more than six (6) Interest Periods (each
variation in time or in the basis upon which interest is calculated
constituting an Interest Period).
Such notice shall specify the Interest Rate and Interest Period (if
the Interest Rate selected is based on LIBOR) selected by the
Borrower and the amount or amounts of each Loan (which shall be, in
the case of an Interest Rate based on LIBOR, not less than
$100,000, provided that the aforesaid minimum amount shall be
$500,000 with respect to any notice not applicable to the initial
funding of a Loan or to a Drawing Approval (and Loans to be made to
reimburse the Issuing Bank with respect thereto)) that shall bear
interest at such Interest Rate for such Interest Period. In the
event the Borrower fails to provide such notice to the
Administrative Agent within such time, the Interest Rate shall be
at the rate per annum equal to the Base Rate plus the Applicable
Margin.
(b) On each Interest Payment Date, the Borrower shall pay to the
Administrative Agent, for the account of the Lenders, (x) with
respect to Tranche 1 Loans, accrued interest on the daily unpaid
principal amounts of any Tranche 1 Loans outstanding and (y) with
respect to Tranche 2 Loans, interest in respect of each Interest
Period on the daily unpaid principal amounts of any Tranche 2 Loan
outstanding during such Interest Period in arrears at the rates per
annum equal to the Interest Rates in effect applicable to each such
period. Interest shall be computed on the basis of the actual
number of days elapsed and (i) a year of 360 days for Interest
Rates based on LIBOR and (ii) a year of 365 or 366 days, as
appropriate, for Interest Rates based on the Base Rate and Fixed
Rate.
(c) Without prejudice to the remedies available to the Lenders,
the Issuing Bank and the Administrative Agent under this
Agreement, or otherwise, the Borrower shall pay in Dollars
interest on any principal of any Loan payable under this
Agreement, the Notes, the Letters of Credit or any other
Financing Document which is not paid when due (whether by lapse of
time, acceleration, requirement for mandatory prepayment or
otherwise), for each day that such amounts are overdue until
payment in full thereof, at the rate per annum applicable to such
amount plus 2.00%, and with respect to any other amounts
(including, without limitation, interest on any Loan, Commitment
Commission and Fees) at the rate per annum equal to the Base Rate
plus the Applicable Margin plus 2.00%, computed on the basis of the
actual number of days elapsed and a year of 365 or 366 days, as
appropriate. Such interest shall be payable by the Borrower to the
Administrative Agent, for the account of the Construction Financing
Secured Party to whom the payment obligation giving rise to the
obligation to pay such interest is owed from time to time, upon
demand by the Administrative Agent, on each Quarterly Date and on
the date such obligation is paid in full.
(d) The obligation of the Borrower to pay interest as provided in
Section 2.5(c) shall be without prejudice to its obligation to pay
principal and interest in accordance with Sections 2.5(b), 2.5(e)
and 2.6 and any other amounts payable under this
Agreement, the Notes or any other Financing Document.
(e) The Borrower shall pay in Dollars to each Tranche 2 Lender, so
long as such Lender shall be required under regulations of the
Board of Governors to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency
Liabilities ("Required Reserves"), additional interest on the
unpaid principal amount of each Loan of such Lender which is then
outstanding and at such time is subject to an Interest Period using
LIBOR, from the date of the commencement of each such Interest
Period until the end thereof, at an interest rate per annum equal
at all times to the difference obtained by
subtracting (i) LIBOR for such Interest Period from (ii) the rate
obtained by dividing such LIBOR by a percentage equal to 100% minus
the LIBOR Reserve Percentage of such Lender in respect of such
Required Reserves for such Interest Period. Such additional
interest shall be determined by such Lender and notified to the
Borrower through the Administrative Agent no later than 90 days
after the end of each Interest Period using LIBOR, and shall be due
and payable by the Borrower within five (5) days of delivery to the
Borrower of such Lender's certificate setting forth the amount of
such additional interest, which certificate shall be final and
conclusive, provided that such determination is made on a
reasonable basis. The foregoing notwithstanding, the Borrower
shall not be obligated to make any payment under this Section
2.5(e) to the extent such payment is duplicative of any payment
made by or on behalf of the Borrower pursuant to Section 2.16
hereof as a result of the same event or circumstances.
(f) In the event (i) the commitment of Eximbank to make the
Eximbank Disbursement under the Eximbank Credit Agreement
terminates or is no longer effective, (ii) a Construction Credit
Event of Default occurs and as a result thereof funding under this
Agreement terminates or ceases for more than 180 consecutive days
or (iii) a Construction Credit Event of Default occurs and any or
all of the Borrower's outstanding Construction Financing Secured
Obligations are accelerated, then all outstanding Tranche 1 Loans
shall immediately commence to bear interest at the Base Rate plus
the Applicable Margin plus 2.00% per annum and shall continue to
bear interest at such rate so long as the conditions described in
clause (i), (ii) and/or (iii) exist. Commencing at such time as
the conditions set forth in clauses (i), (ii) and/or (iii) no
longer exists, the outstanding Tranche 1 Loans shall bear interest
at the Fixed Rate. To the extent that (x) the amount of interest
actually received by the Tranche 1 Lenders during the Tranche 1
Floating Rate Period is less than (y) the amount of interest that
would have accrued on all Tranche 1 Loans outstanding during such
Period if such Tranche 1 Loans had
continued to bear interest at the Fixed Rate (the difference
between the amounts determined under clause (y) and clause (x)
being hereinafter referred to as the "Additional Tranche 1
Interest"), the Borrower shall, subject to the indefeasible payment
in full in Dollars of all Construction Financing Secured
Obligations, be obligated to pay on demand such Additional
Tranche 1 Interest, together with interest thereon at the Tranche
1 Default Rate until the payment in full in Dollars of such
Additional Tranche 1 Interest.
Section 2.6 Repayment. The outstanding principal amount of the
Loans shall be paid in a single lump sum on the Maturity Date.
Section 2.7 Commitment Commission and Fees. (a) The Borrower shall
pay in Dollars to the Administrative Agent for distribution to each
Tranche 2 Lender a commitment commission (the "Commitment
Commission") which shall be at the rate of 0.50% per annum on the
daily average of the difference, from time to time, between (i) the
Total Tranche 2 Commitment and (ii) the sum of (x) the Total
Tranche 2 Loans and (y) the Approved Drawing Amount with respect to
the Tranche 2 Lenders at such time. The Commitment Commission
shall begin to accrue on the date this Agreement is signed by the
parties hereto. The Commitment Commission shall be computed on the
basis of the actual number of days elapsed and a year of 360 days
and shall be due and payable in Dollars in arrears on each
Quarterly Date, commencing on the first Quarterly Date after the
Effective Date, and on the last day of the Availability Period or
upon such earlier date as the Total Tranche 2 Commitment shall be
terminated.
(b) Subject to the other terms set forth in this Section 2.7(b),
the Borrower shall pay to the Administrative Agent in Dollars a
non-refundable annual agency fee in the amount of $150,000 per
annum (as adjusted below). Such fee shall be payable in advance on
the Credit Date and annually thereafter on each anniversary of the
Credit Date, provided that commencing with the second
anniversary of the Credit Date, such annual agency fee shall be
payable quarterly in advance in four equal quarterly payments with
each first quarterly payment due on the applicable
anniversary of the Credit Date and the second, third and fourth
quarterly payment due on the date that is 90, 180 and 270 days, as
the case may be, after the applicable anniversary of the Credit
Date. If at any time the number of Lenders is more than three
(APFC, Bank of America National Trust and Savings Association and
any Person that becomes a Tranche 2 Lender pursuant to Section 9.6
shall be excluded from such calculation, but Persons that become
Lenders by an assignment pursuant to Section 2.20(a) shall be
included in such calculation), the amount of such fee shall
increase by $10,000 per annum for each Lender in excess thereof.
The first increase in the agency fee payable for any Person that
becomes a Lender at any time shall be payable on the date such
person becomes a Lender, and shall be in an amount that reflects on
a pro rata basis the number of days from and including the date
such Person becomes a Lender to and including the day immediately
preceding the next succeeding anniversary of the Credit Date. Once
the amount of the agency fee has been increased pursuant to the
foregoing, such amount shall not be reduced if the number of
Lenders is subsequently reduced for any reason whatsoever.
(c) The Borrower shall pay to the Administrative Agent in
Dollars for the account of each Tranche 2 Lender, a non-
refundable letter of credit fee at a rate equal to 2.25% per annum
on the average daily Approved Drawing Amount reimbursable by such
Lender, computed on the basis of the actual number of days elapsed
and a year of 360 days and payable in arrears on each Quarterly
Date.
(d) (i) the Guarantee Exposure Fee and (ii) the Credit Exposure
Fee and the Commitment Fee payable to Eximbank pursuant to the
terms of the Eximbank Guarantee Agreement and the Eximbank Credit
Agreement, respectively, shall be for the account of the
Borrower. Such Guarantee Exposure Fee is to be financed as part of
a Loan or a drawing under the Letters of Credit in the manner
described in Annex B and such Credit Exposure Fee is to be
financed as provided in Section 3.04 of the Eximbank Credit
Agreement.
(e) The Borrower hereby agrees to pay to the Administrative Agent
in accordance with the terms of Section 2.8 of this Agreement the
Commitment Fee payable by the Borrower to Eximbank under the
Eximbank Credit Agreement on each date such Commitment Fee is due
pursuant to the terms of the Eximbank Credit Agreement, and upon
receipt thereof the Administrative Agent shall then pay to Eximbank
in the manner and to the account of Eximbank described in Section
3.08 of the Eximbank Credit Agreement the amount so made available
by the Borrower. The Administrative Agent may assume that the
Borrower will make available to the Administrative Agent the amount
of the Commitment Fee on each date such Commitment Fee is due under
the terms of the Eximbank Credit Agreement, and the Administrative
Agent may, in reliance upon such assumption, make available to
Eximbank a corresponding amount on each such date. If such
corresponding amount is not in fact made available to the
Administrative Agent by the Borrower, the Administrative Agent
shall be entitled to recover such corresponding amount from the
Borrower on demand. If the Borrower does not pay such
corresponding amount forthwith upon the Administrative Agent's
demand therefor, the Administrative Agent shall promptly notify
each Lender of such failure to pay such amount by the Borrower, of
the amount owed by the Borrower, of such Lender's proportionate
share thereof (which shall be based on such Lender's Applicable
Percentage) and the date for payment of such amount by such Lender
(which date for payment shall be three (3) Business Days following
the date of the Administrative Agent's notice to such Lender), and
on the date for payment each Lender shall pay its pro rata share of
such amount to the Administrative Agent. The Administrative Agent
shall also be entitled to recover on demand from the Borrower or
each Lender, as the case may be, interest on such corresponding
amount due to the Administrative Agent in respect of each day from
the date such corresponding amount was made available by the
Administrative Agent to Eximbank until the date such corresponding
amount is recovered by the Administrative Agent, at the following
interest rates, in each case computed on the basis of the actual
number of days elapsed and a year of 365 or 366 days, as
appropriate: (i) with respect to interest from the Borrower, at
the rate per annum equal to the Base Rate plus the Applicable
Margin and (ii) with respect to interest from each Lender, at the
Federal Funds Rate until the 3rd Business Day and at the Base Rate
plus 1.50% thereafter, which interest shall be payable pro rata by
the Lenders if the Lenders are obligated to repay the
Administrative Agent in accordance with the immediately preceding
sentence. Upon payment by a Lender of its pro rata share of the
amounts owing to the Administrative Agent pursuant to this Section
2.7(e), such Lender shall be subrogated to the rights of the
Administrative Agent with respect to payment of such amounts from
the Borrower and such Lender shall be entitled to receive on demand
from the Borrower interest on such amounts paid to the
Administrative Agent in respect of each day from the date such
Lender makes such amounts available to the Administrative Agent
until the date such Lender is reimbursed in full by the Borrower
for such amount at the rate per annum specified in clause (i) of
the fifth sentence of this Section 2.7(e). Nothing in this Section
2.7(e) shall be deemed to relieve the Borrower of its obligation to
pay the Administrative Agent as required by the terms of this
Section 2.7(e) for amounts owing with respect to the Commitment Fee
or to prejudice any rights which the Administrative Agent or any
Lender may have against the Borrower as a result of any failure by
the Borrower to make such payments as required hereunder. In lieu
of the foregoing procedures relating to the payment of the
Commitment Fee by the Administrative Agent and the Lenders, the
Administrative Agent may demand that, and the Borrower shall cause,
an equity contribution or subordinated loan to be made under the
Funding Agreement or demand that the Borrower take all actions
necessary to obtain an OPIC Disbursement, in each case in an amount
equal to the unpaid Commitment Fee. The proceeds of such equity
contribution, subordinated loan or OPIC Disbursement shall be
applied to the unpaid Commitment Fee.
(f) The Borrower shall pay to the Issuing Bank in Dollars a non-
refundable annual letter of credit processing fee in the amount of
$25,000 per annum, payable in arrears on each Quarterly Date in
installments of $6,250 commencing on September 30, 1994.
Section 2.8 Payments. (a) Except as otherwise specifically
provided herein, payments of principal, interest, Commitment
Commission, Fees and any other payment due to the Administrative
Agent and/or the Lenders and/or the Issuing Bank under this
Agreement shall be made to the Administrative Agent for its own
account or for the account of the Lender, Lenders or Issuing Bank
entitled thereto, as the case may be, not later than 10:00 a.m.
(New York time) on the date when due and shall be made in
Dollars, in immediately available funds, to the Administrative
Agent Account.
(b) If any date for any payment under this Agreement shall not be
a Business Day then such payment shall be made on the next
succeeding Business Day and interest (or Commitment Commission, as
the case may be) shall continue to accrue for the period from such
due date to the next succeeding Business Day.
Section 2.9 Payment Allocation. (a) If the amount of any payment
made by the Borrower hereunder is less than the total amount due
and payable by the Borrower to the Lenders and/or the
Administrative Agent and/or the Issuing Bank, as relevant, as of
the date on which such payment is actually made by the Borrower,
such payment shall be applied first against charges, fees, costs
and expenses due the Administrative Agent hereunder; then against
charges, fees, costs and expenses due the Lenders and the Issuing
Bank; then against interest on interest which became overdue, if
any, with respect to the Loans; then against interest on
principal of the Loans which became overdue, if any; then against
interest due on the Loans; then against the Loans due and
payable; and thereafter against the amount of the Total Letter of
Credit at such time.
(b) Payments received by the Administrative Agent pursuant to
Section 2.9(a), 2.13 and 2.14 shall be allocated to each Lender
based on each Lender's Applicable Percentage.
(c) To the extent the Administrative Agent is still holding monies
for application against the Total Letter of Credit after the
Letters of Credit have expired and no further drawings can be made
thereunder, the Administrative Agent shall, subject to the terms
and conditions of the Intercreditor Agreement, first apply such
monies to any amounts then owed by the Borrower under this
Agreement in the order of priority set forth in Section 2.9(a), and
thereafter pay any remaining amount to the Borrower. The
application of monies described under "first" in the immediately
preceding sentence shall not be deemed a prepayment of a Loan for
purposes of this Agreement and the other Financing Documents.
Section 2.10 Currency of Payment. The obligation of the
Borrower to pay in Dollars the aggregate amount of the principal
of, and interest, Commitment Commission, Fees and other charges on,
the Loans and any other amounts payable in Dollars under this
Agreement shall not be deemed to have been novated, discharged or
satisfied by any tender of (or recovery under judgment expressed
in) any currency other than Dollars, except to the extent to which
such tender (or recovery) shall result in the effective payment of
such aggregate amount in Dollars at the place where such payment is
to be made and, accordingly, the amount (if any) by which any such
tender (or recovery) shall fall short of such aggregate amount
shall be and remain due to the Lenders, the Issuing Bank and/or the
Administrative Agent, as relevant, as a separate obligation,
unaffected by judgment having been obtained (if such is the case)
for any other amounts due under or in respect of this Agreement.
Section 2.11 Taxes. (a) Subject to Sections 2.22 and 2.23, any
and all payments by the Borrower to each Lender, the Issuing Bank
or the Administrative Agent under this Agreement and any other
Financing Document shall be made free and clear of, and without
deduction or withholding for any Bank Taxes. In addition, the
Borrower shall pay all Other Taxes.
(b) Subject to Sections 2.22 and 2.23, the Borrower agrees to
indemnify and hold harmless each Lender, the Issuing Bank and the
Administrative Agent for the full amount of Bank Taxes or Other
Taxes (including any Bank Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.11) paid by
such Lender, the Issuing Bank or the Administrative Agent and any
liability (including penalties, interest, additions to tax and
expenses) arising therefrom or with respect thereto, whether or not
such Bank Taxes or Other Taxes were correctly or legally asserted.
Payment under this indemnification shall be made within 30 days
after the date such Lender, Issuing Bank or the Administrative
Agent makes written demand therefor.
(c)Subject to Sections 2.22 and 2.23, if the Borrower shall be
required by law to deduct or withhold any Bank Taxes or Other Taxes
from or in respect of any sum payable hereunder or under any
Financing Document to any Lender, the Issuing Bank or the
Administrative Agent, then:
(i) the sum payable shall be increased as necessary so that after
making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable
under this Section 2.11) such Lender, the Issuing Bank or the
Administrative Agent, as the case may be, receives an amount equal
to the sum it would have received had no such deductions or
withholdings been made;
(ii) the Borrower shall make such deductions and withholdings;
(iii) the Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Borrower shall, without duplication of any amounts paid
pursuant to clause (c)(i) above, also pay to each Lender, the
Issuing Bank or the Administrative Agent for the account of such
Lender or the Issuing Bank, at the time interest is paid, all
additional amounts which the respective Lender or the Issuing Bank
specifies as necessary to preserve the after-tax yield such Lender
or the Issuing Bank would have received if such Bank Taxes or Other
Taxes had not been imposed.
(d) Within 30 days after the date of any payment by the Borrower
of Bank Taxes or Other Taxes, the Borrower shall furnish to the
Administrative Agent the original or a certified copy of a
receipt evidencing payment thereof, or other evidence of payment
satisfactory to the Administrative Agent.
(e) If the Borrower is required to pay additional amounts to any
Lender, the Issuing Bank or the Administrative Agent pursuant to
Section 2.11(c), then such Lender, the Issuing Bank or the
Administrative Agent shall use reasonable efforts (consistent with
legal and regulatory restrictions) to change the
jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Borrower which may thereafter accrue, if
such change in the judgment of such Lender, the Issuing Bank or the
Administrative Agent is not otherwise disadvantageous to such
Lender, the Issuing Bank or the Administrative Agent.
(f) For the avoidance of doubt, without prejudice to the
survival of any other agreement of the Borrower under this
Agreement and any other Financing Document or Project Document, the
provisions set forth in this Section 2.11 shall survive the payment
of the Construction Financing Secured Obligations.
Section 2.12 Termination of Commitment. The Commitments of the
Lenders shall automatically terminate in accordance with the
provisions of Article 7 hereof.
Section 2.13 Voluntary Prepayment. Subject to any required
Governmental Approvals having been obtained (including from the
Central Bank), the Borrower shall have the right, at any time on at
least 30 but not more than 60 days prior written notice to the
Administrative Agent, Eximbank and OPIC, to prepay all or a part of
the principal amount then outstanding of the Loans, without premium
or penalty; provided that (a) no prepayment of any part of any Loan
bearing interest using LIBOR shall be made on a day which is not
the last day of an Interest Period with respect thereto unless the
Borrower pays the Lenders the amounts determined by the Lenders to
be payable pursuant to Section 2.15 hereof, (b) the amount of such
prepayment is applied in the following order of priority: first,
to prepay the Total Tranche 1 Loans, the Total Tranche 2 Loans and
the OPIC Loan pro rata at such time; and second, to cash
collateralize the Total Letter of Credit at such time, (c) all
accrued interest on the principal amount of the Loans to be prepaid
and all other amounts then due to the Lenders hereunder are paid at
the same time, and (d) in the case of partial prepayment, such
prepayment shall be in an amount equal to $1 million or more in
integral multiples of $100,000. Upon delivery of any such notice,
the Borrower shall be obligated to effect prepayment in accordance
with the terms thereof.
Section 2.14 Mandatory Prepayment. On the applicable dates set
forth in Sections 3.05(a) and 3.05(d) of the Disbursement
Agreement, the Borrower shall, without demand or notice, make
prepayments to the Administrative Agent using funds then made
available for such purpose from the Contingency Account by the
Collateral Agent pursuant to Sections 3.05(a) and 3.05(d) of the
Disbursement Agreement. The Borrower shall, if the Required
Secured Parties so require pursuant to Section 3.04 of the
Disbursement Agreement, make prepayments to the Administrative
Agent and to OPIC, pro rata among the Loans and the OPIC Loan then
outstanding, using funds then made available for such
purpose from the Default Subordinated Debt Proceeds Account by the
Collateral Agent pursuant to Section 3.04 of the Disbursement
Agreement. All such prepayments and all other prepayments
required hereunder shall be made pro rata among the Lenders and
OPIC based on the Lenders' and OPIC's respective shares of the
aggregate amount of the Total Commitment and the OPIC Commitment.
Section 2.15 Funding Costs. If, as a result of (a) any failure by
the Borrower to pay when due the principal amount of or
interest on any Tranche 2 Loan (or portion thereof) having an
Interest Rate determined using LIBOR, (b) any failure by the
Borrower to make a borrowing of any Tranche 2 Loan having an
Interest Rate determined using LIBOR after the Borrower has
selected an Interest Rate using LIBOR with respect to such
borrowing pursuant to Section 2.5(a) hereof, (c) any failure by the
Borrower to make a conversion of any Tranche 2 Loan having an
Interest Rate determined using the Base Rate to a Tranche 2 Loan
having an Interest Rate determined using LIBOR after the Borrower
has given any notice required hereunder electing such conversion,
(d) any failure by the Borrower to make any prepayment of any
Tranche 2 Loan having an Interest Rate determined using LIBOR after
the Borrower has given any notice required hereunder regarding such
prepayment or (e) the making of a payment or prepayment (including,
without limitation, on acceleration or in connection with an
assignment of a Tranche 1 Loan pursuant to Section 2.20(a)) or the
conversion of any Tranche 2 Loan having an Interest Rate determined
using LIBOR on a day which is not the last day of an Interest
Period with respect thereto, any Tranche 2 Lender shall incur any
costs, expenses or losses, the Borrower shall pay, in Dollars, upon
request by such Lender the amount which such Lender shall notify
the Borrower as being the aggregate of such costs, expenses and
losses. For the purposes of the preceding sentence, "costs,
expenses or losses" shall include, without limitation, any interest
paid or payable to carry any unpaid amount and any loss, premium,
penalty or expense which may be incurred in liquidating or
employing deposits of or borrowings from third parties in order to
make, maintain or fund the Loans or any portion thereof (but in the
case of a late payment, after taking into account any default
interest received under Section 2.5(c)).
Section 2.16 Maintenance Amount. (a) Subject to Sections 2.22
and 2.23, on each Interest Payment Date, the Borrower shall pay in
Dollars, in addition to interest on the Loans, the amount which any
Lender and/or the Issuing Bank shall from time to time notify to
the Borrower and the Administrative Agent as being the aggregate of
the Maintenance Amount (as defined in subsection (b) below), if
any, of such Lender and/or the Issuing Bank, as the case may be,
accrued and unpaid prior to such Interest Payment Date.
(b) For the purposes of subsection (a) above, the following terms
shall have the following meanings:
(i) "Maintenance Amount" means the amount, if any, certified in
the Maintenance Amount Certification to be the net incremental
costs of the affected Lender and/or the Issuing Bank with respect
to the making or maintaining of any Loan or the Letters of Credit
(or any reimbursement obligation with respect thereto) which result
from (A) any change in, or introduction of, any Applicable Law
and/or (B) any compliance with any request from, guideline or
requirement of, any central bank or other monetary or other
comparable authority or any Governmental Authority (whether or not
having the force of law), which in either case, subsequent to the
date of this Agreement, shall:
(1) impose, modify or deem applicable any reserve, capital
adequacy, special deposit or similar requirements against assets
held by, or deposits with or for the account of, or Loans by, such
Lender or the Issuing Bank;
(2) impose a cost on such Lender or the Issuing Bank as a result
of its having made, funding or maintaining any Loan or issued the
Letters of Credit or reduce the rate of return on the overall
capital of such Lender or the Issuing Bank which it would have been
able to achieve if it had not made such Loan or issued the Letters
of Credit;
(3) change the basis of taxation on payments received by such
Lender or the Issuing Bank in respect of its Loans otherwise than
by a change in taxation of the overall net income of such Lender or
the Issuing Bank; or
(4) impose on such Lender or the Issuing Bank any other
condition regarding the making or maintaining of the Loans or the
issuance or maintaining of the Letters of Credit (or any
reimbursement obligation with respect thereto); and
(ii) the term "Maintenance Amount Certification" means a
certification furnished from time to time by any Lender or the
Issuing Bank to the Borrower and the Administrative Agent,
certifying:
(A) the circumstances giving rise to the Maintenance Amount;
(B) that such net costs have increased;
(C) that, in the opinion of such Lender or the Issuing Bank, as
the case may be, it has exercised reasonable efforts to minimize or
eliminate such increase; and
(D) the Maintenance Amount.
(c) Notwithstanding anything in Section 2.13, and subject to any
Governmental Approvals having been obtained (including from the
Central Bank), the Borrower shall have the right on any Interest
Payment Date for the Loans upon not less than forty-five (45) days'
prior written notice to the Administrative Agent and the affected
Lender (which notice shall be irrevocable and shall bind the
Borrower to make the prepayment specified below) and upon payment
of all accrued interest and Maintenance Amount (if any) on the
amount to be prepaid (subject to Sections 2.22 and 2.23), to prepay
all or, as the case may be, that portion of the Loans of which a
Lender informs the Borrower and the Administrative Agent that
Maintenance Amount is then being charged; provided, however, that
no prepayment of any part of any Loan bearing interest using LIBOR
shall be made on any Interest Payment Date which is not the last
day of an Interest Period with respect thereto unless the Borrower
pays the affected Lender the amounts determined by such Lender to
be payable pursuant to Section 2.15 hereof; provided, further, that
the use of Collateral to make any prepayments pursuant to this
Section 2.16 shall be subject to the restrictions set forth in the
Financing Documents on the use of such Collateral.
Section 2.17 Illegality of Participation. (a) Notwithstanding any
other provision of this Agreement, if, subsequent to the date of
this Agreement, the making, funding or continuance of any
Commitment or any Loan has been made (x) unlawful by any change
made in any Applicable Law, (y) impossible by compliance by a
Lender with any request of a Governmental Authority (whether or not
having force of law) or (z) impracticable as a result of a
contingency occurring after the Effective Date which materially and
adversely affects the inter bank Eurodollar market, the Borrower
shall, upon notice by the affected Lender or Lenders (but subject
to the approval of the appropriate Governmental Authorities
(including the Central Bank), which the Borrower agrees to take all
reasonable steps to obtain as quickly as possible, if such approval
is then required), prepay in full and on the next occurring
Interest Payment Date unless the effect of the Applicable Law,
request or contingency requires earlier or immediate repayment, in
which case, on such earlier date or immediately, as relevant, that
portion of the principal amount of the Loans affected thereby
together with all accrued interest and Maintenance Amount (if any
and subject to Sections 2.22 and 2.23) thereon and all amounts, if
any, determined by each affected Lender to be payable to it
pursuant to Section 2.15 hereof; provided, however, that the use of
Collateral to make any
prepayments pursuant to this Section 2.17 shall be subject to the
restrictions set forth in the Financing Documents on the use of
such Collateral. In addition, the Commitment of the affected
Lender or Lenders to make Loans similar to those affected by the
foregoing shall terminate immediately. In the event a L/C
Commitment of a Lender is terminated pursuant to the foregoing
provisions, (x) such affected Lender or Lenders shall immediately
notify the Administrative Agent thereof and the Administrative
Agent shall immediately notify the Issuing Bank of such L/C
Commitment terminations, (y) the obligation of the Issuing Bank to
honor any drawings under any of the Letters of Credit (other than
any drawings in respect of any Approved Drawing Amount) in excess
of the aggregate L/C Commitments then in effect or issue any of the
Letters of Credit (if such Letter of Credit shall not have
previously been issued) shall immediately be suspended until such
time as one or more Replacement Lenders shall have assumed the L/C
Commitment of the affected Lender or Lenders and the Administrative
Agent shall have notified the Issuing Bank thereof (which notice
shall be provided as soon as practicable after Replacement
Lender(s) have assumed the L/C Commitment(s) and (z) the Borrower
thereafter shall immediately, upon the payment of any drawing by
the Issuing Bank in connection with any of the Letters of Credit
issued by the Issuing Bank, reimburse the Issuing Bank for the
portion of such payment that would have been reimbursed to the
Issuing Bank by such affected Lender pursuant to Article 3.
(b) Notwithstanding any other provision of this Agreement, if,
subsequent to the date of this Agreement, the making, funding or
continuance by any Tranche 2 Lender of its proportionate interest
in any Tranche 2 Loan bearing interest based on LIBOR has been made
(x) unlawful by any change made in any Applicable Law, (y)
impossible by compliance by such Lender with any request of a
Governmental Authority (whether or not having the force of law),
then such Tranche 2 Lender shall promptly give notice thereof to
the Borrower and the Administrative Agent and the obligation of
such Tranche 2 Lender to make or continue, or to convert Tranche 2
Loans into, Tranche 2 Loans bearing interest based on LIBOR shall
be immediately suspended and during such suspension be converted
into an obligation to do the same with respect to Tranche 2 Loans
bearing interest at the rate per annum equal to the Base Rate plus
the Applicable Margin; provided, however, that if such Tranche 2
Lender determines that it may lawfully continue to maintain and
fund any outstanding Tranche 2 Loans bearing interest based on
LIBOR until the end of the applicable Interest Period then in
effect with respect thereto, upon written notice from the Borrower
to such Lender and the Administrative Agent, such outstanding
Tranche 2 Loans shall be converted into Tranche 2 Loans bearing
interest at the rate per annum equal to the Base Rate plus the
Applicable Margin on the last day of the then current Interest
Period applicable to such Loans.
(c) If the Borrower so requests within ten (10) days of receipt of
a notice from a Lender pursuant to clause (a) or (b) of this
Section 2.17 (which notice, if pursuant to clause (b) of this
Section 2.17, is based on circumstances not generally applicable to
United States or foreign lenders making loans of the types
contemplated hereunder), such Lender shall (consistent with legal
and regulatory restrictions) (i) during the sixty-day period
immediately following receipt of such request from the Borrower,
use reasonable efforts to assist the Borrower in identifying a
Replacement Lender willing to accept an assignment of all or a part
of such Lender's proportionate share of the Loans or its Commitment
and (ii) if the Borrower shall designate a Replacement Lender
within such sixty-day period, assign all or a part of its
proportionate share of the Loans or its Commitment to the
Replacement Lender designated by the Borrower; provided that any
assignment made by a Lender to a Replacement Lender shall satisfy
the following conditions: (x) the Borrower shall promptly pay when
due all reasonable fees and expenses which such Lender incurs in
connection with such assignment, (y) any assignment of all or part
of the Loans or any Lender's Commitment shall be made without
recourse, representation or warranty and (z) the Borrower shall
cause the Replacement Lender to pay to the Administrative Agent for
the account of the assigning Lender in immediately available funds
all amounts outstanding or payable under the Financing Documents to
the Lender assigning its interest in the Loans or its Commitment.
Section 2.18 Substitute Basis of Borrowing. If, on or before the
first day of any Interest Period relating to the Tranche 2 Loans,
either (a) the Administrative Agent determines that, for whatever
reason, deposits in Dollars for a period equal to such Interest
Period or in the relevant amounts are not being offered generally
to banks in the London interbank market or (b) the Administrative
Agent receives notice from the Required Lenders that the Interest
Rate then in effect based on LIBOR for such Interest Period will
not adequately reflect the cost to such Required Lenders of making,
funding or otherwise maintaining their Tranche 2 Loans for such
Interest Period, the Administrative Agent shall promptly notify the
Borrower and the Tranche 2 Lenders of such event. Thereafter, the
obligations of the Tranche 2 Lenders to make or maintain Loans
bearing interest at LIBOR shall be suspended until the
Administrative Agent, upon instruction from the Required Lenders,
revokes such notice in writing, and interest for such Interest
Period with respect to a scheduled Utilization and for outstanding
Tranche 2 Loans for which interest is then scheduled to be
determined shall accrue at the rate per annum equal to the Base
Rate plus the Applicable Margin.
Section 2.19 Mitigation Provision. Each Lender and the Issuing
Bank agree that (a) as promptly as practicable after it becomes
aware of the occurrence of an event or the existence of a
condition arising after the date hereof that would cause it to be
affected under Section 2.17 or 3.7 and (b) as promptly as
practicable after it has made a determination to make a claim for
amounts under Section 2.11, 2.15 or 2.16, as the case may be, with
respect to events or conditions arising after the date hereof, it
shall notify the Borrower of the same and use commercially
reasonable efforts (consistent with legal and regulatory
restrictions and such Tranche 2 Lender's or the Issuing Bank's, as
relevant, internal policies) to mitigate the effect of such
provisions on the Borrower, including (i) in the case of Sections
2.11, 2.16, 2.17 or 3.7, efforts to make, fund, issue or maintain
its Loans or the Letters of Credit, as relevant, through another
office of such Lender or the Issuing Bank, as relevant and (ii) in
the case of Section 2.15, efforts to reemploy amounts held by such
Lender, (x) if as a result thereof the additional moneys which
would otherwise be required to be paid to such Lender pursuant to
any of such provisions of this Agreement would be reduced, or the
illegality or other adverse circumstances which would otherwise
require a prepayment of such Loans or the suspension of the
issuance of, or of drawings under, any of the Letters of Credit
pursuant to any of such provisions would cease to exist, and (y)
if, as determined by such Lender or the Issuing Bank, as relevant,
in good faith, the making, funding, issuing or maintaining of such
Loan or the Letters of Credit, or the making of drawings under the
Letters of Credit as relevant, through such other office would not
otherwise adversely affect such Lender or the Issuing Bank, as
relevant.
2.20 Assignment of Tranche 1 Loans. (a) From time to time, at the
election of a Tranche 1 Lender, all or a portion of its Tranche 1
Loans may be assigned by such Tranche 1 Lender to one or more
Eligible Assignees approved by the Issuing Bank, such approval to
be required only so long as any of the Letters of Credit is
outstanding, in the manner set forth in this Section 2.20(a). From
time to time a Tranche 1 Lender may designate by prior written
notice to the Borrower and the Administrative Agent the amount of
its Tranche 1 Loans and Tranche 1 Commitment it elects to assign
pursuant to this Section 2.20(a), such amount not to be, in the
case of an Eligible Assignee that at such time is not a Lender,
less than $10,000,000 (in the aggregate for such Loans and
Commitment) for each assignment, unless the Administrative Agent
agrees to a lesser amount. The assigned amount shall be comprised
of a percentage of the Tranche 1 Commitment (the "Assigned
Commitment") and the same percentage of the Tranche 1 Loans (the
"Assigned Loans"), and upon such assignment and as more fully
described below, the Assigned Commitment shall become a Tranche 2
Commitment and the Assigned Loans shall become a Tranche 2 Loan.
The Borrower and each Tranche 1 Lender hereby agree that any
accrued and unpaid interest on the Tranche 1 Loans or a portion
thereof assigned pursuant to this Section 2.20(a) shall be paid by
the Borrower to such Tranche 1 Lender at the time such interest
would have been due and payable to such Tranche 1 Lender if such
assignment had not occurred. Interest on the Assigned Loans shall
begin to accrue to the benefit of the assignee on the date the
assignment is effective.
The assignment of the Assigned Loans and the Assigned Commitment
shall be evidenced by the execution and delivery by the assignor
and the assignee of an Assignment and Acceptance Agreement in the
form of Schedule 2.20(a). A true and complete copy of such
executed Assignment and Acceptance Agreement shall be delivered to
the Administrative Agent, OPIC, Eximbank and the Borrower. The
effectiveness of any assignment pursuant to this Section 2.20(a) is
subject to (a) the prior written consent of the
Issuing Bank in its sole discretion and (b) the satisfaction of all
conditions set forth in the Assignment and Acceptance
Agreement.
Upon the closing of any assignment in accordance with the terms of
this Section 2.20(a), the following shall occur: (i) the assignee
shall become a Tranche 2 Lender, (ii) the assigning Tranche 1
Lender's Tranche 1 Loans and Tranche 1 Commitment shall be reduced
by the amount equal to the Assigned Loans and Assigned Commitment,
respectively, (iii) the assignee shall have
outstanding (without taking into account any of its prior Tranche
2 Commitments) a Tranche 2 Commitment in an amount equal to the
Assigned Commitment, and the amount of the Total Tranche 2
Commitment prior to such assignment shall increase by an amount
equal to the Assigned Commitment, (iv) the assignee shall have
outstanding (without taking into account any of its prior Tranche
2 Loans) a Tranche 2 Loan in an amount equal to the Assigned Loans,
which shall (subject to Section 2.20 (d)) bear interest at the rate
of other Tranche 2 Loans outstanding, and the amount of the Total
Tranche 2 Loans prior to such assignment shall increase by an
amount equal to the Assigned Loans, (v) each Tranche 2 Lender
(including the assignee) will own a proportionate share of the
Total Tranche 2 Loans (subject to Section 2.20 (d)) and Total
Tranche 2 Commitment based on its Tranche 2 Applicable
Percentage, (vi) the assignee shall have all rights (including
voting rights) and shall be entitled to the benefits of a Tranche
2 Lender and a Senior Secured Party hereunder and under the
Security Documents and (vii) the assignee shall automatically be
bound by the terms of the Intercreditor Agreement.
(b) For purposes of Sections 2.20(a) and 2.20(d), the term
"Tranche 2 Applicable Percentage" shall mean, with respect to any
Tranche 2 Lender (including an assignee), a fraction (expressed as
a percentage) the numerator of which shall be the amount of such
Lender's Tranche 2 Commitment and the denominator of which shall be
an amount equal to the Total Tranche 2 Commitment, in each case
after giving effect to assignments of Tranche 1 Loans. In
connection with any assignment of the Tranche 1 Loans, the Borrower
shall, without duplication, pay to BA Securities, Inc. or Bank of
America National Trust and Savings Association, as applicable, the
syndication and underwriting fee, if any, due pursuant to the terms
set forth in the letter agreement dated the date hereof between the
Borrower, BA Securities, Inc. and APFC relating thereto.
(c) As a condition to the effectiveness of any assignment under
Section 2.20(a), either (i) all the Tranche 2 Loans outstanding
immediately prior to such assignment shall be accruing interest at
the Base Rate, (ii) all Tranche 2 Loans having an Interest Rate
determined using LIBOR shall have the same Interest Period, which
period shall end after the date of such assignment, and shall be
deemed to have been prepaid on the date of such
assignment for purposes of determining "costs, expenses and losses"
under Section 2.15, provided that APFC rather than the Borrower
shall pay, in Dollars, such "costs, expenses and losses" upon the
closing of such assignment to the Administrative Agent for the
account of the Tranche 2 Lenders, such payment to be made from
sources other than the APFC Funding Account, or (iii) the
provisions of Section 2.20(d) shall apply.
(d) If the conditions described in Section 2.20(c), clauses (i) or
(ii), are not satisfied with respect to any assignment under
Section 2.20(a), in the alternative and at the option of the
Tranche 1 Lender, (i) the Tranche 2 Loan acquired upon such
assignment (the "New Tranche 2 Loan") shall bear interest at the
Base Rate plus the Applicable Margin or (ii) if upon the date such
assignment becomes effective one or more of the then
existing Tranche 2 Loans (the "Existing Tranche 2 Loans")
commence an Interest Period using LIBOR, then the New Tranche 2
Loan shall be combined with any such Existing Tranche 2 Loan
(selected by the Borrower) that on such date commences a new
Interest Period and shall bear interest on the terms applicable to
such Existing Tranche 2 Loan. If upon such assignment the New
Tranche 2 Loan commences to bear interest at the Base Rate plus the
Applicable Margin, on the next instance that an Existing Tranche 2
Loan commences to bear interest at an Interest Rate based on LIBOR
for a new Interest Period the New Tranche 2 Loan shall be combined
with such Existing Tranche 2 Loan and shall commence to bear
interest at the same rate applicable to such new Interest Period,
which rate shall be effective for such new Interest Period. At the
end of any Interest Period based on LIBOR for a New Tranche 2 Loan,
interest shall commence to accrue at an Interest Rate based on
LIBOR for an Interest Period then commenced for any of the Existing
Tranche 2 Loans and, if there is no such Interest Period, then at
the Base Rate plus the
Applicable Margin until the commencement of an Interest Period
based on LIBOR for any of the Existing Tranche 2 Loans. Upon the
effectiveness of any assignment under Section 2.20(a), the
Borrower shall inform the Lender purchasing the New Tranche 2 Loan
of the latest date on which any Interest Period based on LIBOR then
in effect for any of the Existing Tranche 2 Loans ends (the
"Determination Date"). During such time as this Section 2.20(d) is
in effect, and notwithstanding anything in this
Agreement to the contrary, no Interest Period based on LIBOR for
any New Tranche 2 Loan or any Existing Tranche 2 Loan shall be
selected with a last day that is later than the Determination Date.
At the earliest of such time as (x) all the Tranche 2 Loans accrue
interest at the Base Rate plus the Applicable
Margin, (y) the Determination Date has been reached, or (z) all the
Tranche 2 Loans bear interest at an Interest Rate based on LIBOR
for the same Interest Period, the provisions of this
Section 2.20(d) shall be suspended and cease to be in effect until
the next assignment under Section 2.20(a), and from such time but
subject to the subsequent operation of this Section 2.20(d) each
Tranche 2 Lender will be deemed to own a proportionate share of the
Total Tranche 2 Loans based on its Tranche 2 Applicable Percentage.
Nothing in this Section 2.20(d) shall preclude one or more
assignments under Section 2.20(a) being given effect while this
Section 2.20(d) is in effect with regard to a prior assignment, and
the Determination Date set upon the effectiveness of an assignment
under Section 2.20(a) shall apply to any subsequent assignment that
has become effective prior to the provisions of this Section
2.20(d) becoming
suspended with respect to a preceding assignment.
Section 2.21 Developer Fee. The Borrower may earn and draw on the
Loans to pay the developer fee set forth in the Construction Budget
(the "Developer Fee") in accordance with the provisions set forth
in this Section. A pro rata share of 60% (calculated in
accordance with the immediately succeeding sentence) of such fee is
payable in installments payable when the progress payments are made
under the Supply Contract and the Construction Contract. The pro
rata share of such amount applicable to any such progress payment
shall equal the product of (x) 60% of the Developer Fee (expressed
in Dollars) multiplied by (y) the percentage obtained by dividing
(1) the amount of such progress payment by (2) the total amount of
the Contract Price. Subject to the terms of this Section 2.21, 40%
of the Developer Fee is payable upon satisfaction of either of the
following conditions: (A) the earlier of (i) the occurrence of the
Construction Financing Termination Date or (ii) the date that the
Tranche 2 Lenders' Construction Financing Secured Obligations are
paid in full in cash or (B) the conditions to funding set forth in
Sections 5.1 and 5.2 shall have been satisfied and Substantial
Completion shall have occurred under the Construction Contract and
as part of Substantial Completion (i) each of the Net Deliverable
Capacity Guarantee and Guaranteed Net Plant Steam Rate shall have
been satisfied under the Construction Contract to the extent
necessary under Section 14.4(a) of the Construction Contract to
result in no Buy Down Amount becoming due and payable thereunder
and (ii) each of the Reliability Guarantee, Emissions Guarantee and
Noise Compliance Guarantee has been met. Immediately upon $10
million of Contingency Costs being drawn (whether as Loans or
Drawing Approvals under this Agreement, as OPIC Disbursements under
the OPIC Finance Agreement, or as Progress Subordinated Loans or
Equity Subordinated Loans), the portion of the
Construction Budget allocated to such 40% portion of the
Developer Fee shall be automatically reallocated for the payment of
additional Contingency Costs and shall be drawn in accordance with
the terms hereof (or of the OPIC Finance Agreement, as the case may
be) against the payment of any such additional
Contingency Costs. Upon any payment of such additional
Contingency Costs (from such reallocated portion of the
Construction Budget), the aforesaid 40% portion of the Developer
Fee shall be reduced on a dollar-for-dollar basis. To the extent
that all or any portion of such reallocated 40% portion of the
Developer Fee is not drawn to pay additional Contingency Costs,
such undrawn amount shall be automatically available to the
Borrower on the date and subject to the conditions set forth in the
fourth sentence of this Section 2.21. Capitalized terms used in
this Section 2.21 and not defined in Schedule X hereto shall have
the meaning assigned to such terms in the Construction Contract.
Section 2.22 Limitation on Certain Payments to Tranche 1
Lenders. Subject to the last sentence of this Section 2.22, the
maximum amount any Tranche 1 Lender may receive pursuant to Section
2.11, 2.16 or 2.17 for each Dollar of its Tranche 1 Loans shall not
exceed the average amount each Tranche 2 Lender received pursuant
to such Section for each Dollar of Tranche 2 Loans. For example,
if (A) there are five Tranche 2 Lenders, (B) each Tranche 2 Lender
has $1 of Tranche 2 Loans and (C) only one of such Tranche 2
Lenders received an amount equal to $.50 by application of one of
such Sections, then the Tranche 1 Lender would be entitled to
receive up to $.10 for each Dollar of its Tranche 1 Loans. If
after the application of this Section 2.22 any costs, expenses,
taxes or other amounts due any Tranche 1 Lender pursuant to Section
2.11, 2.16 or 2.17 remain unpaid, such costs, expenses, taxes or
other amounts shall accrue until the date of the Eximbank
Disbursement. After the date of the Eximbank Disbursement, such
unpaid costs, expenses, taxes and other amounts due any Tranche 1
Lender shall be payable pursuant to Section 3.02(d)(ii), priority
SEVENTH of the Disbursement Agreement.
Section 2.23 Certificate of Lenders, the Issuing Bank and the
Administrative Agent. Any Lender, the Issuing Bank or the
Administrative Agent claiming reimbursement under Section 2.11,
2.15, 2.16 or 2.17 shall deliver to the Borrower (with a copy to
the Administrative Agent in the case of any Lender and the
Issuing Bank and without duplication of the Maintenance
Certificate) a certificate setting forth in reasonable detail,
including calculations thereof, the amount payable to such
Lender, the Issuing Bank or the Administrative Agent thereunder and
such certificate shall be conclusive and binding on the Borrower in
the absence of manifest error.
Section 2.24 Survival. Without prejudice to the survival of any
other agreement of the Borrower under this Agreement and any other
Financing Document or Project Document, the agreements and
obligations of the Borrower set forth in Sections 2.11, 2.15, 2.16,
2.17 and 2.22 shall survive the payment of the Construction
Financing Secured Obligations.
ARTICLE 3. The Letters of Credit
Section 3.1 Issuance of Letters of Credit. In addition to the
procedures set forth in Section 2.2, the Borrower may borrow
hereunder by requesting (a) the Issuing Bank to open for the
account of the Borrower an irrevocable letter of credit,
substantially in the form of Exhibit G hereto, in favor of the
Construction Supplier, (the "Construction Supplier Letter of
Credit") (b) the Issuing Bank to open for the account of the
Borrower an irrevocable letter of credit, substantially in the form
of Exhibit I hereto, in favor of the Construction Contractor (the
"Construction Contractor Letter of Credit", and together with the
Construction Supplier Letter of Credit, the "Letters of Credit"),
and (c) the Issuing Bank to make payments under the Letters of
Credit issued by the Issuing Bank, provided that: (i) the aggregate
amount of the Letters of Credit shall not exceed the then Total
Unutilized Commitment (not including in the
calculation of Total Letter of Credit thereunder the face amount of
the Letter of Credit which is being requested to be opened); and
(ii) the Issuing Bank shall not issue the Letters of Credit unless
it has received a certificate from the Administrative Agent that
all the applicable conditions precedent set forth in Article 5 have
been met or waived.
Section 3.2 Documents Accompanying Requests for Issuance of
Letters of Credit. Requests by the Borrower for the issuance of
any of the Letters of Credit by the Issuing Bank shall be made by
delivering to the Administrative Agent and the Issuing Bank, at
least fifteen (15) Business Days prior to the proposed date for the
issuance of such Letter of Credit, the documents described in items
(1), (3), (4) and (5) of Part C of Annex B and by
delivering simultaneously to the Issuing Bank an application on the
form provided by the Issuing Bank for an irrevocable
documentary letter of credit together with such other documents
relating to the opening of commercial credits, as the Issuing Bank
may request, in all cases such documents to be appropriately
completed. A copy of such documents shall be sent by the
Borrower to each Lender, OPIC and Eximbank at the time the
Borrower sends such documents to the Administrative Agent and the
Issuing Bank.
Section 3.3 Terms of Letters of Credit. (a) Each of the Letters
of Credit issued hereunder (i) shall provide: (A) for payment of
drawings on the seventh (7th) Business Day (the
"Payment Date") after the Negotiation Date, (B) for an expiry date
not later than the L/C Termination Date and (C) that no Payment
Date shall occur after the L/C Termination Date; (ii) shall include
all provisions required in the Request for Letter of Credit
Approval applicable to such Letter of Credit as set forth in
Exhibit 4 to Annex B, including, as relevant, the
provisions set forth therein with respect to payment of the
Guarantee Exposure Fee; and (iii) shall be amended in accordance
with the procedures set forth in Annex B. The Letters of Credit,
and the provisions of this Agreement relating thereto, are
subject to the Uniform Customs and Practice for Documentary Credits
(1993 Revision), International Chamber of Commerce
Brochure No. 500.
(b) Upon each Payment Date occurring in connection with a
drawing under any of the Letters of Credit, the amounts payable
with respect to the Guarantee Exposure Fee under such Letter of
Credit (as calculated pursuant to the terms of the Eximbank
Guarantee Agreement) shall be paid to Eximbank.
Section 3.4 Notices of Drawings. Promptly on each Negotiation
Date, the Issuing Bank shall notify the Construction Supplier and
Construction Contractor, as appropriate, the Administrative Agent,
the Borrower, OPIC and Eximbank in writing of the amount of such
drawing and the Payment Date of such drawing (each such notice, an
"L/C Notice").
Section 3.5 Drawings. (a) Upon receipt by the Administrative
Agent of an L/C Notice which advises that a drawing is to be made
under any of the Letters of Credit, the Administrative Agent shall
promptly, but in no event later than three (3) Business Days prior
to the Payment Date stated in the L/C Notice, give each Lender
notice of the receipt of such L/C Notice, of such Lender's
proportionate share of the amount to be reimbursed to the Issuing
Bank based on the amount of the drawing stated in such L/C Notice,
and the Payment Date of such amount, and on the Payment Date of
such amount each Lender shall make its pro rata share thereof
available to the Administrative Agent in the same manner specified
in Section 2.2(b) for a Loan, and the Administrative Agent shall
then pay to the Issuing Bank Account the aggregate of the amounts
so made available by the Lenders.
(b) For the avoidance of doubt, (i) the amounts reimbursed by the
Lenders to the Issuing Bank pursuant to Section 3.5(a) shall be
deemed to be Loans hereunder and (ii) the interest provisions
relating to Loans, including, without limitation, those described
in Section 2.5 shall apply to the amounts so reimbursed by the
Lenders to the Issuing Bank pursuant to Section 3.5(a).
Section 3.6 Reimbursement by Lenders of Issuing Bank. (a) Each
Lender hereby irrevocably and unconditionally agrees that it shall
reimburse the Issuing Bank if any of the Letters of Credit is
issued by the Issuing Bank as provided herein, in the manner and at
the times set forth in this Article 3 for such Lender's Applicable
Percentage of each payment of drawings made by the Issuing Bank in
accordance with the terms of such Letter of Credit.
(b) The obligation of the Lenders to reimburse the Issuing Bank
pursuant to this Article 3 shall be absolute, irrevocable and
unconditional and shall not be affected by any circumstance, nor
subject to any qualification or exception whatsoever, and shall be
honored in accordance with the terms and conditions of this
Agreement under all circumstances, including, without limitation:
(i) any claim, counterclaim, defenses, right of setoff or other
right which such Lender may have or assert against any other
Lender, the Issuing Bank, the Administrative Agent, the Borrower or
any other Person; (ii) any fact or circumstance relating to the
Borrower; (iii) the occurrence and continuance of a
Construction Credit Default or Construction Credit Event of
Default; (iv) any lack of validity or enforceability of this
Agreement or any of the other Financing Documents; or (v) any
draft, certificate of any other document presented under any of the
Letters of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue
or inaccurate in any respect. Without limiting the
generality of the foregoing, each Lender agrees that its
obligation under this Section 3.6 is not subject at the time it is
required to reimburse the Issuing Bank hereunder to the
satisfaction of any of the conditions set forth in Article 5. Each
Lender agrees that each payment made by such Lender to the Issuing
Bank pursuant to this Article 3 shall be made without any offset,
abatement, withholding or reduction whatsoever.
(c) The Administrative Agent may assume that each Lender will make
available to the Administrative Agent such Lender's
Applicable Percentage of any payment of drawings made by the
Issuing Bank under any of the Letters of Credit on the date
required by the terms of this Article 3, and the Administrative
Agent may, in reliance upon such assumption, make available to the
Issuing Bank a corresponding amount on such date. If such
corresponding amount is not in fact made available to the
Administrative Agent by such Lender, the Administrative Agent shall
be entitled to recover such corresponding amount from the Issuing
Bank on demand. If the Issuing Bank does not pay such
corresponding amount forthwith upon the Administrative Agent's
demand therefor, the Administrative Agent shall promptly notify the
Borrower, and the Borrower shall pay such corresponding amount to
the Administrative Agent within such period of time as the
Administrative Agent deems reasonable in the circumstances. The
Administrative Agent shall also be entitled to recover on demand
from the Issuing Bank or the Borrower, as the case may be, interest
on such corresponding amount in respect of each day from the date
such corresponding amount was made available by the Administrative
Agent to the Issuing Bank until the date such corresponding amount
is recovered by the Administrative Agent, at the rate per annum
equal to (i) if recovered from the Issuing Bank, the Federal Funds
Rate until the 3rd Business Day and the Base Rate plus 1.50%
thereafter and (ii) if recovered from the Borrower, the applicable
Interest Rate selected by the Borrower with respect to such amount
pursuant to Section 2.5 (or, if the Borrower shall fail to so
select an Interest Rate, at the rate per annum equal to the Base
Rate plus the Applicable Margin). Nothing in this Section 3.6(c)
shall be deemed to relieve any Lender from its obligation to pay
the Issuing Bank for drawings under any of the Letters of Credit as
required by the terms of this Article 3 or of making Loans to the
Borrower in connection therewith or to prejudice any rights which
the Issuing Bank or the Borrower may have against any Lender as a
result of any failure by such Lender to make such payments or Loans
as required hereunder. Any payment by the Borrower to the
Administrative Agent pursuant to this Section 3.6(c) shall not be
considered a Loan hereunder and such payment shall not be deemed to
be a prepayment of a Loan for purposes of this Agreement and the
other Financing Documents.
(d) Each of the Lenders, upon reimbursement to the Issuing Bank
through the Administrative Agent of the amount owing by such Lender
to the Issuing Bank with respect to a drawing under any of the
Letters of Credit, shall be deemed to have made a Loan in the
amount which each Lender so makes available to the Issuing Bank
through the Administrative Agent as of the date thereof. As
promptly as practicable following the making of any Loan under this
Article 3, the Administrative Agent shall provide written notice
thereof to Eximbank and OPIC, which notice shall indicate the
amount of such Loan.
(e) If any Lender fails to make its pro rata share of any
reimbursement available to the Issuing Bank at the time and in the
manner required pursuant to this Article 3 and the Borrower has not
paid such amount pursuant to Section 3.6(c), (i) the Issuing Bank
shall promptly notify the Borrower, and the Borrower shall pay such
amount to the Issuing Bank within such period of time as the
Issuing Bank deems reasonable under the circumstances, and (ii)
interest which would otherwise be payable to such Lender in respect
of the Loan which would have been made by it shall be payable to
the Issuing Bank until such amount is recovered by the Issuing
Bank, in each case without prejudice to the rights of the Borrower
and the Issuing Bank against such Lender. Any payment by the
Borrower to the Issuing Bank pursuant to this Section 3.6(e) shall
not be considered a Loan hereunder and such payment shall not be
deemed to be a prepayment of a Loan for purposes of this Agreement
and the other Financing Documents. In the event a Lender fails to
make its pro rata share of any reimbursement available to the
Issuing Bank as required pursuant to the terms of this Section 3.6
and the Borrower has not reimbursed the Issuing Bank with respect
to such pro rata share pursuant to the first sentence of this
Section 3.6(e), such Lender for all purposes of this Agreement
hereby agrees that any Person that the Issuing Bank may designate
in writing to such Lender may reimburse the Issuing Bank in lieu of
such defaulting Lender and that, for all purposes of this
Agreement, such reimbursement shall be treated as though made in
accordance with an assignment of all of the defaulting Lender's
right, title and interest and a delegation of all of the defaulting
Lender's obligations with respect to such defaulted obligation to
such Person, except that such Person shall have all of the rights
that the Issuing Bank would otherwise have hereunder to
reimbursement from such defaulting Lender; provided, that if the
Issuing Bank so designates a Person other than one of the Lenders
listed in Schedule I, the prior approval of Eximbank or OPIC (which
shall not be unreasonably withheld) shall be required for such
designation. In any event, such Person that the Issuing Bank may
designate in accordance with the immediately preceding sentence
shall be a Person eligible for the coverage of the Guarantee (as
defined in the Eximbank Guarantee Agreement) under the laws, rules,
regulations and policies of or applicable to Eximbank. Such
defaulting Lender hereby agrees to cooperate with the
Administrative Agent, the Issuing Bank and the designated Person
that reimburses the Issuing Bank on the defaulting Lender's behalf
and to take all actions necessary, in each case to effect the
provisions hereof.
(f) The Issuing Bank shall have all the voting rights of a Lender
and of a Secured Party under this Agreement and the other relevant
Financing Documents with respect to a Defaulted Amount relating to
any of the Letters of Credit for which the Issuing Bank has not
been reimbursed, until such time as such Defaulted Amount is
reimbursed to the Issuing Bank.
Section 3.7 Issuance of Letters of Credit; Illegality.
Notwithstanding any other provision of this Agreement, in the event
that any restrictions or limitations are, after the date hereof,
imposed upon or determined or held to be applicable to the Issuing
Bank by, under or pursuant to any Applicable Law now or hereafter
in effect or by reason of any interpretation thereof by any court
or Governmental Authority, which would prevent (as determined by
the Issuing Bank) the Issuing Bank from legally incurring liability
under any of the Letters of Credit to be issued pursuant hereto,
then the Issuing Bank shall give prompt written notice thereof to
the Administrative Agent (who shall notify the Borrower, Eximbank,
OPIC and each Lender thereof as soon as reasonably practicable),
whereupon the obligation of the Issuing Bank to issue and allow
drawings under such Letter of Credit pursuant hereto shall be
suspended until the Administrative Agent shall be advised by the
Issuing Bank that such event is no longer continuing or until such
event shall have continued for a period of one hundred eighty (180)
days, after which period the obligation of the Issuing Bank to
issue and allow drawings under such Letter of Credit pursuant
hereto shall terminate, provided, however, that, without limiting
the provisions of Section 2.19, upon any such suspension, the
Administrative Agent shall cooperate with the Borrower in the
Borrower's efforts to identify a financial institution that, based
on information provided by such institution to the Borrower, is not
then subject to any event which is likely to result in any such
suspension and to arrange for the delivery by the Borrower of a
substitute letter of credit having the same terms as, and being in
a form substantially identical to, the Letter of Credit being
replaced. Any such substitute letter of credit shall be issued by
a financial institution satisfactory to the Senior Secured Parties,
and on terms and conditions substantially similar to those
applicable to the Issuing Bank under the Financing Documents.
Section 3.8 Exoneration. (a) As between the Borrower, the
Administrative Agent, the Lenders and the Issuing Bank, the
Borrower assumes all risks of the acts and omissions of, or misuse
of either of the Letters of Credit by, the beneficiary of such
Letter of Credit. All directions and correspondence
relating to either of the Letters of Credit are to be sent at the
Borrower's risk and expense. In furtherance and not in
limitation of the foregoing, the Issuing Bank, the Administrative
Agent and the Lenders shall not be responsible (except for the
Issuing Bank's gross negligence or willful misconduct in
connection therewith): (i) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of
either of the Letters of Credit, even if it should in fact prove to
be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) for the validity or
sufficiency of any instrument transferring or assigning or
purporting to transfer or assign either of the Letters of Credit or
the rights or benefits thereunder or proceeds thereof, in whole or
in part, which may prove to be invalid or ineffective for any
reason; (iii) for failure of the beneficiary of either of the
Letters of Credit to comply duly with conditions required in order
to draw upon such Letter of Credit; (iv) for errors,
omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex, or other similar
form of teletransmission or otherwise, whether or not they be in
cipher; (v) for errors in interpretation of technical terms; (vi)
for any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of
Credit or of the proceeds thereof; (vii) for the misapplication by
the beneficiary of any Letter of Credit of the proceeds of any
drawing under such Letter of Credit; and (viii) for any
consequences arising from causes beyond the control of the
Administrative Agent, the Issuing Bank and Lenders including any
governmental acts. None of the above shall affect, impair, or
prevent the vesting of any of the Issuing Bank's rights or powers
under this Section 3.8 or Section 9.3.
(b) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth or set forth in Section
9.3, any action taken or omitted by the Issuing Bank under or in
connection with any of the Letters of Credit issued on behalf of
the Borrower or any related certificates, if taken or omitted in
good faith, shall not, in the absence of gross negligence or
willful misconduct, put the Issuing Bank, the Administrative Agent
or any Lender under any resulting liability to the Borrower or
relieve the Borrower of any of its obligations hereunder to any
such Person.
ARTICLE 4. Representations and Warranties
In order to induce the Administrative Agent, the Arranger, each of
the Lenders and the Issuing Bank to enter into this Agreement and
each of the other Financing Documents to which it is a party and in
order to induce each of the Lenders to make the Loans and the
Issuing Bank to issue the Letters of Credit, the Borrower makes the
following representations, warranties and agreements as of the
Credit Date, which shall survive the execution and
delivery of this Agreement and the making and repayment of the
Loans:
Section 4.1 Corporate Status. The Borrower (a) is a duly
organized and validly existing corporation in good standing under
the laws of the Republic, (b) is duly qualified to do business as
a foreign corporation under the laws of each jurisdiction in which
the character of the properties owned or leased by it or in which
the transaction of its business as presently conducted or proposed
to be conducted makes such qualification necessary and (c) has full
power and authority to own the property and assets owned by it and
to lease the properties leased by it and to transact the business
in which it is engaged or proposes to be engaged and to do all
things necessary or appropriate in respect of the Project and to
consummate the transactions contemplated by the Project Documents
in effect or required to be in effect as of each date this
representation is made or deemed made.
Section 4.2 Corporate Power and Authority. The Borrower has the
corporate power and authority to execute and deliver, and to
perform the terms and provisions of, each of the Project
Documents to which it is party and has taken all necessary
corporate action to authorize the execution, delivery and
performance by it of each of such Project Documents as have been
executed and delivered as of each date this representation and
warranty is made. The Borrower has, or in the case of the
Project Documents other than this Agreement, by the Credit Date
will have, duly executed and delivered each of the Project
Documents to which it is party, and each of such Project
Documents constitutes or, in the case of each such other Project
Document when executed and delivered, will constitute the legal,
valid and binding obligations of the Borrower, enforceable in
accordance with its respective terms, except as the enforceability
thereof may be limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (b) general
equitable principles, regardless of whether the issue of
enforceability is considered in a proceeding in equity or at law.
Section 4.3 No Violation. Neither the execution and delivery by
the Borrower of the Project Documents to which it is a party, nor
the Borrower's compliance with or performance of the terms and
provisions thereof, nor the use of the proceeds of the Loans as
contemplated by this Agreement or the Eximbank Guarantee
Agreement or the OPIC Finance Agreement (a) will contravene or
violate any provision of any Applicable Law to which the
Borrower, any of its assets or the Project is subject, (b) 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
(except any Construction Period Permitted Liens) upon any of the
property or assets of the Borrower pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement, loan
agreement or any other agreement, contract or instrument to which
the Borrower is a party or by which it or any of its property or
assets is bound or to which it may be subject, (c) will violate any
provision of the Articles of Incorporation or By-Laws of the
Borrower or (d) will require any consent or approval of any
Governmental Authority or any creditor, shareholder, director or
officer of the Borrower which has not been obtained.
Section 4.4 Capitalization. As of the date of this Agreement, (i)
the authorized capital stock of the Borrower consists of 2,148,000
shares of common stock, par value P28 per share, of which 537,014
shares are duly and validly issued, outstanding, fully paid and
non-assessable; (ii) 268,502 of such issued shares of common stock
(representing approximately 50% of such 537,014 issued shares) are
owned and held by CE Mahanagdong; (iii)
268,502 of such issued shares of common stock (representing
approximately 50% of such 537,014 issued shares) are owned and held
by Kiewit Energy; (iv) one (1) share of such issued shares of
common stock is owned and held by APFC; and (v) nine (9) shares of
such issued shares of common stock are directors' qualifying
shares. Except as described in the Shareholder's Agreement, the
Funding Agreement, the Marubeni Purchase Agreement and the
Convertible Subordinated Notes, the Borrower does not have
outstanding (i) any securities convertible into or
exchangeable for its capital stock or (ii) any rights to
subscribe for or to purchase, or any options for the purchase of,
or any agreements, arrangements or understandings providing for the
issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, its capital
stock.
Section 4.5 Subsidiaries. The Borrower has no Subsidiaries and
owns no equity interest in any other Person.
Section 4.6 Single-Purpose Borrower. The Borrower has not
incurred any liabilities other than in connection with its
participation in the transactions contemplated by the Project
Documents. The Borrower (a) has not engaged in any business other
than the design, development, ownership, financing,
construction and operation of the Project and (b) is not a party to
any agreement, contract or commitment (other than (w) the
agreements identified in clauses (i) through (xiii) of the
definition of the term Operating Agreements set forth in Schedule
X hereto, (x) the Financing Documents, (y) agreements, contracts or
commitments contemplated by the O&M Parameters (including those
relating to employee training, secondment of employees and vehicle
rentals), the then-current Construction Budget or the then-current
Annual Budget and (z) agreements, contracts and commitments in
respect of Construction Period Permitted Indebtedness) which,
individually, creates an annual financial obligation of the
Borrower in excess of $100,000 (or the equivalent in other
currency) or which would cause the aggregate annual financial
obligations of the Borrower under all agreements, contracts and
commitments (other than those specified in clauses (w) through (z)
immediately above) to which the Borrower is a party to exceed
$300,000 (or the equivalent in other currency).
Section 4.7 Financial Statements; Financial Condition;
Undisclosed Liabilities; Etc. (a) The statements of financial
condition of the Borrower at June 30, 1994 heretofore furnished to
the Lenders present fairly the financial condition of the Borrower
at the date of such statements of financial condition and the
results of the operations of the Borrower for the fiscal period
referred to in such statements. Such financial statements have
been prepared in accordance with United States generally accepted
accounting principles and practices consistently applied. Since
June 30, 1994, no event, condition or circumstance (including
without limitation Force Majeure as defined in Articles 13.1(a) and
13.1(b) of the Energy Conversion Agreement) has existed or has
occurred which is reasonably likely to have a Material Adverse
Effect.
(b) Except as fully reflected in the financial statements
referred to in Section 4.7(a), there are no liabilities or
obligations with respect to the Borrower of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether or
not due) for the period to which such financial statements relate
which, either individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect. The Borrower does not
know of any reasonable basis for the assertion against the Borrower
of any liability or obligation of any nature whatsoever for such
relevant period that is not fully reflected in the financial
statements referred to in Section 4.7(a) which, either individually
or in the aggregate, is reasonably likely to have a Material
Adverse Effect.
Section 4.8 Litigation; Labor Disputes. (a) Except as disclosed
in Schedule 4.8 hereto, there is no action, suit, investigation or
proceeding by or before any court, arbitrator, administrative
agency or other Governmental Authority pending or, to the best of
the Borrower's knowledge, threatened against or affecting the
Borrower or any of its properties, revenues or assets or the
Project or the Site which has had or is reasonably likely to have
a Material Adverse Effect. The Borrower is not in default with
respect to any order of any court, arbitrator, administrative
agency or other Governmental Authority. There is no injunction,
writ, preliminary restraining order or any order of any nature
issued by an arbitrator, court or other Governmental Authority
directing that any of the material transactions provided for in any
of the Project Documents not be consummated as herein or therein
provided. To the best of the Borrower's knowledge, there is no
action, suit, investigation or proceeding by or before any court,
arbitrator, administrative agency or other Governmental Authority
pending or threatened against or affecting any party to any Project
Document which is an Affiliate of the Borrower or any of their
properties, revenues or assets, and the Borrower does not have
actual knowledge of any such action, suit, investigation or
proceeding pending or threatened against or affecting any other
party to any Project Document or any of their properties, revenues
or assets, in each case described in this sentence which has had or
is reasonably likely to have a Material Adverse
Effect.
(b) There are no strikes, slowdowns or work stoppages by the
Borrower's employees on-going, or, to the knowledge of the
Borrower, threatened which are reasonably likely to have a
Material Adverse Effect.
Section 4.9 True and Complete Disclosure. All factual
information (taken as a whole, which, for the avoidance of doubt
(i) shall not include any information by way of projections,
estimates or other expressions of view as to future circumstances
provided that such projections, estimates or other expressions of
view are expressed in good faith and on the basis of reasonable
assumptions and (ii) shall be qualified by any disclaimers with
respect to such factual information provided by the Borrower to the
Administrative Agent, the Arranger and/or the Lenders) heretofore
or contemporaneously furnished by or on behalf of the Borrower in
writing to the Administrative Agent or the Arranger or provided
heretofore by CECI or any Affiliate of the Borrower in the form of
financial statements of CECI or such other Affiliate, as the case
may be (including without limitation such factual information as is
contained in the Information Memorandum and the Project Documents),
and all other such factual information (taken as a whole) hereafter
furnished by or on behalf of the Borrower or CECI in writing to the
Administrative Agent, the Lenders or the Arranger will be, true and
accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to
state any fact necessary to make such information (taken as a
whole) not misleading in any material respect at such time in light
of the circumstances under which such information was provided.
There are in existence no documents or agreements which have not
been disclosed to the Administrative Agent or the Arranger which
are material in the context of the Project Documents or which have
the effect of varying any of the Project Documents.
Section 4.10 Tax Returns and Payments. The Borrower has filed all
tax returns required by Applicable Law to be filed by it and has
paid all income taxes payable by it which have become due pursuant
to such tax returns and all other taxes and assessments payable by
it which have become due, other than those not yet delinquent and
except for those contested in good faith and for which adequate
reserves have been established. The Borrower has paid, or has
provided adequate reserves (in the good faith judgment of the
management of the Borrower) for the payment of, all national,
regional or local income taxes applicable for all prior Fiscal
Years and for the current Fiscal Year to the date hereof.
Section 4.11 Governmental Approvals. All Governmental Approvals
necessary under Applicable Law in connection with (a) the due
execution and delivery of, and performance by the Borrower of its
obligations and the exercise of its rights under, the Project
Documents in effect or required to be in effect as of each date
this representation is made or deemed made, (b) the grant by each
of the Borrower, CECI, CE Mahanagdong, Kiewit Energy and KEC of the
Liens created pursuant to the Security Documents and the Funding
Agreement and the validity, enforceability and perfection thereof
and the exercise by the Collateral Agent of its rights and remedies
thereunder and (c) the construction and operation of the Project as
contemplated by the Project Documents, to be obtained by the
Borrower are, and to be obtained by any other Person (to the best
knowledge of the Borrower) are, set forth in Schedule 4.11 hereto.
Each of the Governmental Approvals set forth in Part A of Schedule
4.11 hereto and each other Governmental Approval obtained by the
Borrower after the date hereof but on or prior to the date this
representation is made, has been duly obtained or made, is validly
issued, is in full force and effect, is not subject to appeal (it
being understood that for purposes of this Section 4.11, a
Governmental Approval shall not be considered to be subject to
appeal if it is being contested or challenged solely by Persons
other than the Governmental Authority which issued the Governmental
Approval or any other Governmental Authority notwithstanding that
such contest or challenge is ongoing) and is free from conditions
or requirements compliance with which is reasonably likely to have
a Material Adverse Effect or which the Borrower does not reasonably
expect to be able to satisfy. There is no proceeding pending or,
to the best knowledge of the Borrower, threatened which is
reasonably likely to result in the rescission, termination,
material modification, suspension or determination of invalidity or
lack of effectiveness of any such Governmental Approval. The
information set forth in each application and other written
material submitted by the Borrower to the applicable Governmental
Authority in connection with each such Governmental Approval is
accurate and complete in all material respects. The Governmental
Approvals set forth in Part B of Schedule 4.11 hereto are
required solely in connection with later stages of construction and
operation of the Project. The Borrower has no reason to believe
that any Governmental Approval that has not been obtained by the
Borrower, but which will be required in the future, will not be
granted to it in due course, on or prior to the date when required
and free from any condition or requirement compliance with which is
reasonably likely to have a Material Adverse Effect or which the
Borrower does not reasonably expect to be able to satisfy. The
Project, if constructed in accordance with the Construction
Contract, the Supply Contract and the other Project Documents, will
conform to and comply in all material respects with all covenants,
conditions, restrictions and reservations in the Governmental
Approvals and the Project Documents applicable thereto and all
Applicable Laws. The Borrower has no reason to believe that the
Collateral Agent will not be entitled, without undue expense or
delay, to the benefit of each Governmental Approval set forth on
Schedule 4.11 hereto upon the exercise of remedies under the
Security Documents. The Administrative Agent has received a true
and complete copy of each Governmental Approval heretofore obtained
or made by the Borrower.
Section 4.12 Compliance with Statutes, Etc. (a) The Borrower is
in compliance with all Applicable Laws in respect of the conduct of
its business and the ownership of its property (including, without
limitation, Applicable Laws relating to environmental standards and
controls and resettlements and Applicable Laws relating to the
maintenance of debt to equity ratios).
(b) Without limitation to the foregoing clause (a), the
Borrower's business and the Project are being carried out in
compliance with applicable Republic environmental guidelines.
Section 4.13 Environmental Matters. To the best of the Borrower's
knowledge, neither the Site nor the Plant (nor any other property
with respect to which the Borrower has retained or assumed
liability either contractually or by operation of the law) has been
affected by any Hazardous Material in a manner which does or is
reasonably likely to give rise to any material liability of the
Borrower under any Environmental Law or which has had or is
reasonably likely to have a Material Adverse
Effect.
Section 4.14 Patents, Licenses, Franchises and Formulas. The
Borrower owns or has the right to use all the patents,
trademarks, permits, service marks, trade names, copyrights,
licenses, franchises and formulas, or rights with respect
thereto, and has obtained assignments of all leases and other
rights of whatever nature, necessary for the present and proposed
conduct of its business and the carrying out of the Project in the
manner contemplated by the Project Documents, without any known
conflict with the rights of others which, or the failure to obtain
which, as the case may be, is reasonably likely to have a Material
Adverse Effect.
Section 4.15 Submission to Law and Jurisdiction. As of the Credit
Date, the choice of governing law for each of the
respective Project Documents in effect or required to be in effect
as of the Credit Date will be recognized in the courts of the
Republic, and those courts will recognize and give effect to any
judgment in respect of such Project Document obtained by or against
the Borrower in the courts the jurisdictions of which the Borrower
has submitted to.
Section 4.16 Status of the Loans. The Construction Financing
Secured Obligations constitute direct, unconditional, and general
obligations of the Borrower and rank senior as to priority of
payment to all Subordinated Secured Obligations and all
Indebtedness of the Borrower described in Section 6.17(f) and not
less than pari passu as to priority of payment to all other
Indebtedness of the Borrower. Except as permitted by
Section 6.18 of this Agreement, the Borrower has not secured or
agreed to secure any such other Indebtedness by any Lien upon any
of its present or future revenues or assets or capital stock.
Section 4.17 Documents; Sufficiency of Project Documents. (a)
The Administrative Agent has received a complete copy of each
Project Document in effect or required to be in effect as of each
date this representation is made or deemed made (including all
exhibits, schedules and disclosure letters referred to therein or
delivered pursuant thereto, if any).
(b) To the best of the Borrower's knowledge, the services to be
performed, the materials to be supplied and the easements,
licenses and other rights granted or to be granted to the
Borrower pursuant to the terms of the Project Documents provide or
will provide the Borrower with all rights and property
interests required to enable the Borrower to obtain all services,
materials or rights (including access) required for the design,
construction, start-up, operation and maintenance of the Project,
including the Borrower's full and prompt performance of its
obligations, and full and timely satisfaction of all conditions
precedent to the performance by others of their obligations, under
the Project Documents, other than those services, materials or
rights that reasonably can be expected to be obtainable in the
ordinary course of business without material additional expenses or
material delay.
Section 4.18 Fees and Enforcement. Other than amounts that have
been paid in full or will have been paid in full by the Credit
Date, no fees or taxes, including without limitation stamp,
transaction, registration or similar taxes, are required to be paid
for the legality, validity, or enforceability of this Agreement or
any of the other Project Documents in effect or required to be in
effect as of each date this representation is made or deemed made.
This Agreement and each of such Project Documents are each in
proper legal form under the laws of the Republic, and under the
respective governing laws selected in such Project Documents, for
the enforcement thereof in such jurisdiction without any further
action on the part of the Administrative Agent, the Collateral
Agent, the Issuing Bank, the Lenders, OPIC or Eximbank.
Section 4.19 Utility Availability. Arrangements reflected
accurately and completely in the Construction Budget have been made
under the Construction Contract, the Supply Contract, the Energy
Conversion Agreement or otherwise on commercially
reasonable terms for the provision of all services, housing,
materials, utilities and other infrastructure reasonably
necessary for the construction of the Project.
Section 4.20 Availability and Transfer of Foreign Currency.
Except as disclosed in Schedule 4.20, all requisite foreign
exchange control approvals and other authorizations, if any, by the
Republic or any department or agency thereof have been validly
obtained and will be kept current and in full force and effect to
assure (a) the ability of the Borrower to receive, and the ability
of any other party to make, any and all payments to the Borrower
contemplated by the Project Documents, (b) the availability of
Dollars to enable the Borrower to perform all of its obligations
hereunder and under the other Project Documents, as the case may
be, in accordance with their respective terms, and (c) the ability
of the Borrower to convert all sums received in Peso amounts from
PNOC-EDC under the Energy Conversion Agreement and the PNOC-EDC
Consent Agreement and from the Republic under the Performance
Undertaking and the Republic Consent Agreement, including any Peso
amounts representing SFRI Fees, from Pesos to Dollars, immediately
upon receipt thereof, and to use the Dollars as necessary to
perform all of its obligations under the Project Documents, in
accordance with their respective terms. Except as disclosed in
Schedule 4.20, there are no restrictions or requirements which
limit the availability or transfer of foreign exchange, or the
conversion to a foreign exchange, for the purpose of the
performance by the Borrower of its obligations under this Agreement
or under any of the other Project Documents.
Section 4.21 Construction Budget. (a) The Construction Budget as
in effect on the date hereof is attached hereto as Schedule 4.21.
The Construction Budget accurately specifies, to the best of the
Borrower's knowledge, all costs and expenses incurred and
anticipated to be incurred prior to the latest date on which the
Maturity Date can be expected to occur to construct and finance the
construction of the Project in the manner contemplated by the
Project Documents. In addition, to the best of the Borrower's
knowledge, the amount of all costs and expenses required or
expected to be paid or incurred prior to the latest date on which
the Maturity Date can be expected to occur to finance and
construct the Project in the manner contemplated by the Project
Documents does not exceed the amount reflected in the
Construction Budget.
(b) To the best of the Borrower's knowledge, all projections and
budgets (including the Construction Budget and the Base Case
Forecast) furnished or to be furnished to the Administrative Agent,
the Collateral Agent, the Issuing Bank or the Lenders by or on
behalf of the Borrower and the summaries of significant assumptions
related thereto (i) have been and will be prepared with due care,
(ii) fairly present, and will fairly present, the Borrower's
expectations as to the matters covered thereby as of their date,
(iii) are based on, and will be based on, reasonable assumptions as
to all factual and legal matters material to the estimates therein
(including interest rates and costs) and (iv) are in all material
respects consistent with, and will be in all material respects
consistent with, the provisions of the Project Documents.
Section 4.22 Titles; Liens. The Borrower has good and valid title
to all of its properties and assets, in each case, free and clear
of all Liens other than Construction Period Permitted Liens,
including without limitation, on and subject to the terms of the
Energy Conversion Agreement, an unconditional and
unencumbered right to use the Site for the duration of the
Cooperation Period (as defined in the Energy Conversion
Agreement). No mortgage or financing statement or other
instrument or recordation covering all or any part of the
property or assets of the Borrower is on file in any recording
office, except such as relate only to Construction Period
Permitted Liens described in clauses (b) and (c) of Section 6.18
hereof.
Section 4.23 Transactions with Affiliates. The Borrower is not a
party to any contracts or agreements with, or any other commitments
to, whether or not in the ordinary course of business, any
Affiliate, which are individually valued in excess of $100,000 or
in the aggregate valued in excess of $300,000, except for this
Agreement, the Funding Agreement, the Construction Contract, the
Supply Contract, the APFC Security Agreement (and the agreements
for the transactions contemplated therein), the Pledge Agreement,
the Keystone Agreement and any other contracts, agreements or
commitments that are contemplated in the O&M Parameters (including
those relating to employee training, vehicle rentals and secondment
of employees) or in the Funding Agreement.
Section 4.24 No Additional Fees. Other than as expressly set
forth in the Base Case Forecast, the Construction Budget, the
Borrower has not paid or become obligated to pay any fee or
commission to any broker, finder or intermediary for or on account
of arranging the financing of the transactions contemplated by the
Project Documents.
Section 4.25 Regulation of Parties. None of the Borrower, its
Affiliates nor any of the Construction Financing Secured Parties
nor OPIC is or will be, solely as a result of the participation by
such parties separately or as a group in the transactions
contemplated hereby or by any other Project Document, or as a
result of the ownership, use or operation of the Project, subject
to regulation by any Governmental Authority of the United States as
a "public utility", an "electric utility", an "electric utility
holding company", a "public utility holding company", a "holding
company", or an "electrical corporation" or a subsidiary or
affiliate of any of the foregoing under any Applicable Law of the
United States (including, without limitation, PUHCA and FPA) or by
any Governmental Authority of the Republic as a "public utility"
under any Applicable Law of the Republic. So long as the owner and
operator of the Project is an "exempt wholesale generator" under
Section 32 of PUHCA or a "foreign utility company" under Section 33
of PUHCA, none of the Construction Financing Secured Parties nor
OPIC will by reason of its or their ownership or operation of the
Project upon the exercise of remedies under the Security Documents
be subject to regulation by any Governmental Authority of the
United States as a "public utility", an "electric utility", an
"electric utility holding company", a "holding company", or an
electric corporation" or a subsidiary or affiliate of any of the
foregoing under any Applicable Law of the United States (including,
without limitation, PUHCA and FPA).
Section 4.26 Regulatory Status. The Borrower is not subject to
regulation as a "subsidiary company" of a holding company under
PUHCA.
Section 4.27 ERISA and Employees. The Borrower does not
sponsor, maintain, administer, contribute to, participate in, or
have any obligation to contribute to or any liability under, any
Plan nor since the date which is six years immediately preceding
the Credit Date has the Borrower established, sponsored,
maintained, administered, contributed to, participated in, or had
any obligation to contribute to or liability under, any Plan. A
Termination Event has not occurred with respect to any Plan the
occurrence of which has had or to the Borrower's knowledge is
reasonably likely to result in a Material Adverse Effect.
Neither the Borrower nor any ERISA Affiliate has failed to make a
required contribution or payment to a Multiemployer Plan when due,
the failure of which has had or to the Borrower's knowledge is
reasonably likely to result in a Material Adverse Effect. To the
Borrower's knowledge, no accumulated funding deficiency as defined
in Section 412 of the Code has been incurred nor has any funding
waiver from the Internal Revenue Service been received or requested
with respect to any Pension Plan, nor has the Borrower or any ERISA
Affiliate failed to make any contribution or to pay any amount due
and owing as required by Section 412 of the Code, Section 302 of
ERISA or the terms of any Pension Plan, nor has there been any
event requiring disclosure under Section 4041(c)(3)(C) or Section
4063 of ERISA with respect to any Pension Plan, the event or
occurrence of which has had or to the Borrower's knowledge is
reasonably likely to result in a Material Adverse Effect. To the
Borrower's knowledge, the Borrower and each ERISA Affiliate has met
its minimum funding requirements under ERISA and the Code with
respect to the Plans and all benefit liabilities under each Pension
Plan are being funded in accordance with applicable legal
requirements and reasonable actuarial assumptions and methods as
set forth in ERISA and the Code. To the Borrower's knowledge, no
material proceeding, claim, lawsuit and/or investigation exists or,
to the best of the Borrower's knowledge, is threatened concerning
any (a) Pension Plan or (b) Multiemployer Plan the occurrence of
which has had or is reasonably likely to result in a Material
Adverse Effect. Neither the Borrower nor to the Borrower's
knowledge, any ERISA Affiliate has incurred any liability to the
PBGC other than for insurance premiums with respect to a Pension
Plan, the payment of which is not yet due.
Section 4.28 Investment Company Act. Neither the Borrower nor any
of its Affiliates is an "investment company" or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
The Borrower warrants to the Arranger, the Administrative Agent,
the Issuing Bank and the Lenders that each of the foregoing
representations is true and correct in all material respects as of
the date of this Agreement and that none of them omits any matter
necessary to make such representation not misleading in any
material respect. The rights and remedies of the Arranger, the
Administrative Agent, the Issuing Bank and the Lenders in relation
to any misrepresentations or breach of warranty on the part of the
Borrower shall not be prejudiced by any investigation by or on
behalf of any of the Arranger, the Administrative Agent, the
Issuing Bank and the Lenders into the affairs of the Borrower, by
any relation or affiliation of any Tranche 1 Lender to the
Borrower, by the execution, delivery or performance of this
Agreement or any other Financing Document or by any other act or
thing which may be done by or on behalf of the Arranger, the
Administrative Agent, the Issuing Bank or the Lenders or any of
them in connection with this Agreement or any other Financing
Document and which might, apart from this Section, prejudice such
rights or remedies.
ARTICLE 5. Conditions Precedent
Section 5.1 Conditions of First Utilization. The initial
Utilization hereunder, whether it be the making of a Loan or the
issuance by the Issuing Bank of a Letter of Credit, shall be
subject to the satisfaction of the following conditions on or prior
to the date thereof (such date, the "Credit Date");
provided that if any such conditions shall have been satisfied
prior to the Eximbank Guarantee Effective Date, then, on the Credit
Date, the Borrower shall supply such evidence indicating that such
condition continues to be satisfied as the Lenders may reasonably
require, including, without limitation, bring-down opinions and
certificates:
(a) Project Documents. Each of the Project Documents,
including, without limitation, the Eximbank Guarantee Agreement,
the OPIC Finance Agreement and the Eximbank Credit Agreement, but
excluding the Mortgage (provided, that by the Credit Date the
Senior Secured Parties and the Borrower shall have agreed on the
amounts secured by the Mortgage), the ECA Operation Performance
Bond, the Insurance Contracts, the Governmental Approvals set forth
in Part B of Schedule 4.11 hereto and agreements and
instruments pertaining to Working Capital Subordinated Secured
Obligations and Senior Permitted Indebtedness, shall have been
entered into by the respective parties thereto, shall be
unconditional and fully effective in accordance with their
respective terms (except for this Agreement having become
unconditional and fully effective, if that is a condition of
effectiveness of any of such documents) and the Borrower shall
deliver to the Administrative Agent a certificate signed by an
authorized officer of the Borrower certifying the foregoing, which
certification may be incorporated into an Application for Funding.
In addition, (i) the Power Purchase Agreement shall have been
entered into by PNOC-EDC and NAPOCOR and shall have become
unconditional and fully effective in accordance with its terms and
the Administrative Agent shall have received a copy thereof from
the Borrower, (ii) the Geothermal Fluid
Specifications (as defined in the Energy Conversion Agreement)
shall have been finalized as contemplated in Annex I to the Energy
Conversion Agreement and an agreement evidencing the finalization
of such specifications shall have been incorporated as an addendum
to the Energy Conversion Agreement and (iii) the Borrower shall
deliver to the Administrative Agent a certificate signed by an
authorized officer of the Borrower certifying the foregoing, which
certification may be incorporated into an
Application for Funding.
(b) [Intentionally Omitted]
(c) Opinions of Counsel. (i) The Lenders, the Issuing Bank, the
Collateral Agent and the Administrative Agent shall have received
signed legal opinions of counsel to the Borrower, each of the
Obligors (other than the ECA Operation Performance Bond Issuer) and
the Republic and each such other Person as the Administrative
Agent, the Issuing Bank, the Collateral Agent or any Lender may
reasonably require, each of which shall be in form and substance
satisfactory to the Administrative Agent, the Issuing Bank, the
Collateral Agent and the Lenders and (ii) the Administrative Agent
shall have received the signed legal opinion of Chadbourne & Parke
in form and substance satisfactory to the Administrative Agent, and
each opinion shall be dated no earlier than the Eximbank Guarantee
Effective Date; provided that the opinion of counsel of PNOC-EDC
may be dated the Effectivity Date (as defined in the Energy
Conversion Agreement).
(d) Corporate Documents; Proceedings.
(i) The Administrative Agent, the Issuing Bank and the Lenders
shall have received a certificate dated the Eximbank Guarantee
Effective Date, signed by a Financial Officer of the Borrower, and
attested to by the Secretary or any Assistant Secretary of the
Borrower, in form and substance satisfactory to the Lenders,
together with copies of the Articles of Incorporation and By-Laws
of the Borrower and resolutions of the Board of Directors of the
Borrower reasonably requested by the Lenders, certifying that
attached to such certificate are true, correct and complete copies
of such Articles of Incorporation, By-Laws and
resolutions.
(ii) The Administrative Agent, the Issuing Bank and the Lenders
shall have received a certificate dated the Eximbank Guarantee
Effective Date signed by a Financial Officer of each Obligor (other
than PNOC-EDC and the ECA Operation Performance Bond Issuer) and
attested to by the Secretary or any Assistant Secretary of the
Obligor, in form and substance satisfactory to the Lenders,
together with copies of the Articles of Incorporation and By-Laws
of the Obligor and resolutions of the Obligor reasonably requested
by the Lenders, certifying that attached to such certificate are
true, correct and complete copies of such Articles of
Incorporation, By-Laws and resolutions.
(iii) The Administrative Agent shall have received a copy of an
engagement letter for the engagement of Deloitte, Touche &
Tohmatsu International or such other firm of independent public
accountants acceptable to the Lenders, as Auditors.
(iv) The Administrative Agent shall have received a certificate
from each Obligor (other than PNOC-EDC and the ECA Operation
Performance Bond Issuer) signed by an authorized officer
certifying the incumbency of parties executing any Project
Document or related document on behalf of such Obligor.
(e) Auditors. The Administrative Agent shall have received a copy
of the authorization to the Auditors referred to in Section 6.2(b).
(f) Pledged Stock; Convertible Subordinated Notes. CE
Mahanagdong and Kiewit Energy shall have delivered to the
Collateral Agent, as pledgee, (i) the share certificates
representing all of the Pledged Stock, together with executed and
undated stock powers, and (ii) the Convertible Subordinated Notes
evidencing Required Subordinated Loans, together with executed
instruments of transfer and the Collateral Agent shall have
received share certificates representing all director's
qualifying shares and APFC's share of common stock of the
Borrower, together with executed and undated stock powers.
(g) Consent Letters. The Administrative Agent shall have
received a letter, in form and substance satisfactory to the
Lenders, from White & Case, presently located at 1155 Avenue of the
Americas, New York, NY 10036-2787, indicating the consent of White
& Case to its appointment by the Borrower, CECI, BHCO, CBE and CE
Mahanagdong, as their agent to receive service of process as
specified in Section 9.5 hereof, in the case of the Borrower, in
the Funding Agreement and the Pledge Agreement, in the case of CECI
and CE Mahanagdong and under the Construction Contract, the Supply
Contract and the Keystone Agreement, in the case of BHCO and CBE.
The Administrative Agent shall have received a letter, in form and
substance satisfactory to the Lenders, from CT Corporation System
presently located at 1633 Broadway, New York, New York 10019,
indicating the consent of CT Corporation System to its appointment
by KCGI, Kiewit Energy, KEC, the Construction Contractor, KIG and
GICO as their agent to receive service of process as specified in
the Funding Agreement and the Pledge Agreement, in the case of
Kiewit Energy and KEC, in the KCGI Guaranty, in the case of KCGI
and under the Construction Contract, the Supply Contract and the
Keystone Agreement, in the case of the Construction Contractor, KIG
and GICO.
(h) Energy Conversion Agreement Effectiveness. Each of PNOC-EDC
and the Borrower shall have issued to the Administrative Agent, the
Issuing Bank and the Lenders a certification confirming that the
Effectivity Date (as defined in the Energy Conversion
Agreement) has occurred.
(i) Certificates. The Administrative Agent, the Issuing Bank and
each Lender shall have received copies of each executed Project
Document, together with a certificate of a Financial Officer of the
Borrower certifying that (i) the Borrower is not in default in the
performance, observance or fulfillment of any of its obligations,
covenants or conditions contained therein and, to the best of the
Borrower's knowledge, no other party to any such Project Document
is in default in the performance, observance or fulfillment of any
of its material obligations, covenants or conditions contained
therein and (ii) in the case of each such document to which the
Administrative Agent is not a party, (x) that such document is in
full force and effect, (y) that, to the best of the Borrower's
knowledge, no Force Majeure (as defined in any of the Energy
Conversion Agreement, the Construction Contract and the Supply
Contract) has occurred thereunder and that (z) the copy thereof
delivered to the Administrative Agent, the Lenders and the Issuing
Bank is true, correct and complete. The Administrative Agent shall
have received evidence or copies of all Governmental Approvals set
forth in Schedule 4.11 hereof (other than those set forth in Part
B thereof), certified by a Financial Officer of the Borrower as
being in full force and effect and, except as disclosed in
Schedule 4.11 hereof, not subject to appeal. For purposes of this
Section 5.1(i), a Governmental Approval shall not be considered to
be subject to appeal if it is being contested or challenged solely
by Persons other than the Governmental Authority who issued the
Governmental Approval or any other Governmental Authority
notwithstanding that such contest or challenge is ongoing.
(j) Construction Budget; Base Case Forecast. The Administrative
Agent, the Issuing Bank and each Lender shall have received the
Construction Budget and the Base Case Forecast, each of which shall
be in form and substance satisfactory to the Lenders.
(k) Reports of Consultants and Other Information. The
Administrative Agent, the Issuing Bank, OPIC and each Lender shall
have received the Independent Engineer's Report and such other
information as shall be reasonably requested by the
Administrative Agent, OPIC or the Lenders.
(l) Financial Statements. The Administrative Agent, the Issuing
Bank and each Lender shall have received copies of the most recent
audited financial statements of CECI, Peter Kiewit Sons', Inc. and
KDG and shall have received copies of the most recent unaudited
financial statements (if audited financial statements are not
otherwise available) of the Borrower and each other Obligor (other
than PNOC-EDC and the ECA Operation Performance Bond Issuer)
showing, for each such Person, no material adverse change in the
financial condition of such Person since the date of the last
financial statements provided to the Administrative Agent prior to
the date of this Agreement, and certificates dated the Eximbank
Guarantee Effective Date signed by a Financial Officer of each such
Person stating that (x) such financial statements are true,
complete and correct and (y) no material adverse change in the
financial condition, operations, properties, business or prospects
of such Person has occurred since the date of such financial
statements.
(m) Items. The Borrower shall have delivered to the
Administrative Agent, the Collateral Agent, the Independent
Engineer, OPIC, Eximbank, each Lender and the Issuing Bank a
satisfactory list of the Items, containing with respect to each
Item a brief description and the quantity and estimated invoice
cost and the estimated date of shipment plus, for each Item, a copy
of the Purchase Contract for such Item. Such Purchase Contracts
shall not contravene any applicable statute or public policy of the
United States. The list shall include the supplier's DUNS numbers,
and the product SIC Codes for each Item on the list.
(n) Evidence of Authority. The Administrative Agent shall have
received evidence of the authority of the Borrower to enter into
this Agreement, the OPIC Finance Agreement and the Eximbank Credit
Agreement, and the names, specimen signatures and evidences of
authority of the Persons signing this Agreement, the Notes, the
Eximbank Credit Agreement and the other documents required by this
Agreement and the Eximbank Credit Agreement as of the date of
execution hereof or who as of the Eximbank Guarantee Effective Date
will otherwise act as representatives of the Borrower in the
operation of the Loans, the Letters of Credit and the credit
facility provided under the Eximbank Credit Agreement.
(o) Eximbank and OPIC Conditions. Each of the conditions
precedent set forth in Article IV of the Eximbank Guarantee
Agreement and Section 5.01 of the Eximbank Credit Agreement shall
have been satisfied in a manner satisfactory to Eximbank and each
of the conditions precedent set forth in Article IV of the OPIC
Finance Agreement shall have been satisfied in a manner
satisfactory to OPIC.
(p) Eximbank Note and Request for Eximbank Disbursement to Account
of Borrower. The Administrative Agent shall have received from the
Borrower (i) a promissory note, substantially in the form of Annex
A to the Eximbank Credit Agreement, which has been signed by the
Borrower, but which has all the blanks therein left uncompleted and
(ii) a Request for Eximbank Disbursement to Account of Borrower,
substantially in the form of Annex B to the Eximbank Credit
Agreement, which has been signed by the Borrower, but which has all
the blanks therein left uncompleted.
(q) Blocked Account. The Borrower shall have established the
Blocked Account.
(r) Notice to Proceed and Contractor's and Supplier's
Representation. The Borrower shall have delivered to the
Administrative Agent a copy of the Notice to Proceed under (and as
defined in) the Construction Contract and the Notice to
Proceed under (and as defined in) the Supply Contract, each of
which shall have been issued on or prior to the Credit Date. The
Administrative Agent, the Issuing Bank and the Lenders shall have
received a certificate signed by an authorized representative of
each of the Construction Contractor and the Construction Supplier
to the effect that (i) as of the Credit Date the Scheduled
Completion Date is July 1, 1997 or such later date (which is
acceptable to the Administrative Agent) as shall correspond to any
extension of the milestone date set forth in Section 4.1.1 of the
Energy Conversion Agreement for the achievement of the Completion
Date (as defined in the Energy Conversion Agreement), (ii) the
Borrower is not in default under the Construction Contract or the
Supply Contract, (iii) the Construction Contractor is not entitled
to any change orders under the Construction Contract and the
Construction Supplier is not entitled to any change orders under
the Supply Contract (in each case, other than change orders
previously disclosed to the Administrative Agent in writing) on
such date and is not then aware of any other change orders required
under the Construction Contract or the Supply Contract and (iv) to
the best of the Construction Contractor's or the Construction
Supplier's (as the case may be) knowledge, after reasonable
inquiry, no Force Majeure event (as defined in each of the
Construction Contract and the Supply Contract) has occurred.
(s) Project Site Opinion. The Borrower shall have furnished to
the Lenders, OPIC, Eximbank, the Issuing Bank, the Collateral Agent
and the Administrative Agent, a signed legal opinion of Castillo
Laman Tan & Pantaleon in form and substance satisfactory to the
Lenders, OPIC, Eximbank, the Issuing Bank, the Collateral Agent and
the Administrative Agent to the effect that the Republic has valid
legal title to or an easement over the Site free of Liens (other
than the Liens of or arising through the Borrower, the Construction
Contractor or the Construction Supplier).
(t) Marubeni Purchase Agreement. The Administrative Agent shall
have received an executed copy of the Marubeni Purchase Agreement
in form and substance satisfactory to the Lenders.
(u) No Change in Contract Price. The contract price set forth in
each of the Supply Contract and the Construction Contract shall not
have been amended, changed or otherwise modified and the
Administrative Agent shall have received a certificate from each of
the Construction Supplier and the Construction Contractor to such
effect in form and substance satisfactory to the
Administrative Agent.
(v) Other Instruments, Conditions, Etc. The delivery of any other
instruments and agreements and the satisfaction of any other
condition as the Administrative Agent and the Tranche 2 Lenders may
reasonably request.
(w) Fees, Costs, Etc. The fees, costs and expenses (including any
and all Attorney Costs) referred to in the last sentence of Section
9.3(b) shall have been paid.
(x) Management Service Arrangements. The Borrower and CECI (or
another Affiliate of the Borrower acceptable to the Lenders) shall
have entered into a management services contract or other
operations and maintenance personnel guaranty or similar
arrangement acceptable to the Lenders provided that such
arrangement would not result in Philippine value added tax being
incurred by CECI or such Affiliate of the Borrower, as the case may
be.
(y) Energy Conversion Agreement Amendments. The Energy
Conversion Agreement shall have been amended in a manner
satisfactory to the Lenders including, without limitation, to
conform the Correction Curves (as defined in the Energy
Conversion Agreement) and references to interface conditions (to
the extent presently identified) to the Construction Contract, and
the Lenders shall have received a true, original copy of such
amendment thereto. The Lenders shall have received a certified
true copy of a letter from the General Counsel of PNOC-EDC
affirming that loss of use of the Site constitutes an event of
Force Majeure under (and as defined in) the Energy Conversion
Agreement.
(z) Additional Conditions. The requirements of Section 5.2 hereof
shall have been satisfied.
Section 5.2 Conditions of Each Utilization and Each Issuance of a
Drawing Approval. Each Utilization hereunder (other than a Loan to
reimburse the Issuing Bank for the payment of drawings made by the
Issuing Bank under any of the Letters of Credit) and each issuance
of a Drawing Approval pursuant to Section 2.2 hereof shall be
subject to the satisfaction of the following conditions:
(a) No Default; Representations and Warranties. Immediately
before and after giving effect to such Utilization or the
issuance of a Drawing Approval, as the case may be:
(i) no Construction Credit Default or Construction Credit Event of
Default shall have occurred and be continuing;
(ii) all representations and warranties made by the Borrower and
any Obligor which is an Affiliate of the Borrower and contained
herein (other than the representations made pursuant to Section
4.7(b)) or in the other Project Documents (other than the
Insurance Contracts, Governmental Approvals or any other
agreement, commitment or understanding referred to in subsection
(xiii) of the definition of "Operating Agreements" in Schedule X)
shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made
on and as of the date of such Utilization or on or as of the date
of the issuance of such Drawing Approval, as the case may be,
except where expressed to be made only as of an earlier date (it
being understood that the representations and warranties made by
the Borrower in Article 4 of this Agreement shall not be deemed to
be made only as of an earlier date notwithstanding that the
preamble to such Article states that such representations and
warranties are made as of the Credit Date);
(iii) the following representations and warranties shall be true
and correct in all material respects with the same effect as though
such representations and warranties had been made on and as of the
date of such Utilization or on and as of the date of the issuance
of such Drawing Approval, as the case may be: (A) except as fully
reflected in each financial statement delivered prior to such
Utilization or prior to the issuance of such
Drawing Approval (as the case may be) pursuant to Sections 6.1(a)
and 6.1(b), there shall have been, as of the date of such
financial statement, no liabilities or obligations with respect to
the Borrower of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either
individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect and (B) the Borrower does not know of any
reasonable basis for the assertion against the Borrower of any
liability or obligation of any nature whatsoever that is not fully
reflected in the financial statements delivered pursuant to
Sections 6.1(a) and 6.1(b) which, either individually or in the
aggregate, is reasonably likely to have a Material Adverse
Effect.
(b) Security. The Security, in form and substance satisfactory to
the Administrative Agent and the Collateral Agent, shall have been
duly created, perfected and, where appropriate, registered as
required hereunder, to create a first priority security
interest and charge over the Collateral in existence at the date of
such Utilization or at the date of the issuance of such
Drawing Approval, as the case may be. Without limitation to the
preceding sentence, the Borrower shall have duly authorized,
executed and delivered or, as the case may be, provided:
(i) acknowledgment copies of proper financing statements or other
instruments duly filed under the Applicable Law of each
jurisdiction as may be necessary or, in the reasonable opinion of
the Administrative Agent and the Collateral Agent, desirable to
perfect the charges and security interests purported to be
created by the Security Documents;
(ii) certified copies of requests for information or copies, or
equivalent reports, listing the financing statements and
instruments referred to in clause (i) above and all other
effective financing statements that name the Borrower as debtor and
that are filed in the jurisdictions referred to in said clause (i),
together with copies of such other financing
statements and instruments (none of which shall cover the
Collateral except to the extent evidencing Construction Period
Permitted Liens);
(iii) evidence of the completion of all other recordings and
filings of, or with respect to, the Security Documents as may be
necessary or, in the reasonable opinion of the Administrative Agent
and the Collateral Agent, desirable to perfect the security
interests purported to be created by the Security Documents; and
(iv) evidence that all other actions necessary or, in the
reasonable opinion of the Administrative Agent and the Collateral
Agent, desirable to perfect and protect the security interests
purported to be created by the Security Documents have been taken.
(c) Consents and Approvals. There shall have been obtained, or
there shall have been made arrangements, satisfactory to the
Administrative Agent, for obtaining, in addition to the Project
Documents, all other governmental, corporate, creditors',
shareholders' and other necessary licenses, approvals or consents
(other than any board or other internal approval or consents to be
obtained by any of the Lenders or the Issuing Bank from the
management or shareholders of its respective institution or any
approval which a Lender is required by the laws or applicable
regulations of its domicile to obtain prior to making its Loans)
for: (i) the financing by each of the Lenders and the Issuing Bank
under this Agreement; (ii) the carrying on of the business of the
Borrower as it is presently carried on and is contemplated to be
carried on; (iii) the carrying out of the Project; (iv) the due
execution and delivery of, and performance under, each Project
Document which has been entered into at the time of such
Utilization or at the time of issuance of such Drawing Approval (as
the case may be), the Security, and any documents in implementation
of any thereof; and (v) the remittance to the Collateral Agent and
by the Collateral Agent to the Secured Parties or their respective
assignees, in Dollars, of all monies payable pursuant to each
Project Document which has been entered into at the time of such
Utilization or at the time of issuance of such Drawing Approval (as
the case may be), and any documents in implementation of any
thereof. In addition, a true and complete copy of each material
license, approval or consent described in this Section 5.2(c) shall
have been delivered by the Borrower to the Administrative Agent.
(d) No Project Document Default; Governmental Approvals. Each of
the Project Documents which has been entered into or which is
required to have been entered into at the time of such
Utilization or at the time of issuance of such Drawing Approval
shall be in full force and effect and no material breach or default
shall have occurred under any such Project Document. No event of
Force Majeure (as defined in any of the Energy
Conversion Agreement, the Supply Contract and the Construction
Contract) shall have occurred which has had, or in the reasonable
judgment of the Administrative Agent is reasonably likely to have,
a Material Adverse Effect. No events shall have occurred pursuant
to which a claim could be made by the Administrative Agent on
behalf of the Lenders under the Eximbank Guarantee Agreement.
(e) Limitations on Indebtedness. Immediately before and after
giving effect to such Utilization or to the drawing under any of
the Letters of Credit which is the subject of such Drawing
Approval, as the case may be, the sum of (i) the principal amount
of all Loans outstanding (including, in the case of a Drawing
Approval, the amounts to be reimbursed by the Lenders to the
Issuing Bank in connection with a drawing under any of the
Letters of Credit which is the subject of such Drawing Approval)
and (ii) the principal amount of the OPIC Loan outstanding shall
not exceed $231,835,000.
(f) Energy Conversion Agreement. The Administrative Agent, the
Issuing Bank and the Lenders shall have received from the
Borrower a certification if not covered by the certificate to be
delivered pursuant to Section 5.1(n), in form and substance
satisfactory to the Administrative Agent, signed by an authorized
representative of the Borrower and expressed to be effective as of
the date of the relevant Utilization or as of the date of issuance
of the relevant Drawing Approval, stating that the Borrower is in
compliance in all material respects with all provisions of the
Energy Conversion Agreement.
(g) No Material Adverse Effect. Since the Credit Date, no event
or events shall have occurred which has had or is reasonably likely
to have a Material Adverse Effect.
(h) Costs; Construction Progress. The Administrative Agent and
the Independent Engineer shall have received from the Borrower a
certificate in the form of Schedule 5.2(h) hereto signed by an
authorized representative of the Borrower and expressed to be
effective on the date of the relevant utilization or as of the date
of issuance of the relevant Drawing Approval stating that (i) the
costs and expenses theretofore incurred by the Borrower and to be
incurred by the Borrower prior to the latest date on which the
Maturity Date can be expected to occur will not exceed
$320,318,000; (ii) the date of the Eximbank Disbursement is likely
to occur on or before the Date Certain; and (iii) the sum of (A)
the aggregate Financed Portion of the costs incurred by the
Borrower after January 1, 1993 and before the Maturity Date for the
purchase in the United States and export to the
Philippines of the Items and (B) the aggregate Local Costs
Financed Portion of the costs incurred by the Borrower for the
purchase in the Republic of the Local Cost Items and (C) the
aggregate IDC Financed Portion of IDC will (x) not exceed the
difference between (1) the Total Commitment and (2) 100% of the
Guarantee Exposure Fee and (y) not be less than the difference
between (1) the Total Commitment less the OPIC Commitment and (2)
100% of the Guarantee Exposure Fee.
(i) Insurance. The Administrative Agent shall have received a
certificate from the Insurance Consultant stating that the
insurance policies required pursuant to Section 6.3 hereof to be in
effect on the date of such Utilization or on the date of issuance
of such Drawing Approval are in full force and effect.
(j) Fees and Expenses. The Borrower shall have paid or arranged
for payment (to the extent arrangement for payment out of
Utilizations, OPIC Disbursements, Progress Equity Contributions or
Progress Subordinated Loans are permitted) of all fees,
expenses and other charges then payable by it under this
Agreement and the OPIC Finance Agreement.
(k) Eximbank Certificate. The Administrative Agent shall have
received (i) with respect to each Loan (other than a Loan to
reimburse the Issuing Bank for the payment of drawings made by the
Issuing Bank under any of the Letters of Credit), a
certificate from Eximbank substantially in the form of Exhibit 3 to
Annex B-1, Exhibit 3 to Annex B-2 or Exhibit 2 to Annex B-3, as the
case may be, which has been fully completed and signed by Eximbank
and which indicates that all of the proceeds of such Loan will be
eligible for Eximbank support and (ii) with respect to the issuance
of each of the Letters of Credit, a certificate from Eximbank in
the form of Exhibit 5 to Annex B-1 or Exhibit 5 to Annex B-2, as
the case may be, which has been fully completed and signed by
Eximbank and which indicates that such Letter of Credit is in form
and substance satisfactory to Eximbank and that 100% of all
payments under such Letter of Credit will be eligible for Eximbank
support.
(l) Lien Waivers. The Administrative Agent shall have received
(i) a certificate executed by the Construction Contractor and/or
the Construction Supplier, as appropriate, to the effect that (A)
all subcontractors contracting directly with the Construction
Supplier or the Construction Contractor whose subcontract is valued
at more than $200,000 or who can claim a Lien of more than $200,000
have been paid to the extent that such amounts are then due or that
payment is subject to a good faith contest which is being
diligently pursued by the Construction Contractor and/or the
Construction Supplier, as appropriate (provided that such contest
is being pursued in a manner and on a basis acceptable to the
Borrower and the Administrative Agent) or (B) such subcontractors
who can claim a Lien of more than $200,000 (for which a prior
Utilization or a prior issuance of a Drawing Approval or a prior
approval of an Application for Funding for an OPIC Disbursement, a
Progress Subordinated Loan or a Progress Equity Contribution has
been made who have not been paid directly by the Collateral Agent)
have been paid or, in lieu thereof, (ii) conditional Lien waivers
for the Utilization or Drawing Approval requested and unconditional
Lien releases for all prior Utilizations and Drawing Approvals and
Applications for Fundings from such subcontractors or (iii) in lieu
thereof, invoices showing full payment of amounts owed to those
subcontractors referred to in clause (i) above.
(m) Other Conditions. The obligation of the Lenders or the
Issuing Bank to make any Utilization and of the Administrative
Agent to issue any Drawing Approval shall also be subject to the
conditions that:
(i) the Borrower shall have the corporate authority to borrow the
amount requested to be disbursed, the amount of the drawing which
is the subject of a Drawing Approval or the face amount of any of
the Letters of Credit, as the case may be;
(ii) the amount requested to be disbursed, the amount of the
drawing which is the subject of a Drawing Approval or the face
amount of any of the Letters of Credit, as the case may be, shall
be within the Borrower's available borrowing power; and
(iii) after giving effect to such Utilization or to the drawing
under any of the Letters of Credit which is then the subject of a
Drawing Approval, as the case may be, the Borrower shall not be in
violation of its Articles of Incorporation or By-Laws, any
provision contained in any document to which the Borrower is a
party (including this Agreement) or by which the Borrower is bound,
or any Applicable Law directly or indirectly limiting or otherwise
restricting the Borrower's borrowing power or authority or its
ability to borrow (including, without limitation, any Applicable
Law requiring the maintenance of a debt to equity ratio).
(n) Certificates. The Borrower shall have delivered to the
Administrative Agent a certification, signed by a Financial Officer
of the Borrower and expressed to be effective as of the date of the
relevant Utilization or the relevant issuance of a Drawing
Approval, as the case may be, with respect to the
satisfaction of the foregoing conditions of this Article 5, which
certification shall, in the case of the issuance of each of the
Letters of Credit, be substantially in the form of Exhibit E hereto
and, in the case of the making of a Loan or the issuance of a
Drawing Approval, be substantially in the form of Exhibit A to
Schedule 2.2(a) hereto. Such certification shall also
include: (i) such other evidence as to the proposed utilization of
the proceeds of the relevant Utilization or of the proceeds of the
drawing under such Letter of Credit which is the subject of a
Drawing Approval, and the utilization of the proceeds of any prior
Utilization or drawing under such Letter of Credit as the
Administrative Agent shall reasonably require; and (ii) if the
Administrative Agent acting on the instructions of the Required
Lenders shall so reasonably request, a legal opinion or opinions,
in form and substance satisfactory to them, of counsel acceptable
to the Administrative Agent, with respect to any matters incident
to the Utilization or the issuance of the Drawing Approval.
(o) OPIC Finance Agreement. OPIC shall have made available to the
Borrower pursuant to the OPIC Finance Agreement the amount of the
OPIC Disbursement, if any, corresponding to the requested
Utilization set forth in the Application for Funding for such
Utilization.
(p) APFC Security Agreement. The APFC Security Agreement shall be
in form and substance satisfactory to the Administrative Agent, the
APFC Escrow Agent and the Tranche 2 Lenders. The APFC Escrow Agent
shall have a perfected security interest in the APFC Funding
Account and the collateral pledge under the APFC Security
Agreement.
Section 5.3 No Waivers. (a) No course of dealing or waiver by
the Administrative Agent, the Lenders or the Issuing Bank in
connection with any condition of Utilization or issuance of a
Drawing Approval under this Agreement shall impair any right, power
or remedy of the Administrative Agent, the Lenders or the Issuing
Bank with respect to any other condition of Utilization or issuance
of a Drawing Approval, or be construed to be a waiver thereof; nor
shall the action of the Administrative Agent, the Lenders or the
Issuing Bank in respect of any Utilization or issuance of a Drawing
Approval affect or impair any right, power or remedy of the
Administrative Agent, the Lenders or the Issuing Bank in respect of
any other Utilization or issuance of a Drawing Approval.
(b) Unless otherwise notified to the Borrower by the
Administrative Agent, the Lenders or the Issuing Bank and without
prejudice to the generality of subsection (a) above, the right of
the Administrative Agent, the Lenders or the Issuing Bank to
require compliance with any condition under this Agreement which
may be waived by the Lenders, the Administrative Agent or the
Issuing Bank in respect of any Utilization or issuance of a Drawing
Approval is expressly preserved for the purposes of any subsequent
Utilization and/or issuance of a Drawing Approval.
(c) The acceptance of the benefits of each Utilization or
issuance of a Drawing Approval shall constitute a representation
and warranty by the Borrower to the Administrative Agent, the
Issuing Bank and each of the Lenders that all the conditions
specified in this Article 5 have been satisfied (unless waived in
accordance with this Agreement) as of that time. All the
certificates, legal opinions, bylaws, articles of incorporation and
other documents and papers referred to in this Article 5, unless
otherwise specified, shall be delivered to the Administrative Agent
and/or the Lenders and/or the Issuing Bank at their addresses
specified in Section 9.1 of this Agreement, or at such other office
as any of them may hereafter designate in writing to the other
parties hereto, in sufficient counterparts for the Administrative
Agent, each of the Lenders and the Issuing Bank, and shall be
satisfactory in form and substance to the Administrative Agent
and/or the Lenders and/or the Issuing Bank, as appropriate.
ARTICLE 6. Covenants
The Borrower covenants and agrees that until the Construction
Financing Termination Date, and unless otherwise waived in
writing by the Required Secured Parties:
Section 6.1 Information Covenants. The Borrower shall furnish to
the Administrative Agent (in sufficient quantities for the Issuing
Bank and each of the Lenders):
(a) Quarterly Financial Statements of Borrower. As soon as
available but, in any event, within 60 days after the close of each
of the first three quarterly accounting periods in each Fiscal
Year,
(i) complete unaudited statements of financial condition of the
Borrower as at the end of such quarterly period with related
statements of income and retained earnings and statements of
changes in financial position for such quarterly period and for the
elapsed portion of the Fiscal Year ended with the last day of such
quarterly period, in each case setting forth comparative figures
for the related periods in the prior Fiscal Year, subject to normal
year-end audit adjustments;
(ii) a report on any event or condition which has had or which is
reasonably likely to have a Material Adverse Effect; and
(iii) a statement, in form and detail reasonably satisfactory to
the Administrative Agent, of all financial transactions in such
Quarter between the Borrower and any Affiliate of the Borrower,
including a certification of a Financial Officer of the Borrower
that such transactions were on ordinary commercial terms
negotiated on an arms-length basis.
(b) Annual Financial Statements of Borrower. As soon as
available but, in any event, within 120 days after the close of
each Fiscal Year, the following, all in form satisfactory to the
Administrative Agent: (i) statements of financial condition of the
Borrower as at the end of such Fiscal Year with the related
statements of income and retained earnings and statements of
changes in financial position for such Fiscal Year, in each case
setting forth comparative figures for the preceding Fiscal Year and
certified by the Auditors (all such statements being in agreement
with the Borrower's books of account and prepared in accordance
with Philippines generally accepted accounting
principles consistently applied), (ii) a report of the Auditors
stating that in the course of its regular audit of the financial
statements of the Borrower, which audit was conducted in
accordance with Philippines generally accepted auditing
standards, the Auditors obtained no knowledge of any Construction
Credit Default or Construction Credit Event of Default which has
occurred and is continuing or, if in the opinion of the Auditors
such a Construction Credit Default or Construction Credit Event of
Default has occurred and is continuing, a statement as to the
nature thereof and (iii) consolidating statement of financial
condition of the Borrower at the end of such Fiscal Year with
related statements of income and retained earnings and statement of
changes in financial position for such Fiscal Year, in each case
setting forth comparative figures for the preceding Fiscal Year all
reflecting United States generally accepted accounting principles
consistently applied and certified by the Chief
Financial Officer of the Borrower.
(c) Financial Statements of CECI and Other Obligors. Within 30
days after the filing of the same with the United States
Securities and Exchange Commission, copies of the annual and
quarterly financial statements (consisting of a balance sheet and
the related statements of income, equity and cash flows) of CECI,
Peter Kiewit Sons', Inc. and KDG and, within 120 days of the end of
each fiscal year, copies of the audited annual financial statements
(consisting of a balance sheet and the related statements of
income, equity and cash flows), unaudited if audited are not
available, of CE Mahanagdong, Kiewit Energy, KEC, KIC, GICO, CBE,
KCGI, BHCO, the Construction Contractor and the Construction
Supplier, certified by the chief financial officer of CE
Mahanagdong, Kiewit Energy, KEC, KIC, GICO, CBE, KCGI, BHCO, the
Construction Contractor and the Construction Supplier, as the case
may be, and within 60 days after the end of each of the first three
fiscal quarters of each fiscal year, copies of the unaudited
quarterly financial statements (consisting of a balance sheet and
the related statements of income, equity and cash flows) of CE
Mahanagdong, Kiewit Energy, KIC, KEC, GICO, CBE, KCGI, BHCO, the
Construction Contractor and the Construction Supplier, certified by
the chief financial officer of CE Mahanagdong, Kiewit Energy, KIC,
KEC, GICO, CBE, KCGI, BHCO, the Construction Contractor and the
Construction Supplier, as the case may be, that such financial
statements are true and correct and have been prepared in
accordance with United States generally accepted accounting
principles (subject to normal year-end adjustments); provided,
however, that so long as CE Mahanagdong or Kiewit Energy engage in
no business other than the holding of their respective direct or
indirect ownership interests in the Borrower, the Borrower shall be
deemed to have complied with this Section 6.1(c) with respect to
the financial statements of CE Mahanagdong or Kiewit Energy, as the
case may be, if on each date the Borrower would otherwise be
required to furnish financial statements of any such Persons
pursuant to this Section 6.1(c), the Borrower instead furnishes a
certificate of the chief financial officer of each such Person
certifying that such Person is engaged in no other business;
provided further, that the Borrower shall have no obligation
hereunder to provide to the Administrative Agent the financial
statements of any of KIC, KEC, GICO, CBE, KCGI or BHCO after such
entity is no longer an Obligor.
(d) Management Letters. Promptly after the Borrower's receipt
thereof, a copy of any "management letter" or other similar
communication received by the Borrower from the Auditors in
relation to the Borrower's financial, accounting and other
systems, management and accounts.
(e) Annual Operating Budget. As soon as available but, in any
event, within 60 days prior to (i) the Operation Date and,
thereafter, (ii) the commencement of each Fiscal Year, an annual
operating budget (the "Annual Budget") (including budgeted
statements of income and sources and uses of cash and balance
sheets) prepared by the Borrower and accompanied by a statement of
the chief financial officer of the Borrower to the effect that, to
the best of his or her knowledge, the budget is a
reasonable estimate for the period covered thereby. The first
Annual Budget shall cover the period from the Operation Date
through the end of the Fiscal Year in which the Operation Date
occurs and, if such period consists of less than six (6) months,
for the immediately succeeding Fiscal Year. Each Annual Budget
shall contain complete, fair and accurate estimates (by principal
components) of Sales Proceeds, Operating and Maintenance Costs and
Debt Service for each Month covered by such Annual Budget based on
the Borrower's best projections at such time. Unless otherwise
consented to by the Administrative Agent (or, if a change therein,
in the reasonable judgment of the Administrative Agent, has had or
is reasonably likely to have a Material Adverse Effect, the
Required Secured Parties), which consent shall not be unreasonably
withheld, the Annual Budget from year to year shall be based on the
same format as the Base Case Forecast and be maintained on the same
basis and provide sufficient detail to permit a meaningful
comparison. The Administrative Agent and the Independent Engineer
shall have thirty (30) days from the date each Annual Budget is
submitted by the Borrower to approve such budget, which approval
shall not be unreasonably withheld. If the Administrative Agent
and the Independent Engineer do not approve an Annual Budget, the
Administrative Agent shall notify the Borrower in writing of the
items which are disapproved and the reason for such disapproval.
Until such Annual Budget is so approved, the Annual Budget most
recently in effect shall
continue to apply, except that any items of the then proposed
Annual Budget that have been approved shall also be given effect.
From time to time, but not more frequently than once per Quarter,
the Borrower may propose amendments to an Annual Budget, and the
Administrative Agent and the Independent Engineer may reject such
proposal within fifteen (15) Business Days from the date the
Borrower submits such proposal if in their reasonable judgment such
amendment is not reasonably necessary or advisable for operation of
the Project and, if no such rejection is made, subject to the
following sentence, such amendments shall become effective. If in
the reasonable judgment of the Administrative Agent, any such
amendment proposed by the Borrower has had or is reasonably likely
to have a Material Adverse Effect, the Administrative Agent will so
notify the Borrower in writing and promptly provide such proposal
to the Lenders, and the Required Secured Parties shall have ten
(10) Business Days after their receipt of such proposal to reject
the same in their reasonable judgment and, if no such rejection is
made, such amendments shall become effective. Not later than three
(3) Business Days after the effective date of each Annual Budget
and of any amendment thereto, the Borrower shall provide a copy of
the same to the Collateral Agent.
(f) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Section 6.1(a) and (b), a
certificate substantially in the form of Schedule 6.1(f) of a
Financial Officer of the Borrower to the effect that, to the best
of his knowledge, no Construction Credit Default or Construction
Credit Event of Default has occurred and is continuing or, if any
such Construction Credit Default or Construction Credit Event of
Default has occurred and is continuing, specifying the nature and
extent thereof and what action the Borrower is taking or proposes
to take in response thereto.
(g) Notice of Default, Litigation, etc. (i) Immediately upon an
officer of the Borrower obtaining actual knowledge thereof, notice
substantially in the form of Schedule 6.1(g), by
facsimile, cable or telex, of the occurrence of any Construction
Credit Default or Construction Credit Event of Default or any
breach or default hereunder or under any of the other Project
Documents by the Borrower or any other party thereto, specifying
the nature thereof and the action which the Borrower is taking and
proposes to take with respect to the same; and (ii) promptly, and
in any event within 20 Business Days after an officer of the
Borrower obtains actual knowledge thereof, notice of:
(A) any litigation or governmental proceeding pending (x)
against the Borrower (i) involving a claim in excess of $500,000
(or the equivalent thereof in other currency) or (ii) which is
reasonably likely to have a Material Adverse Effect or (y) with
respect to any Project Document;
(B) any proposal by any Governmental Authority to acquire
compulsorily the Borrower, any of the Collateral or a substantial
part of the Borrower's business or assets;
(C) any substantial dispute between (x) the Borrower or any
Sponsor and any Governmental Authority, (y) the Borrower and any
Obligor and any other Obligor, in each case relating to the
Project;
(D) any change in the authorized officers or directors referred to
in Section 5.1(d) above, giving certified specimen signatures of
any new officer or director so appointed and, if requested by the
Administrative Agent, satisfactory evidence of the authority of
such new officer or director;
(E) any actual or proposed termination, rescission, discharge
(otherwise than by performance), amendment or waiver or
indulgence under, any material provision of any Project Document
(other than by a Lender);
(F) any material notice or correspondence received or initiated by
the Borrower relating to a Governmental Approval or other license
or authorization necessary for the performance by it of its
obligations under the Project Documents;
(G) any Lien (other than a Construction Period Permitted Lien)
becoming enforceable over any of the Borrower's assets; or
(H) any proposed material change in the nature or scope of the
Project or the business or operations of the Borrower and any one
or more events, conditions or circumstances (including without
limitation Force Majeure as defined in Sections 13.1(a) and 13.1(b)
of the Energy Conversion Agreement) that exist or have occurred
which are reasonably likely to have a Material Adverse Effect;
(I) the occurrence of any event or act which could reasonably
qualify as a Political Risk (as defined in the Eximbank Guarantee
Agreement);
(J) and/or copies of: (x) each funding waiver request filed with
respect to any Pension Plan and all communications received or sent
by the Borrower or any ERISA Affiliate with respect to such
request; and (y) the failure of the Borrower or any ERISA Affiliate
to make a required installment or payment under Section 412 of the
Code, Section 302 of ERISA or the terms of any Pension Plan by the
due date (other than the quarterly contributions described in
Section 302(e) of ERISA or Section 412(m) of the Code);
(K) the occurrence of any Termination Event which has had or is
reasonably likely to result in a Material Adverse Effect in
connection with any Pension Plan or any trust thereunder,
specifying the nature thereof, what action the Borrower or the
ERISA Affiliate has taken, is taking or proposes to take with
respect thereto and, when known, any action taken or threatened by
the Internal Revenue Service, the Department of Labor or the PBGC
with respect thereto;
(L) and copies of: (x) all notices of the PBGC's intent to
terminate any Pension Plan or to have a trustee appointed to
administer any Pension Plan; and (y) all notices from a
Multiemployer Plan Sponsor concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA;
(M) the filing of an intent to terminate any Pension Plan under a
distress termination within the meaning of Section 4041(c) of
ERISA; or
(N) and a copy of each agreement, commitment or understanding
(whether or not subject to the approval of the Administrative Agent
or the Lenders pursuant to any other provision of this Agreement)
executed by or on behalf of the Borrower (excluding (x) the
agreements set forth in clauses (i) through (xi) of the definition
of the term "Operating Agreements" in Schedule X hereto but
including replacements thereof and (y) agreements, commitments or
understandings entered into in the ordinary course of business
which are required to perform the O&M Parameters and which (1) do
not, individually, create a financial obligation of the Borrower in
excess of $250,000 and (2) would not, in the aggregate, result in
the expenditure of funds in any Fiscal Year in excess of the amount
budgeted for Operating and Maintenance Costs (including the
Contingent O&M Amount) in the then-current Annual Budget for such
Fiscal Year) in connection with the
Project, which notice shall specifically refer to this Section
6.1(g)(ii)(N) and request that the Administrative Agent confirm
whether or not such agreement, commitment or understanding shall
constitute an Operating Agreement, in which case such agreement,
commitment or understanding shall only constitute an Operating
Agreement if the Administrative Agent, in consultation with
Eximbank, shall designate it as an Operating Agreement in a writing
delivered to the Borrower within 60 days of the
Administrative Agent's receipt thereof.
(h) Implementation Reports. Prior to the date of the Eximbank
Disbursement, within 21 days of the end of each Month, a report, in
a form satisfactory to the Administrative Agent and the Independent
Engineer, on the implementation and progress of the Project,
including (1) any factors materially and adversely affecting or
which are reasonably likely to materially and adversely affect the
carrying out of the Project and (2) copies of any reports received
by the Borrower from any outside technical consultant identifying
any matter that is of material adverse significance to the
construction or operation of the Plant.
(i) Operation Date and Eximbank Funding Condition Notices. The
Borrower shall notify the Administrative Agent and the Collateral
Agent, within two Business Days, of the occurrence of each of (i)
the Operation Date and (ii) the satisfaction of the Eximbank
Funding Conditions.
(j) Other Information. From time to time, (i) advance notice of
the commencement of all performance tests under the Construction
Contract, (ii) if the Completion Date (as defined in the Energy
Conversion Agreement) shall have been deemed to have occurred
pursuant to Section 4.9(b) of the Energy Conversion Agreement,
information as to the circumstances giving rise to the same, the
action(s) which the Borrower (and, to the extent known by the
Borrower, PNOC-EDC) is taking or proposes to take with respect to
the same and periodic reports of the status of such actions and the
implementation thereof, (iii) any plan or report prepared by or for
PNOC-EDC (as to which the Borrower shall have reasonable access and
shall make a good faith effort to obtain) or the Borrower with
respect to hazardous waste disposal relating to the Project, and
(iv) such other information or documents (financial or otherwise)
as the Administrative Agent, on behalf of the Secured Parties, or
OPIC, may reasonably request.
Section 6.2 Books, Records and Inspections; Accounting and Audit
Matters; Plans. (a) The Borrower will keep proper books of record
and account adequate to reflect truly and fairly the financial
condition and results of operations of the Borrower (including the
progress of the Project) in which full, true and correct entries in
conformity with Philippine generally accepted accounting principles
consistently applied and all Applicable Laws shall be made of all
dealings and transactions in relation to its business and
activities. The Borrower will permit officers and designated
representatives of the Administrative Agent, the Collateral Agent
or the Independent Engineer to visit and inspect, under guidance of
officers of the Borrower, any of the properties of the Borrower,
and to examine and make copies of the books of record and account
of the Borrower and discuss the affairs, finances and accounts of
the Borrower with, and be advised as to the same by, its officers,
all at such reasonable times and intervals and to such reasonable
extent as the Administrative Agent or the Collateral Agent may
request.
(b) The Borrower shall (i) authorize the Auditors to communicate
directly with the representatives of the Administrative Agent and
the Independent Engineer at reasonable intervals, but if a
Construction Credit Default or Construction Credit Event of Default
has occurred or is continuing, then at any time,
regarding the Borrower's accounts and operations and (ii) furnish
to the Administrative Agent a copy of such authorization, which
shall be in the form of Schedule 6.2(b); provided, however, that
the Administrative Agent will (i) provide the Borrower with copies
of any correspondence between such representatives and the
Auditors; and (ii) provide the Borrower with reasonable notice of
any meeting between such representatives and the Auditors, with a
description of the matters to be discussed at such meeting, and
allow the Borrower to attend any such meeting.
(c) The Borrower will at all times cause a complete set of the
current and (when available) as-built plans (and all supplements
thereto) relating to the Plant to be maintained at the Plant or the
Construction Contractor's office for inspection by the
Independent Engineer and the Administrative Agent.
Section 6.3 Maintenance of Property; Insurance. (a) The
Borrower will (i) keep all property useful and necessary (other
than property that has become obsolete) in its business in good
working order and condition and (ii) keep its present and future
properties and business insured with financially sound and
reputable insurers satisfactory to the Administrative Agent against
loss or damage in such manner and to the same extent as required in
Section A of Schedule 6.3 hereto until the expiration of such
policies and immediately thereafter as required in Section C of
Schedule 6.3, in each case pursuant to policies naming the
Collateral Agent as joint loss payee with the Borrower
thereunder and containing cut-through endorsements to reinsurers
and provisions requiring that the Collateral Agent and the
Administrative Agent shall receive notices of extensions or
renewals of insurance policies and notice of any non-payment of
premiums and that such policy may only be canceled for non-
payment of premiums, if cancelable, upon sixty (60) days prior
notice to the Collateral Agent and the Administrative Agent. On or
prior to the dates required pursuant to Section A or Section C, as
the case may be, of Schedule 6.3, the Borrower will submit to the
Administrative Agent and the Insurance Consultant
certificates of insurance relating to the insurances required by
Section A and Section C of Schedule 6.3 (together with copies of
such insurance policies if then available) from the Borrower's
insurers and insurance brokers (including confirmation of premium
payments then due), which certificates shall indicate the
properties insured, amounts and risks covered, names of the
beneficiaries, expiration dates, names of the insurers and
special features of the insurance policies. The Borrower shall
provide the Administrative Agent and the Insurance Consultant with
copies of insurance policies relating to the insurances required by
Section A and Section C of Schedule 6.3 hereto on or prior to the
date such policies are required to be delivered to the
Administrative Agent in accordance with such Section A or Section
C, as the case may be, such policies to be in form and substance,
and issued by companies, satisfactory to the Administrative Agent
in consultation with the Insurance Consultant.
(b) The Borrower will cause the Construction Contractor or the
Construction Supplier, as applicable, to keep the insurances
described in Section B of Schedule 6.3 hereto with financially
sound and reputable insurers satisfactory to the Administrative
Agent against loss or damage in such manner and to the same extent
as so described, in the case of any insurance required under
subsection (c) thereof pursuant to policies containing cut-through
endorsements to reinsurers and provisions requiring that the
Collateral Agent and the Administrative Agent shall receive notices
of extensions and renewals of insurance policies and notices of any
non-payment of premiums and that such policy may only be canceled
(x) as provided in Section B of Schedule 6.3 thereto or (y), if not
therein provided, for non-payment of premiums, if cancelable, upon
thirty (30) days prior written notice to the Collateral Agent and
the Administrative Agent. On or prior to the dates required
pursuant to Section B of Schedule 6.3, the Borrower will cause the
Construction Contractor or the Construction Supplier, as
applicable, to submit to the Administrative Agent certificates of
insurance relating to the insurances required by Section B of
Schedule 6.3 (together with copies of such insurance policies if
then available) from the insurance brokers for such insurances
(including confirmation of premium payments then due), which
certificates shall indicate the type of insurance, amounts and
risks covered, names of the beneficiaries, expiration dates, names
of the insurers and special features of the insurance policies.
The Borrower will cause the Construction Contractor or the
Construction Supplier, as applicable, to provide the Administrative
Agent with copies of insurance policies relating to the insurances
described in Section B of Schedule 6.3 hereto on or prior to the
date such policies are required to be delivered to the
Administrative Agent in accordance with such Section B of Schedule
6.3 hereto, such policies to be in form and substance, and issued
by companies, satisfactory to the Administrative Agent in
consultation with the Insurance Consultant. The Borrower will
cause the Construction Contractor to establish the ECA Construction
Performance Bond in favor of PNOC-EDC on or prior to the date which
is ten (10) calendar days after the Effectivity Date (as defined in
the Energy Conversion Agreement) and will deliver evidence, in the
form of the certificate attached as Exhibit F hereto, of PNOC-EDC's
acceptance of the ECA Construction Performance Bond within fifteen
(15) calendar days after the same is so established.
(c) In the event that any insurance whatsoever (other than the
OPIC Contract of Insurance or other political-risk insurance
acquired with respect to the equity interest in the Borrower and
not required by the Construction Financing Secured Parties) is
purchased, taken or otherwise obtained by the Borrower with respect
to the Project otherwise than as required hereunder or if not
properly endorsed to the Collateral Agent as the joint loss payee
with the Borrower or otherwise made upon the terms required in this
Section 6.3, without limitation to any provision of the Assignment
and Security Agreement, such insurance shall be considered assigned
hereunder to the Collateral Agent with the right of the Collateral
Agent to exercise its rights and remedies under any of the
Financing Documents or under any Applicable Law.
Section 6.4 Maintenance of Existence; Privileges; Etc.. The
Borrower shall at all times (a) preserve and maintain in full force
and effect (i) its existence as a corporation and good standing
under the laws of the Republic, (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 and (iii) all of its
powers, rights, privileges and franchise necessary for the
construction, ownership, maintenance and operation of the Project
and the maintenance of its existence, (b) obtain in a timely manner
and maintain in full force and effect (or where
appropriate, renew) all Governmental Approvals (including,
without limitation, those under Environmental Laws) and all other
licenses, registrations, waivers, consents and approvals required
at any time or advisable in connection with the construction,
maintenance, ownership or good and orderly operation of the Project
and all licenses, consents and approvals necessary for the
conversion to Dollars of all Peso amounts (including, without
limitation, Peso amounts representing SFRI Fees) payable under the
Energy Conversion Agreement, the PNOC-EDC Consent Agreement, the
Performance Undertaking and the Republic Consent Agreement and for
the remission to the United States in Dollars of any amounts paid
or payable to the Secured Parties in connection with any Financing
Document or the transactions contemplated thereby or the shares of
common stock of the Borrower and (c) preserve and maintain good and
marketable title to its properties and assets (it being understood
that the Borrower's rights with respect to the Site are solely as
set forth in the Energy
Conversion Agreement and the Accession Undertaking) subject to no
Liens other than Construction Period Permitted Liens.
Section 6.5 Compliance with Statutes. The Borrower will comply
with all Applicable Laws in respect of the conduct of its
business and the ownership, operation and use of its property
(including, without limitation, Applicable Laws relating to
environmental standards and controls and Applicable Laws relating
to the maintenance of debt to equity ratios).
Section 6.6 Consultations Regarding Independent Engineer's Report.
The Borrower agrees that (a) in addition to any other consultation
required hereunder, following the end of each Month, upon the
request of the Administrative Agent, the Borrower shall consult
with the Administrative Agent regarding any materially adverse
event or condition identified by the Independent Engineer in the
reports provided by the Independent Engineer for such Month
pursuant to the Representative Agreement, and (b) in the event the
Borrower fails to hold such consultations within 30 days of such
request, such event or condition shall be deemed to have a Material
Adverse Effect.
Section 6.7 Project Implementation. (a) The Borrower shall (i)
carry out the Project and conduct its business with due diligence
and efficiency and in accordance with sound engineering,
financial, and business practices and (ii) use the proceeds of all
Loans only for the purpose set forth in Section 2.1(d) and strictly
in accordance with the Construction Budget.
(b) Without limiting the generality of the preceding clause (a),
the Borrower will cause the construction of the Project to be
prosecuted and completed with due diligence and continuity
(except for interruptions due to events of Force Majeure (as
defined in any of the Energy Conversion Agreement, the
Construction Contract and the Supply Contract), which the
Borrower will use its best efforts to mitigate), in a good and
workmanlike manner and in accordance with (i) sound generally
accepted building and engineering practices, (ii) all
Governmental Approvals and Applicable Laws applicable to the Site,
the Plant or the Borrower, (iii) the Construction Contract, (iv)
the Supply Contract, (v) the Keystone Agreement and (vi) the
Construction Budget.
(c) In the Construction Budget, the Borrower will allocate $10
million to the payment of Contingency Costs and, except with the
prior written approval of the Administrative Agent, will not incur
any Contingency Costs if, after giving effect thereto, the
aggregate amount of all Contingency Costs incurred would exceed $2
million.
(d) Without limiting the generality of clause (a) of this
Section 6.7, the Borrower will operate and maintain the Project,
and retain and maintain staff sufficient to operate and maintain
the Project, in accordance with the O&M Parameters and will
otherwise comply with and satisfy the requirements of the O&M
Parameters.
(e) The Borrower shall use reasonable efforts to become a member
of the multi-partite monitoring team described in paragraph 1 of
Section IV of the Environmental Compliance Certificate; provided,
however, that the Borrower need not become a member of such
monitoring team if, in the reasonable judgment of the Borrower,
after consultation with its counsel, the Borrower's participation
in the activities conducted by such monitoring team could
reasonably be expected to expose the Borrower to additional
liability under Applicable Laws of the Republic.
(f) Without limiting the generality of clauses (a) and (b) of this
Section 6.7, in order to avoid a deemed abandonment under Section
14.2.1 of the Energy Conversion Agreement, if the
conditions precedent specified in clauses (a) and (b) of Section
13.3 of the Construction Contract have been satisfied the
Borrower shall, prior to the date of potential abandonment under
the Energy Conversion Agreement, exercise the right granted to it
under the last sentence of Section 13.3 of the Construction
Contract and certify to PNOC-EDC that the Power Plant (as defined
in the Construction Contract) has achieved ECA Completion in
accordance with Section 6.1(b) of the Energy Conversion
Agreement.
(g) The Borrower shall supply the Independent Engineer with the
information the Independent Engineer reasonably requires to assess
the success of the Performance Tests (as defined in the
Construction Contract) and to assess whether the agreed testing
procedures were followed, and the Borrower agrees that the
Administrative Agent, after consultation with the Independent
Engineer, shall have the right to cause the Borrower to, and the
Borrower shall upon the request of the Administrative Agent, (i)
advise the Construction Contractor of any defects and/or
deficiencies in the Power Plant that were discovered or occurred
during the Performance Tests or withhold the issuance of the
certificate referred to in Section 16.3 of the Construction
Contract that the agreed testing procedures have been followed and
(ii) take any other action that the Borrower would otherwise be
entitled to take under Sections 13.2 or 16.3 of the
Construction Contract.
(h) If the Contractor shall fail to stay within sixty (60) days of
the schedule for achieving ECA Completion by the Scheduled
Completion Date under circumstances which would give rise to an
obligation of the Contractor under Section 19.1(i) of the
Construction Contract to submit for approval the Modified
Schedule (as defined in Section 19.1(i) of the Construction
Contract), the Borrower, promptly after obtaining knowledge of such
failure, shall provide written notice of such failure to the
Administrative Agent and the Independent Engineer.
(i) The Borrower agrees that it shall not designate an
arbitrator or engineering firm under either the Construction
Contract or the Supply Contract with respect to any disputes
thereunder without obtaining the prior written consent of the
Required Secured Parties, such consent not to be unreasonably
withheld.
(j) The Borrower shall provide the Administrative Agent with
notice immediately upon becoming aware that conditions to
enforcing the KCGI Guaranty have been met.
Section 6.8 Auditors. In the event that Deloitte, Touche &
Tohmatsu International should cease to be the Auditors of the
Borrower for any reason, the Borrower shall appoint and maintain as
the Auditors another firm of independent public accountants
approved by the Required Secured Parties.
Section 6.9 Taxes, Duties, Etc. The Borrower will pay and
discharge all taxes, duties, fees, assessments and other
governmental charges imposed on it, on its income or profits, on
any of its property, or in connection with any payment made under
this Agreement or the execution, issue, delivery, registration,
notarization, assignment or transfer of any interest in or for the
legality, validity or enforceability of any Project Document
(including, without limitation, any documentary, stamp,
registration or similar tax or fee imposed in connection with any
assignment or transfer by any Lender of its Note, its Loans or any
of its interests therein or herein pursuant to Sections 2.2, 2.17
or 3.6 hereof) prior to the date on which penalties attach thereto,
and all claims, levies or liabilities (including,
without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which have
or, if unpaid, might become a Lien upon the property of Borrower
(or any part thereof). The Borrower shall have the right, however,
to contest in good faith the validity or amount of any such tax,
assessment, governmental charge or claim by proper proceedings
timely instituted, and may permit the taxes, assessments,
governmental charges or claims so contested to remain unpaid during
the period of such contest if (i) the
Borrower diligently prosecutes such contest, (ii) during the period
of such contest the enforcement of any contested item is
effectively stayed, (iii) the Borrower sets aside on its books
adequate reserves with respect to the contested items and (iv) such
contest does not, in the reasonable discretion of the
Administrative Agent, involve a material risk of the sale,
forfeiture or loss of any of the Collateral. The Borrower will
promptly pay or cause to be paid any valid, final judgment
enforcing any such tax, duty, fee, assessment, other governmental
charge or claim and cause the same to be satisfied of record.
Section 6.10 Independent Engineer; Insurance Consultant. The
Borrower (a) agrees to the Independent Engineer carrying out the
role described in the Representative Agreement, (b) confirms and
agrees to the terms of its Acknowledgment appended to the
Representative Agreement, which terms are incorporated herein by
reference as if fully set forth herein and (c) will ensure that the
Insurance Consultant will be provided with all information
reasonably requested by the Insurance Consultant and will
exercise due care to ensure that any information which it may
supply to the Insurance Consultant is materially accurate and not,
by omission of information or otherwise, misleading in any material
respect.
Section 6.11 Performance of Obligations. The Borrower will
perform all of its material obligations under the terms of each
mortgage, indenture, security agreement and other debt instrument
by which it is bound and will perform (i) all of its obligations
under the terms of the Financing Documents and the Energy
Conversion Agreement and (ii) such of its obligations under the
terms of the Project Documents (other than the Financing
Documents and the Energy Conversion Agreement) the non-
performance of which is reasonably likely to have a Material
Adverse Effect. The Borrower will maintain in full force and
effect the Eximbank Credit Agreement, the OPIC Finance Agreement
and each of the other Project Documents to which it is a party.
The Borrower will preserve, protect, defend and enforce the rights
granted to it under or in connection with the Project Documents.
The Borrower shall take all action within its control required or
in the reasonable opinion of the Administrative Agent advisable to
ensure that each of the Project Documents is in proper legal form
under the laws of the Republic or under the respective governing
laws selected in such Project Documents, for the enforcement
thereof in such jurisdictions without any further action on the
part of the Administrative Agent, the Collateral Agent, the Issuing
Bank, the Lenders, OPIC or Eximbank, as the case may be.
Section 6.12 Availability and Transfer of Foreign Currency. All
requisite foreign exchange control approvals and other
authorizations, if any, by the Republic or any department or agency
thereof will be kept current and in full force and effect to assure
(i) the ability of the Borrower to receive, and the ability of any
other party to make, any and all payments to the Borrower
contemplated by the Project Documents, (ii) the
availability of Dollars to enable the Borrower to perform all of
its obligations hereunder and under the other Project Documents, as
the case may be, in accordance with their respective terms, and
(iii) the ability of the Borrower to convert all sums
received in Peso amounts from PNOC-EDC under the Energy
Conversion Agreement and the PNOC-EDC Consent Agreement and from
the Republic under the Performance Undertaking and the Republic
Consent Agreement, including any Peso amounts representing SFRI
Fees, from Pesos to Dollars, immediately upon receipt thereof, and
to use the Dollars as necessary to perform all of its
obligations under the Project Documents, in accordance with their
respective terms.
Section 6.13 Name Changes; Etc. The Borrower shall not change its
name without the prior written consent of the Administrative Agent
and the Collateral Agent. The Borrower shall not adopt or change
any trade name or fictitious business name without the prior
written consent of the Administrative Agent and the Collateral
Agent. The Borrower shall execute and deliver to the
Administrative Agent and the Collateral Agent any additional
documents or certificates necessary or advisable to reflect any
permitted adoption of or change in its name, trade name or
fictitious business name.
Section 6.14 Consolidation, Merger, Sale of Assets, Etc. The
Borrower will not (a) wind up, liquidate or dissolve its affairs or
enter into any transaction of merger or consolidation; (b) convey,
sell, lease or otherwise dispose of (or agree to do any of the
foregoing at any future time) all or any part of its property or
assets (other than electricity and any chemical by-products
produced by the Plant1) except, in the ordinary course of business,
or sales of equipment which is uneconomic or obsolete or sales of
assets that are no longer used by or useful to the Borrower and
which are promptly replaced (if applicable) by adequate substitutes
of substantially equivalent utility to the replaced assets; or (c)
purchase or otherwise acquire (in one or a series of related
transactions) any part of the property or assets of any Person
(other than purchases or other acquisitions of inventory or
materials or capital expenditures, each in the ordinary course of
business).
Section 6.15 Dividends; Restricted Payments. (a) The Borrower
will not declare or pay any dividends, or return any capital, to
its stockholders or authorize or make any other distribution,
payment or delivery of property or cash to its stockholders as
such, or redeem, retire, purchase or otherwise acquire, directly or
indirectly, for consideration, any shares of any class of its
capital stock now or hereafter outstanding (or any options or
warrants issued by the Borrower with respect to its capital stock),
or set aside any funds for any of the foregoing purposes.
(b) The Borrower will not (i) make any payment or delivery of
property or cash to any Subordinated Secured Party on account of
any Subordinated Debt Service or any Subordinated Secured
Obligations or (ii) redeem, retire, purchase or otherwise
acquire, directly or indirectly, for consideration, any
Affiliated Subordinated Indebtedness or Subordinated Secured
Working Capital Indebtedness or (iii) set aside any funds for any
of the foregoing purposes; provided, however, that the Borrower may
issue shares of its capital stock to the Affiliated Funding
Entities in accordance with the terms of the Convertible
Subordinated Notes in connection with the conversion of the
Affiliated Subordinated Loans contemplated by the Convertible
Subordinated Notes.
Section 6.16 Leases. Except as contemplated by the O&M
Parameters, the Construction Budget or the Annual Budget (in each
case as then in effect), the Borrower will not enter into any
agreement or arrangement to acquire by lease the use of any
property or equipment of any kind, except leases of operating
equipment and premises under which the aggregate rental payments
(including, without limitation, any property taxes paid as
additional rent) or lease payments do not exceed the equivalent of
$300,000 in any Fiscal Year.
Section 6.17 Indebtedness. The Borrower will not contract,
create, incur, assume or suffer to exist any Indebtedness, except
for the following types of Indebtedness ("Construction Period
Permitted Indebtedness"):
(a) Indebtedness of the Borrower incurred under the Financing
Documents (including, without limitation, any Required
Subordinated Loans and, subject to subparagraph (h) below, any
Optional Subordinated Loans but excluding any Unsecured Senior
Working Capital Indebtedness and Subordinated Secured Working
Capital Indebtedness not otherwise permitted under subparagraphs
(b) and (h) of this Section 6.17); provided, however, that the
Borrower shall not obtain any OPIC Disbursements if, after giving
effect thereto, the sum of (x) the aggregate principal amount of
the Loans outstanding and (y) the aggregate principal amount of the
OPIC Loan outstanding, would exceed $231,835,000;
(b) subject to subparagraph (h) of this Section 6.17, Unsecured
Senior Working Capital Indebtedness or Subordinated Secured Working
Capital Indebtedness incurred after the Operation Date, which when
aggregated with the Borrower's contingent liability arising from
the discounting of trade receivables relating to the sale of
chemical by-products would not exceed at any one time outstanding
the equivalent of $500,000; provided, however, that the $500,000
limit set forth in the preceding proviso of this Section 6.17(b)
shall, from time to time be increased to an amount not to exceed $1
million to the extent necessary (i) to permit the Borrower to make
expenditures required as a result of casualties for which the
Borrower is, in its good faith judgment insured (provided that (x)
the Borrower promptly files a claim for reimbursement under such
insurance for any such casualty, (y) the Borrower uses its best
efforts to expedite payment of such claims and (z) the proceeds
from any such insurance shall first be used to repay any Unsecured
Senior Working Capital
Indebtedness incurred pursuant to this clause (i) and any
remaining proceeds shall be deposited in the Contingency Account)
or (ii) to take into account timing differences between the
Borrower's working capital needs and the Borrower's receipt of
Sales Proceeds (excluding ordinary course payments) reflecting
increases in Operating and Maintenance Costs reimbursable under the
Energy Conversion Agreement by PNOC-EDC; and provided further that
any and all Subordinated Working Capital Lenders shall, prior to
the date on which any Subordinated Secured Working Capital
Indebtedness is incurred, become party to the Collateral Agency
Agreement and deliver to each of the Administrative Agent and the
Collateral Agent an opinion of councel to such Subordinated Working
Capital Lender reasonably satisfactory to the Administrative Agent,
the Collateral Agent and the Lenders to the effect that the
Collateral Agency Agreement and the subordination terms set forth
in Schedule 6.17(c) hereto constitute the binding obligations of
such Subordinated Working Capital Lender enforceable in accordance
with their respective terms (subject to customary qualifications)
and any and all Senior Working Capital Lenders shall, prior to the
date on which any Unsecured Senior Working Capital Indebtedness is
incurred, become party to the Intercreditor Agreement;
(c) Indebtedness incurred under the OPIC Funding Documents.
(d) Indebtedness incurred after the Operation Date which is not in
a principal amount in excess, in the aggregate, of $1 million, at
any time and is accrued expenses or current trade accounts payable
incurred in the ordinary course of business, or
obligations under trade letters of credit incurred by the
Borrower in the ordinary course of business, which are to be repaid
in full not more than ninety days after the date on which such
Indebtedness is originally incurred to finance the purchase of
goods by the Borrower;
(e) Indebtedness for purchase money Liens incurred after the
Operation Date and otherwise permitted under Section6.18(c);
(f) subject to subparagraph (h) of this Section 6.17, Contingent
Obligations permitted under Section 6.19;
(g) Indebtedness constituting lease obligations permitted under
Section 6.16 hereof; and
(h) Notwithstanding the foregoing, the Borrower may not incur any
Optional Subordinated Loans or any Indebtedness described in
subparagraph (b) of this Section 6.17 unless, prior to the
incurrence of any such Indebtedness, the Borrower shall have
submitted evidence satisfactory to the Administrative Agent that
such Indebtedness, by its terms, will be converted into equity of
the Borrower or discharged by other means satisfactory to the
Required Secured Parties such that the Borrower will be able to
satisfy the requirements of all Applicable Laws relating to the
maintenance of debt to equity ratios.
Section 6.18 Liens. The Borrower will not, and will not agree to,
create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets (real, personal or mixed,
tangible or intangible) of the Borrower, whether now owned or
hereafter acquired, provided that the provisions of this Section
6.18 shall not prevent the creation, incurrence, assumption or
existence of the following Liens (each, a "Construction Period
Permitted Lien"):
(a) Liens for current taxes, assessments and other governmental
charges, the payment of which is not at the time required
pursuant to Section 6.9;
(b) Liens created pursuant to the Security Documents;
(c) purchase money Liens on any property acquired after the
Operation Date, provided, however, that (A) any property subject to
such purchase money Lien is acquired by the Borrower in the
ordinary course of its business and such purchase money Lien
attaches to such property concurrently or within ninety days after
the acquisition thereof; (B) the Indebtedness secured by such
purchase money Lien shall not exceed 90% of the lesser of the cost
or the fair market value as of the time of the
acquisition of the property covered thereby by the Borrower; (C)
each such purchase money Lien shall attach only to the property so
acquired and fixed improvements thereon; (D) the Indebtedness
secured by all such purchase money Liens shall not, at any time
exceed $2 million; and (E) the Indebtedness secured by such
purchase-money Lien is not otherwise prohibited by the provisions
of Section 6.17;
(d) mechanics', materialmen's, carrier's and similar Liens
securing obligations incurred in the ordinary course of business
which (i) are not past due or which are the subject of a Good Faith
Contest by the Borrower (unless during the pendency of such contest
or as a result thereof the Liens of the Security Documents could
reasonably be expected to be materially endangered or any material
portion of the Site, the Plant or the Project could reasonably be
expected to become subject to loss or forfeiture) and (ii) which do
not in the aggregate materially detract from the value of the Site,
the Plant or the Project or other assets of the Borrower or
materially impair the use thereof; provided that upon the
commencement of any proceeding to foreclose or enforce any such
Construction Period Permitted Lien, the Collateral Agent may take
such action as it reasonably deems necessary to protect the Secured
Parties' interests in the Site, the Plant or the Project including,
without limitation, payment of amounts reasonably necessary to
release any such Lien, and in such event the Borrower shall
reimburse the Collateral Agent upon demand for the cost thereof
together with interest thereon at a rate per annum equal to the
Base Rate plus the Applicable Margin plus 2.00%; and
(e) Liens on property or equipment leased by the Borrower as
permitted pursuant to Section 6.16.
Section 6.19 Guarantees. Without limitation to the restrictions
of Section 6.17 hereof, the Borrower will not enter into any
Contingent Obligations, including without limitation any
agreement or arrangement to guarantee or, in any way or under any
condition, become obligated for all or any part of any
Indebtedness or other obligation of another Person, except that,
notwithstanding the restrictions of this Section 6.19 or Section
6.17 hereof, the Borrower may enter into (a) the Accession
Undertaking, (b) Contingent Obligations set forth in the then-
current Construction Budget or Annual Budget and identified as
Contingent Obligations in any such budget so as to permit a
determination of the Borrower's compliance with this Section 6.19,
(c) an obligation, not secured by any Lien, to (i)
reimburse the ECA Operation Performance Bond Issuer for amounts
paid to PNOC-EDC under the ECA Operation Performance Bond,
provided that such obligation is subordinated to the prior
payment in full of the Construction Financing Secured Obligations
on the terms set forth in Schedule 6.17(c) and to the prior payment
in full of the Eximbank Secured Obligations and the OPIC Secured
Obligations on the terms set forth in Schedule 8.05(c) of the
Eximbank Credit Agreement or (ii) reimburse CECI and/or KEC, on the
terms set forth in Section 3 of the Funding Agreement, for amounts
advanced by CECI and/or KEC to the Borrower for purposes of
reimbursing the ECA Operation Performance Bond Issuer for amounts
paid to PNOC-EDC under the ECA Operation Performance Bond as
contemplated by Section 3 of the Funding Agreement, and (d) other
Contingent Obligations to the extent that the amount of all such
other Contingent Obligations does not exceed, in the
aggregate, $100,000 (or the equivalent in other currency).
Section 6.20 Subsidiaries; Advances, Investments and Loans. The
Borrower will not form or have any Subsidiaries, lend money or
credit or make deposits (other than deposits in relation to the
payment for goods and equipment in the ordinary course of
business) with or advances (except as specifically required by the
Construction Contract or the Supply Contract) to any Person, or
purchase or acquire any stock, obligations or securities of, or any
other interest in, or make any capital contribution to, any other
Person, except that the Borrower may use idle cash to acquire and
hold Cash Equivalents solely to give employment to its idle
resources in accordance with the Disbursement Agreement.
Section 6.21 Transactions. The Borrower will not (a) enter into
any transaction or series of related transactions with any Person
other than in the ordinary course of business and on an arm's-
length basis or (b) establish any sole and exclusive purchasing or
sales agency, or enter into any transaction whereby the
Borrower might receive less than the full ex-works commercial price
(subject to normal trade discounts) for electricity or pay more
than ex-works commercial price for products of others, provided,
however, that nothing in this Section 6.21 shall be deemed to
prohibit the execution, delivery, declaring effective and
performance by the Borrower of this Agreement, the Energy
Conversion Agreement, the Construction Contract, the Supply
Contract, the Keystone Agreement, contracts contemplated by the O&M
Parameters (including those relating to employee training and
secondment of employees) and the Funding Agreement.
Section 6.22 Other Transactions. The Borrower will not enter into
any partnership, profit-sharing, or royalty agreement or other
similar arrangement whereby the Borrower's income or
profits are, or might be, shared with any other Person, or enter
into any management contract or similar arrangement whereby its
business or operations are managed by any other Person, provided,
however, that nothing in this Section 6.22 shall be deemed to
prohibit the execution, delivery, declaring effective and
performance by the Borrower of the contracts contemplated by the
O&M Parameters and the Funding Agreement.
Section 6.23 Modifications of Articles of Incorporation and By-
Laws; Additional Agreements; Assignments and Modifications of
Agreements; Etc. (a) The Borrower will not (i) amend or modify
its Articles of Incorporation or By-Laws, except as contemplated by
the Marubeni Purchase Agreement or to provide for the issuance of
preferred stock to CE Mahanagdong or Kiewit Energy, which preferred
stock issued to CE Mahanagdong or Kiewit Energy shall not be
transferable, or (ii) change its Fiscal Year.
(b) The Borrower will not, without the prior written consent of
the Administrative Agent, become a party to any agreement,
contract or commitment (other than (w) the agreements identified in
clauses (i) through (xiii) of the definition of the term Operating
Agreements set forth in Schedule X hereto, but not replacements
thereof, (x) the Financing Documents, (y)
agreements, contracts or commitments contemplated by the O&M
Parameters (including those relating to employee training,
secondment of employees and vehicle rentals), the then-current
Construction Budget or the then-current Annual Budget and (z)
agreements, contracts or commitments in respect of Construction
Period Permitted Indebtedness) which, individually, creates an
annual financial obligation of the Borrower in excess of $100,000
(or the equivalent in other currency) or which would cause the
aggregate annual financial obligations of the Borrower under all
agreements, contracts and commitments (other than those specified
in clauses (w) through (z) immediately above) to which the
Borrower is a party to exceed $300,000 (or the equivalent in other
currency).
(c) The Borrower shall not issue, direct, authorize, consent to or
permit to be effective any change order under the Construction
Contract or the Supply Contract or any Change in the Work without
the prior written approval of the Independent Engineer and the
Required Secured Parties, except for change orders and/or Changes
in the Work which (i) do not change the plans and specifications
therein in any material respect, (ii) do not materially alter the
construction schedule and do not directly postpone or cause a
postponement of Substantial Completion or ECA Completion beyond the
Scheduled Completion Date, (iii) do not alter in any respect the
performance or availability guarantees set forth in the
Construction Contract or the test methods for determining the
Plant's capability to meet such performance or availability
guarantees and (iv) do not change the Contract Price (as defined in
the Construction Contract) and the Contract Price (as defined in
the Supply Contract) by more than $2,000,000 in the aggregate or
(taking into account all previous change orders and Changes in the
Work under both the Construction Contract and the Supply Contract)
by more than $250,000 per item, and (v) do not violate any
provision of any Project Document. The Borrower shall not issue,
direct, authorize, consent to or permit to be effective any change
order under the Construction Contract or the Supply Contract or any
Change in the Work which does not require the consent of the
Required Secured Parties pursuant to the preceding sentence and
which changes the Contract Price (as defined in the Construction
Contract) or the Contract Price (as defined in the Supply Contract)
by more than $50,000 as to any one change
without the prior written approval of the Independent Engineer
(which approval shall not be unreasonably withheld or delayed).
(d) Without the prior written consent of the Required Secured
Parties, the Borrower shall not, directly or indirectly, terminate,
cancel or suspend, or permit or consent to any termination,
cancellation or suspension of, or enter into or consent to or
permit the assignment of the rights or obligations of any party to,
any of the Project Documents; provided, however, that without the
prior written consent of the Required Secured Parties the Borrower
may do, permit to be done or consent to any of the foregoing if (i)
the Project Document which is the subject of the proposed
termination, cancellation, suspension or assignment is an Insurance
Contract and the Administrative Agent, after consultation with the
Insurance Consultant, shall have consented thereto or (ii) the
Project Document which is the subject of the proposed termination,
cancellation, suspension or assignment is a non-material
Governmental Approval or an agreement, commitment or understanding
described in clause (xiv) of the definition of the term "Operating
Agreements" set forth in Schedule X hereto and, in each case, the
Administrative Agent shall have reasonably determined
(notwithstanding its right to make such determination, the
Administrative Agent may elect for that determination to be subject
to the approval of the Required Lenders) that such termination,
cancellation, suspension or assignment is not reasonably likely to
have a Material Adverse Effect (provided, however, that if in any
Project Document the consent of the Borrower to an assignment by
the other party thereto cannot be unreasonably withheld, the
Administrative Agent or the Required Secured Parties (as the case
may be) shall not unreasonably withhold its (or their) consent to
the Borrower providing such consent to assignment). The Borrower
shall not, directly or indirectly, amend, modify, supplement or
waive, or permit or consent to the amendment, modification,
supplement or waiver of, any of the provisions of, or give any
consent under, any of the Project Documents, except for change
orders under the Construction Contract or the Supply Contract or
Changes in the Work (provided that the provisions of clause (c) of
this Section 6.23 are complied with in each case), without (i)
first submitting to the Administrative Agent, OPIC and Eximbank a
copy of such proposed amendment, supplement, waiver, or consent and
(ii) obtaining the prior written consent of the Administrative
Agent, unless in the reasonable judgment of the Administrative
Agent, such proposed amendment, supplement, waiver, or consent is
reasonably likely to have a Material Adverse Effect, in which case,
the express prior written consent of the Required Secured Parties
thereto. Notwithstanding the foregoing, without the prior written
consent of each of the Lenders, the Borrower shall not, (i)
directly or indirectly, amend, modify, supplement or waive, or
permit or consent to the amendment, modification, supplement or
waiver of, (x) any provision of Article 9 of the Energy Conversion
Agreement or (y) any other provision of the Energy Conversion
Agreement governing the terms and conditions of, or the events or
circumstances giving rise to the Borrower's or PNOC-EDC's right to
require, a buyout of the Power Plant (as defined in the Energy
Conversion Agreement) or (ii) enter into or permit or grant any
amendment or modification of the Energy Conversion Agreement or any
supplement to or waiver thereunder which is reasonably likely to
have an adverse financial impact on the Borrower (including,
without limitation, on the amounts of or timing of payments to the
Borrower under the Energy Conversion Agreement). The parties
hereto acknowledge that the prior written consent of Eximbank is
required in order for the Administrative Agent, the Collateral
Agent and the Lenders to (i) agree to any material amendments to
the terms of, or consent to any material deviation from the
provisions of, any Project Document or other document or agreement
referred to in Section 10.01(c) of the Eximbank Guarantee Agreement
or (ii) enter into any agreement with any foreign governing
authority with respect to compensation for any acts for which
compensation is payable under Article VIII of the Eximbank
Guarantee Agreement.
(e) Other than the assignment as security of the Project
Documents to the Collateral Agent as security for the benefit of
the Secured Parties, the Borrower will not assign (except with
respect to Construction Period Permitted Liens) any of its rights
or obligations under any Project Document without the prior written
consent of the Required Secured Parties.
(f) The Borrower will not take any action under Article 9 of the
Energy Conversion Agreement to require a Buyout without the prior
written consent of the Required Secured Parties, which consent
shall not be unreasonably withheld or delayed.
(g) Without the prior written consent of the Required Secured
Parties, the Borrower will not refund to PNOC-EDC (but may credit
to PNOC-EDC) any amount described in the last sentence of Section
4.9 of the Energy Conversion Agreement.
(h) The Borrower shall not claim for itself Force Majeure as
provided in Article 13 of the Energy Conversion Agreement,
Section 22 of the Construction Contract or Section 22 of the Supply
Contract without the prior written consent of the
Administrative Agent and the Independent Engineer, which consents
shall not be unreasonably withheld or delayed.
(i) Without the prior written consent of the Required Secured
Parties, OPIC and Eximbank, the Borrower shall not direct,
authorize, consent to or permit to be effective any amendment to or
modification of the Marubeni Purchase Agreement or the
Certificate of Designation (as defined in the Marubeni Purchase
Agreement). The Borrower shall not issue any shares of the
Preferred Stock (as defined in the Marubeni Purchase Agreement)
prior to the Construction Financing Termination Date.
Section 6.24 No Other Business. Without the prior written consent
of the Required Secured Parties, except as contemplated by Section
6.20 hereof, the Borrower will not carry on any
business other than in connection with the completion and
operation of the Project and will take no action whether by
acquisition or otherwise which would constitute or result in any
material alteration to the nature of that business or the nature or
scope of the Project.
Section 6.25 Abandonment. The Borrower will not abandon or agree
to abandon the Project or place it or agree to place it on a "care
and maintenance" basis for more than 14 days in any calendar year,
provided, however, that (i) nothing in this Section 6.25 shall
prevent the Borrower from shut-downs necessary for repairs and
maintenance at the Plant or from putting the Plant on a "care and
maintenance basis" during any Force Majeure (as defined in the
Energy Conversion Agreement) not within the control of the
Borrower, which Force Majeure prevents the Borrower from
developing, constructing or operating the Plant; and (ii) nothing
in this Section 6.25 shall be deemed to waive or limit in any way
the right of any of the Lenders to declare a Construction Credit
Event of Default as provided in Article 7 hereof, including without
limitation Sections 7.6 and 7.7 hereof.
Section 6.26 Improper Use. The Borrower will not use, maintain,
operate or occupy, or allow the use, maintenance, operation or
occupancy of, any portion of the Site or the Project for any
purpose:
(a) which may be dangerous, unless safeguarded as required by
Applicable Law (provided, however, that this clause (a) shall not
be deemed to prohibit the Borrower from carrying out the Project in
accordance with the terms of the Energy Conversion Agreement and
the Construction Contract in a reasonable and prudent
manner);
(b) which violates any Applicable Law in any material respect;
(c) which may constitute a public or private nuisance resulting in
a Material Adverse Effect;
(d) which may make void, voidable, or cancelable or increase the
premium of, any insurance then in force with respect to the Site or
the Project or any part thereof unless, in the case of an increase
in premium, the Borrower gives proof of payment of such increase;
or
(e) otherwise than for the intended purpose thereof in the
construction, operation and maintenance of the Plant.
Section 6.27 Budgets. From and after the Operation Date the
Borrower will not make expenditures in any Fiscal Year (up to the
Maturity Date) in excess of the projected annual Operating and
Maintenance Costs (including the Contingent O&M Amount) set forth
in the Annual Budget for such Fiscal Year (up to the Maturity Date)
except for (a) expenditures funded with the proceeds of Optional
Subordinated Loans, (b) Emergency Operating Costs
Amounts funded with the proceeds of withdrawals from the Debt
Reserve Cash Collateral Account in accordance with Section
3.03(b) of the Disbursement Agreement and (c) provided no
Construction Credit Event of Default has occurred and is
continuing, expenditures not to exceed in any Fiscal Year in the
aggregate $1.5 million required as a result of casualties for which
the Borrower is, in its good faith judgment, insured, provided that
(i) the Borrower promptly files a claim or claims for reimbursement
under such insurance for any such casualty, (ii) the Borrower uses
its best efforts to expedite payment of such claims, and (iii) the
proceeds from any such insurance claims shall be paid into the
Contingency Account.
Section 6.28 Capital Stock. The Borrower shall not allow the
capital stock of the Borrower to be other than as follows: (a) the
authorized capital stock of the Borrower shall consist of 2,148,000
shares of common stock, par value P28 per share, of which (i)
537,014 shares will be issued, outstanding and fully paid until the
day immediately prior to the commencement of the Cooperation Period
(as defined in the Energy Conversion
Agreement) and (ii) commencing on the day immediately prior to the
commencement of the Cooperation Period (as defined in the Energy
Conversion Agreement) 537,014 shares, plus the amount of shares,
issued as either common stock, preferred stock or both, into which
the Convertible Subordinated Notes evidencing Required Subordinated
Loans shall have been converted as of such date, will be issued,
outstanding and fully paid; and (b) all such outstanding shares
will be duly and validly issued, fully paid and non-assessable;
provided, however, the Borrower may issue preferred stock to
Marubeni pursuant to the Marubeni Purchase Agreement and, prior to
the Cooperation Period Commencement Date, to CE Mahanagdong and
Kiewit Energy, which preferred stock issued to CE Mahanagdong or
Kiewit Energy shall not be transferable.
Section 6.29 Amendment of Construction Budget. The Borrower will
not, directly or indirectly, amend, modify, allocate, re-allocate
or supplement or permit or consent to the amendment, modification,
allocation, re-allocation or supplement of, any of the provisions
of the Construction Budget, except with the prior written approval
of the Required Secured Parties. Notwithstanding the foregoing,
the Borrower may make such allocations and re-allocations with
respect to the Construction Budget (other than such portions
thereof allocated to the payment of Contingency Costs, including
allocations pursuant to Section 2.21, and the Commitment Fee
payable to Eximbank under the Eximbank Credit Agreement in
accordance with Section 6.7(c) hereof and other than such portion
thereof allocated to the pre-funding of the debt reserve on the
date of the Eximbank Disbursement) as are approved in writing by
the Administrative Agent and the Independent Engineer.
Section 6.30 Covenants Regarding the Eximbank Credit Agreement and
the OPIC Finance Agreement. (a) The Borrower shall observe and
perform the covenants set forth in Articles VII and VIII of the
Eximbank Credit Agreement, which covenants are incorporated by
reference herein as if fully set forth herein, in accordance with
the terms thereof; provided, however, that to the extent such
covenants permit (whether expressly or by omission) the Borrower to
engage in any transaction or do any act or thing otherwise
prohibited by the terms of this Agreement, or permit (whether
expressly or by omission) the Borrower to refrain from doing any
act or thing otherwise required to be done by the terms of this
Agreement, the terms of this Agreement shall be
controlling. The Borrower shall, if and to the extent required by
Eximbank, comply with World Bank Guidelines.
(b) The Borrower acknowledges and agrees that no earlier than five
(5) Business Days prior to the proposed Disbursement Date (as
defined in the Eximbank Credit Agreement), the Administrative
Agent, on behalf of the Borrower, shall deliver to Eximbank the
Request for Eximbank Disbursement to Account of Borrower referred
to in Section 5.1(p) fully completed in an amount sufficient to pay
all amounts of principal of the Loans outstanding as of the Project
Completion Date (the "Final Principal Amount") and 100% of the
Credit Exposure Fee on the Final Principal Amount.
(c) The Borrower acknowledges and agrees that no earlier than five
(5) Business Days prior to the proposed Disbursement Date (as
defined in the Eximbank Credit Agreement), the Administrative
Agent, on behalf of the Borrower, shall deliver to Eximbank the
promissory note referred to in Section 5.1(p) fully completed,
dated the date of the proposed Disbursement Date and in an amount
equal to the amount set forth in the Request for Eximbank
Disbursement to Account of Borrower referred to in Section
6.30(b).
(d) The Borrower covenants and agrees to use all the proceeds of
the disbursement it receives under the Eximbank Credit Agreement
for the payment to the Lenders of the Final Principal Amount and
for the payment to Eximbank of the Credit Exposure Fee. To
accomplish such payment to the Lenders the Borrower hereby
irrevocably instructs the Administrative Agent (i) immediately to
transfer from the amounts paid into the Blocked Account pursuant to
the Request for Eximbank Disbursement to Account of Borrower
referred to in Section 6.30(b) an amount equal to the Final
Principal Amount to the Administrative Agent Account for payment to
the Lenders and (ii) to disregard any contrary instructions whether
received before, on or after the date hereof unless such contrary
instructions are agreed to in writing by the
Administrative Agent (with the consent of the Required Secured
Parties) and Eximbank.
(e) The Borrower covenants and agrees to cause and take all
actions necessary to cause each condition precedent set forth in
the Eximbank Credit Agreement (including, without limitation,
delivery of the evidences of authority required by Section
5.02(c) of the Eximbank Credit Agreement and delivery of the
certification required under Section 5.02(d) of the Eximbank Credit
Agreement concerning the Borrower's compliance with the Energy
Conversion Agreement) to be satisfied no later than three (3)
Business Days prior to the proposed Disbursement Date (as defined
in the Eximbank Credit Agreement).
(f) Commencing on the Effective Date and until the Construction
Financing Termination Date, the Borrower shall not, without the
prior written consent of the Lenders and OPIC, (i) suspend, cancel
or terminate all or any part of the credit facility
provided under the Eximbank Credit Agreement or cause or permit the
same to be suspended, canceled or terminated in any way or for any
reason or (ii) amend or modify or permit the amendment or
modification of any provision of the Eximbank Credit Agreement.
(g) Commencing on the Effective Date and until the Construction
Financing Termination Date, the Borrower shall promptly (x) notify
the Administrative Agent and the Collateral Agent of any change of
the names of the Persons advised by the Borrower to the
Administrative Agent pursuant to Section 5.1(n) as being the
Persons who will act as representatives of the Borrower in the
operation of the Loans, the Letters of Credit and the credit
facility provided under the Eximbank Credit Agreement and (y)
provide evidence of the authority of any new Persons so appointed
to act on behalf of the Borrower.
(h) The Borrower covenants and agrees promptly to deliver to the
Administrative Agent and the Collateral Agent a copy of each notice
or other written communication sent to it by Eximbank in connection
with the Eximbank Credit Agreement, including, without limitation,
any notice relating to a change of Eximbank's account described in
Section 3.08 of the Eximbank Credit Agreement.
(i) Commencing on the Effective Date and until the Construction
Financing Termination Date, the Borrower shall not, without the
prior written consent of the Lenders, (i) suspend, cancel or
terminate all or any part of the credit facility provided under the
OPIC Finance Agreement or cause or permit the same to be suspended,
canceled or terminated in any way or for any reason or (ii) amend
or modify or permit the amendment or modification of any provision
of the OPIC Finance Agreement.
Section 6.31 Bank Accounts. The Borrower shall maintain all its
bank accounts with the Collateral Agent, except that the Borrower
may maintain, in accordance with the Disbursement Agreement, (a)
the Service Fee Account,(b) the Philippines Peso Account, (c) the
Dollar Operating Cost Account and (d) the Additional Equity
Contribution Account, and the Borrower may maintain any account
contemplated by the Marubeni Purchase Agreement.
Section 6.32 Press Releases; Advertising. Neither the Borrower,
any Construction Financing Secured Party nor any Affiliate of the
Borrower shall issue or consent to the issuance of any press
release or other announcement or advertisement that refers to the
provision of financing by the Construction Financing Secured
Parties for the Project without the prior written consent of the
Borrower, the Arranger and the Administrative Agent, which
consent shall not be unreasonably withheld or delayed, except that
no consent shall be required where the issuance of any such press
release, announcement or advertisement is required by Applicable
Law.
Section 6.33 Additional Documents; Filings and Recordings. The
Borrower shall execute and deliver, from time to time as
reasonably requested by the Administrative Agent or the
Collateral Agent, at the Borrower's expense, such other documents
as shall be necessary or advisable or that the Administrative Agent
or the Collateral Agent may reasonably request in connection with
the rights and remedies of the Secured Parties granted or provided
for by the Project Documents, as applicable, and to consummate the
transactions contemplated therein. The Borrower shall, at its own
expense, take all reasonable actions that have been or shall be
requested by the Administrative Agent or the Collateral Agent or
that the Borrower knows are necessary to establish, maintain,
protect, perfect and continue the perfection of the first priority
security interests of the Secured Parties created by the Security
Documents and shall furnish timely notice of the necessity of any
such action, together with such instruments, in execution form, and
such other information as may be required to enable the
Administrative Agent, the Collateral Agent and any other
appropriate Secured Party to effect any such action. Without
limiting the generality of the foregoing, the Borrower shall (a)
execute or cause to be executed and shall file or cause to be filed
such financing statements, continuation statements, fixture filings
and mortgages or deeds of trust in all places necessary or
advisable (in the opinion of counsel for the Administrative Agent
or the Collateral Agent) to establish, maintain and perfect such
security interests and in all other places that the Administrative
Agent or the Collateral Agent shall reasonably request and (b) do
everything necessary in the reasonable judgment of the
Administrative Agent or the Collateral Agent to (i) create and
perfect the Security with respect to future assets covered by the
Mortgage, (ii) maintain the Security in full force and effect at
all times and (iii) preserve and protect the Collateral and protect
and enforce its rights and title and the rights and title of the
Secured Parties to the Collateral.
Section 6.34 Employees and Employee Plans. The Borrower shall not
adopt, establish, maintain, Sponsor, administer, contribute to,
participate in, or incur any liability under or obligation to
contribute to, any Plan or incur any liability to provide post-
retirement welfare benefits, except such liability to provide post-
retirement welfare benefits as may be required by Applicable Law.
Section 6.35 Shipment of the Items. (a) All Items which are
financed under the Construction Credit and are exported from the
United States by ocean vessel shall be transported from the United
States in vessels of U.S. Registry as required by 46 U.S.C. U
1241-1 (Public Resolution No. 17 of the 73rd Congress of the United
States, as amended), except to the extent that a waiver of this
requirement is obtained from the U.S. Maritime Administration
("MARAD"). If shipments are made on non-U.S. vessels without a
waiver or contrary to the provisions of the waiver, the Items will
not be eligible for financing under the Construction Credit.
(b) The costs of ocean or air freight for shipment of the Items on
vessels or aircraft of non-U.S. registry pursuant to a waiver from
MARAD will constitute Foreign Costs of the Items if such costs are
included in the Contract Price of the Items. If such freight costs
are for shipment of the Items on vessels or
aircraft of U.S. registry, such costs will constitute U.S.
Content.
(c) The Borrower shall obtain insurance against marine and transit
hazards on all shipments of the Items in an amount not less than
the amount of the Loans made with respect to those shipments.
United States insurers shall be given a
nondiscriminatory opportunity to bid for such insurance business
related to the Items. The premiums for such insurance if
provided by non-U.S. insurers will be eligible for financing under
this Agreement only if they are included in the Contract Price of
the Items. If such premiums are paid to companies in the United
States, they will be considered as part of the U.S. Content of such
Items. All other such premiums will be
considered as Foreign Costs of the Items.
Section 6.36 Administrative Agent Appointed Attorney-in-Fact. The
Borrower hereby irrevocably appoints the Administrative Agent, with
full power of substitution, the attorney-in-fact of the Borrower
for the purpose of completing the documents and instruments
referred to in Section 5.1(p) in such manner as the Administrative
Agent deems necessary or advisable and in
accordance with the terms of this Agreement, and for delivering
such completed documents to Eximbank pursuant to the terms of this
Agreement and the Eximbank Credit Agreement and to take any other
action and execute any other instrument or document, in each case
in the name or on behalf of the Borrower, which the Administrative
Agent deems necessary or advisable to accomplish the purposes
hereof, which appointment is irrevocable and coupled with an
interest. The power of attorney in this Section 6.36 is of the
essence and forms an integral and inseparable part of this
Agreement without which this Agreement would not have been made.
Section 6.37 Accounting Changes. The Borrower shall not make any
significant change in accounting treatment or reporting, except as
permitted by United States or Philippine, as
applicable, generally accepted accounting principles.
Section 6.38 Certain Governmental Approvals. The Borrower shall
obtain on or before September 30, 1994 each of the Governmental
Approvals listed as items 4.3 and 10.5 of Part B of Schedule 4.11
hereto, each of which shall be in form and substance satisfactory
to the Lenders.
ARTICLE 7. Events of Default
Notwithstanding anything herein or in any of the Financing
Documents or elsewhere to the contrary, upon the occurrence of any
of the following events (each of the following events, a
"Construction Credit Event of Default"):
Section 7.1 Payments. The Borrower shall (i) default in the
payment when due of any principal of any Loan or (ii) default, and
such default shall continue unremedied for five (5) or more
Business Days, in the payment when due of any interest on any Loan
or any other amounts owing to the Construction Financing Secured
Parties hereunder or under the Notes, the Letters of Credit or any
other Financing Document; or
Section 7.2 Representations, Etc. Any representation or
warranty confirmed or made in any Project Document by the Borrower
or any Obligor which is an Affiliate of the Borrower, or in any
writing provided by any of them in connection with the execution
and delivery of, or in connection with any Application for Funding
or request for a Utilization under, this Agreement shall be found
to have been incorrect in any material respect when made or deemed
to be made and shall continue to be incorrect for a period of
thirty (30) days after notice thereof shall have been given to the
Borrower by a Construction Financing Secured Party; or
Section 7.3 Covenants. (a) The Borrower shall fail to perform or
observe any covenant, term or agreement contained in Sections
2.1(d) (The Commitments), 2.7 (Commitment Commission and Fees),
6.1(a) (Quarterly Financial Statements of Borrower), 6.1(b) (Annual
Financial Statements of Borrower), 6.3 (Maintenance of Property;
Insurance), 6.14 (Consolidation, Merger, Sale of
Assets, Etc.), 6.15 (Dividends; Restricted Payments), 6.16
(Leases), 6.17 (Indebtedness), 6.18 (Liens), 6.19 (Guarantees),
6.20 (Subsidiaries; Advances, Investments and Loans), 6.23(b), (f)
and (g) (Modifications of Articles of Incorporation and By-Laws;
Additional Agreements; Assignments and Modifications of Agreements;
Etc.), 6.24 (No Other Business), 6.30(b)-(f)
(Covenants Regarding the Eximbank Credit Agreement and the OPIC
Finance Agreement) or 6.38 (Certain Governmental Approvals) hereof
or any covenant, term or agreement contained in the Energy
Conversion Agreement; or
(b) The Borrower or any Obligor which is an Affiliate of the
Borrower shall fail to perform or observe any other covenant, term
or agreement contained in this Agreement or any other
Project Document and such failure shall not be remediable or, if
remediable, shall continue unremedied (x) with respect to
breaches under this Agreement, for a period of 30 days after the
earlier of (i) the date on which such failure shall have first
become known to the Borrower and (ii) the date on which written
notice thereof shall have been received by the Borrower from the
Administrative Agent, and (y) with respect to breaches under any
other Project Document, after the expiration of the earlier of (1)
30 days after the earlier of (I) the date on which such failure
shall have first become known to the Borrower and (II) the date on
which written notice thereof shall have been received by the
Borrower from the Administrative Agent and (2) the
applicable grace period under such Project Documents; provided that
if (A) such failure cannot be cured within such applicable period,
(B) such failure, in the reasonable judgment of the Independent
Engineer, is susceptible of cure, (C) the Borrower is proceeding
with diligence and in good faith to cure such failure, (D) the
existence of such failure in the reasonable judgment of the
Required Lenders has not had and is not reasonably likely to have
a Material Adverse Effect and (E) the Administrative Agent shall
have received an officer's certificate signed by a
Financial Officer of the Borrower to the effect of clauses (A), (B)
and (C) above and stating what action the Borrower is taking to
cure such failure, then, such applicable cure period shall be
extended by up to an additional 60 days as shall be necessary for
the Borrower diligently to cure such failure; or
Section 7.4 Default Under Other Agreements. (a) The Borrower
shall (i) default in any payment of any Indebtedness For Borrowed
Money (other than the Loans) beyond the period of grace, if any,
provided in the instrument or agreement under which such
Indebtedness For Borrowed Money was created or (ii) default (other
than in the manner referred to in clause (i)) in the observance or
performance of any agreement or condition relating to any
Indebtedness For Borrowed Money (other than the Loans) or contained
in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition shall exist,
the effect of which such default or other event or condition is to
(x) cause any such Indebtedness For Borrowed Money to become due
prior to its stated maturity or (y) if such Indebtedness For
Borrowed Money is pari passu in right of payment to the
Construction Financing Secured Obligations, permit the Person to
whom such Indebtedness For Borrowed Money is owed to declare the
same due and payable prior to the stated maturity thereof; or
(b) any Indebtedness For Borrowed Money of the Borrower shall be
declared to be due and payable, or required to be prepaid other
than by a regularly scheduled required prepayment, prior to the
stated maturity thereof; or
(c) any Obligor (other than PNOC-EDC, the ECA Operation
Performance Bond Issuer, CECI and KEC) shall (i) default in any
payment of any Indebtedness For Borrowed Money in an aggregate
principal amount exceeding $2 million and $3 million, in the case
of BHCO, $5 million in the case of Kiewit Energy and $10 million,
in the case of KCGI, beyond the period of grace, if any, provided
in the instrument or agreement under which such Indebtedness For
Borrowed Money was created or (ii) default in the observance or
performance of any agreement or condition relating to any
Indebtedness For Borrowed Money in an aggregate principal amount
exceeding $2 million and $3 million, in the case of BHCO, $5
million in the case of Kiewit Energy and $10 million, in the case
of KCGI, or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or
condition is to cause any such Indebtedness For Borrowed Money to
become due prior to its stated maturity; or
(d) CECI (i) defaults in any payment of any Indebtedness For
Borrowed Money in an aggregate principal amount exceeding $10
million beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness For
Borrowed Money was created or (ii) defaults in the observance of
performance of any agreement or condition relating to any
Indebtedness for Borrowed Money in an aggregate principal amount
exceeding $10 million or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other
event or condition is to cause any such Indebtedness For Borrowed
Money to become due prior to its stated maturity;
provided, however, that if one or more of the events described in
this clause (d) shall occur after the date on which CECI shall
cease to be an Obligor, the occurrence of such event or events
shall not be deemed a Construction Credit Event of Default
unless, in the reasonable judgment of the Required Lenders, the
occurrence of such event or events has had or is reasonably likely
to have a material adverse effect on the operations, business,
condition (financial or otherwise) or property of the Borrower; or
(e) So long as KEC is an Obligor, KEC (i) defaults in any
payment of any Indebtedness For Borrowed Money in an aggregate
principal amount exceeding $10 million beyond the period of grace,
if any, provided in the instrument or agreement under which such
Indebtedness For Borrowed Money was created or (ii) defaults in the
observance of performance of any agreement or condition relating to
any Indebtedness for Borrowed Money in an aggregate principal
amount exceeding $10 million or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default
or other event or condition is to cause any such Indebtedness For
Borrowed Money to become due prior to its stated maturity;
provided, however, that if one or more of the events described in
this clause (e) shall occur, the occurrence of such event or events
shall not be deemed a Construction Credit Event of Default unless,
in the reasonable judgment of the Required Lenders, the occurrence
of such event or events has had or is reasonably likely to have a
material adverse effect on the operations, business, condition
(financial or otherwise) or property of the Borrower; or
(f) any Indebtedness For Borrowed Money in an aggregate
principal amount exceeding $2 million of any Obligor (other than
Kiewit Energy, CECI, KEC, KCGI, the ECA Operation Performance Bond
Issuer and PNOC-EDC), or any Indebtedness For Borrowed Money in an
aggregate principal amount exceeding $5 million of Kiewit Energy,
$10 million of CECI, $10 million of KEC or $10 million of KCGI,
shall be declared to be due and payable, or required to be prepaid
other than by a regularly scheduled required prepayment, prior to
the stated maturity thereof, and, if such Obligor is KCGI, such
Indebtedness For Borrowed Money that has been declared due and
payable prior to the stated maturity thereof, in the reasonable
judgment of the Required Lenders, has had or is reasonably likely
to have a Material Adverse Effect; provided, however, that if one
or more of the events described in this clause (f) with respect to
Indebtedness For Borrowed Money of CECI or KEC shall occur after
the date on which CECI and KEC shall cease to be an Obligor, the
occurrence of such event or events shall not be deemed a
Construction Credit Event of Default unless, in the reasonable
judgment of the Required Lenders, the occurrence of such event or
events has had or is reasonably likely to have a material adverse
effect on the operations, business, condition (financial or
otherwise) or property of the Borrower; or
(g) a default shall have occurred in the performance of any
material obligation by (i) any Obligor or the Republic under any of
the Project Documents to which such Person is a party and such
default shall continue unremedied beyond the period of grace, if
any, extended to such Person with respect to such default, as
specified in the Project Document under which such obligation was
created or (ii) any other party (other than the Persons referred to
in clause (i) of this Section 7.4(g)) under any of the Project
Documents and the existence of such default in the reasonable
judgment of the Required Lenders has had or is reasonably likely to
have a Material Adverse Effect (and such default has not been cured
within 60 days).
Section 7.5 Bankruptcy, Etc. There shall have been entered
against the Borrower or any Obligor (other than the ECA Operation
Performance Bond Issuer and PNOC-EDC) a decree or order by a court
adjudging the Borrower or such Obligor bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in
respect of the Borrower or such Obligor under any Applicable Law;
or appointing a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Borrower or such
Obligor or of any substantial part of its property or other assets,
or ordering the winding up or liquidation of its affairs; or the
institution by the Borrower or such Obligor of proceedings to be
adjudicated bankrupt or insolvent, or the consent by it to the
institution of bankruptcy or insolvency proceedings against it; or
the filing by it of a petition or answer or consent
seeking reorganization or debt relief under any Applicable Law; or
the consent by it to the filing of any such petition or to the
appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Borrower or any
such Obligor or of any substantial part of its property; or the
making by it of an assignment for the benefit of creditors; or the
admission by it in writing of its inability to pay its debts
generally as they become due; or any other event shall have
occurred which under any Applicable Law would have an effect
analogous to any of those events listed above in this subsection
with respect to the Borrower or any such Obligor; or any
corporate action is taken by the Borrower or any such Obligor for
the purpose of effecting any of the foregoing; provided that any
reorganization or reconstruction of a company while solvent with
the prior consent of the Required Lenders, such consent not to be
unreasonably withheld or delayed, shall not be held to constitute
any event mentioned in this paragraph; and provided, further, that
(a) in connection with any Obligor, no Construction Credit Event of
Default shall be declared under this Section 7.5 if (x) such Person
has fully complied and continues to fully comply with all of its
obligations under all Project Documents to which such Person is a
party and (y) in the reasonable judgment of the Required Lenders,
such Construction Credit Event of Default has not had and is not
reasonably likely to have a Material Adverse Effect; or
Section 7.6 Project Events. (a) the Borrower shall cease to have
the right to possess and use the Site; or
(b) any event shall have occurred which entitles the Borrower or
PNOC-EDC to give a notice under Section 9.1 of the Energy
Conversion Agreement; or
(c) the Borrower shall (except as permitted by Section 6.14 hereof)
sell or otherwise dispose of any of its interest in the Project; or
(d) the Eximbank Disbursement shall not have occurred by the Date
Certain; or
(e) an event or circumstance described in subclause (a), (b), (c)
or (d) of Section 14.2.1 of the Energy Conversion Agreement shall
have occurred, it being understood that for purposes of this
Section 7.6(e), (i) the words "one-hundred twenty (120)" or "120"
contained in subclauses (b), (c) and (d) of Section 14.2.1 of the
Energy Conversion Agreement shall be replaced with the words "sixty
(60)" in each place where such words appear and the words "thirty
(30) months" shall be replaced by the words "twenty-two (22)
months" in each place in subclause (b) of Section 14.2.1 of the
Energy Conversion Agreement in which such words appear; or
(f) an event or circumstance described in subclause (a), (b) or (c)
of Section 14.2.2 of the Energy Conversion Agreement shall have
occurred, it being understood that for purposes of this Section
7.6(f), the words "one-hundred twenty (120)" contained in
subclauses (b) and (c) of Section 14.2.2 of the Energy Conversion
Agreement shall be replaced with the words "sixty (60)" in each
place where such words appear; or
(g) a failure by the Borrower described in the first sentence of
Section 14.3 of the Energy Conversion Agreement shall have
occurred, it being understood that for purposes of this Section
7.6(g), the words "sixty (60) consecutive days" contained in the
first sentence of Section 14.3 of the Energy Conversion Agreement
shall be replaced with the words "forty-five (45) consecutive
days"; or
(h) the Mortgage shall not have been entered into by the parties
thereto, become fully effective in accordance with its terms and
been registered in all places in the Republic necessary or
desirable in the opinion of counsel to the Collateral Agent on or
before 90 days after the Effective Date; or
Section 7.7 Material Adverse Effect. One or more events,
conditions or circumstances (including without limitation Force
Majeure as defined in Sections 13.1(a) and 13.1(b) of the Energy
Conversion Agreement) shall exist or shall have occurred which, in
the reasonable judgment of the Required Lenders, is reasonably
likely to have a Material Adverse Effect; or
Section 7.8 Project Documents; Security Documents. (a) This
Agreement or any of the other Financing Documents or any of the
Energy Conversion Agreement, the Supply Contract, the
Construction Contract or the Keystone Agreement, or any provision
hereof or thereof (i)is or becomes invalid, illegal or
unenforceable or any party thereto (other than any Construction
Financing Secured Party) shall so assert, or (ii) ceases to be in
full force and effect, or shall cease to give the Secured Parties
the Liens, rights, powers and privileges purported to be created
thereby or hereby or any party thereto (other than any
Construction Financing Secured Party) shall so assert; or
(b) any of the Project Documents (other than the Financing
Documents or any of the Energy Conversion Agreement, the Supply
Contract, the Construction Contract or the Keystone Agreement) or
any material provision thereof (i) is or becomes invalid, illegal
or unenforceable or any party thereto (other any Construction
Financing Secured Party) shall so assert, and such default shall
have continued for a period of thirty (30) days after notice
thereof shall have been given to the Borrower by the Administrative
Agent, or (ii) ceases to be in full force and effect, or shall
cease to give the Secured Parties the Liens, rights, powers and
privileges purported to be created thereby such that the interests
of the Construction Financing Secured Parties are adversely
affected to a material extent; or
(c) except as permitted by Section 6.18 hereof, the Security or
any component part thereof for any reason fails to constitute a
valid and perfected first priority Lien or ceases to be in full
force and effect or the Borrower or the grantor or pledgor
thereof shall so assert; or
Section 7.9 Ownership of the Borrower. (a) Either CECI or KDG
shall cease to directly or indirectly own 49.9991% (rounded to the
nearest ten thousandth) of the shares of capital stock of the
Borrower free and clear of all Liens, other than Liens
contemplated by the Security Documents (it being understood that
for all purposes of this Section 7.9 (including paragraph (b)
hereof), if CECI or KDG owns shares of capital stock of the
Borrower indirectly, the percentage of its ownership in the
Borrower shall be the product of (i) the product of the
percentage ownership it has in each of one or more intermediate
subsidiaries or other entities (excluding for purposes of this
calculation any ownership interest that KEC has in CECI) times (ii)
the percentage ownership which the subsidiary or other entity
owning shares of capital stock of the Borrower directly has in the
Borrower); or
(b) the Borrower or CE Mahanagdong or Kiewit Energy shall, without
the prior consent of the Required Lenders, issue or have
outstanding any securities convertible into or exchangeable for its
capital stock or issue or grant or have outstanding any rights to
subscribe for or to purchase, or any options or
warrants for the purchase of, or any agreements, arrangements or
understandings providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any
character relating to, its capital stock, other than as provided in
the Board of Investments Approval and the Marubeni Purchase
Agreement; provided, however, that a Construction Credit Event of
Default shall not be deemed to have occurred if (x) full dilution
of the capital stock of the Borrower and/or CE Mahanagdong and/or
Kiewit Energy by the methods noted above in this Section 7.9(b)
would not have the effect of reducing below 49.9991% (rounded to
the nearest ten thousandth) CECI's or KEC's direct or indirect
ownership of the shares of capital stock of the Borrower and (y)
100% of the capital stock of the Borrower is at all times subject
to a Lien in favor of the Collateral Agent on terms substantially
similar to the terms of the Pledge Agreement; or
Section 7.10 Judgments. (a) One or more judgments or decrees
shall be entered (i) against the Borrower, CE Mahanagdong or Kiewit
Energy involving in the aggregate a liability (not paid or fully
covered by insurance) of $2 million or more; or (ii) prior to the
date on which CECI or KEC shall cease to be an Obligor, against
CECI or KEC involving in the aggregate a liability (not paid or
fully covered by insurance) of $10 million or more with respect to
CECI and $10 million or more with respect to KEC; or (iii) after
the date on which CECI or KEC shall cease to be an Obligor, against
CECI or KEC involving in the aggregate a liability (not paid or
fully covered by insurance) of $15 million or more, which
liability, in the reasonable judgment of the Required Lenders, has
had or is reasonably likely to have a material adverse effect on
the operations, business, condition (financial or otherwise) or
property of the Borrower or; (iv) prior to the date on which BHCO
shall cease to be an Obligor, against BHCO involving in the
aggregate a liability (not paid or fully covered by insurance) of
$3 million or more, which liability, in the reasonable judgment of
the Required Lenders, has or is reasonably likely to have a
Material Adverse Effect; (v) prior to the date on which the
Construction Contractor shall cease to be an Obligor, against the
Construction Contractor involving in the aggregate a liability (not
paid or fully covered by insurance) of $2 million or more, which
liability, in the reasonable judgment of the Required Lenders, has
had or is reasonably likely to have a Material Adverse Effect; or
(vi) prior to the date on which the Construction Supplier shall
cease to be an Obligor, against the Construction Supplier involving
in the aggregate a liability (not paid or fully covered by
insurance) of $2 million or more, which liability, in the
reasonable judgment of the Required Lenders, has had or is
reasonably likely to have a Material Adverse Effect; or (vii) prior
to the date on which KCGI shall cease to be an Obligor, against
KCGI involving in the aggregate a liability (not paid or fully
covered by insurance) of $10 million or more, which liability, in
the reasonable judgment of the Required Lenders, has had or is
likely to have a Material Adverse Effect; or (viii) prior to the
date on which any other Obligor ceases to be an Obligor, against
such Obligor involving in the aggregate a liability (not paid or
fully discharged by insurance) of $2 million or more, which
liability in the reasonable judgment of the Required Lenders has
had or is likely to have a Material Adverse Effect; and in any such
case all such judgments or decrees shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days after
the entry thereof; or
(b) Any non-monetary judgment, order or decree is entered
against the Borrower which in the reasonable judgment of the
Required Secured Parties does or would be expected to have a
Material Adverse Effect and there should be any period of 10
consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect.
Section 7.11 Governmental Action. Any government or
Governmental Authority shall have condemned, nationalized,
seized, or otherwise expropriated all or any substantial part of
the property or other assets of the Borrower or of its capital
stock or shall have assumed custody or control of such property or
other assets or of the business or operations of the Borrower or of
its capital stock or shall have taken any action for the
dissolution or disestablishment of the Borrower or any action that
would prevent the Borrower or its officers from carrying on its
business or operations or a substantial part thereof; or
Section 7.12 Eximbank Documents and OPIC Documents. (a) The
Eximbank Guarantee Agreement or the OPIC Finance Agreement shall
cease to be in full force and effect or shall cease to give the
Lenders the rights, privileges and powers purported to be created
thereby or any provision thereof becomes invalid, illegal or
enforceable or (b) all or any part of the credit facility to be
provided under the Eximbank Credit Agreement or the OPIC Finance
Agreement is canceled or terminated in any way or for any reason or
(c) all or any part of the credit facility to be provided under the
Eximbank Credit Agreement or the OPIC Finance Agreement is
suspended for any reason for more than 30 days; or
Section 7.13 Permits. The Borrower or any Obligor shall fail to
obtain, renew, maintain or comply in all material respects with any
Governmental Approval set forth in Schedule 4.11 hereof or any
license, approval or consent referred to in Section 5.2(c); or any
such Governmental Approval or license, approval or consent shall be
rescinded, terminated, suspended, modified or withheld or shall be
determined to be invalid or shall cease to be in full force and
effect; or any proceeding shall be commenced by or before any
Governmental Authority for the purpose of rescinding, terminating,
suspending, modifying or withholding any such
Governmental Approval or license, approval or consent and such
proceeding is not dismissed within 60 days; and such failure,
rescission, determination of invalidity, termination, suspension,
modification, withholding, cessation or commencement is
reasonably likely to have a Material Adverse Effect; or
Section 7.14 Transfer of Collateral; Event of Loss; Diminution of
Property Rights. (a) Title to or any right in all or any part of
(i) the Mortgage Collateral, (ii) the Plant or (iii) any other
collateral purported to be covered by the Security
Documents (other than as permitted pursuant to this Agreement,
including Section 6.14 hereof) shall become vested in any party
other than the party named as owner and/or holder thereof in the
applicable Security Document, whether by operation of law or
otherwise, or (iv) there shall have occurred an Event of Loss; or
(b) Except as otherwise permitted pursuant to this Agreement, the
Borrower hereafter grants any easement or dedication, files any
plat, declaration or restriction or enters into any lease or sub-
lease concerning the Site, the Mortgage Collateral or the Plant and
the effect thereof is determined by the Administrative Agent, in
its reasonable discretion, to be material and adverse to the Site,
the Mortgage Collateral, the Plant or the Borrower; or
Section 7.15 Completion by Date Certain. A determination by the
Independent Engineer, in each case in its reasonable judgment, that
(a) the Project is not reasonably likely to be completed within the
Construction Budget (taking into account any
additional commitment of funds, any payments (without
duplication) of delay liquidated damages under the Construction
Contract and/or the Supply Contract and any payments (without
duplication) of performance damages under the Construction
Contract and/or the Supply Contract, if any, that as of such time
have been determined by the Required Lenders to be used to remedy
the condition that would result in a Construction Credit Event of
Default under this Section 7.15) or (b) that the Disbursement Date
(as defined in the Eximbank Credit Agreement) is not reasonably
likely to occur by the Date Certain; provided, that no Construction
Credit Event of Default shall be declared as a result of any such
determination if all of the following conditions are met: (i)
within 30 days after notice by the Administrative Agent to the
Borrower of such determination, the Borrower submits to the
Administrative Agent a plan, in form and substance acceptable to
the Required Lenders, specifying the plan of action the Borrower
intends to take to remedy the condition described herein that would
result in a Construction Credit Event of Default and (ii) the
Borrower proceeds diligently in implementing such plan to the
Required Lenders' reasonable satisfaction, provides reports
periodically and at such other times as the Administrative Agent
may request to the Administrative Agent of the status of such
implementation and from time to time amends such plan with the
Required Lenders' consent (which shall not be unreasonably
withheld) so that such plan remains likely to achieve its aims; or
Section 7.16 Funding Agreement; KCGI Guaranty; OPIC Finance
Agreement; Tranche 1 Loans. (a) The failure by any of the
Affiliated Funding Entities to make any Required Subordinated Loan
or Required Equity Contribution or the failure by any of the
Affiliated Funding Entities to pay any amount required to be paid
by it under or otherwise to comply with any of the terms of the
Funding Agreement; provided that no Construction Credit Event of
Default shall be declared as a result of any such failure by any of
the Affiliated Funding Entities to make a Required
Subordinated Loan or Required Equity Contribution or to make any
such payment if an amount equal to the amount of all such
Required Subordinated Loans and Required Equity Contributions and
payments is available to be withdrawn from the Funding Account on
the date required; or
(b) KCGI shall have breached the financial covenants set forth in
the KCGI Guaranty and KCGI shall have failed to establish the
letter of credit and/or bond pursuant to the terms of the KCGI
Guaranty.
(c) The failure of APFC to comply with Section 2.02 of the APFC
Security Agreement.
(d) The failure by OPIC, in default of its funding obligations
under the OPIC Finance Agreement and the Intercreditor Agreement,
or the failure by any Tranche 1 Lender, in respect of its funding
obligations under this Agreement, to make available any OPIC
Disbursement or Tranche 1 Loan, as applicable, or portion thereof
as required by the OPIC Finance Agreement and the Intercreditor
Agreement or this Agreement, as applicable; provided, that no
Construction Credit Event of Default shall be declared as a result
of such failure if, on or prior to the date on which the funds OPIC
or such Tranche 1 Lender, as applicable, failed to disburse are
required by the Borrower for the prompt payment of Project Costs,
another bank or financial institution (other than any Construction
Financing Secured Party) shall have disbursed such funds to the
Borrower on terms not materially less favorable to the Borrower
than the terms applicable to the OPIC Loan under the OPIC Finance
Agreement or Tranche 1 Loans under this
Agreement, as applicable, or if payment is available to be
withdrawn from the APFC Funding Account; or
(e) The occurrence and continuance of an OPIC Credit Event of
Default.
Section 7.17 Regulatory Status. The Borrower shall fail to remain
continuously exempt from all regulation under PUHCA as a result of
being a "foreign utility company" under Section 33 of PUHCA or
otherwise; or
Section 7.18 ERISA. Any of the following events occur or exist
with respect to the Borrower or, in the case of (a) through (e)
below, any ERISA Affiliate: (a) any Termination Event with respect
to any Plan; or (b) any event or circumstance that is reasonably
likely to constitute grounds entitling the PBGC to institute
proceedings under Section 4042 of ERISA for the
imposition of liability in respect of any Pension Plan (other than
a liability to the PBGC for insurance premiums the payment of which
is not yet due); (c) any Pension Plan shall have an accumulated
funding deficiency as defined in Section 412 of the Code or Section
302 of ERISA; (d) any Plan intended to be
qualified under Section 401(a) or 401(k) of the Code shall be
disqualified; (e) any Plan shall be subject to an excise tax
pursuant to Code Section 4980B or shall fail to comply with
Sections 601-606 (inclusive) of ERISA; (f) the Borrower provides
employee welfare benefits to retirees other than statutorily
required or pursuant to Section 601 et seq. of ERISA and Section
4980B of the Code; or (g) the Borrower incurs liability under or
relating to any Plan resulting from a violation of ERISA, the Code
and/or any other applicable law, including without
limitation the Age Discrimination in Employment Act, the
Americans With Disabilities Act and Title VII of the Civil Rights
Act, each as amended; and in each case above, such event or
condition, individually or in the aggregate together with all other
such events or conditions, if any, is reasonably likely to subject
the Borrower to any tax, penalty, or other liability to a Plan, a
Multiemployer Plan, the PBGC, or otherwise (or any
combination thereof) which in the aggregate has had or is
reasonably likely to have a Material Adverse Effect; or the
Borrower or any ERISA Affiliate shall fail to pay when due an
amount or amounts which it shall have become liable to pay under
Title IV or ERISA or as a contribution to a Pension Plan and/or
Multiemployer Plan which, as a result, has had or is reasonably
likely to have a Material Adverse Effect; or
Section 7.19 Authority to Construct. The Cross-Over Date shall
have occurred and the Construction Contractor shall not have
obtained the Authority to Construct on terms free from conditions
or requirements not contemplated by the Construction Budget;
Section 7.20 Events Affecting APFC's Funding Obligations. The
occurrence of any of the following events and, in the reasonable
judgment of the Required Lenders, such event has a material adverse
effect on APFC's funding obligations hereunder:
(a) the entering against APFC of a decree or order by a court
adjudging APFC bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of APFC under any Applicable Law, or
appointing a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of APFC or of any
substantial part of its property or other assets, or ordering the
winding up or liquidation of its affairs; or the institution by
APFC of proceedings to be adjudicated bankrupt or insolvent, or the
consent by it to the institution of bankruptcy or insolvency
proceedings against it; or the filing by it of a petition or answer
or consent seeking reorganization or debt relief under any
Applicable Law; or the consent by it to the filing of any such
petition or to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of APFC
or of any substantial part of its property; or the making by it of
an assignment for the benefit of creditors; or the admission by it
in writing of its inability to pay its debts generally as they
become due; or any corporate action is taken by APFC for the
purpose of effecting any of the foregoing; or
(b) one or more judgments or decrees shall be entered against APFC
involving in the aggregate a liability (not paid or fully covered
by insurance) of $500,000 or more and all of such judgments or
decrees shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60 days after the entry thereof;
then, and in any such event, and at any time thereafter, if such
event is continuing, subject to the terms of the Intercreditor
Agreement, the Administrative Agent, on behalf of the Construction
Financing Secured Parties, upon receiving the consent of the
Required Lenders, may, and upon the request of the Required
Lenders, shall, subject to receiving, if applicable, such indemnity
as provided in Section 8.4(a), (i) take any actions necessary to
cure such Construction Credit Event of Default, and/or declare a
Construction Credit Event of Default, (ii) declare, without
presentment, demand, protest or notice of any kind, all of which
are hereby expressly waived by the Borrower, the Commitment of each
Lender terminated, irrespective of any other provision of any
Financing Document, whereupon such Commitment shall immediately
terminate (provided, that if a Construction Credit Event of Default
specified in Section 7.5 shall have occurred or a Buyout shall have
occurred, all such Commitments shall automatically be immediately
terminated without any declaration, presentment, demand, protest or
notice or any act of any kind by any of the Construction Financing
Secured Parties whatsoever), (iii) declare, without presentment,
demand, protest or notice of any kind, all of which are hereby
expressly waived by Borrower, the entire amount of Borrower's
outstanding Construction Financing Secured Obligations to be
immediately due and payable, irrespective of any other provision of
any Financing Document, whereupon the same shall be and become
immediately due and payable (provided that if a Construction Credit
Event of Default specified in Section 7.5 shall have occurred or a
Buyout shall have occurred, the entire amount of Borrower's
outstanding Construction Financing Secured Obligations shall be
automatically immediately due and payable without any declaration,
presentment, demand, protest or notice or other act of any kind by
any of the Construction Financing Secured Parties whatsoever), and
(iv) proceed to enforce or cause or instruct the Collateral Agent
to enforce any remedies provided under any of the Financing
Documents. In addition to any or all of the foregoing, at any time
on or after the Maturity Date, the Administrative Agent, subject to
the terms of the Intercreditor Agreement, upon receiving the
consent of the Required Lenders, may, and upon the request of the
Required Lenders, shall, require the Borrower to enter into one or
more interest rate swap or cap agreements or currency swap
agreements, in which event the Borrower shall use its best efforts
to enter into any and all of such agreements as required by the
Administrative Agent. In addition to any or all of the foregoing,
if a Construction Credit Event of Default shall have occurred as a
result of the Borrower's failure to perform or observe any
covenant, term or agreement contained in Section 6.7(d) hereof, the
Administrative Agent, upon receiving the consent of the Required
Lenders may, and upon the request of the Required Lenders shall,
require the Borrower to enter into an agreement providing for the
operation and maintenance of the Project by a third-party operator
satisfactory to the Required Lenders, in which event the Borrower
shall use its best efforts to enter into such an agreement as
required by the Administrative Agent. If an event or occurrence
constitutes a Construction Credit Event of Default or Construction
Credit Default under more than one of the provisions of this
Article 7, the Administrative Agent on behalf of the Construction
Financing Secured Parties may, subject to the terms of the
Intercreditor Agreement, during the continuance of such
Construction Credit Event of Default take all actions and remedies
provided hereunder upon expiration of the shortest grace period, if
any, applicable to such Construction Credit Default or Construction
Credit Event of Default (subject to any consent or request of the
Required Lenders). Notwithstanding anything to the contrary
herein, upon the occurrence and continuance of a Construction
Credit Event of Default, the Borrower shall immediately reimburse
the Lenders for any payment made by them to the Issuing Bank
thereafter pursuant to Article 3.
ARTICLE 8. The Administrative Agent and The Issuing Bank
Section 8.1 Appointment and Authorization. Each Lender and the
Issuing Bank hereby irrevocably appoint, designate and authorize
the Administrative Agent to take such action on its behalf under
the provisions of this Agreement, the Representative Agreement and
any other Financing Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms
of this Agreement, the Representative Agreement, the other
Financing Documents and any other instruments and agreements
referred to herein or therein, together with such powers as are
reasonably incidental thereto, and to execute on its behalf the
Representative Agreement. Notwithstanding any provision to the
contrary contained elsewhere in this Agreement, the
Representative Agreement or in any other Financing Document, the
Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor
shall the Administrative Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or any other Financing Document
or otherwise exist against the Administrative Agent.
Section 8.2 Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement or any other
Financing Document by or through agents, employees or attorneys-in-
fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
Section 8.3 Liability of Administrative Agent. None of the
Administrative Agent-Related Persons shall (i) be liable for any
action taken or omitted to be taken by any of them under or in
connection with this Agreement, the Representative Agreement or any
other Financing Document or the transactions contemplated hereby or
thereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the
Lenders for any recital, statement, information, representation or
warranty made by the Borrower or any Subsidiary or Affiliate of the
Borrower, or any officer thereof, contained in this
Agreement, the Representative Agreement or in any other Financing
Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement,
the Representative Agreement or any other Financing Document, or
the execution, validity, effectiveness, genuineness,
enforceability, perfection, collectibility, priority or
sufficiency of this Agreement, the Representative Agreement or any
other Financing Document, or for any failure of the Borrower or any
other party to any Financing Document to perform its obligations
hereunder or thereunder or the financial condition of the Borrower.
No Administrative Agent-Related Person shall be under any
obligation to any Lender (A) to ascertain or to inquire as to (i)
the observance or performance of any of the agreements contained
in, or conditions of, this Agreement, the
Representative Agreement or any other Financing Document, (ii) the
financial condition of the Borrower or (iii) the existence or
possible existence of any Construction Credit Default or
Construction Credit Event of Default, or (B) to inspect the
properties, books or records of the Borrower or any of the
Borrower's Subsidiaries or Affiliates.
Section 8.4 Reliance by Administrative Agent. (a) The
Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex
or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons, and upon
advice and statements of legal counsel (including counsel to the
Borrower), independent accountants and other experts selected by
the Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under this
Agreement, the Representative Agreement or any other
Financing Document unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate in its
sole discretion and, if it so requests, it shall first be
indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement, the
Representative Agreement or any other Financing Document in
accordance with a request or consent of the Required Lenders and
such request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in Sections 5.1 and 5.2, each Lender that has executed
this Agreement shall be deemed to have consented to, approved or
accepted or to be satisfied with, each document or other matter
either sent by the Administrative Agent to such Lender for
consent, approval, acceptance or satisfaction, or required
thereunder to be consented to or approved by or acceptable or
satisfactory to such Lender.
Section 8.5 Notice of Construction Credit Default. The
Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of any Construction Credit Default or
Construction Credit Event of Default, except with respect to
defaults in the payment of principal, interest and fees required to
be paid to the Administrative Agent for the account of the Lenders,
unless the Administrative Agent shall have received written notice
from a Lender or the Borrower referring to this Agreement,
describing such Construction Credit Default or Construction Credit
Event of Default and stating that such notice is a "notice of
default". The Administrative Agent will notify the Lenders of its
receipt of any such notice. The Administrative Agent shall take
such action with respect to such Construction Credit Default or
Construction Credit Event of Default as may be requested by the
Required Lenders in accordance with Article 7; provided, however,
that unless and until the Administrative Agent has received any
such request, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action,
with respect to such Construction Credit Default or Construction
Credit Event of Default as it shall deem advisable or in the best
interest of the Lenders.
Section 8.6 Credit Decision. Each Lender acknowledges that none
of the Administrative Agent-Related Persons has made any
representation or warranty to it, and that no act by any
Administrative Agent-Related Person hereinafter taken, including
any review of the affairs of the Borrower and its Subsidiaries,
shall be deemed to constitute any representation or warranty by any
Administrative Agent-Related Person to any Lender. Each Lender
represents to the Administrative Agent that it has, independently
and without reliance upon any Administrative Agent-Related Person
and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other
condition and creditworthiness of the Borrower and its
Subsidiaries, and all applicable regulatory laws relating to the
transactions contemplated hereby, and made its own decision to
enter into this Agreement and to extend credit to the Borrower
hereunder. Each Lender also represents that it will, independently
and without reliance upon any Administrative Agent-Related Person
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 the other Financing
Documents, and to make such investigations as it deems necessary to
inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of the Borrower.
Except for notices, reports and other documents expressly herein
required to be furnished to the Lenders by the Administrative
Agent, no Administrative Agent-Related Person shall have any duty
or responsibility, either initially or on a continuing basis, to
provide any Lender with any credit or other information concerning
the business, prospects, operations, property, financial and other
condition or creditworthiness of the Borrower which may come into
the possession of any of the Administrative Agent-Related Persons.
Section 8.7 Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify
upon demand the Administrative Agent-Related Persons (to the extent
not reimbursed by or on behalf of the Borrower and without limiting
the obligation of the Borrower to do so), in proportion to their
respective Applicable Percentages of the Total Commitment, from and
against any and all Indemnified Liabilities; provided, however,
that no Lender shall be liable for the payment to the
Administrative Agent-Related Persons of any portion of such
Indemnified Liabilities resulting solely from such Person's gross
negligence or willful misconduct. Without limitation of the
foregoing, each Lender shall reimburse the Administrative Agent
upon demand for its ratable share of any costs or out-of-pocket
expenses (including Attorney Costs) incurred by the
Administrative Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, the Representative
Agreement, any other Financing Document, or any document
contemplated by or referred to herein, to the extent that the
Administrative Agent is not reimbursed for such expenses by or on
behalf of the Borrower. The undertaking in this Section 8.7 shall
survive the payment of all Senior Secured Obligations and the
resignation or replacement of the Administrative Agent.
Section 8.8 Administrative Agent in Individual Capacity. Bank of
America National Trust and Savings Association and its
Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial
advisory, underwriting or other business with the Borrower and its
Subsidiaries and Affiliates as though Bank of America
National Trust and Savings Association were not the
Administrative Agent hereunder and without notice to or consent of
the Lenders. The Lenders acknowledge that, pursuant to such
activities, Bank of America National Trust and Savings
Association or its Affiliates may receive information regarding the
Borrower or its Affiliates (including information that may be
subject to confidentiality obligations in favor of the Borrower or
such Subsidiary) and acknowledge that the Administrative Agent
shall be under no obligation to provide such information to them.
With respect to its Loans, Bank of America National Trust and
Savings Association shall have the same rights and powers under
this Agreement as any other Lender and may exercise the same as
though it were not the Administrative Agent, and the terms
"Lender", "Lenders", "Required Lenders", "Construction Financing
Secured Parties" or any other similar terms include Bank of America
National Trust and Savings Association in its individual capacity.
Section 8.9 Successor Administrative Agent and Termination of
Rights, Powers and Duties. (a) The Administrative Agent may, and
at the request of the Required Lenders shall, resign as
Administrative Agent upon 30 days' notice to the Lenders. If the
Administrative Agent resigns under this Agreement, the Required
Lenders shall appoint from among the Lenders a successor
Administrative Agent for the Lenders which successor Administrative
Agent shall be approved by the Borrower, OPIC and Eximbank. If no
successor Administrative Agent is appointed prior to the effective
date of the resignation of the Administrative Agent, the
Administrative Agent may appoint, after consulting with the Lenders
and the Borrower, a successor Administrative Agent from among the
Lenders. Upon the acceptance of its appointment as successor
Administrative Agent hereunder, such successor Administrative Agent
shall succeed to all the rights, powers and duties of the retiring
Administrative Agent and the term "Administrative Agent" shall mean
such successor Administrative Agent and the retiring Administrative
Agent's appointment, powers and duties as Administrative Agent
shall be terminated. After any retiring Administrative Agent's
resignation hereunder as Administrative Agent, the provisions of
this Article 8 and Section 9.3 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement. If no successor
Administrative Agent has accepted appointment as Administrative
Agent by the date which is 30 days following a retiring
Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon
become effective and the Lenders shall perform all of the duties of
the Administrative Agent hereunder until such time, if any, as the
Required Lenders appoint a successor Administrative Agent as
provided for above.
(b) The rights, powers and duties of the Administrative Agent
hereunder shall terminate on the earlier of (i) the
Administrative Agent's resignation or removal pursuant to Section
8.9(a) and (ii) the payment in full of the Tranche 2 Lenders'
Construction Financing Secured Obligations.
Section 8.10 Withholding Tax. (a) If any Lender is a foreign
corporation e., a Person other than a United States Person for
United States Federal income tax purposes) and such Lender claims
exemption from, or a reduction of, U.S. withholding tax under
Sections 1441 or 1442 of the Code, such Lender agrees with and in
favor of the Administrative Agent that:
(i) it shall, no later than the Credit Date (or, in the case of a
Lender which becomes a party hereto pursuant to Sections 2.20 or
9.6 after the Credit Date, the date upon which, such Lender becomes
a party hereto) deliver to the Borrower through the Administrative
Agent two accurate and complete signed originals of Internal
Revenue Service Form 4224 or any successor thereto ("Form 4224"),
or two accurate and complete signed originals of Internal Revenue
Service Form 1001 or any successor thereto ("Form 1001"), as
appropriate, in each case indicating that such Lender is on the
date of delivery thereof entitled to receive payments of principal,
interest and fees under this Agreement free from withholding of
United States Federal income tax;
(ii) if at any time a Lender makes any changes necessitating a new
Form 4224 or Form 1001, it shall with reasonable promptness deliver
to the Borrower through the Administrative Agent in replacement
for, or in addition to, the forms previously
delivered by it hereunder, two accurate and complete signed
originals of Form 4224 or two accurate and complete signed
originals of Form 1001, as appropriate, in each case indicating
that such Lender is on the date of delivery thereof entitled to
receive payments of principal, interest and fees under this
Agreement free from withholding of United States Federal income
tax;
(iii) it shall, before or promptly after the occurrence of any
event (including the passing of time but excluding any event
mentioned in (ii) above) requiring a change in or renewal of the
most recent Form 4224 or Form 1001 previously delivered by such
Lender and deliver to the Borrower through the Administrative Agent
two accurate and complete original signed copies of Form 4224 or
Form 1001 in replacement for the forms previously
delivered by such Lender; and
(iv) it shall, promptly upon the Borrower's or the
Administrative Agent's reasonable request to that effect, deliver
to the Borrower or the Administrative Agent (as the case may be)
such other forms or similar documentation as may be required from
time to time by any applicable law, treaty, rule or regulation in
order to establish such Lender's tax status for withholding
purposes.
Such Lender agrees to promptly notify the Administrative Agent of
any change in circumstances which would modify or render invalid
any claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS
Form 1001 and such Lender sells, assigns, or otherwise transfers
all or part of its rights and obligations under this Agreement
and/or its Loans to such Lender, such Lender agrees to notify the
Administrative Agent of the percentage amount in which it is no
longer the beneficial owner of such rights and obligations and/or
Loans. To the extent of such percentage amount, the
Administrative Agent will treat such Lender's IRS Form 1001 as no
longer valid.
(c) If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Administrative
Agent sells, assigns, or otherwise transfers all or part of its
rights and obligations under this Agreement and/or its Loans to
such Lender, such Lender agrees to undertake sole responsibility
for complying with the withholding tax requirements imposed by
Sections 1441 and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Administrative Agent may withhold from any
interest payment to such Lender an amount equivalent to the
applicable withholding tax after taking into account such
reduction. If the forms or other documentation required by Section
8.10(a) are not delivered to the Administrative Agent, then the
Administrative Agent may withhold from any interest payment to such
Lender not providing such forms or other documentation an amount
equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the
Administrative Agent did not properly withhold tax from amounts
paid to or for the account of any Lender (because the appropriate
form was not delivered, was not properly executed, or because such
Lender failed to notify the Administrative Agent of a change in
circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason) such Lender
shall indemnify the Administrative Agent fully for all amounts
paid, directly or indirectly, by the Administrative Agent as tax or
otherwise, including penalties and interest, and including any
taxes imposed by any jurisdiction on the amounts payable to the
Administrative Agent under this Section, together with all costs
and expenses (including Attorney Costs). The obligation of the
Lenders under this Section 8.11(e) shall survive the payment of all
Construction Financing Secured Obligations and the resignation or
replacement of the Administrative Agent.
ARTICLE 9. Miscellaneous
Section 9.1 Notices. (a) All notices, requests and other
communications shall be in writing (including, unless the context
expressly otherwise provides, by facsimile transmission, provided
that any matter transmitted by the Borrower by facsimile (i) shall
be immediately confirmed by a telephone call to the
recipient at the number specified below, and (ii) shall be
followed promptly by delivery of a hard copy original thereof) and
mailed, faxed or delivered, to the address or facsimile number
specified for notices below; or, as directed to the
Borrower or the Administrative Agent, to such other address as
shall be designated by such party in a written notice to the other
parties, and as directed to any other party, at such other address
as shall be designated by such party in a written notice to the
Borrower and the Administrative Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when
delivered for overnight (next-day) delivery, or transmitted in
legible form by facsimile machine, respectively, or if mailed, upon
the third Business Day after the date deposited into the U.S. mail,
or if delivered, upon delivery; except that notices pursuant to
Articles 2 or 8 shall not be effective until actually received by
the Administrative Agent.
(c) Any agreement of the Administrative Agent and the Lenders
herein to receive certain notices by telephone or facsimile is
solely for the convenience and at the request of the Borrower. The
Administrative Agent and the Lenders shall be entitled to rely on
the authority of any Person purporting to be a Person authorized by
the Borrower to give such notice and the Administrative Agent and
the Lenders shall not have any liability to the Administrative
Agent or other Person on account of any action taken or not taken
by the Administrative Agent or the Lenders in reliance upon such
telephonic or facsimile notice. The obligation of the Borrower to
repay the Loans shall not be affected in any way or to any extent
by any failure by the Administrative Agent and the Lenders to
receive written confirmation of any telephonic or facsimile notice
or the receipt by the Administrative Agent and the Lenders of a
confirmation which is at variance with the terms understood by the
Administrative Agent and the Lenders to be contained in the
telephonic or facsimile notice.
(d) Addresses:
If to the Borrower:
CE LUZON GEOTHERMAL POWER COMPANY, INC.
c/o California Energy Company, Inc.
10831 Old Mill Road
Omaha, Nebraska 68154
Attn: Chief Financial Officer
Tel: 402-330-8900
Fax: 402-334-3759
and with copies to:
c/o California Energy Company, Inc.
10831 Old Mill Road
Omaha, Nebraska 68154
Attn: General Counsel
Tel: 402-330-8900
Fax: 402-334-3746
and with copies to:
c/o Ms. Rosario Calderon Flanagan
Sycip, Gorres Velayo & Co.
6760 Ayala Avenue
Makati, Metro Manila Philippines
Tel: 011-632-819-3011
Fax: 011-632-819-0872
If to the Administrative Agent:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
1455 Market Street, 12th Floor
Global Agency #5596
San Francisco, California 94103
Attn: Kevin C. Leader, Vice President
Tel: (415) 953-0108
Fax: (415) 622-4894
Telex: GRT 3726050 BAGASFO
If to the Collateral Agent:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
Corporate Trust and Agency Services
1 Embarcadero Center, 20thFloor
San Francisco, California 94111
Attn: Claudia Sun
Tel: (415) 953-4004
Fax: (415) 953-3737
with copies to:
BANKAMERICA NATIONAL TRUST COMPANY
Corporate Trust and Agency Services
One World Trade Center, 18th Floor
New York, New York 10048
Attn: John Bowman
Tel: (212) 390-3081
Fax: (212) 390-3119
If to the Issuing Bank:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
International Trade Banking Division #5655
333 S. Beaudry Avenue, 19th Floor
Los Angeles, California 90017
Attn: Jim Keesey
Tel: (213) 345-0537
Fax: (213) 345-3387
Telex: 67652 BANKAMER SFO
and with copies to:
Bank of America National Trust
and Savings Association
Structured Finance Support Service
1850 Gateway Boulevard
Concord, California 94520-3281
Attn: Ana Gloria Panameno
Tel: (510) 675-7820
Fax: (510) 675-7934
If to Eximbank:
EXPORT-IMPORT BANK OF THE UNITED STATES
811 Vermont Avenue, N.W.
Washington, D.C. 20571
U.S.A.
Attn: Vice President Project Finance Division
Tel: (202) 566-5092
Fax: (202) 566-7524
Telex: RCA 248460 EXBK UR
TRT 197681 EXIM UT
WUI 64319 EXIBANK
WUT 89461 EXIBANK WSH
If to the Construction Supplier:
Gilbert/CBE L.P.
3555 Farnam Street
Omaha, Nebraska 68131
Facsimile: (402) 271-2837
Attn:Rex A. Lucke
Area Manager
and with copies to:
CBE Engineering Co.
201 S. Lake Avenue, Suite 312
Pasadena, California 91101
Facsimile: (819) 795-2734
Attn: Thomas Ettinger
Project Manager
and with copies to:
California Energy Company, Inc.
10831 Old Mill Road
Omaha, Nebraska 68154
Attn: General Counsel
Tel: (402) 339-8900
Fax: (402) 334-3746
If to OPIC:
OVERSEAS PRIVATE INVESTMENT CORPORATION
1100 New York Avenue, N.W.
Washington, DC 20527
United States of America
Attn: Vice President & Treasurer
with a copy to Tracey Webb
Fax: (202) 408-4866
and with copies to:
Milbank, Tweed, Hadley & McCloy
1825 Eye Street, N.W. - Suite 1100
Washington, DC 20006
Attn: Mark A. Kantor
Tel: (202) 835-7518
Fax: (202) 835-7586
Section 9.2 English Language. All documents to be furnished or
communications to be given or made under this Agreement, any of the
Letters of Credit or any other Financing Document shall be in the
English language or, if in another language, shall be
accompanied by a translation into English certified by a
representative of the Borrower, which translation shall be the
governing version among the Borrower, the Lenders, the Issuing Bank
and the Administrative Agent.
Section 9.3 Indemnities and Expenses. (a) Subject to Section
9.5(b), whether or not the transactions contemplated hereby are
consummated, the Borrower shall indemnify and hold the
Administrative Agent-Related Persons, the Collateral Agent, the
APFC Escrow Agent, each Lender, the Issuing Bank and the Arranger
and each of its respective officers, directors, employees,
counsel, agents and attorneys-in-fact (each, an "Indemnified
Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
claims, suits, costs, charges, expenses and disbursements
(including, without limitation, Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time
following repayment of the Loans and the termination, resignation
or replacement of the Administrative Agent or replacement of any
Lender) be imposed on, incurred by or asserted against any such
Person in any way relating to or arising out of this Agreement or
any document contemplated by or referred to herein, or the
transactions contemplated hereby, or any action taken or omitted by
any such Person under or in connection with any of the
foregoing, including, without limitation, with respect to the
failure of the Issuing Bank to honor a drawing under any of the
Letters of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto
Governmental Authority, any investigation, litigation or proceeding
(including any Insolvency Proceeding or appellate proceeding)
related to or arising out of this Agreement, any of the Letters of
Credit, or any other Project Documents or the Loans or the use of
the proceeds thereof or any Environmental Claim relating to the
Borrower or the Project or arising out of the use of the Plant or
Site or any actual or alleged presence of Hazardous Materials on,
under or at the Plant or Site, whether or not any Indemnified
Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, that the Borrower shall have
no obligation hereunder to any Indemnified Person with respect to
Indemnified Liabilities resulting solely from the gross negligence
or willful misconduct of such
Indemnified Person. The agreements in this Section shall survive
payment of all other Construction Financing Secured Obligations.
(b) The Borrower shall: (i) subject to the last sentence of this
Section 9.3(b) whether or not the transactions contemplated hereby
are consummated, pay or reimburse the Administrative Agent, the
Collateral Agent and the APFC Escrow Agent as soon as practicable
but, in any event, within 30 days after demand (subject to Section
3.02(d) of the Disbursement Agreement) for all costs and expenses
incurred by the Administrative Agent, the Collateral Agent, the
APFC Escrow Agent and each Lender in connection with the
development, preparation, delivery, printing, registration,
administration, enforcement and execution of, and any amendment,
supplement, waiver or modification to (in each case, whether or not
consummated), this Agreement, any Financing Document and any other
documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby,
including reasonable Attorney Costs incurred by the Administrative
Agent, the Collateral Agent, the APFC Escrow Agent and any Lender
with respect thereto; (ii) pay or reimburse the Administrative
Agent, the Arranger, the Collateral Agent, the APFC Escrow Agent
and each Lender as soon as practicable but, in any event, within 30
days after demand for all costs and expenses (including Attorney
Costs) incurred by them in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies
under this Agreement or any other Financing Document during the
existence of a Construction Credit Event of Default or after
acceleration of the Loans (including in connection with any
"workout" or restructuring regarding the Loans, and including in
any Insolvency Proceeding or appellate proceeding); and (iii) pay
the fees of the Independent Engineer and the Insurance Consultant.
In addition, the Borrower shall, whether or not the transactions
contemplated hereby are consummated, pay or reimburse the
Administrative Agent, the Collateral Agent and the APFC Escrow
Agent on the earlier of the Credit Date and October 31, 1994 for
all accrued and unpaid costs, fees and expenses to the extent then
due and payable on such date of payment (including Attorney Costs,
Commitment Commissions and any amounts arising from any
indemnities) incurred by the Administrative Agent, the Collateral
Agent, the APFC Escrow Agent and each Lender prior to such date in
connection with the development, preparation, delive ry, printing,
administration, enforcement and execution of, and any amendment,
supplement, waiver or modification to (in each case whether or not
consummated), this Agreement, any Financing Document and any other
documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby,
provided that Attorney Costs shall include such costs to the extent
invoiced prior to or on such date of payment, plus such additional
amounts of Attorney Costs as shall constitute the Administrative
Agent's, the Collateral Agent's, the Issuing Bank's, the APFC
Escrow Agent's, the Arranger's and Bank of America National Trust
and Savings Association's reasonable estimate of Attorney Costs
incurred or to be incurred by it through the closing proceedings
(provided that such estimate shall not thereafter preclude final
settling of accounts between the Borrower and the Administrative
Agent, the Collateral Agent, the Issuing Bank, the APFC Escrow
Agent, the Arranger and Bank of America National Trust and Savings
Association).
(c) To the extent that the undertaking in the preceding
paragraphs of this Section may be unenforceable because it is
violative of any law or public policy, the Borrower will
contribute the maximum portion that it is permitted to pay and
satisfy under Applicable Law to the payment and satisfaction of
such undertakings.
(d) All sums paid and costs incurred by the Administrative Agent,
the Issuing Bank, the Collateral Agent, the APFC Escrow Agent or
the Lenders in respect to any matter indemnified
hereunder shall bear interest at the Base Rate plus the
Applicable Margin plus 2.00% from the date so paid until
reimbursed by the Borrower, and all such sums and costs shall be
added to the debt and be secured by the Security Documents and
shall be immediately due and payable on demand.
(e) If (i) the Lenders are entitled to indemnification and
reimbursement under this Section 9.3 for Indemnified Liabilities
actually incurred, and (ii) the amount of such Indemnified
Liabilities incurred by one or more Lenders is greater than their
respective Applicable Percentage of the aggregate amount of
Indemnified Liabilities of the Lenders, then prior to the payment
of any indemnification and reimbursement amounts to any other
Lender, the Borrower shall first pay to the Lenders that incurred
Indemnified Liabilities in an amount greater than their
respective Applicable Percentage of the aggregate amount of the
Indemnified Liabilities an amount equal to the amount of their
respective Indemnified Liabilities in excess of their respective
Applicable Percentage thereof. Once such payment has been made in
full, the Borrower shall pay to the Lenders all indemnification and
reimbursement amounts on a pro rata basis based on their respective
Applicable Percentage.
(f) If any arbitration award, judgment or order is given or made
for the payment of any amount due under this Agreement or any other
Project Document and such arbitration award, judgment or order is
expressed in a currency other than Dollars, the Borrower shall,
subject to Section 9.3(e), indemnify the Administrative Agent-
Related Persons, each Lender, the Issuing Bank and the Arranger
against and hold such Person harmless from all loss and damage
incurred by such Person as a result of any variation in rates of
exchange between the date of such arbitration award, judgment or
order and the date of payment (or, in the case of partial payments,
the date of each partial payment) thereof. This indemnity shall
constitute an obligation separate and
independent from the other obligations contained in this
Agreement or any other Project Document, shall give rise to a
separate and independent cause of action, shall apply
irrespective of any indulgence granted by the Administrative Agent-
Related Persons, each Lender, the Issuing Bank and the Arranger
from time to time, and shall continue in full force and effect
notwithstanding any arbitration award, judgment or order for a
liquidated sum in respect of an amount due under this Agreement or
any other Project Document.
Section 9.4 Survival. All indemnities set forth herein and the
obligations of the Borrower to pay additional costs as set forth in
Article 2 hereof shall survive the execution and delivery of this
Agreement and the Notes and the making and repayment of the Loans.
Section 9.5 Governing Law; Submission to Jurisdiction. (a) This
Agreement is a contract made under the laws of the State of New
York of the United States and shall for all purposes be governed by
and construed in accordance with the laws of such State without
regard to the conflict of law rules thereof.
(b) Any legal action or proceeding against the Borrower with
respect to this Agreement, any of the Letters of Credit or any
Financing 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 Borrower hereby irrevocably accepts for itself
and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The
Borrower agrees that a judgment, after exhaustion of all
available appeals, in any such action or proceeding shall be
conclusive and binding upon the Borrower, and may be enforced in
any other jurisdiction, including without limitation the
Republic, by a suit upon such judgment, a certified copy of which
shall be conclusive evidence of the judgment. The Borrower hereby
irrevocably designates, appoints and empowers White & Case, with
offices on the date hereof at 1155 Avenue of the Americas, New
York, New York 10036-2787, as its designee,
appointee and agent to receive, accept and acknowledge for and on
its behalf, and in respect of its property, service of any and all
legal process, summons, notices and documents which may be served
in any such action or proceeding. If for any reason such designee,
appointee and agent shall cease to be available to act as such, the
Borrower agrees to designate a new designee,
appointee and agent in New York City on the terms and for the
purposes of this provision satisfactory to the Administrative
Agent. The Borrower further irrevocably consents to the service of
process out of any of the aforementioned courts in any such action
or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to the Borrower, at
its address set forth in Section 9.1 hereof, such service to become
effective 30 days after such mailing. Nothing herein shall affect
the right of any Construction Financing Secured Party to serve
process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Borrower in the
Republic or in any other jurisdiction.
(c) The Borrower hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection
with this Agreement, any of the Letters of Credit or any other
Financing Document brought in the courts referred to in clause (b)
above and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or
proceeding brought in any such court has been brought in an
inconvenient forum.
(d) WITH REGARD TO THIS AGREEMENT, THE BORROWER, EACH BANK, THE
ISSUING BANK, THE ADMINISTRATIVE AGENT, THE ARRANGER HEREBY WAIVE
THE RIGHT TO A TRIAL BY JURY.
Section 9.6 Successors and Assigns. (a) This Agreement shall be
binding upon and inure to the benefit of the respective
successors and assigns of the parties hereto (and, with respect to
Sections 9.3 and 9.15 hereof, the Collateral Agent and the APFC
Escrow Agent), except that (i) the Borrower may not assign or
otherwise transfer all or any part of its rights or obligations
under this Agreement without obtaining the prior written consent of
the Required Secured Parties, OPIC and Eximbank and (ii) no Tranche
1 Lender may assign or otherwise transfer all or any part of its
rights or obligations under this Agreement or the Tranche 1 Loans,
except pursuant to Section 2.20 or with the prior written consent
of the Administrative Agent, the Collateral Agent, Required Secured
Parties, the Issuing Bank (only so long as any of the Letters of
Credit is outstanding), OPIC and Eximbank. For the avoidance of
doubt, any merger, reincorporation, corporate restructuring or
other business combination involving any shareholder of any Tranche
1 Lender (and any other transaction related to such shareholder
which is undertaken in connection with any such transactions) shall
not be construed as an assignment or transfer requiring any consent
under this Section 9.6(a).
(b) Subject to the following exceptions, any Tranche 2 Lender may
at any time sell, assign, transfer, negotiate, or otherwise dispose
of, in whole or in part, its rights and obligations under this
Agreement or the Loans and such sale, assignment, negotiation or
disposition shall be evidenced by an Assignment and Acceptance
Agreement in the form of Schedule 9.6 appropriately completed and
executed by the assigning Tranche 2 Lender and the assignee;
provided, however, that any Tranche 2 Commitment sold, assigned,
transferred or otherwise disposed of pursuant to this Section
9.6(a) shall not be less than (i) $10,000,000 or (ii) if the
aggregate amount of the assigning Tranche 2 Lender's Tranche 2
Commitment is less than $10,000,000, the entire amount of such
Tranche 2 Commitment. Such executed Assignment and Acceptance
Agreement shall be delivered to the Administrative Agent, OPIC and
Eximbank immediately after execution and shall not be effective
until all conditions set forth therein and in this Section 9.6
shall have been satisfied.
(i) Each Tranche 2 Lender may assign its rights and obligations
under this Agreement and/or the Tranche 2 Loans only to an
Eligible Assignee approved by the Administrative Agent and the
Borrower (which approval in each case shall not be unreasonably
withheld) and the Issuing Bank in its sole discretion; provided,
that in the event of such an assignment by a Tranche 2 Lender to
another Tranche 2 Lender, no Borrower or Administrative Agent
approval shall be required for such assignment.
(ii) The Issuing Bank's, the Borrower's and the Administrative
Agent's (except, in the case of the Borrower and the
Administrative Agent, to the extent described in the proviso to
clause (i) above) prior consent (which consent in the case of the
Borrower and the Administrative Agent shall not be unreasonably
withheld) shall be required with respect to the assignment and
delegation of a Tranche 2 Lender's obligation hereunder to (A)
reimburse the Issuing Bank for payment of drawings under any of the
Letters of Credit and (B) make Loans.
(iii) The exercise of such right by any Tranche 2 Lender is
subject in all cases to the conditions that immediately thereafter
such Tranche 2 Lender shall have given written notice of any such
transfer to the Borrower and the Administrative Agent, and the
transferee shall (a) not have, or shall have effectively waived,
any right pursuant to Section 2.11 or 2.16 to claim from the
Borrower any additional amounts above and beyond those which could
have been claimed by the transferor had it continued to own its
Tranche 2 Loans hereunder and (b) not have any right pursuant to
Section 2.11 or 2.16 not possessed by the transferor had it
continued to own its Tranche 2 Loans hereunder.
(c) From and after the date that the Administrative Agent
notifies the assigning Lender that it has received an executed
Assignment and Acceptance Agreement and payment of the below-
referenced transfer fee and annual fee and the conditions set forth
in such Assignment and Acceptance Agreement have been satisfied,
(i) the assignee Lender thereunder shall be a party hereto and, to
the extent that rights and obligations hereunder have been assigned
to it pursuant to such Assignment and Acceptance Agreement, shall
have the rights and obligations of a Tranche 2 Lender hereunder and
under the other Financing Documents and shall be bound by the terms
of the Intercreditor Agreement, and (ii) the assignor Lender shall,
to the extent that rights and obligations hereunder and under the
other Financing Documents have been assigned by it pursuant to such
Assignment and Acceptance Agreement, relinquish its rights and be
released from its obligations under the Financing Documents.
(d) Promptly after its receipt of notice by the Administrative
Agent that it has received an executed Assignment and Acceptance
Agreement and payment of the transfer fee, the Borrower shall
execute and deliver to the Administrative Agent, new Notes
evidencing such assignee Lender's assigned Tranche 2 Loans and
Tranche 2 Commitment and, if the assigning Lender has retained a
portion of its Tranche 2 Loans and its Tranche 2 Commitment,
replacement Notes, if requested by such Tranche 2 Lender, in the
amount of the Tranche 2 Commitment retained by the assigning Lender
(such Notes to be in exchange for, but not in payment of, the Notes
held by such Tranche 2 Lenders). Immediately upon each assignee
Lender's making its transfer fee payment under the Assignment and
Acceptance Agreement and the satisfaction of all other conditions
in this Section 9.6 and in such Assignment and Acceptance
Agreement, this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition
of the assignee Lender and the resulting adjustment of the Tranche
2 Commitments arising therefrom. The Tranche 2 Commitment
allocated to each assignee Lender shall reduce such Tranche 2
Commitments of the assigning Lender pro tanto.
(e) The Borrower and the Administrative Agent may treat each
Lender as the owner of any Loan made by it until written notice of
transfer or assignment shall have been received by it.
(f) Notwithstanding anything to the contrary contained herein, the
Borrower hereby consents to any assignment made by the
Lenders and the Administrative Agent to Eximbank pursuant to
Section 9.02 of the Eximbank Guarantee Agreement without any
restrictions contained herein or otherwise and the Borrower hereby
agrees to cooperate with the Administrative Agent, the Lenders and
the Issuing Bank, as relevant, and to take all actions necessary,
to effect any such assignment. Upon any such assignment, Eximbank
shall become a Tranche 2 Lender for all purposes of this Agreement,
and all Tranche 1 Loans so assigned to Eximbank will automatically
convert to Tranche 2 Loans.
(g) Notwithstanding anything to the contrary contained herein, the
Issuing Bank may not assign its obligations hereunder with respect
to any of the Letters of Credit without the prior written consent
of the Borrower, Eximbank, OPIC and the Lenders.
(h) Any Person that becomes a Tranche 2 Lender by assignment
pursuant to this Section 9.6 shall pay to the Administrative Agent
an annual fee of $5,000 on each anniversary of the Credit Date.
The first payment of such fee shall be made on the date the
Assignment and Acceptance Agreement to which such Person is a party
is delivered to the Administrative Agent and shall be an amount
that reflects on a pro rata basis the number of days from and
including the date such Person becomes a Tranche 2 Lender to and
including the day immediately preceding the next successive
anniversary of the Credit Date. The assigning Lender shall pay to
the Administrative Agent a one-time transfer fee of $3,500, payable
on the date the Assignment and Acceptance Agreement is delivered to
the Administrative Agent.
(i) All fees and expenses which a Lender or the Issuing Bank
incurs in connection with any assignment or grant of
participations pursuant to subparagraphs (b), (c) and (e) of this
Section 9.6 shall be for the account of such Lender or the
Issuing Bank, as the case may be.
Section 9.7 Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
agreement.
Section 9.8 Right of Setoff. Subject to Article V of the
Intercreditor Agreement, in addition to any rights now or
hereafter granted under Applicable Law or otherwise, and not by way
of limitation of any such rights, upon the occurrence of a
Construction Credit Event of Default, each Lender and the Issuing
Bank is hereby authorized at any time or from time to time, without
presentment, demand, protest or other notice of any kind to the
Borrower or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and apply any and
all deposits (general or special) and any other Indebtedness at any
time held or owing by such Lender or the Issuing Bank (including
without limitation by branches and agencies of such Lender, as
relevant, or the Issuing Bank wherever located), to or for the
credit or the account of the Borrower against and on account of the
Construction Financing Secured Obligations of the Borrower under
this Agreement and liabilities of the Borrower to such Lender or
the Issuing Bank as relevant, under this Agreement, each of the
Letters of Credit or any of the other Financing Documents,
including, without limitation, all interests in Construction
Financing Secured Obligations of the Borrower under this Agreement
purchased by such Lender pursuant to Section 9.12(b), and all other
claims of any nature or description arising out of or connected
with this Agreement, each of the Letters of Credit or any other
Financing Document, irrespective of whether or not such Lender or
the Issuing Bank, as relevant, shall have made any demand hereunder
and although said Construction Financing Secured Obligations,
liabilities or claims, or any of them, shall be contingent or
unmatured.
Section 9.9 No Waiver; Remedies Cumulative. No failure or delay
on the part of the Administrative Agent, the Issuing Bank or any
Lender in exercising any right, power or privilege hereunder or
under any of the Letters of Credit or any other Financing
Document and no course of dealing between the Borrower and the
Administrative Agent, the Issuing Bank or any Lender shall impair
any such right, power or privilege or operate as a waiver
thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder or under any of the Letters of Credit
or any other Financing Document preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder. The rights, powers and remedies
herein, in any of the Letters of Credit or in any other Financing
Document expressly provided are cumulative and not exclusive of any
rights, powers or remedies which the Administrative Agent, the
Issuing Bank or any Lender would otherwise have. No notice to or
demand on the Borrower in any case shall entitle the Borrower to
any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the
Administrative Agent, the Issuing Bank or any Lender to any other
or further action in any circumstances without notice or demand.
Section 9.10 Severability. Any provision of this Agreement, any
Note and any other Financing Document which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability but that shall not invalidate the remaining
provisions of this Agreement, any Note or any other Financing
Document or affect such provision in any other jurisdiction.
Section 9.11 Calculation. Except as otherwise provided, all
financial calculations to be made under, or for the purposes of,
this Agreement shall be determined in accordance with United States
generally accepted accounting principles, applied on a consistent
basis and, except as otherwise required to conform to the
definitions contained in Schedule X of this Agreement or any other
provisions of this Agreement, shall be calculated from the then
most recently issued quarterly financial statements which the
Borrower is obligated to furnish to the Administrative Agent from
time to time, as provided hereunder; provided, however, that (a) if
the relevant quarterly financial statements should be in respect of
the last quarter of a Fiscal Year then, at the option of the
Required Lenders, such calculations may instead be made from the
audited financial statements for the relevant Fiscal Year, and (b)
if there should occur any material adverse change in the financial
condition or results of operations of the
Borrower after the end of the period covered by the relevant
financial statements, then such material adverse change shall also
be taken into account in calculating the relevant figures.
Section 9.12 Payments Pro Rata; Sharing. (a) Subject to
Section 2.9 and subject to Article V of the Intercreditor
Agreement, the Administrative Agent agrees that promptly after its
receipt of each payment from or on behalf of the Borrower in
respect of any Construction Financing Secured Obligations of the
Borrower to the Lenders hereunder, it shall distribute such payment
to the Lenders pro rata based upon their respective shares, if any,
of the Construction Financing Secured Obligations with respect to
which such payment was received.
(b) Subject to the terms and conditions of the Intercreditor
Agreement, each of the Lenders agrees that, if it should receive
any amount hereunder (whether by voluntary payment, by realization
upon security, by the exercise of the right of setoff or banker's
lien, by counterclaim or cross action, by the enforcement of any
right under the Financing Documents, any Note or otherwise), which
is applicable to the payment of the principal of, or interest on,
the Loans or Commitment Commission, of a sum which with respect to
the related sum or sums received by other Lenders is in a greater
proportion than the total amount of such Obligation then owed and
due to such Lender bears to the total amount of such Obligation
then owed and due to all the Lenders immediately prior to such
receipt, then such Lender receiving such excess payment shall
purchase for cash without recourse or warranty from the other
Lenders an interest in the Construction Financing Secured
Obligations of the Borrower to such Lenders in such amount as shall
result in a proportional participation by all the Lenders in such
amount; provided, however, that if all or any portion of such
excess amount is thereafter recovered from such Lender, such
purchase shall be rescinded and the purchase price restored to the
extent of such recovery, but without interest.
Section 9.13 Effectiveness. This Agreement shall become
effective on the date (the "Effective Date") on which (i) each of
the Lenders shall have provided to the Administrative Agent
evidence of the authority of such Lender to enter into this
Agreement and the names, specimen signatures and evidences of
authority of the persons who will sign this Agreement on behalf of
such Lender and (ii) the Borrower, the Administrative Agent, the
Issuing Bank, the Arranger and each of the Lenders shall have
signed a copy hereof (whether the same or different copies) and
shall have delivered the same to the Administrative Agent or, in
the case of the Lenders and the Arranger, shall have given to the
Administrative Agent telephone (confirmed in writing), written or
telex notice (actually received) that the same has been signed and
mailed to it. The Administrative Agent will give the Borrower,
each Lender, the Arranger and Eximbank prompt notice of the
occurrence of the Effective Date. The commitment of each Lender to
make Loans to the Borrower hereunder and of the Issuing Bank to
issue the Letters of Credit hereunder shall expire on October 31,
1994 unless the Credit Date shall have occurred on or prior to such
date.
Section 9.14 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for
convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
Section 9.15 Amendment or Waiver. Neither this Agreement nor any
terms hereof may be changed, waived, discharged or terminated
unless, subject to the terms of the Intercreditor Agreement, such
change, waiver, discharge or termination is in a writing signed by
the Required Lenders and the Administrative Agent; provided,
however, that no such change, waiver, discharge or termination
shall, without the consent of each Lender (subject to Section 9.17)
and the Issuing Bank, (i) extend the final maturity of any Loan, or
reduce the rate or extend the time of payment of interest on any
Loan or any Fees, or reduce the principal amount of any Loan, or
increase the Commitment of any Lender over the amount thereof then
in effect (it being understood that a waiver of any Construction
Credit Default or Construction Credit Event of Default shall not
constitute a change in the terms of any Commitment of any Lender),
(ii) provide for the forgiveness of the principal amount of any
Loan or any interest thereon or of any Fees or Commitment
Commission or any other amounts payable by the Borrower pursuant to
this Agreement, (iii) amend, modify or waive any provision of this
Section 9.15 or Section 9.3, 9.6, 9.8, 9.12 or 9.17, (iv) reduce
the percentage specified in the definition of Required Lenders set
forth in Schedule X hereto or (v) consent to the assignment or
transfer by the Borrower of any of its rights and obligations under
this Agreement; provided, further, that (a) no amendment, waiver or
consent shall, unless in writing signed by the Administrative
Agent, affect the rights or duties of the Administrative Agent
under this Agreement or any other Financing Document; (b) no
amendment, waiver or consent shall, unless in writing signed by the
Collateral Agent, affect the rights or duties of the Collateral
Agent under any Financing Document; (c) no amendment, waiver, or
consent shall, unless in writing signed by the Issuing Bank, affect
the right and duties of the Issuing Bank under this Agreement or
any Letter of Credit and (d) no amendment, waiver or consent shall,
unless in writing signed by the APFC Escrow Agent, affect the right
and duties of the APFC Escrow Agent under the APFC Escrow
Agreement; provided, further, that any amendment, change or
modification of the final maturity of any Loan or the definition of
"Maturity Date" set forth in Schedule X hereto requires the prior
written consent of OPIC in addition to the consent of each Lender
and the Issuing Bank. The Administrative Agent and each of the
Lenders hereby agree that neither the Eximbank Guarantee Agreement
nor any of the terms thereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination is
in a writing signed by the Administrative Agent and each of the
Lenders.
Section 9.16 Disclaimer. None of the Lenders, the Issuing Bank or
the Administrative Agent shall be responsible in any way for the
performance of the Purchase Contracts, and no claim against the
Supplier of any Item or any other Person with respect to the
performance of the Purchase Contracts will affect the obligations
of the Borrower under this Agreement, any other Financing
Document or the Letters of Credit.
Section 9.17 No Voting Rights for Tranche 1 Lenders.
Notwithstanding anything herein or in any other Financing
Document to the contrary, so long as (i) any Tranche 2 Lender has
outstanding a Tranche 2 Commitment, (ii) any Construction
Financing Secured Obligations owed to any Tranche 2 Lender are
outstanding, (iii) any OPIC Secured Obligation remains
outstanding or (iv) any Eximbank Secured Obligation remains
outstanding, no Tranche 1 Lender shall have any rights to
approve, consent to, vote on or ratify any action, inaction or
determination (including any consent, waiver, discharge or
termination) taken or made hereunder, provided, that this Section
9.17 shall not apply to the Tranche 1 Lender with respect to
Section 9.15, clauses (i), (ii) or (iii) (insofar as clause (iii)
relates to provisions of Sections 9.12, 9.15 and 9.17).
Section 9.18 Payments Set Aside. To the extent that the
Borrower makes a payment to the Administrative Agent, the Issuing
Bank or any Lender, or the Administrative Agent, the Issuing Bank
or any Lender exercises its right of set-off, and such payment or
the proceeds of such set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by
the Administrative Agent, the Bank or such Lender in its
discretion) to be repaid to a trustee, receiver or any other party,
in connection with any Insolvency Proceeding or otherwise, then (a)
to the extent of such recovery the obligation or part thereof
originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or
such set-off had not occurred, and (b) each Lender agrees to pay to
the Administrative Agent upon demand its pro rata share of any
amount so recovered from or repaid by the Administrative Agent.
IN WITNESS WHEREOF, the parties hereto, acting through their duly
authorized representatives, have caused this Agreement to be signed
in their respective names as of the date set forth below.
Signed On: August 11, 1994
CE LUZON GEOTHERMAL POWER COMPANY, INC.
By: /s/ Steven A. McArthur
Name: Steven A. McArthur
Title: Senior Vice President
AMERICAN PACIFIC FINANCE COMPANY,
as a Tranche 1 Lender
By: /s/ John G. Sylvia
Name: John G. Sylvia
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as
Administrative Agent
By: /s/ Kevin C. Leader
Name: Kevin C. Leader
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Issuing
Bank and as a Tranche 2 Lender
By: /s/ Gary M. Tsuyuki
Name: Gary M. Tsuyuki
Title: Vice President
BA SECURITIES, INC., as Arranger
By: /s/ C.W. Snyder
Name: Charles W. Snyder
Title: Vice President
Exhibit 10.102
CREDIT AGREEMENT, dated as of June 30, 1994 (this
"Agreement"), between CE LUZON GEOTHERMAL POWER COMPANY, INC., a
corporation organized and existing under the laws of the Republic
of the Philippines (together with its successors, the "Borrower")
and EXPORT-IMPORT BANK OF THE UNITED STATES ("Eximbank"), an agency
of the United States. Capitalized terms used herein shall be
defined as provided in Section 1.01 hereof.
WHEREAS, the Borrower, the Administrative Agent, the Issuing
Bank, the Arranger and the Lenders are entering into the Lender
Credit Agreement, pursuant to which the Lenders have agreed,
subject to the terms and conditions set forth therein, to provide
certain financing for construction of the Project and, as a
condition to such financing, the Borrower, the Administrative
Agent, the Issuing Bank, the Arranger and the Lenders have
requested Eximbank to provide a limited guaranty of the Loans made
by the Lenders under the Lender Credit Agreement;
WHEREAS, the Borrower has requested Eximbank to establish a
credit (the "Eximbank Credit") in favor of the Borrower as part of
the overall debt financing of the costs of construction of the
Project;
WHEREAS, Eximbank is prepared (i) to issue the Eximbank
Guarantee subject to the terms and conditions of the Eximbank
Guarantee Agreement and (ii) to establish the Eximbank Credit and
to make the Eximbank Credit available to the Borrower after the
Project Completion Date, subject to the terms and conditions set
forth in this Agreement;
WHEREAS, it is contemplated that the proceeds of the
Eximbank Credit shall be applied by the Borrower to repay the
construction financing to be provided by the Lenders;
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
Section 1.01. General Definitions. Capitalized terms used herein
and not otherwise defined herein are used as defined in Schedule X
attached hereto. In addition, wherever used in this Agreement or
any Annex, Exhibit or Schedule hereto, unless the context otherwise
requires, the following terms shall have the following meanings:
"Business Day" shall mean any day on which the Federal Reserve
Bank of New York is open for business.
"Commitment Fee" shall have the meaning provided in Section
3.03.
"Construction Note" shall mean each of, and "Construction
Notes" shall mean all of, the promissory notes executed and
delivered by the Borrower pursuant to Section 2.4 of the Lender
Credit Agreement.
"Credit Availability Date" shall mean February 27, 1998;
provided that, (i) if on or before such date, the Completion Date
(as defined in the Energy Conversion Agreement) shall have
actually occurred pursuant to Section 6.1 of the Energy
Conversion Agreement or have been deemed to have occurred
pursuant to Section 4.9(b) of the Energy Conversion Agreement or
(ii) if on February 27, 1998, Force Majeure (as defined in any of
the Energy Conversion Agreement, the Construction Contract or the
Supply Contract) or a default by PNOC-EDC under the Energy
Conversion Agreement shall exist, or shall have existed prior to
February 27, 1998 for an aggregate period in excess of 15 days, the
Credit Availability Date shall be extended for an additional period
terminating on the earlier to occur of (x) February 27, 1999 and
(y) the date on which the Eximbank Credit is canceled or disbursed.
"Credit Exposure Fee" shall have the meaning provided in
Section 3.04.
"Default" shall mean any event, act or condition which, with
notice, lapse of time, or both, or the fulfillment of any other
requirement provided for in Article IX, would constitute an Event
of Default.
"Disbursement Date" shall mean the date on which the
Eximbank Disbursement is made by Eximbank to the Borrower.
"Eximbank Credit" shall have the meaning provided in the
second WHEREAS clause hereof.
"Eximbank Disbursement" shall mean the disbursement made under
the Eximbank Credit in accordance with the terms of this Agreement
and evidenced by the Eximbank Note.
"Eximbank Note" shall have the meaning provided in Section
3.07.
"Event of Default" shall have the meaning provided in
Article IX.
"Guarantee Operative Date" shall mean the date designated by
Eximbank on or after which Utilizations may be made under the
Lender Credit Agreement.
"IDC" shall mean 100% of the interest due and payable to the
Lenders in respect of Utilizations under the Lender Credit
Agreement from and including the Credit Date to but excluding the
Construction Financing Termination Date.
"IDC Financed Portion" shall mean 100% of IDC.
"Lender Disbursement" shall mean each of the Loans disbursed
from time to time pursuant to Article II of the Lender Credit
Agreement.
"Local Cost Financed Portion" shall mean the costs incurred by
the Borrower for the purchase in the Republic of Local Cost Items
up to an aggregate amount not to exceed, both prior to and after
giving effect to any Utilization, 15/85 of the Financed Portion of
the Items, all as approved by Eximbank as eligible for financing
hereunder and subject to the provisions of Annex B-2 to the Lender
Credit Agreement.
"Local Cost Item" shall mean an item of eligible equipment,
materials or services of Philippine origin or manufacture
contemplated by the Construction Contract, Supply Contract or other
contract, agreement or arrangement to which the Borrower is a party
in connection with the Project, invoices for which are submitted by
the Construction Contractor, the Construction
Supplier or other United States supplier pursuant to any such other
contract, agreement or arrangement, as the case may be, and which
is incorporated into, or used to develop or construct, the Project.
"O&M Parameters" shall mean the parameters governing the
operation and maintenance of the Project set forth in Schedule
7.07(c) hereto.
"Payment Date" shall have the meaning provided in Section
3.01.
"Request for Eximbank Disbursement" shall mean a request for
disbursement in the form of Annex B hereto.
"Taxes" shall mean any taxes, fees, levies, imposts, duties or
charges of whatsoever nature (whether imposed by withholding or
deduction or otherwise) imposed by the Republic or any
political subdivision or taxing authority thereof, or any other
taxing jurisdiction from which payments required hereunder or under
the Eximbank Note are made.
"U.S. Treasury Rate" shall mean the rate specified for the day
which is five (5) Business Days prior to the date of
prepayment in the Federal Reserve Statistical Release, H.15 (519)
Selected Interest Rates, for the category entitled "Treasury Bills,
Secondary Market" or, if not included in such category, the
category entitled "Treasury Constant Maturities".
Section 1.02. Principles of Construction. The principles of
construction set forth in Schedule X shall apply.
ARTICLE II. AMOUNT, CASH PAYMENTS & AVAILABILITY
DATE OF EXIMBANK CREDIT
Section 2.01. Amount of the Eximbank Credit; Use of
Proceeds. Eximbank establishes the Eximbank Credit to make an
advance to the Borrower so that the Borrower may (i) refinance the
Financed Portion of the costs incurred by the Borrower after
January 1, 1993, for the purchase in the United States and export
to the Republic of the Items; (ii) refinance the Local Cost
Financed Portion of the costs incurred by the Borrower after
January 1, 1993 for the purchase in the Republic of the Local Cost
Items; (iii) refinance the IDC Financed Portion of IDC; (iv)
refinance the Guarantee Exposure Fee in respect of any of the
above; and (v) finance the Credit Exposure Fee. On the terms and
conditions hereof, Eximbank shall make the Eximbank Credit
available to the Borrower in a single Eximbank Disbursement on the
date upon which all of the conditions precedent to such
disbursement under Section 5.02 hereof shall have been satisfied or
waived. The Eximbank Credit shall not under any circumstances
exceed in aggregate amount the lesser of:
(a) the sum of (i) the aggregate amount of the Financed
Portion for all Items; and (ii) the aggregate amount of
the Local Cost Financed Portion for all Local Cost Items;
and (iii) the aggregate amount of the IDC Financed Portion
for all IDC; and (iv) 100% of the Guarantee Exposure Fee
paid to Eximbank under the Eximbank Guarantee Agreement in
respect of each of the above; and (v) 100% of the Credit
Exposure Fee payable to Eximbank under this Agreement; and
(b) the sum of (i) the aggregate outstanding principal amount
of the Construction Notes (provided that the principal
amount thereof shall not exceed $191,834,859 and (ii) 100%
of the Credit Exposure Fee payable to Eximbank under this
Agreement.
From and after the date Eximbank makes the Eximbank Credit
available to the Borrower, all amounts due to Eximbank under this
Agreement and the Eximbank Note are entitled to the benefit of the
Collateral that is held for the benefit of Eximbank by the
Collateral Agent pursuant to the terms and conditions of the
Collateral Agency Agreement. Any amount of the Eximbank Credit not
disbursed on the Disbursement Date shall automatically be canceled
upon and as of the close of business on the Disbursement Date.
Section 2.02. Cash Payments. The Borrower agrees to make
cash payments for the Items in an aggregate amount equal to not
less than 15% of the Contract Price of each of the Items.
Section 2.03. Credit Availability Date. The Eximbank Credit
will not be disbursed after, and the Eximbank Credit will terminate
upon, the close of business on the Credit Availability Date. The
Credit Availability Date may be extended only upon thirty (30)
days' prior written request of the Borrower and only if and to the
extent that Eximbank shall have given its consent to such
extension.
ARTICLE III. TERMS OF THE EXIMBANK CREDIT
Section 3.01. Repayment. The Borrower shall repay all
principal amounts disbursed under the Eximbank Credit in
approximately equal, successive quarterly installments, the first
such installment being due on the 30th day of the first March,
June, September or December occurring 180 days after the
Disbursement Date and on each succeeding March 30, June 30,
September 30 and December 30 (each such date being referred to
herein as a "Payment Date"), and ending on the Payment Date
immediately preceding the Transfer Date (as such term is defined in
the Energy Conversion Agreement as in effect on the date hereof).
Section 3.02. Interest. (a) The Borrower shall pay
interest on each Payment Date, and on the date that all amounts
disbursed under the Eximbank Credit are paid in full, on all
amounts disbursed and outstanding from time to time under the
Eximbank Credit, beginning on the first of such dates which is
after the Disbursement Date, calculated at an interest rate per
annum of 6.92%, computed on the basis of the actual number of days
elapsed (including the first day but excluding the last day), using
a 365-day year.
(b) If any amount of principal, interest or fee owing to
Eximbank under this Agreement or the Eximbank Note is not paid in
full when due, the Borrower shall pay to Eximbank on demand (to the
extent permitted by applicable law) interest on the unpaid amount
for the period from the date said amount was due until paid in
full, computed on the same basis as set forth in
paragraph (a) above, but at the per annum rate of 8.92%.
Section 3.03. Commitment Fee. The Borrower shall pay to
Eximbank a commitment fee ("Commitment Fee") of 0.5% per annum on
the uncanceled and undisbursed balance from time to time of the
Eximbank Credit, computed on the basis of the actual number of days
elapsed (including the first day but excluding the last day), using
a 365-day year, accruing from October 9, 1994 and payable quarterly
on each Quarterly Date, beginning on December 30, 1994 and on the
Credit Availability Date.
Section 3.04. Credit Exposure Fee. At the time of the
Eximbank Disbursement, the Borrower shall pay or cause to be paid
to Eximbank an exposure fee ("Credit Exposure Fee") equal to 4.64%
of the amount of the Eximbank Disbursement that relates to the sum
of (i) the aggregate Financed Portion of the Items, (ii) the
aggregate Local Cost Financed Portion of the Local Cost Items, and
(iii) the aggregate IDC Financed Portion of IDC. The Credit
Exposure Fee may be financed by the Borrower by the
inclusion of the request for such financing in the Borrower's
Request for Eximbank Disbursement.
Section 3.05. Voluntary Prepayment. The Borrower may from
time to time prepay all or any part of the outstanding principal
amount of the Eximbank Credit, provided that the Borrower shall
have given Eximbank thirty (30) days prior written notice
thereof, shall have paid in full all amounts due to Eximbank under
this Agreement and the Eximbank Note as of the date of such
prepayment, including interest which has accrued to the date of
prepayment on the amount prepaid, and shall pay to Eximbank a
prepayment premium equal to the amount by which (i) the amount of
the proposed prepayment is less than (ii) the discounted cash flow
of the installments of principal and interest thereon
represented by said prepayment. The discount rate shall be the
U.S. Treasury Rate for maturities similar to the weighted average
term of the installments of the Eximbank Credit to be prepaid, as
determined by Eximbank. Any prepayment shall be applied to the
installments of principal of the Eximbank Credit in the inverse
order of their maturity. Upon delivery of any notice pursuant to
this Section 3.05, the Borrower shall be obligated to effect
prepayment in accordance with the terms thereof.
Section 3.06. Mandatory Prepayment. On the applicable dates
set forth in Sections 3.05(a) and 3.05(d) of the
Disbursement Agreement, the Borrower shall, without demand or
notice, make prepayments to Eximbank using funds then made
available for such purpose from the Contingency Account by the
Collateral Agent pursuant to Sections 3.05(a) and 3.05(d) of the
Disbursement Agreement. In addition, on the date of receipt of
funds from any Buyout, the Borrower shall, without demand or
notice, make a prepayment to Eximbank in the amount of the then
outstanding principal amount of the Eximbank Credit, together with
all interest accrued thereon and all other amounts then payable to
Eximbank by the Borrower under any of the Financing Documents. In
the case of any partial payments, such prepayments shall be applied
to the installments of principal of the Eximbank Credit in the
inverse order of their maturity. No prepayment premium is payable
in connection with a mandatory prepayment pursuant to this Section
3.06.
Section 3.07. Eximbank Note. The Borrower agrees that to
evidence further its obligation to repay all amounts disbursed
under the Eximbank Credit, with interest thereon, it shall issue
and deliver to Eximbank a promissory note dated the Disbursement
Date in the form of Annex A hereto (together with replacements and
substitutions therefor, the "Eximbank Note"). The Eximbank Note
shall be valid and enforceable as to its principal amount at any
time only to the extent of the amount then disbursed and
outstanding under the Eximbank Credit and, as to interest, only to
the extent of the interest accrued from the date of the most recent
interest payment (if interest was then paid in full) on the
disbursed amount.
Section 3.08. Method of Payment. All payments to be made to
Eximbank under this Agreement or the Eximbank Note shall be made
without set-off or counterclaim in Dollars in immediately available
and freely transferable funds no later than 11:00 a.m. (New York
City time) on the date on which due (each such payment made after
such time shall be deemed to have been made on the next succeeding
Business Day) at the Federal Reserve Bank of New York for credit to
the following Eximbank account as identified below, or as otherwise
directed in writing by the Treasurer-Controller, Deputy Treasurer-
Controller or an Assistant
Treasurer-Controller of Eximbank:
U.S. Treasury Department
0210-3000-4
TREAS NYC/CTR/
BNF=/AC-4984 OBI=
EXPORT-IMPORT BANK
DUE ____________ ON EIB CREDIT NO. 066920 - PHILIPPINES
FROM _________________
Whenever any payment under this Agreement or the Eximbank Note
shall be stated to be due and payable 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 be included in the
computation of any interest or fee due thereon.
Section 3.09. Application of Payments. Eximbank shall apply
payments received by it under this Agreement or the
Eximbank Note (excluding prepayments and prepayment premiums) in
the following order of priority: (i) interest due pursuant to
Section 3.02(b), (ii) Commitment Fees, Guarantee Exposure Fees and
all other amounts due to Eximbank under this Agreement, (iii)
interest due pursuant to Section 3.02(a), (iv) installments of
principal due and (v) amounts due and not otherwise provided for in
this Section 3.09.
ARTICLE IV. CANCELLATION
Section 4.01. Cancellation by the Borrower. The Borrower may
cancel at any time all or any part of the undisbursed and
uncanceled amount of the Eximbank Credit, provided that thirty (30)
days' prior written notice is given to Eximbank.
Cancellation in full of the Eximbank Credit shall not terminate any
provision of this agreement other than Articles 5, 7, 8 and 9
hereof.
Section 4.02. Cancellation by Eximbank. Eximbank shall not
have the right to cancel the Eximbank Credit prior to the Credit
Availability Date, except in the case of payment default
hereunder as set forth in subsection (a) of Section 9.01 hereof.
Prior to any such cancellation, Eximbank shall first provide the
Lenders with an opportunity to cure such payment default by
providing the Administrative Agent with thirty (30) days' prior
written notice of its intent to cancel the Eximbank Credit and the
amount of such payment default.
ARTICLE V. CONDITIONS PRECEDENT
Section 5.01. Conditions Precedent to Lender Disbursement.
The applicability of the Eximbank Guarantee to any Utilization
shall be subject to the satisfaction of the following conditions on
or prior to the Guarantee Operative Date (or, if so specified, the
Credit Date); provided that if any such conditions shall have been
satisfied on or prior to the Effective Date then on the Guarantee
Operative Date, the Borrower shall supply such evidence indicating
that such condition continues to be satisfied as Eximbank may
reasonably require, including, without limitation, bring-down
opinions and certificates:
(a) Project Documents. Each of the Project Documents,
excluding the ECA Operation Performance Bond, the Mortgage, the
Insurance Contracts, the Governmental Approvals set forth in Part
B of Schedule 5.01(t) hereto and agreements and instruments
pertaining to Working Capital Subordinated Secured Obligations,
Third Party Subordinated Indebtedness and Senior Permitted
Indebtedness, shall have been entered into by the respective
parties thereto, shall be unconditional and fully effective in
accordance with their respective terms (except for this Agreement
or the Eximbank Guarantee Agreement having become unconditional and
fully effective, if such is a condition of effectiveness of any of
such documents), shall be in form and substance satisfactory to
Eximbank and Eximbank and the Collateral Agent shall each have
received a true, original copy thereof or, if a true, original copy
is unavailable, a certified true copy thereof. In addition, the
Geothermal Fluid Specifications (as defined in the Energy
Conversion Agreement) shall have been finalized as contemplated in
Annex I to the Energy Conversion Agreement, an agreement evidencing
the finalization of such specifications shall have been
incorporated as an addendum to the Energy Conversion Agreement and
Eximbank and the Collateral Agent shall each have received a true,
original copy thereof or, if a true, original copy is unavailable,
a certified true copy
thereof.
(b) Other Documents. The APFC Escrow and Security
Agreement shall have been entered into by the respective parties
thereto, shall be unconditional and fully effective in accordance
with its respective terms, shall be in form and substance
satisfactory to Eximbank and Eximbank and the Collateral Agent
shall each have received a true, original copy thereof or, if a
true, original copy is unavailable, a certified true copy
thereof.
(c) Opinions of Counsel. Eximbank shall have received signed
legal opinions of counsel to each Person listed on Section A of
Schedule 5.01(c) hereto, each of which shall be in form and
substance and by counsel satisfactory to Eximbank and shall be
dated the date of execution hereof; provided that the opinion of
PNOC-EDC may be dated the Effectivity Date (as defined in the
Energy Conversion Agreement).
(d) Corporate Documents; Proceedings.
(i) Eximbank shall have received a certificate, dated not
earlier than the date of execution hereof, signed by a
Financial Officer of the Borrower, and attested to by the
Secretary or any Assistant Secretary of the Borrower, in form
and substance satisfactory to Eximbank, together with copies of
the Articles of Incorporation and By-Laws of the Borrower and
resolutions of the Board of Directors of the Borrower reasonably
requested by Eximbank, and if not in English
accompanied by an accurate English translation upon which
Eximbank shall have the right to rely for all purposes under
this Agreement, the Eximbank Guarantee Agreement and the
Eximbank Note.
(ii) Eximbank shall have received a certificate,
dated not earlier than the date of execution hereof, signed by
a Financial Officer of each Obligor (other than PNOC-EDC and the
ECA Operation Performance Bond Issuer) and attested to by the
Secretary or any Assistant Secretary of the Obligor, in form and
substance satisfactory to Eximbank, together with copies of the
Articles of Incorporation and By-Laws of the Obligor and
resolutions of the Obligor reasonably requested by Eximbank.
(iii) Eximbank shall have received a copy of an
engagement letter for the engagement of Deloitte, Touche &
Tohmatsu International, or such other firm of independent public
accountants acceptable to Eximbank, as Auditors.
(iv) Eximbank shall have received a certificate
from each Obligor (other than PNOC-EDC and the ECA Operation
Performance Bond Issuer) signed by an authorized officer
certifying the incumbency of parties executing any Project
Document or related document on behalf of such Obligor.
(e) Auditors. Eximbank shall have received copies of the
authorization of the Auditors referred to in Section 6.2(b) of the
Lender Credit Agreement and Section 7.02(b) hereof.
(f) Pledged Stock; Convertible Subordinated Notes.
CE Mahanagdong and Kiewit Energy shall have delivered to the
Collateral Agent, as pledgee, (i) the share certificates
representing all of the Pledged Stock, together with executed and
undated stock powers, and (ii) the Convertible Subordinated Notes
evidencing Required Subordinated Loans, together with executed
instruments of transfer, and the Collateral Agent shall have
received share certificates representing all directors'
qualifying shares of the Borrower and the one share of the
Borrower issued to APFC, together in each case with executed and
undated stock powers thereto.
(g) Consent Letters. Eximbank shall have received a
letter, in form and substance satisfactory to Eximbank, from (i)
White & Case, presently located at 1155 Avenue of the
Americas, New York, New York 10036-2787, indicating the consent of
White & Case to its appointment by the Borrower, CECI, BHCO, CBE,
and CE Mahanagdong as their agent to receive service of process as
specified in Section 10.02 hereof, in the case of the Borrower, as
specified in the Funding Agreement, in the case of CECI, as
specified in the Pledge Agreement and the Funding Agreement, in the
case of CE Mahanagdong and under the Construction Contracts the
Supply Contract and the Keystone Agreement in the case of BHCO and
CBE and (ii) CT Corporation System, presently located at 1633
Broadway, New York, New York 10019, indicating the consent of CT
Corporation System to its appointment by Kiewit Energy, KEC, GICO,
the Construction Contractor, the Construction Supplier, KIC and
KCGI as their agent to receive service of process as specified in
the Funding Agreement and the Pledge Agreement, in the case of
Kiewit Energy, as specified in the KCGI Guaranty, in the case of
KCGI and under the Construction Contract, the Supply Contract and
the Keystone Agreement, in the case of GICO, the Construction
Contractor, the Construction Supplier and KIC.
(h) Environmental Matters. Arrangements shall have been made
for the Borrower and the Project to comply with applicable
Philippine law and guidelines relating to occupational health and
safety and to the environment.
(i) Energy Conversion Agreement Effectiveness. Each of PNOC-
EDC, and the Borrower shall have issued to Eximbank a
certification confirming that the Effectivity Date (as defined in
the Energy Conversion Agreement) has occurred.
(j) Certificates. Eximbank shall have received copies of
each executed Project Document, together with a certificate of a
Financial Officer of the Borrower certifying that (i) the
Borrower is not in default in the performance, observance or
fulfillment of any of its obligations, covenants or conditions
contained therein and, to the best of the Borrower's knowledge, no
other party to any such Project Document is in default in the
performance, observance or fulfillment of any of its material
obligations, covenants or conditions contained therein and
(ii) in the case of each such document to which Eximbank is not a
party, (x) that such document is in full force and effect, (y) that
to the best of the Borrower's knowledge no event of Force Majeure
(as defined in such Project Document) has occurred
thereunder and (z) that the copy thereof delivered to Eximbank is
true, correct and complete. Eximbank shall have received
evidence or copies of all Governmental Approvals set forth in
Schedule 5.01(t) hereto (other than those set forth in Part B
thereof), certified by a Financial Officer of the Borrower as being
in full force and effect and except as disclosed in such Schedule
5.01(t), not the object of a currently pending appeal.
(k) Construction Budget; Base Case Forecast. Eximbank shall
have received the Construction Budget and the Base Case Forecast,
each of which shall be in form and substance
satisfactory to Eximbank.
(l) Reports of Consultants. Eximbank shall have received the
Independent Engineer's Report, the Insurance Consultant's Report
and such other information as shall be reasonably
requested by Eximbank.
(m) Financial Statements. Eximbank shall have received
copies of the most recent audited financial statements of CECI, KDG
and Peter Kiewit Sons', Inc. and shall have received copies of the
most recent unaudited financial statements (if audited financial
statements are not otherwise available) of the Borrower, KCGI, KEC,
KIC, GICO, CBE, the Construction Contractor, the Construction
Supplier, CE International Ltd., BHCO, Kiewit Energy, CE
Mahanagdong and each other Obligor (other than PNOC-EDC and the ECA
Operation Performance Bond Issuer) showing, for each such Person,
no material adverse change in the financial condition of such
Person since the date of the last financial statements provided to
Eximbank prior to the date of this Agreement, and certificates
dated the Guarantee Operative Date and signed by a Financial
Officer of each such Person stating that (x) such financial
statements are true, complete and correct and (y) no material
adverse change in the financial condition, operations, properties,
business or prospects of such Person has occurred since the date of
such financial statements.
(n) Acquisition List. The Borrower shall have delivered to
Eximbank the acquisition list of the Items, containing with respect
to each Item a brief description and the quantity and estimated
invoice cost and the estimated date of shipment, if any, plus, for
each Item, a copy of the Purchase Contract for such Item. Such
Purchase Contracts shall not contravene any applicable statute or
public policy of the United States. The list shall include, where
applicable, the Supplier's DUNS
numbers, and the product SIC Codes for each Item on the list.
(o) Evidence of Authority. Eximbank shall have received
evidence of the authority of the Borrower to enter into this
Agreement, the Eximbank Note, the Lender Credit Agreement, the OPIC
Finance Agreement, the Disbursement Agreement, the Collateral
Agency Agreement and the Security Documents and the other documents
required by this Agreement, the Lender Credit Agreement and the
OPIC Finance Agreement as of the date hereof, and the names,
specimen signatures and evidences of authority of the person
signing this Agreement, the Eximbank Note, the Eximbank Guarantee
Agreement, the Lender Credit Agreement, the OPIC Finance Agreement,
the Construction Notes, the Disbursement Agreement, the Collateral
Agency Agreement and the Security Documents and the other documents
required by this Agreement and the Lender Credit Agreement as of
the date hereof, or who, as of the date hereof, will otherwise act
as representatives of the Borrower in the operation of the Eximbank
Guarantee Agreement and the Eximbank Credit.
(p) Notice to Proceed and Construction Contractor's and
Construction Supplier's Representation. The Borrower shall have
delivered to Eximbank copies of the Notice to Proceed under (and as
defined in) the Construction Contract and the Notice to Proceed
under (and as defined in) the Supply Contract, each of which shall
have been issued on or prior to the date of execution hereof.
Eximbank shall have received certificates signed by authorized
representatives of each of the Construction Contractor and the
Construction Supplier to the effect that (i) as of the date hereof
the Scheduled Completion Date is July 1, 1997 or such later date
(which is acceptable to Eximbank) as shall correspond to any
extension of the milestone date set forth in Section 4.1.1 of the
Energy Conversion Agreement for the achievement of the Completion
Date (as defined in the Energy Conversion Agreement), (ii) the
Borrower is not in default under the Construction Contract or the
Supply Contract, (iii) the Construction Contractor is not entitled
to any change orders under the Construction Contract and the
Construction Supplier is not entitled to any change orders under
the Supply Contract (in each case, other than change orders
previously disclosed to Eximbank in writing) on such date and is
not then aware of any other change orders required under the
Construction Contract or the Supply Contract and (iv) to the best
of the Construction Contractor's or the Construction Supplier's (as
the case may be) knowledge, after reasonable inquiry, no Force
Majeure event (as defined in each of the Construction Contract and
the Supply Contract) has occurred.
(q) Project Site. Eximbank shall have received (i) an
opinion of counsel to the Borrower to the effect that the
Republic has valid legal title to the Site free of Liens (other
than Liens of or arising through the Borrower, the Construction
Contractor or the Construction Supplier) and that PNOC-EDC has the
valid legal authority to use the Site and delegate
unencumbered use of the Site to the Borrower on the terms and
conditions set forth in the Energy Conversion Agreement, which
opinion shall be from counsel and in form and substance
satisfactory to Eximbank, and (ii) a certificate of the Borrower
that PNOC-EDC has granted the Borrower and its designees full
access to and the ability to use the Site, so that the Borrower
and/or the Construction Contractor and their respective designees
may fully perform their respective obligations under the Energy
Conversion Agreement and their respective related obligations.
(r) No Default; Representations and Warranties.
Immediately before and after the initial Utilization:
(i) No Construction Credit Default or Construction Credit
Event of Default shall have occurred and be continuing;
(ii) No OPIC Credit Default or OPIC Credit Event of
Default shall have occurred and be continuing; and
(iii) all representations and warranties made by the
Borrower and any Obligor which is an Affiliate of the Borrower
and contained herein or in the Project Documents (other than the
Insurance Contracts, Governmental Approvals or any other
agreement, commitment or understanding referred to in
subsection (xiii) of the definition of "Operating Agreements"
in Schedule X) shall be true and correct in all material
respects with the same effect as though such representations and
warranties had been made on and as of the Guarantee
Operative Date except where expressed to be made only as of an
earlier date.
(s) Security. The Security, in form and substance
satisfactory to Eximbank, shall have been duly created, perfected
and, where appropriate, registered, to create a first priority
security interest and charge over the Collateral in existence at
the date hereof. Without limitation to the preceding sentence, the
Borrower shall have duly authorized, executed and delivered or, as
the case may be, provided:
(i) acknowledgment copies of proper financing statements
or other instruments duly filed under the Applicable Law of
each jurisdiction as may be necessary or, in the reasonable
opinion of Eximbank, desirable to perfect the charges and
security interests purported to be created by the Security
Documents;
(ii) certified copies of requests, for information
or copies, or equivalent reports, listing the financing
statements and instruments referred to in clause (i) above and
all other effective financing statements that name the
Borrower as debtor and that are filed in the jurisdictions
referred to in said clause (i), together with copies of such
other financing statements and instruments (none of which shall
cover the Collateral except to the extent evidencing
Construction Period Permitted Liens);
(iii) evidence of the completion of all other
recordings and filings of, or with respect to, the Security
Documents as may be necessary or, in the reasonable opinion of
Eximbank, desirable to perfect the security interests
purported to be created by the Security Documents; and
(iv) evidence that all other actions necessary or,
in the reasonable opinion of Eximbank, desirable to perfect
and protect the security interests purported to be created by
the Security Documents have been taken.
(t) Consent and Approvals. There shall have been obtained,
or there shall have been made arrangements, satisfactory to
Eximbank, for obtaining during the period prior to the Project
Completion Date, in addition to the Project Documents, the
governmental, corporate, creditors', shareholders' and other
licenses, approvals or consents listed in Schedule 5.01(t) hereto
and all other governmental, corporate, creditors, shareholders' and
other necessary licenses, approvals or consents (other than with
respect to Eximbank) for: (i) the financing by each of the Lenders
and the Issuing Bank under the Lender Credit Agreement; (ii) the
carrying on of the business of the Borrower as it is presently
carried on and is contemplated to be carried on; (iii) the carrying
out of the Project; (iv) the due execution and delivery of, and
performance under, each Project Document which has been entered
into at the date hereof, the Security, and any documents in
implementation of any thereof; and (v) the remittance to Eximbank
and the Collateral Agent and by the Collateral Agent to the Secured
Parties or their respective assignees, in Dollars, of all monies
payable pursuant to each Project Document which has been entered
into on the date hereof, and any documents in implementation of any
thereof.
(u) No Project Document Default; Governmental Approvals.
Each of the Project Documents which has been entered into or which
is required to have been entered into on the Guarantee Operative
Date shall be in full force and effect and no material breach or
default shall have occurred under such Project Document. No event
of Force Majeure (as defined in any of the Energy Conversion
Agreement, the Supply Contract and the Construction Contract) shall
have occurred which has had, or in the reasonable judgment of
Eximbank is reasonably likely to have, a Material Adverse Effect.
No events shall have occurred pursuant to which a claim could be
made by the Administrative Agent on behalf of the Lenders under the
Eximbank Guarantee Agreement.
(v) Costs; Construction Progress. Eximbank and the
Independent Engineer shall have received from the Borrower a
certificate in the form of Schedule 5.2(h) to the Lender Credit
Agreement signed by an authorized representative of the Borrower
and expressed to be effective on the date of the relevant
Utilization that (i) the costs and expenses theretofore incurred by
the Borrower and to be incurred by the Borrower prior to the latest
date on which the Maturity Date can be expected to occur will not
exceed $320,318,000 and (ii) the sum of (A) the
aggregate Financed Portion of the costs incurred by the Borrower
after January 1, 1993 and before the Maturity Date for the
purchase in the United States and export to the Republic of the
Items and (B) the aggregate Local Cost Financed Portion of the
costs incurred by the Borrower for the purchase in the Republic of
the Local Cost Items and (C) the aggregate IDC Financed
Portion of IDC will not exceed the difference between (x) the Total
Commitment and (y) 100% of the Guarantee Exposure Fee.
(w) Fees and Expenses. On or before the Credit Date, the
Borrower shall have paid or arranged for payment of fees,
expenses and other charges (including any and all Attorney Costs)
then due and payable by it under this Agreement.
(x) OPIC Disbursement. On the Credit Date, OPIC shall have
made available to the Borrower pursuant to the Disbursement
Agreement the amount of the OPIC Disbursement, if any,
corresponding to the Utilization requested on the Credit Date in
the Application for Funding delivered by the Borrower to the
Administrative Agent.
(y) Marubeni Purchase Agreement. The Marubeni Purchase
Agreement shall have been entered into by the respective parties
thereto, shall be unconditional and fully effective in accordance
with its respective terms, shall be in form and substance
satisfactory to Eximbank and Eximbank shall have received a true,
original copy thereof.
(z) Energy Conversion Agreement Amendments. On or before the
Credit Date, (i) the Energy Conversion Agreement shall have been
amended in a manner satisfactory to Eximbank (including, without
limitation, to conform the Correction Curves (as defined in the
Energy Conversion Agreement) and the interface conditions (to the
extent presently identified) to those specified in the Construction
Contract) and Eximbank shall have received a certified true copy of
each of the amendments thereto and (ii) Eximbank shall have
received a certified true copy of a letter from the General Counsel
of PNOC-EDC affirming that loss of use of the Site constitutes an
event of Force Majeure under (and as defined in) the Energy
Conversion Agreement.
(aa) Amounts Secured by Mortgage Chattel Lien. On or
before the Credit Date, the Borrower, the Lenders, the
Administrative Agent, OPIC and Eximbank shall have agreed upon the
amount of Secured Obligations to be secured by the Lien granted
under Article IV of the Mortgage, which agreement shall be
evidenced in a manner satisfactory to Eximbank.
(bb) No Change in Contract Price. The contract price set
forth in the Supply Contract and the Construction Contract shall
not have been amended, changed or otherwise modified and Eximbank
shall have received a certificate from each of the Construction
Supplier and the Construction Contractor to such effect in form and
substance satisfactory to Eximbank.
(cc) Management Services Arrangements. On or before the
Credit Date, the Borrower and CECI (or another Affiliate of the
Borrower acceptable to Eximbank) shall have entered into a
management services contract or other operations and maintenance
personnel guaranty or similar arrangement acceptable to Eximbank,
OPIC, the Lenders and the Administrative Agent provided that such
arrangement would not result in Philippine value added tax being
incurred by CECI or such Affiliate of the Borrower, as the case may
be.
(dd) Other Instruments, Conditions, Etc. The delivery of any
other instruments and agreements and the satisfaction of any other
condition as Eximbank may reasonably request.
Section 5.02. Conditions Precedent to Eximbank
Disbursement. As conditions precedent to Eximbank's obligation to
disburse the Eximbank Credit, the documents described in paragraphs
(a) through (d) below shall have been received by Eximbank, each in
form and substance satisfactory to Eximbank and dated no earlier
than five (5) Business Days prior to the
proposed Disbursement Date, and the conditions described in
paragraphs (e) through (k) shall have been fulfilled on or before
the Disbursement Date, in a manner satisfactory to Eximbank:
(a) Eximbank Note. The executed Eximbank Note in the
principal amount of the requested Eximbank Disbursement.
(b) Opinions of Counsel. Signed legal opinions of counsel to
each Person listed on Section B of Schedule 5.01(c) hereto, each of
which shall be in form and substance and by counsel satisfactory to
Eximbank and shall be dated the Disbursement Date.
(c) Evidence of Authority. Evidence of the authority of the
Borrower to enter into the Eximbank Note and the other
documents required by this Agreement, and the names, specimen
signatures and evidences of authority of the persons who will sign
this Agreement, the Eximbank Note and the other documents required
by this Agreement, or will otherwise act as
representatives of the Borrower in the operation of the Eximbank
Credit.
(d) Energy Conversion Agreement. A certification signed by
an authorized representative of the Borrower and expressed to be
effective as of the Disbursement Date, stating that the Borrower is
in compliance with the Energy Conversion Agreement.
(e) Security. The Security shall have been duly created,
perfected and, where appropriate, registered, to create a first
priority security interest and charge over the Collateral in
existence on the Disbursement Date in favor of the Collateral Agent
for the benefit of Eximbank.
(f) Project Completion. The Project Completion Date shall
have occurred.
(g) No Event of Default. No Default Event or Incipient
Default Event exists or will exist after giving effect to the
requested Eximbank Disbursement that has not been cured or
waived.
(h) Representations and Warranties. All the
representations and warranties made by the Borrower in Section 6.02
shall be true and correct in all material respects.
(i) Fees and Costs. The Commitment Fee due pursuant to
Section 3.03 and all costs and expenses required to be paid
pursuant to Section 11.07 and 11.08 shall have been paid by the
Borrower, and arrangements satisfactory to Eximbank shall have been
entered into for providing payment to Eximbank of the Credit
Exposure Fee required under Section 3.04. For the purposes of the
foregoing sentence, "arrangements satisfactory to Eximbank" shall
include, without limitation, (i) the direct payment of the Credit
Exposure Fee by the Borrower to Eximbank on or prior to the
Disbursement Date or (ii) the submission to Eximbank by the
Borrower of a Request for Eximbank Disbursement that includes a
request for Eximbank financing of the Credit Exposure Fee in the
form provided in Annex B hereto.
(j) Debt Reserve Cash Collateral Account. The Debt Reserve
Account shall be funded in an amount equal to $20,000,000.
(k) Unforeseen Events. No event now unforeseen has
occurred which, in the reasonable judgment of Eximbank, would
render unlikely the performance by the Borrower of its
obligations under this Agreement and the other Financing
Documents.
(l) Insurance. Eximbank shall have received a certificate
from the Insurance Consultant stating that the insurance policies
required pursuant to Section 7.03 hereof to be in effect on the
Disbursement Date are in full force and effect and the Borrower
shall have complied with its obligations set forth in the last
sentence of Section 7.03(a) hereof.
Section 5.03. No Waivers. No course of dealing or waiver by
Eximbank in connection with any condition to the Eximbank
Disbursement under this Agreement shall impair any right, power or
remedy of Eximbank with respect to any other condition of the
Eximbank Disbursement, or be construed to be a waiver thereof.
Section 5.04. Representation and Warranty. The acceptance of
the benefits of the Eximbank Disbursement shall constitute a
representation and warranty by the Borrower to Eximbank that all
the conditions specified in Section 5.02 hereof have been
satisfied or waived as of that time.
Section 5.05. Request for Eximbank Disbursement. The
Borrower may, no earlier than five (5) Business Days prior to the
proposed Disbursement Date, submit to Eximbank a completed and duly
executed Request for Eximbank Disbursement; provided,
however, that no Eximbank Disbursement shall be made in respect of
such Request for Eximbank Disbursement until the conditions set
forth in Article V have been fulfilled or waived. The
Request for Eximbank Disbursement shall be executed by an
authorized representative of the Borrower, and shall be
accompanied by (i) true, correct and complete copies of all the
Eximbank Certificates and (ii) a written undertaking from the
Administrative Agent in the form of Exhibit 1 to Annex B hereto.
In no event shall the maximum amount of the Eximbank Disbursement
exceed the aggregate of the Dollar amounts certified by Eximbank in
the accompanying Eximbank Certificates as amounts eligible for
Eximbank support and 100% of the Credit Exposure Fee.
Notwithstanding anything to the contrary contained herein, the
Borrower may only submit one (1) Request for Eximbank
Disbursement under this Agreement.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES
Section 6.01. Representations and Warranties with Respect to
Guarantee Operative Date. In order to induce Eximbank to enter
into this Agreement and each of the other Financing
Documents to which it is a party, to issue the Eximbank Guarantee
Agreement and to establish the Eximbank Credit, the Borrower makes
the following representations, warranties and agreements as of the
date hereof and as of the Guarantee Operative Date, which shall
survive the execution and delivery of this Agreement and the other
Financing Documents to which Eximbank is a party and the
disbursement and repayment of the Eximbank Credit:
(a) Corporate Status. The Borrower (i) is a duly organized
and validly existing corporation in good standing under the laws of
the Republic, (ii) is duly qualified to do business as a foreign
corporation under the laws of each jurisdiction in which the
character of the properties owned or leased by it or in which the
transaction of its business as presently conducted or
proposed to be conducted makes such qualification necessary and
(iii) has full power and authority to own the property and assets
owned by it and to lease the properties leased by it and to
transact the business in which it is engaged or proposes to be
engaged and to do all things necessary or appropriate in respect of
the Project and to consummate the transactions contemplated by the
Project Documents in effect or required to be in effect as of each
date this representation is made or deemed made.
(b) Corporate Power and Authority. The Borrower has the
corporate power and authority to execute and deliver, and to
perform the terms and provisions of, each of the Project
Documents to which it is party and has taken all necessary
corporate action to authorize the execution, delivery and
performance by it of each of such Project Documents as have been
executed and delivered as of each date this representation and
warranty is made. The Borrower has, or in the case of the
Project Documents other than this Agreement, by the Guarantee
Operative Date will have, duly executed and delivered each of the
Project Documents to which it is party, and each of such Project
Documents constitutes or, in the case of each such other Project
Document when executed and delivered, will constitute, the legal,
valid and binding obligations of the Borrower and enforceable in
accordance with its respective terms, except as the
enforceability thereof may be limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and
(b) general equitable principles, regardless of whether the issue
of enforceability is considered in a proceeding in equity or at
law.
(c) No Violation. Neither the execution and delivery by the
Borrower of the Project Documents to which it is a party, nor the
Borrower's compliance with or performance of the terms and
provisions thereof, nor the use of the proceeds of the Loans or the
Eximbank Credit as contemplated by the respective Financing
Documents (i) will contravene or violate any provision of any
Applicable Law to which the Borrower, any of its assets or the
Project is subject, (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 (except any Permitted Liens) upon any of the property or
assets of the Borrower pursuant to the terms of any indenture,
mortgage, deed of trust, credit agreement, loan agreement or any
other agreement, contract or instrument to which the Borrower is a
party or by which it or any of its property or assets is bound or
to which it may be subject, (iii) will violate any provision of the
Articles of Incorporation or By-Laws of the Borrower or (iv) will
require any consent or approval of any Governmental Authority or
any creditor, shareholder, director or officer of the Borrower
which has not been obtained.
(d) Capitalization. The authorized capital stock of the
Borrower consists of 2,148,000 shares of common stock, par value
P28 per share, of which 537,014 shares are duly and validly issued,
outstanding, fully paid and non-assessable; 268,502 of such issued
shares of common stock (representing approximately 50% of such
537,014 issued shares) are owned and held by CE Mahanagdong, a
wholly-owned subsidiary of CE International (a wholly-owned
subsidiary of CECI); 268,502 of such issued shares of common stock
(representing approximately 50% of such 537,014 issued shares) are
owned and held by Kiewit Energy; one (1) share of such issued
shares of common stock is owned and held by APFC; and nine (9)
shares of such issued shares of common stock are directors'
qualifying shares. Except as described in the
Shareholder's Agreement, the Funding Agreement, the Marubeni
Purchase Agreement and the Convertible Subordinated Notes, the
Borrower does not have outstanding (x) any securities convertible
into or exchangeable for its capital stock or (y) any rights to
subscribe for or to purchase, or any options for the purchase of,
or any agreements, arrangements or understandings providing for the
issuance (contingent or otherwise) of, or any calls, commit-ments
or claims of any character relating to, its capital stock.
(e) Subsidiaries. The Borrower has no Subsidiaries and owns
no equity interest in any other Person.
(f) Single-Purpose Borrower. The Borrower has not incurred
any liabilities other than in connection with its participation in
the transactions contemplated by the Project Documents. The
Borrower (i) has not engaged in any business other than the design,
development, ownership, financing, construction and operation of
the Project and (ii) is not a party to any
agreement, contract or commitment (other than (w) the agreements
identified in clauses (i) through (xiii) of the definition of the
term Operating Agreements set forth in Schedule X hereto, (x) the
Financing Documents, (y) agreements, contracts or commitments
contemplated by the O&M Parameters (including those relating to
employee training, secondment of employees and vehicle rentals),
the then-current Construction Budget or the then-current Annual
Budget and (z) agreements, contracts and commitments in respect of
Permitted Indebtedness) which, individually, creates an annual
financial obligation of the Borrower in excess of $100,000 (or the
equivalent in other currency) or which would cause the
aggregate annual financial obligations of the Borrower under all
agreements, contracts and commitments (other than those specified
in clauses (w) through (z) immediately above) to which the
Borrower is a party to exceed $300,000 (or the equivalent in other
currency).
(g) Financial Statements; Financial Condition; Undisclosed
Liabilities; Etc.
(i) The statements of financial condition of the Borrower
most recently furnished to Eximbank present fairly the
financial condition of the Borrower at the date of such
statements of financial condition and the results of the
operations of the Borrower for such fiscal year. Such
financial statements have been prepared in accordance with
Philippine generally accepted accounting principles and
practices consistently applied. Since the date of such
financial statements, no event, condition or circumstance
(including without limitation Force Majeure as defined in
Articles 13.1(a) and 13.1(b) of the Energy Conversion
Agreement) has existed or has occurred which is reasonably
likely to have a Material Adverse Effect.
(ii) Except as fully reflected in the financial
statements referred to in Section 6.01(g)(i), there are no
liabilities or obligations with respect to the Borrower of any
nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether or not due) for the period to which such
financial statements relate which, either individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect.
The Borrower does not know of any reasonable basis for the
assertion against the Borrower of any liability or obligation of
any nature whatsoever for such relevant period that is not fully
reflected in the financial statements referred to in Section
6.01(g)(i) which, either individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect.
(h) Litigation; Labor Disputes. (i) Except as disclosed in
Schedule 6.01(h) hereto, there is no action, suit, investigation or
proceeding by or before any court, arbitrator, administrative
agency or other Governmental Authority (including without
limitation any appeal by any Person of a Governmental Approval)
pending or, to the best of the Borrower's knowledge, threatened
against or affecting the Borrower or any of its properties,
revenues or assets or the Project or the Site which has had or is
reasonably likely to have a Material Adverse Effect. The
Borrower is not in default with respect to any order of any court,
arbitrator, administrative agency or other Governmental Authority.
There is no injunction, writ, preliminary restraining order of any
nature issued by an arbitrator, court or other Governmental
Authority directing that any of the material transactions provided
for in any of the Project Documents not be consummated as herein or
therein provided. To the best of the Borrower's knowledge, there
is no action, suit, investigation or proceeding by or before any
court, arbitrator, administrative agency or other Governmental
Authority (including without limitation any appeal by any Person of
a Governmental Approval) pending or threatened against or affecting
any party to any Project Document which is an Affiliate of the
Borrower or any of their properties, revenues or assets, and the
Borrower does not have knowledge of any such action, suit,
investigation or proceeding pending or threatened against or
affecting any other party to any Project Document or any of their
properties, revenues or assets, in each case described in this
sentence which has had or is reasonably likely to have a Material
Adverse Effect.
(ii) There are no strikes, slowdowns or work stoppages by
the Borrower's employees on-going, or, to the knowledge of the
Borrower, threatened which are reasonably likely to have a
Material Adverse Effect.
(i) True and Complete Disclosure. All factual information
(taken as a whole, which, for the avoidance of doubt (i) shall not
include any information by way of projections, estimates or other
expressions of view as to future circumstances provided that such
projections, estimates or other expressions of view are expressed
in good faith and on the basis of reasonable assumptions and (ii)
shall be qualified by any disclaimers with respect to such factual
information provided by the Borrower to Eximbank, heretofore or
contemporaneously furnished by or on behalf of the Borrower, in
writing to Eximbank or provided heretofore by CECI or any other
Affiliate of the Borrower in the form of financial statements of
CECI or such other Affiliate, as the case may be (including without
limitation such factual information as contained in the Information
Memorandum and the Project Documents), and all other such factual
information (taken as a whole) hereafter furnished by or on behalf
of the Borrower or CECI in writing to Eximbank will be, true and
accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to
state any fact necessary to make such information (taken as a
whole) not misleading in any material respect at such time in light
of the circumstances under which such information was provided.
There are in existence no documents or agreements which have not
been disclosed to Eximbank which are material in the context of the
Project Documents or which have the effect of varying any of the
Project Documents.
(j) Tax Returns and Payments. The Borrower has filed all tax
returns required by Applicable Law to be filed by it and has paid
all income taxes payable by it which have become due pursuant to
such tax returns and all other taxes and assessments payable by it
which have become due, other than those not yet delinquent and
except for those contested in good faith and for which adequate
reserves have been established. The Borrower has paid, or has
provided adequate reserves (in the good faith judgment of the
management of the Borrower) for the payment of, all national,
regional or local income taxes applicable for all prior Fiscal
Years and for the current Fiscal Year to the date hereof.
(k) Governmental Approvals. All Governmental Approvals
necessary under Applicable Law in connection with (i) the due
execution and delivery of, and performance by the Borrower of its
obligations and the exercise of its rights under, the Project
Documents in effect or required to be in effect as of each date
this representation is made or deemed made, (ii) the grant by each
of the Borrower, CECI, Kiewit Energy, KEC and CE Mahanagdong of the
Liens created pursuant to the Security Documents and the Funding
Agreement and the validity, enforceability and perfection thereof
and the exercise by Eximbank or the Collateral Agent of its rights
and remedies thereunder and (iii) the construction and operation of
the Project as contemplated by the Project Documents, to be
obtained by the Borrower are, and to be obtained by any other
Person (to the best knowledge of the Borrower) are, set forth in
Schedule 5.01(t). Each of the Governmental Approvals set forth in
Part A of Schedule 5.01(t) and each other Governmental Approval
obtained by the Borrower after the date of this Agreement but on or
prior to the date this representation is made, has been duly
obtained or made, is validly issued, is in full force and effect,
is not the object of a currently pending appeal, is held in the
name of the Person identified in Schedule 5.01(t) and is free from
any condition or requirement compliance with which is reasonably
likely to have a Material Adverse Effect or which the Borrower does
not reasonably expect to be able to satisfy. There is no
proceeding (including without limitation any appeal by any Person)
pending or, to the best knowledge of the Borrower, threatened which
is reasonably likely to result in the rescission, termination,
material modification, suspension or determination of invalidity or
lack of effectiveness of any such Governmental Approval. The
information set forth in each application and other written
material submitted by the Borrower to the applicable Governmental
Authority in connection with each such Governmental Approval is
accurate and complete in all material respects. The Governmental
Approvals set forth in Part B of Schedule 5.01(t) are required
solely in connection with later stages of construction and
operation of the Project. The Borrower has no reason to believe
that any Governmental Approval that has not been obtained by the
Borrower, but which will be required in the future, will not be
granted to it in due course, on or prior to the date when required
and free from any condition or requirement compliance with which is
reasonably likely to have a Material Adverse Effect or which the
Borrower does not reasonably expect to be able to satisfy. The
Project, if constructed in accordance with the Construction
Contract, the Supply Contract and the other Project Documents, will
conform to and comply with all covenants, conditions, restrictions
and reservations in the Governmental Approvals and the Project
Documents applicable thereto and all Applicable Laws. The Borrower
has no reason to believe that the Collateral Agent will not be
entitled, without undue expense or delay, to the benefit of each
Governmental Approval set forth on Schedule 5.01(t) upon the
exercise of remedies under the Security Documents. Eximbank has
received a true and complete copy of each Governmental Approval
heretofore obtained or made by the Borrower.
(l) Compliance with Statutes, Etc.
(i) The Borrower is in compliance with all Applicable
Laws in respect of the conduct of its business and the ownership of
its property (including, without limitation, Applicable Laws
relating to environmental standards and controls and resettlements
and Applicable Laws relating to the maintenance of debt to equity
ratios).
(ii) Without limitation to the foregoing clause (i),
the Borrower's business and the Project are being carried out in
compliance with applicable Republic environmental guidelines.
(m) Environmental Matters. To the best of the Borrower's
knowledge, neither the Site nor the Plant (nor any other property
with respect to which the Borrower has retained or assumed
liability either contractually or by operation of the law) has been
affected by any Hazardous Material in a manner that is reasonably
likely to give rise to any material liability of the Borrower under
any Environmental Law or which has had or is reasonably likely to
have a Material Adverse Effect.
(n) Patents, Licenses, Franchises and Formulas. The Borrower
owns or has the right to use all the patents, trade-marks, permits,
service marks, trade names, copyrights, licenses, franchises and
formulas, or rights with respect thereto, and has obtained
assignments of all leases and other rights of whatever nature,
necessary for the present and proposed conduct of its business and
the carrying out of the Project in the manner contemplated by the
Project Documents, without any known conflict with the rights of
others which, or the failure to obtain which, as the case may be,
is reasonably likely to result in a Material Adverse Effect.
(o) Submission to Law and Jurisdiction. As of the Guarantee
Operative Date, the choice of governing law for each of the
respective Project Documents in effect or required to be in effect
as of the Guarantee Operative Date will be recognized in the courts
of the Republic, and those courts will recognize and give effect to
any judgment in respect of such Project Document obtained by or
against the Borrower in the courts of the jurisdictions to which
the Borrower has submitted.
(p) Status of the Loans and the Eximbank Credit. The
Construction Financing Secured Obligations constitute, and the
Eximbank Secured Obligations will constitute, direct,
unconditional, and general obligations of the Borrower and rank
senior as to priority of payment to all Subordinated Secured
Obligations and all Indebtedness of the Borrower described in
Section 8.05(i)(j) and not less than pari passu as to priority of
payment to all other Indebtedness of the Borrower. Except as
permitted by Section 8.01 of this Agreement, the Borrower has not
secured or agreed to secure any such other Indebtedness by any Lien
upon any of its present or future revenues or assets or capital
stock.
(q) Documents; Sufficiency of Project Documents.
(i) Eximbank has received a complete copy of each Project
Document in effect or required to be in effect as of each date
this representation is made or deemed made (including all exhibits,
schedules and disclosure letters referred to therein or delivered
pursuant thereto, if any).
(ii) To the best of the Borrower's knowledge, the
services to be performed, the materials to be supplied and
easements, licenses and other rights granted or to be granted to
the Borrower pursuant to the terms of the Project Documents
provide or will provide the Borrower with all rights and property
interests required to enable the Borrower to obtain all services,
materials or rights (including access) required for the design,
construction, start-up, operation and maintenance of the Project,
including the Borrower's full and prompt performance of its
obligations, and full and timely satisfaction of all conditions
precedent to the performance by others of their obligations, under
the Project Documents, other than those services, materials or
rights that reasonably can be expected to be obtainable in the
ordinary course of business without material additional expenses or
material delay.
(r) Fees and Enforcement. Other than amounts that have been
paid in full or will have been paid in full by the Guarantee
Operative Date (or, for the purposes of Section 6.02 hereof, the
Disbursement Date), no fees or taxes, including without limitation
stamp, transaction, registration or similar taxes, are required to
be paid for the legality, validity, or enforceability of this
Agreement or any of the other Project Documents in effect or
required to be in effect as of each date this representation is
made or deemed made. This Agreement and each of such Project
Documents executed and delivered as of the date this representation
is made or deemed made are each in proper legal form under the laws
of the Republic, and under the respective governing laws selected
in such Project Documents, for the enforcement thereof in such
jurisdiction without any further action on the part of the
Collateral Agent or Eximbank.
(s) Utility Availability. Arrangements reflected
accurately and completely in the Construction Budget have been made
under the Construction Contract, the Supply Contract, the Energy
Conversion Agreement or otherwise on commercially
reasonable terms for the provision of all services, materials and
utilities reasonably necessary for the construction of the
Project.
(t) Availability and Transfer of Foreign Currency. Except as
disclosed in Schedule 6.01(t) to this Agreement, all requisite
foreign exchange control approvals and other authorizations, if
any, by the Republic or any department or agency thereof have been
validly obtained and are in full force and effect to assure (i) the
ability of the Borrower to receive, and the ability of any other
party to make, any and all payments to the Borrower contemplated by
the Project Documents, (ii) the availability of Dollars to enable
the Borrower to perform all of its obligations under the Financing
Documents or any of the other Project Documents, as the case may
be, in accordance with their respective terms, and (iii) the
ability of the Borrower to convert all sums received in Peso
amounts from PNOC-EDC under the Energy Conversion Agreement and the
PNOC-EDC Consent Agreement and from the Republic under the
Performance Undertaking and the Republic Consent Agreement,
including any Peso amounts representing SFRI Fees, from Pesos to
Dollars, immediately upon receipt thereof, and to use the Dollars
as necessary to perform all of its obligations under the Project
Documents, in accordance with their respective terms. Except as
disclosed in Schedule 6.01(t) to this Agreement, there are no
restrictions or requirements which limit the availability or
transfer of foreign exchange, or the conversion to a foreign
exchange, for the purpose of the performance by the Borrower of its
obligations under the Financing Documents, this Agreement or under
any of the other Project Documents.
(u) Construction Budget. (i) The Construction Budget as in
effect on the date hereof is attached as Schedule 6.01(u) to this
Agreement. The Construction Budget accurately specifies all costs
and expenses incurred and, to the best of the Borrower's knowledge,
anticipated to be incurred, prior to the latest date on which the
Maturity Date can be expected to occur to construct and finance the
construction of the Project in the manner contemplated by the
Project Documents. In addition, to the best of the Borrower's
knowledge, the amount of all costs and expenses required to be paid
or incurred prior to the latest date on which the Maturity Date can
be expected to occur to construct and finance the construction of
the Project in the manner contemplated by the Project Documents
does not exceed the amount reflected in the Construction Budget.
(ii) To the best of the Borrower's knowledge, all
projections and budgets (including the Construction Budget and
the Base Case Forecast) furnished or to be furnished to the
Administrative Agent, the Collateral Agent, the Issuing Bank,
the Lenders or Eximbank by or on behalf of the Borrower and the
summaries of significant assumptions related thereto (w) have been
and will be prepared with due care, (x) fairly present, and will
fairly present, the Borrower's expectations as to the matters
covered thereby as of their date, (y) are based on, and will be
based on, reasonable assumptions as to all factual and legal
matters material to the estimates therein (including interest rates
and costs) and (z) are in all materials respects consistent with,
and will be in all material respects consistent with, the
provisions of the Project Documents.
(v) Title; Liens. The Borrower has good and valid title to
all of its other properties and assets, in each case, free and
clear of all Liens other than Permitted Liens, including without
limitation, on and subject to the terms and conditions of the
Energy Conversion Agreement, an unconditional and unencumbered
right to use the Site for the duration of the Cooperation Period
(as defined in the Energy Conversion Agreement). No mortgage or
financing statement or other instrument or recordation covering all
or any part of the property or assets of the Borrower is on file in
any recording office, except such as relate to Liens described in
paragraphs (a) and (b) of Section 8.01 hereof.
(w) Transactions with Affiliates. The Borrower is not a
party to any contracts or agreements with, or any other
commitments to, whether or not in the ordinary course of
business, any Affiliate, which are individually valued in excess of
$100,000 or in the aggregate valued in excess of $300,000, except
for the Lender Credit Agreement, the Construction
Contract, the Supply Contract, the Funding Agreement (and the
agreements for the transactions contemplated therein), the
Funding Security Agreement, the APFC Escrow and Security
Agreement, the Pledge Agreement, the Keystone Agreement and any
other contracts, agreements or commitments that are contemplated in
the O&M Parameters (including those relating to employee training,
vehicle rentals and secondment of employees) or in the Funding
Agreement.
(x) No Additional Fees. Other than as expressly set forth in
the Base Case Forecast, the Construction Budget and the fee letters
referred to in Sections 2.7 and 2.20 of the Lender Credit
Agreement, the Borrower has not paid or become obligated to pay any
fee or commission to any broker, finder or intermediary for or on
account of arranging the financing of the transactions contemplated
by the Project Documents.
(y) Regulation of Parties. None of the Borrower, its
Affiliates nor any of the Secured Parties or Eximbank is or will
be, solely as a result of the participation by such parties
separately or as a group in the transactions contemplated hereby or
by any other Project Document, or as a result of the ownership, use
or operation of the Project, subject to regulation by any
Governmental Authority of the United States as a "public utility",
an "electric utility holding company", a "public utility holding
company", a "holding company", or an "electrical corporation" or a
subsidiary or affiliate of any of the foregoing under any
Applicable Law of the United States (including, without limitation,
PUHCA and FPA) or by any Governmental Authority of the Republic as
a "public utility" under any Applicable Law of the Republic. So
long as the owner and operator of the Project is an "exempt
wholesale generator" under Section 32 of PUHCA or a "foreign
utility company" under Section 33 of PUHCA, none of the Secured
Parties will by reason of its or their ownership or operation of
the Project upon the exercise or remedies under the Security
Documents be subject to regulation by any Governmental Authority of
the United States as a "public utility", an "electric utility", an
"electric utility holding company", a "holding company", or an
"electric corporation" or a subsidiary or affiliate of any of the
foregoing under any Applicable Law of the United States (including,
without limitation, PUHCA and FPA).
(z) Regulatory Status. The Borrower is not subject to
regulation as a "subsidiary company" of a holding company under
PUHCA.
(aa) ERISA and Employees. The Borrower does not sponsor,
maintain, administer, contribute to, participate in, or have any
obligation to contribute to or any liability under, any Plan nor
since the date which is six years immediately preceding the
Guarantee Operative Date has the Borrower established, sponsored,
maintained, administered, contributed to, participated in, or had
any obligation to contribute to or liability under, any Plan. A
Termination Event has not occurred with respect to any Plan the
occurrence of which has had or to the Borrower's knowledge is
reasonably likely to result in a Material Adverse Effect.
Neither the Borrower nor any ERISA Affiliate has failed to make a
required contribution or payment to a Multiemployer Plan when due,
the failure of which has had or to the Borrower's knowledge is
reasonably likely to result in a Material Adverse Effect. To the
Borrower's knowledge, no accumulated funding deficiency as defined
in Section 412 of the Code has been incurred nor has any funding
waiver from the Internal Revenue Service been received or requested
with respect to any Pension Plan, nor has the Borrower or any ERISA
Affiliate failed to make any contribution or to pay any amount due
and owing as required by Section 412 of the Code, Section 302 of
ERISA or the terms of any Pension Plan, nor has there been any
event requiring disclosure under Section
4041(c)(3)(C) or Section 4063 of ERISA with respect to any
Pension Plan, the event or occurrence of which has had or to the
Borrower's knowledge is reasonably likely to result in a Material
Adverse Effect. To the Borrower's knowledge, the Borrower and each
ERISA Affiliate has met its minimum funding requirements under
ERISA and the Code with respect to the Plans and all benefit
liabilities under each Pension Plan are being funded in accordance
with applicable legal requirements and reasonable actuarial
assumptions and methods as set forth in ERISA and the Code. To the
Borrower's knowledge, no material proceeding, claim, lawsuit and/or
investigation exists or, to the best of the Borrower's knowledge,
is threatened concerning any (i) Pension Plan, or (ii)
Multiemployer Plan, the occurrence of which has had or is
reasonably likely to result in a Material Adverse Effect. Neither
the Borrower nor, to the Borrower's knowledge, any ERISA Affiliate
has incurred any liability to the PBGC other than for insurance
premiums with respect to a Pension Plan, the payment of which is
not yet due.
(bb) Investment Company Act. Neither the Borrower nor any of
its Affiliates is an "investment company" or a company "controlled"
by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended.
(cc) No Re-Export of Items. To the best of the Borrower's
knowledge, no Items will be re-exported from the Republic (whether
as discrete Items, components of another product or part of a
project), nor will any Item be used or sold to any Person in any
Excluded Country.
(dd) Special Representation, Warranty and Covenant. The
Borrower represents, warrants and covenants that it has not
employed, does not employ and will not employ (i) as an agent or
attorney in connection with the Eximbank Credit any person who as
an employee of Eximbank had participated personally and
substantially in the Eximbank Credit or (ii) as an agent or
attorney to appear personally in connection with the Eximbank
Credit any person who had been an employee of Eximbank within two
years of being employed by the Borrower and had official
responsibility for the Eximbank Credit at any time during the last
year of that person's employment by Eximbank.
Section 6.02. Representations and Warranties with Respect to
the Disbursement Date. In order to induce Eximbank to make the
Eximbank Credit available to the Borrower on the Disbursement Date,
the Borrower confirms the representations and warranties set forth
in Section 6.01 as if made as of the Disbursement Date (except
where specified to be made as of a specified date).
Section 6.03. Acknowledgment. The Borrower acknowledges that
it has made the foregoing representations and warranties with the
intention of persuading Eximbank to enter into this Agreement and
the Eximbank Guarantee Agreement and to make the Eximbank Credit
available and that Eximbank has entered into this Agreement and the
Eximbank Guarantee Agreement on the basis of, and in full reliance
on, each of such representations and warranties. The Borrower
warrants to Eximbank that each of such representations is true and
correct in all material respects as of the date of this Agreement
and that none of them omits any matter necessary to make such
representation not misleading in any material respect. The rights
and remedies of Eximbank in relation to any misrepresentations or
breach of warranty on the part of the Borrower shall not be
prejudiced by any investigation by or on behalf of Eximbank into
the affairs of the Borrower, by the execution, delivery or
performance of this Agreement or any other Financing Document or by
any other act or thing which may be done by or on behalf of
Eximbank in connection with this Agreement or any other Financing
Document and which might, apart from this Section, prejudice such
rights or remedies.
ARTICLE VII. AFFIRMATIVE COVENANTS.
With respect to provisions of this Article VII so
specifying, from and after the Disbursement Date and, with
respect to all remaining provisions of this Article VII, from and
after the execution and delivery of this Agreement, in each case
until the Eximbank Credit is paid in full, except as otherwise
waived pursuant to the next two succeeding sentences, the
Borrower covenants and agrees as provided in this Article VII.
Provisions of this Article VII specifying effect from and after the
Disbursement Date and provisions requiring consultations with or
the furnishing of documents or other information to Eximbank or
requiring the consent or approval of Eximbank to the taking or
omission of any action may only be waived by Eximbank and in
writing. All other provisions of this Article VII may be waived
with effect during the period prior to the Disbursement Date by the
Required Secured Parties and in writing and, thereafter, by
Eximbank and in writing.
Section 7.01. Information Covenants. The Borrower shall
furnish to Eximbank:
(a) Quarterly Financial Statements. As soon as available
but, in any event, within 60 days (or 120 days in the case of the
fourth quarterly accounting period) after the close of each
quarterly accounting period in each Fiscal Year,
(i) two copies of complete unaudited statements of
financial condition of the Borrower as at the end of such
quarterly period with related statements of income and
retained earnings and statements of changes in financial posi-
tion for such quarterly period and for the elapsed portion of
the Fiscal Year ended with the last day of such quarterly per-
iod, in each case setting forth comparative figures for (A) the
related periods in the prior Fiscal Year and (B) the proforma
financial projections submitted to Eximbank in connection with the
Borrower's application for credit approval, all of which shall be
prepared in accordance with generally accepted accounting
principles as in effect in the United States from time to time and
otherwise in form satisfactory to Eximbank and certified by the
chief financial officer of the Borrower, subject to normal year-end
audit adjustments;
(ii) a report on any event or condition which has had or
which is reasonably likely to have a Material Adverse Effect; and
(iii) a statement, in form reasonably satisfactory to
Eximbank, of all financial transactions in such Quarter between the
Borrower and any Affiliate of the Borrower, including a
certification that such transactions were on ordinary commercial
terms negotiated on an arms-length basis.
(b) Annual Financial Statements. As soon as available but,
in any event, within 120 days after the close of each Fiscal Year,
two copies of the following, all prepared in accordance with
generally accepted accounting principles as in effect in the
Philippines from time to time and otherwise in form satisfactory to
Eximbank: (i) statements of financial condition of the Borrower as
at the end of such Fiscal Year with the related statements of
income and retained earnings and statements of changes in financial
position for such Fiscal Year, in each case setting forth
comparative figures for the preceding Fiscal Year and certified by
the Auditors, together with consolidating statements (and all
adjustments thereto) with respect to the Company (all such
statements being in agreement with the Borrower's books of account
and prepared in accordance with United States generally accepted
accounting principles consistently applied), (ii) a report of the
Auditors (x) stating that in the course of its regular audit of the
financial state-ments of the Borrower, which audit was conducted in
accordance with Philippine generally accepted auditing standards,
the Auditors obtained no knowledge of any Incipient Default Event
or Default Event which has occurred and is continuing or, if in the
opinion of the Auditors such an Incipient Default Event or
Default Event has occurred and is continuing, a statement as to the
nature thereof and (y) certifying that, based on said
financial statements, the Borrower was in compliance with the
financial covenants contained in Article VIII as of the end of the
relevant Fiscal Year or, as the case may be, detailing any non-
compliance therewith and (iii) consolidating statement of financial
condition of the Company at the end of such Fiscal Year with
related statements of income and retained earnings and statement of
changes in financial position for such Fiscal Year, in each case
setting forth comparative figures for the preceding Fiscal Year all
reflecting United States generally accepted accounting principles
consistently applied and certified by the Chief Financial Officer
of the Company.
(c) Other Financial Statements. Within 30 days after the
filing of the same with the United States Securities and Exchange
Commission, copies of the annual and quarterly financial
statements (consisting of a balance sheet and the related
statements of income, equity and cash flows) of CECI, Peter Kiewit
Sons', Inc. and KDG, certified by the chief financial officer of
CECI, Peter Kiewit Sons', Inc. or KDG as the case may be, and,
within 120 days of the end of each fiscal year, copies of the most
recent unaudited financial statements (consisting of a balance
sheet and the related statements of income, equity and cash flows)
if audited financial statements are not otherwise available of KEC,
KIC, GICO, CBE, KCGI, BHCO, Kiewit Energy, CE Mahanagdong, CE
International, the Construction Contractor and the Construction
Supplier, certified by the chief financial officer of KEC, KIC,
GICO, CBE, KCGI, BHCO, Kiewit Energy, CE Mahanagdong, CE
International, the Construction Contractor or the Construction
Supplier, as the case may be, and within 60 days after the end of
each of the first three fiscal quarters of each fiscal year, copies
of the unaudited quarterly financial statements (consisting of a
balance sheet and the related statements of income, equity and cash
flows) of KEC, KIC, GICO, CBE, KCGI, BHCO, Kiewit Energy, CE
Mahanagdong, CE International, the Construction Contractor and the
Construction Supplier, certified by the chief financial officer of
KEC, KIC, GICO, CBE, KCGI, BHCO, Kiewit Energy, CE Mahanagdong, CE
International, the Construction Contractor or the Construction
Supplier, as the case may be, that such financial statements are
true and correct and have been prepared in accordance with United
States generally accepted accounting principles (subject to normal
year-end adjustments); provided, however, that so long as CE
Mahanagdong and Kiewit Energy engage in no business other than the
holding of their respective direct or indirect ownership interests
in the Borrower, the Borrower shall be deemed to have complied with
this Section 7.01(c) if on each date the Borrower would otherwise
be required to furnish financial statements of any such Persons
pursuant to this Section 7.01(c), the Borrower instead furnishes a
certificate of the chief financial officer of each such Person
certifying that such Person is engaged in no other business,
provided further, that the Borrower shall have no obligation
hereunder to provide to Eximbank the financial statements of any of
KIC, KEC, GICO, CBE, KCGI, the Construction Contractor, the
Construction Supplier or BHCO after such entity is no longer an
Obligor.
(d) Management Letters. Promptly after the Borrower's
receipt thereof, a copy of any "management letter" or other similar
communication received by the Borrower from the Auditors in
relation to the Borrower's financial, accounting and other systems,
management and accounts.
(e) Annual Operating Budget. As soon as available but, in
any event, within 60 days prior to (i) the Operation Date and,
thereafter, (ii) the commencement of each Fiscal Year, an annual
operating budget (the "Annual Budget") (including budgeted state-
ments of income and sources and uses of cash and balance sheets)
prepared by the Borrower and accompanied by a statement of the
chief financial officer of the Borrower to the effect that, to the
best of his or her knowledge, the budget is a reasonable estimate
for the period covered thereby. The first Annual Budget shall
cover the period from the Operation Date through the end of the
Fiscal Year in which the Operation Date occurs, and, if such period
consists of less than six (6) months, for the immediately
succeeding Fiscal Year. Each Annual Budget shall contain
complete, fair and accurate estimates (by principal components) of
Sales Proceeds, Operating and Maintenance Costs and Debt Service
for each Month covered by such Annual Budget based on the
Borrower's best projections at such time. Unless otherwise
consented to by Eximbank, the Annual Budget from year to year shall
be based on the same format as the Base Case Forecast, including
any amounts allocated for contingencies, and be maintained on the
same basis and provide sufficient detail to permit a meaningful
comparison. For each Annual Budget that is expected to cover any
period occurring after the Disbursement Date, Eximbank (in
consultation with the Independent Engineer) shall review such
Annual Budget, and Eximbank's response shall not be unreasonably
delayed. If Eximbank does not approve an Annual Budget, Eximbank
shall notify the Borrower of the items which are disapproved and
the reason for such disapproval. Until such Annual Budget is so
approved, the Annual Budget most recently in effect shall continue
to apply, except that any items of the then proposed Annual Budget
that have been approved shall also be given effect. From time to
time, but not more frequently than once per Quarter, the Borrower
may propose amendments to an Annual Budget, and Eximbank (in
consultation with the Independent Engineer) may reject such
proposal within thirty (30) Business Days from the date the
Borrower submits such proposal if in Eximbank's reasonable judgment
such amendment is not reasonably necessary or advisable for
operation of the Project and, if no such rejection is made, such
amendments shall become effective. Not later than three (3)
Business Days after the effective date of each Annual Budget and of
any amendment thereto, the Borrower shall provide a copy of the
same to the Collateral Agent.
(f) Officer's Certificates. At the time of the delivery of
the financial statements provided for in Section 7.01(a) and (b),
a certificate of a Financial Officer of the Borrower to the effect
that, to the best of his or her knowledge, no Incipient Default
Event or Default Event has occurred and is continuing or, if any
Incipient Default Event or Default Event has occurred and is
continuing, specifying the nature and extent thereof and what
action the Borrower is taking or proposes to take in response
thereto, which certificate shall, from and after the Disbursement
Date, set forth the calculations required to establish whether the
Borrower was in compliance with the provisions of Section 7.14,
8.03, 8.19 and 8.20.
(g) Notice of Default, Litigation, etc. (i) Immediately upon
the Borrower obtaining knowledge thereof, notice, by
facsimile, cable or telex, of any event which constitutes an
Incipient Default Event or Default Event, specifying the nature of
such Incipient Default Event or Default Event and any steps the
Borrower is taking to remedy the same; and (ii) promptly, and in
any event within 20 Business Days after an officer of the Borrower
obtains knowledge thereof:
(A) notice of any litigation or governmental proceeding
pending (x) against the Borrower (i) involving a claim in excess of
$500,000 (or the equivalent thereof in other currency) or (ii)
which is reasonably likely to have a Material Adverse Effect or (y)
with respect to any Project Document;
(B) notice of any proposal by any Governmental Authority
to acquire compulsorily the Borrower, any of the Collateral or a
substantial part of the Borrower's business or assets;
(C) notice of any substantial dispute between the Borrower
or the Sponsor and any Governmental Authority relating to the
Project;
(D) notice of any change in the authorized officers or
directors referred to in Section 5.01(p) above, giving certified
specimen signatures of any new officer or director so appointed
and, if requested by Eximbank, satisfactory evidence of the
authority of such new officer or director;
(E) notice of any actual or proposed termination,
rescission, discharge (otherwise than by performance), amendment or
waiver or indulgence under, any material provision of any Project
Document (other than by Eximbank);
(F) copies of any material notice or correspondence
received or initiated by the Borrower relating to a Governmental
Approval or other license or authorization necessary for the
performance by the Borrower of its obligations under the Project
Documents;
(G) notice of any Lien (other than a Permitted Lien)
becoming enforceable over any of the Borrower's assets;
(H) notice of any proposed material change in the nature
or scope of the Project or the business or operations of the
Borrower and any one or more events, conditions or circumstances
(including without limitation Force Majeure as defined in Sections
13.1(a) and 13.1(b) of the Energy Conversion Agreement) that exist
or have occurred which are reasonably likely to have a Material
Adverse Effect;
(I) until the Eximbank Guarantee Agreement has terminated
in accordance with its terms, notice of the occurrence of any event
or act which could reasonably qualify as a Political Risk (as
defined in the Eximbank Guarantee Agreement);
(J) notice of or (in the case of items described in
clause (x)) copies of: (x) each funding waiver request filed
with respect to any Pension Plan and all communications received or
sent by the Borrower or any ERISA Affiliate with respect to such
request; and (y) the failure of the Borrower or any ERISA Affiliate
to make a required installment or payment under Section 412 of the
Code, Section 302 of ERISA or the terms of any Pension Plan by the
due date (other than the quarterly contributions described in
Section 302(e) of ERISA or Section 412(m) of the Code);
(K) notice of the occurrence of any Termination Event
which has had or is reasonably likely to result in a Material
Adverse Effect in connection with any Pension Plan or any trust
thereunder, specifying the nature thereof, what action the Borrower
or the ERISA Affiliate has taken, is taking or proposes to take
with respect thereto and, when known, any action taken or
threatened by the United States Internal Revenue Service, the
United States Department of Labor or the PBGC with respect thereto;
(L) copies of: (x) all notices of the PBGC's intent to
terminate any Pension Plan or to have a trustee appointed to
administer any Pension Plan; and (y) all notices from a
Multiemployer Plan sponsor concerning the imposition or amount
of withdrawal liability pursuant to Section 4202 of ERISA; or
(M) notice of the filing of an intent to terminate any
Pension Plan under a distress termination within the meaning of
Section 4041(c) of ERISA; or
(N) a copy of each agreement, commitment or understanding
(whether or not subject to the approval of Eximbank pursuant to any
other provision of this Agreement) executed by or on behalf of the
Borrower (excluding (x) the agreements set forth in clauses (i)
through (xi) of the definition of the term "Operating Agreements"
in Schedule X hereto but including replacements thereof and (y)
agreements, commitments or understandings entered into in the
ordinary course of business which are required to perform the O&M
Parameters and which (1) do not, individually, create a financial
obligation of the Borrower in excess of $250,000 and (2) would not,
in the aggregate, result in the expenditure of funds in any Fiscal
Year in excess of the amount budgeted for Operating and Maintenance
Costs (including the Contingent O&M Amount) in the then-current
Annual Budget for such Fiscal Year) in connection with the Project,
which notice shall specifically refer to this Section
7.01(g)(ii)(N) and, with respect to any such agreement, commitment
or understanding extending by its terms beyond the Disbursement
Date, request that Eximbank confirm (prior to the Disbursement
Date, after consultation with the Administrative Agent) whether or
not such agreement, commitment or understanding shall constitute an
Operating Agreement, in which case such agreement, commitment or
understanding shall only constitute an Operating Agreement if
Eximbank shall so designate it as an Operating Agreement in a
writing delivered to the Borrower within 60 days of Eximbank's
receipt thereof.
(h) Implementation Reports. Prior to the Project Completion
Date, within 21 days of the end of each Month, a report, in a form
satisfactory to Eximbank, on the implementation and progress of the
Project, including (i) any factors materially and adversely
affecting or which are reasonably likely to materially and
adversely affect the carrying out of the Project and (ii) copies of
any reports received by the Borrower from any outside technical
consultant identifying any matter that is of material adverse
significance to the operation of the Plant.
(i) Operation Date Notice. The Borrower shall notify
Eximbank, within two Business Days, of the occurrence of each of
(i) the Operation Date and (ii) satisfaction of the conditions
precedent to Eximbank Disbursement specified in Section 5.02
hereof.
(j) Other Information. From time to time, such other
information or documents (financial or otherwise) as Eximbank may
reasonably request including, without limitation, (1) advance
notice of the commencement of all performance tests under the
Construction Contract and (2) if the Completion Date (as defined in
the Energy Conversion Agreement) shall have been deemed to have
occurred pursuant to Section 4.9(b) of the Energy Conversion
Agreement, information as to the circumstances giving rise to the
same, the action(s) which the Borrower (and, to the extent known by
the Borrower, PNOC-EDC) is taking or proposes to take with respect
to the same and periodic reports of the status of such actions and
the implementation thereof.
Section 7.02. Books, Records and Inspections; Accounting and
Audit Matters. (a) The Borrower will keep proper books of record
and account adequate to reflect truly and fairly the financial
condition and results of operations of the Borrower (including the
progress of the Project) in which full, true and correct entries in
conformity with Philippine generally accepted accounting principles
consistently applied and all Applicable Laws shall be made of all
dealings and transactions in relation to its business and
activities. The Borrower will permit officers and designated
representatives of Eximbank to visit and inspect, under guidance of
officers of the Borrower, any of the properties of the Borrower,
and to examine and make copies of the books of record and account
of the Borrower and discuss the affairs, finances and accounts of
the Borrower with, and be advised as to the same by, its and their
officers, all at such reasonable times and intervals and to such
reasonable extent as Eximbank may request.
(b) The Borrower shall (i) authorize the Auditors (whose fees
and expenses shall be for the account of the Borrower) to
communicate directly with Eximbank at reasonable intervals, but if
a Incipient Default Event or a Default Event has occurred or is
continuing, then at any time, regarding the Borrower's accounts and
operations and (ii) furnish to Eximbank a copy of such
authorization, which shall be in the form of Schedule 6.2(b) to the
Lender Credit Agreement; provided, however, that Eximbank will (i)
provide the Borrower with copies of any correspondence between
Eximbank and the Auditors; and (ii) provide the Borrower with
reasonable notice of any meeting between Eximbank and the Auditors,
with a description of the matters to be discussed at such meeting,
and allow the Borrower to attend any such meeting.
(c) The Borrower will at all times cause a complete set of
the current and (when available) as-built plans (and all
supplements thereto) relating to the Plant to be maintained at the
Plant or the Construction Contractor's office for inspection by the
Independent Engineer and Eximbank.
Section 7.03. Maintenance of Property, Insurance. (a) The
Borrower will (i) keep all property useful and necessary (other
than property that has become obsolete) in its business in good
working order and condition and (ii) keep its present and future
properties and business insured with financially sound and
reputable insurers satisfactory to Eximbank against loss or damage
in such manner and to the same extent as required in Section A of
Schedule 7.03 hereto until the expiration of such policies and
immediately thereafter as required in Section C of Schedule 7.03
hereto, including in each case pursuant to policies naming the
Collateral Agent and the Borrower jointly as sole loss payees
thereunder, and containing cut-through endorsements to reinsurers,
provisions requiring that the Collateral Agent and Eximbank shall
receive notices of extensions or renewals of insurance policies and
notice of any non-payment of premiums and that such policy may only
be canceled for non-payment of premiums, if cancelable, upon sixty
(60) days prior notice to the Collateral Agent and Eximbank. On or
prior to the dates required pursuant to Section A or Section C, as
the case may be, of Schedule 7.03, the Borrower will submit to
Eximbank certificates of insurance relating to the insurances
required by Section A and Section C of Schedule 7.03 (together with
copies of such insurance policies if then available) from the
Borrower's insurers or insurance brokers (including confirmation of
premium payments then due), which certificates shall indicate the
properties insured, amounts and risks covered, names of the
beneficiaries, expiration dates, names of the insurers and
special features of the insurance policies. The Borrower shall
provide Eximbank with copies of insurance policies relating to the
insurances required by Section A and Section C of Schedule 7.03
hereto on or prior to the date such policies are required to be
delivered to Eximbank in accordance with such Section A or Section
C, as the case may be. Prior to the Disbursement Date, the
Borrower shall provide Eximbank with copies of the insurance
policies relating to the insurances required by Section C of
Schedule 7.03 hereto, such policies to be in form and substance,
and issued by companies, satisfactory to Eximbank (in
consultation with the Insurance Consultant).
(b) The Borrower will cause the Construction Contractor and
the Construction Supplier, as applicable, to (i) keep the
insurances described in Section B of Schedule 7.03 hereto with
financially sound and reputable insurers satisfactory to, prior to
the Disbursement Date, the Administrative Agent and, thereafter,
Eximbank, in each case against loss or damage in such manner and to
the same extent as so described in each case containing cut-through
endorsements to reinsurers and provisions requiring that the
Collateral Agent and Eximbank shall receive notices of any non-
payment of premiums and that such policy may only be canceled (x)
as provided in Section B of Schedule 7.03 hereto or (y) if not
therein provided, for non-payment of premiums, if cancelable, upon
thirty (30) days prior written notice to the Collateral Agent and
Eximbank. On or prior to the dates required pursuant to Section B
of Schedule 7.03, the Borrower will cause the Construction
Contractor or the Construction Supplier, as applicable, to submit
to Eximbank certificates of insurance relating to the insurances
required by Section B of Schedule 7.03 (together with copies of
such insurance policies if then available) from the insurers or
insurance brokers for such insurances (including confirmation of
premium payments then due), which certificates shall indicate the
type of insurance, amounts and risks covered, names of the
beneficiaries, expiration dates, names of the insurers and special
features of the insurance policies. The Borrower will cause the
Construction Contractor or the Construction Supplier, as
applicable, to provide Eximbank with copies of insurance policies
relating to the insurances described in Section B of Schedule 7.03
hereto on or prior to the date such policies are required to be
delivered to Eximbank in accordance with such Section B of Schedule
7.03 hereto, such policies to be in form and substance, and issued
by companies, satisfactory to Eximbank in consultation with the
Insurance Consultant. The Borrower will cause the Construction
Contractor to establish the ECA Construction Performance Bond in
favor of PNOC-EDC within the time required by PNOC-EDC in
connection with the Energy Conversion Agreement and will deliver
evidence reasonably satisfactory to Eximbank of PNOC-EDC's
acceptance of the ECA Construction Performance Bond within fifteen
(15) calendar days after the same is so established.
(c) In the event any insurance (including the limits or
deductibles thereof) hereby required to be maintained by the
Borrower or for which the Borrower is responsible, or required to
be maintained by the Construction Supplier or the Construction
Contractor or for which the Construction Supplier or the
Construction Contractor is responsible, other than insurance
required by Applicable Law to be maintained, shall not be
available on commercially reasonable terms in the commercial
insurance market, the Administrative Agent, prior to the
Construction Financing Termination Date, or, thereafter,
Eximbank, shall not unreasonably withhold its consent to waive such
requirement to the extent the maintenance thereof is not so
available; provided, however, that (i) the Borrower shall first
request any such waiver in writing, which request shall be
accompanied by a written report prepared by the Borrower's
insurance adviser certifying that such insurance is not
reasonably available and commercially feasible in the commercial
insurance market for electric generating plants of similar type and
capacity and, with respect to catastrophic perils, located in
Southeast Asia, and (ii) the Insurance Consultant shall confirm in
writing the conclusions contained in such report. The failure at
any time to satisfy the condition to any waiver of an insurance
requirement set forth in the proviso to the preceding sentence
shall not impair or be construed as a relinquishment of the
Borrower's ability to obtain a waiver of an insurance requirement
pursuant to the preceding sentence at any other time upon
satisfaction of such conditions.
(d) The provisions of this Section 7.03 shall be deemed to be
supplemental to, but not duplicative of, the provisions of any of
the Security Documents that require the maintenance of insurance.
In the event that any insurance whatsoever (other than political
risk insurance acquired with respect to the equity interest in the
Borrower) is purchased, taken or otherwise obtained by the Borrower
with respect to the Project otherwise than as required hereunder or
if not properly endorsed to the Collateral Agent and the Borrower
jointly as the sole loss payees or beneficiaries or otherwise made
upon the terms required in this Section 7.03, without limitation to
any provision of the Assignment and Security Agreement, such
insurance shall be considered assigned hereunder to the Collateral
Agent with the right of the Collateral Agent to make, settle,
compromise and liquidate any and all claims thereunder, without
prejudice to the exercise of any other rights and remedies that the
Collateral Agent may have under any of the Financing Documents, or
under any Applicable Law.
Section 7.04. Maintenance of Existence; Privileges; Etc. The
Borrower shall at all times (a) preserve and maintain in full force
and effect (i) its existence as a corporation and good standing
under the laws of the Republic, (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 and (iii) all of its powers, rights,
privileges and franchise necessary for the construction, ownership,
maintenance and operation of the Project and the maintenance of its
existence, (b) obtain in a timely manner and maintain in full force
and effect (or where appropriate, renew) all Governmental Approvals
(including, without limitation, those under Environmental Laws) and
all other licenses, registrations, waivers, consents and approvals
required at any time in connection with the construction,
maintenance, ownership or good and orderly operation of the Project
and all licenses, consents and approvals necessary for the
conversion to Dollars of all Peso amounts (including, without
limitation, Peso amounts representing SFRI Fees) payable under the
Energy Conversion Agreement, the PNOC-EDC Consent Agreement, the
Performance Undertaking and the Republic Consent Agreement and for
the remission to the United States in Dollars of any amounts paid
or payable to the Secured Parties in connection with any Financing
Document or the transactions contemplated thereby or the shares of
common stock of the Borrower and (c) preserve and maintain good and
marketable title to its properties and assets (it being understood
that the Borrower's rights with respect to the Site are solely as
set forth in the Energy Conversion Agreement and the Accession
Undertaking) subject to no Liens other than Permitted Liens.
Section 7.05. Compliance with Statutes. The Borrower will
comply with all Applicable Laws in respect of the conduct of its
business and the ownership, operation and use of its property
(including, without limitation, Applicable Laws relating to
environmental standards and controls and Applicable Laws relating
to the maintenance of debt to equity ratios).
Section 7.06. Consultations Regarding Independent
Engineer's Report. The Borrower agrees that (i) in addition to any
other consultation required hereunder, following the end of each
Month, upon the request of the Administrative Agent or Eximbank,
the Borrower shall consult with such Person regarding any
materially adverse event or condition identified by the Independent
Engineer in the reports provided by the Independent Engineer for
such Month pursuant the Representative Agreement, and (ii) in the
event the Borrower fails to hold such consultations within 30 days
of such request, such event or condition shall be deemed to have a
Material Adverse Effect.
Section 7.07. Project Implementation; Use of Proceeds.
(a) The Borrower shall (i) carry out the Project and
conduct its business with due diligence and efficiency and in
accordance with sound engineering, financial, and business
practices and in accordance with the Annual Budget as specified in
Section 7.01(e); and (ii) use the proceeds of the Loans and the
Eximbank Credit only for the purpose set forth in Section 2.01.
(b) Without limiting the generality of the preceding clause
(a), the Borrower will cause the construction of the Project to be
prosecuted and completed with due diligence and continuity (except
for interruptions due to events of Force Majeure (as defined in any
of the Energy Conversion Agreement, the Construction Contract and
the Supply Contract), which the Borrower will use its best efforts
to mitigate), in good and workmanlike manner and in accordance with
(i) sound generally accepted building and engineering practices,
(ii) all Governmental Approvals and Applicable Laws applicable to
the Site, the Plant or the Borrower, (iii) the Construction
Contract, (iv) the Supply Contract and (v) the Construction Budget.
(c) Without limiting the generality of clause (a) of this
Section 7.07, from and after the Disbursement Date, the Borrower
will operate and maintain the Project, and retain and maintain the
staff sufficient to operate and maintain the Project, in accordance
with the O&M Parameters and will otherwise comply with and satisfy
the requirements of the O&M Parameters.
(d) The Borrower shall use reasonable efforts to become a
member of the multi-partite monitoring team described in
paragraph 1 of Section IV of the Environmental Compliance
Certificate; provided, however, that the Borrower need not become
a member of such monitoring team if, in the reasonable judgment of
the Borrower, after consultation with its counsel, the
Borrower's participation in the activities conducted by such
monitoring team could reasonably be expected to expose the
Borrower to additional liability under Applicable Laws of the
Republic.
(e) Without limiting the generality of clauses (a) and (b) of
this Section 7.07, in order to avoid a deemed abandonment under
Section 14.2.1(d) of the Energy Conversion Agreement, if the
conditions precedent specified in clauses (a) and (b) of Section
13.3 of the Construction Contract have been satisfied the Borrower
shall, within ten (10) Business Days prior to the date of potential
abandonment under the Energy Conversion Agreement, exercise the
right granted to it under the last sentence of Section 13.3 of the
Construction Contract and certify to PNOC-EDC that the Power Plant
(as defined in the Construction Contract) has achieved ECA
Completion in accordance with Section 6.1(b) of the Energy
Conversion Agreement.
(f) The Borrower shall provide Eximbank with notice
immediately upon becoming aware that the conditions to enforcing of
the KCGI Guaranty have been met.
(g) The Borrower agrees that it shall not designate an
arbitrator or engineering firm under either the Construction
Contract or the Supply Contract with respect to any disputes
thereunder without obtaining the prior written consent of the
Required Secured Parties, such consent not to be unreasonably
withheld.
Section 7.08. Auditors. In the event that Deloitte, Touche
& Tohmatsu International should cease to be the Auditors of the
Borrower for any reason, the Borrower shall appoint and maintain as
the Auditors another firm of independent public accountants
approved by Eximbank.
Section 7.09. Taxes, Duties, Proper Legal Form. The
Borrower will pay and discharge all taxes, duties, fees,
assessments or other governmental charges imposed on it, on its
income or profits, on any of its property, or in connection with
any payment made under this Agreement or the execution, issue,
delivery, registration, notarization, assignment or transfer of any
interest in or for the legality, validity, or enforceability, of
any Project Document prior to the date on which penalties attach
thereto, and all claims, levies or liabilities (including, without
limitation, claims for labor, services, materials and supplies) for
sums which have become due and payable and which have or, if
unpaid, might become a Lien upon the property of Borrower (or any
part thereof). The Borrower shall have the right, however, to
contest in good faith the validity or amount of any such tax,
assessment, governmental charge or claim by proper proceedings
timely instituted, and may permit the taxes, assessments,
governmental charges or claims so contested to remain unpaid during
the period of such contest if (i) the Borrower diligently
prosecutes such contest, (ii) during the period of such contest the
enforcement of any contested item is effectively stayed, (iii) the
Borrower sets aside on its books adequate reserves with respect to
the contested items and (iv) such contest does not, in the
reasonable discretion of, prior to the Disbursement Date, the
Administrative Agent and thereafter, Eximbank, involve a material
risk of the sale, forfeiture or loss of any of the Collateral. The
Borrower will promptly pay or cause to be paid any valid, final
judgment enforcing any such tax, duty, fee, assessment, other
governmental charge or claim and cause the same to be satisfied of
record.
Section 7.10. Independent Engineer; Insurance Consultant.
The Borrower (i) agrees to the Independent Engineer carrying out
the role described in the Representative Agreement, (ii) confirms
and agrees to the terms of its Acknowledgment appended to the
Representative Agreement, which terms are incorporated herein by
reference as if fully set forth herein and (iii) will ensure that
the Insurance Consultant will be provided with all information
reasonably requested by the Insurance Consultant and will
exercise due care to ensure that any information which it may
supply to the Insurance Consultant is materially accurate and not,
by omission of information or otherwise, misleading in any material
respect.
Section 7.11. Performance of Obligations. The Borrower will
perform all of its material obligations under the terms of each
mortgage, indenture, security agreement and other debt instrument
by which it is bound and will perform (i) all of its obligations
under the terms of the Financing Documents and the Energy
Conversion Agreement and (ii) such of its obligations under the
terms of the Project Documents (other than the Financing Documents
and the Energy Conversion Agreement) the non-performance of which
is reasonably likely to have a Material Adverse Effect. The
Borrower will maintain in full force and effect each of the Project
Documents to which it is a party. The Borrower will preserve,
protect, defend and enforce the rights granted to it under or in
connection with the Project Documents. The Borrower shall take all
action within its control required or in the reasonable opinion of
Eximbank advisable to ensure that, unless otherwise consented to in
writing by Eximbank, each of the Project Documents is in proper
legal form under the laws of the Republic or under the respective
governing laws selected in such Project Documents, for the
enforcement thereof in such jurisdictions without any further
action on the part of Eximbank, OPIC or the Lenders, as the case
may be.
Section 7.12. Additional Documents; Filings and Recordings.
The Borrower shall execute and deliver, from time to time as
reasonably requested by Eximbank or the Collateral Agent, at the
Borrower's expense, such other documents as shall be necessary or
advisable or that Eximbank or the Collateral Agent may reasonably
request in connection with the rights and remedies of the Secured
Parties granted or provided for by the Project Documents, as
applicable, and to consummate the transactions contemplated
therein. The Borrower shall, at its own expense, take all
reasonable actions that have been or shall be requested by
Eximbank or the Collateral Agent or that the Borrower knows are
necessary to establish, maintain, protect, perfect and continue the
perfection of the first priority security interests of the Secured
Parties created by the Security Documents and shall furnish timely
notice of the necessity of any such action, together with such
instruments, in execution form, and such other information as may
be required to enable Eximbank and any other appropriate Secured
Party to effect any such action. Without limiting the generality
of the foregoing, the Borrower shall (a) execute or cause to be
executed and shall file or cause to be filed such financing
statements, continuation statements, fixture filings and mortgages
or deeds of trust in all places necessary or advisable (in the
opinion of counsel for Eximbank or the Collateral Agent) to
establish, maintain and perfect such security interests and in all
other places that Eximbank or the Collateral Agent shall reasonably
request and (b) do everything necessary in the reasonable judgement
of Eximbank or the Collateral Agent to (i) create and perfect the
Security with respect to future assets covered by the Mortgage,
(ii) maintain the Security in full force and effect at all times
and (iii) preserve and protect the Collateral and protect and
enforce its rights and title and the rights and title of the
Secured Parties to the Collateral.
Section 7.13. Bank Accounts. The Borrower shall maintain all
its bank accounts with the Collateral Agent, except that the
Borrower may maintain (a) the Service Fee Account, the
Philippines Peso Account, the Dollar Operating Cost Account and the
Additional Equity Contribution Account, all in accordance with the
Disbursement Agreement, and (b) any account contemplated by the
Marubeni Purchase Agreement.
Section 7.14. Debt Reserve Cash Collateral Account. On or
before the date 90 days after the Disbursement Date, the Debt
Reserve Cash Collateral Account shall be fully funded in an amount
equal to at least the Senior Debt Service due and payable during
the next succeeding six months, in addition to all amounts required
to be deposited at such time in accordance with clause "FOURTH" of
3.02(d)(ii) of the Disbursement Agreement.
Section 7.15. Marubeni Proxy Agreement. On the Closing Date
under (and as defined in) the Marubeni Purchase Agreement, Marubeni
and the Collateral Agent shall execute and deliver to each other
the Marubeni Proxy Agreement, and the Borrower shall cause a true,
original copy thereof to be delivered to Eximbank and OPIC.
Section 7.16 Availability and Transfer of Foreign Currency.
The Borrower will ensure that all requisite foreign exchange
control approvals and other authorizations, if any, by the
Republic or any department or agency thereof will be kept current
and in full force and effect to assure (i) the ability of the
Borrower to receive, and the ability of any other party to make,
any and all payments to the Borrower contemplated by the Project
Documents, (ii) the availability of Dollars to enable the
Borrower to perform all of its obligations under the Financing
Documents or any of the other Project Documents, as the case may
be, in accordance with their respective terms, and (iii) the
ability of the Borrower to convert all sums received in Peso
amounts from PNOC-EDC under the Energy Conversion Agreement and the
PNOC-EDC Consent Agreement and from the Republic under the
Performance Undertaking and the Republic Consent Agreement,
including any Peso amounts representing SFRI Fees, from Pesos to
Dollars, immediately upon receipt thereof, and to use the Dollars
as necessary to perform all of its obligations under the Project
Documents, in accordance with their respective terms.
Section 7.17 Certain Governmental Approvals. The Borrower
shall have obtained each of the Governmental Approvals described in
Sections B.4.3 and B.10.5 of Schedule 5.01(t) hereto, each of which
shall be in form and substance satisfactory to Eximbank, on or
before September 30, 1994.
ARTICLE VIII. NEGATIVE COVENANTS.
With respect to provisions of this Article VIII so
specifying, from and after the Disbursement Date and, with
respect to all remaining provisions of this Article VIII, from and
after the execution and delivery of this Agreement, in each case
until the Eximbank Credit is paid in full, except as otherwise
waived pursuant to the next two succeeding sentences, the Borrower
covenants and agrees as provided in this Article VIII. Provisions
of this Article VIII specifying effect from and after the
Disbursement Date and provisions requiring consultations with or
the furnishing of documents or other information to Eximbank or
requiring the consent or approval of Eximbank to the taking or
omission of any action may only be waived by Eximbank and in
writing. All other provisions of this Article VIII may be waived
with effect during the period prior to the Disbursement Date by the
Required Secured Parties and in writing and, thereafter, by
Eximbank and in writing.
Section 8.01. Liens. The Borrower will not, and will not
agree to, create, incur, assume or suffer to exist any Lien upon or
with respect to any property or assets (real, personal or mixed,
tangible or intangible) of the Borrower, whether now owned or
hereafter acquired, provided that the provisions of this Sec-tion
8.01 shall not prevent the creation, incurrence, assumption or
existence of, prior to the Disbursement Date, Construction Period
Permitted Liens and, thereafter, the following Liens (each, a
"Post-Completion Permitted Lien"):
(a) any tax or other statutory Lien, provided that such lien
shall be discharged within sixty (60) days after the Borrower
becomes aware or reasonably should have been aware of such Lien
(unless contested in good faith by the Borrower, in which case it
shall be discharged within thirty (30) days after final
adjudication, and provided that during the period of such contest
the Borrower sets aside on its books adequate reserves with respect
to the contested items);
(b) Liens created pursuant to the Security Documents;
(c) purchase-money Liens on any property acquired after the
Operation Date, provided, however, that (i) any property subject to
such purchase-money Lien is acquired by the Borrower in the
ordinary course of its business and such purchase-money Lien
attaches to such property concurrently or within ninety days after
the acquisition thereof; (ii) the Indebtedness secured by such
purchase-money Lien shall not exceed 90% of the lesser of the cost
or the fair market value as of the time of the acquisition of the
property covered thereby by the Borrower; (iii) each such purchase-
money Lien shall attach only to the property so acquired and fixed
improvements thereon; (iv) the Indebtedness secured by all such
purchase-money Liens shall not at any time exceed $2,700,000 (or an
equivalent amount in other currency); and (v) the Indebtedness
secured by such purchase-money Lien is not otherwise prohibited by
the provisions of Section 8.05;
(d) Liens on property and equipment constituting leases
permitted by Section 8.04; and
(e) mechanics', materialmen's, carrier's and similar Liens
securing obligations incurred in the ordinary course of business
which (i) are not past due or which are the subject of a Good Faith
Contest by the Borrower (unless during the pendency of such contest
or as a result thereof the Liens of the Security Documents could
reasonably be expected to be materially endangered or any material
portion of the Site, the Plant or the Project could reasonably be
expected to become subject to loss or forfeiture) and (ii) which do
not in the aggregate materially detract from the value of the Site,
the Plant or the Project or other assets of the Borrower or
materially impair the use thereof; provided that, upon the
commencement of any proceeding to foreclose or enforce any such
Post-Completion Permitted Lien, Eximbank or the Collateral Agent
may take such action as it reasonably deems necessary to protect
its interest in the Site, the Plant or the Project including,
without limitation, payment of amounts reasonably necessary to
release any such Lien, and in such event the Borrower shall
reimburse Eximbank or the Collateral Agent, as the case may be,
upon demand for the cost thereof together with interest thereon at
a rate per annum equal to 8.92% (in the case of Eximbank) or the
Base Rate plus 4.50%, in the case of the Collateral Agent.
Section 8.02. Consolidation, Merger, Sale of Assets, Etc.
The Borrower will not (a) wind up, liquidate or dissolve its
affairs or enter into any transaction of merger or consolidation;
(b) convey, sell, lease or otherwise dispose of (or agree to do any
of the foregoing at any future time) all or any part of its
property or assets (other than electricity and any chemical by-
products produced by the Plant) except in the ordinary course of
business, or sales of equipment which is uneconomic or obsolete or
sales of assets that are no longer used by or useful to the
Borrower and which are promptly replaced (if applicable) by
adequate substitutes of substantially equivalent utility to the
replaced assets; or (c) purchase or otherwise acquire (in one or a
series of related transactions) any part of the property or assets
of any Person (other than purchases or other acquisitions of
inventory or materials or capital expenditures, each in the
ordinary course of business).
Section 8.03. Dividends; Restricted Payments. (a) The
Borrower will not declare or pay any dividends, or return any
capital, to its stockholders or authorize or make any other
distribution, payment or delivery of property or cash to its
stockholders as such, or redeem, retire, purchase or otherwise
acquire, directly or indirectly, for consideration, any shares of
any class of its capital stock now or hereafter outstanding (or any
options or warrants issued by the Borrower with respect to its
capital stock), or set aside any funds for any of the foregoing
purposes (collectively, "Restricted Payments"), other than as
provided in paragraphs (b) and (c) below, unless:
(i) such Restricted Payment is permitted by Applicable
Law;
(ii) no Default or Event of Default is then in existence
(or would be in existence after giving effect to such Restricted
Payment);
(iii) such Restricted Payment is made in accordance with
the provisions of Section 3.02(d)(ii) of the Disbursement
Agreement; and
(iv) such Restricted Payment is made only after the
Disbursement Date.
(b) Payments of principal of, interest on and redemption,
purchase and retirement of Affiliated Subordinated Loans shall be
governed by, and permitted only in accordance with, Section 8.19.
(c) Provided no Default or Event of Default has occurred and
is continuing both before and after giving effect to any payment
contemplated by this Section 8.03(c), and provided that the other
conditions of this Section 8.03 are satisfied, the Borrower may
make dividend and redemption payments pursuant to the Marubeni
Purchase Agreement on its 14.5% redeemable cumulative preferred
stock commencing on the date falling six months after the
Disbursement Date and otherwise in accordance with Section
3.02(d)(ii) of the Disbursement Agreement.
Section 8.04. Leases. The Borrower will not enter into any
agreement or arrangement to acquire by lease the use of any
property or equipment of any kind, except leases as contemplated by
the O&M Parameters, the Construction Budget or the Annual Budget
(in each case as then in effect), of operating equipment and
premises under which the aggregate rental payments (including,
without limitation, any property taxes paid as additional rent or
lease payments) do not exceed the equivalent of $2,400,000 in any
Fiscal Year.
Section 8.05. Indebtedness. (i) The Borrower will not
contract, create, incur, assume or suffer to exist any Indebt-
edness, except for, prior to the Disbursement Date, Construction
Period Permitted Indebtedness and, thereafter, the following types
of Indebtedness ("Post-Completion Permitted Indebtedness"):
(a) Indebtedness of the Borrower incurred under this
Agreement;
(b) OPIC Loans outstanding on the Disbursement Date, to the
extent that the sum of (x) the aggregate principal amount of the
Eximbank Credit disbursed hereunder and (y) the aggregate
principal amount of the OPIC Loan outstanding on the Disbursement
Date do not exceed $240,239,000;
(c) Unsecured Senior Working Capital Indebtedness or
Subordinated Secured Working Capital Indebtedness incurred after
the Operation Date, which when aggregated with the Borrower's
contingent liability arising from the discounting of trade
receivables relating to the sale of chemical by-products would not
exceed at any one time outstanding the equivalent of $6,800,000;
provided that (i) any and all Subordinated Working Capital
Indebtedness shall be subordinated to the payment of the Eximbank
Credit in accordance with the provisions of Schedule 8.05(c), (ii)
any and all Subordinated Working Capital Lenders shall, prior to
the date on which any Subordinated Secured Working Capital
Indebtedness is incurred, become party to the Collateral Agency
Agreement and deliver to each of the Collateral Agent and Eximbank
an opinion of counsel to such Subordinated Working Capital Lender
reasonably satisfactory to Eximbank to the effect that the
Collateral Agency Agreement and the subordination terms set forth
in Schedule 8.05(c) hereto constitute the binding obligations of
such Subordinated Working Capital Lender enforceable in accordance
with their respective terms (subject to customary qualifications)
and (iii) any and all Senior Working Capital Lenders shall, prior
to the date on which any Unsecured Senior Working Capital
Indebtedness is incurred, become party to the Intercreditor
Agreement;
(d) Third Party Subordinated Indebtedness in an outstanding
principal amount not to exceed $13,600,000 at any time; provided,
however, that (i) any and all Third Party Subordinated Indebtedness
shall be subordinated to the payment of the Eximbank Credit in
accordance with the provisions of Schedule 8.05(c) and (ii) any and
all Third Party Subordinated Lenders shall, prior to the date on
which such Indebtedness is incurred, become party to the Collateral
Agency Agreement and deliver to each of the Collateral Agent and
Eximbank an opinion of counsel to such Third Party Subordinated
Lender reasonably satisfactory to Eximbank to the effect that the
Collateral Agency Agreement and the subordination terms set forth
in Schedule 8.05(c) hereto constitute the binding obligations of
such Third Party Subordinated Lender enforceable in accordance with
their respective terms (subject to customary qualifications);
(e) Indebtedness incurred after the Operation Date which is
not in a principal amount in excess, in the aggregate, of
$2,700,000, at any time and is accrued expenses or current trade
accounts payable incurred in the ordinary course of business, which
are to be repaid in full not more than ninety days after the date
on which such Indebtedness is originally incurred to finance the
purchase of goods by the Borrower;
(f) Indebtedness secured by purchase money Liens incurred
after the Operation Date and otherwise permitted under Section
8.01(c);
(g) Indebtedness constituting lease obligations permitted
under Section 8.04;
(h) Optional Subordinated Loans in an outstanding principal
amount not to exceed $34,000,000 at any time and which bear
interest at a rate not in excess of 12.5% per annum; provided,
however, that any and all Optional Subordinated Loans shall be
subordinated to the payment of the Eximbank Credit in accordance
with the provisions of Schedule 8.05(c);
(i) Affiliated Reimbursement Obligations;
(j) Contingent Obligations permitted under Section 8.06; and
(k) Indebtedness incurred under the OPIC Funding Documents.
(ii) The Borrower agrees that it will not obligate itself
to make regularly scheduled payments during the period when the
Eximbank Credit is outstanding of or on any Permitted Indebtedness
that is Indebtedness for Borrowed Money other than quarterly and
other than on a Permitted Payment Date or a date occurring no
earlier than eight (8) days after and no later than fifteen (15)
days after a Permitted Payment Date.
Section 8.06. Guarantees. Without limitation to the
restrictions of Section 8.05 hereof, from and after the
Disbursement Date, the Borrower will not enter into or have
outstanding any Contingent Obligations, including without
limitation any agreement or arrangement to guarantee or, in any way
or under any condition, become obligated for all or any part of any
Indebtedness or other obligation of another Person, except that,
notwithstanding the restrictions of this Section 8.06 or Section
8.05 hereof, the Borrower may enter into (a) the Accession
Undertaking, (b) Contingent Obligations set forth in the then-
current Construction Budget or Annual Budget and identified as
Contingent Obligations in any such budget so as to permit a
determination of the Borrower's compliance with this Section 8.06,
(c) an obligation, not secured by any Lien to (i) reimburse the ECA
Operation Performance Bond Issuer for amounts paid to PNOC-EDC
under the ECA Operation Performance Bond, provided that such
obligation is subordinated to the prior payment in full of the
Eximbank Secured Obligations and the OPIC Secured Obligations on
terms set forth in Schedule 8.05(c), or (ii) reimburse CECI, KEC or
one or both of the Affiliated Funding Entities for Affiliated
Reimbursement Obligations, provided that such obligation is
subordinated to the prior payment in full of the Eximbank Secured
Obligations and the OPIC Secured Obligations on terms set forth in
Schedule 8.05(c), and payment is made solely out of funds available
to the Borrower for the payment of Affiliated Reimbursement
Obligations as set forth in Section 3.02(d)(ii) of the Disbursement
Agreement, and (d) other Contingent Obligations to the extent that
the amount of all such other Contingent Obligations does not
exceed, in the aggregate, $100,000 (or the equivalent in other
currency).
Section 8.07. Subsidiaries; Advances, Investments and Loans.
The Borrower will not form or have any Subsidiaries, lend money or
credit or make deposits (other than deposits in relation to the
payment for goods and equipment in the ordinary course of business)
with or advances (except as specifically required by the
Construction Contract or the Supply Contract) to any Person, or
purchase or acquire any stock, obligations or securities of, or any
other interest in, or make any capital contribution to, any other
Person, except that the Borrower may use idle cash to acquire and
hold Cash Equivalents solely to give employment to its idle
resources in accordance with the Disbursement Agreement; and
provided that the Borrower may make loans and advances to, or
investments in, Affiliates of the Borrower from funds available to
the Borrower pursuant to payment of priority "NINTH" of Section
3.02(d)(ii) of the Disbursement Agreement.
Section 8.08. Transactions. From and after the Disbursement
Date, the Borrower will not (a) enter into or have in effect any
transaction or series of related transactions with any Person other
than in the ordinary course of business and on an arm's-length
basis or (b) establish or have in effect any sole and exclusive
purchasing or sales agency, or enter into any transaction whereby
the Borrower might receive less than the full ex-works commercial
price (subject to normal trade discounts) for electricity or
sulphur or pay more than ex-works commercial price for products of
others, provided, however, that nothing in this Section 8.08 shall
be deemed to prohibit the execution, delivery, declaring effective
and performance by the Borrower of the Energy Conversion Agreement,
the Construction Contract, the Supply Contract, the Keystone
Agreement, contracts contemplated by the O&M Parameters (including
those relating to employee training and secondment of employees),
the Funding Agreement or the Lender Credit Agreement.
Section 8.09. Other Transactions. From and after the
Disbursement Date, the Borrower will not enter into or have in
effect any partnership, profit-sharing, or royalty agreement or
other similar arrangement whereby the Borrower's income or profits
are, or might be, shared with any other Person, or enter into or
have in effect any management contract or similar arrangement
whereby its business or operations are managed by any other Person,
provided, however, that nothing in this Section 8.09 shall be
deemed to prohibit the execution, delivery, declaring effective and
performance by the Borrower of the contracts contemplated by the
O&M Parameters and the Funding Agreement.
Section 8.10. Modifications of Articles of Incorporation, By-
Laws; Additional Agreements; Assignments and Modifications of
Agreements; Etc.
(a) The Borrower will not (i) amend or modify its Articles of
Incorporation or By-Laws (except in accordance with the terms of
the Marubeni Purchase Agreement or in connection with an issuance
of preferred stock permitted under Section 8.15 hereof), (ii)
change its Fiscal Year or (iii) materially change the nature of its
present business.
(b) The Borrower will not, on or after the Disbursement Date,
become a party to any agreement, contract or commitment (other than
(i) (w) the agreements identified in clauses (i) through (xiii) of
the definition of the term Operating Agreements set forth in
Schedule X hereto, but not replacements thereof, (x) the Financing
Documents, (y) agreements, contracts or commitments contemplated by
the O&M Parameters (including those relating to employee training,
secondment of employees and vehicle rentals), the then-current
Construction Budget, the then- current Annual Budget or the Funding
Agreement and (z) agreements, contracts or commitments in respect
of Post-Completion Permitted Indebtedness) which, individually,
creates an annual financial obligation of the Borrower in excess of
$100,000 (or the equivalent in other currency) or (ii) which would
cause the aggregate annual financial obligations of the Borrower
under all agreements, contracts and commitments (other than those
specified in clauses (w) through (z) immediately above) to which
the Borrower is a party to exceed $300,000 (or the equivalent in
other currency).
(c) The Borrower shall not, directly or indirectly,
terminate, cancel or suspend, or permit or consent to any
termination, cancellation or suspension of, or enter into or
consent to or permit the assignment of the rights or obligations of
any party to, any of the Project Documents; provided, however, that
prior to the Disbursement Date and without the prior written
consent of the Required Secured Parties the Borrower may do, permit
to be done or consent to any of the foregoing if (i) the Project
Document which is the subject of the proposed termination,
cancellation, suspension or assignment is an Insurance Contract and
the Administrative Agent, after consultation with the Insurance
Consultant, shall have consented thereto or (ii) the Project
Document which is the subject of the proposed termination,
cancellation, suspension or assignment is a non-material
Governmental Approval or an agreement, commitment or understanding
described in clause (xiv) of the definition of the term "Operating
Agreements" set forth in Schedule X hereto and, in each case, the
Administrative Agent shall have reasonably determined that such
termination, cancellation, suspension or assignment is not
reasonably likely to have a Material Adverse Effect and so notified
Eximbank. The Borrower shall not, directly or indirectly amend,
modify, supplement or waive, or permit or consent to the amendment,
modification, supplement or waiver of, any of the provisions of, or
give any consent under, any of the Project Documents or the
Marubeni Purchase Agreement, except for change orders under the
Construction Contract or the Supply Contract or Change in the Work
(provided that the provisions of clause (c) of this Section 8.10
are complied with in each case), without (i) first submitting to
Eximbank a copy of such proposed amendment, supplement, waiver, or
consent and (ii) from and after the Disbursement Date, or with
respect to any amendment, modification, supplement or waiver
proposed to be taken with respect to the Marubeni Purchase
Agreement or the Marubeni Shareholders' Agreement, obtaining the
prior written consent thereto of Eximbank (provided, however, that
if in any Project Document the consent of the Borrower to an
assignment by the other party thereto cannot be unreasonably
withheld, the consent of Eximbank to such an assignment shall not
be unreasonably withheld).
(d) Other than the assignment as security of the Project
Documents to the Collateral Agent as security for the benefit of
the Secured Parties, the Borrower will not assign (except with
respect to Permitted Liens) any of its rights or obligations under
any Project Document without the prior written consent of Eximbank.
(e) The Borrower will not take any action under Article 9 of
the Energy Conversion Agreement to require a Buyout without the
prior written consent of Eximbank.
(f) From and after the Disbursement Date, without the prior
written consent of Eximbank, the Borrower will not refund to PNOC-
EDC (but may credit to PNOC-EDC) any amount described in the last
sentence of Section 4.9 of the Energy Conversion Agreement.
(g) From and after the Disbursement Date, the Borrower shall
not claim for itself Force Majeure as provided in Article 13 of the
Energy Conversion Agreement, Section 22 of the
Construction Contract or Section 22 of the Supply Contract
without the prior written consent of Eximbank (in consultation with
the Independent Engineer).
Section 8.11. No Other Business. Without the prior written
consent of Eximbank, and except as contemplated by Section 8.07
hereof, the Borrower will not carry on any business other than in
connection with the completion and operation of the Project and
will take no action whether by acquisition or otherwise which would
constitute or result in any material alteration to the nature of
that business or the nature or scope of the Project.
Section 8.12. Abandonment. From and after the Disbursement
Date, the Borrower will not abandon or agree to abandon the Project
or place it or agree to place it on a "care and maintenance" basis
for more than 14 days in any calendar year, provided, however, that
(i) nothing in this Section shall prevent the Borrower from shut-
downs necessary for repairs and maintenance at the Plant or from
putting the Plant on a "care and maintenance basis" during any
Force Majeure (as defined in the Energy Conversion Agreement) not
within the control of the Borrower which Force Majeure prevents the
Borrower from developing, constructing or operating the Plant; and
(ii) nothing in this Section 8.12 shall be deemed to waive or limit
in any way the right of Eximbank to declare an Event of Default as
provided in Article IX hereof, including without limitation
Sections 9.06 and 9.07 hereof.
Section 8.13. Improper Use. The Borrower will not use,
maintain, operate or occupy, or allow the use, maintenance,
operation or occupancy of, any portion of the Site or Project for
any purpose:
(a) which may be dangerous, unless safeguarded as required by
Applicable Law (provided, however, that this clause (i) shall not
be deemed to prohibit the Borrower from carrying out the Project in
accordance with the terms of the Energy Conversion Agreement and
the Construction Contract in a reasonable and prudent manner);
(b) which violates any Applicable Law in any material
respect;
(c) which may constitute a public or private nuisance
resulting in a Material Adverse Effect;
(d) which may make void, voidable, or cancelable, or
increase the premium of, any insurance then in force with respect
to the Site or Project or any part thereof unless, in the case of
an increase in premium, the Borrower gives proof of payment of such
increase; or
(e) otherwise than for the intended purpose thereof in the
construction, operation and maintenance of the Plant.
Section 8.14. Budgets. From and after the Disbursement Date
the Borrower will not make expenditures in any Fiscal Year in
excess of the projected annual Operating and Maintenance Costs
(including Contingent O&M Amount) set forth in the Annual Budget
for such Fiscal Year except for:
(a) emergency operating costs amounts funded with (i) funds
available to the Borrower pursuant to payment of priority "NINTH"
of Section 3.02(d)(ii) of the Disbursement Agreement and, to the
extent that such funds are not sufficient for such purpose; (ii)
proceeds of Unsecured Senior Working Capital Indebtedness or
Subordinated Secured Working Capital Indebtedness or Subordinated
Secured Working Capital Indebtedness permitted under Section 8.05;
or (iii) proceeds of Optional Subordinated Loans or Third Party
Subordinated Loans;
(b) provided no Event of Default has occurred and is
continuing, expenditures not to exceed in any Fiscal Year in the
aggregate $1.5 million (or the equivalent in other currency)
required as a result of casualties for which the Borrower is, in
its good faith judgment, insured; provided that (A) the Borrower
promptly files a claim or claims for reimbursement under such
insurance for any such casualty, (B) the Borrower uses its best
efforts to expedite payment of such claims, and (C) the proceeds
from any such insurance claims shall be paid into the Contingency
Account; and
(c) provided no Event of Default has occurred and is
continuing, non-budgeted payments of amounts for which the
Borrower is liable to PNOC-EDC under Article 4.10 of the Energy
Conversion Agreement, not to exceed, without the consent of the
Required Secured Parties, $16,477,000.
Section 8.15. Capital Stock. Without the prior written
consent of Eximbank, the Borrower shall not allow the capital stock
of the Borrower to be other than as follows: the authorized capital
stock of the Borrower shall consist of (a) 2,148,000 shares of
common stock, par value P28 per share, of which (i) 537,014 shares
will be issued, outstanding and fully paid until the day
immediately prior to the commencement of the Cooperation Period (as
defined in the Energy Conversion Agreement) and (ii) commencing on
the day immediately prior to the commencement of the Cooperation
Period (as defined in the Energy Conversion Agreement) 537,014
shares, plus the amount of shares, issued as common stock,
preferred stock or both, into which the Convertible Subordinated
Notes evidencing Required Convertible Subordinated Loans shall have
been converted as of such date, will be issued, outstanding and
fully paid; (b) 1,000,000 shares of preferred stock of which no
shares will be issued to any Person other than CE Mahanagdong or
Kiewit Energy, until after the Disbursement Date hereunder, after
which, in addition to issuing shares of such preferred stock to CE
Mahanagdong or Kiewit Energy, 400 14.5% redeemable cumulative
shares of such preferred stock may be issued to Marubeni on and
subject to the terms of the Marubeni Purchase Agreement; and (c)
all such issued shares will be duly and validly issued, fully paid
and non-assessable.
Section 8.16. Press Releases; Advertising. If the Borrower
shall issue, or if the Borrower shall obtain knowledge that any
other Person has issued, any press release or other announcement or
advertisement that refers to the provision of financing or other
support by Eximbank for the Project, the Borrower shall promptly
notify Eximbank thereof and promptly deliver to Eximbank a copy of
such press release or other announcement or
advertisement.
Section 8.17. Employees and Employee Plan. The Borrower
shall not adopt, establish, maintain, sponsor, administer,
contribute to, participate in, or incur any liability under or
obligation to contribute to, any Plan or incur any liability to
provide post-retirement welfare benefits, except such liability to
provide post-retirement welfare benefits as required by
Applicable Law.
Section 8.18. Name Changes; Etc. The Borrower shall not
change its name without the prior written consent of Eximbank. The
Borrower shall not adopt or change any trade name or fictitious
business name without the prior written consent of Eximbank. The
Borrower shall execute and deliver to Eximbank and the Collateral
Agent any additional documents or certificates necessary or
advisable to reflect any permitted adoption of or change in its
name, trade name or fictitious business name.
Section 8.19. Payments on Subordinated Debt. Without the
prior written consent of Eximbank, the Borrower will not make any
payment or delivery of property or cash to any Person on account of
any Subordinated Secured Obligations or other subordinated debt or
redeem, retire, purchase or otherwise acquire, directly or
indirectly, for consideration, any Subordinated Secured Obligations
or other subordinated debt now or hereafter outstanding, or set
aside any funds for any of the foregoing purposes (collectively,
"Subordinated Debt Payments") unless:
(i) such Subordinated Debt Payment is permitted by
Applicable Law;
(ii) no Default or Event of Default is then in existence
(or would be in existence after giving effect to such Subordinated
Debt Payment);
(iii) such Subordinated Debt Payment is made only after
the Disbursement Date; and
(iv) such Subordinated Debt Payment is made in
accordance with the provisions of Section 3.02(d)(ii) of the
Disbursement Agreement.
Section 8.20 Equity Ratio. On and after the Disbursement
Date, the Borrower shall not permit the Equity Ratio at any time to
be less than 1:3 (which, for the avoidance of doubt, shall be
calculated in accordance with generally accepted accounting
principles as in effect in the United States from time to time).
ARTICLE IXN EVENTS OF DEFAULT
Notwithstanding anything herein or in any of the Financing
Documents or elsewhere to the contrary, upon the occurrence of any
of the following events (each of the following events, an "Event of
Default"):
Section 9.01. Payments. The Borrower shall (a) default in
the payment when due of any principal of or interest on the
Eximbank Note or any other amount owing under this Agreement or the
Eximbank Note, (b) default in the payment when due (after giving
effect to any grace periods providing in the relevant Financing
Document) of any principal of or interest on, or any other amount
owing under, any other Financing Document save for any default
arising by reason of a failure of the Collateral Agent to make any
payment where funds are available and payable pursuant to the
Disbursement Agreement to meet such payment; or
Section 9.02. Representations, Etc. Any representation or
warranty confirmed or made in any Project Document by the
Borrower or any Obligor which is an Affiliate of the Borrower, or
in any writing provided by any of them in connection with the
execution and delivery of, or in connection with any disbursement
under any of the Lender Credit Agreement, the OPIC Finance
Agreement or this Agreement or for a payment of monies from any
Account by the Collateral Agent, shall be found to have been
incorrect in any material respect when made or deemed to be made
and shall continue to be incorrect for a period of thirty (30) days
after notice thereof shall have been given to the Borrower by
Eximbank; or
Section 9.03. Covenants. (a) The Borrower shall fail to
perform or observe any covenant, term or agreement contained in
Sections 2.01 (Amount of the Eximbank Credit; Use of Proceeds),
7.03 (Maintenance of Property; Insurance), 7.14 (Debt Reserve Cash
Collateral Account), 7.17 (Certain Government Approvals), 8.01
(Liens), 8.02 (Consolidation, Merger, Sale of Assets, Etc.), 8.03
(Dividends; Restricted Payments), 8.04 (Leases), 8.05
(Indebtedness), 8.06 (Guarantees), 8.07 (Subsidiaries; Advances,
Investments and Loans), 8.10(a), (f) and (g) (Modifications of
Articles of Incorporation and By-Laws; Additional Agreements;
Assignments and Modifications of Agreements; Etc.), 8.11 (No Other
Business); 8.19 (Payments on Subordinated Debt); 8.20 (Equity
Ratio); or
(b) The Borrower or any Obligor which is an Affiliate of the
Borrower shall fail to perform or observe any other covenant, term
or agreement contained in this Agreement or any other Project
Document and such failure shall not be remediable or, if
remediable, shall continue unremedied for a period of 30 days after
the earlier of (i) the date on which such failure shall have first
become known to the Borrower and (ii) the date on which written
notice thereof shall have been received by the Borrower from
Eximbank; provided that if (A) such failure cannot be cured within
such 30-day period, (B) such failure in the reasonable judgment of
the Independent Engineer or the Required Secured Parties is
susceptible of cure, (C) the Borrower is proceeding with diligence
and in good faith to cure such failure, (D) the existence of such
failure in the reasonable judgment of Eximbank has not had and is
not reasonably likely to have a Material Adverse Effect and (E)
Eximbank shall have received an officer's certificate signed by a
Financial Officer of the Borrower to the effect of clauses (A), (B)
and (C) above, certifying that the existence of such failure has
not had and is not reasonably likely to have a Material Adverse
Effect and stating what action the Borrower is taking to cure such
failure, then, such 30-day cure period shall be extended by up to
an additional 60 days as shall be necessary for the Borrower
diligently to cure such failure; or
Section 9.04. Default Under Other Agreements. (a) The
Borrower shall (i) default in any payment of any Indebtedness For
Borrowed Money (other than as provided in Section 9.01) beyond the
period of grace, if any, provided in the instrument or agreement
under which such Indebtedness For Borrowed Money was created or
(ii) default (other than in the manner referred to in clause (i))
in the observance or performance of any agreement or condition
relating to any Indebtedness For Borrowed Money (other than as
provided in Section 9.01) or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which such
default or other event or condition is to (x) cause any such
Indebtedness For Borrowed Money to become due prior to its stated
maturity or (y) if such Indebtedness For Borrowed Money ranks pari
passu in right of payment with the Eximbank Secured Obligations,
permit the Person to whom such Indebtedness For Borrowed Money is
owed to declare the same due and payable prior to the stated
maturity thereof; or
(b) any Indebtedness For Borrowed Money of the Borrower shall
be declared to be due and payable, or required to be prepaid other
than by a regularly scheduled required prepayment, prior to the
stated maturity thereof; or
(c) any Obligor (other than PNOC-EDC, the ECA Operation
Performance Bond Issuer, and CECI) shall (i) default in any payment
of any Indebtedness For Borrowed Money in an aggregate principal
amount exceeding the equivalent of $2 million, ($3 million in the
case of BHCO and KEC and $10 million, in the case of KCGI) beyond
the period of grace, if any, provided in the instrument or
agreement under which such Indebtedness For Borrowed Money was
created or (ii) default in the observance or performance of any
agreement or condition relating to any Indebtedness For Borrowed
Money in an aggregate principal amount exceeding the equivalent of
$2 million, ($3 million in the case of BHCO and KEC and $10
million, in the case of KCGI) or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default
or other event or condition is to cause any such Indebtedness For
Borrowed Money to become due prior to its stated maturity; or
(d) CECI shall (i) default in any payment of any
Indebtedness For Borrowed Money in an aggregate principal amount
exceeding $10 million beyond the period of grace, if any, provided
in the instrument or agreement under which such Indebtedness For
Borrowed Money was created or (ii) default in the observance or
performance of any agreement or condition relating to any
Indebtedness for Borrowed Money in an aggregate principal amount
exceeding $10 million or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other
event or condition is to cause any such Indebtedness For Borrowed
Money to become due prior to its stated maturity; provided,
however, that if one or more of the events described in this clause
(d) with respect to CECI, shall occur after the date on which CECI
shall cease to be an Obligor, the occurrence of such event or
events shall not be deemed an Event of Default unless, in the
reasonable judgment of the Required Secured Parties, the occurrence
of such event or events has had or is reasonably likely to have a
material adverse effect on the operations, business, condition
(financial or otherwise) or property of the Borrower; or
(e) any Indebtedness For Borrowed Money in an aggregate
principal amount exceeding the equivalent of $2 million of any
Obligor (other than PNOC-EDC, the ECA Operation Performance Bond
Issuer, CECI and KEC) or any Indebtedness For Borrowed Money in an
aggregate principal amount exceeding $3 million of KEC or $10
million of CECI, shall be declared to be due and payable, or
required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity thereof, and, if
such Obligor is the Construction Supplier, the existence of such
Indebtedness For Borrowed Money that has been declared due and
payable prior to the stated maturity thereof, in the reasonable
judgment of Eximbank, has had or is reasonably likely to have a
Material Adverse Effect; provided, however, that if one or more of
the events described in this clause (e) with respect to
indebtedness For Borrowed Money of CECI or KEC, as the case may be,
shall occur after the date on which CECI or KEC, as the case may
be, shall cease to be an Obligor, the occurrence of such event or
events shall not be deemed an Event of Default unless, in the
reasonable judgment of the Required Secured Parties, the occurrence
of such event or events has had or is reasonably likely to have a
Material Adverse Effect; or
(f) a default shall have occurred in the performance of any
material obligation by (i) any Obligor (other than the ECA
Operation Performance Bond Issuer) or the Republic under any of the
Project Documents to which such Person is a party and such default
shall continue unremedied beyond the period of grace, if any,
extended to such Person with respect to such default, as specified
in the Project Document under which such obligation was created or
(ii) any other party (other than the Persons referred to in clause
(i) of this Section 9.04(f)) under any of the Project Documents and
the existence of such default in the reasonable judgment of
Eximbank has had or is reasonably likely to have a Material Adverse
Effect (and has not been cured within 60 days); or
Section 9.05. Bankruptcy, Etc. There shall have been entered
against the Borrower or any Obligor (other than the ECA Operation
Performance Bond Issuer or PNOC-EDC) a decree or order by a court
adjudging the Borrower or such Obligor bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the
Borrower or such Obligor under any Applicable Law; or appointing a
receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Borrower or such Obligor or of any
substantial part of its property or other assets, or ordering the
winding up or liquidation of its affairs; or the institution by the
Borrower or such Obligor of proceedings to be adjudicated bankrupt
or insolvent, or the consent by it to the institution of bankruptcy
or insolvency proceedings against it; or the filing by it of a
petition or answer or consent seeking reorganization or debt relief
under any Applicable Law; or the consent by it to the filing of any
such petition or to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the
Borrower or any such Obligor or of any substantial part of its
property; or the making by it of an assignment for the benefit of
creditors; or the admission by it in writing of its inability to
pay its debts generally as they become due; or any other event
shall have occurred which under any Applicable Law would have an
effect analogous to any of those events listed above in this
subsection with respect to the Borrower or any such Obligor; or any
corporate action is taken by the Borrower or any such Obligor for
the purpose of effecting any of the foregoing; provided that any
reorganization or reconstruction of a company while solvent with
the prior consent of Eximbank shall not be held to constitute any
event mentioned in this paragraph; and provided, further, that in
connection with any Obligor, no Event of Default shall be
declared under this Section 9.05 if (x) such Person has fully
complied and continues to fully comply with all of its
obligations under all Project Documents to which such Person is a
party and (y) in the reasonable judgment of the Required Secured
Parties, such Event of Default has not had and is not reasonably
likely to have a Material Adverse Effect; or
Section 9.06. Project Events. (a) The Borrower shall cease
to have the right to possess and use the Site; or
(b) any event shall have occurred which entitles the
Borrower or PNOC-EDC to give a notice under Section 9.1 of the
Energy Conversion Agreement; or
(c) the Borrower shall (except as permitted by Section 8.02
hereof) sell or otherwise dispose of any of its interest in the
Project; or
(d) an event or circumstance described in subclause (a), (b),
(c) or (d) of Section 14.2.1 of the Energy Conversion
Agreement shall have occurred, it being understood that for
purposes of this Section 9.06(d), (i) the words "one-hundred twenty
(120)" or "120" contained in subclauses (b), (c) and (d) of Section
14.2.1 of the Energy Conversion Agreement shall be replaced with
the words "sixty (60)" in each place where such words appear and
the words "thirty (30) months" shall be replaced by the words
"twenty-two (22) months" in each place in subclause (b) of Section
14.2.1 of the Energy Conversion Agreement in which such words
appear; or
(e) an event or circumstance described in subclause (a), (b)
or (c) of Section 14.2.2 of the Energy Conversion Agreement shall
have occurred, it being understood that for purposes of this
Section 9.06(e), the words "one-hundred twenty (120)" contained in
subclauses (b) and (c) of Section 14.2.2 of the Energy Conversion
Agreement shall be replaced with the words "sixty (60)" in each
place where such words appear; or
(f) a failure by the Borrower described in the first
sentence of Section 14.3 of the Energy Conversion Agreement shall
have occurred, it being understood that for purposes of this
Section 9.06(f), the words "sixty (60) consecutive days"
contained in the first sentence of Section 14.3 of the Energy
Conversion Agreement shall be replaced with the words "forty-five
(45) consecutive days"; or
Section 9.07. Material Adverse Effect. One or more events,
conditions or circumstances (including without limitation Force
Majeure as defined in Sections 13.1(a) and 13.1(b) of the Energy
Conversion Agreement) shall exist or shall have occurred which, in
the reasonable judgment of the Required Secured Parties, is
reasonably likely to have a Material Adverse Effect; or
Section 9.08. Project Documents; Security Documents. (a)
This Agreement or any of the other Financing Documents or any of
the Energy Conversion Agreement, the Supply Contract or the
Construction Contract, or any provision hereof or thereof (i) is or
becomes invalid, illegal or unenforceable or any party thereto
(other than Eximbank) shall so assert, or (ii) ceases to be in full
force and effect, or shall cease to give the Secured Parties the
Liens, rights, powers and privileges purported to be created
thereby or hereby or any party thereto (other than Eximbank) shall
so assert; or
(b) any of the Project Documents (other than the Financing
Documents or any of the Energy Conversion Agreement, the Supply
Contract or the Construction Contract) or any material provision
thereof (i) is or becomes invalid, illegal or unenforceable or any
party thereto (other than Eximbank) shall so assert, and such
default shall have continued for a period of thirty (30) days after
notice thereof shall have been given to the Borrower by Eximbank,
or (ii) ceases to be in full force and effect, or shall cease to
give the Secured Parties the Liens, rights, powers and privileges
purported to be created thereby such that the interests of the
Secured Parties are adversely affected to a material extent; or
(c) except as permitted by Section 8.01 hereof, the
Security or any component part thereof for any reason fails to
constitute a valid and perfected first priority Lien or ceases to
be in full force and effect or the Borrower or the grantor or
pledgor thereof shall so assert; or
Section 9.09. Ownership of the Borrower. (a) CECI and KDG
acting together shall cease to maintain Control (as defined below)
of the Borrower or, without the prior written consent of Eximbank,
one or more sales or other transfers, directly or indirectly, of
shares of capital stock of the Borrower shall have occurred such
that, after giving effect thereto, either (x) CECI and KDG would
own, directly or indirectly, less than 66-2/3% of the shares of
capital stock of the Borrower free and clear of all Liens (other
than the Liens created by the Security Documents) or (y) CECI and
KDG and each of their respective subsidiaries would have received
aggregate gross proceeds on account of the sale or other transfer
of shares of capital stock of the Borrower exceeding an amount
equal to 40% of paid-in capital as at the Disbursement Date (for
purposes of this Section 9.09, "Control" means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, including
operating and maintenance decisions, whether through ownership of
voting securities, by contract, or otherwise); or
(b) the Borrower or CE Mahanagdong or Kiewit Energy shall,
without the prior consent of Eximbank, issue or have outstanding
any securities convertible into or exchangeable for its capital
stock or issue or grant or have outstanding any rights to
subscribe for or to purchase, or any options or warrants for the
purchase of, or any agreements, arrangements or understandings
providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its
capital stock, other than as provided in the Board of Investments
Approval and the Marubeni Purchase Agreement; provided, however,
that an Event of Default shall not be deemed to have occurred if
(x) at any time from and after the Disbursement Date full dilution
of the capital stock of the Borrower and/or CE Mahanagdong and/or
Kiewit Energy by the methods noted above in this Section 9.09(b)
would not have the effect of reducing below 66 2/3% CECI's and
KDG's aggregate direct or indirect ownership of the shares of
capital stock of the Borrower and (y) 100% of the capital stock of
the Borrower (other than the capital stock sold pursuant to the
terms of the Marubeni Purchase Agreement, directors' qualifying
shares and the single share of common stock held by APFC) is at all
times subject to a Lien in favor of the Collateral Agent on terms
substantially similar to the terms of the Pledge Agreement; or
Section 9.10. Judgments. One or more judgments or decrees
shall be entered (a) against the Borrower, CE Mahanagdong or Kiewit
Energy involving in the aggregate a liability (not paid or fully
covered by insurance) of the equivalent of $2 million or more; or
(b) prior to the date on which CECI or KEC, as the case may be,
shall cease to be an Obligor, against CECI or KEC, as the case may
be, involving in the aggregate a liability (not paid or fully
covered by insurance) of the equivalent of $3 million or more in
the case of KEC and $10 million or more in the case of CECI; or (c)
after the date on which CECI shall cease to be an Obligor, against
CECI , as the case may be, involving in the aggregate liability
(not paid or fully covered by insurance) of the equivalent of $15
million or more, which liability in the reasonable judgment of the
Required Secured Parties, has had or is reasonably likely to have
a material adverse effect on the operations, business, condition
(financial or otherwise) or property of the Borrower; or (d) prior
to the date on which the Construction Contractor or KIC shall cease
to be an Obligor, against the Construction Contractor or KIC
involving in the aggregate a liability (not paid or fully covered
by insurance) the equivalent of $2 million or more, which
liability, in the reasonable judgment of the Required Secured
Parties, has had or is reasonably likely to have a Material Adverse
Effect; (e) prior to the date on which the Construction Supplier,
GICO or CBE shall cease to be an Obligor, against the Construction
Supplier, GICO or CBE involving in the aggregate a liability (not
paid or fully covered by insurance) the equivalent of $2 million or
more, which liability, in the reasonable judgment of the Required
Secured Parties, has had or is reasonably likely to have a Material
Adverse Effect; (f) prior to the date on which KCGI or BHCO shall
cease to be an Obligor, against KCGI or BHCO involving in the
aggregate a liability (not paid or fully covered by insurance) in
the equivalent of $10 million or more in the case of KCGI or $3
million or more, in the case of BHCO, which liability, in the
reasonable judgment of the Required Secured Parties, has had or is
likely to have a Material Adverse Effect; and in any such case all
such judgments or decrees shall not have been vacated, discharged,
or stayed or bonded pending appeal within 60 days after the entry
thereof; or
Section 9.11. Governmental Action. Any government or
Governmental Authority shall have condemned, nationalized,
seized, or otherwise expropriated all or any substantial part of
the property or other assets of the Borrower or of its capital
stock or shall have assumed custody or control of such property or
other assets or of the business or operations of the Borrower or of
its capital stock or shall have taken any action for the
dissolution or disestablishment of the Borrower or any action that
would prevent the Borrower or its officers from carrying on its
business or operations or a substantial part thereof; or
Section 9.12. Permits. The Borrower or any Obligor shall
fail to obtain, renew, maintain or comply in all material
respects with any Governmental Approval set forth in Schedule
5.01(t) hereof or any license, approval or consent referred to in
Section 5.2(c) of the Lender Credit Agreement; or any such
Governmental Approval or license, approval or consent shall be
rescinded, terminated, suspended, modified or withheld or shall be
determined to be invalid or shall cease to be in full force and
effect; or any proceeding shall be commenced by or before any
Governmental Authority for the purpose of rescinding, terminating,
suspending, modifying or withholding any such Governmental Approval
or license, approval or consent and such proceeding is not
dismissed within 60 days; and such failure, rescission,
determination of invalidity, termination, suspension, modification,
withholding, cessation or commencement is reasonably likely to have
a Material Adverse Effect; or
Section 9.13. Transfer of Collateral; Event of Loss;
Diminution of Property Rights. (a) Title to or any right in all
or any part of (i) the Mortgage Collateral, (ii) the Plant or (iii)
any other collateral purported to be covered by the Security
Documents (other than as permitted pursuant to this Agreement,
including Section 8.02 hereof) shall become vested in any party
other than the party named as owner and/or holder thereof in the
applicable Security Document, whether by operation of law or
otherwise, or (iv) there shall have occurred an Event of Loss; or
(b) Except as otherwise permitted pursuant to this Agreement,
the Borrower hereafter grants any easement or dedication, files any
plat, declaration or restriction or enters into any lease or sub-
lease concerning the Site, the Mortgage Collateral or the Plant and
the effect thereof is determined by Eximbank, in its reasonable
discretion, to be material and adverse to the Site, the Mortgage
Collateral, the Plant or the Borrower; or
Section 9.14. Funding Agreement, OPIC Finance Agreement. The
failure by OPIC, in default of its funding obligations under the
OPIC Finance Agreement and the Intercreditor Agreement, to make
available a disbursement of the OPIC Loan or any portion thereof as
required by the OPIC Finance Agreement and the Intercreditor
Agreement; provided, that no Event of Default shall be declared as
a result of such failure if, on or prior to the date on which the
funds OPIC failed to disburse are required by the Borrower for the
prompt payment of Project Costs, another bank or financial
institution (other than any Construction Financing Secured Party)
shall have disbursed such funds to the Borrower on terms not
materially less favorable to the Borrower than the terms applicable
to the OPIC Loan under the OPIC Finance Agreement; or
Section 9.15. Regulatory Status. The Borrower shall fail to
remain continuously exempt from all regulation under PUHCA as a
result of being a "foreign utility company" under Section 33 of
PUHCA or otherwise; or
Section 9.16. ERISA. Any of the following events occur or
exist with respect to the Borrower or, in the case of (a) through
(e) below, any ERISA Affiliate: (a) any Termination Event with
respect to any Plan; (b) any event or circumstance that is
reasonably likely to constitute grounds entitling the PBGC to
institute proceedings under Section 4042 of ERISA for the
imposition of liability in respect of any Pension Plan (other than
a liability to the PBGC for insurance premiums the payment of which
is not yet due); (c) any Pension Plan shall have an accumulated
funding deficiency as defined in Section 412 of the Code or Section
302 of ERISA; (d) any Plan intended to be qualified under Section
401(a) or 401(k) of the Code shall be disqualified; (e) any Plan
shall be subject to an excise tax pursuant to Code Section 4980B or
shall fail to comply with Sections 601-606 (inclusive) of ERISA;
(f) the Borrower provides employee welfare benefits to retirees
other than statutorily required or pursuant to Section 601 et seq.
of ERISA and Section 4980B of the Code; or (g) the Borrower incurs
liability under or relating to any Plan resulting from a violation
of ERISA, the Code and/or any other applicable law, including
without limitation the Age Discrimination in Employment Act, the
Americans With Disabilities Act and Title VII of the Civil Rights
Act, each as amended; and in each case above, such event or
condition, individually or in the aggregate, together with all
other such events or conditions, if any, is reasonably likely to
subject the Borrower to any tax, penalty, or other liability to a
Plan, a Multiemployer Plan, the PBGC, or otherwise (or any
combination thereof) which in the aggregate has had or is
reasonably likely to have a Material Adverse Effect; or the
Borrower or any ERISA Affiliate shall fail to pay when due an
amount or amounts which it shall have become liable to pay under
Title IV or ERISA or as a contribution to a Pension Plan and/or
Multiemployer Plan which, as a result, has had or is reasonably
likely to have a Material Adverse Effect;
then, (a) in the event that an Event of Default described in
Section 9.01(a) with respect to any amount owing to Eximbank shall
occur and be continuing on or prior to the Disbursement Date,
Eximbank shall, subject to the terms of the Intercreditor
Agreement, have the right to declare, without presentment,
demand, protest or notice of any kind, all of which are hereby
expressly waived by Borrower, the Eximbank Credit to be
terminated, irrespective of any other provision of any Financing
Document, whereupon the same shall be and become terminated
immediately, and (b) in the event that any Event of Default
(including any Event of Default described in Section 9.01(a) with
respect to any amount owing to Eximbank) shall occur, and at any
time thereafter, if such Event of Default is continuing on and/or
after the Disbursement Date, Eximbank shall have the right to (i)
take any actions necessary to cure such Event of Default and/or
declare an Event of Default, (ii) declare, without presentment,
demand, protest or notice of any kind, all of which are hereby
expressly waived by Borrower, the entire amount of Borrower's
outstanding Eximbank Secured Obligations to be immediately due and
payable, irrespective of any other provision of any Financing
Document, whereupon the same shall be and become immediately due
and payable (provided that if an Event of Default specified in
Section 9.05 shall have occurred or a Buyout shall have occurred,
the entire amount of Borrower's outstanding Eximbank Secured
Obligations shall be automatically immediately due and payable
without any declaration, presentment, demand, protest or notice or
other act of any kind by Eximbank or any of the other Secured
Parties whatsoever), and (iii) proceed to enforce or cause or
instruct the Collateral Agent to enforce any remedies provided
under any of the Financing Documents. If an event or occurrence
constitutes an Event of Default or Default under more than one of
the provisions of this Article IX, Eximbank may during the
continuance of such Event of Default take all actions and
remedies provided hereunder upon expiration of the shortest grace
period, if any, applicable to such Default or Event of Default.
ARTICLE X. GOVERNING LAW AND JURISDICTION
Section 10.01. Governing Law. THIS AGREEMENT IS A CONTRACT
MADE UNDER THE LAWS OF THE STATE OF NEW YORK OF THE UNITED STATES
OF AMERICA AND SHALL FOR ALL PURPOSES BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE WITHOUT REGARD
TO THE CONFLICT OF LAWS RULES THEREOF.
Section 10.02. Submission to Jurisdiction; Service of
Process. (a) Any legal action or proceeding against the
Borrower with respect to this Agreement or any Financing 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
Borrower hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of
the aforesaid courts. The Borrower agrees that a judgment, after
exhaustion of all available appeals, in any such action or
proceeding shall be conclusive and binding upon the Borrower, and
may be enforced in any other jurisdiction, including without
limitation the Republic, by a suit upon such judgment, a certified
copy of which shall be conclusive evidence of the judgment. The
Borrower hereby irrevocably designates, appoints and empowers White
& Case, with offices on the date hereof at 1155 Avenue of the
Americas, New York, New York 10036-2787, as its designee, appointee
and agent to receive, accept and acknowledge for and on its behalf,
and in respect of its property, service of any and all legal
process, summons, notices and documents which may be served in any
such action or proceeding. If for any reason such designee,
appointee and agent shall cease to be available to act as such, the
Borrower agrees to designate a new designee, appointee and agent in
New York City on the terms and for the purposes of this provision
satisfactory to Eximbank, advise Eximbank thereof, and deliver to
Eximbank evidence in writing of the successor agent's acceptance of
such appointment. The Borrower further irrevocably consents to the
service of process out of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to the Borrower, at
its address set forth opposite its signature below, such service to
become effective 30 days after such mailing. The foregoing
provisions constitute, among other things, a special arrangement
for service between the parties to this Agreement for the purposes
of 28 U.S.C. U 1608. Nothing herein shall affect the right of the
Collateral Agent or Eximbank to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise
proceed against the Borrower in the Republic or in any other
jurisdiction.
(b) The Borrower hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in
connection with this Agreement or any other Financing Document
brought in the courts referred to in clause (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.
Section 10.03. Waiver of Sovereign Immunity. The Borrower
acknowledges and agrees that the activities contemplated by the
provisions of the Financing Documents are commercial in nature
rather than governmental or public, and therefore acknowledges and
agrees that it is not entitled to any right of immunity on the
grounds of sovereignty or otherwise with respect to such activities
or in any legal action or proceeding arising out of or relating to
the Financing Documents. The Borrower, in respect of itself, its
process agents, and its properties and revenues, expressly and
irrevocably waives any such right of immunity which may now or
hereafter exist (including any immunity from any legal process,
from the jurisdiction of any court or from any execution or
attachment in aid of execution prior to judgment or otherwise) or
claim thereto which may now or hereafter exist, and agrees not to
assert any such right or claim in any such action or
proceeding, whether in the United States or otherwise.
ARTICLE XI. MISCELLANEOUS
Section 11.01. Transportation. All Items which are
financed under the Eximbank Credit and which are exported by ocean
vessel must be transported from the United States in vessels of
U.S. Registry as required by 46 U.S.C. U 1241-1 (Public Resolution
No. 17 of the 73rd Congress of the United States, as amended),
except to the extent that a waiver of this requirement is obtained
from the U.S. Maritime Administration ("MARAD"). If shipments are
made on non-U.S. vessels without a waiver or contrary to the
provisions of the waiver, the Items will not be eligible for
financing under the Eximbank Credit or for coverage under the
Eximbank Guarantee Agreement.
Section 11.02. Transportation Costs. The costs of ocean or
air freight for shipment of any Item on a vessel or aircraft of
non-U.S. registry pursuant to a waiver from MARAD will constitute
Foreign Cost associated with such Item if such costs are included
in the Contract Price of such Item. If such freight costs are for
shipment of an Item on a vessel or aircraft of U.S. registry, such
costs will constitute U.S. Content.
Section 11.03. Insurance. The Borrower shall obtain
insurance against marine and transit hazards on all shipments of
the Items in an amount not less than the amount of the
Disbursements made with respect to those shipments. United States
insurers shall be given a nondiscriminatory opportunity to bid for
such insurance business related to the Items. The cost of the
premiums for such insurance may be included in the U.S. content of
the insured Item if the insurance is placed in the United States
with a United States company. In all other cases, the cost of the
premiums shall be included in the Foreign Cost associated with the
Item.
Section 11.04. Disposition of Indebtedness. Eximbank may
sell, transfer, pledge, negotiate, grant participations in or
otherwise dispose of all or any part of the Borrower's
indebtedness under this Agreement and the Eximbank Note to any
party, and any such party shall enjoy all the rights and
privileges of Eximbank under this Agreement and the Eximbank Note.
The Borrower shall, at the request of Eximbank, execute and deliver
to Eximbank or to any party that Eximbank may designate any such
further instruments as may be necessary or desirable to give full
force and effect to the disposition by Eximbank. Notwithstanding
anything to the contrary contained herein, the Borrower may not
assign or otherwise transfer any of its rights or obligations under
this Agreement without the prior written consent of Eximbank.
Section 11.05. Taxes. The Borrower agrees to pay all amounts
owing by it under this Agreement, the Eximbank Guarantee Agreement
or the Eximbank Note free and clear of and without deduction for
any Taxes. The Borrower further agrees:
(a) that if it is prevented by operation of law from paying
any such Taxes, then the interest rate or fees required to be paid
under this Agreement, the Eximbank Guarantee Agreement or the
Eximbank Note shall be increased by the amount necessary to yield
to Eximbank interest, fees or expenses in the amounts provided for
in this Agreement, the Eximbank Guarantee Agreement or the Eximbank
Note after provision for the payment of all such Taxes;
(b) that it shall at the request of Eximbank execute and
deliver to Eximbank such further instruments as may be necessary or
desirable to effect the increased amounts as provided for in clause
(a) immediately above, including a new Eximbank Note to be issued
in exchange for any Eximbank Note theretofore issued;
(c) that it shall hold Eximbank harmless from and against any
liabilities with respect to any such Taxes (whether or not properly
or legally asserted); and
(d) to provide Eximbank with the original or a certified copy
of evidence of the payment of any such Taxes by the Borrower as
Eximbank may reasonably request, or, in the event of a non-payment
of any such Tax being asserted against Eximbank, to provide
Eximbank with a certificate from the appropriate taxing authority
or an opinion of counsel acceptable to Eximbank stating that such
asserted Tax is not payable.
In the event that it is necessary for Eximbank to cooperate with
the Borrower in order for the Borrower to fulfill its obligations
under this Section 11.05, Eximbank shall cooperate to the extent
necessary, provided Eximbank shall incur no expense or other
liability in connection therewith. In the event Eximbank assigns
or transfers its rights, title and interest under this Agreement to
a Person which is not a Person entitled to tax exemptions on its
assets, revenues and operations substantially similar to the tax
exemptions applicable to Eximbank, then the definition of "Taxes"
applicable to such Person for purposes of this Agreement shall be
the definition of "Taxes" set forth in Schedule X attached hereto.
Section 11.06. Disclaimer. Eximbank shall not be
responsible in any way for the performance of the Purchase
Contracts, and no claim against the supplier of any Item or any
other person with respect to the performance of the Purchase
Contracts will affect the obligations of the Borrower under this
Agreement, the Eximbank Note or any Financing Document.
Section 11.07. Indemnities and Expenses. (a) The Borrower
shall, whether or not the transactions herein contemplated are
consummated, pay the reasonable fees and expenses of the
Independent Engineer, the Insurance Consultant, Milbank, Tweed,
Hadley & McCloy, special New York counsel to Eximbank, and SyCip
Salazar Hernandez & Gatmaitan, special Philippine counsel to
Eximbank and the law firms referred to in 5.01(c) and 5.02(b), and
all reasonable costs and expenses incurred by Eximbank, incurred in
connection with (i) the preparation, printing, execution, delivery,
administration, registration (where appropriate) or enforcement of
this Agreement, the Eximbank Note, the Eximbank Guarantee Agreement
and the other Financing Documents and any other documents related
thereto (including the Legal Opinions); (ii) any amendment or
modification to, preservation of rights under, or waiver in
connection with, the Financing Documents or any such other
document; and (iii) the registration (where appropriate) and the
delivery of the evidences of Indebtedness relating to the Eximbank
Credit and the Disbursement thereof.
(b) The Borrower shall, whether or not the transactions
herein contemplated are consummated, (i) pay and hold Eximbank
harmless from and against any and all present and future stamp and
other similar taxes and documentary or registration fees with
respect to the matters referred to in the foregoing clause (a) and
save Eximbank harmless from and against any and all liabili-ties
with respect to or resulting from any delay or omission (other than
to the extent attributable to Eximbank) to pay such taxes or fees;
and (ii) indemnify Eximbank and each of its respective officers,
directors, employees, representatives, attorneys and agents from
and hold each of them harmless against any and all liabilities
incurred by any of them as a result of, or arising out of, or in
any way related to, or by reason of, any investigation, litigation
or other proceeding (whether or not Eximbank is a party thereto)
related to the entering into and/or performance of this Agreement,
the Eximbank Note, the Eximbank Guarantee Agreement or any other
Project Document or the use of the proceeds of the Eximbank Credit
or the consummation of any transactions contemplated herein or in
any other Project Document, including, without limitation, the
reasonable fees and disbursements of counsel selected by such
indemnified party incurred in connection with any such
investigation, litigation or other proceeding or in connection with
enforcing the provisions of this Section 11.07(b) (but excluding
any such liabilities, obligations, losses, to the extent incurred
by reason of the gross negligence or willful misconduct of the
Person to be indem-nified or its officers, directors, employees,
representatives, attorneys or agents, as the case may be as
determined by a court of competent jurisdiction). Without
limitation to the foregoing provisions of this paragraph, the
indemnity provided hereunder shall cover any loss, liability or
expense reasonably incurred other than by reason of gross
negligence or wilful misconduct on behalf of Eximbank arising out
of or in connection with claims by third parties (including without
limitation any Lender or the Administrative Agent) to whom a copy
of the Information Memorandum has been distributed with the
knowledge of the Borrower against Eximbank relating to any alleged
inaccuracy of the factual information (taken as a whole) which, for
the avoidance of doubt shall not include any information by way of
projections, estimates or other expressions of view as to future
circumstances (provided that such projections, estimates or other
expression of view are expressed in good faith and on the basis of
assumptions which when made were viewed by the Borrower in good
faith to be reasonable) contained in, or any alleged omission of
information which will render such aforesaid factual information
(taken as a whole) inaccurate or misleading in a material respect
from, the Information Memorandum and the Project Documents.
Eximbank shall (1) use reasonable efforts to, upon its becoming
aware of any event which may result in the Borrower being required
to perform any of its indemnity obligations under this paragraph
(b), promptly notify the Borrower (provided that failure to so
notify shall not mitigate the obligations of the Borrower
hereunder), (2) upon request from the Borrower consult with the
Borrower regarding any step (including any step which may mitigate
the effect of such event) it proposes to take in respect of such
event and (3) consult with the Borrower before entering into any
settlement or compromise in relation to any such claims, actions or
suits.
(c) Without limitation to the provisions of paragraph (b)
above, the Borrower agrees to defend, protect, indemnify and hold
harmless Eximbank and each of its officers, directors, employees,
representatives, attorneys and agents from and hold each of them
harmless against any and all liabilities (including removal and
remedial actions), obligations, losses, damages, penalties, claims,
actions, judgments, suits, costs, expenses and disbursements
(including reasonable attorneys' and consultants' fees and
disbursements) imposed on or asserted against any such Persons
directly or indirectly based on, or arising or resulting from, (i)
the actual or alleged presence of Hazardous Materials on, under or
at the Plant or the Site, (ii) any Environmental Claim relating to
the Borrower or the Project or arising out of the use of the Plant
or the Site, or (iii) the exercise of Eximbank's rights under any
of the provisions of this Section regardless of when any such
matters arise, but excluding any matter based solely on the gross
negligence or willful misconduct of Eximbank or its officers,
directors, employees, representatives, attorneys or agents, as the
case may be. Eximbank shall (1) use reasonable efforts to, upon
its becoming aware of any event which may result in the Borrower
being required to perform any of its obligations under this
paragraph (c), promptly notify the Borrower (provided that failure
to so notify shall not mitigate the obligations of the Borrower
hereunder), (2) upon request from the Borrower consult with the
Borrower regarding any step (including any step which may
mitigate the effect of such event) it proposes to take in respect
of such event and (3) consult with the Borrower before entering
into any settlement or compromise in relation to any such claims,
actions or suits.
(d) To the extent that the undertaking in the preceding
paragraphs of this Section may be unenforceable because it is
violative of any law or public policy, the Borrower will
contribute the maximum portion that it is permitted to pay and
satisfy under applicable law to the payment and satisfaction of
such undertakings.
(e) All sums paid and costs incurred by Eximbank with respect
to any matter indemnified hereunder shall bear interest at the
default rate applicable to the Eximbank Credit from the date so
paid or incurred until reimbursed by the Borrower, and all such
sums and costs shall be added to the debt and be secured by the
Security Documents and shall be immediately due and payable on
demand.
Section 11.08. Right of Setoff. In addition to any rights
now or hereafter granted under applicable law or otherwise, and not
by way of limitation of any such rights, upon the occurrence of an
Event of Default, Eximbank is hereby authorized at any time or from
time to time, without presentment, demand, protest or other notice
of any kind to the Borrower or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any other
Indebtedness at any time held or owing by Eximbank to or for the
credit or the account of the Borrower against and on account of the
Eximbank Secured Obligations and liabilities of the Borrower to
Eximbank under this Agreement or under any of the other Financing
Documents, and all other claims of any nature or description
arising out of or connected with this Agreement or any other
Financing Document, irrespective of whether or not Eximbank shall
have made any demand with respect thereto.
Section 11.09. Benefit of Agreement. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto, except
that the Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of
Eximbank.
Section 11.10. No Waiver; Remedies Cumulative. No failure or
delay on the part of Eximbank in exercising any right, power or
privilege hereunder or under any other Financing Document and no
course of dealing between the Borrower and Eximbank shall impair
any such right, power or privilege or operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Financing Document preclude
any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder or thereunder. The rights,
powers and remedies herein or in any other Financing Document
expressly provided are cumulative and not exclusive of any rights,
powers or remedies which Eximbank would otherwise have. No notice
to or demand on the Borrower in any case shall entitle the Borrower
to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of Eximbank to
any other or further action in any circumstances without notice or
demand.
Section 11.11. Severability. Any provision of this
Agreement, the Eximbank Note and any other Financing Document which
is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability but that shall not invalidate the remaining
provisions of this Agreement, the Eximbank Note or any Financing
Document or affect such provision in any other jurisdiction.
Section 11.12. English Language. All documents to be
furnished or communications to be given or made under this
Agreement or any other Financing Document shall be in the English
language.
Section 11.13. Calculations; Computations. All financial
calculations to be made under, or for the purposes of, this
Agreement shall be determined in accordance with Philippine
generally accepted accounting principles, applied on a consistent
basis and, except as otherwise required to conform to the
definitions contained in Schedule X or any other provisions of this
Agreement, shall be calculated from the then most recently issued
quarterly financial statements which the Borrower is obligated to
furnish to Eximbank from time to time, as provided hereunder;
provided, however, that (a) if the relevant quarterly financial
statements should be in respect of the last quarter of a Fiscal
Year then, at the option of Eximbank, such calculations may instead
be made from the audited financial statements for the relevant
Fiscal Year, and (b) if there should occur any material adverse
change in the financial condition or results of operations of the
Borrower after the end of the period covered by the relevant
financial statements, then such material adverse change shall also
be taken into account in calculating the relevant figures.
Section 11.14. Survival. All indemnities set forth herein
shall survive the execution and delivery of this Agreement and the
Eximbank Note, the execution, delivery and termination of the
Eximbank Guarantee Agreement, and the making and repayment of the
Eximbank Credit.
Section 11.15. Amendments. No term or provision of this
Agreement may be amended, changed, modified or waived except by an
instrument in writing signed by the party against whom such
amendment, change, modification or waiver is sought to be enforced.
Section 11.16. Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same agreement.
Section 11.17. Notices. Except as otherwise expressly
provided herein, (a) all notices and other communications
provided for hereunder shall be provided in writing (including
telegraphic, telex, facsimile or cable communication) and shall be
sent by telecopy, telex, telegraph or cable with the original of
such communication dispatched by (if inland) overnight or (if
overseas) international courier and, if such courier service is not
available, by registered airmail (or, if inland, registered first-
class mail) with postage prepaid to the Borrower, the Collateral
Agent and Eximbank at their respective addresses specified below,
or at such other address as shall be designated by such party in a
written notice to the other parties hereto and (b) all such notices
and communications shall, when mailed, telegraphed, telexed,
telecopied, or cabled or sent by overnight courier, be effective
seven (7) days after being deposited in the mails in the manner as
aforesaid, when delivered to the telegraph company or cable company
(if inland), one (1) day or (if overseas) three (3) days after
delivery to a courier in the manner as aforesaid, as the case may
be, or when sent by telex (with the correct answer back) or
telecopier:
Addresses:
If to the Borrower:
CE LUZON GEOTHERMAL POWER COMPANY, INC.
c/o California Energy Company, Inc.
10831 Old Mill Road
Omaha, Nebraska 68154
Tel: 402-330-8900
Fax: 402-334-3759
Attention: Chief Financial Officer
with a copy to General Counsel
Fax: 402-334-3746
with copies to:
CE LUZON GEOTHERMAL POWER COMPANY, INC.
c/o Sycip Gorres Velayo & Co.
6760 Ayala Avenue
Makati, Metro Manila
Philippines
Tel: 011-632-819-3011
Fax: 011-632-819-0872
Attention: Ms. Rosario Calderon Flanagan
If to the Collateral Agent:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
Corporate Trust and Agency Services
1 Embaracadero Center, 20th Floor
San Francisco, California 94111
Tel: 415-953-4004
Fax: 415-622-3737
Attention: Ms. Claudia Sun
If to Eximbank:
EXPORT-IMPORT BANK OF THE UNITED STATES
811 Vermont Avenue, N.W.
Washington, D.C. 20571
U.S.A.
Attn: Vice President
Project Finance Division
Tel: (202) 566-5092
Fax: (202) 566-7524
Telex: RCA 248460 EXBK UR
TRT 197681 EXIM UT
WUI 64319 EXIBANK
WUT 89461 EXIBANK WSH
with a copy to:
Mark Kantor, Esq.
Milbank, Tweed, Hadley & McCloy
1825 Eye Street, N.W.
Suite 1100
Washington, D.C. 20006
Section 11.18. Currency of Payment. The obligation of the
Borrower to pay in Dollars the aggregate amount of the sums due
under this Agreement or the Eximbank Note shall not be deemed to
have been novated, discharged or satisfied by any tender of (or
recovery under judgment expressed in) any currency other than
Dollars, except to the extent which such tender (or recovery) shall
result in the effective payment of such aggregate amount in Dollars
at the place where such payment is to be made and, accordingly, the
amount (if any) by which any such tender (or recovery) shall fall
short of such aggregate amount shall be and remain due to Eximbank
as a separate obligation, unaffected by judgment having been
obtained (if such is the case) for any other amounts due under or
in respect of this Agreement or the Eximbank Note.
Section 11.19. Headings Descriptive. The headings of the
several sections and subsections of this Agreement are inserted for
convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
Section 11.20. Prior Agreements Superseded. This Agreement,
and the Eximbank Guarantee Agreement and the other Financing
Documents to which the Borrower is a party shall completely and
fully supersede all prior understandings or agreements, both
written and oral, among the parties hereto regarding the Eximbank
Credit and the Eximbank Guarantee Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have caused
this Agreement to be duly executed and delivered in the United
States as of the date set forth below.
CE LUZON GEOTHERMAL POWER EXPORT-IMPORT BANK OF THE
COMPANY, INC. UNITED STATES
By /s/ John G. Sylvia By /s/ Diane S. Rudo
(Signature) (Signature)
Name John G. Sylvia Name Diane S. Rudo
(Print) (Print)
Title Vice President Title Vice President
(Print) (Print)
Date of Execution: August 15, 1994.
Eximbank Credit No. 066920 - Philippines
Exhibit 10.103
FINANCE AGREEMENT
FINANCE AGREEMENT dated as of June 30, 1994 between CE LUZON
GEOTHERMAL POWER COMPANY, INC. (the "Company"), a private company
organized and existing under the laws of the Republic of the
Philippines and OVERSEAS PRIVATE INVESTMENT CORPORATION ("OPIC"),
an agency of the United States of America.
WITNESSETH:
WHEREAS, the Company intends to build, operate and transfer to
PNOC-Energy Development Corporation of the Republic of the
Philippines an approximately 180 (gross) MW geothermal power plant
at Mahanagdong, Leyte, in the Republic of the Philippines in
accordance with the Energy Conversion Agreement referred to below;
WHEREAS, to secure a portion of the financing therefor, the
Company has requested that OPIC provide the OPIC Loan (as
hereinafter defined) pursuant to Section 234(b) of the Foreign
Assistance Act of 1961, as amended, which OPIC is willing to do on
the terms and conditions hereof;
NOW, THEREFORE, in consideration of the premises and of the
agreements contained herein, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.
(a) For all purposes of this Agreement, (i) capitalized terms
not otherwise defined herein shall have the meanings set forth in
Schedule X to the Lender Credit Agreement and (ii) the principles
of construction set forth in Schedule X to the Lender Credit
Agreement shall apply. Schedule X to the Lender Credit Agreement
is incorporated by reference herein as if fully set forth herein.
(b) Unless otherwise provided, capitalized terms used herein
shall have the definitions specified below:
"Agreement" means this Finance Agreement between the Company
and OPIC.
"Authorized Officer" means, with respect to any Person, its
President, Secretary or Treasurer, any Vice President, Assistant
Secretary or Assistant Treasurer thereof, and 8 any other officer
designated in writing by such Person as an "Authorized Officer".
"Commitment Period" means the period commencing on the date of
execution of this Agreement as indicated on the signature page
hereof and ending on (but excluding) the earlier of (i) the date
that the entire OPIC Commitment has been disbursed or canceled and
(ii) the Maturity Date.
"Default Spread" has the meaning assigned thereto in Section
2.04(e) hereof.
"Disbursement" means each Disbursement of a portion of the
OPIC Loan pursuant to Section 2.01 hereof.
"Event of Default" has the meaning assigned thereto in
Sections 6.01 and 6.02 hereof.
"Fixed Rate" has the meaning assigned thereto in Section
4.06(c) of the Participation and Guaranty Agreement.
"Fixed Rate Conversion Date" has the meaning assigned
thereto in the Participation and Guaranty Agreement.
"Initial Holder" has the meaning assigned thereto in the
Participation and Guaranty Agreement.
"Investor Rate" means, as applicable, the LIBOR Rate, the T-
Bill Rate or the Fixed Rate.
"Lender Credit Agreement" means the Lender Credit Agreement
dated as of June 30, 1994 among the Company, the Administrative
Agent, the Issuing Bank, the Arranger and the Lenders.
"LIBOR Index" means, for any Interest Period with respect to
each Disbursement, the rate of interest per annum (rounded upward
to the next 1/16th of 1%) equal to the rate at which dollar
deposits for such Interest Period and in an amount approximately
equal to the amount of the Disbursement during such period would be
offered by the Initial Holder to major banks in the London
eurodollar market at or about 11:00 a.m. (London time) two
Business Days prior to the commencement of such Interest Period.
"LIBOR Rate" means, for each Interest Period, an interest rate
equal to the sum of the LIBOR Index plus the LIBOR Spread.
"LIBOR Spread" means (i) prior to (but excluding) the date of
the Eximbank Disbursement, 0.50% and (ii) from and including the
date of the Eximbank Disbursement, 0.625%.
"91-Day T-Bill" means a direct obligation of the United States
of America having a maturity of 13 weeks.
"91-Day T-Bill Yield" means the per annum discount rate
(expressed as a bond equivalent yield on the basis of a year of 365
or 366 days, as applicable, and applied on a daily basis) for 91-
Day T-Bills set at a 91-Day T-Bill auction as published by the
Board of Governors of the Federal Reserve or the United States
Department of the Treasury (in Statistical Release H.15 or any
successor publication), or, in the event no such rates are
published by either of the above, then as quoted or published by
any Federal Reserve Bank or any department or agency of the United
States of America.
"Note Rate" means the sum of the applicable Investor Rate from
time to time plus the OPIC Spread; provided, that if all or any
portion of the OPIC Loan bears interest at a fixed rate determined
in accordance with the last sentence of Section
2.04(a) hereof, the "Note Rate" for such portion of the OPIC Loan
shall be such fixed rate.
"OPIC Commitment" means, as of any date during the
Commitment Period, $40,000,000 less the sum of (i) the aggregate
Disbursements made on or prior to such date and (ii) the portion
thereof which has expired or been canceled pursuant to Section
2.03.
"OPIC Credit Date" has the meaning assigned thereto in Section
4.01 hereof.
"OPIC Loan" has the meaning assigned thereto in Section
2.01(a) hereof.
"OPIC Maturity Date" means the Principal Payment Date
immediately preceding the Transfer Date (as such term is defined in
the Energy Conversion Agreement as in effect on the date hereof).
"OPIC Note" has the meaning assigned thereto in Section
2.01(c) hereof.
"OPIC Spread" means, at any time, the sum of 2.50% per annum
on the principal amount of the OPIC Loan outstanding from time to
time plus any applicable Default Spread.
"Paying Agent" means BankAmerica National Trust Company or any
successor permitted under the terms of the Participation and
Guaranty Agreement.
"Placement Spread" means the LIBOR Spread or the T-Bill
Spread, as the case may be.
"Principal Payment Date" means the 30th day of the first
March, June, September or December occurring not less than 180 days
after the date of the Eximbank Disbursement and each
succeeding March 30, June 30, September 30 and December 30
thereafter to and including the OPIC Maturity Date.
"T-Bill Index" means, for each T-Bill Rate Interest Period, a
weighted average of 91-Day T-Bill Yield equal to (i) the sum of (x)
each 91-Day T-Bill Yield in effect for each day during a T-Bill
Rate Interest Period multiplied by (ii) the number of days from and
including the date following the auction setting such 91-Day T-Bill
Yield to and including the date of the next
succeeding auction (or, if sooner, the last day of such T-Bill Rate
Interest Period), plus, if no auction occurs on the first day of a
T-Bill Rate Interest Period, (y) the 91-day Treasury Bill Yield set
in the auction next preceding the T-Bill Rate Interest Period
multiplied by the number of days from and including the first day
of the T-Bill Rate Interest Period through and including the date
of the first such auction to occur during that T-Bill Rate Interest
Period, divided by (ii) the number of days in such T-Bill Rate
Interest Period; provided, however, that (1) if no such auction
occurs during the T-Bill Rate Interest Period, the T-Bill Index for
that period shall be the 91-Day T-Bill Yield set in the auction
next preceding such period, and (2) the 91-Day T-Bill Yield
applicable to the 10 Business Days immediately prior to each
Interest Payment Date shall be the 91-Day T-Bill Yield most
recently published on or prior to the 11th Business Day prior to
such Interest Payment Date.
"T-Bill Rate" means, for each T-Bill Rate Interest Period, the
sum of the T-Bill Index for such T-Bill Rate Interest Period and
the T-Bill Spread.
"T-Bill Rate Conversion Date" has the meaning assigned thereto
in the Participation and Guaranty Agreement.
"T-Bill Rate Interest Period" means initially the period
commencing on the T-Bill Rate Conversion Date and ending on the
next succeeding Interest Payment Date and thereafter, each period
commencing on the last day of the immediately preceding T-Bill Rate
Interest Period and ending on the next succeeding Interest Payment
Date.
"T-Bill Spread" means the placement spread
established from time to time by the Placement and Remarketing
Agent in accordance with Section 4.06(b) of the Participation and
Guaranty Agreement.
ARTICLE II
OPIC LOAN; TERMS
SECTION 2.01. Disbursements. (a) Subject to the terms and
conditions hereof, OPIC agrees to lend to the Company, in
accordance with Section 2.01(b) hereof, an aggregate principal
amount of not more than $40,000,000 (the "OPIC Loan").
(b) Subject to the satisfaction of the conditions set forth
in Article IV hereof, the Company may from time to time during the
Commitment Period, but not more than once per month, submit an
Application for Funding substantially in the form of Schedule
2.2(a) to the Lender Credit Agreement to OPIC and the Initial
Holder requesting a Disbursement of the OPIC Commitment
simultaneously with the submission of such application to the
Administrative Agent. Each such Application for Funding shall be
submitted to OPIC, with a copy to the Independent Engineer, at
least twelve (12) Business Days prior to the date scheduled for
Disbursement requested in such Application for Funding. An
Application for Funding shall not request a Disbursement in excess
of the then available OPIC Commitment. Each requested Disbursement
satisfying the requirements hereof shall, subject to substantially
simultaneous disbursement (to the extent such simultaneous
disbursement is requested in the Application for Funding) by the
Lenders of the Loans or Letter of Credit drawings, as the case may
be, and by the Affiliated Funding Entities of the Progress
Subordinated Loans and Progress Equity Contributions, if any,
requested in such Application, be made on the date requested
therefor in the applicable Application For Funding by wire transfer
of immediately available funds as the Company shall instruct OPIC
by written notice in compliance with the OPIC Funding Documents.
(c) The OPIC Loan shall be evidenced by a single promissory
note of the Company substantially in the form of Exhibit A
hereto, dated the date of the initial Disbursement hereunder,
payable to OPIC in a principal amount equal to the amount of the
OPIC Commitment as originally in effect and otherwise duly
completed.
(d) OPIC is hereby irrevocably authorized by the Company to
endorse on Schedule I attached to the OPIC Note the principal
amount outstanding from time to time of the OPIC Loan, together
with notations of payments of principal received by OPIC in respect
thereof, which endorsements shall, in the absence of manifest
error, be conclusive as to the outstanding principal amount of such
Loan; provided that the failure of OPIC to make any such
recordation or endorsement shall not affect the obligations of the
Company to make a payment when due of any amount owing hereunder or
under the OPIC Note in respect of the OPIC Loan.
(e) The OPIC Loan shall not be of a revolving nature, and any
portion thereof prepaid in advance of maturity shall not be
readvanced to the Company, except as contemplated by Section 5.06
of the Intercreditor Agreement.
(f) Any and all amounts due to OPIC pursuant to the OPIC
Loan, the OPIC Note, this Agreement and the other Financing
Documents are entitled to the benefit of the Collateral which is
held for the benefit of the Secured Parties through the
Collateral Agent pursuant to the terms of the Security Documents
and the Funding Agreement.
(g) The Company agrees that the proceeds of Disbursements of
the OPIC Loan will be applied only to finance the Project.
SECTION 2.02. OPIC Commitment Fee. Commencing as of the date
of execution of this Agreement and continuing through the last day
of the Commitment Period, without limitation of the Commitment
Letter, a commitment fee shall accrue on a daily basis at the rate
of 0.25% per annum on the OPIC Commitment as in effect on such day.
The accrued and unpaid amount of such commitment fee shall be
payable in arrears on each Quarterly Date to OPIC (commencing on
the first Quarterly Date after the date of this Agreement) prior to
the last day of the Commitment Period and on the last day thereof.
SECTION 2.03. Cancellation of the OPIC Commitment. The
Company may cancel all or any part of the OPIC Commitment at any
time upon payment of a fee to OPIC equal to 1% of the amount of the
OPIC Commitment then canceled by giving prior written notice to
OPIC. Any part of the OPIC Commitment not disbursed at the end of
the Commitment Period shall be deemed to have been canceled on such
date.
SECTION 2.04. Interest. (a) Interest on the unpaid
principal amount of each Disbursement shall accrue at the Note Rate
from and including the date of such Disbursement to but excluding
the date such Disbursement is paid in full. Subject to the next
succeeding sentence, the Note Rate shall be determined (i) by
reference to the LIBOR Rate for each Interest Period from and
including the OPIC Credit Date to but excluding the earlier of the
T-Bill Rate Conversion Date and the Fixed Rate Conversion Date,
(ii) by reference to the T-Bill Rate for each T-Bill Rate Interest
Period from and including the T-Bill Rate Conversion Date to but
excluding the earlier of the Fixed Rate Conversion Date and the
date that the OPIC Loan is paid in full and (iii) by reference to
the Fixed Rate from and including the Fixed Rate Conversion Date to
but excluding the date that the OPIC Loan is paid in full. If
following an Event of Default hereunder OPIC shall have made
payment pursuant to the Participation and Guaranty Agreement to
holders of Participation Certificates of any principal, interest or
other Guaranteed Amount (as defined in the Participation and
Guaranty Agreement) with respect to the OPIC Loan (an "OPIC Payment
Amount"), then from the date of payment of such OPIC Payment Amount
to the date of repayment in full to OPIC of such OPIC Payment
Amount, the Note Rate for that portion of the OPIC Loan
corresponding to the OPIC Payment Amount shall be, without
duplication of adjustments to the Note Rate in respect to such OPIC
Payment Amount pursuant to Section 2.04(e) hereof, a fixed interest
rate per annum equal to the sum of (i) OPIC's cost of funds for
such OPIC Payment Amount (which will approximate the interest rate
on U.S. Treasury notes with a maturity comparable to the remaining
maturity of the OPIC Loan as of the date of such OPIC payment),
plus (ii) 4.50%.
(b) At any time that the Disbursements bear interest at a rate
determined by reference to the LIBOR Rate, the Company shall select
each Interest Period by giving written notice of such selection to
OPIC and the Initial Holder by 12:00 noon (New York time) at least
three (3) Business Days before the first day of such Interest
Period; provided that:
(i) 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 Month, in which case such Interest Period shall end on
the next preceding Business Day;
(ii) any Interest Period which begins on the last
Business Day of a Month (or on a day for which there is no
numerically corresponding day in the Month in which such
Interest Period ends) shall, subject to clause (iv) below, end
on the last Business Day of a Month;
(iii) no Disbursement upon first being made shall be
divided into or allocated among more than two (2) Interest
Periods;
(iv) no Interest Period for any Disbursement shall
extend beyond the date of the OPIC Maturity Date; and
(v) unless otherwise consented to by OPIC, at no time
shall the outstanding principal amounts of the Disbursements
accrue interest pursuant to more than six (6) Interest Periods
(each variation in time or in the basis upon which interest is
calculated constituting an Interest Period).
Such notice shall specify the Interest Period selected by the
Company and the amount or amounts of each Disbursement (which shall
be not less than $500,000) that shall bear interest at a rate
determined by reference to the LIBOR Rate for such Interest Period.
In the event the Company fails to provide such notice to the
Initial Holder within such time, the LIBOR Rate shall be calculated
based upon an Interest Period of one month; provided, however, that
if as a consequence of the restriction set forth at Section
2.04(b)(iv) hereof it is not possible to select an Interest Period
of one Month, the LIBOR Rate shall be equal to the Base Rate plus
2.00%
(c) The Company shall be entitled to convert (i) the LIBOR
Rate to the T-Bill Rate or the Fixed Rate, as the case may be and
(ii) the T-Bill Rate to the Fixed Rate at the times and subject to
the terms and conditions set forth in the Participation and
Guaranty Agreement.
(d) On each Interest Payment Date the Company shall, without
duplication of amounts paid on such Interest Payment Date
pursuant to the Participation and Guaranty Agreement, pay to OPIC
interest in respect of each Interest Period or T-Bill Rate
Interest Period, as the case may be (or, if the OPIC Loan then
bears interest at a Note Rate determined by reference to the Fixed
Rate for the period from and including the next preceding Interest
Payment Date to but excluding such Interest Payment Date) on the
daily unpaid principal amounts of any OPIC Loan outstanding during
such Interest Period, T-Bill Rate Interest Period or such period
that the OPIC Loan (or portion thereof, as applicable) bears
interest at a Note Rate determined by reference to the Fixed Rate
in arrears at a rate per annum equal to the Note Rate then
applicable to each such period. Interest shall be computed on the
basis of the actual number of days elapsed and (i) a year of 360
days for the LIBOR Rate and (ii) a year of 365 or 366 days, as
appropriate, for the T-Bill Rate or the Fixed Rate.
(e) If the Company fails to pay in full when due any amount
of principal of or interest on the OPIC Loan or any portion
thereof, the Company shall, without duplication of amounts paid as
"Default Spread" under (and as defined in) the Participation and
Guaranty Agreement, pay interest to OPIC on demand (to the extent
permitted by applicable law) at a rate of interest per annum equal
to the sum of 2% plus the rate otherwise applicable hereunder
applied on a daily basis to the amount in default from the date
payment is due to the date of actual payment of such defaulted
amount (the "Default Spread").
(f) Without duplication of amounts paid under Section 2.09 of
the Participation and Guaranty Agreement, the Company shall pay or
cause to be paid in Dollars to OPIC, so long as any holder of the
LIBOR Participation Certificates shall be required under
regulations of the Board of Governors to maintain reserves with
respect to liabilities or assets consisting of or including
Eurocurrency Liabilities ("Required Reserves"), additional
interest on the unpaid principal amount of the OPIC Note and each
Interest (as defined in the Participation and Guaranty Agreement)
of such holder of the LIBOR Participation Certificates which is
then outstanding, from the date of the commencement of each
Interest Period during which such holder holds a LIBOR
Participation Certificate until the end thereof, at an interest
rate per annum equal at all times to the difference obtained by
subtracting (i) the LIBOR Index for such Interest Period from (ii)
the rate obtained by dividing such LIBOR Index by a percentage
equal to 100% minus the LIBOR Reserve Percentage of such holder of
a LIBOR Participation Certificate in respect of such Required
Reserves for such Interest Period. Such additional interest shall
be determined by such holder of a LIBOR Participation Certificate
and notified to the Company and OPIC no later than 90 days after
the end of each Interest Period using the LIBOR Index, and shall be
due and payable by the Company within five (5) days of delivery to
the Company of a certificate of such holder setting forth the
amount of such additional interest, which certificate shall be
final and conclusive, provided that such determination is made on
a reasonable basis. The foregoing notwithstanding, the Company
shall not be obligated to make any payment under this Section to
the extent such payment is duplicative of any payment made by or on
behalf of the Company pursuant to Section 2.04(h) hereof as a
result of the same event or circumstances.
(g) If, as a result of (i) any failure by the Company to pay
when due the principal amount of or interest on the OPIC Note or
any LIBOR Participation Certificate (or portion thereof), (ii) any
failure by OPIC to sell an Interest (as defined in the
Participation and Guaranty Agreement) to the Initial Holder after
the Company has selected an Interest Period with respect to such
Interest pursuant to Section 2.08 of the Participation and
Guaranty Agreement and Section 2.04(b) hereof, (iii) any failure by
the Company to make any prepayment of the OPIC Note or any LIBOR
Participation Certificate after the Company has given any notice
required hereunder regarding such prepayment, or (iv) the making of
a payment or prepayment (including, without limitation, on
acceleration) or the conversion of the LIBOR Rate to the T-Bill
Rate or Fixed Rate on a day which is not the last day of an
Interest Period with respect thereto, OPIC or the holder of any
LIBOR Participation Certificate shall incur any costs, expenses or
losses, then, upon the written request of OPIC or such holder to
the Company, the Company shall, to the extent not paid pursuant to
Section 2.10 of the Participation and Guaranty Agreement, pay or
cause to be paid, in Dollars, the amount which OPIC or the holder
of any LIBOR Participation Certificate shall notify the Company as
being the aggregate of such costs, expenses and losses. For the
purposes of the preceding sentence, "costs, expenses or losses"
shall include, without limitation, any interest paid or payable to
carry any unpaid amount and any loss, premium, penalty or expense
which may be incurred in liquidating or employing deposits of or
borrowings from third parties in order to make, maintain or fund
the Interests (as defined in the Participation and Guaranty
Agreement) or any portion thereof.
(h) (i) In addition to interest on the OPIC Loan as herein
provided, the Company shall, to the extent not paid pursuant to
Section 2.11 of the Participation and Guaranty Agreement, pay or
cause to be paid on each Interest Payment Date, in Dollars, the
amount which OPIC or any holder of a LIBOR Participation
Certificate shall from time to time notify to the Company as being
the aggregate of the Maintenance Amount (as defined in subsection
(ii) below), if any, of OPIC or any holder of a LIBOR Participation
Certificate, as the case may be, accrued and unpaid prior to such
Interest Payment Date.
(ii) For the purposes of subsection (i) above, the
following terms shall have the following meanings:
(A) "Maintenance Amount" means the amount, if any, certified
in the Maintenance Amount Certification to be the net incremental
costs of OPIC or the affected holder of a LIBOR Participation
Certificate with respect to the making or maintaining of the
Interest (as defined in the Participation and Guaranty Agreement)
which result from (x) any change in, or introduction of, any
Applicable Law and/or (y) any compliance with any request from,
guideline or requirement of, any central bank or other monetary or
other comparable authority or any Governmental Authority (whether
or not having the force of law), which in either case, subsequent
to the date of this Agreement, shall:
(1) impose, modify or deem applicable any reserve,
capital adequacy, special deposit or similar requirements
against assets held by, or deposits with or for the account
of, or Interests (as so defined) purchased by, OPIC or such
holder of a LIBOR Participation Certificate;
(2) impose a cost on OPIC or such holder of a LIBOR
Participation Certificate as a result of its having purchased,
funding or maintaining the Interest or reduce the rate of return on
the overall capital of OPIC or such holder which it would have been
able to achieve if it had not issued the OPIC Note or purchased the
Interest (as so defined), as the case may be;
(3) change the basis of taxation on payments received
by OPIC or such holder of a LIBOR Participation Certificate in
respect of the OPIC Note or such holder's Interest (as so defined)
otherwise than by a change in taxation of the overall net income of
OPIC or such holder of a LIBOR Participation Certificate; or
(4) impose on OPIC or such holder of a LIBOR
Participation Certificate, as the case may be, any other condition
regarding the issuance, purchasing or holding of the OPIC Note or
such Interest (as so defined), as the case may be; and
(B) the term "Maintenance Amount Certification" means a
certification furnished from time to time by OPIC or the holder of
a LIBOR Participation Certificate to the Company, certifying:
(1) the circumstances giving rise to the Maintenance
Amount;
(2) that such net costs have increased;
(3) that, in the opinion of OPIC or such holder of a
LIBOR Participation Certificate, it has exercised reasonable
efforts to minimize or eliminate such increase; and
(4) the Maintenance Amount.
(iii) Notwithstanding anything in Section 2.06, and
subject to any Governmental Approvals having been obtained
(including from the Central Bank), the Company shall have the right
on any Interest Payment Date upon not less than forty-five (45)
days' prior written notice to the Paying Agent, OPIC and the
affected holder of a LIBOR Participation Certificate (which notice
shall be irrevocable and shall bind the Company to make the
prepayment specified below) and upon payment of all accrued
interest and Maintenance Amount (if any) on the amount to be
prepaid, to prepay all or, as the case may be, that portion of the
Loan of which OPIC or a holder of a LIBOR Participation Certificate
informs the Company and the Paying Agent that Maintenance Amount is
then being charged; provided, however, that no prepayment of any
part of the Loan or any LIBOR Participation Certificate shall be
made on any Interest Payment Date which is not the last day of an
Interest Period with respect thereto unless the Company pays the
affected holder of the LIBOR Participation Certificate the amounts
determined by such holder to be payable pursuant to Section 2.04(g)
hereof; provided, further, that the use of Collateral to make any
prepayments pursuant to this Section 2.04(h)(iii) shall be subject
to the restrictions set forth in the Financing Documents on the use
of such Collateral.
(i) (i) If, subsequent to the date of this Agreement, the
purchasing, funding or continuance of the OPIC Note or any
Interest (as defined in the Participation and Guaranty Agreement)
has been made (x) unlawful by any change made in any Applicable
Law, (y) impossible by compliance by OPIC or a holder of a LIBOR
Participation Certificate with any request of a Governmental
Authority (whether or not having force of law) or (z) impracticable
as a result of a contingency occurring after the effective date of
this Agreement which materially and adversely affects the interbank
Eurodollar market, the Company shall, upon notice by OPIC or the
affected holder of a LIBOR Participation Certificate (but subject
to the approval of the appropriate Governmental Authorities
(including the Central Bank), which the Company agrees to take all
reasonable steps to obtain as quickly as possible, if such approval
is then required), prepay the OPIC Note or such Interest (as so
defined), as the case may be, in full on the next occurring
Interest Payment Date unless the effect of the Applicable Law,
request or contingency requires earlier or immediate repayment, in
which case, on such earlier date or immediately, as relevant, that
portion of the principal amount of the OPIC Note and the
Interests (as so defined) affected thereby together with all
accrued interest and Maintenance Amount (if any) thereon and all
amounts, if any, determined by OPIC or each affected holder of a
LIBOR Participation Certificate to be payable to it pursuant to
Section 2.04(g) hereof. In addition, the then undrawn OPIC
Commitment shall terminate immediately.
(ii) If the Company so requests within ten (10) days of
receipt of a notice from a holder of a LIBOR Participation
Certificate pursuant to clause (i) of this Section 2.04(i), such
holder shall (consistent with legal and regulatory restrictions)
(A) during the sixty-day period immediately following receipt of
such request from the Company, use reasonable efforts to assist the
Company in identifying an Eligible Investor (as defined in the
Participation and Guaranty Agreement) willing to accept an
assignment of all or a part of such holder's Interests (as
defined in the Participation and Guaranty Agreement) and (B) if the
Company shall designate such an Eligible Investor within such
sixty-day period, assign all or a part of its proportionate share
of the Interests (as so defined) to such Eligible Investor
designated by the Company; provided that any assignment made by a
holder to such an Eligible Investor shall satisfy the following
condition: (x) the Company shall promptly pay when due all
reasonable fees and expenses which such holder incurs in
connection with such assignment and (y) any assignment of all or
part of such Interests shall be made without recourse,
representation or warranty.
(j) If by change in law or regulation, or by change in
interpretation of any existing law or regulation by a court of
competent jurisdiction (including without limitation any
regulation relating to reserve requirements), or by request from
any central bank or other governmental authority having the force
of law, (i) there is any increase in cost to OPIC (whether
pursuant to the OPIC Funding Documents or otherwise), of funding or
maintaining the OPIC Loan, or (ii) there is any reduction in any
amounts received or receivable by OPIC with respect to the OPIC
Loan, or (iii) OPIC incurs other loss or damage or makes any
payment or forgoes any interest or other amount with respect to
such extension of credit (collectively, together with (but
without duplication of) any other amounts specified in Sections
2.04(f), (g), (h) or (i) hereof, "Increased Costs"), then upon
prompt written demand by OPIC to the Company, accompanied by a
certificate in reasonable detail substantiating the amount and
calculation of such Increased Costs, the Company shall pay to OPIC
for payment in accordance with the OPIC Funding Documents
additional amounts sufficient to reimburse OPIC for such
Increased Costs.
(k) OPIC agrees that (i) as promptly as practicable after it
becomes aware of the occurrence of an event or the existence of a
condition arising after the date hereof that would cause it to be
affected under Section 2.04(i) or 2.04(j) and (ii) as promptly as
practicable after it has made a determination to make a claim for
amounts under Section 2.10, 2.04(g) or 2.04(e), as the case may be,
with respect to events or conditions arising after the date hereof,
it shall notify the Company of the same and use commercially
reasonable efforts (consistent with legal and regulatory
restrictions and OPIC's internal policies) to mitigate the effect
of such provisions on the Company, including (i) in the case of
Sections 2.10, 2.04(e), 2.04(i) or 2.04(j), efforts to make, fund,
issue or maintain the OPIC Loan, through another office of OPIC and
(ii) in the case of Section 2.04(g), efforts to reemploy amounts
held by it, (x) if as a result thereof the additional moneys which
would otherwise be required to be paid to it pursuant to any of
such provisions of this Agreement would be reduced, or the
illegality or other adverse circumstances which would otherwise
require a prepayment of the OPIC Loan pursuant to any of such
provisions would cease to exist, and (y) if, as determined by OPIC,
in good faith, the making, funding, issuing or maintaining of the
OPIC Loan through such other office would not otherwise adversely
affect OPIC.
SECTION 2.05. Repayment. The Company shall repay the
principal amount of the OPIC Loan in approximately equal
successive quarterly installments on each Principal Payment Date.
SECTION 2.06. Voluntary Prepayments. (a) On any Interest
Payment Date the Company may, upon providing notice in accordance
with Section 4.04(b) of the Participation and Guaranty Agreement,
which notice shall specify the amount of the OPIC Loan to be
prepaid and the date of prepayment, shall be irrevocable and shall
obligate the Company to make the prepayment in the amount and on
the date described therein, prepay the OPIC Loan in whole or in
part in accordance with the provisions of this Section 2.06;
provided that such prepayment shall be accompanied by a payment to
OPIC of a prepayment premium as follows: (i) during the twelve-
month period immediately following the date of the initial
Disbursement, 3% of the principal amount of the OPIC Loan then
being prepaid during such period, (ii) during the twelve-month
period immediately following the first anniversary of the date of
the initial Disbursement, 2% of the principal amount of the OPIC
Loan then being prepaid, (iii) during the twelve-month period
immediately following the second anniversary of the date of the
initial Disbursement, 1% of the principal amount of the OPIC Loan
then being prepaid and (iv) thereafter, without premium. In
connection with any such prepayment the Company shall pay to OPIC
promptly upon demand the Prepayment Premium as specified (and
defined) in the Participation Certificates, the amount of which
shall be set forth in a certificate of OPIC showing in reasonable
detail the calculation of the amount of such Prepayment Premium,
which amount, absent manifest error, shall be conclusive and
binding upon the Company.
(b) Partial prepayments of the OPIC Loan hereunder shall be
in minimum amounts of $100,000. The amount by which the OPIC Loan
is prepaid pursuant to this Section 2.06 shall be applied against
the installments of the OPIC Loan provided for in Section 2.05
hereof in inverse order of maturity.
SECTION 2.07. Mandatory Prepayments. (a) The Company shall
prepay the OPIC Loan pro rata with mandatory prepayments of Loans
under the Lender Credit Agreement, including without limitation
under Section 2.14 thereof, or with mandatory prepayments of the
Eximbank Credit under the Eximbank Credit Agreement, as the case
may be. To the extent that the Loans under the Lender Credit
Agreement are voluntarily prepaid (other than pursuant to an
assignment thereof under Section 2.20 of the Lender Credit
Agreement) or to the extent that all or any portion of the Eximbank
Credit is voluntarily prepaid, the Company shall, in either case,
make a simultaneous pro rata prepayment of the OPIC Loan. Without
limiting the obligation of the Company to pay any other amounts due
hereunder or under the OPIC Funding Documents in connection with
any prepayment, in the event of any prepayment of all or any
portion of the OPIC Loan under this Section 2.07, the Company shall
pay to OPIC a prepayment premium as if such prepayment occurred
pursuant to Section 2.06 hereof, except that the Company shall not
be obligated to pay any of the amounts specified in the proviso to
the first sentence of Section 2.06 hereof in connection with any
such prepayment under this Section 2.07.
(b) The amount by which the OPIC Loan is prepaid pursuant to
this Section 2.07 shall be applied against the installments of the
OPIC Loan provided for in Section 2.05 hereof in inverse order of
the maturity thereof.
(c) Notwithstanding the foregoing, at any time that the OPIC
Loan bears interest at a Note Rate determined by reference to the
T-Bill Rate, mandatory prepayments shall be made on the Interest
Payment Date immediately succeeding the date on which the mandatory
prepayment obligation arises, together with interest accrued on the
amount prepaid through the date of such prepayment.
SECTION 2.08. Guaranty Fee. As further consideration for
providing the OPIC Loan, the Company shall pay to OPIC a fee (the
"Guaranty Fee") calculated at the rate of 2.50% per annum on the
principal amount of the OPIC Loan outstanding from time to time.
This fee shall be payable in arrears as the OPIC Spread on each
Interest Payment Date during the term of the OPIC Loan and upon the
repayment of the OPIC Loan in full.
SECTION 2.09. Facility Fee. The Company agrees to pay to
OPIC a facility fee (the "Facility Fee") in the amount of
$200,000 (less the portion thereof theretofore paid), which shall
be due and payable on the earlier of the OPIC Credit Date and the
Credit Date.
SECTION 2.10. Taxes. (a) All sums payable by the Company
hereunder, under any Security Document or under any OPIC Funding
Document, whether of principal, interest, prepayment premiums,
fees, expenses or otherwise, shall be paid in full, free of any
deductions or withholdings for any and all present and future
taxes, levies, imposts, stamp duties, fees, deductions,
withholdings and other government charges, and all liabilities with
respect thereto, imposed by any government or any department,
agency or other unit thereof (herein, collectively, but subject to
the following exclusions, referred to as "Covered Taxes"),
excluding (x) any taxes, levies, imposts, stamp duties, fees,
deductions, charges, withholdings and all liabilities with respect
thereto imposed by any jurisdiction as a direct consequence of OPIC
being organized and existing, qualified to do business, or
maintaining a permanent office or establishment in such
jurisdiction and (y) to the extent similarly excluded in the OPIC
Funding Documents as to amounts received by any beneficial owner of
an ownership interest in a Participation Certificate, any taxes,
levies, imposts, stamp duties, fees, deductions, charges,
withholdings imposed by any jurisdiction as a direct consequence of
such beneficial owner being organized and existing, qualified to do
business, or maintaining a permanent office or establishment in
such jurisdiction and all liabilities with respect thereto and (z)
to the extent similarly excluded in the OPIC Funding Documents as
to amounts received by any beneficial owner of an ownership
interest in a Participation Certificate, U.S. federal, state or
local income taxes, including withholding taxes. In the event that
the Company is prohibited by law from making payments hereunder,
under any Security Document or under the OPIC Funding Documents
free of Covered Taxes, then the Company shall pay such additional
amount as may be necessary in order that the actual amount received
after deduction or withholding shall equal the full amount of such
payments stated to be payable hereunder, under any Security
Document or under the OPIC Funding Documents.
(b) The Company shall pay directly to the appropriate taxing
authority any and all present and future Covered Taxes, and all
liabilities with respect thereto imposed by law or by any taxing
authority on or with regard to any aspect of the transactions
contemplated by this Agreement or the execution and delivery of
this Agreement, the Security Documents or the OPIC Funding
Documents, except for any such Covered Taxes or other liabilities
which the Company is contesting in good faith by appropriate
proceedings, provided that OPIC and any party to or beneficiary of
the OPIC Funding Documents shall be indemnified by the Company on
demand for any fees or additional interest assessed by reason of
its withholding of the payment of such amounts. Within 30 days
after the payment by the Company of any Covered Taxes, the Company
shall furnish OPIC with the original or a certified copy of the
receipt evidencing payment thereof.
(c) OPIC shall use its best efforts to notify the Company of
any payment of Covered Taxes required or requested of it and shall
give due consideration to any advice or recommendation given in
response thereto by the Company, and upon notice from OPIC, or any
party to or beneficiary of the OPIC Funding Documents, as the case
may be, that Covered Taxes or any liability relating thereto
(including penalties and interest) have been paid by any of them,
the Company shall pay or reimburse such party therefor within 30
days of such notice.
(d) Without prejudice to the survival of any other agreement
of the Company hereunder, the agreements and obligations of the
Company contained in this Section 2.10 and in Section 2.11(a) shall
survive the payment in full of principal and interest hereunder.
SECTION 2.11. Additional Terms.
(a) Reimbursement of Expenses. The Company shall pay or
reimburse OPIC, upon demand, for OPIC's reasonable out-of-pocket
costs and expenses incurred in connection with the negotiation,
preparation, execution, implementation, maintaining and
administration of this Agreement, the other Financing Documents and
the OPIC Funding Documents, including, without limitation, the
reasonable expenses of outside legal and business counsel,
communications costs, travel expenses, document preparation costs
and the authentication, registration and recordation of any of the
Financing Documents. The Company shall also reimburse OPIC upon
demand for all costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) incurred by OPIC
monitoring the OPIC Loan or in preserving in full force and effect
or enforcing its rights hereunder or under any of the Financing
Documents or incurred in connection with the modification,
amendment or waiver of any provision of any such document. Without
limiting the foregoing, the Company shall be responsible for, and
shall indemnify OPIC against and hold OPIC harmless for, any and
all expenses and amounts payable by OPIC under or pursuant to the
OPIC Funding Documents or related agreements, including, without
limitation, any prepayment premium, amounts in respect of Increased
Costs or Covered Taxes, break funding costs or other amounts
payable by OPIC to any other party thereunder. Payments made under
any other provisions of this Agreement, including without
limitation Sections 2.04(f), (g), (h), (i), (j) or (k), shall not
limit the Company's obligations under this Section 2.11(a).
(b) Currency, Time and Place of Payment. All payments
required hereunder shall be made in Dollars in immediately
available funds without any offset or deduction for Covered Taxes
at the address of the Paying Agent stated in Section 7.05 hereof no
later than 10:00 a.m. (New York City time) on the date on which due
(each such payment made after such time shall be deemed to have
been made on the next succeeding Business Day). If any payment
date is not a Business Day, payment shall be made on the next
succeeding Business Day.
(c) Computation of Fees, etc. Except as otherwise provided
herein or in the OPIC Funding Documents, commitment fees and the
Guaranty Fee shall be computed (i) prior to the date of the initial
Disbursement, on the basis of a 360-day year of twelve 30-day
months and (ii) after the date of the initial
Disbursement, on the same basis as interest on the OPIC Loan is
calculated.
(d) Application of Payments to OPIC. Payments received by
the Paying Agent on behalf of OPIC under this Agreement shall be
applied as provided in Section 4.02(b) of the Participation and
Guaranty Agreement.
(e) Development Fee. The Company may earn and draw
Disbursements to pay the developer fee set forth in the
Construction Budget (the "Developer Fee") in accordance with the
provisions set forth in this Section 2.11(e). A pro rata share of
60% (calculated in accordance with the immediately succeeding
sentence) of such fee is payable in installments payable when the
progress payments are made under the Supply Contract and the
Construction Contract. The pro rata share of such amount
applicable to any such progress payment shall equal the product of
(x) 60% of the Developer Fee (expressed in Dollars) multiplied by
(y) the percentage obtained by dividing (1) the amount of such
progress payment by (2) the total amount of the Contract Price.
Subject to the terms of this Section 2.11(e), 40% of the
Developer Fee is payable upon satisfaction of either of the
following conditions: (A) the earlier of (i) the occurrence of the
Construction Financing Termination Date or (ii) the date that the
Trunche 2 Lenders' Construction Financing Secured Obligations are
paid in full in cash or (B) the conditions to funding set forth in
Sections 5.1 and 5.2 of the Lender Credit Agreement shall have been
satisfied, Substantial Completion shall have occurred under the
Construction Contract and as part of Substantial Completion (i)
each of the Net Deliverable Capacity Guarantee and Guaranteed Net
Plant Steam Rate shall have been satisfied under the Construction
Contract to the extent necessary under Section 14.4(a) of the
Construction Contract to result in no Buy Down Amount becoming due
and payable thereunder and (ii) each of the Reliability Guarantee,
Emissions Guarantee and Noise Compliance Guarantee shall have been
met. Immediately upon $10 million of Contingency Costs being drawn
(whether as Disbursements hereunder, as Loans or Drawing Approvals
under the Lender Credit Agreement, or as Progress Subordinated
Loans or Equity Subordinated Loans), the portion of the
Construction Budget allocated to such 40% portion of the Developer
Fee shall be automatically reallocated for the payment of
additional Contingency Costs and shall be drawn in accordance with
the terms hereof (or of the Lender Credit Agreement, as the case
may be) against the payment of any such additional Contingency
Costs. Upon any payment of such additional Contingency Costs (from
such reallocated portion of the Construction Budget) the aforesaid
40% portion of the Developer Fee shall be reduced on a dollar-for-
dollar basis. To the extent that all or any portion of such
reallocated 40% portion of the Developer Fee is not drawn to pay
additional Contingency Costs, such undrawn amount shall be
automatically available to the Company on the date and subject to
the conditions set forth in this Section 2.11(e). Capitalized
terms used in this Section 2.11(e) and not defined in Schedule X
hereto shall have the meaning assigned to such terms in the
Construction Contract.
(f) No Duplication of Payments Under OPIC Funding Documents.
OPIC and the Company acknowledge and agree that payments under this
Agreement and the OPIC Note shall be made without duplication of
corresponding payments made under the OPIC Funding Documents and
that payments by the Company thereunder shall satisfy such
corresponding payments hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations, Warranties and Covenants. In
order to induce OPIC to enter into this Agreement and each of the
other Financing Documents to which it is a party and in order to
induce OPIC to make the OPIC Loan, the Company makes the following
representations, warranties and agreements as of the OPIC Credit
Date, which shall survive the execution and delivery of this
Agreement and the making and repayment of the OPIC Loan:
(a) Corporate Status. The Company (i) is a duly organized
and validly existing corporation in good standing under the laws of
the Republic, (ii) is duly qualified to do business as a foreign
corporation under the laws of each jurisdiction in which the
character of the properties owned or leased by it or in which the
transaction of its business as presently conducted or proposed to
be conducted makes such qualification necessary and (iii) has full
power and authority to own the property and assets owned by it and
to lease the properties leased by it and to transact the business
in which it is engaged or proposes to be engaged and to do all
things necessary or appropriate in respect of the Project and to
consummate the transactions contemplated by the Project Documents
in effect or required to be in effect as of each date this
representation is made or deemed made.
(b) Corporate Power and Authority. The Company has the
corporate power and authority to execute and deliver, and to
perform the terms and provisions of, each of the Project
Documents to which it is party and has taken all necessary
corporate action to authorize the execution, delivery and
performance by it of each of such Project Documents as have been
executed and delivered as of each date this representation and
warranty is made. The Company has, or in the case of the Project
Documents other than this Agreement, by the OPIC Credit Date will
have, duly executed and delivered each of the Project Documents to
which it is party, and each of such Project Documents constitutes
or, in the case of each such other Project Document when executed
and delivered, will constitute the legal, valid and binding
obligations of the Company, enforceable in accordance with its
respective terms, except as the enforceability thereof may be
limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general equitable principles,
regardless of whether the issue of enforceability is considered in
a proceeding in equity or at law.
(c) No Violation; No Construction Credit Default or
Construction Credit Event of Default. (i) Neither the execution
and delivery by the Company of the Project Documents to which it is
a party, nor the Company's compliance with or performance of the
terms and provisions thereof, nor the use of the proceeds of the
OPIC Loan as contemplated by this Agreement or the Eximbank Credit
as contemplated by the Eximbank Guarantee Agreement or the Loans as
contemplated by the Lender Credit Agreement (i) will contravene or
violate any provision of any Applicable Law to which the Company,
any of its assets or the Project is subject, (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 (except any Permitted
Liens) upon any of the property or assets of the Company pursuant
to the terms of any indenture, mortgage, deed of trust, credit
agreement, loan agreement or any other agreement, contract or
instrument to which the Company is a party or by which it or any of
its property or assets is bound or to which it may be subject,
(iii) will violate any provision of the Articles of Incorporation
or By-Laws of the Company or (iv) will require any consent or
approval of any Governmental Authority or any creditor,
shareholder, director or officer of the Company which has not been
obtained.
(ii) No Construction Credit Default or Construction Credit
Event of Default exists or would result from the incurring of any
Construction Financing Secured Obligations. The Company is not in
default under or with respect to any contractual obligation in any
respect which, individually or together with all such defaults,
could reasonably be expected to have a Material Adverse Effect, or
that would create a Construction Credit Event of Default.
(d) Capitalization. As of the date of this Agreement, (j)(i)
the authorized capital stock of the Company consists of 2,148,000
shares of common stock, par value P28 per share, of which 537,014
shares are duly and validly issued, outstanding, fully paid and
non-assessable; (ii) 268,502 of such issued shares of common stock
(representing approximately 50% of such 537,014 issued shares) are
owned and held by CE Mahanagdong; (iii) 268,502 of such issued
shares of common stock (representing approximately 50% of such
537,014 issued shares) are owned and held by Kiewit Energy; (iv)
one of such issued shares of common stock is owned and held by
APFC; and (v) nine of such issued shares of common stock are
directors' qualifying shares. Except as described in the
Shareholder's Agreement, the Funding Agreement, the Marubeni
Purchase Agreement and the Convertible Subordinated Notes, the
Company does not have outstanding (i) any securities convertible
into or exchangeable for its capital stock or (ii) any rights to
subscribe for or to purchase, or any options for the purchase of,
or any agreements, arrangements or understandings providing for the
issuance (contingent or otherwise) of, or any calls, commitments or
claims of any character relating to, its capital stock.
(e) Subsidiaries. The Company has no Subsidiaries and owns
no equity interest in any other Person.
(f) Single-Purpose Company. The Company has not incurred any
liabilities other than in connection with its participation in the
transactions contemplated by the Project Documents. The Company
(i) has not engaged in any business other than the design,
development, ownership, financing, construction and operation of
the Project and (ii) is not a party to any agreement, contract or
commitment (other than (w) the agreements identified in clauses (i)
through (xiii) of the definition of the term Operating Agreements
set forth in Schedule X hereto, (x) the Financing Documents, (y)
agreements, contracts or commitments contemplated by the O&M
Parameters (including those relating to employee training,
secondment of employees and vehicle rentals), the then-current
Construction Budget or the then-current Annual Budget and (z)
agreements, contracts and commitments in respect of Permitted
Indebtedness) which, individually, creates an annual financial
obligation of the Company in excess of $100,000 (or the equivalent
in other currency) or which would cause the aggregate annual
financial obligations of the Company under all agreements,
contracts and commitments (other than those specified in
clauses (w) through (z) immediately above) to which the Company is
a party to exceed $300,000 (or the equivalent in other
currency).
(g) Financial Statements; Financial Condition; Undisclosed
Liabilities; Etc. (i) The statements of financial condition of the
Company at June 30, 1994 heretofore furnished to OPIC present
fairly the financial condition of the Company at the date of such
statements of financial condition and the results of the
operations of the Company for such fiscal year. Such financial
statements have been prepared in accordance with United States
generally accepted accounting principles and practices
consistently applied. Since June 30, 1994, no event, condition or
circumstance (including without limitation Force Majeure as defined
in Articles 13.1(a) and 13.1(b) of the Energy Conversion Agreement)
has existed or has occurred which is reasonably likely to have a
Material Adverse Effect.
(ii) Except as fully reflected in the financial
statements referred to in Section 3.01(g)(i), there are no
liabilities or obligations with respect to the Company of any
nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether or not due) for the period to which such
financial statements relate which, either individually or in the
aggregate, is reasonably likely to have a Material Adverse
Effect. The Company does not know of any reasonable basis for the
assertion against the Company of any liability or obligation of any
nature whatsoever for such relevant period that is not fully
reflected in the financial statements referred to in Section
3.01(g)(i) which, either individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect.
(h) Litigation; Labor Disputes. (i) Except as disclosed in
Schedule 4.8 to the Lender Credit Agreement, there is no action,
suit, investigation or proceeding by or before any court,
arbitrator, administrative agency or other Governmental Authority
pending or, to the best of the Company's knowledge, threatened
against or affecting the Company or any of its properties,
revenues or assets or the Project or the Site which has had or is
reasonably likely to have a Material Adverse Effect. The Company
is not in default with respect to any order of any court,
arbitrator, administrative agency or other Governmental Authority.
There is no injunction, writ, preliminary restraining order or any
order of any nature issued by an arbitrator, court or other
Governmental Authority directing that any of the material
transactions provided for in any of the Project Documents not be
consummated as herein or therein provided. To the best of the
Company's knowledge, there is no action, suit, investigation or
proceeding by or before any court, arbitrator, administrative
agency or other Governmental Authority pending or threatened
against or affecting any party to any Project Document which is an
Affiliate of the Company or any of their properties, revenues or
assets, and the Company does not have actual knowledge of any such
action, suit, investigation or proceeding pending or threatened
against or affecting any other party to any Project Document or any
of their properties, revenues or assets, in each case described in
this sentence which has had or is reasonably likely to have a
Material Adverse Effect.
(ii) There are no strikes, slowdowns, work stoppages by the
Company's employees on-going, or, to the knowledge of the Company,
threatened which are reasonably likely to have a Material Adverse
Effect.
(i) True and Complete Disclosure. All factual information
(taken as a whole, which, for the avoidance of doubt (i) shall not
include any information by way of projections, estimates or other
expressions of view as to future circumstances provided that such
projections, estimates or other expressions of view are expressed
in good faith and on the basis of reasonable assumptions and (ii)
shall be qualified by any disclaimers with respect to such factual
information provided by the Company to OPIC heretofore or
contemporaneously furnished by or on behalf of the Company in
writing to OPIC or provided heretofore by CECI or any other
Affiliate of the Company in the form of financial statements of
CECI or such other Affiliate, as the case may be (including without
limitation such factual information as is contained in the
Information Memorandum and the Project Documents), and all other
such factual information (taken as a whole) hereafter furnished by
or on behalf of the Company or CECI in writing to OPIC will be,
true and accurate in all material respects on the date as of which
such information is dated or certified and not incomplete by
omitting to state any fact necessary to make such information
(taken as a whole) not misleading in any material respect at such
time in light of the circumstances under which such information was
provided. There are in existence no documents or agreements which
have not been disclosed to OPIC which are material in the context
of the Project Documents or which have the effect of varying any of
the Project Documents.
(j) Tax Returns and Payments. The Company has filed all tax
returns required by Applicable Law to be filed by it and has paid
all income taxes payable by it which have become due pursuant to
such tax returns and all other taxes and assessments payable by it
which have become due, other than those not yet delinquent and
except for those contested in good faith and for which adequate
reserves have been established. The Company has paid, or has
provided adequate reserves (in the good faith judgment of the
management of the Company) for the payment of, all national,
regional or local income taxes applicable for all prior Fiscal
Years and for the current Fiscal Year to the date hereof.
(k) Governmental Approvals. All Governmental Approvals
necessary under Applicable Law in connection with (i) the due
execution and delivery of, and performance by the Company of its
obligations and the exercise of its rights under, the Project
Documents in effect or required to be in effect as of each date
this representation is made or deemed made, (ii) the grant by each
of the Company, CECI, CE Mahanagdong, Kiewit Energy and KEC of the
Liens created pursuant to the Security Documents and the Funding
Agreement and the validity, enforceability and perfection thereof
and the exercise by the Collateral Agent of its rights and remedies
thereunder and (iii) the construction and operation of the Project
as contemplated by the Project Documents, to be obtained by the
Company are, and to be obtained by any other Person (to the best
knowledge of the Company) are, set forth in Schedule 4.11 to the
Lender Credit Agreement. Each of the Governmental Approvals set
forth in Part A of Schedule 4.11 to the Lender Credit Agreement
hereto and each other Governmental Approval obtained by the Company
after the date hereof but on or prior to the date this
representation is made, has been duly obtained or made, is validly
issued, is in full force and effect, is not subject to appeal (it
being understood that for purposes of this Section 3.01(k), a
Governmental Approval shall not be considered to be subject to
appeal if it is being contested or challenged solely by Persons
other than the Governmental Authority which issued the Governmental
Approval or any other Governmental Authority notwithstanding that
such contest or challenge is ongoing) and is free from conditions
or requirements compliance with which is reasonably likely to have
a Material Adverse Effect or which the Company does not reasonably
expect to be able to satisfy. There is no proceeding pending or,
to the best knowledge of the Company, threatened which is
reasonably likely to result in the rescission, termination,
material modification, suspension or determination of invalidity or
lack of effectiveness of any such Governmental Approval. The
information set forth in each application and other written
material submitted by the Company to the applicable Governmental
Authority in connection with each such Governmental Approval is
accurate and complete in all material respects. The Governmental
Approvals set forth in Part B of Schedule 4.11 to the Lender Credit
Agreement are required solely in connection with later stages of
construction and operation of the Project. The Company has no
reason to believe that any Governmental Approval that has not been
obtained by the Company, but which will be required in the future,
will not be granted to it in due course, on or prior to the date
when required and free from any condition or requirement compliance
with which is reasonably likely to have a Material Adverse Effect
or which the Company does not reasonably expect to be able to
satisfy. The Project, if constructed in accordance with the
Construction Contract, the Supply Contract and the other Project
Documents, will conform to and comply in all material respects with
all covenants, conditions, restrictions and reservations in the
Governmental Approvals and the Project Documents applicable thereto
and all Applicable Laws. The Company has no reason to believe that
the Collateral Agent will not be entitled, without undue expense or
delay, to the benefit of each Governmental Approval set forth on
Schedule 4.11 to the Lender Credit Agreement upon the exercise of
remedies under the Security Documents. OPIC has received a true
and complete copy of each Governmental Approval heretofore obtained
or made by the Company.
(l) Compliance with Statutes, Etc. (i) The Company is in
compliance with all Applicable Laws in respect of the conduct of
its business and the ownership of its property (including,
without limitation, Applicable Laws relating to environmental
standards and controls and resettlements and Applicable Laws
relating to the maintenance of debt to equity ratios).
(ii) Without limitation to the foregoing clause (i), the
Company's business and the Project are being carried out in
compliance with applicable Republic environmental guidelines.
(m) Environmental Matters. To the best of the Company's
knowledge, neither the Site nor the Plant (nor any other property
with respect to which the Company has retained or assumed
liability either contractually or by operation of the law) has been
affected by any Hazardous Material in a manner which does or is
reasonably likely to give rise to any material liability of the
Company under any Environmental Law or which has had or is
reasonably likely to have a Material Adverse Effect.
(n) Patents, Licenses, Franchises and Formulas. The
Company owns or has the right to use all the patents, trademarks,
permits, service marks, trade names, copyrights, licenses,
franchises and formulas, or rights with respect thereto, and has
obtained assignments of all leases and other rights of whatever
nature, necessary for the present and proposed conduct of its
business and the carrying out of the Project in the manner
contemplated by the Project Documents, without any known conflict
with the rights of others which, or the failure to obtain which, as
the case may be, is reasonably likely to have a Material Adverse
Effect.
(o) Submission to Law and Jurisdiction. As of the OPIC
Credit Date, the choice of governing law for each of the
respective Project Documents in effect or required to be in effect
as of the OPIC Credit Date will be recognized in the courts of the
Republic, and those courts will recognize and give effect to any
judgment in respect of such Project Document obtained by or against
the Company in the courts the jurisdictions of which the Company
has submitted to.
(p) Status of the Loans and the OPIC Loan. The
Construction Financing Secured Obligations and the OPIC Loan
constitute direct, unconditional, and general obligations of the
Company and rank senior as to priority of payment to all
Subordinated Secured Obligations and all Indebtedness of the
Company described in Section 5.01(q) or Section 5.03(e) and not
less than pari passu as to priority of payment to all other
Indebtedness of the Company. Except as permitted by Section
5.01(q) or Section 5.03(e), the Company has not secured or agreed
to secure any such other Indebtedness by any Lien upon any of its
present or future revenues or assets or capital stock.
(q) Documents; Sufficiency of Project Documents. (i) OPIC
has received a complete copy of each Project Document in effect or
required to be in effect as of each date this representation is
made or deemed made (including all exhibits, schedules and
disclosure letters referred to therein or delivered pursuant
thereto, if any).
(ii) To the best of the Company's knowledge, the services
to be performed, the materials to be supplied and the easements,
licenses and other rights granted or to be granted to the Company
pursuant to the terms of the Project Documents provide or will
provide the Company with all rights and property interests required
to enable the Company to obtain all services, materials or rights
(including access) required for the design, construction, start-up,
operation and maintenance of the Project, including the Company's
full and prompt performance of its obligations, and full and timely
satisfaction of all conditions precedent to the performance by
others of their obligations, under the Project Documents, other
than those services, materials or rights that reasonably can be
expected to be obtainable in the ordinary course of business
without material additional expenses or material delay.
(r) Fees and Enforcement. Other than amounts that have been
paid in full or will have been paid in full by the OPIC Credit
Date, no fees or taxes, including without limitation stamp,
transaction, registration or similar taxes, are required to be paid
for the legality, validity, or enforceability of this Agreement or
any of the other Project Documents in effect or required to be in
effect as of each date this representation is made or deemed made.
This Agreement and each of such Project Documents are each in
proper legal form under the laws of the Republic, and under the
respective governing laws selected in such Project Documents, for
the enforcement thereof in such jurisdiction without any further
action on the part of the Administrative Agent, the Collateral
Agent, OPIC, the Issuing Bank, the Lenders or Eximbank.
(s) Utility Availability. Arrangements reflected accurately
and completely in the Construction Budget have been made under the
Construction Contract, the Supply Contract, the Energy Conversion
Agreement or otherwise on commercially reasonable terms for the
provision of all services, housing, materials, utilities and other
infrastructure reasonably necessary for the construction of the
Project.
(t) Availability and Transfer of Foreign Currency. Except as
disclosed in Schedule 4.20 to the Lender Credit Agreement, all
requisite foreign exchange control approvals and other
authorizations, if any, by the Republic or any department or agency
thereof have been validly obtained and are in full force and effect
to assure (i) the ability of the Company to receive, and the
ability of any other party to make, any and all payments to the
Company contemplated by the Project Documents, (ii) the
availability of Dollars to enable the Company to perform all of its
obligations hereunder and under the other Project Documents, as the
case may be, in accordance with their respective terms, and (iii)
the ability of the Company to convert all sums received in Peso
amounts from PNOC-EDC under the Energy Conversion Agreement and the
PNOC-EDC Consent Agreement and from the Republic under the
Performance Undertaking and the Republic Consent Agreement,
including any Peso amounts representing SFRI Fees, from Pesos to
Dollars, immediately upon receipt thereof, and to use the Dollars
as necessary to perform all of its obligations under the Project
Documents, in accordance with their respective terms. Except as
disclosed in Schedule 4.20 to the Lender Credit Agreement, there
are no restrictions or requirements which limit the availability or
transfer of foreign exchange, or the conversion to a foreign
exchange, for the purpose of the performance by the Company of its
obligations under this Agreement or under any of the other Project
Documents.
(u) Construction Budget. (i) The Construction Budget as in
effect on the date hereof is attached hereto as Schedule 4.21 to
the Lender Credit Agreement. The Construction Budget accurately
specifies, to the best of the Company's knowledge, all costs and
expenses incurred and anticipated to be incurred prior to the
latest date on which the Maturity Date can be expected to occur to
construct and finance the construction of the Project in the manner
contemplated by the Project Documents. In addition, to the best of
the Company's knowledge, the amount of all costs and expenses
required or expected to be paid or incurred prior to the latest
date on which the Maturity Date can be expected to occur to finance
and construct the Project in the manner contemplated by the Project
Documents does not exceed the amount reflected in the Construction
Budget.
(ii) To the best of the Company's knowledge, all
projections and budgets (including the Construction Budget and the
Base Case Forecast) furnished or to be furnished to OPIC by or on
behalf of the Company and the summaries of significant assumptions
related thereto (w) have been and will be prepared with due care,
(x) fairly present, and will fairly present, the Company's
expectations as to the matters covered thereby as of their date,
(y) are based on, and will be based on, reasonable assumptions as
to all factual and legal matters material to the estimates therein
(including interest rates and costs) and (z) are in all material
respects consistent with, and will be in all material respects
consistent with, the provisions of the Project Documents.
(v) Titles; Liens. The Company has good and valid title to
all of its properties and assets, in each case, free and clear of
all Liens other than Permitted Liens, including without limitation,
on and subject to the terms of the Energy Conversion Agreement, an
unconditional and unencumbered right to use the Site for the
duration of the Cooperation Period (as defined in the Energy
Conversion Agreement). No mortgage or financing statement or other
instrument or recordation covering all or any part of the property
or assets of the Company is on file in any recording office, except
such as relate only to Construction Period Permitted Liens
described in clauses (i) and (v) of Section 5.01(q) hereof.
(w) Transactions with Affiliates. The Company is not a party
to any contracts or agreements with, or any other commitments to,
whether or not in the ordinary course of business, any Affiliate,
which are individually valued in excess of $100,000 or in the
aggregate valued in excess of $300,000, except for the Lender
Credit Agreement, the Funding Agreement, the Construction Contract,
the Supply Contract, the APFC Security Agreement (and the
agreements for the transactions contemplated therein), the Pledge
Agreement, the Keystone Agreement and any other contracts,
agreements or commitments that are contemplated in the O&M
Parameters (including those relating to employee training, vehicle
rentals and secondment of employees) or in the Funding Agreement.
(x) No Additional Fees. Other than as expressly set forth in
the Base Case Forecast, the Construction Budget and in the fee
letters referred to in Sections 2.7 and 2.20 of the Lender Credit
Agreement, the Company has not paid or become obligated to pay any
fee or commission to any broker, finder or intermediary for or on
account of arranging the financing of the transactions contemplated
by the Project Documents.
(y) Regulation of Parties. None of the Company, its
Affiliates nor any of the Construction Financing Secured Parties
and OPIC is or will be, solely as a result of the participation by
such parties separately or as a group in the transactions
contemplated hereby or by any other Project Document, or as a
result of the ownership, use or operation of the Project, subject
to regulation by any Governmental Authority of the United States as
a "public utility", an "electric utility", an "electric utility
holding company", a "public utility holding company", a "holding
company", or an "electrical corporation" or a subsidiary or
affiliate of any of the foregoing under any Applicable Law of the
United States (including, without limitation, PUHCA and FPA) or by
any Governmental Authority of the Republic as a "public utility"
under any Applicable Law of the Republic. So long as the owner and
operator of the Project is an "exempt wholesale generator" under
Section 32 of PUHCA or a "foreign utility company" under Section 33
of PUHCA, none of the Construction Financing Secured Parties and
OPIC will by reason of its or their ownership or operation of the
Project upon the exercise of remedies under the Security Documents
be subject to regulation by any Governmental Authority of the
United States as a "public utility", an "electric utility", an
"electric utility holding company", a "holding company", or an
electric corporation" or a subsidiary or affiliate of any of the
foregoing under any Applicable Law of the United States (including,
without limitation, PUHCA and FPA).
(z) Regulatory Status. The Company is not subject to
regulation as a "subsidiary company" of a holding company under
PUHCA.
(aa) 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 Plan nor
since the date which is six years immediately preceding the OPIC
Credit Date has the Company established, sponsored, maintained,
administered, contributed to, participated in, or had any
obligation to contribute to or liability under, any Plan. A
Termination Event has not occurred with respect to any Plan the
occurrence of which has had or to the Company's knowledge is
reasonably likely to result in a Material Adverse Effect.
Neither the Company nor any ERISA Affiliate has failed to make a
required contribution or payment to a Multiemployer Plan when due,
the failure of which has had or to the Company's knowledge is
reasonably likely to result in a Material Adverse Effect. To the
Company's knowledge, no accumulated funding deficiency as defined
in Section 412 of the Code has been incurred nor has any funding
waiver from the Internal Revenue Service been received or requested
with respect to any Pension Plan, nor has the Company or any ERISA
Affiliate failed to make any contribution or to pay any amount due
and owing as required by Section 412 of the Code, Section 302 of
ERISA or the terms of any Pension Plan, nor has there been any
event requiring disclosure under Section 4041(c)(3)(C) or Section
4063 of ERISA with respect to any Pension Plan, the event or
occurrence of which has had or to the Company's knowledge is
reasonably likely to result in a Material Adverse Effect. To the
Company's knowledge, the Company and each ERISA Affiliate has met
its minimum funding requirements under ERISA and the Code with
respect to the Plans and all benefit liabilities under each Pension
Plan are being funded in accordance with applicable legal
requirements and reasonable actuarial assumptions and methods as
set forth in ERISA and the Code. To the Company's knowledge, no
material proceeding, claim, lawsuit and/or investigation exists or,
to the best of the Company's knowledge, is threatened concerning
any (i) Pension Plan or (ii) Multiemployer Plan the occurrence of
which has had or is reasonably likely to result in a Material
Adverse Effect. Neither the Company nor to the Company's
knowledge, any ERISA Affiliate has incurred any liability to the
PBGC other than for insurance premiums with respect to a Pension
Plan, the payment of which is not yet due.
(bb) Investment Company Act. Neither the Company nor any of
its Affiliates is an "investment company" or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
The Company warrants to OPIC that each of the foregoing
representations is true and correct in all material respects as of
the date of this Agreement and that none of them omits any matter
necessary to make such representation not misleading in any
material respect. The rights and remedies of OPIC in
relation to any misrepresentations or breach of warranty on the
part of the Company shall not be prejudiced by any investigation by
or on behalf of OPIC into the affairs of the Company, by the
execution, delivery or performance of this Agreement or any other
Financing Document or by any other act or thing which may be done
by or on behalf of OPIC in connection with this Agreement or any
other Financing Document and which might, apart from this
Section, prejudice such rights or remedies.
ARTICLE IV
CONDITIONS PRECEDENT TO OPIC LOAN DISBURSEMENTS
SECTION 4.01. Conditions Precedent to the Initial
Disbursement. Unless OPIC otherwise agrees in writing, the
obligation of OPIC to effect the initial Disbursement of the OPIC
Loan (such date, the "OPIC Credit Date") is subject to the prior
fulfillment, to OPIC's satisfaction in its sole discretion, of the
following conditions precedent; provided that if any such
conditions shall have been satisfied on or prior to the Eximbank
Guarantee Effective Date, then, on the OPIC Credit Date, the
Company shall supply such evidence indicating that such condition
continues to be satisfied as OPIC may reasonably require,
including, without limitation, bring-down opinions and
certificates:
(a) Project Documents. Each of the Project Documents,
including, without limitation, the Eximbank Guarantee Agreement,
the Eximbank Credit Agreement and the Lender Credit Agreement, but
excluding the Mortgage, the ECA Operation Performance Bond, the
Insurance Contracts, the Governmental Approvals set forth in Part
B of Schedule 4.11 to the Lender Credit Agreement and agreements
and instruments pertaining to Working Capital Subordinated Secured
Obligations, Third Party Subordinated Indebtedness and Senior
Permitted Indebtedness, shall have been entered into by the
respective parties thereto, shall be in form and substance
satisfactory to OPIC and shall be unconditional and fully effective
in accordance with their respective terms (except for this
Agreement having become unconditional and fully effective, if that
is a condition of effectiveness of any of such documents) and the
Company shall deliver to OPIC a certificate signed by an authorized
officer of the Company certifying as to the foregoing (other than
as to OPIC's satisfaction with such Project Documents), which
certification may be incorporated into the Application for Funding
pertaining to such initial Disbursement. In addition, (i) the
Power Purchase Agreement shall have been entered into by PNOC-EDC
and NAPOCOR and shall have become unconditional and fully effective
in accordance with its terms and OPIC shall have received a copy
thereof from the Company, (ii) the Geothermal Fluid Specifications
(as defined in the Energy Conversion Agreement) shall have been
finalized as contemplated in Annex I to the Energy Conversion
Agreement and an agreement evidencing the finalization of such
specifications shall have been incorporated as an addendum or
amendment to the Energy Conversion Agreement and (iii) the Company
shall deliver to OPIC a certificate signed by an authorized officer
of the Company certifying the foregoing, such certification being
permitted to be incorporated into an Application for Funding.
(b) Other Documents. The APFC Security Agreement shall have
been entered into by the parties thereto, shall be unconditional
and fully effective in accordance with its terms, shall be in form
and substance satisfactory to OPIC, and OPIC and the Collateral
Agent shall each have received a true, original copy thereof or, if
a true, original copy is unavailable, a certified true copy
thereof.
(c) Opinions of Counsel. OPIC shall have received signed
legal opinions of counsel to the Company, each of the Obligors
(other than the ECA Operation Performance Bond Issuer) and the
Republic and each such other Person as OPIC may reasonably
require, each of which shall be in form and substance satisfactory
to OPIC and shall be dated the Eximbank Guarantee Effective Date;
provided that the opinion of PNOC-EDC may be dated the Effectivity
Date (as defined in the Energy Conversion Agreement).
(d) Corporate Documents; Proceedings.
(i) OPIC shall have received a certificate, dated
the Eximbank Guarantee Effective Date, signed by a Financial
Officer of the Company, and attested to by the Secretary or any
Assistant Secretary of the Company, in form and substance
satisfactory to OPIC, together with copies of the Articles of
Incorporation and By-Laws of the Company and resolutions of the
Board of Directors of the Company reasonably requested by OPIC,
certifying that attached to such certificate are true, correct and
complete copies of such Articles of Incorporation, By-Laws and
resolutions.
(ii) OPIC shall have received a certificate, dated
the Eximbank Guarantee Effective Date, signed by a Financial
Officer of each Obligor (other than PNOC-EDC and the ECA Operation
Performance Bond Issuer) and attested to by the Secretary or any
Assistant Secretary of the Obligor, in form and substance
satisfactory to OPIC, together with copies of the Articles of
Incorporation and By-Laws of the Obligor and resolutions of the
Obligor reasonably requested by OPIC, certifying that attached to
such certificate are true, correct and complete copies of such
Articles of Incorporation, By-Laws and resolutions.
(iii) OPIC shall have received a copy of an
engagement letter for the engagement of Deloitte, Touche &
Tohmatsu International or such other firm of independent
public accountants acceptable to OPIC, as Auditors.
(iv) OPIC shall have received a certificate from
each Obligor (other than PNOC-EDC and the ECA Operation Performance
Bond Issuer) signed by an authorized officer certifying the
incumbency of parties executing any Project Document or related
document on behalf of such Obligor.
(e) Auditors. OPIC shall have received a copy of the
authorization to the Auditors referred to in Section 5.02(b)(ii).
(f) Pledged Stock; Convertible Subordinated Notes. CE
Mahanagdong and Kiewit Energy shall have delivered to the
Collateral Agent, as pledgee, (i) the share certificates
representing all of the Pledged Stock, together with executed and
undated stock powers, and (ii) the Convertible Subordinated Notes
evidencing Required Subordinated Loans, together with executed
instruments of transfer, and the Collateral Agent shall have
received share certificates representing all directors'
qualifying shares of the Company and the one share of the Company
issued to APFC, in each case together with executed and undated
stock powers thereto.
(g) Consent Letters. OPIC shall have received a letter,
in form and substance satisfactory to OPIC, from White & Case,
presently located at 1155 Avenue of the Americas, New York, NY
10036-2787, indicating the consent of White & Case to its
appointment by the Company, CECI, BHCO, CBE and CE Mahanagdong as
their agent to receive service of process as specified in
Section 7.01 hereof, in the case of the Company, as specified in
the Funding Agreement, in the case of CECI, as specified in the
Funding Agreement and the Pledge Agreement, in the case of CE
Mahanagdong and under the Construction Contract, the Supply
Contract and the Keystone Agreement, in the case of BHCO and CBE.
OPIC shall have received a letter, in form and substance
satisfactory to OPIC, from CT Corporation System, presently located
at 1633 Broadway, New York, New York 10019, indicating the consent
of CT Corporation System to its appointment by Kiewit Energy, KEC,
GICO, the Construction Contractor, the Construction Supplier, KIC
and KCGI as their agent to receive service of process as specified
in the Funding Agreement and the Pledge Agreement, in the case of
Kiewit Energy, in the Funding Agreement, in the case of KEC, in the
KCGI Guaranty, in the case of KCGI and under the Construction
Contract, the Supply Contract and the Keystone Agreement, in the
case of GICO, the Construction Contractor, the Construction
Supplier and KIC.
(h) Energy Conversion Agreement Effectiveness. Each of
PNOC-EDC and the Company shall have issued to OPIC a certification
confirming that the Effectivity Date (as defined in the Energy
Conversion Agreement) has occurred.
(i) Certificates. OPIC shall have received copies of
each executed Project Document, together with a certificate of a
Financial Officer of the Company certifying that (i) the Company is
not in default in the performance, observance or fulfillment of any
of its obligations, covenants or conditions contained therein and,
to the best of the Company's knowledge, no other party to any such
Project Document is in default in the performance, observance or
fulfillment of any of its material obligations, covenants or
conditions contained therein and (ii) in the case of each such
document to which OPIC is not a party, (x) that such document is in
full force and effect, (y) that, to the best of the Company's
knowledge, no Force Majeure (as defined in any of the Energy
Conversion Agreement, the Construction Contract and the Supply
Contract) has occurred thereunder and that (z) the copy thereof
delivered to OPIC is true, correct and complete. OPIC shall have
received evidence or copies of all Governmental Approvals set forth
in Schedule 4.11 to the Lender Credit Agreement (other than those
set forth in Part B thereof), certified by a Financial Officer of
the Company as being in full force and effect and, except as
disclosed in Schedule 4.11 to the Lender Credit Agreement, not
subject to appeal. For purposes of this Section 4.01(i), a
Governmental Approval shall not be considered to be subject to
appeal if it is being contested or challenged solely by Persons
other than the Governmental Authority who issued the Governmental
Approval or any other Governmental Authority notwithstanding that
such contest or challenge is ongoing.
(j) Construction Budget; Base Case Forecast. OPIC shall
have received the Construction Budget and the Base Case Forecast,
each of which shall be in form and substance satisfactory to the
Construction Financing Secured Parties and OPIC.
(k) Reports of Consultants. OPIC shall have received
the Independent Engineer's Report, the Insurance Consultant's
Report and such other information as shall be reasonably
requested by OPIC, the Administrative Agent or the Lenders.
(l) Financial Statements. OPIC shall have received
copies of the most recent audited financial statements of CECI,
Peter Kiewit Sons', Inc. and KDG and shall have received copies of
the most recent unaudited financial statements (if audited
financial statements are not otherwise available) of the Company
and each other Obligor (other than PNOC-EDC and the ECA Operation
Performance Bond Issuer) showing, for each such Person, no
material adverse change in the financial condition of such Person
since the date of the last financial statements provided to OPIC
prior to the date of this Agreement, and certificates dated the
Eximbank Guarantee Effective Date and signed by a Financial Officer
of each such Person stating that (i) such financial statements are
true, complete and correct and (ii) no material adverse change in
the financial condition, operations, properties, business or
prospects of such Person has occurred since the date of such
financial statements.
(m) Items. The Company shall have delivered to OPIC a
list of the Items, containing with respect to each Item a brief
description and the quantity and estimated invoice cost and the
estimated date of shipment, plus, for each Item, a copy of the
Purchase Contract for such Item. Such Purchase Contracts shall not
contravene any applicable statute or public policy of the United
States. The list shall include, where available, the supplier's
DUNS numbers, and the product SIC Codes for each Item on the list.
(n) Evidence of Authority. OPIC shall have received
evidence of the authority of the Company to enter into this
Agreement, the Lender Credit Agreement and the Eximbank Credit
Agreement, and the names, specimen signatures and evidences of
authority of the Persons signing this Agreement, the OPIC Note, the
Lender Credit Agreement, the Notes, the Eximbank Credit Agreement
and the other documents required by this Agreement, the Lender
Credit Agreement and the Eximbank Credit Agreement as of the date
of execution hereof, or who, as of the Eximbank Guarantee Effective
Date, will otherwise act as representatives of the Company in the
operation of the OPIC Loan, the Loans, the Letter of Credit and the
credit facility provided under the Eximbank Credit Agreement.
(o) Conditions. (i) OPIC shall have received written
confirmation from the Administrative Agent that each of the
conditions precedent set forth in Sections 5.1 and 5.2 of the
Lender Credit Agreement has been satisfied or waived; and (ii) OPIC
shall have received written confirmation from Eximbank that each of
the conditions precedent set forth in Article IV of the Eximbank
Guarantee Agreement and Section 5.01 of the Eximbank Credit
Agreement has been satisfied in a manner satisfactory to Eximbank.
(p) Eximbank Note and Request for Eximbank Disbursement
to Account of Borrower. The Administrative Agent shall have
received from the Company (i) a promissory note, substantially in
the form of Annex A to the Eximbank Credit Agreement, which has
been signed by the Company, but which has all the blanks therein
left uncompleted and (ii) a Request for Eximbank Disbursement to
Account of Borrower, substantially in the form of Annex B to the
Eximbank Credit Agreement, which has been signed by the Company,
but which has all the blanks therein left uncompleted.
(q) Blocked Account. The Company shall have
established the Blocked Account.
(r) Notice to Proceed and Contractor's and Supplier's
Representation. The Company shall have delivered to OPIC a copy of
the Notice to Proceed under (and as defined in) the Construction
Contract and the Notice to Proceed under (and as defined in) the
Supply Contract, each of which shall have been issued on or prior
to the OPIC Credit Date. OPIC shall have received a certificate
signed by an authorized representative of each of the Construction
Contractor and the Construction Supplier to the effect that (i) as
of the OPIC Credit Date the Scheduled Completion Date is July 1,
1997 or such later date (which is acceptable to the Administrative
Agent) as shall correspond to any extension of the milestone date
set forth in Section 4.1.1 of the Energy Conversion Agreement for
the achievement of the Completion Date (as defined in the Energy
Conversion Agreement), (ii) the Company is not in default under the
Construction Contract or the Supply Contract, (iii) the
Construction Contractor is not entitled to any change orders under
the Construction Contract and the Construction Supplier is not
entitled to any change orders under the Supply Contract (in each
case, other than change orders previously disclosed to the
Administrative Agent in writing) on such date and is not then aware
of any other change orders required under the Construction Contract
or the Supply Contract and (iv) to the best of the Construction
Contractor's or the Construction Supplier's (as the case may be)
knowledge, after reasonable inquiry, no Force Majeure event (as
defined in each of the Construction Contract and the Supply
Contract) has occurred.
(s) Project Site Opinion. The Company shall have
furnished to OPIC a signed legal opinion of Castillo Laman Tan &
Pantaleon in form and substance satisfactory to OPIC to the effect
that the Republic has valid legal title to the Site free of Liens
(other than the Liens of or arising through the Company, the
Construction Contractor or the Construction Supplier) and that
PNOC-EDC has valid legal authority to use the Site and delegate
unencumbered use of the Site to the Company on the terms set forth
in the Energy Conversion Agreement from the OPIC Credit Date to the
end of the Cooperation Period (as defined in the Energy Conversion
Agreement).
(t) Marubeni Purchase Agreement. The Marubeni
Purchase Agreement shall have been entered into by the respective
parties thereto, shall be unconditional and fully effective in
accordance with its respective terms, shall be in form and
substance satisfactory to OPIC and OPIC shall have received a true,
original copy thereof.
(u) Energy Conversion Agreement Amendments. (i) The
Energy Conversion Agreement shall have been amended in a manner
satisfactory to OPIC including, without limitation, to conform the
Correction Curves (as defined in the Energy Conversion
Agreement) and references to the interface conditions (to the
extent presently identified) to the Construction Contract), and
OPIC shall have received a true, original copy of each of the
amendments thereto and (ii) OPIC shall have received a certified
true copy of a letter from the General Counsel of PNOC-EDC
affirming that loss of use of the Site constitutes an event of
Force Majeure under (and as defined in) the Energy Conversion
Agreement.
(v) Amounts Secured by Mortgage Chattel Lien. The
Company, the Lenders, the Administrative Agent, OPIC and Eximbank
shall have agreed upon the amount of Secured Obligations to be
secured by the Lien granted under Article IV of the Mortgage, which
agreement shall be evidenced in a manner satisfactory to OPIC.
(w) Management Service Arrangements. The Company and
CECI (or another Affiliate of the Company acceptable to OPIC) shall
have entered into a management services contract or other
operations and maintenance personnel guaranty or similar
arrangement acceptable to Eximbank, OPIC, the Lenders and the
Administrative Agent provided that such arrangement would not
result in Philippine value added tax being incurred by CECI or such
Affiliate of the Company, as the case may be.
(x) No Change in Contract Price. The contract price set
forth in each of the Supply Contract and the Construction Contract
shall not have been amended, changed or otherwise
modified and OPIC shall have received a certificate from each of
the Construction Supplier and the Construction Contractor to such
effect in form and substance satisfactory to OPIC.
(y) Other Instruments, Conditions, Etc. The delivery of
any other instruments and agreements and the satisfaction of any
other condition as OPIC may reasonably request.
(z) Fees, Costs, Etc. The fees, costs and expenses
(including any and all Attorney Costs) referred to in Section
2.11(a) shall have been paid.
(aa) Additional Conditions. The requirements of Section
4.02 hereof shall have been satisfied.
SECTION 4.02. Conditions Precedent to each
Disbursement. Subject to Section 4.01 of the Intercreditor
Agreement with respect to each Disbursement other than the
initial Disbursement, unless OPIC otherwise agrees in writing, the
obligation of OPIC to effect any Disbursement of the OPIC Loan is
subject to the prior fulfillment, to OPIC's satisfaction in its
sole discretion, of the following conditions precedent:
(a) No Default; Representations and Warranties.
Immediately before and after giving effect to such Disbursement:
(i) no Construction Credit Default or
Construction Credit Event of Default shall have occurred and
be continuing;
(ii) all representations and warranties made by
the Company and any Obligor which is an Affiliate of the
Company and contained herein (other than the representations
made pursuant to Section 3.01(g)(ii)) or in the other
Project Documents (other than the Insurance Contracts,
Governmental Approvals or any other agreement, commitment or
understanding referred to in subsection (xiii) of the
definition of "Operating Agreements" in Schedule X) shall be
true and correct in all material respects with the same
effect as though such representations and warranties had been
made on and as of the date of such Disbursement, except where
expressed to be made only as of an earlier date (it being
understood that the representations and warranties made by the
Company in Section 3.01 of this Agreement shall not be deemed
to be made only as of an earlier date
notwithstanding that the preamble to such Section 3.01
states that such representations and warranties are made as of
the OPIC Credit Date);
(iii) the following representations and warranties
shall be true and correct in all material respects with the
same effect as though such representations and warranties had
been made on and as of the date of such Disbursement or on and
as of the date of the issuance of such Drawing
Approval, as the case may be: (A) except as fully reflected
in each financial statement delivered prior to such
Disbursement pursuant to Sections 5.01(a)(i) and
5.01(a)(ii), there shall have been, as of the date of such
financial statement, no liabilities or obligations with
respect to the Company of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether or not
due) which, either individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect and (B)
the Company does not know of any reasonable basis for the
assertion against the Company of any liability or
obligation of any nature whatsoever that is not fully
reflected in the financial statements delivered pursuant to
Sections 5.01(a)(i) and 5.01(a)(ii) which, either
individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect.
(b) Security. The Security, in form and substance
satisfactory to OPIC and the Collateral Agent, shall have been duly
created, perfected and, where appropriate, registered, to create a
first priority security interest and charge over the Collateral in
existence at the date of such Disbursement.
Without limitation to the preceding sentence, the Company shall
have duly authorized, executed and delivered or, as the case may
be, provided:
(i) acknowledgment copies of proper financing
statements or other instruments duly filed under the Applicable Law
of each jurisdiction as may be necessary or, in the reasonable
opinion of OPIC and the Collateral Agent, desirable to perfect the
charges and security interests purported to be created by the
Security Documents;
(ii) certified copies of requests for information
or copies, or equivalent reports, listing the financing statements
and instruments referred to in clause (i) above and all other
effective financing statements that name the Company as debtor and
that are filed in the jurisdictions referred to in said clause (i),
together with copies of such other financing statements and
instruments (none of which shall cover the Collateral except to the
extent evidencing Construction Period Permitted Liens);
(iii) evidence of the completion of all other
recordings and filings of, or with respect to, the Security
Documents as may be necessary or, in the reasonable opinion of OPIC
and the Collateral Agent, desirable to perfect the security
interests purported to be created by the Security Documents; and
(iv) evidence that all other actions necessary or,
in the reasonable opinion of OPIC and the Collateral Agent,
desirable to perfect and protect the security interests purported
to be created by the Security Documents have been taken.
(c) Consents and Approvals. There shall have been
obtained, or there shall have been made arrangements, satisfactory
to OPIC, for obtaining, in addition to the Project Documents, all
other governmental, corporate, creditors', shareholders' and other
necessary licenses, approvals or consents for: (i) the financing by
OPIC under this Agreement; (ii) the carrying on of the business of
the Company as it is presently carried on and is contemplated to be
carried on; (iii) the carrying out of the Project; (iv) the due
execution and delivery of, and performance under, each Project
Document which has been entered into at the time of such
Disbursement, the Security, and any documents in implementation of
any thereof; and (v) the remittance to the Collateral Agent and by
the Collateral Agent to the Secured Parties or their respective
assignees, in Dollars, of all monies payable pursuant to each
Project Document which has been entered into at the time of such
Disbursement, and any documents in implementation of any thereof.
In addition, a true and complete copy of each material license,
approval or consent described in this Section 4.02(c) shall have
been delivered by the Company to OPIC.
(d) No Project Document Default; Governmental Approvals.
Each of the Project Documents which has been entered into or which
is required to have been entered into at the time of such
Disbursement shall be in full force and effect and no material
breach or default shall have occurred under any such Project
Document. No event of Force Majeure (as defined in any of the
Energy Conversion Agreement, the Supply Contract and the
Construction Contract) shall have occurred which has had, or in the
reasonable judgment of OPIC is reasonably likely to have, a
Material Adverse Effect. No events shall have occurred pursuant to
which a claim could be made by the Administrative Agent on behalf
of the Lenders under the Eximbank Guarantee Agreement.
(e) Limitations on Indebtedness. Immediately before and
after giving effect to such Disbursement or to the drawing under
the Letters of Credit which is the subject of such Drawing
Approval, as the case may be, the sum of (i) the principal amount
of all Loans outstanding (including, in the case of a Drawing
Approval, the amounts to be reimbursed by the Lenders to the
Issuing Bank in connection with a drawing under any of the
Letters of Credit which is the subject of such Drawing Approval)
and (ii) the principal amount of all Disbursements of the OPIC Loan
outstanding shall not exceed $231,834,859.
(f) Energy Conversion Agreement. OPIC shall have
received from the Company a certification, in form and substance
satisfactory to OPIC, signed by an authorized representative of the
Company and expressed to be effective as of the date of the
relevant Disbursement or as of the date of issuance of the relevant
Disbursement, stating that the Company is in compliance in all
material respects with all provisions of the Energy Conversion
Agreement.
(g) No Material Adverse Effect. Since the OPIC Credit
Date, no event or events shall have occurred which has had or is
reasonably likely to have a Material Adverse Effect.
(h) Costs; Construction Progress. OPIC and the
Independent Engineer shall have received from the Company a
certificate in the form of Schedule 5.2(h) to the Lender Credit
Agreement signed by an authorized representative of the Company and
expressed to be effective on the date of the relevant OPIC
Disbursement that (i) the costs and expenses theretofore incurred
by the Company and to be incurred by the Company prior to the
latest date on which the Maturity Date can be expected to occur
will not exceed $320,318,000; (ii) the date of the Eximbank
Disbursement is likely to occur on or before the Date Certain; and
(iii) the sum of (A) the aggregate Financed Portion of the costs
incurred by the Company after January 1, 1993 and before the
Maturity Date for the purchase in the United States and export to
the Philippines of the Items and (B) the aggregate Local Cost
Financed Portion of the costs incurred by the Company for the
purchase in the Republic of the Local Cost Items and (C) the
aggregate IDC Financed Portion of IDC will (x) not exceed the
difference between (1) the Total Commitment and (2) 100% of the
Guarantee Exposure Fee and (y) not be less than the difference
between (1) the Total Commitment less the OPIC Commitment and (2)
100% of the Guarantee Exposure Fee.
(i) Insurance. OPIC shall have received a certificate
from the Insurance Consultant stating that the insurance policies
required pursuant to Section 5.01(c) hereof to be in effect on the
date of such Disbursement or on the date of issuance of such
Drawing Approval are in full force and effect.
(j) Fees and Expenses. The Company shall have paid or
arranged for payment (to the extent arrangement for payment out of
Utilizations, Disbursements of the OPIC Loan, Progress Equity
Contributions or Progress Subordinated Loans are permitted) of all
fees, expenses and other charges then payable by it under this
Agreement and the Lender Credit Agreement.
(k) Eximbank Certificate. OPIC shall have received (i)
with respect to each Disbursement, a certificate from
Eximbank, substantially in the form of Exhibit 3 to Annex B-1,
Exhibit 3 to Annex B-2 or Exhibit 2 to Annex B-3, as the case may
be, to the Lender Credit Agreement, which has been fully
completed and signed by Eximbank and which indicates that all of
the proceeds of the corresponding Loan, if any, under the Lender
Credit Agreement will be eligible for Eximbank support and
(ii) with respect to the issuance of the Letter of Credit, a
certificate from Eximbank, in the form of Exhibit 5 to Annex B-1 or
Exhibit 5 to Annex B-2, as the case may be, to the Lender Credit
Agreement, which has been fully completed and signed by Eximbank
and which indicates that such Letter of Credit is in form and
substance satisfactory to Eximbank and that 100% of all payments
under such Letter of Credit will be eligible for
Eximbank support.
(l) Lien Waivers. OPIC shall have received (i) a
certificate executed by the Construction Contractor and/or the
Construction Supplier, as appropriate, to the effect that (A) all
subcontractors contracting directly with the Construction
Supplier or the Construction Contractor whose subcontract is valued
at more than $200,000 or who can claim a Lien of more than $200,000
have been paid to the extent that such amounts are then due or that
payment is subject to a good faith contest which is being
diligently pursued by the Construction Contractor and/or the
Construction Supplier, as appropriate (provided that such contest
is being pursued in a manner and on a basis acceptable to the
Company and OPIC) or (B) such subcontractors who can claim a Lien
of more than $200,000 (for which a prior Utilization or a prior
issuance of a Drawing Approval or a prior approval of an
Application for Funding for a Disbursement of the OPIC Loan, a
Progress Subordinated Loan or a Progress Equity Contribution has
been made who have not been paid directly by the Collateral Agent)
have been paid or, in lieu thereof, (ii) conditional Lien waivers
for the Disbursement requested and unconditional Lien releases for
all prior Disbursements of the OPIC Loan,
Utilizations and Drawing Approvals and Applications for Fundings
from such subcontractors or (iii) in lieu thereof, invoices showing
full payment of amounts owed to those subcontractors referred to in
clause (i) above.
(m) Other Conditions. The obligation of OPIC to make
any Disbursement shall also be subject to the conditions that:
(i) the Company shall have the corporate
authority to borrow the amount requested to be disbursed;
(ii) the amount requested to be disbursed shall be
within the Company's available borrowing power; and
(iii) after giving effect to such Disbursement, the
Company shall not be in violation of its Articles of
Incorporation or By-Laws, any provision contained in any
document to which the Company is a party (including this
Agreement) or by which the Company is bound, or any
Applicable Law directly or indirectly limiting or otherwise
restricting the Company's borrowing power or authority or
its ability to borrow (including, without limitation, any
Applicable Law requiring the maintenance of a debt to equity
ratio).
(n) Certificates. The Company shall have delivered to
OPIC a certification, signed by a Financial Officer of the
Company and expressed to be effective as of the date of the
relevant Disbursement, with respect to the satisfaction of the
foregoing conditions of this Section 4.02, which certification
shall be substantially in the form of Exhibit A to Schedule 2.2(a)
to the Lender Credit Agreement. Such certification shall also
include: (i) such other evidence as to the proposed utilization of
the proceeds of the relevant Disbursement, and the utilization of
the proceeds of any prior Disbursement as OPIC shall reasonably
require; and (ii) if the Administrative Agent acting on the
instructions of the Required Secured Parties shall so reasonably
request, a legal opinion or opinions, in form and substance
satisfactory to them, of counsel acceptable to the Administrative
Agent, with respect to any matters incident to the Disbursement.
(o) Lender Credit Agreement. The Lenders shall have
made available to the Company pursuant to the Lender Credit
Agreement the amount of the utilization or issuance of a Drawing
Approval, as the case may be, corresponding to such Disbursement if
and as requested in the relevant Application for Funding.
(p) No Change in Contract Price. Without limiting
Section 5.01(w)(iii) hereof, the contract price set forth in the
Supply Contract and the Construction Contract shall not have been
amended, changed or otherwise modified in any way which would
increase the Company's obligations by an amount exceeding $10
million.
SECTION 4.03 No Waivers. (a) No course of dealing or
waiver by OPIC in connection with any Disbursement under this
Agreement shall impair any right, power or remedy of OPIC with
respect to any other condition of Disbursement or be construed to
be a waiver thereof; nor shall the action of OPIC in respect of any
Disbursement affect or impair any right, power or remedy of OPIC in
respect of any other Disbursement.
(b) Unless otherwise notified to the Company by OPIC and
without prejudice to the generality of subsection (a) above, the
right of OPIC to require compliance with any condition under this
Agreement which may be waived by OPIC in respect of any
Disbursement is expressly preserved for the purposes of any
subsequent Disbursement.
(c) The acceptance of the benefits of each
Disbursement shall constitute a representation and warranty by the
Company to OPIC that all the conditions specified in this Article
4 have been satisfied (unless waived in accordance with this
Agreement) as of that time. All the certificates, legal opinions,
bylaws, articles of incorporation and other documents and papers
referred to in this Article 4, unless otherwise
specified, shall be delivered to OPIC at the addresses specified in
Section 7.05 of this Agreement, or at such other office as any of
them may hereafter designate in writing to the other parties
hereto, and shall be satisfactory in form and substance to OPIC.
ARTICLE V
COVENANTS
Unless OPIC otherwise agrees in writing, so long as the
OPIC Commitment or any portion of the OPIC Loan shall remain
outstanding and until the occurrence of the Construction
Financing Termination Date, the Company covenants and agrees as
follows:
SECTION 5.01. Construction Period Covenants.
(a) Information Covenants. The Company shall furnish to
the Administrative Agent and OPIC:
(i) Quarterly Financial Statements of Company. As
soon as available but, in any event, within 60 days after the close
of each of the first three quarterly accounting periods in each
Fiscal Year,
(A) complete unaudited statements of financial
condition of the Company as at the end of such quarterly
period with related statements of income and retained
earnings and statements of changes in financial position for
such quarterly period and for the elapsed portion of the
Fiscal Year ended with the last day of such quarterly
period, in each case setting forth comparative figures for
the related periods in the prior Fiscal Year, subject to
normal year-end audit adjustments, together with a
certificate executed by the chief financial officer of the
Company, all of which shall be prepared in accordance with
generally accepted accounting principles as in effect from
time to time in the United States and otherwise in form
satisfactory to the Required Secured Parties;
(B) a report on any event or condition which has
had or which is reasonably likely to have a Material Adverse
Effect; and
(C) a statement, in form reasonably satisfactory
to OPIC, of all financial transactions in such Quarter
between the Company and any Affiliate of the Company,
including a certification of a Financial Officer of the
Company that such transactions were on ordinary commercial
terms negotiated on an arms-length basis.
(ii) Annual Financial Statements of Company. As
soon as available but, in any event, within 120 days after the
close of each Fiscal Year, the following, all in form
satisfactory to the Required Secured Parties: (A) statements of
financial condition of the Company as at the end of such Fiscal
Year with the related statements of income and retained earnings
and statements of changes in financial position for such Fiscal
Year, in each case setting forth comparative figures for the
preceding Fiscal Year and certified by the Auditors (all such
statements being in agreement with the Company's books of account
and prepared in accordance with Philippine generally accepted
accounting principles consistently applied), (B) a report of the
Auditors stating that in the course of its regular audit of the
financial statements of the Company, which audit was conducted in
accordance with Philippine generally accepted auditing standards,
the Auditors obtained no knowledge of any Construction Credit
Default or Construction Credit Event of Default which has
occurred and is continuing or, if in the opinion of the Auditors
such a Construction Credit Default or Construction Credit Event of
Default has occurred and is continuing, a statement as to the
nature thereof and (C) consolidating statement of financial
condition of the Company at the end of such Fiscal Year with
related statements of income and retained earnings and statement of
changes in financial position for such Fiscal Year, in each case
setting forth comparative figures for the preceding Fiscal Year all
reflecting United States generally accepted accounting principles
consistently applied and certified by the Chief
Financial Officer of the Company.
(iii) Other Financial Statements. Within 30 days
after the filing of the same with the United States Securities and
Exchange Commission, copies of the annual and quarterly financial
statements (consisting of a balance sheet and the related
statements of income, equity and cash flows) of CECI, Peter Kiewit
Sons', Inc. and KDG, certified by the chief
financial officer of CECI, Peter Kiewit Sons', Inc. or KDG, as the
case may be, and, within 120 days of the end of each fiscal year,
copies of the most recent unaudited financial statements
(consisting of a balance sheet and the related statements of
income, equity and cash flows) if audited financial statements are
not otherwise available of CE Mahanagdong, Kiewit Energy, KEC, KIC,
GICO, CBE, KCGI, CE International, the Construction Contractor, the
Construction Supplier and BHCO, certified by the chief financial
officer of CE Mahanagdong, Kiewit Energy, KEC, KIC, GICO, CBE,
KCGI, CE International, the Construction Contractor, the
Construction Supplier or BHCO, as the case may be, and within 60
days after the end of each of the first three fiscal quarters of
each fiscal year, copies of the unaudited quarterly financial
statements (consisting of a balance sheet and the related
statements of income, equity and cash flows) of CE Mahanagdong,
Kiewit Energy, KIC, KEC, GICO, CBE, KCGI, CE International, the
Construction Contractor, the Construction Supplier and BHCO,
certified by the chief financial officer of CE Mahanagdong, Kiewit
Energy, KEC, KIC, GICO, CBE, KCGI, CE International, the
Construction Contractor, the Construction Supplier or BHCO, as the
case may be, that such financial statements are true and correct
and have been prepared in accordance with United States generally
accepted accounting principles (subject to normal year-end
adjustments); provided, however, that so long as CE Mahanagdong and
Kiewit Energy engage in no business other than the holding of their
respective direct or indirect ownership interests in the Company,
the Company shall be deemed to have complied with this Section
5.01(a)(iii) with respect to the financial statements of CE
Mahanagdong or Kiewit Energy, as the case may be, if on each date
the Company would otherwise be required to furnish financial
statements of any such Persons pursuant to this Section
5.01(a)(iii), the Company instead furnishes a certificate of the
chief financial officer of each such Person certifying that such
Person is engaged in no other business provided further, that the
Company shall have no obligation hereunder to provide to OPIC the
financial statements of any of KIC, KEC, GICO, CBE, KCGI, the
Construction Contractor, the Construction Supplier or BHCO after
such entity is no longer an Obligor.
(iv) Management Letters. Promptly after the
Company's receipt thereof, a copy of any "management letter" or
other similar communication received by the Company from the
Auditors in relation to the Company's financial, accounting and
other systems, management and accounts.
(v) Annual Operating Budget. As soon as
available but, in any event, within 60 days prior to (i) the
Operation Date and, thereafter, (ii) the commencement of each
Fiscal Year, an annual operating budget (the "Annual Budget")
(including budgeted statements of income and sources and uses of
cash and balance sheets) prepared by the Company and accompanied by
a statement of the chief financial officer of the Company to the
effect that, to the best of his or her knowledge, the budget is a
reasonable estimate for the period covered thereby. The first
Annual Budget shall cover the period from the Operation Date
through the end of the Fiscal Year in which the Operation Date
occurs and, if such period consists of less than six (6) months,
for the immediately succeeding Fiscal Year. Each Annual Budget
shall contain complete, fair and accurate estimates (by principal
components) of Sales Proceeds, Operating and
Maintenance Costs and Debt Service for each Month covered by such
Annual Budget based on the Company's best projections at such time.
Unless otherwise consented to by the Administrative Agent (or, if
a change therein, in the reasonable judgment of the Administrative
Agent, has had or is reasonably likely to have a Material Adverse
Effect, the Required Secured Parties), which consent shall not be
unreasonably withheld, the Annual Budget from year to year shall be
based on the same format as the Base Case Forecast and be
maintained on the same basis and provide sufficient detail to
permit a meaningful comparison. The
Administrative Agent and the Independent Engineer shall have thirty
(30) days from the date each Annual Budget is submitted by the
Company to approve such budget, which approval shall not be
unreasonably withheld. If the Administrative Agent and the
Independent Engineer do not approve an Annual Budget, the
Administrative Agent shall notify the Company in writing of the
items which are disapproved and the reason for such disapproval.
Until such Annual Budget is so approved, the Annual Budget most
recently in effect shall continue to apply, except that any items
of the then proposed Annual Budget that have been approved shall
also be given effect. From time to time, but not more frequently
than once per Quarter, the Company may propose amendments to an
Annual Budget, and the Administrative Agent and the Independent
Engineer may reject such proposal within fifteen (15) Business Days
from the date the Company submits such proposal if in their
reasonable judgment such amendment is not reasonably necessary or
advisable for operation of the Project and, if no such rejection is
made, subject to the following sentence, such amendments shall
become effective. If in the reasonable judgment of the
Administrative Agent, any such amendment proposed by the Company
has had or is reasonably likely to have a Material Adverse
Effect, the Administrative Agent will so notify the Company in
writing and promptly provide such proposal to the Lenders and OPIC
and the Required Secured Parties shall have ten (10) Business Days
after their receipt of such proposal to reject the same in their
reasonable judgment and, if no such rejection is made, such
amendments shall become effective. Not later than three (3)
Business Days after the effective date of each Annual Budget and of
any amendment thereto, the Company shall provide a copy of the same
to the Collateral Agent.
(vi) Officer's Certificates. At the time of the
delivery of the financial statements provided for in Section
5.01(a)(i) and Section 5.01 (a)(ii), a certificate substantially in
the form of Schedule 6.1(f) of the Lender Credit Agreement of a
Financial Officer of the Company to the effect that, to the best of
his knowledge, no Construction Credit Default or Construction
Credit Event of Default has occurred and is continuing or, if any
such Construction Credit Default or Construction Credit 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.
(vii) Notice of Default, Litigation, etc.
(1) Immediately upon an officer of the Company obtaining actual
knowledge thereof, notice substantially in the form of Schedule
6.1(g) to the Lender Credit Agreement, by facsimile, cable or
telex, of the occurrence of any Construction Credit Default or
Construction Credit Event of Default or any breach or default
hereunder or under any of the other Project Documents by the
Company or any other party thereto, specifying the nature thereof
and the action which the Company is taking and proposes to take
with respect to the same; and (2) promptly, and in any event within
20 Business Days after an officer of the Company obtains actual
knowledge thereof, notice of:
(A) any litigation or governmental proceeding
pending (x) against the Company (i) involving a claim in excess of
$500,000 (or the equivalent thereof in other currency) or (ii)
which is reasonably likely to have a Material Adverse Effect or (y)
with respect to any Project Document;
(B) any proposal by any Governmental Authority to
acquire compulsorily the Company, any of the Collateral or a
substantial part of the Company's business or assets;
(C) any substantial dispute between (x) the Company
or any Sponsor and any Governmental Authority, (y) the Company and
any Obligor and any other Obligor, in each case relating to the
Project;
(D) any change in the authorized officers or
directors referred to in Section 4.01(d) above, giving certified
specimen signatures of any new officer or director so appointed
and, if requested by the Administrative Agent, satisfactory
evidence of the authority of such new officer or director;
(E) any actual or proposed termination, rescission,
discharge (otherwise than by performance), amendment or waiver or
indulgence under, any material provision of any Project Document
(other than by a Lender);
(F) any material notice or correspondence received
or initiated by the Company relating to a Governmental Approval or
other license or authorization necessary for the performance by it
of its obligations under the Project Documents;
(G) any Lien (other than a Construction Period
Permitted Lien) becoming enforceable over any of the Company's
assets;
(H) any proposed material change in the nature or
scope of the Project or the business or operations of the company
and any one or more events, conditions or circumstances (including
without limitation Force Majeure as defined in Sections 13.1(a) and
13.1(b) of the Energy Conversion Agreement) that exist or have
occurred which are reasonably likely to have a Material Adverse
Effect;
(I) the occurrence of any event or act which could
reasonably qualify as a Political Risk (as defined in the Eximbank
Guarantee Agreement);
(J) and/or copies of: (x) each funding waiver
request filed with respect to any Pension Plan and all
communications received or sent by the Company or any ERISA
Affiliate with respect to such request; and (y) the failure of the
Company or any ERISA Affiliate to make a required installment or
payment under Section 412 of the Code, Section 302 of ERISA or the
terms of any Pension Plan by the due date (other than the quarterly
contributions described in Section 302(e) of ERISA or Section
412(m) of the Code);
(K) the occurrence of any Termination Event which
has had or is reasonably likely to result in a Material Adverse
Effect in connection with any Pension Plan or any trust thereunder,
specifying the nature thereof, what action the Company or the ERISA
Affiliate has taken, is taking or proposes to take with respect
thereto and, when known, any action taken or threatened by the
Internal Revenue Service, the Department of Labor or the PBGC with
respect thereto;
(L) and copies of: (x) all notices of the PBGC's
intent to terminate any Pension Plan or to have a trustee appointed
to administer any Pension Plan; and (y) all notices from a
Multiemployer Plan sponsor concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA;
(M) the filing of an intent to terminate any
Pension Plan under a distress termination within the meaning of
Section 4041(c) of ERISA; or
(N) and a copy of each agreement, commitment or
understanding (whether or not subject to the approval of OPIC, the
Administrative Agent or the Required Secured Parties pursuant to
any other provision of this Agreement) executed by or on behalf of
the Company (excluding (x) the agreements set forth in clauses (i)
through (xi) of the definition of the term "Operating Agreements"
in Schedule X hereto but including replacements thereof and (y)
agreements, commitments or understandings entered into in the
ordinary course of business which are required to perform the O&M
Parameters and which (1) do not, individually, create a financial
obligation of the Company in excess of $250,000 and (2) would not,
in the aggregate, result in the expenditure of funds in any Fiscal
Year in excess of the amount budgeted for Operating and Maintenance
Costs (including the Contingent O&M Amount) in the then-current
Annual Budget for such Fiscal Year) in connection with the Project,
which notice shall specifically refer to this Section
5.01(a)(vii)(2)(N) and request that the Administrative Agent
confirm whether or not such agreement, commitment or understanding
shall constitute an Operating Agreement, in which case such
agreement, commitment or understanding shall only constitute an
Operating Agreement if the Administrative Agent, in consultation
with Eximbank and OPIC, shall designate it as an Operating
Agreement in a writing delivered to the Company within 60 days of
the Administrative Agent's receipt thereof.
(viii) Implementation Reports. Prior to the date of
the Eximbank Disbursement, within 21 days of the end of each Month,
a report, in a form satisfactory to the Administrative Agent and
the Independent Engineer, on the implementation and progress of the
Project, including (1) any factors materially and adversely
affecting or which are reasonably likely to materially and
adversely affect the carrying out of the Project and (2) copies of
any reports received by the Company from any outside technical
consultant identifying any matter that is of material adverse
significance to the construction or operation of the Plant.
(ix) Operation Date and Eximbank Funding
Condition Notices. The Company shall notify OPIC, within two
Business Days, of the occurrence of each of (i) the Operation Date
and (ii) the satisfaction of the Eximbank Funding
Conditions.
(x) Accounting Principles. All accounting
calculations in connection with determining compliance with the
covenants set forth in this Section 5.01 shall be made in
accordance with generally accepted accounting principles as in
effect in the United States from time to time.
(xi) Other Information. From time to time, such
other information or documents (financial or otherwise) as OPIC or
the Administrative Agent on behalf of the Secured Parties may
reasonably request including, without limitation, (1) advance
notice of the commencement of all performance tests under the
Construction Contract, (2) if the Completion Date (as defined in
the Energy Conversion Agreement) shall have been deemed to have
occurred pursuant to Section 4.9(b) of the Energy Conversion
Agreement, information as to the circumstances giving rise to the
same, the action(s) which the Company (and, to the extent known by
the Company, PNOC-EDC) is taking or proposes to take with respect
to the same and periodic reports of the status of such actions and
the implementation thereof, (iii) any plan or report prepared by or
for PNOC-EDC (as to which the Company shall have reasonable access
and shall make a good faith effort to obtain) or the Company with
respect to hazardous waste disposal relating to the Project and
(iv) such other information or documents (financial or otherwise)
as the Administrative Agent, on behalf of the Secured Parties, or
OPIC, may reasonably request.
(b) Books, Records and Inspections; Accounting and Audit
Matters; Plans. (i) The Company will keep proper books of record
and account adequate to reflect truly and fairly the financial
condition and results of operations of the Company (including the
progress of the Project) in which full, true and correct entries in
conformity with Philippine generally accepted accounting principles
consistently applied and all Applicable Laws shall be made of all
dealings and transactions in relation to its business and
activities. The Company will permit officers and designated
representatives of OPIC, the Administrative Agent, the Collateral
Agent or the Independent Engineer to visit and inspect, under
guidance of officers of the Company, any of the properties of the
Company, and to examine and make copies of the books of record and
account of the Company and discuss the affairs, finances and
accounts of the Company with, and be advised as to the same by, its
officers, all at such reasonable times and intervals and to such
reasonable extent as OPIC, the Administrative Agent or the
Collateral Agent may request.
(ii) The Company shall (i) authorize the Auditors
to communicate directly with the representatives of OPIC, the
Administrative Agent and the Independent Engineer at reasonable
intervals, but if a Construction Credit Default or Construction
Credit Event of Default has occurred or is continuing, then at any
time, regarding the Company's accounts and operations and (ii)
furnish to OPIC and the Administrative Agent a copy of such
authorization, which shall be in the form of Schedule 6.2(b) to the
Lender Credit Agreement; provided, however, that the Administrative
Agent will (i) provide the Company with copies of any
correspondence between such representatives and the Auditors; and
(ii) provide the Company with reasonable notice of any meeting
between such representatives and the Auditors, with a description
of the matters to be discussed at such meeting, and allow the
Company to attend any such meeting.
(iii) The Company will at all times cause a
complete set of the current and (when available) as-built plans
(and all supplements thereto) relating to the Plant to be
maintained at the Plant or the Construction Contractor's office for
inspection by OPIC, the Independent Engineer and the
Administrative Agent.
(c) Maintenance of Property; Insurance. (i) The Company
will (A) keep all property useful and necessary (other than
property that has become obsolete) in its business in good working
order and condition and (B) keep its present and future properties
and business insured with financially sound and reputable insurers
satisfactory to the Administrative Agent against loss or damage in
such manner and to the same extent as required in Section A of
Schedule 6.3 to the Lender Credit Agreement until the expiration of
such policies and immediately thereafter as required in Section C
of Schedule 6.3 to the Lender Credit Agreement, in each case
pursuant to policies naming the Collateral Agent and the Company
jointly as sole loss payees thereunder, and containing cut-through
endorsements to reinsurers and provisions requiring that the
Collateral Agent, the Administrative Agent and OPIC shall receive
notices of extensions or renewals of insurance policies and notice
of any non-payment of premiums and that such policy may only be
canceled for non-payment of premiums, if cancelable, upon sixty
(60) days prior notice to the Collateral Agent, the Administrative
Agent and OPIC. On or prior to the dates required pursuant to
Section A or Section C, as the case may be, of Schedule 6.3 to the
Lender Credit Agreement, the Company will submit to the
Administrative Agent, OPIC and the Insurance Consultant
certificates of insurance relating to the insurances required by
Section A and Section C of Schedule 6.3 to the Lender Credit
Agreement (together with copies of such insurance policies if then
available) from the Company's insurers or insurance brokers
(including confirmation of premium payments then due), which
certificates shall indicate the properties insured, amounts and
risks covered, names of the beneficiaries, expiration dates, names
of the insurers and special features of the insurance policies.
The Company shall provide the Administrative Agent, OPIC and the
Insurance Consultant with copies of insurance policies relating to
the insurances required by Section A and Section C of Schedule 6.3
to the Lender Credit Agreement on or prior to the date such
policies are required to be delivered to the Administrative Agent
in accordance with such Section A or Section C, as the case may be,
such policies to be in form and substance, and issued by companies,
satisfactory to OPIC in consultation with the Insurance Consultant.
Prior to the date of the Eximbank Disbursement, the Company shall
provide OPIC with copies of the insurance policies relating to the
insurances required by Section C of Schedule 7.03 to the Eximbank
Credit Agreement, such policies to be in form and substance, and
issued by companies, satisfactory to OPIC (in consultation with the
Insurance Consultant).
(ii) The Company will cause the Construction
Contractor or the Construction Supplier, as applicable, to
(i) keep the insurances described in Section B of Schedule 6.3 to
the Lender Credit Agreement with financially sound and reputable
insurers satisfactory to OPIC against loss or damage in such manner
and to the same extent as so described, in the case of any
insurance required under subsection (c) thereof pursuant to
policies containing cut-through endorsements to reinsurers and
provisions requiring that the Collateral Agent, the Administrative
Agent and OPIC shall receive notices of any extensions and renewals
of insurance policies and notices of any non-payment of premiums
and that such policy may only be canceled (x) as provided in
Section B of Schedule 6.3 to the Lender Credit Agreement or (y), if
not therein provided, for non-payment of premiums, if cancelable,
upon thirty (30) days prior written notice to the Collateral Agent,
the Administrative Agent and OPIC. On or prior to the dates
required pursuant to Section B of Schedule 6.3 to the Lender Credit
Agreement, the Company will cause the Construction Contractor or
the Construction Supplier, as applicable, to submit to the
Administrative Agent and OPIC certificates of insurance relating to
the insurances required by Section B of Schedule 6.3 to the Lender
Credit Agreement (together with copies of such insurance policies
if then available) from the insurers or insurance brokers for such
insurances (including confirmation of premium payments then due),
which certificates shall indicate the type of insurance, amounts
and risks covered, names of the beneficiaries, expiration dates,
names of the insurers and special features of the insurance
policies. The Company will cause the Construction Contractor or
the Construction Supplier, as applicable, to provide the
Administrative Agent and OPIC with copies of insurance policies
relating to the insurances described in Section B of Schedule 6.3
to the Lender Credit Agreement on or prior to the date such
policies are required to be delivered to the Administrative Agent
in accordance with such Section B of Schedule 6.3 to the Lender
Credit Agreement, such policies to be in form and substance, and
issued by companies, satisfactory to OPIC in consultation with the
Insurance Consultant. The Company will cause the Construction
Contractor to establish the ECA Construction Performance Bond in
favor of PNOC-EDC on or prior to the date which is ten (10)
calendar days after the Effectivity Date (as defined in the Energy
Conversion Agreement) and will deliver evidence, in the form of the
certificate attached as Exhibit F hereto, of PNOC-EDC's acceptance
of the ECA Construction Performance Bond within fifteen (15)
calendar days after the same is so established.
(iii) In the event any insurance (including the
limits or deductible thereof) hereby required to be maintained by
the Company or for which the Company is responsible, or required to
be maintained by the Construction Supplier or the Construction
Contractor is responsible, other than insurance required by
Applicable Law to be maintained, shall not be available on
commercially reasonable terms, in the commercial insurance market,
the Administrative Agent, prior to the Construction Financing
Termination Date, or, thereafter, OPIC, shall not unreasonably
withhold its consent to waive such requirement to the extent the
maintenance thereof is not so available; provided, however, that
(i) the Company shall first request any such waiver in writing,
which request shall be accompanied by a written report prepared by
the Company's insurance adviser certifying that such insurance is
not reasonably available and commercially feasible in the
commercial insurance market for electric generating plants of
similar type, capacity and with respect to catastrophic perils,
located in Southeast Asia, and (ii) the Insurance Consultant shall
confirm in writing the conclusions contained in such report. The
failure at any time to satisfy the condition to any waiver of an
insurance requirement set forth in the proviso to the preceding
sentence shall not impair or be construed as a relinquishment of
the Company's ability to obtain a waiver of an insurance
requirement pursuant to the preceding sentence at any other time
upon satisfaction of such conditions.
(iv) The provisions of this Section 5.01(c) shall be
deemed to be supplemental to, but not duplicative of, the
provisions of any of the Security Documents that require the
maintenance of insurance. In the event that any insurance
whatsoever (other than political risk insurance acquired with
respect to the equity interest in the Company) is purchased, taken
or otherwise obtained by the Company with respect to the Project
otherwise than as required hereunder or if not properly endorsed to
the Collateral Agent and the Company jointly as the sole loss
payees or beneficiaries or otherwise made upon the terms required
in this Section 5.01(c), without limitation to any provision of the
Assignment and Security Agreement, such insurance shall be
considered assigned hereunder to the Collateral Agent with the
right of the Collateral Agent to make, settle, compromise and
liquidate any and all claims thereunder, without prejudice to the
exercise of any other rights and remedies that the Collateral Agent
may have under any of the Financing Documents, or under any
Applicable Law.
(d) Maintenance of Existence; Privileges; Etc. The
Company shall at all times (i) preserve and maintain in full force
and effect (A) its existence as a corporation in good standing
under the laws of the Republic, (B) its qualification to do
business in each other jurisdiction in which the character of the
properties owned or leased by it or in which the transaction of its
business as conducted or proposed to be conducted makes such
qualification necessary and (C) all of its powers, rights,
privileges and franchise necessary for the construction,
ownership, maintenance and operation of the Project and the
maintenance of its existence, (ii) obtain in a timely manner and
maintain in full force and effect (or where appropriate, renew) all
Governmental Approvals (including, without limitation, those under
Environmental Laws) and all other licenses, registrations, waivers,
consents and approvals required at any time or advisable in
connection with the construction, maintenance, ownership or good
and orderly operation of the Project and all licenses, consents and
approvals necessary for the conversion to Dollars of all Peso
amounts (including, without limitation, Peso amounts representing
SFRI Fees) payable under the Energy Conversion Agreement, the PNOC-
EDC Consent Agreement, the Performance
Undertaking and the Republic Consent Agreement and for the
remission to the United States in Dollars of any amounts paid or
payable to the Secured Parties in connection with any Financing
Document or the transactions contemplated thereby or the shares of
common stock of the Company and (iii) preserve and maintain good
and marketable title to its properties and assets (it being
understood that the Company's rights with respect to the Site are
solely as set forth in the Energy Conversion Agreement and the
Accession Undertaking) subject to no Liens other than
Construction Period Permitted Liens.
(e) Compliance with Statutes. The Company will comply
with all Applicable Laws in respect of the conduct of its
business and the ownership, operation and use of its property
(including, without limitation, Applicable Laws relating to
environmental standards and controls and Applicable Laws relating
to the maintenance of debt to equity ratios).
(f) Consultations Regarding Independent Engineer's
Report. The Company agrees that (i) in addition to any other
consultation required hereunder, following the end of each Month,
upon the request of OPIC, the Company shall consult with OPIC
regarding any materially adverse event or condition identified by
the Independent Engineer in the reports provided by the
Independent Engineer for such Month pursuant to the
Representative Agreement, and (ii) in the event the Company fails
to hold such consultations within 30 days of such request, such
event or condition shall be deemed to have a Material Adverse
Effect.
(g) Project Implementation. (i) The Company shall (A)
carry out the Project and conduct its business with due diligence
and efficiency and in accordance with sound engineering, financial,
and business practices and (B) use the proceeds of all Loans only
for the purpose set forth in Section 2.1(d) of the Lender Credit
Agreement and the proceeds of the Disbursements only for the
purpose set forth in Section 2.01(g) hereof all strictly in
accordance with the Construction Budget.
(ii) Without limiting the generality of the
preceding clause (i), the Company will cause the construction of
the Project to be prosecuted and completed with due diligence and
continuity (except for interruptions due to events of Force Majeure
(as defined in any of the Energy Conversion Agreement, the
Construction Contract or the Supply Contract), which the Company
will use its best efforts to mitigate), in a good and workmanlike
manner and in accordance with (A) sound generally accepted building
and engineering practices, (B) all Governmental Approvals and
Applicable Laws applicable to the Site, the Plant or the Company,
(C) the Construction Contract, (D) the Supply Contract, (E) the
Keystone Agreement and (F) the Construction Budget.
(iii) In the Construction Budget, the Company will
allocate $10 million to the payment of Contingency Costs and,
except with the prior written approval of the Required Secured
Parties, will not incur any Contingency Costs if, after giving
effect thereto, the aggregate amount of all Contingency Costs
incurred would exceed $2 million.
(iv) Without limiting the generality of
clause (i) of this Section 5.01(g), the Company will operate and
maintain the Project, and retain and maintain staff sufficient to
operate and maintain the Project, in accordance with the O&M
Parameters and will otherwise comply with and satisfy the
requirements of the O&M Parameters.
(v) The Company shall use reasonable efforts to
become a member of the multi-partite monitoring team described in
paragraph 1 of Section IV of the Environmental Compliance
Certificate; provided, however, that the Company need not become a
member of such monitoring team if, in the reasonable judgment of
the Company, after consultation with its counsel, the
Company's participation in the activities conducted by such
monitoring team could reasonably be expected to expose the
Company to additional liability under Applicable Laws of the
Republic.
(vi) Without limiting the generality of clauses (i)
and (ii) of this Section 5.01(g), in order to avoid a deemed
abandonment under Section 14.2.1 of the Energy Conversion
Agreement, if the conditions precedent specified in clauses (a) and
(b) of Section 13.3 of the Construction Contract have been
satisfied the Company shall, within 15 Business Days prior to the
date of potential abandonment under the Energy Conversion
Agreement, exercise the right granted to it under the last
sentence of Section 13.3 of the Construction Contract and certify
to PNOC-EDC that the Power Plant (as defined in the Construction
Contract) has achieved ECA Completion in accordance with
Section 6.1(b) of the Energy Conversion Agreement.
(vii) The Company shall supply the Independent
Engineer with the information the Independent Engineer reasonably
requires to assess the success of the Performance Tests (as defined
in the Construction Contract) and to assess whether the agreed
testing procedures were followed, and the Company agrees that the
Administrative Agent, after consultation with the Independent
Engineer, shall have the right to cause the Company to, and the
Company shall upon the request of the Administrative Agent, (i)
advise the Construction Contractor of any defects and/or
deficiencies in the Power Plant that were discovered or occurred
during the Performance Tests or withhold the issuance of the
certificate referred to in Section 16.3 of the Construction
Contract that the agreed testing procedures have been followed and
(ii) take any other action that the Company would otherwise be
entitled to take under Sections 13.2 or 16.3 of the
Construction Contract.
(viii) If the Contractor shall fail to stay within 60
days of the schedule for achieving ECA Completion by the Scheduled
Completion Date under circumstances which would give rise to an
obligation of the Contractor under Section 19.1(i) of the
Construction Contract to submit for approval the Modified Schedule
(as defined in Section 19.1(i) of the Construction Contract), the
Company, promptly after obtaining knowledge of such failure, shall
provide written notice of such failure to OPIC and the Independent
Engineer.
(ix) The Company agrees that it shall not
designate an arbitrator or engineering firm under either the
Construction Contract or the Supply Contract with respect to any
disputes thereunder without obtaining the prior written consent of
the Required Secured Parties, such consent not to be
unreasonably withheld.
(x) The Company shall provide OPIC and the
Administrative Agent with notice immediately upon becoming aware
that conditions to enforcing the KCGI Guaranty have been met.
(h) Auditors. In the event that Deloitte, Touche &
Tohmatsu International should cease to be the Auditors of the
Company for any reason, the Company shall appoint and maintain as
the Auditors another firm of independent public accountants
approved by the Required Secured Parties.
(i) Taxes, Duties, Etc. The Company will pay and
discharge all taxes, duties, fees, assessments and other
governmental charges imposed on it, on its income or profits, on
any of its property, or in connection with any payment made under
this Agreement or the execution, issue, delivery, registration,
notarization, assignment or transfer of any interest in or for the
legality, validity or enforceability of any Project Document
(including, without limitation, any documentary, stamp,
registration or similar tax or fee imposed in connection with any
assignment or transfer by OPIC of the OPIC Note, the OPIC Loan or
any of its interests therein or herein pursuant to Section 7.07
hereof) prior to the date on which penalties attach thereto, and
all claims, levies or liabilities (including, without limitation,
claims for labor, services, materials and supplies) for sums which
have become due and payable and which have or, if unpaid, might
become a Lien upon the property of Company (or any part thereof).
The Company shall have the right, however, to contest in good faith
the validity or amount of any such tax, assessment, governmental
charge or claim by proper proceedings timely
instituted, and may permit the taxes, assessments, governmental
charges or claims so contested to remain unpaid during the period
of such contest if (i) the Company diligently prosecutes such
contest, (ii) during the period of such contest the enforcement of
any contested item is effectively stayed, (iii) the Company sets
aside on its books adequate reserves with respect to the contested
items and (iv) such contest does not, in the reasonable discretion
of OPIC, involve a material risk of the sale,
forfeiture or loss of any of the Collateral. The Company will
promptly pay or cause to be paid any valid, final judgment
enforcing any such tax, duty, fee, assessment, other governmental
charge or claim and cause the same to be satisfied of record.
(j) Independent Engineer; Insurance Consultant. The
Company (a) agrees to the Independent Engineer carrying out the
role described in the Representative Agreement, (b) confirms and
agrees to the terms of its Acknowledgment appended to the
Representative Agreement, which terms are incorporated herein by
reference as if fully set forth herein and (c) will ensure that the
Insurance Consultant will be provided with all information
reasonably requested by the Insurance Consultant and will
exercise due care to ensure that any information which it may
supply to the Insurance Consultant is materially accurate and not,
by omission of information or otherwise, misleading in any material
respect.
(k) Performance of Obligations. The Company will
perform all of its material obligations under the terms of each
mortgage, indenture, security agreement and other debt instrument
by which it is bound and will perform (i) all of its obligations
under the terms of the Financing Documents and the Energy
Conversion Agreement and (ii) such of its obligations under the
terms of the Project Documents (other than the Financing
Documents and the Energy Conversion Agreement) the non-
performance of which is reasonably likely to have a Material
Adverse Effect. The Company will maintain in full force and
effect, the Lender Credit Agreement, the Eximbank Credit
Agreement and each of the other Project Documents to which it is a
party. The Company will preserve, protect, defend and enforce the
rights granted to it under or in connection with the Project
Documents. The Company shall take all action within its control
required or in the reasonable opinion of OPIC advisable to ensure
that each of the Project Documents is in proper legal form under
the laws of the Republic or under the respective governing laws
selected in such Project Documents, for the enforcement thereof in
such jurisdictions without any further action on the part of OPIC,
the Administrative Agent, or the Collateral Agent.
(l) Availability and Transfer of Foreign Currency. All
requisite foreign exchange control approvals and other
authorizations, if any, by the Republic or any department or agency
thereof will be kept current and in full force and effect to assure
(i) the ability of the Company to receive, and the ability of any
other party to make, any and all payments to the Company
contemplated by the Project Documents, (ii) the
availability of Dollars to enable the Company to perform all of its
obligations hereunder and under the other Project Documents, as the
case may be, in accordance with their respective terms, and (iii)
the ability of the Company to convert all sums received in Peso
amounts from PNOC-EDC under the Energy Conversion
Agreement and the PNOC-EDC Consent Agreement and from the
Republic under the Performance Undertaking and the Republic Consent
Agreement, including any Peso amounts representing SFRI Fees, from
Pesos to Dollars, immediately upon receipt thereof, and to use the
Dollars as necessary to perform all of its
obligations under the Project Documents, in accordance with their
respective terms.
(m) Name Changes; Etc. The Company shall not change its
name without the prior written consent of the Administrative Agent.
The Company shall not adopt or change any trade name or fictitious
business name without the prior written consent of the
Administrative Agent. The Company shall execute and deliver to
OPIC, the Administrative Agent and the Collateral Agent any
additional documents or certificates necessary or advisable to
reflect any permitted adoption of or change in its name, trade name
or fictitious business name.
(n) Consolidation, Merger, Sale of Assets, Etc. The
Company will not (i) wind up, liquidate or dissolve its affairs or
enter into any transaction of merger or consolidation;
(ii) convey, sell, lease or otherwise dispose of (or agree to do
any of the foregoing at any future time) all or any part of its
property or assets (other than electricity and any chemical by-
products produced by the Plant) except, in the ordinary course of
business, or sales of equipment which is uneconomic or obsolete or
sales of assets that are no longer used by or useful to the Company
and which are promptly replaced (if applicable) by
adequate substitutes of substantially equivalent utility to the
replaced assets; or (iii) purchase or otherwise acquire (in one or
a series of related transactions) any part of the property or
assets of any Person (other than purchases or other acquisitions of
inventory or materials or capital expenditures, each in the
ordinary course of business).
(o) Dividends; Restricted Payments. (i) The Company
will not declare or pay any dividends, or return any capital, to
its stockholders or authorize or make any other distribution,
payment or delivery of property or cash to its stockholders as
such, or redeem, retire, purchase or otherwise acquire, directly or
indirectly, for consideration, any shares of any class of its
capital stock now or hereafter outstanding (or any options or
warrants issued by the Company with respect to its capital
stock), or set aside any funds for any of the foregoing purposes.
(ii) The Company will not (x) make any payment or
delivery of property or cash to any Subordinated Secured Party on
account of any Subordinated Debt Service or any Subordinated
Secured Obligations or (y) redeem, retire, purchase or otherwise
acquire, directly or indirectly, for consideration, any Third Party
Subordinated Indebtedness, Affiliated Subordinated
Indebtedness or Subordinated Secured Working Capital Indebtedness
or (z) set aside any funds for any of the foregoing purposes;
provided, however, that the Company may issue shares of its capital
stock to the Affiliated Funding Entities in accordance with the
terms of the Convertible Subordinated Notes in
connection with the conversion of the Affiliated Subordinated Loans
contemplated by the Convertible Subordinated Notes.
(p) Leases. Except as contemplated by the O&M
Parameters, the Construction Budget or the Annual Budget (in each
case as then in effect), the Company will not enter into any
agreement or arrangement to acquire by lease the use of any
property or equipment of any kind, except leases of operating
equipment and premises under which the aggregate rental payments
(including, without limitation, any property taxes paid as
additional rent) or lease payments do not exceed the equivalent of
$300,000 in any Fiscal Year.
(q) Indebtedness. The Company will not contract,
create, incur, assume or suffer to exist any Indebtedness, except
for the following types of Indebtedness ("Construction Period
Permitted Indebtedness"):
(i) Indebtedness of the Company incurred under the
Financing Documents (including, without limitation, any Required
Subordinated Loans and, subject to subparagraph (viii) below, any
Optional Subordinated Loans but excluding any Unsecured Senior
Working Capital Indebtedness, Subordinated Secured Working Capital
Indebtedness and Third Party Subordinated Indebtedness not
otherwise permitted under subparagraphs (ii), (iii) and (iv) of
this Section 5.01(q)); provided, however, that the Company shall
not borrow any Loans under the Lender Credit Agreement if, after
giving effect thereto, the sum of (x) the aggregate principal
amount of the Loans outstanding under the Lender Credit Agreement
and (y) the aggregate principal amount of the OPIC Loan
outstanding, would exceed $231,834,859;
(ii) subject to subparagraph (viii) of this
Section 5.01(q), Unsecured Senior Working Capital Indebtedness or
Subordinated Secured Working Capital Indebtedness incurred after
the Operation Date, which when aggregated with the Company's
contingent liability arising from the discounting of trade
receivables relating to the sale of chemical by-products would not
exceed at any one time outstanding the equivalent of
$500,000; provided, however, that the $500,000 limit set forth in
the preceding proviso of this Section 5.01(q) shall, from time to
time be increased to an amount not to exceed $1 million to the
extent necessary (A) to permit the Company to make expenditures
required as a result of casualties for which the Company is, in its
good faith judgment insured (provided that (x) the Company promptly
files a claim for reimbursement under such insurance for any such
casualty, (y) the Company uses its best efforts to expedite payment
of such claims and (z) the proceeds from any such insurance shall
first be used to repay any Unsecured Senior Working Capital
Indebtedness incurred pursuant to this clause (A) and any remaining
proceeds shall be deposited in the Contingency Account) or (B) to
take into account timing differences between the Company's working
capital needs and the Company's receipt of Sales Proceeds
(excluding ordinary course payments) reflecting increases in
Operating and Maintenance Costs reimbursable under the Energy
Conversion Agreement by PNOC-EDC; and provided further that any and
all providers of Subordinated Secured Working Capital Indebtedness
shall, prior to the date on which any such Subordinated Secured
Working Capital Indebtedness is incurred, become party to the
Collateral Agency Agreement and deliver to each of OPIC, the
Administrative Agent and the Collateral Agent an opinion of counsel
to such provider of Subordinated Secured Working Capital
Indebtedness reasonably satisfactory to the Administrative Agent
and OPIC to the effect that the Collateral Agency Agreement and the
subordination terms set forth in Schedule 6.17(c) to the Lender
Credit Agreement constitute the binding obligations of such
provider of Subordinated Secured Working Capital Indebtedness
enforceable in accordance with their respective terms (subject to
customary qualifications) and any and all Senior Working Capital
Lenders shall, prior to the date on which any Unsecured Senior
Working Capital Indebtedness is incurred, become party to the
Intercreditor Agreement;
(iii) Indebtedness incurred under the OPIC Funding
Documents;
(iv) Indebtedness incurred after the Operation Date
which is not in a principal amount in excess, in the
aggregate, of $1 million, at any time and is accrued expenses or
current trade accounts payable incurred in the ordinary course of
business, or obligations under trade letters of credit incurred by
the Company in the ordinary course of business, which are to be
repaid in full not more than ninety days after the date on which
such Indebtedness is originally incurred to finance the purchase of
goods by the Company;
(v) Indebtedness for purchase money Liens
incurred after the Operation Date and otherwise permitted under
Section 6.01(r)(iii);
(vi) subject to subparagraph (viii) of this
Section 5.01(q), Contingent Obligations permitted under
Section 5.01(s); and
(vii) Indebtedness constituting lease obligations
permitted under Section 5.01(p) hereof,
(viii) Notwithstanding the foregoing, the Company
may not incur any Optional Subordinated Loans or any Indebtedness
described in subparagraph (ii) of this Section 5.01(q) unless,
prior to the incurrence of any such Indebtedness, the Company shall
have submitted evidence satisfactory to the Required Secured
Parties that such Indebtedness, by its terms, will be converted
into equity of the Company or discharged by other means
satisfactory to the Administrative Agent such that the Company will
be able to satisfy the requirements of all Applicable Laws relating
to the maintenance of debt to equity ratios.
(r) Liens. The Company will not, and will not agree to,
create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets (real, personal or mixed,
tangible or intangible) of the Company, whether now owned or
hereafter acquired, provided that the provisions of this
Section 5.01(r) shall not prevent the creation, incurrence,
assumption or existence of the following Liens (each, a
"Construction Period Permitted Lien"):
(i) Liens for current taxes, assessments and other
governmental charges, the payment of which is not at the time
required pursuant to Section 5.01(i);
(ii) Liens created pursuant to the Security
Documents;
(iii) purchase money Liens on any property acquired
after the Operation Date, provided, however, that (A) any
property subject to such purchase money Lien is acquired by the
Company in the ordinary course of its business and such purchase
money Lien attaches to such property concurrently or within ninety
days after the acquisition thereof; (B) the Indebtedness secured by
such purchase money Lien shall not exceed 90% of the lesser of the
cost or the fair market value as of the time of the acquisition of
the property covered thereby by the Company; (C) each such purchase
money Lien shall attach only to the
property so acquired and fixed improvements thereon; (D) the
Indebtedness secured by all such purchase money Liens shall not, at
any time exceed $2 million; and (E) the Indebtedness secured by
such purchase-money Lien is not otherwise prohibited by the
provisions of Section 5.01(q); and
(iv) mechanics', materialmen's, carrier's and
similar Liens securing obligations incurred in the ordinary course
of business which (A) are not past due or which are the subject of
a Good Faith Contest by the Company (unless during the pendency of
such contest or as a result thereof the Liens of the Security
Documents could reasonably be expected to be materially endangered
or any material portion of the Site, the Plant or the Project could
reasonably be expected to become subject to loss or forfeiture) and
(B) which do not in the aggregate materially detract from the value
of the Site, the Plant or the Project or other assets of the
Company or materially impair the use thereof; provided that upon
the commencement of any proceeding to foreclose or enforce any such
Construction Period Permitted Lien, the Collateral Agent may take
such action as it reasonably deems necessary to protect the Secured
Parties' interests in the Site, the Plant or the Project including,
without limitation, payment of amounts reasonably necessary to
release any such Lien, and in such event the Company shall
reimburse the Collateral Agent upon demand for the cost thereof
together with interest thereon at a rate per annum equal to the
Note Rate then in effect plus 2.00%.
(s) Guarantees. Without limitation to the
restrictions of Section 5.01(q) hereof, the Company will not enter
into any Contingent Obligations, including without
limitation any agreement or arrangement to guarantee or, in any way
or under any condition, become obligated for all or any part of any
Indebtedness or other obligation of another Person, except that,
notwithstanding the restrictions of this Section 5.01(s) or Section
5.01(q) hereof, the Company may enter into (i) the
Accession Undertaking, (ii) Contingent Obligations set forth in the
then-current Construction Budget or Annual Budget and
identified as Contingent Obligations in any such budget so as to
permit a determination of the Company's compliance with this
Section 5.01(s), (iii) an obligation, not secured by any Lien, to
(A) reimburse the ECA Operation Performance Bond Issuer for amounts
paid to PNOC-EDC under the ECA Operation Performance Bond, provided
that such obligation is subordinated to the prior payment in full
of the Construction Financing Secured Obligations on the terms set
forth in Schedule 6.17(c) to the Lender Credit Agreement and the
prior payment in full of the Eximbank Secured Obligations and the
OPIC Secured Obligations on the terms set forth in Schedule 8.05(c)
to the Eximbank Credit Agreement or (B) reimburse CECI and/or KEC,
on the terms set forth in Section 3 of the Funding Agreement, for
amounts advanced by CECI and/or KEC to the Company for purposes of
reimbursing the ECA Operation
Performance Bond Issuer for amounts paid to PNOC-EDC under the ECA
Operation Performance Bond as contemplated by Section 3 of the
Funding Agreement, and (iv) other Contingent Obligations to the
extent that the amount of all such other Contingent
Obligations does not exceed, in the aggregate, $100,000 (or the
equivalent in other currency).
(t) Subsidiaries; Advances, Investments and Loans. The
Company will not form or have any Subsidiaries, lend money or
credit or make deposits (other than deposits in relation to the
payment for goods and equipment in the ordinary course of
business) with or advances (except as specifically required by the
Construction Contract or the Supply Contract) to any Person, or
purchase or acquire any stock, obligations or securities of, or any
other interest in, or make any capital contribution to, any other
Person, except that the Company may use idle cash to acquire and
hold Cash Equivalents solely to give employment to its idle
resources in accordance with the Disbursement Agreement.
(u) Transactions. The Company will not (i) enter into
any transaction or series of related transactions with any Person
other than in the ordinary course of business and on an arm's-
length basis or (ii) establish any sole and exclusive purchasing or
sales agency, or enter into any transaction whereby the
Company might receive less than the full ex-works commercial price
(subject to normal trade discounts) for electricity or pay more
than ex-works commercial price for products of others, provided,
however, that nothing in this Section 5.01(u) shall be deemed to
prohibit the execution, delivery, declaring effective and
performance by the Company of this Agreement, the Energy Conversion
Agreement, the Construction Contract, the Supply Contract, the
Keystone Agreement, contracts contemplated by the O&M Parameters
(including those relating to employee training and secondment of
employees) and the Funding Agreement.
(v) Other Transactions. The Company will not enter into
any partnership, profit-sharing, or royalty agreement or other
similar arrangement whereby the Company's income or profits are, or
might be, shared with any other Person, or enter into any
management contract or similar arrangement whereby its business or
operations are managed by any other Person, provided, however, that
nothing in this Section 5.01(v) shall be deemed to prohibit the
execution, delivery, declaring effective and performance by the
Company of the contracts contemplated by the O&M Parameters and the
Funding Agreement.
(w) Modifications of Articles of Incorporation and By-
Laws; Additional Agreements; Assignments and Modifications of
Agreements; Etc. (i) The Company will not (A) amend or modify its
Articles of Incorporation or By-Laws (other than in
accordance with the terms of the Marubeni Purchase Agreement or in
connection with an issuance of preferred stock permitted under
Section 5.01(bb) hereof) or (B) change its Fiscal Year.
(ii) The Company will not, without the prior written
consent of the Administrative Agent, become a party to any
agreement, contract or commitment (other than (w) the
agreements identified in clauses (i) through (xiii) of the
definition of the term Operating Agreements set forth in
Schedule X hereto, but not replacements thereof, (x) the
Financing Documents, (y) agreements, contracts or commitments
contemplated by the O&M Parameters (including those relating to
employee training, secondment of employees and vehicle rentals),
the then-current Construction Budget or the then-current Annual
Budget and (z) agreements, contracts or commitments in respect of
Construction Period Permitted Indebtedness which, individually,
creates an annual financial obligation of the Company in excess of
$100,000 (or the equivalent in other currency) or which would cause
the aggregate annual financial obligations of the Company under all
agreements, contracts and commitments (other than those specified
in clauses (w) through (z) immediately above) to which the Company
is a party to exceed $300,000 (or the equivalent in other
currency).
(iii) The Company shall not issue, direct,
authorize, consent to or permit to be effective any change order
under the Construction Contract, the Supply Contract or the
Keystone Agreement or any Change in the Work without the prior
written approval of the Independent Engineer and the Required
Secured Parties, except for change orders and/or Changes in the
Work which (A) do not change the plans and specifications therein
in any material respect, (B) do not materially alter the
construction schedule and do not directly postpone or cause a
postponement of Substantial Completion or ECA Completion beyond the
Scheduled Completion Date, (C) do not alter in any respect the
performance or availability guarantees set forth in the
Construction Contract or the test methods for determining the
Plant's capability to meet such performance or availability
guarantees and (D) do not change the Contract Price (as defined in
the Construction Contract) and the Contract Price (as defined in
the Supply Contract) by more than $2,000,000 in the aggregate
(taking into account all previous change orders and Changes in the
Work under both the Construction Contract and the Supply Contract)
or by more than $250,000 per item, and (E) do not violate any
provision of any Project Document. The Company shall not issue,
direct, authorize, consent to or permit to be effective any change
order under the Construction Contract or the Supply Contract or any
Change in the Work which does not require the consent of the
Required Secured Parties pursuant to the preceding sentence and
which changes the Contract Price (as defined in the Construction
Contract) or the Contract Price (as defined in the Supply Contract)
by more than $50,000 as to any one change without the prior written
approval of the Independent Engineer (which approval shall not be
unreasonably withheld or delayed).
(iv) Subject to Section 5.01(w)(ix), without the
prior written consent of the Required Secured Parties, the
Company shall not, directly or indirectly, terminate, cancel or
suspend, or permit or consent to any termination, cancellation or
suspension of, or enter into or consent to or permit the
assignment of the rights or obligations of any party to, any of the
Project Documents; provided, however, that without the prior
written consent of the Required Secured Parties the Company may do,
permit to be done or consent to any of the foregoing if (A) the
Project Document which is the subject of the proposed
termination, cancellation, suspension or assignment is an
Insurance Contract and the Administrative Agent, after
consultation with the Insurance Consultant, shall have consented
thereto or (B) the Project Document which is the subject of the
proposed termination, cancellation, suspension or assignment is a
non-material Governmental Approval or an agreement, commitment or
understanding described in clause (xiv) of the definition of the
term "Operating Agreements" set forth in Schedule X hereto and, in
each case, the Administrative Agent shall have reasonably
determined that such termination, cancellation, suspension or
assignment is not reasonably likely to have a Material Adverse
Effect. Subject to Section 5.01(w)(ix), the Company shall not,
directly or indirectly, amend, modify, supplement or waive, or
permit or consent to the amendment, modification, supplement or
waiver of, any of the provisions of, or give any consent under, any
of the Project Documents, except for change orders under the
Construction Contract or the Supply Contract or Changes in the Work
(provided that the provisions of clause (iii) of this Section
5.01(w) are complied with in each case), without (A) first
submitting to the Administrative Agent, OPIC and Eximbank a copy of
such proposed amendment, supplement, waiver, or consent and (B)
obtaining the prior written consent of the Administrative Agent,
unless in the reasonable judgment of the Administrative Agent, such
proposed amendment, supplement, waiver, or consent is reasonably
likely to have a Material Adverse Effect, in which case, the
express prior written consent of the Required Secured Parties
thereto (provided, however, that if in any Project Document, the
consent of the Company to an assignment by the other party thereto
cannot be unreasonably withheld, the Administrative Agent or the
Required Secured Parties (as the case may be) shall not
unreasonably withhold its (or their) consent to the Company
providing such consent to assignment). Notwithstanding the
foregoing, without the prior written consent of OPIC, the Company
shall not, (A) directly or indirectly, amend, modify, supplement or
waive, or permit or consent to the amendment, modification,
supplement or waiver of, (x) any provision of Article 9 of the
Energy Conversion Agreement or (y) any other provision of the
Energy Conversion Agreement governing the terms and conditions of,
or the events or circumstances giving rise to the Company's or
PNOC-EDC's right to require, a buyout of the Power Plant (as
defined in the Energy Conversion Agreement) or (B) enter into or
permit or grant any amendment or modification of the Energy
Conversion Agreement or any supplement to or waiver thereunder
which is reasonably likely to have an adverse financial impact on
the Company (including, without limitation, on the amounts of or
timing of payments to the Company under the Energy Conversion
Agreement). The parties hereto acknowledge that the prior written
consent of Eximbank is required in order for the Administrative
Agent, the Collateral Agent and the Lenders to (i) agree to any
material amendments to the terms of, or consent to any material
deviation from the provisions of, any Project Document or other
document or agreement referred to in Section 10.01(c) of the
Eximbank Guarantee Agreement or (ii) enter into any agreement with
any foreign governing authority with respect to compensation for
any acts for which compensation is payable under Article VIII of
the Eximbank Guarantee Agreement.
(v) Other than the assignment as security of the
Project Documents to the Collateral Agent as security for the
benefit of the Secured Parties, the Company will not assign (except
with respect to Construction Period Permitted Liens) any of its
rights or obligations under any Project Document without the prior
written consent of the Required Secured Parties.
(vi) The Company will not take any action under
Article 9 of the Energy Conversion Agreement to require a Buyout
without the prior written consent of the Required Secured
Parties, which consent shall not be unreasonably withheld or
delayed.
(vii) Without the prior written consent of the
Required Secured Parties, the Company will not refund to PNOC-EDC
(but may credit to PNOC-EDC) any amount described in the last
sentence of Section 4.9 of the Energy Conversion Agreement.
(viii) The Company shall not claim for itself Force
Majeure as provided in Article 13 of the Energy Conversion
Agreement, Section 22 of the Construction Contract or Section 22 of
the Supply Contract without the prior written consent of the
Administrative Agent and the Independent Engineer, which consents
shall not be unreasonably withheld or delayed.
(ix) Without the prior written consent of the
Required Secured Parties, OPIC and Eximbank, the Company shall not
direct, authorize, consent to or permit to be effective any
amendment to or modification of the Marubeni Purchase Agreement,
the Company's Certificate of Designation (as defined in the
Marubeni Purchase Agreement), the form of Marubeni Proxy
Agreement attached to the Marubeni Purchase Agreement or the
Marubeni Shareholders Agreement. The Company shall not issue any
shares of the Preferred Stock (as defined in the Marubeni
Purchase Agreement) prior to the Construction Financing
Termination Date.
(x) No Other Business. Without the prior written
consent of the Required Secured Parties, except as contemplated by
Section 5.01(t) hereof, the Company will not carry on any business
other than in connection with the completion and operation of the
Project and will take no action whether by acquisition or otherwise
which would constitute or result in any material alteration to the
nature of that business or the nature or scope of the Project.
(y) Abandonment. The Company will not abandon or agree
to abandon the Project or place it or agree to place it on a "care
and maintenance" basis for more than 14 days in any calendar year,
provided, however, that (i) nothing in this Section 5.01(y) shall
prevent the Company from shut-downs necessary for repairs and
maintenance at the Plant or from putting the Plant on a "care and
maintenance basis" during any Force Majeure (as defined in the
Energy Conversion Agreement) not within the control of the Company,
which Force Majeure prevents the Company from developing,
constructing or operating the Plant; and (ii) nothing in this
Section 5.01(y) shall be deemed to waive or limit in any way the
right of any of the Lenders or OPIC to declare a Construction
Credit Event of Default as provided in Article VI hereof, including
without limitation Sections 6.01(f) and 6.01(g) hereof.
(z) Improper Use. The Company will not use, maintain,
operate or occupy, or allow the use, maintenance, operation or
occupancy of, any portion of the Site or the Project for any
purpose:
(i) which may be dangerous, unless safeguarded as
required by Applicable Law (provided, however, that this clause (a)
shall not be deemed to prohibit the Company from carrying out the
Project in accordance with the terms of the Energy Conversion
Agreement and the Construction Contract in a reasonable and prudent
manner);
(ii) which violates any Applicable Law in any
material respect;
(iii) which may constitute a public or private
nuisance resulting in a Material Adverse Effect;
(iv) which may make void, voidable, or cancelable
or increase the premium of, any insurance then in force with
respect to the Site or the Project or any part thereof unless, in
the case of an increase in premium, the Company gives proof of
payment of such increase; or
(v) otherwise than for the intended purpose
thereof in the construction, operation and maintenance of the
Plant.
(aa) Budgets. From and after the Operation Date the
Company will not make expenditures in any Fiscal Year (up to the
Maturity Date) in excess of the projected annual Operating and
Maintenance Costs (including the Contingent O&M Amount) set forth
in the Annual Budget for such Fiscal Year (up to the Maturity Date)
except for (i) expenditures funded with the proceeds of Optional
Subordinated Loans, (ii) Emergency Operating Costs Amounts funded
with the proceeds of withdrawals from the Debt Reserve Cash
Collateral Account in accordance with
Section 3.03(b) of the Disbursement Agreement and (iii) provided no
Construction Credit Event of Default has occurred and is
continuing, expenditures not to exceed in any Fiscal Year in the
aggregate $1.5 million required as a result of casualties for which
the Company is, in its good faith judgment, insured,
provided that (A) the Company promptly files a claim or claims for
reimbursement under such insurance for any such casualty, (B) the
Company uses its best efforts to expedite payment of such claims,
and (C) the proceeds from any such insurance claims shall be paid
into the Contingency Account.
(bb) Capital Stock. The Company shall not allow the
capital stock of the Company to be other than as follows: (i) the
authorized capital stock of the Company shall consist of
2,148,000 shares of common stock, par value P28 per share, of which
(A) 537,014 shares will be issued, outstanding and fully paid until
the day immediately prior to the commencement of the Cooperation
Period (as defined in the Energy Conversion
Agreement) and (B) commencing on the day immediately prior to the
commencement of the Cooperation Period (as defined in the Energy
Conversion Agreement) 537,014 shares, plus the amount of shares
into which the Convertible Subordinated Notes evidencing Required
Subordinated Loans shall have been converted as of such date, will
be issued, outstanding and fully paid; and (ii) all such
outstanding shares will be duly and validly issued, fully paid and
non-assessable; provided, however, the Company may issue preferred
stock to Marubeni pursuant to the Marubeni Purchase Agreement and
to CE Mahanagdong and Kiewit Energy.
(cc) Amendment of Construction Budget. The Company will
not, directly or indirectly, amend, modify, allocate, re-allocate
or supplement or permit or consent to the amendment, modification,
allocation, re-allocation or supplement of, any of the provisions
of the Construction Budget, except with the prior written approval
of the Required Secured Parties. Notwithstanding the foregoing,
the Company may make such allocations and re-allocations with
respect to the Construction Budget (other than such portions
thereof allocated to the payment of Contingency Costs (including
reallocations, if any, pursuant to Section 2.11(e) hereof) and the
Commitment Fee payable to Eximbank under the Eximbank Credit
Agreement in accordance with Section 3.03 thereof and other than
such portion thereof allocated to the pre-funding of the debt
reserve on the date of the Eximbank Disbursement) as are approved
in writing by the Administrative Agent and the Independent
Engineer.
(dd) Covenants Regarding the Eximbank Credit Agreement
and the Lender Credit Agreement. (i) The Company shall observe
and perform the covenants set forth in Articles VII and VIII of the
Eximbank Credit Agreement and Articles VI of the Lender Credit
Agreement, which covenants are incorporated by reference herein as
if fully set forth herein, in accordance with the terms thereof;
provided, however, that to the extent such covenants permit
(whether expressly or by omission) the Company to engage in any
transaction or do any act or thing otherwise prohibited by the
terms of this Agreement, or permit (whether expressly or by
omission) the Company to refrain from doing any act or thing
otherwise required to be done by the terms of this Agreement, the
terms of this Agreement shall be controlling. The Company shall,
if and to the extent required by Eximbank, comply with World Bank
Guidelines.
(ii) The Company acknowledges and agrees that no
earlier than five (5) Business Days prior to the proposed date of
the Eximbank Disbursement, the Administrative Agent, on behalf of
the Company, shall deliver to Eximbank the Request for Eximbank
Disbursement to Account of Company referred to in Section 4.01(p)
fully completed in an amount sufficient to pay all amounts of
principal of the Loans outstanding as of the Project Completion
Date (the "Final Principal Amount") and 100% of the Credit
Exposure Fee on the Final Principal Amount.
(iii) The Company acknowledges and agrees that no
earlier than five (5) Business Days prior to the proposed date of
the Eximbank Disbursement, the Administrative Agent, on behalf of
the Company, shall deliver to Eximbank the promissory note
referred to in Section 4.01(p) fully completed, dated the date of
the proposed date of the Eximbank Disbursement, and in an amount
equal to the amount set forth in the Request for Eximbank
Disbursement to Account of Company referred to in Section
4.01(p).
(iv) The Company covenants and agrees to use all the
proceeds of the disbursement it receives under the Eximbank Credit
Agreement for the payment to the Lenders of the Final Principal
Amount and for the payment to Eximbank of the Credit Exposure Fee.
To accomplish such payment to the Lenders the Company hereby
irrevocably instructs the Administrative Agent (A) immediately to
transfer from the amounts paid into the Blocked Account pursuant to
the Request for Eximbank Disbursement to Account of Company
referred to in Section 4.01(p) an amount equal to the Final
Principal Amount to the Administrative Agent Account for payment to
the Lenders and (B) to disregard any contrary instructions whether
received before, on or after the date hereof unless such contrary
instructions are agreed to in writing by the Administrative Agent
(with the consent of the Required Secured Parties) and Eximbank.
(v) The Company covenants and agrees to cause and
take all actions necessary to cause each condition precedent set
forth in the Eximbank Credit Agreement (including, without
limitation, delivery of the evidences of authority required by
Section 5.02(c) of the Eximbank Credit Agreement and delivery of
the certification required under Section 5.02(d) of the Eximbank
Credit Agreement concerning the Company's compliance with the
Energy Conversion Agreement) to be satisfied no later than three
(3) Business Days prior to the proposed date of the Eximbank
Disbursement.
(vi) Commencing on the Effective Date and until the
Construction Financing Termination Date, the Company shall not (A)
without the prior written consent of the Lenders and OPIC, (1)
suspend, cancel or terminate all or any part of the credit facility
provided under the Eximbank Credit Agreement or cause or permit the
same to be suspended, canceled or terminated in any way or for any
reason or (2) amend or modify or permit the amendment or
modification of any provision of the Eximbank Credit Agreement or
(B) without the prior written consent of OPIC and Eximbank, (1)
suspend, cancel or terminate all or any part of the credit facility
provided under the Lender Credit Agreement or cause the same to be
suspended, canceled or terminated in any way for any reason or (2)
amend or modify or permit the amendment or modification of any
provision of the Lender Credit Agreement.
(vii) Commencing on the Effective Date and until the
Construction Financing Termination Date, the Company shall promptly
(A) notify OPIC of any change of the names of the
Persons advised by the Company to OPIC pursuant to
Section 4.01(n) as being the Persons who will act as
representatives of the Company in the operation of the OPIC Loan,
the Loans and the credit facility provided under the Eximbank
Credit Agreement and (B) provide evidence of the authority of any
new Persons so appointed to act on behalf of the Company.
(viii) The Company covenants and agrees promptly to
deliver to OPIC a copy of each notice or other written
communication sent to it by Eximbank in connection with the
Eximbank Credit Agreement, including, without limitation, any
notice relating to a change of Eximbank's account described in
Section 3.08 of the Eximbank Credit Agreement.
(ee) Bank Accounts. The Company shall maintain all its
bank accounts with the Collateral Agent, except that the Company
may maintain, in accordance with the Disbursement Agreement, (a)
the Service Fee Account, (b) the Philippines Peso Account and (c)
the Dollar Operating Cost Account and (d) the Additional Equity
Contribution Account and may maintain any account contemplated by
the terms of the Marubeni Purchase Agreement.
(ff) Press Releases; Advertising. Neither the
Company, any Construction Financing Secured Party nor any
Affiliate of the Company shall issue or consent to the issuance of
any press release or other announcement or advertisement that
refers to the provision of financing by the Construction
Financing Secured Parties and/or OPIC for the Project without the
prior written consent of the Company and the Administrative Agent,
which consent shall not be unreasonably withheld or
delayed, except that no consent shall be required where the
issuance of any such press release, announcement or advertisement
is required by Applicable Law.
(gg) Additional Documents; Filings and Recordings. The
Company shall execute and deliver, from time to time as reasonably
requested by OPIC, the Administrative Agent or the Collateral
Agent, at the Company's expense, such other documents as shall be
necessary or advisable or that OPIC, the Administrative Agent or
the Collateral Agent may reasonably request in connection with the
rights and remedies of the Secured Parties granted or provided for
by the Project Documents, as applicable, and to consummate the
transactions contemplated therein. The Company shall, at its own
expense, take all reasonable actions that have been or shall be
requested by OPIC, the Administrative Agent or the Collateral Agent
or that the Company knows are necessary to establish, maintain,
protect, perfect and continue the perfection of the first priority
security interests of the Secured Parties created by the Security
Documents and shall furnish timely notice of the necessity of any
such action, together with such instruments, in execution form, and
such other information as may be required to enable the
Administrative Agent, the Collateral Agent and any other
appropriate Secured Party to effect any such action. Without
limiting the generality of the foregoing, the Company shall (i)
execute or cause to be executed and shall file or cause to be filed
such financing statements, continuation statements, fixture filings
and mortgages or deeds of trust in all places necessary or
advisable (in the opinion of counsel for OPIC, the Administrative
Agent or the Collateral Agent) to establish, maintain and perfect
such security interests and in all other places that OPIC, the
Administrative Agent or the Collateral Agent shall reasonably
request and (ii) do everything necessary in the reasonable judgment
of OPIC, the Administrative Agent or the Collateral Agent to (A)
create and perfect the Security with respect to future assets
covered by the Mortgage, (B) maintain the Security in full force
and effect at all times and (C) preserve and protect the Collateral
and protect and enforce its rights and title and the rights and
title of the Secured Parties to the Collateral.
(hh) Employees and Employee Plans. The Company shall
not adopt, establish, maintain, sponsor, administer, contribute to,
participate in, or incur any liability under or obligation to
contribute to, any Plan or incur any liability to provide post-
retirement welfare benefits, except such liability to provide post-
retirement welfare benefits as may be required by Applicable Law.
(ii) Administrative Agent Appointed Attorney-in-Fact.
The Company hereby irrevocably appoints OPIC, with full power of
substitution, the attorney-in-fact of the Company for the purpose
of completing the documents and instruments referred to in
Section 4.01(p) in such manner as the Administrative Agent deems
necessary or advisable and in accordance with the terms of this
Agreement, and for delivering such completed documents to
Eximbank pursuant to the terms of this Agreement and the Eximbank
Credit Agreement and to take any other action and execute any other
instrument or document, in each case in the name or on behalf of
the Company, which the Administrative Agent deems necessary or
advisable to accomplish the purposes hereof, which appointment is
irrevocable and coupled with an interest. The power of attorney in
this Section 5.01(ii) is of the essence and forms an integral and
inseparable part of this Agreement without which this Agreement
would not have been made.
(jj) Accounting Changes. The Company shall not make any
significant change in accounting treatment or reporting, except as
permitted by United States or Philippine, as
applicable, generally accepted accounting principles.
(kk) Certain Government Approvals. The Company shall
have obtained each of the Government Approvals described in
Sections B.4.3 and B.10.5 of Schedule 4.11 to the Lender Credit
Agreement, each of which shall be in form and substance
satisfactory to OPIC, on or before September 30, 1994.
SECTION 5.02. Operations Period Affirmative Covenants.
From and after the date of the Eximbank Disbursement and until
principal of, interest and Guarantee Fee on and all other amounts
relating to the OPIC Loan are paid in full, the Company covenants
and agrees as follows in this Section 5.02:
(a) Information Covenants. The Company shall furnish to
OPIC:
(i) Quarterly Financial Statements. As soon as
available but, in any event, within 60 days (or 120 days in the
case of the fourth quarterly accounting period) after the close of
each quarterly accounting period in each Fiscal Year,
(A) two copies of complete unaudited statements of
financial condition of the Company as at the end of such
quarterly period with related statements of income and retained
earnings and statements of changes in financial position for such
quarterly period and for the elapsed portion of the Fiscal Year
ended with the last day of such quarterly period, in each case
setting forth comparative figures for the related periods in the
prior Fiscal Year, all of which shall be prepared in accordance
with generally accepted accounting principles as in effect from
time to time in the United States and otherwise in form
satisfactory to OPIC and certified by the chief financial officer
of the Company, subject to normal year-end audit adjustments;
(B) a report on any event or condition which has had
or which is reasonably likely to have a Material Adverse Effect;
and
(C) a statement of all financial transactions in
such Quarter between the Company and any Affiliate of the
Company, including a certification that such transactions were on
ordinary commercial terms negotiated on an arms-length basis.
(ii) Annual Financial Statements. As soon as
available but, in any event, within 120 days after the close of
each Fiscal Year, two copies of the following, all prepared in
accordance with generally accepted accounting principles as in
effect from time to time in the Philippines and otherwise in form
satisfactory to OPIC: (A) statements of financial condition of the
Company as at the end of such Fiscal Year with the related
statements of income and retained earnings and statements of
changes in financial position for such Fiscal Year, in each case
setting forth comparative figures for the preceding Fiscal Year and
certified by the Auditors, together with consolidating
statements (and all adjustments thereto) with respect to the
Company (all such statements being in agreement with the
Company's books of account and prepared in accordance with United
States generally accepted accounting principles consistently
applied), (B) a report of the Auditors (x) stating that in the
course of its regular audit of the financial statements of the
Company, which audit was conducted in accordance with Philippine
generally accepted auditing standards, the Auditors obtained no
knowledge of any Incipient Default Event or Default Event which has
occurred and is continuing or, if in the opinion of the Auditors
such an Incipient Default Event or Default Event has occurred and
is continuing, a statement as to the nature thereof and (y)
certifying that, based on said financial statements, the Company
was in compliance with the financial covenants contained in
Sections 5.02 and 5.03 as of the end of the relevant Fiscal Year
or, as the case may be, detailing any non-compliance
therewith and (C) consolidating statement of financial condition of
the Company at the end of such Fiscal Year with related
statements of income and retained earnings and statement of changes
in financial position for such Fiscal Year, in each case setting
forth comparative figures for the preceding Fiscal Year all
reflecting United States generally accepted accounting
principles consistently applied and certified by the Chief
Financial Officer of the Company.
(iii) Other Financial Statements. Within 30 days
after the filing of the same with the United States Securities and
Exchange Commission, copies of the annual and quarterly financial
statements (consisting of a balance sheet and the related
statements of income, equity and cash flows) of CECI, Peter Kiewit
Sons', Inc. and KDG, certified by the chief financial officer of
CECI, Peter Kiewit Sons', Inc. or KDG, as the case may be, and,
within 120 days of the end of each fiscal year, copies of the most
recent unaudited financial statements (consisting of a balance
sheet and the related statements of income, equity and cash flows)
if audited financial statements are not otherwise available of KIC,
KEC, GICO, CBE, KCGI, BHCO, Kiewit Energy, CE Mahanagdong, CE
International, the Construction Supplier and the Construction
Contractor, certified by the chief financial officer of KIC, KEC,
GICO, CBE, KCGI, BHCO, Kiewit Energy, CE Mahanagdong, CE
International, the Construction Supplier or the Construction
Contractor, as the case may be, and within 60 days after the end of
each of the first three fiscal quarters of each fiscal year, copies
of the unaudited quarterly financial statements (consisting of a
balance sheet and the related statements of income, equity and cash
flows) of KIC, KEC, GICO, CBE, KCGI, BHCO, Kiewit Energy, CE
Mahanagdong, CE International, the Construction Supplier and the
Construction Contractor, certified by the chief financial officer
of KIC, KEC, GICO, CBE, KCGI, BHCO, Kiewit Energy, CE Mahanagdong,
CE International, the Construction Supplier or the Construction
Contractor, as the case may be, that such financial statements are
true and correct and have been prepared in accordance with United
States generally accepted accounting principles (subject to normal
year-end adjustments); provided, however, that so long as CE
Mahanagdong and Kiewit Energy engage in no business other than the
holding of their respective direct or indirect ownership interests
in the Company, the Company shall be deemed to have complied with
this Section 5.02(a)(iii) if on each date the Company would
otherwise be required to furnish financial statements of any such
Persons pursuant to this Section 5.02(a)(iii), the Company instead
furnishes a certificate of the chief financial officer of each such
Person certifying that such Person is engaged in no other business;
provided further, that the Company shall have no obligation
hereunder to provide to OPIC the financial statements of any of
KIC, KEC, GICO, CBE, KCGI, the Construction Contractor, the
Construction Supplier or BHCO after such entity is no longer an
Obligor.
(iv) Management Letters. Promptly after the
Company's receipt thereof, a copy of any "management letter" or
other similar communication received by the Company from the
Auditors in relation to the Company's financial, accounting and
other systems, management and accounts.
(v) Annual Operating Budget. As soon as
available but, in any event, within 60 days prior to (A) the
Operation Date and, thereafter, (B) the commencement of each Fiscal
Year, an annual operating budget (the "Annual Budget") (including
budgeted statements of income and sources and uses of cash and
balance sheets) prepared by the Company and accompanied by a
statement of the chief financial officer of the Company to the
effect that, to the best of his or her knowledge, the budget is a
reasonable estimate for the period covered thereby. The first
Annual Budget shall cover the period from the Operation Date
through the end of the Fiscal Year in which the Operation Date
occurs, and, if such period consists of less than six (6) months,
for the immediately succeeding Fiscal Year. Each Annual Budget
shall contain complete, fair and accurate estimates (by principal
components) of Sales Proceeds, Operating and
Maintenance Costs and Debt Service for each Month covered by such
Annual Budget based on the Company's best projections at such time.
Unless otherwise consented to by OPIC, the Annual Budget from year
to year shall be based on the same format as the Base Case
Forecast, including any amounts allocated for contingencies, and be
maintained on the same basis and provide sufficient detail to
permit a meaningful comparison. For each Annual Budget that is
expected to cover any period occurring after the date of the
Eximbank Disbursement, OPIC (in consultation with the Independent
Engineer) shall review such Annual Budget, and OPIC's response
shall not be unreasonably delayed. If OPIC does not approve an
Annual Budget, OPIC shall notify the Company of the items which are
disapproved and the reason for such disapproval. Until such Annual
Budget is so approved, the Annual Budget most recently in effect
shall continue to apply, except that any items of the then proposed
Annual Budget that have been approved shall also be given effect.
From time to time, but not more frequently than once per Quarter,
the Company may propose amendments to an Annual Budget, and OPIC
(in consultation with the Independent Engineer) may reject such
proposal within thirty (30) Business Days from the date the Company
submits such proposal if in OPIC's
reasonable judgment such amendment is not reasonably necessary or
advisable for operation of the Project and, if no such rejection is
made, such amendments shall become effective. Not later than three
(3) Business Days after the effective date of each Annual Budget
and of any amendment thereto, the Company shall provide a copy of
the same to the Collateral Agent.
(vi) Officer's Certificates. At the time of the
delivery of the financial statements provided for in Section
5.02(a)(i) and (ii), a certificate of a Financial Officer of the
Company to the effect that, to the best of his or her knowledge, no
Incipient Default Event or Default Event has occurred and is
continuing or, if any Incipient Default Event or Default Event 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, which certificate shall, from and after the
date of the Eximbank Disbursement, set forth the calculations
required to establish whether the Company was in compliance with
the provisions of Section 5.02(m), 5.03(c), 5.03(s) and 5.03(t).
(vii) Notice of Default, Litigation, etc. (A)
Immediately upon the Company obtaining knowledge thereof, notice,
by facsimile, or hand delivery, of any event which constitutes an
Incipient Default Event or Default Event, specifying the nature of
such Incipient Default Event or Default Event and any steps the
Company is taking to remedy the same; and (B) promptly, and in any
event within 20 Business Days after an officer of the Company
obtains knowledge thereof:
(1) notice of any litigation or governmental
proceeding pending (x) against the Company (i) involving a claim in
excess of $500,000 (or the equivalent thereof in other
currency) or (ii) which is reasonably likely to have a Material
Adverse Effect or (y) with respect to any Project Document;
(2) notice of any proposal by any Governmental
Authority to acquire compulsorily the Company, any of the
Collateral or a substantial part of the Company's business or
assets;
(3) notice of any substantial dispute between the
Company or the Sponsor and any Governmental Authority relating to
the Project;
(4) notice of any change in the authorized
officers or directors referred to in Section 5.01(p) of the
Eximbank Credit Agreement, giving certified specimen signatures of
any new officer or director so appointed and, if requested by OPIC,
satisfactory evidence of the authority of such new officer or
director;
(5) notice of any actual or proposed termination,
rescission, discharge (otherwise than by performance), amendment or
waiver or indulgence under, any material provision of any Project
Document (other than by OPIC);
(6) copies of any material notice or
correspondence received or initiated by the Company relating to a
Governmental Approval or other license or authorization necessary
for the performance by the Company of its obligations under the
Project Documents;
(7) notice of any Lien (other than a Permitted
Lien) becoming enforceable over any of the Company's assets;
(8) notice of any proposed material change in the
nature or scope of the Project or the business or operations of the
Company and any one or more events, conditions or
circumstances (including without limitation Force Majeure as
defined in Sections 13.1(a) and 13.1(b) of the Energy Conversion
Agreement) that exist or have occurred which are reasonably likely
to have a Material Adverse Effect;
(9) until the Eximbank Guarantee Agreement has
terminated in accordance with its terms, notice of the occurrence
of any event or act which could reasonably qualify as a Political
Risk (as defined in the Eximbank Guarantee Agreement);
(10) notice of or (in the case of items described
in clause (x)) copies of: (x) each funding waiver request filed
with respect to any Pension Plan and all communications received or
sent by the Company or any ERISA Affiliate with respect to such
request; and (y) the failure of the Company or any ERISA Affiliate
to make a required installment or payment under Section 412 of the
Code, Section 302 of ERISA or the terms of any Pension Plan by the
due date (other than the quarterly contributions described in
Section 302(e) of ERISA or Section 412(m) of the Code);
(11) notice of the occurrence of any Termination
Event which has had or is reasonably likely to result in a
Material Adverse Effect in connection with any Pension Plan or any
trust thereunder, specifying the nature thereof, what action the
Company or the ERISA Affiliate has taken, is taking or
proposes to take with respect thereto and, when known, any action
taken or threatened by the United States Internal Revenue
Service, the United States Department of Labor or the PBGC with
respect thereto;
(12) copies of: (x) all notices of the PBGC's
intent to terminate any Pension Plan or to have a trustee
appointed to administer any Pension Plan; and (y) all notices from
a Multiemployer Plan sponsor concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA; or
(13) notice of the filing of an intent to
terminate any Pension Plan under a distress termination within the
meaning of Section 4041(c) of ERISA; or
(14) a copy of each agreement, commitment or
understanding (whether or not subject to the approval of OPIC
pursuant to any other provision of this Agreement) executed by or
on behalf of the Company (excluding (x) the agreements set forth in
clauses (i) through (xi) of the definition of the term
"Operating Agreements" in Schedule X hereto but including
replacements thereof and (y) agreements, commitments or
understandings entered into in the ordinary course of business
which are required to perform the O&M Parameters and which (1) do
not, individually, create a financial obligation of the Company in
excess of $250,000 and (2) would not, in the aggregate, result in
the expenditure of funds in any Fiscal Year in excess of the amount
budgeted for Operating and Maintenance Costs (including the
Contingent O&M Amount) in the then-current Annual Budget for such
Fiscal Year) in connection with the Project, which notice shall
specifically refer to this Section 5.02(a)(vii)(14) and, with
respect to any such agreement, commitment or understanding
extending by its terms beyond the date of the Eximbank
Disbursement, request that OPIC confirm (prior to the date of the
Eximbank Disbursement, after consultation with the Administrative
Agent) whether or not such agreement, commitment or understanding
shall constitute an Operating Agreement, in which case such
agreement, commitment or understanding shall only constitute an
Operating Agreement if OPIC shall so designate it as an Operating
Agreement in a writing delivered to the Company within 60 days of
OPIC's receipt thereof.
(viii) Accounting Principles. All accounting
calculations in connection with determining compliance with the
covenants set forth in Sections 5.02 and 5.03 hereof shall be made
in accordance with generally accepted accounting principles as in
effect in the United States from time to time.
(ix) Other Information. From time to time, such other
information or documents (financial or otherwise) as OPIC may
reasonably request.
(b) Books, Records and Inspections; Accounting and Audit
Matters. (i) The Company will keep proper books of record and
account adequate to reflect truly and fairly the financial
condition and results of operations of the Company (including the
progress of the Project) in which full, true and correct entries in
conformity with Philippine generally accepted accounting prin-
ciples consistently applied and all Applicable Laws shall be made
of all dealings and transactions in relation to its business and
activities. The Company will permit officers and designated
representatives of OPIC to visit and inspect, under guidance of
officers of the Company, any of the properties of the Company, and
to examine and make copies of the books of record and account of
the Company and discuss the affairs, finances and accounts of the
Company with, and be advised as to the same by, its and their
officers, all at such reasonable times and intervals and to such
reasonable extent as OPIC may request.
(ii) The Company shall authorize the Auditors (whose
fees and expenses shall be for the account of the Company) to
communicate directly with OPIC at reasonable intervals, but if an
Incipient Default Event or a Default Event has occurred or is
continuing, then at any time, regarding the Company's accounts and
operations and furnish to OPIC a copy of such authorization, which
shall be in the form of Schedule 6.2(b) to the Lender Credit
Agreement; provided, however, that OPIC will (i) provide the
Company with copies of any correspondence between OPIC and the
Auditors; and (ii) provide the Company with reasonable notice of
any meeting between OPIC and the Auditors, with a description of
the matters to be discussed at such meeting, and allow the Company
to attend any such meeting.
(iii) The Company will at all times cause a complete set
of the current and (when available) as-built plans (and all
supplements thereto) relating to the Plant to be maintained at the
Plant or the Construction Contractor's office for inspection by the
Independent Engineer and OPIC.
(c) Maintenance of Property, Insurance. (i) The
Company will (A) keep all property useful and necessary (other than
property that has become obsolete) in its business in good working
order and condition and (B) keep its present and future properties
and business insured with financially sound and
reputable insurers satisfactory to OPIC against loss or damage in
such manner and to the same extent as required in Section A of
Schedule 7.03 to the Eximbank Credit Agreement until the
expiration of such policies and immediately thereafter as
required in Section C of Schedule 7.03 to the Eximbank Credit
Agreement, including in each case pursuant to policies naming the
Collateral Agent and the Company jointly as sole loss payees
thereunder and containing cut-through endorsements to reinsurers,
provisions requiring that the Collateral Agent and OPIC shall
receive notices of extensions or renewals of insurance policies and
notice of any non-payment of premiums and that such policy may only
be canceled for non-payment of premiums, if cancelable, upon sixty
(60) days prior notice to the Collateral Agent and OPIC and with
the Collateral Agent and the Company jointly endorsed on each such
insurance policy as the sole loss payees or beneficiaries, as
applicable. On or prior to the dates required pursuant to Section
A or Section C, as the case may be, of Schedule 7.03 to the
Eximbank Credit Agreement, the Company will submit to OPIC
certificates of insurance relating to the insurances required by
Section A and Section C of Schedule 7.03 to the Eximbank Credit
Agreement (together with copies of such insurance policies if then
available) from the Company's insurers or insurance brokers
(including confirmation of premium payments), which certificates
shall indicate the properties insured, amounts and risks covered,
names of the beneficiaries, expiration dates, names of the insurers
and special features of the insurance policies. The Company shall
provide OPIC with copies of insurance policies relating to the
insurances required by Section A and Section C of Schedule 7.03 to
the Eximbank Credit Agreement on or prior to the date such policies
are required to be delivered to OPIC in accordance with such
Section A or Section C, as the case may be.
(ii) The Company will cause the Construction
Contractor and the Construction Supplier, as applicable, to (i)
keep the insurances described in Section B of Schedule 7.03 to the
Eximbank Credit Agreement with financially sound and reputable
insurers satisfactory to, OPIC, in each case against loss or damage
in such manner and to the same extent as so described in each case
pursuant to policies containing cut-through endorsements to
reinsurers and provisions requiring that the Collateral Agent and
OPIC shall receive notices of any non-payment of premiums and that
such policy may only be canceled (x) as provided in Section B of
Schedule 7.03 to the Eximbank Credit Agreement or (y) if not
therein provided, for non-payment of premiums, if cancelable, upon
thirty (30) days prior written notice to the Collateral Agent and
OPIC.
(iii) The provisions of this Section 5.02(c) shall be
deemed to be supplemental to, but not duplicative of, the
provisions of any of the Security Documents that require the
maintenance of insurance. In the event that any insurance
whatsoever (other than political risk insurance acquired with
respect to the equity interest in the Company) is purchased, taken
or otherwise obtained by the Company with respect to the Project
taken otherwise than as required hereunder or if not properly
endorsed to the Collateral Agent and the Company jointly as sole
loss payees or beneficiaries or otherwise made upon the terms
required in this Section 5.02(c), without limitation to any
provision of the Assignment and Security Agreement, such
insurance shall be considered assigned hereunder to the
Collateral Agent with the right of the Collateral Agent to make,
settle, compromise and liquidate any and all claims thereunder,
without prejudice to the exercise of any other rights and
remedies that the Collateral Agent may have under any of the
Financing Documents, or under any Applicable Law.
(d) Maintenance of Existence; Privileges; Etc. The
Company shall at all times (i) preserve and maintain in full force
and effect (x) its existence as a corporation and good standing
under the laws of the Republic, (y) its qualification to do
business in each other jurisdiction in which the character of the
properties owned or leased by it or in which the transaction of its
business as conducted or proposed to be conducted makes such
qualification necessary and (z) all of its powers, rights,
privileges and franchise necessary for the construction,
ownership, maintenance and operation of the Project and the
maintenance of its existence, (ii) obtain in a timely manner and
maintain in full force and effect (or where appropriate, renew) all
Governmental Approvals (including, without limitation, those under
Environmental Laws) and all other licenses, registrations, waivers,
consents and approvals required at any time in connection with the
construction, maintenance, ownership or good and orderly operation
of the Project and all licenses, consents and approvals necessary
for the conversion to Dollars of all Peso amounts (including,
without limitation, Peso amounts representing SFRI Fees) payable
under the Energy Conversion Agreement, the PNOC-EDC Consent
Agreement, the Performance Undertaking and the Republic Consent
Agreement and for the remission to the United States in Dollars of
any amounts paid or payable to the Secured Parties in connection
with any Financing Document or the transactions contemplated
thereby or the shares of common stock of the Company and (iii)
preserve and maintain good and marketable title to its properties
and assets (it being understood that the Company's rights with
respect to the Site are solely as set forth in the Energy
Conversion Agreement and the Accession Undertaking) subject to no
Liens other than Permitted Liens.
(e) Compliance with Statutes. The Company will comply
with all Applicable Laws in respect of the conduct of its
business and the ownership, operation and use of its property
(including, without limitation, Applicable Laws relating to
environmental standards and controls and Applicable Laws relating
to the maintenance of debt to equity ratios).
(f) Project Implementation.
(i) The Company shall carry out the Project and
conduct its business with due diligence and efficiency and in
accordance with sound engineering, financial, and business
practices and in accordance with the Annual Budget as specified in
Section 5.02(a)(v).
(ii) Without limiting the generality of clause (i) of
this Section 5.02(f), the Company will operate and maintain the
Project, and retain and maintain the staff sufficient to operate
and maintain the Project, in accordance with the O&M Parameters and
will otherwise comply with and satisfy the
requirements of the O&M Parameters.
(iii) The Company shall use reasonable efforts to
become a member of the multi-partite monitoring team described in
paragraph 1 of Section IV of the Environmental Compliance
Certificate; provided, however, that the Company need not become a
member of such monitoring team if, in the reasonable judgment of
the Company, after consultation with its counsel, the
Company's participation in the activities conducted by such
monitoring team could reasonably be expected to expose the
Company to additional liability under Applicable Laws of the
Republic.
(iv) The Company shall provide OPIC with notice
immediately upon becoming aware that the conditions to enforcing
the KCGI Guaranty have been met.
(v) The Company agrees that it shall not designate
an arbitrator or engineering firm under either the Construction
Contract or the Supply Contract with respect to any disputes
thereunder without obtaining the prior written consent of the
Required Secured Parties, such consent not to be unreasonably
withheld.
(g) Auditors. In the event that Deloitte, Touche &
Tohmatsu International should cease to be the Auditors of the
Company for any reason, the Company shall appoint and maintain as
the Auditors another firm of independent public accountants
approved by OPIC.
(h) Taxes, Duties, Proper Legal Form. The Company will
pay and discharge all taxes, duties, fees, assessments or other
governmental charges imposed on it, on its income or
profits, on any of its property, or in connection with any
payment made under this Agreement or the execution, issue,
delivery, registration, notarization, assignment or transfer of any
interest in or for the legality, validity, or enforceability, of
any Project Document prior to the date on which penalties attach
thereto, and all claims, levies or liabilities (including, without
limitation, claims for labor, services, materials and supplies) for
sums which have become due and payable and which have or, if
unpaid, might become a Lien upon the property of Company (or any
part thereof). The Company shall have the right, however, to
contest in good faith the validity or amount of any such tax,
assessment, governmental charge or claim by proper proceedings
timely instituted, and may permit the taxes,
assessments, governmental charges or claims so contested to remain
unpaid during the period of such contest if (A) the
Company diligently prosecutes such contest, (B) during the period
of such contest the enforcement of any contested item is
effectively stayed, (C) the Company sets aside on its books
adequate reserves with respect to the contested items and (D) such
contest does not, in the reasonable discretion of OPIC, involve a
material risk of the sale, forfeiture or loss of any of the
Collateral. The Company will promptly pay or cause to be paid any
valid, final judgment enforcing any such tax, duty, fee,
assessment, other governmental charge or claim and cause the same
to be satisfied of record.
(i) Independent Engineer; Insurance Consultant. The
Company (A) agrees to the Independent Engineer carrying out the
role described in the Representative Agreement, (B) confirms and
agrees to the terms of its Acknowledgment appended to the
Representative Agreement, which terms are incorporated herein by
reference as if fully set forth herein and (C) will ensure that the
Insurance Consultant will be provided with all information
reasonably requested by the Insurance Consultant and will
exercise due care to ensure that any information which it may
supply to the Insurance Consultant is materially accurate and not,
by omission of information or otherwise, misleading in any material
respect.
(j) Performance of Obligations. The Company will
perform all of its material obligations under the terms of each
mortgage, indenture, security agreement and other debt instrument
by which it is bound and will perform (i) all of its obligations
under the terms of the Financing Documents and the Energy
Conversion Agreement and (ii) such of its obligations under the
terms of the Project Documents (other than the Financing Documents
and the Energy Conversion Agreement) the non- performance of which
is reasonably likely to have a Material Adverse Effect. The
Company will maintain in full force and effect each of the Project
Documents to which it is a party. The Company will preserve,
protect, defend and enforce the rights granted to it under or in
connection with the Project Documents. The Company shall take all
action within its control required or in the reasonable opinion of
OPIC advisable to ensure that, unless otherwise consented to in
writing by OPIC, each of the Project Documents is in proper legal
form under the laws of the Republic or under the respective
governing laws selected in such Project Documents, for the
enforcement thereof in such jurisdictions without any further
action on the part of OPIC, Eximbank or the Lenders, as the case
may be.
(k) Additional Documents; Filings and Recordings. The
Company shall execute and deliver, from time to time as reasonably
requested by OPIC or the Collateral Agent, at the Company's
expense, such other documents as shall be necessary or advisable or
that OPIC or the Collateral Agent may reasonably request in
connection with the rights and remedies of the Secured Parties
granted or provided for by the Project Documents, as applicable,
and to consummate the transactions contemplated therein. The
Company shall, at its own expense, take all reasonable actions that
have been or shall be requested by OPIC or the Collateral Agent or
that the Company knows are necessary to establish, maintain,
protect, perfect and continue the perfection of the first priority
security interests of the Secured Parties created by the Security
Documents and shall furnish timely notice of the necessity of any
such action, together with such instruments, in execution form, and
such other information as may be required to enable OPIC and any
other appropriate Secured Party to effect any such action. Without
limiting the generality of the foregoing, the Company shall (i)
execute or cause to be executed and shall file or cause to be filed
such financing statements, continuation statements, fixture filings
and mortgages or deeds of trust in all places necessary or
advisable (in the opinion of counsel for OPIC or the Collateral
Agent) to establish, maintain and perfect such security interests
and in all other places that OPIC or the Collateral Agent shall
reasonably request and (ii) do everything necessary in the
reasonable judgement of OPIC or the Collateral Agent to (A) create
and perfect the Security with respect to future assets covered by
the Mortgage, (B) maintain the Security in full force and effect at
all times and (C) preserve and protect the Collateral and protect
and enforce its rights and title and the rights and title of the
Secured Parties to the Collateral.
(l) Bank Accounts. The Company shall maintain all its
bank accounts with the Collateral Agent, except that the Company
may maintain the Service Fee Account, the Philippines Peso Account,
the Dollar Operating Cost Account and the Additional Equity
Contribution Account, all in accordance with the Disbursement
Agreement, and any account contemplated by the Marubeni Purchase
Agreement.
(m) Debt Reserve Cash Collateral Account. On or before
the date 90 days after the date of the Eximbank
Disbursement, the Debt Reserve Cash Collateral Account shall be
fully funded in an amount equal to at least the Senior Debt Service
due and payable during the next succeeding six months, in addition
to all amounts required to be deposited at such time in accordance
with clause "FOURTH" of 3.02(d)(ii) of the
Disbursement Agreement.
(n) Marubeni Proxy Agreement. On the Closing Date under
(and as defined in) the Marubeni Purchase Agreement, Marubeni and
the Collateral Agent shall execute and deliver to each other the
Marubeni Proxy Agreement, and the Company shall cause a true,
original copy thereof to be delivered to OPIC.
(o) Availability and Transfer of Foreign Currency. All
requisite foreign exchange control approvals and other
authorizations, if any, by the Republic or any department or agency
thereof will be kept current and in full force and effect to assure
(i) the ability of the Company to receive, and the ability of any
other party to make, any and all payments to the Company
contemplated by the Project Documents, (ii) the
availability of Dollars to enable the Company to perform all of its
obligations hereunder and under the other Project Documents, as the
case may be, in accordance with their respective terms, and (iii)
the ability of the Company to convert all sums received in Peso
amounts from PNOC-EDC under the Energy Conversion
Agreement and the PNOC-EDC Consent Agreement and from the
Republic under the Performance Undertaking and the Republic Consent
Agreement, including any Peso amounts representing SFRI Fees, from
Pesos to Dollars, immediately upon receipt thereof, and to use the
Dollars as necessary to perform all of its
obligations under the Project Documents, in accordance with their
respective terms.
SECTION 5.03. Operations Period Negative Covenants.
(a) Liens. The Company will not, and will not agree to,
create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets (real, personal or mixed,
tangible or intangible) of the Company, whether now owned or
hereafter acquired, provided that the provisions of this Section
5.03(a) shall not prevent the creation, incurrence, assumption or
existence of the following Liens (each, a "Post-Completion
Permitted Lien"):
(i) any tax or other statutory Lien, provided that
such lien shall be discharged within sixty (60) days after the
Company becomes aware or reasonably should have been aware of such
Lien (unless contested in good faith by the Company, in which case
it shall be discharged within thirty (30) days after final
adjudication, and provided that during the period of such contest
the Company sets aside on its books adequate reserves with respect
to the contested items);
(ii) Liens created pursuant to the Security
Documents;
(iii) purchase-money Liens on any property acquired
after the Operation Date, provided, however, that (A) any
property subject to such purchase-money Lien is acquired by the
Company in the ordinary course of its business and such
purchase-money Lien attaches to such property concurrently or
within ninety days after the acquisition thereof; (B) the
Indebtedness secured by such purchase-money Lien shall not exceed
90% of the lesser of the cost or the fair market value as of the
time of the acquisition of the property covered thereby by the
Company; (C) each such purchase-money Lien shall attach only to the
property so acquired and fixed improvements thereon; (D) the
Indebtedness secured by all such purchase-money Liens shall not at
any time exceed $2,700,000 (or an equivalent amount in other
currency); and (E) the Indebtedness secured by such
purchase-money Lien is not otherwise prohibited by the provisions
of Section 5.03(e);
(iv) Liens on property and equipment constituting
leases permitted by Section 5.03(d); and
(v) mechanics', materialmen's, carrier's and
similar Liens securing obligations incurred in the ordinary course
of business which (A) are not past due or which are the subject of
a Good Faith Contest by the Company (unless during the pendency of
such contest or as a result thereof the Liens of the Security
Documents could reasonably be expected to be materially endangered
or any material portion of the Site, the Plant or the Project could
reasonably be expected to become subject to loss or forfeiture) and
(B) which do not in the aggregate materially detract from the value
of the Site, the Plant or the Project or other assets of the
Company or materially impair the use thereof; provided that, upon
the commencement of any proceeding to foreclose or enforce any such
Post-Completion Permitted Lien, OPIC or the Collateral Agent may
take such action as it reasonably deems necessary to protect its
interest in the Site, the Plant or the Project including, without
limitation, payment of amounts reasonably necessary to release any
such Lien, and in such event the Company shall reimburse OPIC or
the Collateral Agent, as the case may be, upon demand for the cost
thereof together with interest thereon at a rate per annum equal to
the Base Rate plus 4.50%.
(b) Consolidation, Merger, Sale of Assets, Etc. The
Company will not (i) wind up, liquidate or dissolve its affairs or
enter into any transaction of merger or consolidation; (ii) convey,
sell, lease or otherwise dispose of (or agree to do any of the
foregoing at any future time) all or any part of its prop-erty or
assets (other than electricity and any chemical by-
products produced by the Plant) except in the ordinary course of
business, or sales of equipment which is uneconomic or obsolete or
sales of assets that are no longer used by or useful to the Company
and which are promptly replaced (if applicable) by
adequate substitutes of substantially equivalent utility to the
replaced assets; or (iii) purchase or otherwise acquire (in one or
a series of related transactions) any part of the property or
assets of any Person (other than purchases or other acquisitions of
inventory or materials or capital expenditures, each in the
ordinary course of business).
(c) Dividends; Restricted Payments. (i) The Company
will not declare or pay any dividends, or return any capital, to
its stockholders or authorize or make any other distribution,
payment or delivery of property or cash to its stockholders as
such, or redeem, retire, purchase or otherwise acquire, directly or
indirectly, for consideration, any shares of any class of its
capital stock now or hereafter outstanding (or any options or
warrants issued by the Company with respect to its capital
stock), or set aside any funds for any of the foregoing purposes
(collectively, "Restricted Payments"), other than as provided in
clauses (ii) and (iii) below, unless:
(A) such Restricted Payment is permitted by Applicable
Law;
(B) no Incipient Default Event or Event of Default is
then in existence (or would be in existence after giving
effect to such Restricted Payment); and
(C) such Restricted Payment is made in accordance with
the provisions of Section 3.02(d)(ii) of the Disbursement
Agreement.
(ii) Payments of principal of, interest on and
redemption, purchase and retirement of Affiliated Subordinated
Loans shall be governed by, and permitted only in accordance with,
Section 5.03(s).
(iii) Provided no Event of Default has occurred and
is continuing both before and after giving effect to any payment
contemplated by this Section 5.03(c), and provided that the other
requirements of this Section 5.03 are satisfied, the Company may
make quarterly dividend and redemption payments pursuant to the
Marubeni Purchase Agreement on its 14.5% redeemable cumulative
preferred stock commencing on the date falling six months after the
date of the Eximbank Disbursement and otherwise in accordance with
Section 3.02 (d) (ii) of the Disbursement Agreement.
(d) Leases. The Company will not enter into any
agreement or arrangement to acquire by lease the use of any
property or equipment of any kind, except leases as contemplated by
the O&M Parameters, the Construction Budget or the Annual Budget
(in each case as then in effect), of operating equipment and
premises under which the aggregate rental payments
(including, without limitation, any property taxes paid as
additional rent or lease payments) do not exceed the equivalent of
$2,400,000 in any Fiscal Year.
(e) Indebtedness. (i) The Company will not contract,
create, incur, assume or suffer to exist any Indebtedness, except
for the following types of Indebtedness ("Post-Completion
Permitted Indebtedness"):
(A) Indebtedness of the Company incurred under this
Agreement;
(B) Eximbank Loans disbursed on the date of the
Eximbank Disbursement, to the extent that the sum of (x) the
aggregate principal amount of the OPIC Loan disbursed hereunder and
(y) the aggregate principal amount of the Eximbank Loans
outstanding on the date of the Eximbank Disbursement do not exceed
$240,239,000;
(C) Unsecured Senior Working Capital Indebtedness or
Subordinated Secured Working Capital Indebtedness incurred after
the Operation Date, which when aggregated with the Company's
contingent liability arising from the discounting of trade
receivables relating to the sale of chemical by-products would not
exceed at any one time outstanding the equivalent of $6,800,000;
provided that (x) any and all Subordinated Working Capital
Indebtedness shall be subordinated to the payment of the OPIC Loan
in accordance with the provisions of Schedule 8.05(c) to the
Eximbank Credit Agreement, (y) any and all Subordinated Working
Capital Lenders shall, prior to the date on which any Subordinated
Secured Working Capital Indebtedness is incurred, become party to
the Collateral Agency Agreement and deliver to each of the
Collateral Agent and OPIC an opinion of counsel to such
Subordinated Working Capital Lender reasonably satisfactory to OPIC
to the effect that the Collateral Agency Agreement and the
subordination terms set forth in Schedule 8.05(c) to the Eximbank
Credit Agreement constitute the binding obligations of such
Subordinated Working Capital Lender enforceable in accordance with
their respective terms (subject to customary qualifications) and
(z) any and all Senior Working Capital Lenders shall, prior to the
date on which any Unsecured Senior Working Capital Indebtedness is
incurred, become party to the Intercreditor Agreement;
(D) Third Party Subordinated Indebtedness in an
outstanding principal amount not to exceed $13,600,000 at any time;
provided, however, that (x) any and all Third Party Subordinated
Indebtedness shall be subordinated to the payment of the OPIC Loan
in accordance with the provisions of Schedule 8.05(c) to the
Eximbank Credit Agreement and (y) any and all Third Party
Subordinated Lenders shall, prior to the date on which such
Indebtedness is incurred, become party to the Collateral Agency
Agreement and deliver to each of the Collateral Agent and OPIC an
opinion of counsel to such Third Party Subordinated Lender
reasonably satisfactory to OPIC to the effect that the Collateral
Agency Agreement and the subordination terms set forth in
Schedule 8.05(c) to the Eximbank Credit Agreement constitute
the binding obligations of such Third Party Subordinated
Lender enforceable in accordance with their respective terms
(subject to customary qualifications);
(E) Indebtedness incurred after the Operation Date
which is not in a principal amount in excess, in the aggregate, of
$2,700,000, at any time and is accrued expenses or current trade
accounts payable incurred in the ordinary course of business, which
are to be repaid in full not more than ninety days after the date
on which such Indebtedness is originally incurred to finance the
purchase of goods by the Company;
(F) Indebtedness secured by purchase money Liens
incurred after the Operation Date and otherwise permitted
under Section 5.03(a)(iii);
(G) Indebtedness constituting lease obligations
permitted under Section 5.03(d);
(H) Optional Subordinated Loans in an outstanding
principal amount not to exceed $34,000,000 at any time and which
bear interest at a rate not in excess of 12.5% per annum; provided,
however, that any and all Optional Subordinated Loans shall be
subordinated to the payment of the OPIC Loan in accordance with the
provisions of Schedule 8.05(c) to the Eximbank Credit Agreement;
(I) Affiliated Reimbursement Obligations;
(J) Contingent Obligations permitted under Section
5.03(f); and
(K) Indebtedness incurred under the OPIC Funding
Documents.
(ii) The Company agrees that it will not obligate
itself to make regularly scheduled payments during the period when
the OPIC Loan is outstanding of or on any Permitted Indebtedness
that is Indebtedness for Borrowed Money other than quarterly and
other than on a Permitted Payment Date or a date occurring no
earlier than eight (8) days after and no later than fifteen (15)
days after a Permitted Payment Date.
(f) Guarantees. Without limitation to the restrictions
of Section 5.03(e) hereof, the Company will not enter into or have
outstanding any Contingent Obligations, including without
limitation any agreement or arrangement to guarantee or, in any way
or under any condition, become obligated for all or any part of any
Indebtedness or other obligation of another Person, except that,
notwithstanding the restrictions of this Section 5.03(f) or Section
5.03(e) hereof, the Company may enter into (i) the Accession
Undertaking, (ii) Contingent Obligations set forth in the then-
current Construction Budget or Annual Budget and identified as
Contingent Obligations in any such budget so as to permit a
determination of the Company's compliance with this Section
5.03(f), (iii) an obligation, not secured by any Lien to (A)
reimburse the ECA Operation Performance Bond Issuer for amounts
paid to PNOC-EDC under the ECA Operation Performance Bond, provided
that such obligation is subordinated to the prior payment in full
of the OPIC Secured Obligations on terms set forth in Schedule
8.05(c) to the Eximbank Credit Agreement, or (B) reimburse CECI or
one or both of the Affiliated Funding Entities for Affiliated
Reimbursement Obligations, provided that such obligation is
subordinated to the prior payment in full of the OPIC Secured
Obligations on terms set forth in Schedule 8.05(c) to the Eximbank
Credit Agreement, and payment is made solely out of funds available
to the Company for the payment of Affiliated Reimbursement
Obligations as set forth in Section 3.02(d)(ii) of the Disbursement
Agreement, and (iv) other Contingent Obligations to the extent that
the amount of all such other Contingent Obligations does not
exceed, in the aggregate, $100,000 (or the equivalent in other
currency).
(g) Subsidiaries; Advances, Investments and Loans. The
Company will not form or have any Subsidiaries, lend money or
credit or make deposits (other than deposits in relation to the
payment for goods and equipment in the ordinary course of
business) with or advances (except as specifically required by the
Construction Contract or the Supply Contract) to any Person, or
purchase or acquire any stock, obligations or securities of, or any
other interest in, or make any capital contribution to, any other
Person, except that the Company may use idle cash to acquire and
hold Cash Equivalents solely to give employment to its idle
resources in accordance with the Disbursement Agreement; and
provided that the Company may make loans and advances to, or
investments in, Affiliates of the Company from funds available to
the Company pursuant to payment of priority "NINTH" of Section
3.02(d)(ii) of the Disbursement Agreement.
(h) Transactions. The Company will not (i) enter into
or have in effect any transaction or series of related trans-
actions with any Person other than in the ordinary course of
business and on an arm's-length basis or (ii) establish or have in
effect any sole and exclusive purchasing or sales agency, or enter
into any transaction whereby the Company might receive less than
the full ex-works commercial price (subject to normal trade
discounts) for electricity or sulphur or pay more than ex-works
commercial price for products of others, provided, however, that
nothing in this Section 5.03(h) shall be deemed to prohibit the
execution, delivery, declaring effective and performance by the
Company of the Energy Conversion Agreement, the Construction
Contract, the Supply Contract, the Keystone Agreement, contracts
contemplated by the O&M Parameters (including those relating to
employee training and secondment of employees), the Funding
Agreement or the Lender Credit Agreement.
(i) Other Transactions. From and after the date of the
Eximbank Disbursement, the Company will not enter into or have in
effect any partnership, profit-sharing, or royalty agreement or
other similar arrangement whereby the Company's income or profits
are, or might be, shared with any other Person, or enter into or
have in effect any management contract or similar arrangement
whereby its business or operations are managed by any other Person,
provided, however, that nothing in this Section 5.03(i) shall be
deemed to prohibit the execution, delivery, declaring effective and
performance by the Company of the contracts contemplated by the O&M
Parameters and the Funding Agreement.
(j) Modifications of Articles of Incorporation,
By-Laws; Additional Agreements; Assignments and Modifications of
Agreements; Etc.
(i) The Company will not (A) amend or modify its
Articles of Incorporation or By-Laws (other than in accordance with
the terms of the Marubeni Purchase Agreement or in connection with
an issuance of preferred stock permitted under Section 5.03(o)
hereof), (B) change its Fiscal Year or (C) materially change the
nature of its present business.
(ii) The Company will not become a party to any
agreement, contract or commitment (other than (A)(w) the
agreements identified in clauses (i) through (xiii) of the
definition of the term Operating Agreements set forth in Schedule
X hereto, but not replacements thereof, (x) the Financing
Documents, (y) agreements, contracts or commitments contemplated by
the O&M Parameters (including those relating to employee training,
secondment of employees and vehicle rentals), the then-current
Construction Budget, the then- current Annual Budget or the Funding
Agreement and (z) agreements, contracts or commitments in respect
of Post-Completion Permitted Indebtedness) which, individually,
creates an annual financial obligation of the Company in excess of
$100,000 (or the equivalent in other currency) (B) or which would
cause the aggregate annual financial obligations of the Company
under all agreements, contracts and commitments (other than those
specified in clauses (w) through (z) immediately above) to which
the Company is a party to exceed $300,000 (or the equivalent in
other currency).
(iii) The Company shall not, directly or indirectly,
terminate, cancel or suspend, or permit or consent to any
termination, cancellation or suspension of, or enter into or
consent to or permit the assignment of the rights or obligations of
any party to, any of the Project Documents. The Company shall not,
directly or indirectly amend, modify, supplement or waive, or
permit or consent to the amendment, modification, supplement or
waiver of, any of the provisions of, or give any consent under, any
of the Project Documents or the Marubeni Purchase Agreement,
without (A) first submitting to OPIC a copy of such proposed
amendment, supplement, waiver, or consent and (B) from and after
the date of the Eximbank Disbursement, or, with respect to any
amendment, modification, supplement or waiver proposed to be taken
with respect to the Marubeni Purchase Agreement or Marubeni
Shareholders Agreement, obtaining the prior written consent thereto
of OPIC (provided, however, that if in any Project Document, the
consent of the Company to an assignment by the other party thereto
cannot be unreasonably withheld, the consent of OPIC to such an
assignment shall not be unreasonably withheld).
(iv) Other than the assignment as security of the
Project Documents to the Collateral Agent as security for the
benefit of the Secured Parties, the Company will not assign (except
with respect to Permitted Liens) any of its rights or obligations
under any Project Document without the prior written consent of
OPIC.
(v) The Company will not take any action under
Article 9 of the Energy Conversion Agreement to require a Buyout
without the prior written consent of OPIC.
(vi) Without the prior written consent of OPIC, the
Company will not refund to PNOC-EDC (but may credit to PNOC-EDC)
any amount described in the last sentence of Section 4.9 of the
Energy Conversion Agreement.
(vii) The Company shall not claim for itself Force
Majeure as provided in Article 13 of the Energy Conversion
Agreement, Section 22 of the Construction Contract or Section 22 of
the Supply Contract without the prior written consent of OPIC (in
consultation with the Independent Engineer).
(k) No Other Business. Without the prior written
consent of OPIC, and except as contemplated by Section 5.03(g)
hereof, the Company will not carry on any business other than in
connection with the completion and operation of the Project and
will take no action whether by acquisition or otherwise which would
constitute or result in any material alteration to the nature of
that business or the nature or scope of the Project.
(l) Abandonment. The Company will not abandon or agree
to abandon the Project or place it or agree to place it on a "care
and maintenance" basis for more than 14 days in any calendar year,
provided, however, that (i) nothing in this Section shall prevent
the Company from shut-downs necessary for repairs and maintenance
at the Plant or from putting the Plant on a "care and maintenance
basis" during any Force Majeure (as defined in the Energy
Conversion Agreement) not within the control of the Company which
Force Majeure prevents the Company from developing, constructing or
operating the Plant; and (ii) nothing in this Section 5.03(l) shall
be deemed to waive or limit in any way the right of OPIC to declare
an Event of Default as provided in Article VI hereof, including
without limitation Sections 6.01(f), 6.01(g), 6.02(f) and 6.02(g)
hereof.
(m) Improper Use. The Company will not use, maintain,
operate or occupy, or allow the use, maintenance, operation or
occupancy of, any portion of the Site or Project for any purpose:
(i) which may be dangerous, unless safeguarded as
required by Applicable Law (provided, however, that this clause (i)
shall not be deemed to prohibit the Company from carrying out the
Project in accordance with the terms of the Energy Conversion
Agreement and the Construction Contract in a reasonable and prudent
manner);
(ii) which violates any Applicable Law in any
material respect;
(iii) which may constitute a public or private
nuisance resulting in a Material Adverse Effect;
(iv) which may make void, voidable, or cancelable,
or increase the premium of, any insurance then in force with
respect to the Site or Project or any part thereof unless, in the
case of an increase in premium, the Company gives proof of
payment of such increase; or
(v) otherwise than for the intended purpose thereof
in the construction, operation and maintenance of the Plant.
(n) Budgets. The Company will not make expenditures in
any Fiscal Year in excess of the projected annual Operating and
Maintenance Costs (including Contingent O&M Amount) set forth in
the Annual Budget for such Fiscal Year except for:
(i) emergency operating costs amounts funded with
(A) funds available to the Company pursuant to payment of priority
"NINTH" of Section 3.02(d)(ii) of the Disbursement Agreement and,
to the extent that such funds are not sufficient for such purpose;
(B) proceeds of Unsecured Senior Working Capital Indebtedness or
Subordinated Secured Working Capital Indebtedness or Subordinated
Secured Working Capital Indebtedness permitted under Section
5.03(e); or (C) proceeds of Optional Subordinated Loans or Third
Party Subordinated Loans;
(ii) provided no Event of Default has occurred and
is continuing, expenditures not to exceed in any Fiscal Year in the
aggregate $1.5 million (or the equivalent in other currency)
required as a result of casualties for which the Company is, in its
good faith judgment, insured; provided that (A) the Company
promptly files a claim or claims for reimbursement under such
insurance for any such casualty, (B) the Company uses its best
efforts to expedite payment of such claims, and (C) the proceeds
from any such insurance claims shall be paid into the Contingency
Account; and
(iii) provided no Event of Default has occurred and
is continuing, non-budgeted payments of amounts for which the
Company is liable to PNOC-EDC under Article 4.10 of the Energy
Conversion Agreement, not to exceed, without the consent of the
Required Secured Parties, $16,477,000.
(o) Capital Stock. Without the prior written consent of
OPIC, the Company shall not allow the capital stock of the Company
to be other than as follows: the authorized capital stock of the
Company shall consist of (i) 2,148,000 shares of common stock, par
value P28 per share, of which (A) 537,014 shares will be issued,
outstanding and fully paid until the day immediately prior to the
commencement of the Cooperation Period (as defined in the Energy
Conversion Agreement) and (B) commencing on the day immediately
prior to the commencement of the Cooperation Period (as defined in
the Energy Conversion Agreement) 537,014 shares, plus the amount of
shares into which the Convertible Subordinated Notes evidencing
Required Convertible Subordinated Loans shall have been converted
as of such date, will be issued, outstanding and fully paid; (ii)
1,000,000 shares of preferred stock of which no shares will be
issued to any person other than CE Mahanagdong or Kiewit Energy
until the date of the Eximbank Disbursement, after which, in
addition to issuing shares of such preferred stock to CE
Mahanagdong or Kiewit Energy, 400 14.5% redeemable cumulative
shares of such preferred stock may be issued to Marubeni on and
subject to the terms of the Marubeni Purchase Agreement; and (iii)
all such issued shares will be duly and validly issued, fully paid
and non-assessable.
(p) Press Releases; Advertising. If the Company shall
issue, or if the Company shall obtain knowledge that any other
Person has issued, any press release or other announcement or
advertisement that refers to the provision of financing or other
support by OPIC for the Project, the Company shall promptly notify
OPIC thereof and promptly deliver to OPIC a copy of such press
release or other announcement or advertisement.
(q) Employees and Employee Plan. The Company shall not
adopt, establish, maintain, sponsor, administer, contribute to,
participate in, or incur any liability under or obligation to
contribute to, any Plan or incur any liability to provide post-
retirement welfare benefits, except such liability to provide post-
retirement welfare benefits as required by Applicable Law.
(r) Name Changes; Etc. The Company shall not change its
name without the prior written consent of OPIC. The Company shall
not adopt or change any trade name or fictitious business name
without the prior written consent of OPIC. The Company shall
execute and deliver to OPIC and the Collateral Agent any additional
documents or certificates necessary or advisable to reflect any
permitted adoption of or change in its name, trade name or
fictitious business name.
(s) Payments on Subordinated Debt. Without the prior
written consent of OPIC, the Company will not make any payment or
delivery of property or cash to any Person on account of any
Subordinated Secured Obligations or other subordinated debt or
redeem, retire, purchase or otherwise acquire, directly or
indirectly, for consideration, any Subordinated Secured Obligations
or other subordinated debt now or hereafter outstanding, or set
aside any funds for any of the foregoing purposes (collectively,
"Subordinated Debt Payments") unless:
(i) such Subordinated Debt Payment is permitted by
Applicable Law;
(ii) no Incipient Default Event or Event of Default
is then in existence (or would be in existence after giving effect
to such Subordinated Debt Payment);
(iii) such Subordinated Debt Payment is made only
after the date of the Eximbank Disbursement; and
(iv) such Subordinated Debt Payment is made in
accordance with the provisions of Section 3.02(d)(ii) of the
Disbursement Agreement.
(t) Equity Ratio. The Company shall not permit the
Equity Ratio at any time to be less than 1:3 (which, for the
avoidance of doubt, shall be calculated in accordance with
generally accepted accounting principles as in effect in the United
States from time to time).
SECTION 5.04. Additional Covenants.
(a) Procurement. The Company shall procure (or shall
have procured) from sources within the United States, the
Philippines or other developing countries (defined as countries in
which OPIC is authorized to do business) goods or services having
a value of at least the amount of the OPIC Loan when fully
disbursed.
(b) Worker Rights. The Company agrees not to take
actions to prevent its employees from lawfully exercising their
right of free association and their right to organize and bargain
collectively. The Company further agrees to observe applicable
laws relating to a minimum age for employment of children,
acceptable conditions of work with respect to minimum wages, hours
of work, and occupational health and safety, and not to use forced
labor. The Company is not responsible under this paragraph for the
actions of a government.
(c) Project Monitoring. The Company shall complete and
deliver to OPIC annually a Self-Monitoring Questionnaire, certified
by an Authorized Officer of the Company as true and complete,
substantially in the form of Exhibit C hereto.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01. Construction Period Events of Default.
Notwithstanding anything herein or in any of the Financing
Documents or elsewhere to the contrary, upon the occurrence of any
of the following events prior to the date of the Eximbank
Disbursement (each of the following events, a "Construction Credit
Event of Default" and, together with each of the events described
in Section 6.02 hereof, an "Event of Default"):
(a) Payments. The Company shall (i) default in the
payment when due of any principal of the OPIC Loan or (ii) default,
and such default shall continue unremedied for five (5) or more
Business Days, in the payment when due of the Guarantee Fee, any
interest on the OPIC Loan or any other amounts owing to OPIC
hereunder or under the OPIC Note, or any other Financing Document;
or
(b) Representations, Etc. Any representation or
warranty confirmed or made in the OPIC Project Document by the
Company or any Obligor which is an Affiliate of the Company, or in
any writing provided by any of them in connection with the
execution and delivery of, or in connection with any Application
for Funding or request for a Disbursement under, this Agreement
shall be found to have been incorrect in any material respect when
made or deemed to be made and shall continue to be incorrect for a
period of thirty (30) days after notice thereof shall have been
given to the Company by a Construction Financing Secured Party; or
(c) Covenants. (i) The Company shall fail to perform
or observe any covenant, term or agreement contained in Sections
2.01 (Disbursements), 2.02 (OPIC Commitment Fee), 2.08 (Guaranty
Fee), 2.09 (Facility Fee), 5.01(a)(i) (Quarterly Financial
Statements of Company), 5.01(a)(ii) (Annual Financial Statements of
Company), 5.01(c) (Maintenance of Property; Insurance), 5.01(n)
(Consolidation, Merger, Sale of Assets, Etc.), 5.01(o) (Dividends;
Restricted Payments), 5.01(p) (Leases), 5.01(q) (Indebtedness),
5.01(r) (Liens), 5.01(s) (Guarantees), 5.01(t) (Subsidiaries;
Advances, Investments and Loans), 5.01(w)(ii), (vi) and (vii)
(Modifications of Articles of Incorporation and By-Laws;
Additional Agreements; Assignments and Modifications of
Agreements; Etc.), 5.01(x) (No Other Business), 5.01(dd)
(Covenants Regarding the Eximbank Credit Agreement) or 5.01(kk)
(Certain Government Approvals) hereof or any covenant, term or
agreement contained in the Energy Conversion Agreement; or
(ii) The Company or any Obligor which is an
Affiliate of the Company shall fail to perform or observe any other
covenant, term or agreement contained in this Agreement or any
other Project Document and such failure shall not be remediable or,
if remediable, shall continue unremedied (x) with respect to
breaches under this Agreement, for a period of 30 days after the
earlier of (1) the date on which such failure shall have first
become known to the Company and (2) the date on which written
notice thereof shall have been received by the Company from OPIC or
the Administrative Agent, and (y) with respect to breaches under
any other Project Document, after the expiration of the earlier of
(1) 30 days after the earlier of (I) the date on which such failure
shall have first become known to the Company and (II) the date on
which written notice thereof shall have been received by the
Company from OPIC or the Administrative Agent and (2) the
applicable grace period under such Project Documents; provided that
if (A) such failure cannot be cured within such applicable period,
(B) such failure, in the reasonable judgment of the Independent
Engineer or the Administrative Agent, is susceptible of cure, (C)
the Company is proceeding with diligence and in good faith to cure
such failure, (D) the existence of such failure in the reasonable
judgment of the Required Secured Parties has not had and is not
reasonably likely to have a Material Adverse Effect and (E) OPIC
and the Administrative Agent shall have received an officer's
certificate signed by a Financial Officer of the Company to the
effect of clauses (A), (B) and (C) above and stating what action
the Company is taking to cure such failure, then, such applicable
cure period shall be extended by up to an additional 60 days as
shall be necessary for the Company diligently to cure such
failure; or
(d) Default Under Other Agreements. (i) The Company
shall (A) default in any payment of any Indebtedness For Borrowed
Money (other than the OPIC Loan) beyond the period of grace, if
any, provided in the instrument or agreement under which such
Indebtedness For Borrowed Money was created or (B) default (other
than in the manner referred to in clause (A)) in the observance or
performance of any agreement or condition relating to any
Indebtedness For Borrowed Money (other than the OPIC Loan) or
contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition shall
exist, the effect of which such default or other event or condition
is to (x) cause any such Indebtedness For Borrowed Money to become
due prior to its stated maturity or (y) if such Indebtedness For
Borrowed Money is pari passu in right of payment to the OPIC
Secured Obligations, permit the Person to whom such Indebtedness
For Borrowed Money is owed to declare the same due and payable
prior to the stated maturity thereof; or
(ii) any Indebtedness For Borrowed Money of the
Company shall be declared to be due and payable, or required to be
prepaid other than by a regularly scheduled required prepayment,
prior to the stated maturity thereof; or
(iii) any Obligor (other than PNOC-EDC, the ECA
Operation Performance Bond Issuer, CECI and KEC) shall (A) default
in any payment of any Indebtedness For Borrowed Money in an
aggregate principal amount exceeding $2 million and $3 million, in
the case of BHCO, and $10 million, in the case of KCGI, beyond the
period of grace, if any, provided in the instrument or agreement
under which such Indebtedness For Borrowed Money was created or (B)
default in the observance or performance of any agreement or
condition relating to any Indebtedness For Borrowed Money in an
aggregate principal amount exceeding $2 million and $3 million, in
the case of BHCO, and $10 million, in the case of KCGI, or
contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition
exist, the effect of which default or other event or condition is
to cause any such Indebtedness For Borrowed Money to become due
prior to its stated maturity; or
(iv) CECI (A) defaults in any payment of any
Indebtedness For Borrowed Money in an aggregate principal amount
exceeding $10 million beyond the period of grace, if any, provided
in the instrument or agreement under which such Indebtedness For
Borrowed Money was created or (B) defaults in the observance of
performance of any agreement or condition relating to any
Indebtedness for Borrowed Money in an aggregate principal amount
exceeding $10 million or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other
event or condition is to cause any such Indebtedness For Borrowed
Money to become due prior to its stated maturity; provided,
however, that if one or more of the events described in this clause
(iv) shall occur after the date on which CECI shall cease to be an
Obligor, the occurrence of such event or events shall not be deemed
a Construction Credit Event of Default unless, in the reasonable
judgment of the Required Secured Parties, the occurrence of such
event or events has had or is reasonably likely to have a material
adverse effect on the operations, business, condition (financial or
otherwise) or property of the Company; or
(v) So long as KEC is an Obligor, KEC (A)
defaults in any payment of any Indebtedness For Borrowed Money in
an aggregate principal amount exceeding $3 million beyond the
period of grace, if any, provided in the instrument or agreement
under which such Indebtedness For Borrowed Money was created or (B)
defaults in the observance of performance of any agreement or
condition relating to any Indebtedness for Borrowed Money in an
aggregate principal amount exceeding $3 million or contained in any
instrument or agreement evidencing, securing or relating thereto,
or any other event shall occur or condition exist, the effect of
which default or other event or condition is to cause any such
Indebtedness For Borrowed Money to become due prior to its stated
maturity; provided, however, that if one or more of the events
described in this clause (v) shall occur, the occurrence of such
event or events shall not be deemed a Construction Credit Event of
Default unless, in the reasonable judgment of the Required Secured
Parties, the occurrence of such event or events has had or is
reasonably likely to have a material adverse effect on the
operations, business, condition (financial or otherwise) or
property of the Company; or
(vi) any Indebtedness For Borrowed Money in an
aggregate principal amount exceeding $2 million of any Obligor
(other than CECI, KEC, the ECA Operation Performance Bond Issuer
and PNOC-EDC), or any Indebtedness For Borrowed Money in an
aggregate principal amount exceeding $10 million of CECI or $3
million of KEC, shall be declared to be due and payable, or
required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity thereof, and, if
such Obligor is KCGI, the existence of such Indebtedness For
Borrowed Money that has been declared due and payable prior to the
stated maturity thereof, in the reasonable judgment of the Required
Secured Parties, has had or is reasonably likely to have a Material
Adverse Effect; provided, however, that if one or more of the
events described in this clause (vi) with respect to Indebtedness
For Borrowed Money of CECI or KEC shall occur after the date on
which CECI and KEC shall cease to be an Obligor, the occurrence of
such event or events shall not be deemed a Construction Credit
Event of Default unless, in the reasonable judgment of the Required
Secured Parties, the occurrence of such event or events has had or
is reasonably likely to have a material adverse effect on the
operations, business, condition (financial or otherwise) or
property of the Company; or
(vii) a default shall have occurred in the
performance of any material obligation by (A) any Obligor or the
Republic under any of the Project Documents to which such Person is
a party and such default shall continue unremedied beyond the
period of grace, if any, extended to such Person with respect to
such default, as specified in the Project Document under which such
obligation was created or (B) any other party (other than the
Persons referred to in clause (A) of this Section 6.01(d)(vii))
under any of the Project Documents and the existence of such
default in the reasonable judgment of the Required Secured Parties
has had or is reasonably likely to have a Material Adverse Effect
(and such default has not been cured within 60 days); or
(e) Bankruptcy, Etc. There shall have been entered
against the Company or any Obligor (other than the ECA Operation
Performance Bond Issuer and PNOC-EDC) a decree or order by a court
adjudging the Company or such Obligor bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the
Company or such Obligor under any Applicable Law; or appointing a
receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Company or such Obligor or of any
substantial part of its property or other assets, or ordering the
winding up or liquidation of its affairs; or the institution by the
Company or such Obligor of proceedings to be adjudicated bankrupt
or insolvent, or the consent by it to the institution of bankruptcy
or insolvency proceedings against it; or the filing by it of a
petition or answer or consent seeking reorganization or debt relief
under any Applicable Law; or the consent by it to the filing of any
such petition or to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the
Company or any such Obligor or of any substantial part of its
property; or the making by it of an assignment for the benefit of
creditors; or the admission by it in writing of its inability to
pay its debts generally as they become due; or any other event
shall have occurred which under any Applicable Law would have an
effect analogous to any of those events listed above in this
subsection with respect to the Company or any such Obligor; or any
corporate action is taken by the Company or any such Obligor for
the purpose of effecting any of the foregoing; provided that any
reorganization or reconstruction of a company while solvent with
the prior consent of the Required Secured Parties, such consent not
to be unreasonably withheld or delayed, shall not be held to
constitute any event mentioned in this paragraph; and provided,
further, that (a) in connection with any Obligor, no Construction
Credit Event of Default shall be declared under this Section
6.01(e) if (x) such Person has fully complied and continues to
fully comply with all of its obligations under all Project
Documents to which such Person is a party and (y) in the reasonable
judgment of the Required Secured Parties, such Construction Credit
Event of Default has not had and is not reasonably likely to have
a Material Adverse Effect; or
(f) Project Events. (i) the Company shall cease to have
the right to possess and use the Site; or
(ii) any event shall have occurred which entitles
the Company or PNOC-EDC to give a notice under Section 9.1 of the
Energy Conversion Agreement; or
(iii) the Company shall (except as permitted by
Section 5.01(n) hereof) sell or otherwise dispose of any of its
interest in the Project; or
(iv) an event or circumstance described in
subclause (a), (b), (c) or (d) of Section 14.2.1 of the Energy
Conversion Agreement shall have occurred, it being understood that
for purposes of this Section 6.01(f)(iv), (A) the words "one-
hundred twenty (120)" or "120" contained in subclauses (b), (c) and
(d) of Section 14.2.1 of the Energy Conversion Agreement shall be
replaced with the words "sixty (60)" in each place where such words
appear and (B) the words "thirty (30) months" shall be replaced by
the words "twenty-two (22) months" in each place in subclause (b)
of Section 14.2.1 of the Energy Conversion Agreement in which such
words appear; or
(v) an event or circumstance described in
subclause (a), (b) or (c) of Section 14.2.2 of the Energy
Conversion Agreement shall have occurred, it being understood that
for purposes of this Section 6.01(f)(v), the words "one-hundred
twenty (120)" contained in subclauses (b) and (c) of Section 14.2.2
of the Energy Conversion Agreement shall be replaced with the words
"sixty (60)" in each place where such words appear; or
(vi) a failure by the Company described in the first
sentence of Section 14.3 of the Energy Conversion Agreement shall
have occurred, it being understood that for purposes of this
Section 6.01(f)(vi), the words "sixty (60) consecutive days"
contained in the first sentence of Section 14.3 of the Energy
Conversion Agreement shall be replaced with the words "forty-five
(45) consecutive days"; or
(vii) the Mortgage shall not have been entered into
by the parties thereto, become fully effective in accordance with
its terms and been registered in all places in the Republic
necessary or desirable in the opinion of counsel to the Collateral
Agent on or before 90 days after the Effective Date; or
(g) Material Adverse Effect. One or more events,
conditions or circumstances (including without limitation Force
Majeure as defined in Sections 13.1(a) and 13.1(b) of the Energy
Conversion Agreement) shall exist or shall have occurred which, in
the reasonable judgment of the Required Secured Parties, is
reasonably likely to have a Material Adverse Effect; or
(h) Project Documents; Security Documents. (i) This
Agreement or any of the other Financing Documents or any of the
Energy Conversion Agreement, the Supply Contract, the Construction
Contract or the Keystone Agreement, or any provision hereof or
thereof (A) is or becomes invalid, illegal or unenforceable or any
party thereto (other than any Construction Financing Secured Party)
shall so assert, or (B) ceases to be in full force and effect, or
shall cease to give the Secured Parties the Liens, rights, powers
and privileges purported to be created thereby or hereby or any
party thereto (other than any Construction Financing Secured Party)
shall so assert; or
(ii) any of the Project Documents (other than the
Financing Documents or any of the Energy Conversion Agreement, the
Supply Contract, the Construction Contract or the Keystone
Agreement) or any material provision thereof (A) is or becomes
invalid, illegal or unenforceable or any party thereto (other than
any Construction Financing Secured Party) shall so assert, and such
default shall have continued for a period of thirty (30) days after
notice thereof shall have been given to the Company by the
Administrative Agent, or (B) ceases to be in full force and effect,
or shall cease to give the Secured Parties the Liens, rights,
powers and privileges purported to be created thereby such that the
interests of the Construction Financing Secured Parties or OPIC are
adversely affected to a material extent; or
(iii) except as permitted by Section 5.01(r)
hereof, the Security or any component part thereof for any reason
fails to constitute a valid and perfected first priority Lien or
ceases to be in full force and effect or the Company or the grantor
or pledgor thereof shall so assert; or
(i) Ownership of the Company. (A) Either CECI or KDG
shall cease to directly or indirectly own 49.9991% (rounded to the
nearest ten thousandth) of the shares of capital stock of the
Company free and clear of all Liens, other than Liens contemplated
by the Security Documents (it being understood that for all
purposes of this Section 6.01(i) (including paragraph (B) hereof),
if CECI or KDG owns shares of capital stock of the Company
indirectly, the percentage of its ownership in the Company shall be
the product of (1) the product of the percentage ownership it has
in each of one or more intermediate subsidiaries or other entities
(excluding for purposes of this calculation any ownership interest
that KEC has in CECI) times (2) the percentage ownership which the
subsidiary or other entity owning shares of capital stock of the
Company directly has in the Company); or
(B) the Company or CE Mahanagdong or Kiewit Energy
shall, without the prior consent of the Required Secured Parties,
issue or have outstanding any securities convertible into or
exchangeable for its capital stock or issue or grant or have
outstanding any rights to subscribe for or to purchase, or any
options or warrants for the purchase of, or any agreements,
arrangements or understandings providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims
of any character relating to, its capital stock, other than as
provided in the Board of Investments Approval and the Marubeni
Purchase Agreement; provided, however, that a Construction Credit
Event of Default shall not be deemed to have occurred if (x) full
dilution of the capital stock of the Company and/or CE Mahanagdong
and/or Kiewit Energy by the methods noted above in this Section
6.01(i)(B) would not have the effect of reducing below 49.9991%
(rounded to the nearest ten thousandth) CECI's or KDG's direct or
indirect ownership of the shares of capital stock of the Company
and (y) 100% of the capital stock of the Company is at all times
subject to a Lien in favor of the Collateral Agent on terms
substantially similar to the terms of the Pledge Agreement; or
(j) (i) One or more judgments or decrees shall be
entered (A) against the Company, or CE Mahanagdong or Kiewit Energy
involving in the aggregate a liability (not paid or fully covered
by insurance) of $2 million or more; or (B) prior to the date on
which CECI or KEC shall cease to be an Obligor, against CECI or KEC
involving in the aggregate a liability (not paid or fully covered
by insurance) of $10 million or more with respect to CECI and $3
million or more with respect to KEC; or (C) after the date on which
CECI or KEC shall cease to be an Obligor, against CECI or KEC
involving in the aggregate a liability (not paid or fully covered
by insurance) of $3 million or more, which liability, in the
reasonable judgment of the Required Secured Parties, has had or is
reasonably likely to have a material adverse effect on the
operations, business, condition (financial or otherwise) or
property of the Company or; (D) prior to the date on which BHCO
shall cease to be an Obligor, against BHCO involving in the
aggregate a liability (not paid or fully covered by insurance) of
$3 million or more, which liability, in the reasonable judgment of
the Required Secured Parties, has or is reasonably likely to have
a Material Adverse Effect; (E) prior to the date on which the
Construction Contractor shall cease to be an Obligor, against the
Construction Contractor involving in the aggregate a liability (not
paid or fully covered by insurance) of $2 million or more, which
liability, in the reasonable judgment of the Required Secured
Parties, has or is reasonably likely to have a Material Adverse
Effect; (F) prior to the date on which the Construction Supplier
shall cease to be an Obligor, against the Construction Supplier
involving in the aggregate a liability (not paid or fully covered
by insurance) of $2 million or more, which liability, in the
reasonable judgment of the Required Secured Parties, has or is
reasonably likely to have a Material Adverse Effect; (G) prior to
the date on which KCGI shall cease to be an Obligor, against KCGI
involving in the aggregate a liability (not paid or fully covered
by insurance) of $10 million or more, which liability, in the
reasonable judgment of the Required Secured Parties, has or is
likely to have a Material Adverse Effect; or (H) prior to the date
on which any other Obligor ceases to be an Obligor, against such
Obligor involving in the aggregate a liability (not paid or fully
discharged by insurance) of $2 million or more, which liability in
the
reasonable judgment of the Required Secured Parties has or is
likely to have a Material Adverse Effect; and in any such case all
such judgments or decrees shall not have been vacated, discharged,
or stayed or bonded pending appeal within 60 days after the entry
thereof; or
(ii) Any non-monetary judgment, order or decree is
entered against the Company which in the reasonable judgment of the
Required Secured Parties does or would reasonably be expected to
have a Material Adverse Effect and there should be any period of 10
consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect.
(k) Governmental Action. Any government or Governmental
Authority shall have condemned, nationalized, seized, or otherwise
expropriated all or any substantial part of the property or other
assets of the Company or of its capital stock or shall have assumed
custody or control of such property or other assets or of the
business or operations of the Company or of its capital stock or
shall have taken any action for the dissolution or disestablishment
of the Company or any action that would prevent the Company or its
officers from carrying on its business or operations or a
substantial part thereof; or
(l) Eximbank Documents and Lender Documents. (i) The
Eximbank Guarantee Agreement or the Lender Credit Agreement shall
cease to be in full force and effect or the rights, privileges and
powers purported to be created thereby or any provision thereof
become invalid, illegal or enforceable or (ii) all or any part of
the credit facility to be provided under the Eximbank Credit
Agreement or the Lender Credit Agreement is canceled or terminated
in any way or for any reason or (iii) all or any part of the credit
facility to be provided under the Eximbank Credit Agreement or the
Lender Credit Agreement is suspended for any reason for more than
30 days; or
(m) Permits. The Company or any Obligor shall fail to
obtain, renew, maintain or comply in all material respects with any
Governmental Approval set forth in Schedule 4.11 to the Lender
Credit Agreement or any license, approval or consent referred to in
Section 4.02(c); or any such Governmental Approval or license,
approval or consent shall be rescinded, terminated, suspended,
modified or withheld or shall be determined to be invalid or shall
cease to be in full force and effect; or any proceeding shall be
commenced by or before any Governmental Authority for the purpose
of rescinding, terminating, suspending, modifying or withholding
any such Governmental Approval or license, approval or consent and
such proceeding is not dismissed within 60 days; and such failure,
rescission, determination of invalidity, termination, suspension,
modification, withholding, cessation or commencement is reasonably
likely to have a Material Adverse Effect; or
(n) Transfer of Collateral; Event of Loss; Diminution of
Property Rights. (i) Title to or any right in all or any part of
(A) the Mortgage Collateral, (B) the Plant or (C) any other
collateral purported to be covered by the Security Documents (other
than as permitted pursuant to this Agreement, including Section
5.01(n) hereof) shall become vested in any party other than the
party named as owner and/or holder thereof in the applicable
Security Document, whether by operation of law or otherwise, or (D)
there shall have occurred an Event of Loss; or
(ii) Except as otherwise permitted pursuant to this
Agreement, the Company hereafter grants any easement or dedication,
files any plat, declaration or restriction or enters into any lease
or sub-lease concerning the Site, the Mortgage Collateral or the
Plant and the effect thereof is determined by the Administrative
Agent, in its reasonable discretion, to be material and adverse to
the Site, the Mortgage Collateral, the Plant or the Company; or
(o) Completion by Date Certain. A determination by the
Independent Engineer, in each case in its reasonable judgment, that
(i) the Project is not reasonably likely to be completed within the
Construction Budget (taking into account any additional commitment
of funds, any payments (without duplication) of delay liquidated
damages under the Construction Contract and/or the Supply Contract
and any payments (without duplication) of performance damages under
the Construction Contract and/or the Supply Contract, if any, that
as of such time have been determined by the Required Secured
Parties to be used to remedy the condition that would result in a
Construction Credit Event of Default under this Section 6.01(o) or
(ii) that the Eximbank Disbursement is not reasonably likely to
occur by the Date Certain; provided, that no Construction Credit
Event of Default shall be declared as a result of any such
determination if all of the following conditions are met: (i)
within 30 days after notice by the Administrative Agent to the
Company of such determination, the Company submits to OPIC and the
Administrative Agent a plan, in form and substance acceptable to
the Required Secured Parties, specifying the plan of action the
Company intends to take to remedy the condition described herein
that would result in a Construction Credit Event of Default and
(ii) the Company proceeds diligently in implementing such plan to
the Required Secured Parties' reasonable satisfaction, provides
reports periodically and at such other times as the Administrative
Agent may request to OPIC and the Administrative Agent of the
status of such implementation and from time to time amends such
plan with the Required Secured Parties' consent (which shall not be
unreasonably withheld) so that such plan remains likely to achieve
its aims; or
(p) Funding Agreement; KCGI Guaranty; Lender Credit
Agreement. (i) The failure by any of the Affiliated Funding
Entities to make any Required Subordinated Loan or Required Equity
Contribution or the failure by any of the Affiliated Funding
Entities to pay any amount required to be paid by it under or
otherwise to comply with any of the terms of the Funding Agreement;
provided that no Construction Credit Event of Default shall be
declared as a result of any such failure by any of the Affiliated
Funding Entities to make a Required Subordinated Loan or Required
Equity Contribution or to make any such payment if an amount equal
to the amount of all such Required Subordinated Loans and Required
Equity Contributions and payments is available to be withdrawn from
the Funding Account on the date required; or
(ii) The amount of the cash available to the
Collateral Agent for application to the funding obligations of the
Affiliated Funding Entities under the Funding Agreement or the
value of the Cash Equivalents or other permitted securities in
which the Funding Amount is invested is less than an amount equal
to the Funding Amount less the amount of all equity contributions
and/or subordinated loans made under the Funding Agreement prior to
such time, and the Affiliated Funding Entities, CECI or KEC have
not made available to the Collateral Agent within 15 days after
receipt of written notice from the Collateral Agent additional
cash, Cash Equivalents or other permitted securities equal to (in
the case of cash) or with a value equal to (in the case of Cash
Equivalents or other securities) the amount of such deficiency.
(iii) KCGI shall have breached the financial
covenants set forth in the KCGI Guaranty and KCGI shall have failed
to establish the letter of credit and/or bond pursuant to the terms
of the KCGI Guaranty, all in accordance with the terms of the KCGI
Guaranty.
(iv) The failure by any Lender, in default of its
funding obligations under the Lender Credit Agreement and the
Intercreditor Agreement, to make available any Utilization or
portion thereof as required by the Lender Credit Agreement and the
Intercreditor Agreement; provided, that no Construction Credit
Event of Default shall be declared as a result of such failure if,
on or prior to the date on which the funds such Lender failed to
disburse are required by the Company for the prompt payment of
Project Costs, another bank or financial institution (other than
any Construction Financing Secured Party) shall have disbursed such
funds to the Company on terms not materially less favorable to the
Company than the terms applicable to Loans under the Lender Credit
Agreement or in the case of any such default by APFC, payment is
available to be withdrawn from the APFC Funding Account; or
(v) The occurrence of an event of default under the
Lender Credit Agreement; or
(vi) The failure of APFC to comply with Section
2.02 of the APFC Security Agreement.
(q) Regulatory Status. The Company shall fail to remain
continuously exempt from all regulation under PUHCA as a result of
being a "foreign utility company" under Section 33 of PUHCA or
otherwise; or
(r) ERISA. Any of the following events occur or exist
with respect to the Company or, in the case of (i) through (v)
below, any ERISA Affiliate: (i) any Termination Event with respect
to any Plan; or (ii) any event or circumstance that is reasonably
likely to constitute grounds entitling the PBGC to institute
proceedings under Section 4042 of ERISA for the imposition of
liability in respect of any Pension Plan (other than a liability to
the PBGC for insurance premiums the payment of which is not yet
due); (iii) any Pension Plan shall have an accumulated funding
deficiency as defined in Section 412 of the Code or Section 302 of
ERISA; (iv) any Plan intended to be qualified under Section 401(a)
or 401(k) of the Code shall be disqualified; (v) any Plan shall be
subject to an excise tax pursuant to Code Section 4980B or shall
fail to comply with Sections 601-606 (inclusive) of ERISA; (vi) the
Company provides employee welfare benefits to retirees other than
statutorily required or pursuant to Section 601 et seq. of ERISA
and Section 4980B of the Code; or (vii) the Company incurs
liability under or relating to any Plan resulting from a violation
of ERISA, the Code and/or any other applicable law, including
without limitation the Age Discrimination in Employment Act, the
Americans With Disabilities Act and Title VII of the Civil Rights
Act, each as amended; and in each case above, such event or
condition, individually or in the aggregate together with all other
such events or conditions, if any, is reasonably likely to subject
the Company to any tax, penalty, or other liability to a Plan, a
Multiemployer Plan, the PBGC, or otherwise (or any combination
thereof) which in the aggregate has had or is reasonably likely to
have a Material Adverse Effect; or the Company or any ERISA
Affiliate shall fail to pay when due an amount or amounts which it
shall have become liable to pay under Title IV or ERISA or as a
contribution to a Pension Plan and/or Multiemployer Plan which, as
a result, has had or is reasonably likely to have a Material
Adverse Effect; or
(s) Authority to Construct. The Cross-Over Date shall
have occurred and the Construction Contractor shall not have
obtained the Authority to Construct on terms free from conditions
or requirements not contemplated by the Construction Budget; or
(t) Maturity Date. The Eximbank Disbursement shall not
have occurred by the Maturity Date; or
(u) Events Affecting APFC's Funding Obligations. Any of
the following events shall have occurred and, in the reasonable
judgment of the Required Secured Parties such event has a material
adverse effect on APFC's funding obligations hereunder:
(i) the entering against APFC of a decree or order
by a court adjudging APFC bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of APFC under any
Applicable Law, or appointing a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of APFC or of any
substantial part of its property or other assets, or ordering the
winding up or liquidation of its affairs; or the institution by
APFC of proceeding to be adjudicated bankrupt or insolvent, or the
consent by it to the institution of bankruptcy or insolvency
proceedings against it; or the filing by it of a petition or answer
or consent seeking reorganization or debt relief under any
Applicable Law; or the consent by it to the filing of any such
petition or to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of APFC or of any
substantial part of its property; or the making by it of an
assignment for the benefit of creditors; or the admission by it in
writing of its inability to pay its debts generally as they become
due; or any other event shall have occurred which under any
Applicable Law would have an effect analogous to any of those
events listed above in this subsection with respect to APFC; or any
corporate action is taken by APFC for the purpose of effecting any
of the foregoing; or
(ii) one or more judgments or decrees shall be
entered against APFC involving in the aggregate a liability (not
paid or fully covered by insurance) of $500,000 or more and all of
such judgments or decrees shall not have been vacated, discharged,
or stayed or bonded pending appeal within 60 days after the entry
thereof.
then, and in any such case, the provisions of Section 6.03 hereof
shall apply.
SECTION 6.02. Operations Period Events of Default.
Notwithstanding anything herein or in any of the Financing
Documents or elsewhere to the contrary, upon the occurrence of any
of the following events from and after the date of the Eximbank
Disbursement (each of the following events, together with each of
the events described in Section 6.01 hereof, an "Event of
Default"):
(a) Payments. The Company shall (i) default in the
payment when due of any principal of or interest on the OPIC Note
or any other amount owing under this Agreement or the OPIC Note,
(ii) default in the payment when due (after giving effect to any
grace periods providing in the relevant Financing Document) of any
principal of or interest on, or any other amount owing under, any
other Financing Document save for any default arising by reason of
a failure of the Collateral Agent to make any payment where funds
are available and payable pursuant to the Disbursement Agreement to
meet such payment; or
(b) Representations, Etc. Any representation or
warranty confirmed or made in any Project Document by the Company
or any Obligor which is an Affiliate of the Company, or in any
writing provided by any of them in connection with the execution
and delivery of, or in connection with any disbursement under any
of the Lender Credit Agreement, the Eximbank Credit Agreement or
this Agreement or for a payment of monies from any Account by the
Collateral Agent, shall be found to have been incorrect in any
material respect when made or deemed to be made and shall continue
to be incorrect for a period of thirty (30) days after notice
thereof shall have been given to the Company by OPIC; or
(c) Covenants. (i) The Company shall fail to perform or
observe any covenant, term or agreement contained in Sections
2.01(g) (Use of Proceeds); 5.02(c) (Maintenance of Property;
Insurance); 5.02(m) (Debt Reserve Cash Collateral Account); 5.03(a)
(Liens); 5.03(b) (Consolidation, Merger, Sale of Assets, Etc.);
5.03(c) (Dividends; Restricted Payments); 5.03(d) (Leases); 5.03(e)
(Indebtedness); 5.03(f) (Guarantees); 5.03(g) (Subsidiaries;
Advances, Investments and Loans); 5.03(j)(i), (vi) and (vii)
(Modifications of Articles of Incorporation and By-Laws; Additional
Agreements; Assignments and Modifications of Agreements; Etc.);
5.03(k) (No Other Business); 5.03(s) (Payments on Subordinated
Debt); 5.03(t) (Equity Ratio); or
(ii) The Company or any Obligor shall fail to
perform or observe any other covenant, term or agreement
contained in this Agreement or any other Project Document and such
failure shall not be remediable or, if remediable, shall continue
unremedied (x) with respect to breaches under this Agreement, for
a period of 30 days after the earlier of (A) the date on which such
failure shall have first become known to the Company and (B) the
date on which written notice thereof shall have been received by
the Company from OPIC, and (y) with respect to breaches under any
other Project Document, after the expiration of the earlier of (1)
30 days after the earlier (I) the date on which such failure shall
have first become; provided that if (1) such failure cannot be
cured within such 30-day period, (2) such failure in the reasonable
judgment of the Independent Engineer or the Required Secured
Parties is susceptible of cure, (3) the Company is proceeding with
diligence and in good faith to cure such failure, (4) the existence
of such failure in the reasonable judgment of OPIC has not had and
is not reasonably likely to have a Material Adverse Effect and (5)
OPIC shall have received an officer's certificate signed by a
Financial Officer of the Company to the effect of clauses (1), (2)
and (3) above, certifying that the existence of such failure has
not had and is not reasonably likely to have a Material Adverse
Effect and stating what action the Company is taking to cure such
failure, then, such 30-day cure period shall be extended by up to
an additional 60 days as shall be necessary for the Company
diligently to cure such failure; or
(d) Default Under Other Agreements. (i) The Company
shall (A) default in any payment of any Indebtedness For Borrowed
Money (other than as provided in Section 6.02(a)) beyond the period
of grace, if any, provided in the instrument or agreement under
which such Indebtedness For Borrowed Money was created or (B)
default (other than in the manner referred to in clause (A)) in the
observance or performance of any agreement or condition relating to
any Indebtedness For Borrowed Money (other than as provided in
Section 6.02(a)) or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which such default or other
event or condition is to (x) cause any such Indebtedness For
Borrowed Money to become due prior to its stated maturity or (y) if
such Indebtedness For Borrowed Money ranks pari passu in right of
payment with the OPIC Secured Obligations, permit the Person to
whom such Indebtedness For Borrowed Money is owed to declare the
same due and payable prior to the stated maturity thereof; or
(ii) any Indebtedness For Borrowed Money of the
Company shall be declared to be due and payable, or required to be
prepaid other than by a regularly scheduled required prepayment,
prior to the stated maturity thereof; or
(iii) any Obligor (other than PNOC-EDC, the ECA
Operation Performance Bond Issuer, KEC and CECI) shall (A)
default in any payment of any Indebtedness For Borrowed Money in an
aggregate principal amount exceeding the equivalent of $2 million
($3 million, in the case of BHCO and $10 million, in the case of
KCGI) beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness For Borrowed
Money was created or (B) default in the observance or performance
of any agreement or condition relating to any Indebtedness For
Borrowed Money in an aggregate principal amount exceeding the
equivalent of $2 million ($3 million, in the case of BHCO and $10
million, in the case of KCGI) or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default
or other event or condition is to cause any such Indebtedness For
Borrowed Money to become due prior to its stated maturity; or
(iv) CECI shall (A) default in any payment of any
Indebtedness For Borrowed Money in an aggregate principal amount
exceeding $10 million beyond the period of grace, if any, provided
in the instrument or agreement under which such Indebtedness For
Borrowed Money was created or (B) default in the observance or
performance of any agreement or condition relating to any
Indebtedness for Borrowed Money in an aggregate principal amount
exceeding $10 million or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other
event or condition is to cause any such Indebtedness For Borrowed
Money to become due prior to its stated maturity; provided,
however, that if one or more of the events described in this clause
(iv) with respect to CECI shall occur after the date on which CECI
shall cease to be an Obligor, the occurrence of such event or
events shall not be deemed an Event of Default unless, in the
reasonable judgment of the Required Secured Parties, the occurrence
of such event or events has had or is reasonably likely to have a
material adverse effect on the operations, business, condition
(financial or otherwise) or property of the Company; or
(v) any Indebtedness For Borrowed Money in an
aggregate principal amount exceeding the equivalent of $2 million
of any Obligor (other than PNOC-EDC, the ECA Operation Performance
Bond Issuer, KEC and CECI) or any Indebtedness For Borrowed Money
in an aggregate principal amount exceeding $3 million of KEC or $10
million of CECI, shall be declared to be due and payable, or
required to be prepaid other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof, and, if such
Obligor is the Construction Supplier, the existence of such
Indebtedness For Borrowed Money that has been declared due and
payable prior to the stated maturity thereof, in the reasonable
judgment of OPIC, has had or is reasonably likely to have a
Material Adverse Effect; provided, however, that if one or more of
the events described in this clause (v) with respect to
Indebtedness For Borrowed Money of CECI or KEC, as the case may be,
shall occur after the date on which CECI or KEC, as the case may
be, shall cease to be an Obligor, the occurrence of such event or
events shall not be deemed an Event of Default unless, in the
reasonable judgment of the Required Secured Parties, the occurrence
of such event or events has had or is reasonably likely to have a
Material Adverse Effect; or
(vi) a default shall have occurred in the
performance of any material obligation by (A) any Obligor (other
than the ECA Operation Performance Bond Issuer) or the Republic
under any of the Project Documents to which such Person is a party
and such default shall continue unremedied beyond the period of
grace, if any, extended to such Person with respect to such
default, as specified in the Project Document under which such
obligation was created or (B) any other party (other than the
Persons referred to in clause (A) of this Section 6.02(d)(vi))
under any of the Project Documents and the existence of such
default in the reasonable judgment of OPIC has had or is reasonably
likely to have a Material Adverse Effect (and has not been cured
within 60 days); or
(e) Bankruptcy, Etc. There shall have been entered
against the Company or any Obligor (other than the ECA Operation
Performance Bond Issuer or PNOC-EDC) a decree or order by a court
adjudging the Company or such Obligor bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the
Company or such Obligor under any Applicable Law; or appointing a
receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Company or such Obligor or of any
substantial part of its property or other assets, or ordering the
winding up or liquidation of its affairs; or the institution by the
Company or such Obligor of proceedings to be adjudicated bankrupt
or insolvent, or the consent by it to the institution of bankruptcy
or insolvency proceedings against it; or the filing by it of a
petition or answer or consent seeking reorganization or debt relief
under any Applicable Law; or the consent by it to the filing of any
such petition or to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the
Company or any such Obligor or of any substantial part of its
property; or the making by it of an assignment for the benefit of
creditors; or the admission by it in writing of its inability to
pay its debts generally as they become due; or any other event
shall have occurred which under any Applicable Law would have an
effect analogous to any of those events listed above in this
subsection with respect to the Company or any such Obligor; or any
corporate action is taken by the Company or any such Obligor for
the purpose of effecting any of the foregoing; provided that any
reorganization or reconstruction of a company while solvent with
the prior consent of OPIC shall not be held to constitute any event
mentioned in this paragraph; and provided, further, that in
connection with any Obligor, no Event of Default shall be declared
under this Section 6.02(e) if (x) such Person has fully complied
and continues to fully comply with all of its obligations under all
Project Documents to which such Person is a party and (y) in the
reasonable judgment of the Required Secured Parties, such Event of
Default has not had and is not reasonably likely to have a Material
Adverse Effect; or
(f) Project Events. (i) The Company shall cease to
have the right to possess and use the Site; or
(ii) any event shall have occurred which entitles
the Company or PNOC-EDC to give a notice under Section 9.1 of the
Energy Conversion Agreement; or
(iii) the Company shall (except as permitted by
Section 5.03(b) hereof) sell or otherwise dispose of any of its
interest in the Project; or
(iv) an event or circumstance described in
subclause (a), (b), (c) or (d) of Section 14.2.1 of the Energy
Conversion Agreement shall have occurred, it being understood that
for purposes of this Section 6.02(f)(iv), (x) the words "one-
hundred twenty (120)" or "120" contained in subclauses (b), (c) and
(d) of Section 14.2.1 of the Energy Conversion Agreement shall be
replaced with the words "sixty (60)" in each place where such words
appear and (y) the words "thirty (30) months" shall be replaced by
the words "twenty-two (22) months" in each place in subclause (b)
of Section 14.2.1 of the Energy Conversion Agreement in which such
words appear; or
(v) an event or circumstance described in
subclause (a), (b) or (c) of Section 14.2.2 of the Energy
Conversion Agreement shall have occurred, it being understood that
for purposes of this Section 6.02(f)(v), the words "one-hundred
twenty (120)" contained in subclauses (b) and (c) of Section 14.2.2
of the Energy Conversion Agreement shall be replaced with the words
"sixty (60)" in each place where such words appear; or
(vi) a failure by the Company described in the
first sentence of Section 14.3 of the Energy Conversion Agreement
shall have occurred, it being understood that for purposes of this
Section 6.02(f)(vi), the words "sixty (60) consecutive days"
contained in the first sentence of Section 14.3 of the Energy
Conversion Agreement shall be replaced with the words "forty-five
(45) consecutive days"; or
(g) Material Adverse Effect. One or more events,
conditions or circumstances (including without limitation Force
Majeure as defined in Sections 13.1(a) and 13.1(b) of the Energy
Conversion Agreement) shall exist or shall have occurred which, in
the reasonable judgment of the Required Secured Parties, is
reasonably likely to have a Material Adverse Effect; or
(h) Project Documents; Security Documents. (i) This
Agreement or any of the other Financing Documents or any of the
Energy Conversion Agreement, the Supply Contract or the
Construction Contract, or any provision hereof or thereof (i) is or
becomes invalid, illegal or unenforceable or any party thereto
(other than OPIC) shall so assert, or (ii) ceases to be in full
force and effect, or shall cease to give the Secured Parties the
Liens, rights, powers and privileges purported to be created
thereby or hereby or any party thereto (other than OPIC) shall so
assert; or
(ii) any of the Project Documents (other than the
Financing Documents or any of the Energy Conversion Agreement, the
Supply Contract or the Construction Contract) or any material
provision thereof (A) is or becomes invalid, illegal or
unenforceable or any party thereto (other than OPIC) shall so
assert, and such default shall have continued for a period of
thirty (30) days after notice thereof shall have been given to the
Company by OPIC, or (B) ceases to be in full force and effect, or
shall cease to give the Secured Parties the Liens, rights, powers
and privileges purported to be created thereby such that the
interests of the Secured Parties are adversely affected to a
material extent; or
(iii) except as permitted by Section 5.03(a) hereof,
the Security or any component part thereof for any reason fails to
constitute a valid and perfected first priority Lien or ceases to
be in full force and effect or the Company or the grantor or
pledgor thereof shall so assert; or
(i) Ownership of the Company. (A) CECI and KDG acting
together shall cease to maintain Control (as defined below) of the
Company or, without the prior written consent of OPIC, one or more
sales or other transfers, directly or indirectly, of shares of
capital stock of the Company shall have occurred such that, after
giving effect thereto, either (x) CECI and KDG would own, directly
or indirectly, less than 66-2/3% of the shares of capital stock of
the Company free and clear of all Liens (other than the Liens
created by the Security Documents) or (y) CECI and KDG and each of
their respective subsidiaries would have received aggregate gross
proceeds on account of the sale or other transfer of shares of
capital stock of the Company exceeding an amount equal to 40% of
paid-in capital as at the date of the Eximbank Disbursement (for
purposes of this Section 6.02(i)(A), "Control" means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, including
operating and maintenance decisions, whether through ownership of
voting securities, by contract, or otherwise); or
(B) the Company or CE Mahanagdong or Kiewit Energy
shall, without the prior consent of OPIC, issue or have
outstanding any securities convertible into or exchangeable for its
capital stock or issue or grant or have outstanding any rights to
subscribe for or to purchase, or any options or warrants for the
purchase of, or any agreements, arrangements or understandings
providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its
capital stock, other than as provided in the Board of Investments
Approval and the Marubeni Purchase Agreement; provided, however,
that an Event of Default shall not be deemed to have occurred if
(x) at any time from and after the date of the Eximbank
Disbursement full dilution of the capital stock of the Company
and/or CE Mahanagdong and/or Kiewit Energy by the methods noted
above in this Section 6.02(i)(B) would not have the effect of
reducing below 66 2/3% CECI's and KEC's aggregate direct or
indirect ownership of the shares of capital stock of the Company
and (y) 100% of the capital stock of the Company (other than
capital stock sold pursuant to the terms of the Marubeni Purchase
Agreement, directors' qualifying shares and one share of common
stock held by APFC) is at all times subject to a Lien in favor of
the Collateral Agent on terms substantially similar to the terms of
the Pledge Agreement; or
(j) One or more judgments or decrees shall be
entered (i) against the Company, CE Mahanagdong or Kiewit Energy
involving in the aggregate a liability (not paid or fully covered
by insurance) of the equivalent of $2 million or more; or (ii)
prior to the date on which CECI or KEC, as the case may be, shall
cease to be an Obligor, against CECI or KEC, as the case may be,
involving in the aggregate a liability (not paid or fully covered
by insurance) of the equivalent of $3 million or more in the case
of KEC and $10 million or more in the case of CECI; or (iii) after
the date on which CECI shall cease to be an Obligor, against CECI
involving in the aggregate liability (not paid or fully covered by
insurance) of the equivalent of $15 million or more, which
liability in the reasonable judgment of the Required Secured
Parties, has had or is reasonably likely to have a material adverse
effect on the operations, business, condition (financial or
otherwise) or property of the Company; or (iv) prior to the date on
which the Construction Contractor or KIC shall cease to be an
Obligor, against the Construction Contractor or KIC involving in
the aggregate a liability (not paid or fully covered by insurance)
the equivalent of $2 million or more, which liability, in the
reasonable judgment of the Required Secured Parties, has had or is
reasonably likely to have a Material Adverse Effect; (v) prior to
the date on which the Construction Supplier, GICO or CBE shall
cease to be an Obligor, against the Construction Supplier, GICO or
CBE involving in the aggregate a liability (not paid or fully
covered by insurance) the equivalent of $2 million or more, which
liability, in the reasonable judgment of the Required Secured
Parties, has had or is reasonably likely to have a Material Adverse
Effect; (vi) prior to the date on which KCGI or BHCO shall cease to
be an Obligor, against KCGI or BHCO involving in the aggregate a
liability (not paid or fully covered by insurance) the equivalent
of $10 million or more in the case of KCGI or $3 million or more,
in the case of BHCO, which liability, in the reasonable judgment of
the Required Secured Parties, has had or is likely to have a
Material Adverse Effect; and in any such case all such judgments or
decrees shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60 days after the entry thereof; or
(k) Governmental Action. Any government or Governmental
Authority shall have condemned, nationalized, seized, or otherwise
expropriated all or any substantial part of the property or other
assets of the Company or of its capital stock or shall have assumed
custody or control of such property or other assets or of the
business or operations of the Company or of its capital stock or
shall have taken any action for the dissolution or disestablishment
of the Company or any action that would prevent the Company or its
officers from carrying on its business or operations or a
substantial part thereof; or
(l) Permits. The Company or any Obligor shall fail to
obtain, renew, maintain or comply in all material respects with any
Governmental Approval set forth in Schedule 5.01(t) to the Eximbank
Credit Agreement or any license, approval or consent referred to in
Section 5.2(c) of the Lender Credit Agreement; or any such
Governmental Approval or license, approval or consent shall be
rescinded, terminated, suspended, modified or withheld or shall be
determined to be invalid or shall cease to be in full force and
effect; or any proceeding shall be commenced by or before any
Governmental Authority for the purpose of rescinding, terminating,
suspending, modifying or withholding any such Governmental Approval
or license, approval or consent and such proceeding is not
dismissed within 60 days; and such failure, rescission,
determination of invalidity, termination, suspension, modification,
withholding, cessation or commencement is reasonably likely to have
a Material Adverse Effect; or
(m) Transfer of Collateral; Event of Loss; Diminution of
Property Rights. (i) Title to or any right in all or any part of
(A) the Mortgage Collateral, (B) the Plant or (C) any other
collateral purported to be covered by the Security Documents (other
than as permitted pursuant to this Agreement, including Section
5.03(b) hereof) shall become vested in any party other than the
party named as owner and/or holder thereof in the applicable
Security Document, whether by operation of law or otherwise, or (D)
there shall have occurred an Event of Loss; or
(ii) Except as otherwise permitted pursuant to this
Agreement, the Company hereafter grants any easement or dedication,
files any plat, declaration or restriction or enters into any lease
or sub-lease concerning the Site, the Mortgage Collateral or the
Plant and the effect thereof is determined by OPIC, in its
reasonable discretion, to be material and adverse to the Site, the
Mortgage Collateral, the Plant or the Company; or
(n) Funding Agreement; Lender Credit Agreement. The
failure by any Lender, in default of its funding obligations under
the Lender Credit Agreement to make available a utilization or any
portion thereof as required by the Lender Credit Agreement and the
Intercreditor Agreement; provided, that no Event of Default shall
be declared as a result of such failure if, on or prior to the date
on which the funds such Lender failed to disburse are required by
the Company for the prompt payment of Project Costs, another bank
or financial institution (other than any Construction Financing
Secured Party) shall have disbursed such funds to the Company on
terms not materially less favorable to the Company than the terms
applicable to the Loans under the Lender Credit Agreement; or
(o) Regulatory Status. The Company shall fail to remain
continuously exempt from all regulation under PUHCA as a result of
being a "foreign utility company" under Section 33 of PUHCA or
otherwise; or
(p) ERISA. Any of the following events occur or exist
with respect to the Company or, in the case of (i) through (v)
below, any ERISA Affiliate: (i) any Termination Event with respect
to any Plan; (ii) any event or circumstance that is reasonably
likely to constitute grounds entitling the PBGC to institute
proceedings under Section 4042 of ERISA for the imposition of
liability in respect of any Pension Plan (other than a liability to
the PBGC for insurance premiums the payment of which is not yet
due); (iii) any Pension Plan shall have an accumulated funding
deficiency as defined in Section 412 of the Code or Section 302 of
ERISA; (iv) any Plan intended to be qualified under Section 401(a)
or 401(k) of the Code shall be disqualified; (v) any Plan shall be
subject to an excise tax pursuant to Code Section 4980B or shall
fail to comply with Sections 601-606 (inclusive) of ERISA; (vi) the
Company provides employee welfare benefits to retirees other than
statutorily required or pursuant to Section 601 et seq. of ERISA
and Section 4980B of the Code; or (vii) the Company incurs
liability under or relating to any Plan resulting from a violation
of ERISA, the Code and/or any other applicable law, including
without limitation the Age Discrimination in Employment Act, the
Americans With Disabilities Act and Title VII of the Civil Rights
Act, each as amended; and in each case above, such event or
condition, individually or in the aggregate, together with all
other such events or conditions, if any, is reasonably likely to
subject the Company to any tax, penalty, or other liability to a
Plan, a Multiemployer Plan, the PBGC, or otherwise (or any
combination thereof) which in the aggregate has had or is
reasonably likely to have a Material Adverse Effect; or the Company
or any ERISA Affiliate shall fail to pay when due an amount or
amounts which it shall have become liable to pay under Title IV or
ERISA or as a contribution to a Pension Plan and/or Multiemployer
Plan which, as a result, has had or is reasonably likely to have a
Material Adverse Effect;
then, and in any such case, the provisions of Section 6.03 hereof
shall apply.
SECTION 6.03. Remedies upon Event of Default. Subject
to the terms of the Intercreditor Agreement, if any Event of
Default has occurred and is continuing, OPIC may at any time in its
sole discretion, (i) suspend or terminate the OPIC Commitment, (ii)
declare, by written demand for payment to the Company, any portion
or all of the outstanding principal amount of the OPIC Loan to be
due and payable whereupon such portion of the OPIC Loan shall
immediately mature and become due and payable together with
interest accrued thereon, without any other presentment, demand,
diligence, protest, notice of acceleration, or other notice of any
kind, all of which the Company hereby expressly waives (provided
that if an Event of Default specified in Section 6.01(e), Section
6.01(t) or Section 6.02(e) shall have occurred, the entire
outstanding amount of the OPIC Loan and all other OPIC Secured
Obligations that are then capable of being fixed and liquidated
shall be automatically immediately due and payable without any
declaration, presentment, demand, protest or notice or other act of
any kind by OPIC whatsoever) and/or (iii) without notice of default
or demand, proceed to protect and enforce its rights and remedies
by appropriate proceedings, whether for damages or the specific
performance of any provision of this Agreement or the OPIC Note, or
in aid of the exercise of any power granted in this Agreement, the
OPIC Note or by law, or may proceed to enforce the payment of the
OPIC Note.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Jurisdiction and Consent to Suit. Without
prejudice to the rights of OPIC to bring suit in the courts of the
Republic of the Philippines or any other jurisdiction, any
proceeding to enforce this Agreement, the OPIC Note, any OPIC
Funding Document, any Security Document or any other Financing
Document may be brought in the courts of the State of New York in
the County of New York or of the United States of America for the
Southern District of New York. The Company hereby irrevocably
waives any present or future objection to such venue, and for
itself and in respect of any of its property hereby irrevocably
consents and submits unconditionally to the non-exclusive
jurisdiction of any such courts. The Company further irrevocably
waives any claim that any such court is not a convenient forum for
any such proceeding. The Company agrees that any service of
process, writ, judgment or other notice of legal process shall be
deemed and held in every respect to be effectively served upon it
in connection with proceedings in New York, if delivered to White
& Case with offices on the date hereof at 1155 Avenue of the
Americas, New York, New York 10036-2787, which it irrevocably
designates and appoints as its authorized agent for the service of
process in the courts in New York. Nothing herein shall affect the
right of OPIC to serve process in any other manner permitted by
applicable law. The Company further agrees that final judgment
against it in any such action or proceeding arising out of or
relating to this Agreement or the OPIC Note, shall be conclusive
and may be enforced in any other jurisdiction within or outside the
United States of America by suit on the judgment, a certified or
exemplified copy of which shall be conclusive evidence of the fact
and of the amount of its indebtedness.
SECTION 7.02. Judgment Currency. This is an
international loan transaction in which the specification of United
States dollars is of the essence, and such currency shall be the
currency of account in all events. The payment obligation of the
Company hereunder and under the OPIC Note shall not be discharged
by an amount paid in another currency, whether pursuant to a
judgment or otherwise, to the extent that the amount so paid on
prompt conversion to such currency or transfer to New York, New
York under normal banking procedures does not yield the amount of
United States dollars then due. In the event that any payment by
the Company, whether pursuant to a judgment or otherwise, upon
conversion and transfer, does not result in the payment of such
amount of United States dollars at the place such amount is due,
OPIC shall be entitled to demand immediate payment of, and shall
have a separate cause of action against the Company for, the
additional amount necessary to yield the amount then due. In the
event OPIC, upon the conversion of such judgment into dollars,
shall receive (as a result of currency exchange rate fluctuations)
an amount greater than that to which it was entitled, the Company
shall be entitled to immediate reimbursement of the excess amount.
SECTION 7.03. Immunity. The Company represents and
warrants that it is subject to civil and commercial law with
respect to its obligations under this Agreement, the OPIC Note, the
Security Documents and the other Financing Documents to which it is
a party, that the making and performance of this Agreement and such
other Financing Documents and borrowings by the Company pursuant
hereto constitute private and commercial acts rather than
governmental or public acts and that neither the Company nor any of
its properties or revenues has, by virtue of its legal status, any
right of immunity from suit, court jurisdiction, attachment prior
to judgment, attachment in aid of execution of a judgment, set-off,
execution of a judgment or from any other legal process with
respect to its obligations under this Agreement and such other
Financing Documents. To the extent that the Company may hereafter
be entitled, in any jurisdiction in which judicial proceedings may
at any time be commenced with respect to this Agreement or any
other Financing Document to which it is a party, to claim for
itself or its revenues or assets any such immunity, and to the
extent that in any such jurisdiction there may be attributed to the
Company such an immunity (whether or not claimed), the Company
hereby irrevocably agrees not to claim and hereby irrevocably
waives such immunity. The foregoing waiver of immunity shall have
effect under the United States Foreign Sovereign Immunities Act of
1976.
SECTION 7.04. GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF
NEW YORK OF THE UNITED STATES OF AMERICA WITHOUT REGARD TO ITS
CONFLICT OF LAWS PROVISIONS.
SECTION 7.05. Notices. Each report, notice and other
communication to be given under this Agreement shall be in writing
in the English language, be delivered by hand, mail, or telecopy,
postage prepaid, and be deemed to have been duly given when
received by the addressee as follows:
To the Company:
CE LUZON GEOTHERMAL POWER COMPANY, INC.
c/o California Energy Company, Inc.
10831 Old Mill Road
Omaha, Nebraska 68154
Tel: 402-330-8900
Fax: 402-334-3759
Attention: Chief Financial Officer
with a copy to General Counsel
Fax: 402-334-3746
with a copy to:
c/o Sycip Gorres Velayo & Co.
6760 Ayala Avenue
Makati, Metro Manila
Philippines
Tel:011-632-819-3011
Fax:011-632-819-0872
Attention: Ms. Rosario Calderon Flanagan
To OPIC:
Overseas Private Investment Corporation
1100 New York Avenue, N.W.
Washington, D.C. 20527
United States of America
Attn: Vice President & Treasurer with a copy to Tracey Webb
Fax: 202-408-9866
With a copy to:
Milbank, Tweed, Hadley & McCloy
1825 Eye Street, N.W. - Suite 1100
Washington, D.C. 20006
Tel: 202-835-7518
Fax: 202-835-7586
Attention: Mark A. Kantor
To the Paying Agent:
BankAmerica National Trust Company
One World Trade Center, 18th Floor
New York, New York 10048
Tel: 212-390-3081
Fax: 212-390-3326
Attention: John Bowman
Any party by written notice to the others may change the address to
which such communications should be sent to it.
SECTION 7.06. The Table of Contents; Descriptive
Headings. The Table of Contents and the headings in this
Agreement are for the purpose of reference only and do not limit or
affect its meaning.
SECTION 7.07. Succession. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of
the parties hereto, provided that the Company shall not, without
the prior written consent of OPIC, assign or delegate all or any
part of its interest or obligations hereunder.
SECTION 7.08. Survival of Agreements. Each agreement,
representation and warranty contained or referred to in this
Agreement shall survive any investigation at any time made by OPIC
and any Disbursement of the OPIC Loan, except for changes permitted
hereby, and shall terminate only when all amounts due or to become
due under this Agreement and the OPIC Note are paid in full.
SECTION 7.09. Integration; Amendments. This Agreement
and the other Financing Documents embody the entire understanding
of the parties hereto, and supersedes all prior negotiations,
understandings and agreements between them with respect to the
subject matter hereof. The provisions of this Agreement may be
waived, supplemented or amended only by an instrument in writing
signed by duly authorized representatives of the Company and OPIC.
No course of dealing and no failure or delay by OPIC in exercising
any right, power or remedy hereunder shall operate as a waiver
thereof or otherwise prejudice OPIC's rights, powers or remedies.
No right, power or remedy conferred upon OPIC hereby or by the OPIC
Note shall be exclusive of any other right, power or remedy
referred to herein or therein or now or hereafter available at law,
in equity, by statute or otherwise.
SECTION 7.10. Counterparts. This Agreement may be
executed by manual or facsimile signature (with confirmation by
return facsimile) in one or more counterparts, each of which shall
be deemed an original and all of which together shall constitute
one and the same instrument.
SECTION 7.11. Severability. Any provision of this
Agreement, the OPIC Note and any other Financing Document which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability but shall not invalidate the remaining provisions
of this Agreement, the OPIC Note or any other Financing Document or
affect such provision in any other
jurisdiction.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed and delivered on its behalf by its
duly authorized representative on the date set forth below.
Signed on August 11, 1994.
CE LUZON GEOTHERMAL POWER
COMPANY, INC.
By /s/ John G. Sylvia
Its Vice President
OVERSEAS PRIVATE INVESTMENT
CORPORATION
By /s/ Tracey Webb
Its Financial Analyst
Exhibit 10.104
Reserved
Exhibit 10.105
I-1
Article I - Subject of Insurance and Exchange of Promises.
1.01 Subject.
1. Investment. The Investor promises that the Investor
contributed or will contribute up to $40,040,000 in United States
dollars
to
CE Luzon Geothermal Power Company, Inc.
c/o Sycip Gorres Valayo & Co.
6760 Ayala Avenue
Makati, Manila Philippines
a corporation organized under the laws of Philippines
(the "foreign enterprise")
for which the Investor has acquired or will acquire
(a) approximately 270,000 shares of common stock;
(b) subordinated convertible notes that will convert to shares of
redeemable preferred stock or common stock upon commencement of
commercial operations; and
(c) other subordinated debt that may be issued from time to time,
together at all times representing an approximately 50 percent
interest in it
(together "the investment").
Ninety percent of each of these interests acquired by the
Investor is insured under this contract (the "insured
investment").
2. Project. The investment will be applied to
the construction and operation of a 180-megawatt geothermal
electric power generating facility in the Philippines
(the "project").
3. Foreign governing authority means the governmental
authority(ies) in effective control in all or part of
Philippines.
I-2
1.02 Promises.
OPIC promises that if acts occur during the term of this contract
which satisfy the requirements for coverage in Article II, IV or
VI, OPIC will pay the Investor the amount of compensation provided
in Article III, V or VII, in accordance with the procedures in
Article VIII.
The Investor promises to comply with the duties in Article IX. If
the Investor violates any of those duties, the Investor may lose
rights, including the right to compensation.
Amendments to Articles I through IX may be contained in Article X.
1.03 Maximum Aggregate Compensation.
OPIC will not pay compensation under this contract in an
aggregate amount that exceeds $50,000,000.
1.04 Full Faith and Credit.
The full faith and credit of the United States of America is
pledged to secure the full payment by OPIC of its obligations under
this contract.
1.05 Term.
This contract shall enter into force on the date it has been signed
by OPIC and the Investor and shall terminate 15 years afterward
unless terminated earlier (Section 8.07; Section 9.02).
1.06 Premium and Active Amount Elections.
The Investor shall elect amounts of coverage (Section 8.06) and pay
premiums on or before each annual anniversary of the
effective date of the contract.
The coverages and premiums for the first period shall be as
follows:
I-3
Equity/Debt securities:
Inconvertibility Expropriation Political
Violence
Coverage Ceiling $50,000,000 $50,000,000 $50,000,000
Active Amount $24,000,000 $24,000,000 $24,000,000
Premium Rate is x0.30000% x0.60000% x 0.53000%
Total premium is: $72,000.00 +$144,000.00 +$127,200.00
=$343,200.00
Total Premium is: $343,200.00
The premium for the first half of the first period (Section 10.06)
is: $171,600.00
1.07 Administrative Fee. The Investor will pay an annual fee for
contract administration of .25% of the Investment amount (Section
1.01.1) on or before the contract effective date and on or before
each annual anniversary of the contract effective date, but only if
the administrative fee exceeds the premium due for the contract for
that period. If the administrative fee exceeds the premium due for
that period, the premium will be waived.
Article II - Inconvertibility - Scope of Coverage.
2.01 Inconvertibility of Local Currency. Local currency shall be
deemed inconvertible and compensation shall be payable,
subject to the exclusions (Section 2.02) and limitation (Section
3.02), if neither the Investor nor the foreign enterprise is able
legally
(a) to convert earnings from or returns of the insured
investment into United States dollars through any channel during
the 90 days immediately prior to a claim to OPIC, except at an
exchange rate that is less favorable than the then-prevailing
exchange rate described under Section 3.01.2, or
(b) to transfer such converted earnings to the United States
during such period.
2.02 Exclusions. No compensation for inconvertibility shall be
payable if
(a) Pre-existing Restrictions.
(1) An investor in comparable circumstances would have been unable
legally (a) to convert local currency into United States dollars on
the date of this contract or (b) to transfer such dollars to the
United States on the date of this contract; and
(2) The Investor knew or should have known about the
restriction; or
(b) Investor Diligence. The Investor has not made all
reasonable efforts to convert the local currency into United States
dollars or to transfer such dollars to the United States through
all direct and indirect legal mechanisms reasonably available; or
(c) Reconversions. The local currency represents funds which were
previously converted into another currency; or
(d) Provocation. The preponderant cause is unreasonable action
attributable to the Investor, including corrupt practices.
(e) Use Restricted by Expropriation. The use of such local
currency is restricted by an expropriatory action (Section 4.02).
III-1
Article III - Inconvertibility - Amount of Compensation
3.01 Rate of Compensation for Inconvertibility.
1. Date. If the requirements of inconvertibility are satisfied
(Article II), subject to the limitation (Section 3.02), OPIC shall
pay compensation
(a) against prior delivery of the inconvertible local currency, or
(b) if the Investor is unable legally to deliver the local
currency or if OPIC so requests, against prior assignment of the
Investor's right to receive the payment that is the subject of the
claim.
If the Investor delivers local currency or an assignment of rights
denominated in local currency, compensation shall be the United
States dollar equivalent of the local currency at the exchange rate
in effect 90 days before OPIC receives the
completed application for compensation.
If the Investor delivers an assignment of rights denominated in
United States dollars, compensation shall be the United States
dollar amount of the rights so assigned.
2. Exchange Rate.
(a) The exchange rate shall be the official exchange rate
applicable to the type of remittance involved.
(b) If, however,
(1) United States dollars were not generally available at the
applicable official exchange rate; and
(2) exchanges of local currency for United States dollars were
effected legally and customarily through another channel;
then the exchange rate shall be the effective rate obtained through
that channel.
(c) In either case, the exchange rate shall be net of all
deductions for governmentally imposed charges, such as taxes and
commissions.
3.02 Limitation. Compensation shall not exceed the Active Amount
(Section 8.06 in effect 90 days before OPIC receives the
application for compensation.
Article IV - Expropriation - Scope of Coverage.
4.01 Total Expropriation. Compensation is payable for total
expropriation (Section 5.01), subject to the exclusions (Section
4.03) and limitations (Section 5.04), if an act or series of acts
satisfies all of the following requirements:
(a) the acts are attributable to a foreign governing authority
which is in de facto control of the part of the country in which
the project is located;
(b) the acts are violations of international law (without regard
to the availability of local remedies) or material breaches of
local law;
(c) the acts directly deprive the Investor of fundamental rights
in the insured investment (Rights are "fundamental" if without them
the Investor is substantially deprived of the benefits of the
investment.); and
(d) the violations of law are not remedied (Section 9.01.9) and
the expropriatory effect continues for six months.
4.02 Expropriation of Funds. Compensation is payable for an
expropriation of funds that constitute a return of the insured
investment or earnings on the insured investment (Section 5.02) if
an act or series of acts
(a) satisfies the governmental action, illegality and duration
requirements (Section 4.01(a), (b) and (d)); and
(b) directly results in preventing the Investor from
(1) repatriating the funds; and
(2) effectively controlling the funds in the country in which the
project is located.
4.03 Exclusions. No compensation for expropriation shall be
payable if
(a) Provocation. The preponderant cause is unreasonable action
attributable to the Investor including corrupt practices.
(b) Government Action. The action is taken by the foreign
governing authority in its capacity or through its powers as a
purchaser, supplier, creditor, shareholder, director or manager of
the foreign enterprise.
Article V - Expropriation - Amount of Compensation.
5.01 Total Expropriation. For total expropriation (Section 4.01),
OPIC shall pay compensation in United States dollars in the amount
of the book value of the insured investment, subject to adjustments
(Section 5.03) and limitations (Section 5.04).
Compensation is computed as of the date the expropriatory effect
commences (Section 4.01(c)) and is based on financial statements
maintained in accordance with Section 9.01.6 for the foreign
enterprise. However, OPIC may
(1) conform the financial statements to principles of accounting
generally accepted in the United States; and
(2) make adjustments (Section 5.03).
OPIC shall be bound by the Investor's choice among generally
accepted accounting principles, if the choice is consistent with
the Investor's own accounting, unless such choice results in a
substantial overstatement of the fair market value of the insured
investment or the foreign enterprise as an independent entity.
5.02 Expropriation of Funds. For expropriation of funds
(Section 4.02), OPIC shall pay compensation in the amount of the
United States dollar equivalent of the expropriated funds at the
exchange rate determined in accordance with Section 3.01.2,
computed as of the date the expropriation begins. Compensation for
expropriation of funds shall be subject to the adjustments and
limitations (Section 5.03 and Section 5.04).
5.03 Adjustments.
1. Investments of Property. Non-cash items contributed as part of
the investment shall be adjusted if necessary to reflect the fair
market value of the items furnished at the time of contribution to
the project, plus freight, installation and other reasonable direct
costs incurred in furnishing the items to the project.
2. Non-Insured Contribution. Any direct or indirect contribution
(and retained earnings thereon) by the Investor after the insured
investment is made shall be deducted from the book value of the
foreign enterprise.
3. Special Accounting Rules. Dealings among related parties shall
be adjusted if necessary to reflect transactions as they would have
occurred had they been at arm's length, and forgiveness of
obligations shall be disregarded. Each entity shall be accounted
for as if it were a separate person for income tax purposes, and
the effect of tax shifting arrangements shall be disregarded.
Obsolescence or
V-2
permanent reduction in recoverable values shall be recognized by
adjusting the book value of assets to realizable value. OPIC may
adjust financial statements to reflect the effect of events that
occur before the expropriatory effect commences, such as events of
loss which are later confirmed.
4. Other Compensation and Retained Property. OPIC may reduce
compensation by the amount of
(a) compensation received from other sources on account of the
loss (excluding compensation payable under other insurance
policies, except to the extent necessary to prevent the Investor
from recovering more than the amount of the loss as recognized
under any of the policies under which compensation is due,
without regard to policy limits); and
(b) the book value of commercially viable property which remains
subject to the Investor's effective disposition and control after
the expropriatory effect commences (unless OPIC requires the
Investor to assign the property (Section 8.02)); and
(c) any obligation the Investor is relieved of by the
expropriation.
The reduction shall be proportionate to the extent that these items
are attributable to the insured investment.
5. Start-up Expenses. If the book value of the insured investment
of a new foreign enterprise in the development stage is less than
the insured amount originally contributed, the accumulated loss
will be disregarded if
(a) the foreign enterprise is newly formed for the principal
purpose of undertaking the project,
(b) the foreign enterprise is a going concern as of the date the
expropriatory effect commences,
(c) that date is within three years of the date this contract is
issued, and
(d) it is clear that no adjustment to book value is necessary by
reason of obsolescence or permanent reduction in recoverable values
of productive facilities or assets.
5.04 Limitations. Compensation shall not exceed any of the
following limitations:
(a) Active Amount. The Active Amount (Section 8.06) on the date
the expropriatory effect commences;
V-3
(b) Insolvency. If the liabilities of the foreign enterprise
exceed its assets as of the date the expropriatory effect
commences, the amount that the Investor would have been entitled to
receive an insolvency proceedings with respect to the insured
investment if assets had been liquidated at book value on that
date;
(c) Self-Insurance. The maximum amount which could be received by
the Investor from OPIC without breaching Section 9.01.3.
VI-1
Article VI - Political Violence - Scope of Coverage.
6.01 Loss Due to Political Violence. Compensation is payable,
subject to the exclusions (Section 6.02) and limitations (Section
7.02), if political violence is the direct and immediate cause of
the permanent loss (including loss of value by damage or
destruction) of tangible property of the foreign enterprise used
for the project.
"Political violence" means a violent act undertaken with the
primary intent of achieving a political objective, such as declared
or undeclared war, hostile action by national or international
armed forces, civil war, revolution, insurrection, civil strife,
terrorism or sabotage. However, acts undertaken primarily to
achieve labor or student objectives are not covered.
6.02 Exclusions. No compensation for political violence shall be
payable
(a) Excluded Property. For loss of precious metals, gems, works
of art, money or documents;
(b) Minimum loss. If the amount of compensation payable would be
less than $5,000;
(c) Reasonable Protective Measures. If the loss results from the
failure to take reasonable measures to protect or preserve the
property; or
(d) Provocation. If the preponderant cause of the loss is
unreasonable action attributable to the Investor, including corrupt
practices.
VII-1
Article VII - Political Violence - Amount of Compensation.
7.01 Basis of Compensation. If the requirements of Article VI are
satisfied, and subject to the limitations (Section 7.02), OPIC
shall pay compensation for a loss in United States dollars in the
amount of
(a) Adjusted Cost. Adjusted cost is the Investor's share
(Section 7.03) of the lowest of
(1) the original cost;
(2) fair market value; or
(3) the reasonable cost of repair;
less anything of value received by the Investor on account of the
property lost and less the Investor's share of any such receipts by
the foreign enterprise; or
(b) Replacement Cost. If the Investor so elects, OPIC will pay
the reasonable cost to repair any item of lost property or to
replace it with equivalent new property, less anything of value
received by the Investor or the foreign enterprise on account of
the property lost. Such compensation shall not exceed 200% of the
original cost of the item. To receive such compensation, the
Investor must repair or replace the lost property to the project
within three years of the loss.
OPIC shall not reduce the compensation payable under subsections
(a) or (b) above by the amount of compensation payable under other
insurance policies on account of the property lost, except to the
extent necessary to prevent the Investor from recovering more than
the amount of the loss as recognized under any of the policies
under which compensation is due, without regard to policy limits.
7.02 Limitations. Compensation shall not exceed any of the
following limitations:
(a) Active Amount. The Active Amount (Section 8.06) on the date
of the loss.
(b) Self-insurance. The maximum amount which could be recovered
by the Investor from OPIC without breaching Section 9.01.3.
(c) Aggregate Adjusted Cost Compensation. Aggregate
compensation for property compensated at adjusted cost shall not
exceed the book value of the insured investment (Section 7.04) at
the time of loss.
7.03 Investor's Share. "Investor's share" means the ratio that
the equity owned by the Investor bears to the total equity of the
foreign enterprise.
7.04 Book Value of Insured Investment.
(a) Book Value. Book value is based on financial statements
maintained by the Investor in accordance with Section 9.01.6 for
the foreign enterprise. However, OPIC may
(1) conform the financial statements to principles of accounting
generally accepted in the United States; and
(2) make adjustments (Section 7.04(b)).
OPIC shall be bound by the Investor's choice among generally
accepted accounting principles, if the choice is consistent with
the Investor's own accounting, unless such choice results in a
substantial overstatement of the fair market value of the insured
investment or the foreign enterprise as an independent entity.
(b) Adjustments.
(1) Investments of Property. Non-cash items contributed to the
investment shall be adjusted if necessary to reflect the fair
market value of the items furnished at the time of contribution to
the project, plus freight, installation and other reasonable direct
costs incurred in furnishing the items to the project.
(2) Non-Insured Contribution. Any direct or indirect
contribution (and retained earnings thereon) by the Investor after
the insured investment is made shall be deducted from book value of
the foreign enterprise.
(3) Special Accounting Rules. Dealings among related parties
shall be adjusted if necessary to reflect transactions as they
would have occurred had they been at arm's length, and
forgiveness of obligations shall be disregarded. Each entity shall
be accounted for as if it were a separate person for income tax
purposes, and the effect of tax shifting arrangements shall be
disregarded. Obsolescence or permanent reduction in
recoverable values shall be recognized by adjusting the book value
of assets to realizable value. OPIC may adjust financial
statements to reflect the effect of events that occur before the
loss of property, such as events of loss which are later
confirmed.
VII-3
(4) Start-up Expenses. If the book value of the insured
investment of a new foreign enterprise in the development stage is
less than the insured amount originally contributed, the
accumulated loss will be disregarded if
(a) the foreign enterprise is newly formed for the principal
purpose of undertaking the project,
(b) the foreign enterprise is a going concern as of the date of
the loss,
(c) that date is within three years of the date this contract is
issued, and
(d) it is clear that no adjustment to book value is necessary by
reason of obsolescence or permanent reduction in recoverable values
of productive facilities or assets.
(c) Insolvency. If the liabilities of the enterprise exceed its
assets as of the date of the loss, book value of the insured
investment shall not exceed the amount that the Investor would have
been entitled to receive in insolvency proceedings with respect to
the insured investment if assets had been liquidated at book value
on the day prior to the loss.
7.05 Appraisal. If OPIC determines that compensation is payable
but OPIC and the Investor are unable to agree on a question of
valuation, either may demand the appointment of an impartial
appraiser. If the parties are unable to agree on the appraiser,
the appointment shall be made by the American Arbitration
Association. The appraiser's itemized appraisal shall be
binding. Appraisal costs shall be borne equally by OPIC and
Investor.
7.06 Estimated Compensation. If OPIC determines that
compensation is payable but conditions in the project country
preclude reasonable efforts by OPIC to determine the precise amount
due, OPIC may pay estimated compensation based on the information
then available. OPIC may revise its estimate and recover any
excess or pay any additional amount due upon receipt of additional
information.
VIII-1
Article VIII - Procedures.
8.01 Application for Compensation. An application for
compensation shall demonstrate the Investor's right to
compensation in the amount claimed. The Investor shall provide
such additional information as OPIC may reasonably require to
evaluate the application. The Investor may amend or withdraw an
application for compensation at any time, but the right to
recover compensation will be lost for any acts covered by a
withdrawn application.
(a) There is no time limit on application for inconvertibility
compensation (Article III); however, compensation shall not exceed
the Active Amount applicable in accordance with Section 3.02.
(b) An application for expropriation compensation (Article V) must
be filed within six months after the Investor has reason to believe
that all requirements of Article IV have been satisfied.
(c) A notice demonstrating the Investor's entitlement to
political violence compensation for loss of assets (Article VI)
must be filed within six months of the loss. The notice together
with proof of the amount of compensation due will be considered a
completed application, which must be filed within three years of
the loss. The Investor may request adjusted cost compensation
(Section 7.01(a)) and later amend the application within three
years of the loss to elect replacement cost compensation (Section
7.01(b)).
(d) OPIC shall have a reasonable time in which to complete
processing of any application for compensation.
8.02 Assignment to OPIC. Within sixty days after OPIC notifies
the Investor of the amount of compensation OPIC will pay under
expropriation or political violence coverage, and concurrent with
payment, the Investor shall transfer to OPIC (a) for
expropriation, all interests attributable to the insured
investment (Section 4.01) or funds (Section 4.02) as of the date
the expropriatory effect commences, including claims arising out of
the expropriation, or (b) for political violence, claims arising
out of the loss due to political violence (Section 6.01). The
Investor shall transfer the interests and claims free and clear of,
and shall agree to indemnify OPIC against, claims, defenses,
counterclaims, rights of setoff and other encumbrances (except
defenses relating to the expropriation).
VIII-2
In connection with an inconvertibility claim, immediately upon
receipt of instructions from OPIC together with notification that
it intends to pay such claim, the Investor shall deliver the local
currency to OPIC by draft subject to collection (or, at OPIC's
option, in cash), or, if the Investor is unable legally to deliver
the local currency or if OPIC so requests, shall instead deliver an
assignment of the Investor's rights with respect to the payment
that is the subject of the claim.
OPIC may decline all or any portion of the Investor's interests or
claims; if so, the Investor's right to compensation shall be
affected only as provided in Section 5.03.4(b).
8.03 Security. As a condition for paying compensation
(including estimated compensation (Section 7.06)) prior to a final
determination of its liability, OPIC may require the
Investor to provide security, satisfactory to OPIC in its
reasonable judgment, for repayment pursuant to Section 9.02(b).
8.04 Excess Salvage Value. With respect to compensated
expropriation and political violence claims, OPIC shall pay to the
Investor any amounts OPIC realizes in United States dollars from
the rights transferred (Section 8.02) in excess of
(a) the compensation paid by OPIC; plus
(b) reasonable interest; plus
(c) OPIC's out-of-pocket expenses in maintaining and realizing
funds from the transferred property.
However, this provision shall not in any way restrict OPIC's
discretion to deal with the rights transferred. OPIC shall have no
obligation to take action with respect to the rights
transferred and shall incur no liability to the Investor for any
actions taken or not taken after the transfer.
8.05 Arbitration. Any controversy relating to this contract shall
be settled by arbitration in Washington, D.C. according to the then
prevailing Commercial Arbitration Rules of the American Arbitration
Association. Unless the Investor initiates
arbitration, OPIC's liability shall expire one year after OPIC
notifies the Investor of its determination concerning an
application for compensation. A decision by arbitrators shall be
final and binding, and any court having jurisdiction may enter
judgment on it.
8.06 Election of Active Amounts and Coverage Ceilings. By prior
notice to OPIC effective as of the next due date for premiums
(Section 1.06), the Investor may increase or decrease the Active
Amount for any coverage for the remainder of the contract term,
subject to the following limitations:
(a) Active Amount shall not exceed the Coverage Ceiling (Section
1.06);
(b) The Coverage Ceiling shall be reduced automatically by
compensation paid by OPIC; Active Amount shall also be reduced
automatically by compensation paid by OPIC; Active Amount shall
also be reduced for the remainder of the annual election period to
which the claim relates (Section 3.02, Section 5.04(a), or Section
7.02(a));
(c) For inconvertibility, expropriation, and political violence
coverages, Active Amount shall not be less than the lesser of book
value (Section 5.01) or the Coverage Ceiling for that
coverage.
8.07 Termination. The Investor may terminate this contract
effective as of any premium due date unless the premium is
already paid. However, termination shall not affect any rights or
obligations of either party relating to prior periods.
8.08 Legal and Miscellaneous. This contract shall be governed by
the law of the District of Columbia, its conflict of law rules
excepted. This contract constitutes the complete agreement between
the parties, superseding any prior understandings. This contract
may be modified, or its terms waived, only in writing.
8.09 Notices. Notices must be in writing and shall be effective
when received. Notices may be given to the Investor at the address
on the title page (unless changed in writing), and to OPIC at
Overseas Private Investment Corporation
Washington, D.C. 20527
Attention: Vice-President, Insurance.
8.10 Refund of Premiums. Upon timely written request, OPIC will
refund premiums pro rata if
(a) excess coverage is elected while a valid claim for
compensation is pending; or
(b) the Investor becomes ineligible for coverage or ceases to hold
all or a portion of the insured investment, in which case any
refund shall be calculated from the later of (i) the date the
Investor becomes ineligible or ceases to hold the insured
investment, or (ii) the date OPIC receives such written request.
IX-1
Article IX - Investor's Duties.
9.01 Duties.
1. Representations and Project Execution. The Investor
understands that OPIC has issued this contract based on statutory
policy goals (22 U.S.C. Section 2191) as well as underwriting
considerations. All statements made by the Investor to OPIC in
connection with this contract are true and complete, and the
investment and the project shall be carried out as described.
2. Ownership and Eligibility. The Investor shall at all times
remain the beneficial owner of the insured investment and shall
remain eligible for OPIC insurance as
(a) a citizen of the United States; or
(b) a corporation or other association created under the laws of
the United States, its states or territories, of which more than
50% of both the total interest and of each class of shares is
beneficially owned by citizens of the United States; or
(c) an entity created under foreign law in which a 95% interest is
owned by entities eligible under (a) or (b).
3. Self-Insurance. The Investor shall continue to bear the risk
of loss of at least 10% of the book value of its interest in the
foreign enterprise.
4. Assignment. The Investor shall not assign this contract, or
any of its rights, without OPIC's written consent, which will not
be withheld unreasonably.
5. Premiums. The Investor shall pay the premiums for this
contract in accordance with Article I. In the event that
premiums are not paid when due, the Investor shall be in default
but may cure this default within sixty days by paying the
premiums plus interest at a rate of 12% per annum.
6. Accounting Records.
(a) The Investor shall maintain the United States true and
complete copies of the records, books of account and current
financial statements for the foreign enterprise necessary to
compute and substantiate compensation, including
(1) records documenting the investment;
(2) annual balance sheets;
IX-2
(3) annual statements of income, retained earnings, cash flow and
related footnotes.
(b) Accounting records shall be maintained and financial
statements prepared in United States dollars in accordance with
principles of accounting generally accepted in the United States
(including principles of currency translation), as modified by the
special accounting rules (Section 5.03.3 and Section
7.04(b)(3)).
(c) Subject to the obligations of the Investor under Section
9.01.6, the Investor or the foreign enterprise shall retain all
accounting records until
(1) the deadline for filing an application for compensation has
expired (Section 8.01); or
(2) final action has been taken on an application for
compensation (including arbitration and judicial appeals).
However, if compensation has been paid, the accounting records
shall be retained for three years after the Investor receives the
compensation.
7. Reports and Access to Information. In order that OPIC may
perform its statutory duties, including settling claims and
reporting to the Congress 22 U.S.C. Section 2200a), the Investor
shall furnish OPIC with such information as OPIC may reasonably
request, including
(a) making available for interviews any persons subject to the
Investor's practical control (including employees of the project
and independent accountants);
(b) making available for inspection and copying of all documents
and accounting records relating to the project (including
workpapers of independent accountants if available);
(c) permitting OPIC to inspect the project; and
(d) furnishing available information concerning the effects of the
project on the economy of the United States, the environment, and
the economic and social development of the country in which the
project is located.
The Investor's duties under this paragraph shall continue for the
periods specified for retention of accounting records (Section
9.01.6(c)).
8. Compulsory Notice. The Investor shall notify OPIC promptly if
it has reason to believe that the Investor or the foreign
enterprise will not be able to convert or transfer local currency
during the waiting period (Article II). The Investor shall notify
OPIC promptly of any acts or threats to act in a manner which may
come within the scope of the expropriation or political violence
coverage (Articles IV and VI) and shall keep OPIC
informed as to all relevant developments,
IX-3
9. Preservation, Transfer and Continuing Cooperation. At OPIC's
request, the Investor shall promptly assign rights with respect to
the investment, as required by Section 8.02. Prior to the
assignment of rights required by Section 8.02, the Investor shall,
in consultation with OPIC, take all reasonable measures to preserve
property, to pursue available administrative and
judicial remedies, and to negotiate in good faith with the
governing authority of the country in which the project is
located and other potential sources of compensation. After a
transfer of rights or delivery of local currency, in exchange for
reimbursement of reasonable out-of-pocket expenses, the Investor
shall take all actions reasonably requested by OPIC to assist OPIC
in preserving the property and rights transferred to OPIC and in
prosecuting related claims.
10. Other Agreements. The Investor shall not enter into any
agreement with any foreign governing authority with respect to
compensation for any acts within the scope of coverage (Article II,
IV or VI) without OPIC's prior written consent.
9.02 Default. Material breach or misrepresentation by the
Investor shall constitute default, and OPIC may:
(a) refuse to make payments to the Investor;
(b) recover payments made; and
(c) terminate this contract effective as of the date of the breach
by giving notice to the Investor.
9.03 Non-Waiver. Neither OPIC's failure to invoke its rights, nor
its acceptance of premiums, shall constitute waiver of any of its
rights, even though OPIC knows of the Investor's breach.
9.04 Cure. OPIC may permit the Investor to cure a breach in a
manner satisfactory to OPIC, but shall have no obligation to allow
breaches to be cured.
X-1
ARTICLE X - AMENDMENTS
The following amendment is hereby incorporated as part of this
Contract of Insurance No. E093:
10.01 The Investor shall deliver to OPIC within 90 days of the
date of this contract copies of the executed major project
documents. The Investor shall also deliver to OPIC within 90 days
of the date of the investment contribution all documents evidencing
the investment. Failure to deliver the foregoing documents shall
constitute a material breach (Section 9.02) of this contract.
10.02 Notwithstanding any other provision of this contract to the
contrary, the Investor shall not file applications for
compensation, and OPIC shall have no liability for claims, under
inconvertibility coverage (Articles II and III) in excess of
$4,500,000 in any 91-day period.
10.03 Notwithstanding any other provisions of this contract to the
contrary, the failure of the foreign governing authority, the PNOC-
Energy Development Corporation or the National Power
Corporation or any of their affiliates, assigns and successors in
interest to honor their obligations under any agreement,
contractual guaranty or undertaking in favor of the Investor, the
foreign enterprise and its affiliates, assigns and successors in
interest (the "Agreements") shall not constitute a basis for a
claim of expropriation under this contract unless the Investor has
exhausted remedies under the Agreements and the requirements of
Article IV are satisfied.
10.04 Notwithstanding any other provision of this contract to the
contrary, OPIC shall have no liability for claims related to the
wrongful calling of any standby guaranty or bond posted by the
Investor in favor of the PNOC-Energy Development Corporation, its
affiliates and assigns or the foreign governing authority or any of
its agencies.
10.05 Section 1.05, "Term" is amended in its entirety to read as
follows:
"1.05 Term. This contract shall enter into force on the date it
has been signed by OPIC and the Investor and shall terminate 15
years afterward unless terminated earlier (Section 8.07; Section
9.02); provided, however, that the initial term may be extended by
OPIC, in its sole discretion, on such terms and conditions as OPIC
may determine for an additional period not to exceed five years,
provided that the Investor requests, and OPIC agrees in writing to,
such an extension at least six months prior to the termination of
the initial term."
X-2
10.06 Section 1.06, "Premiums and Active Amount Elections", is
amended by deleting the first sentence and substituting the
following therefor:
"The Investor shall elect amounts of coverage pursuant to Section
8.06 and pay premiums on or before (a) July 29, 1994, the
effective date of this contract, to cover the first half of the
first period, (b) R,K,H February 1, 1995, to cover the second half
of the first period, and (c) each August thereafter, which is the
annual anniversary of the effective date of this contract, to cover
each period thereafter."
10.07 Section 5.03, "Adjustments", is amended by adding the
following at the end thereof:
"6. Unearned Payments. Whether or not permitted under generally
accepted accounting principles (Section 9.01.6), the book value of
the insured investment shall not include any amounts payable under
the project agreements, however described, that had not been earned
and accrued as of the date of expropriation."
10.08 Section 9.01, "Duties", is amended by adding the following
at the end thereof:
"11. Modification of Project Agreements. The Investor or the
foreign enterprise shall not agree to the modification or
amendment of any material project agreement that would have a
material adverse effect on the risks borne by OPIC without OPIC's
prior written consent.
12. Worker Rights. The Investor agrees not to take actions to
prevent employees of the foreign enterprise from lawfully
exercising their right of free association and their right to
organize and bargain collectively. The Investor further agrees to
observe applicable laws relating to a minimum age for
employment of children, acceptable conditions of work with
respect to minimum wages, hours of work, and occupational health
and safety, and not to use forced labor. The Investor is not
responsible under this paragraph for the actions of a foreign
government."
INVESTOR
By: /s/ Steven A. McArthur Date:___________________________
Effective July 29, 1994 (/s/ SM)
Steven A. McArthur, Senior Vice President
Print Name and Title
OVERSEAS PRIVATE INVESTMENT CORPORATION
By: /s/ Ruth R. Harkin Date:_______________________
Effective July 29, 1994 (/s/ RRH)
Ruth R. Harkin, President and CEO
Print Name and Title
August 3, 1994
Mr. Miles W. McHugh
Manager, Project Finance
California Energy Company
10831 Old Mill Road
Omaha, Nebraska 68154
Re: Amendment No. 1 to OPIC Insurance Contract No. E093
Dear Mr. McHugh:
OPIC recently executed your insurance contract referenced above,
effective as of July 29, 1994. In order to conform subsequent
anniversary dates of the contract to the effective date, OPIC
proposes to amend the contract as follows:
1. Section 10.06 is amended in its entirety to read as follows:
"10.06 Section 1.06, 'Premiums and Active Amount Elections', is
amended by deleting the first sentence and substituting the
following therefore:
'The Investor shall elect amounts of coverage pursuant to section
8.06 and pay premiums on or before (a) July 29, 1994, the
effective date of this contract, to cover the first half of the
first period, (b) January 29, 1995, to cover the second half of the
first period, and (c) each July 29 thereafter, which is the annual
anniversary of the effective date of this contract, to cover each
annual period thereafter.'"
If this amendment is acceptable to you, please have an authorized
officer countersign both originals of this letter in the spaces
provided. Retain one original for your records, and return the
second to OPIC to the attention of Ms. Sarah McStravick. Upon
execution, this amendment shall be effective from July 29, 1994.
If you have any questions, please contact Mr. Frank Bondengraven at
202-336-8577.
Sincerely,
/s/ Daniel W. Riordan
Daniel W. Riordan
Vice President for Insurance
Enclosures: a/s
ACCEPTED AND AGREED
CALIFORNIA ENERGY COMPANY, INC.
By: /s/ Steven A. McArthur Date: August 8, 1994
Senior Vice President
(print name and title)
Exhibit 10.106
AGREEMENT
This Agreement made and executed on this day of September 1993
by and between:
1. PNOC-ENERGY DEVELOPMENT CORPORATION, hereinafter referred to as
PNOC-EDC, a wholly owned subsidiary of the Philippine National Oil
Company, a corporation created and organised under
Presidential Decree No. 334, as amended, with principal office
address at Petron Building, 7901 Makati Avenue, Makati, Metro
Manila, Philippines, herein represented by its President Mr. MONICO
V. JACOB, who is duly authorised to represent it in this Agreement.
2. MAGMA POWER COMPANY (MAGMA), hereinafter referred to as the
Operator, a private corporation duly organised and existing under
the laws of the State of Nevada with principal office at 4365
Executive Drive, Suite 900, San Diego, California, United States of
America, represented herein by its Executive Vice President Mr. Jon
R. Peele who is duly authorised to represent it in this Agreement.
WITNESSETH THAT
WHEREAS, Republic Act 6957 dated July 9, 1990, (BOT Law)
authorised government infrastructure agencies, including PNOC-EDC,
to enter into contracts with private contractors for the financing,
construction, operation and maintenance of
infrastructure projects;
WHEREAS, NAPOCOR and PNOC-EDC have previously executed a
Memorandum of Understanding for the Development of Geothermal Power
Plant in PNOC-EDC Projects, including the geothermal resources of
the Greater Tongonan area of Leyte, comprising the Upper and Lower
Mahiao, Sambaloran, Malitbog and Mahanagdong sectors where PNOC-EDC
holds an existing Geothermal Service Contract.
WHEREAS, NAPOCOR intends to proceed with the installation of
electric power transmission links from Leyte to Cebu, Luzon and to
other areas of the Philippines.
WHEREAS, NAPOCOR and PNOC-EDC intend to execute a Power Purchase
Agreement for the purchase by NAPOCOR of electric energy produced
by PNOC-EDC from the geothermal resources of the Greater Tongonan
area of Leyte;
WHEREAS, PNOC-EDC has invited several contractors to submit
proposals for the design, construction, operation and maintenance
of a geothermal power plant on a build-operate-transfer (BOT) basis
for the Malitbog portion of the said Geothermal Service Contract
Area, which power plant will convert PNOC-EDC's
geothermal energy into electricity for sale to NAPOCOR.
WHEREAS, the Operator either by itself or through an entity
organised in the Republic of the Philippines to be formed by the
Operator that will assume the Operator's obligations hereunder
wishes to design, construct, own and operate geothermal
electricity generating plants, utilising the geothermal resources
of the Greater Tongonan area and with a Contracted Capacity of two
hundred sixteen (216) MW net and wishes to deliver
electricity exclusively on behalf of PNOC-EDC on such terms and
conditions as are set forth herein; and
NOW, THEREFORE, for and in consideration of the foregoing
presents and the mutual covenants hereinafter set forth, the
Operator and PNOC-EDC have agreed as follows:
ARTICLE 1 DEFINITION OF TERMS
1.1 DEFINITIONS
When used in this Agreement, the terms below shall have the
following meanings:
Agreement: This Energy Conversion Agreement including
attachments, as may be amended from time to time.
Billing Period: The time interval from 10:00 AM on the twenty-
fifth (25th) day of the current month to 10:00 AM on the twenty
fifth (25th) day of the following month where the Operator shall
read meters and accumulate data needed for the purpose of billing
capacity and energy delivered to NAPOCOR on behalf of PNOC-EDC.
BOI: The Board of Investments of the Republic of the
Philippines.
Buyout Date: The meaning specified in Section 9.3
Capacity Payment: The total capacity payments made pursuant to
Section 8.3.1.
Central Bank: The Central Monetary Authority of the Republic of
the Philippines.
Commercial Operation Date: The dates on which each Generating Unit
of the Power Plant is first capable of delivering Nominated
Capacity to NAPOCOR on behalf of PNOC-EDC as certified by the
Parties pursuant to Section 5.4(d).
Construction Bond: The performance bond required to be posted by
the Operator in accordance with Section 3.1.
Contracted Capacity: Between the Commercial Operation Date of the
first Generating Unit and the Commercial Operation Date of the
second Generating Unit seventy two (72) MW net and between the
Commercial Operation Date of the second Generating Unit and the
Commercial Operation Date of the third Generating Unit one hundred
forty four (144) MW net and thereafter two hundred
sixteen (216) MW net, including an agreed maximum amount of power
expressed in kilowatts (kW) for supply to PNOC-EDC (points
MP5(a), (b) and (c) plus points MP4(a) and (b) as indicated in
Figure C1 in Annex C).
Contract Capacity Price: The basic capacity purchase price per
kilowatt (kW) per month for electric capacity nominated by the
Operator consisting of the Contract Capacity Rate for Capital Costs
(CCR), the Contract Capacity Rate for Fixed Operating Costs (OCR),
and the Service Fee Rate to reflect Return on Investments (SFR).
Cooperation Period: The period of ten (10) years of commercial
operation, during which time the Operator shall deliver electric
capacity and energy to NAPOCOR on behalf of PNOC-EDC, starting from
the Commercial Operation Date of the third Generating Unit and
continuing until the tenth (10th) anniversary of that
Commercial Operation Date.
Effectivity Date: The date upon which all conditions precedent set
forth in Article 25 have been either satisfied or waived in writing
by the Party for whose benefit such conditions exist.
Elective Modifications: Modifications to the Operator's design of
the Power Plant requested by PNOC-EDC that are not solely for the
purpose of correcting design errors made by the Operator in its
design of the Power Plant.
Emergency: A condition or situation which in NAPOCOR's sole
judgment affects NAPOCOR's ability to maintain safe, adequate and
continuous electrical service.
Energy Delivered: Kilowatt hours (kWh) generated by the Power
Plant which are delivered to NAPOCOR on behalf of PNOC-EDC at the
Point of Interconnection plus those delivered to PNOC-EDC for its
own use (points MP5(a), (b) and (c) plus points MP4(a) and (b) as
indicated in Figure C1 in Annex C).
Force Majeure: An event specified in Section 14.1.
Forced Outage Hour: An hour during which the Operator failed to
deliver power, for a continuous period of at least thirty (30)
minutes, at a level of at least 95% of the amount of power not in
excess of Nominated Capacity requested by PNOC-EDC where such
failure is not due to a No Fault Outage.
Generating Unit: A signle turbine generator unit, together with
its associated auxiliaries and ancillary plant required to enable
it to generate electricity and to be connected to and operate in
parallel with NAPOCOR's electricity transmission system.
Government: The national Government of the Republic of the
Philippines.
Government Undertaking: The performance undertaking of the
Government in the form attached hereto as Annex G pursuant to which
the Government undertakes to perform all of PNOC-EDC's obligations
hereunder to the extent that PNOC-EDC fails to do so.
Guaranteed Completion Date: The dates set forth in Section 4.1 for
each Generating Unit opposite the terms "Guaranteed
Completion Date", as such dates may be extended pursuant to this
Agreement.
Guaranteed Net Plant Steam Rate: The Net Plant Steam Rate
guaranteed by the Operator, which, for any year during the
Cooperation Period, is the amount set forth in Annex I
corresponding to such year.
NAPOCOR: The National Power Corporation.
NAPOCOR Electric System Integrity: Operation of NAPOCOR's
electric system in a manner which minimizes risks of injury to
persons and/or property and enables NAPOCOR to provide adequate and
reliable electric service to its customers, all in accordance with
generally internationally accepted utility practice.
Net Plant Steam Rate: The total steam flow into the Power Plant
expressed in kilograms divided by (a) the electrical output at the
Point of Interconnection plus (b) the total electric power
delivered to PNOC-EDC, each expressed in kilowatts hours.
No Fault Outage: The inability of the Operator to deliver power to
NAPOCOR due to (i) any condition caused by PNOC-EDC or NAPOCOR,
(ii) any faults in or failure of the steam supply to the Power
Plant, (iii) any faults in or failure of the electrical system
connecting the Power Plant to NAPOCOR's distribution system, (iv)
Force Majeure, (v) a Scheduled Outage, or (vi) any other reason,
provided that the number of hours under this clause (vi) that shall
be considered a No Fault Outage shall not exceed five percent (5%)
of the hours in the relevant Billing Period.
Nominated Capacity: The capacity or amount of power that the
Operator guarantees in accordance with Section 6.13 to deliver to
NAPOCOR on behalf of PNOC-EDC for a period of one year, including
an agreed maximum amount of power expressed in kilowatts (kw) for
supply to PNOC-EDC (points MP5(a), (b) and (c) plus points MP4(a)
and (b) as indicated in Figure C1 in Annex C).
Operating Parameters: The operating parameters set forth in Annex
B attached hereto.
Operating Representative: Individual(s) appointed by each Party
and by NAPOCOR for the purpose of securing effective cooperation
and interchange of information between the Parties and NAPOCOR in
connection with administration and technical matters related to
this Agreement ad the Power Purchase Agreement.
Operator Philippines: A Philippine corporation or partnership to
be formed and wholly owned or controlled by the Operator.
Parties: The contracting personalities in this Agreement,
referring to the Operator and PNOC-EDC.
Point of Interconnection: The point at the interconnection
facilities where the transfer and metering of electrical energy
between PNOC-EDC, NAPOCOR and the Operator takes place, which point
shall be the Power Plant's transformer high side terminals.
Political FM: An event specified in Section 14.1(b).
Power Plant: The Operator's generating equipment including all of
the step-up transformers and switching facilities, together with
all protective and other associated equipment and
improvements, necessary to produce electrical energy at the Point
of Interconnection excluding associated land, land rights and
interests in land, which equipment shall include three Generating
Units of approximately seventy seven (77) MW gross capacity each,
generally conforming to the technical specifications set forth in
the Operator's Bid Documents "A" submitted as part of its bids for
Build, Operate and Transfer (BOT) Geothermal Power Plant for PNOC-
EDC dated February 15, 1993 and April 16, 1993 as it relates to the
Site, with such reasonably equivalent substitutions as the Operator
deems necessary.
Power Purchase Agreement: The contractual agreement to be
entered into between NAPOCOR and PNOC-EDC for the sale by PNOC-EDC
of electric capacity and energy from the Power Plant to NAPOCOR.
Prime: The rate per annum, as of any day, which is the average of
the prime or equivalent rates of Citibank, N.A., Bank of America,
NT&SA, and Bankers Trust Company, New York as publicly announced
from time to time, in force on such day, and a change in any such
rate shall be effective on and from the day on which such change is
announced or is announced to be effective.
Protective Apparatus: The equipment and apparatus installed by the
Operator and/or NAPOCOR pursuant to Section 6.8 hereof.
Scheduled Outage: A planned interruption of the Power Plant's
generating capability that has been scheduled with PNOC-EDC in
accordance with Sections 6.14 and 6.15 and is for maintenance,
testing, inspection, repair, overhauls, replacement, improvement or
similar activity.
Site: The land located at Malitbog to be provided by PNOC-EDC for
the construction and operation (and purposes incidental thereto) of
the Power Plant as more particularly described in Annex A.
Steam Specifications: The specifications of the steam to be
supplied by PNOC-EDC to the Operator as more fully described in the
Interface Data included in Annex C attached hereto.
T-Bill Rate: The rate per annum, on any day, at which Philippine
Treasury Bill bills (with terms of thirty (30) days or if no such
bill with a term of thirty (30) days is issued such bill which is
issued having the term nearest to thirty (30) days) were issued by
the Government on the Friday immediately preceding such day, or, if
no such bills were issued on such Friday then the day immediately
preceding such Friday on which such bills were
issued.
Termination Date: The date upon which this Agreement is
terminated pursuant to Article 15.
Transfer Date: The day following the end of the Cooperation
Period.
Transmission Line: The meaning specified in Section 4.2.
1.2 INTERPRETATION
In this Agreement:
(a) any reference to an "Article", "Section", "Annex" or
"Clause" is a reference to an article or section hereof or an annex
hereto or a clause or section in an annex hereto;
(b) the headings and sub-headings appear as a matter of
convenience and shall not affect the construction of this
Agreement;
(c) the singular includes the plural and vice versa, and words
importing any gender include the other genders;
(d) a reference to a person includes a reference to a body
corporate and to an unincorporated body of persons;
(e) references to any Party include the successors and any
permitted assigns of that Party;
1.3 ABBREVIATIONS
In this Agreement:
(a) "$" and "dollar(s)" and "cents" denote lawful currency of the
United States of America;
(b) "Ps" and "peso(s)" denote lawful currency of the Republic of
the Philippines;
(c) "MW" denotes a megawatt;
(d) "MWh" denotes a megawatt hour;
(e) "kW" denotes a kilowatt;
(f) "kWh" denotes a kilowatt hour;
(g) "kV" denotes kilovolt;
(h) "DC" denotes direct current; and
(i) "AC" denotes alternating current.
ARTICLE 2 PROJECT
2.1 POWER FACILITY
The Operator shall be responsible for the finance, design,
supply, construction, testing and operation of a proposed
approximately two hundred thirty one (231) MW gross geothermal
Power Plant, comprising three (3) Generating Units of
approximately seventy seven (77) MW gross each, to be installed on
the Site, whose net generation shall be delivered to NAPOCOR on
behalf of PNOC-EDC during the Cooperation Period.
2.2 ENERGY CONVERSION
PNOC-EDC shall supply and deliver all steam, in conformity to the
Steam Specifications and at no cost to the Operator, required by
the Operator necessary for the Power Plant to generate the
electric capacity and energy required by NAPOCOR up to the
Nominated Capacity, and the Operator, on behalf of PNOC-EDC shall
deliver all electric capacity and energy generated by the Power
Plant less that required for auxiliary purposes by the Operator to
NAPOCOR up to the Nominated Capacity, less that required by PNOC-
EDC for its own uses in accordance with this Agreement. PNOC-EDC
shall pay to the Operator conversion fees as provided in Section
5.4 and Article 8.
2.3 OWNERSHIP
(a) From the Effectivity Date until the Termination Date, the
Buyout Date or the Transfer Date, whichever comes earlier, the
Operator shall own the Power Plant and all the fixtures,
fittings, machinery and equipment on the Site and used in
connection with the Power Plant which have been supplied by it or
at its cost, and the Operator shall operate and manage the Power
Plant for the purpose of converting the steam of PNOC-EDC
delivered in accordance with this Agreement into electric
capacity and energy.
(b) On the Buyout Date, the Transfer Date or the Termination Date,
whichever comes earlier, ownership, management and
operation of the Power Plant shall be transferred by the Operator
to PNOC-EDC in accordance with Article 9, 13 or 15, as
applicable.
(c) Ownership of the Site shall remain with PNOC-EDC at all times
during the term of this Agreement.
2.4 COMMENCEMENT AND PROSECUTION OF THE PROJECT
The Operator shall develop and construct the Power Plant, with such
resources, construction equipment and temporary facilities as, in
the judgment of the Operator, are sufficient to complete each
Generating Unit of the Power Plant on or before the corresponding
Guaranteed Completion Date. The capacity of the construction
equipment and temporary facilities, sequence of operations, method
of operations, and resources employed shall be such, in the
judgment of the Operator, as to insure that the Commercial
Operation Date of each Generating Unit occur on or before the
relevant Guaranteed Completion Date.
ARTICLE 3 GENERAL RESPONSIBILITIES OF THE OPERATOR
3.1 CONSTRUCTION BOND
(a) To guarantee the faithful performance by the Operator of its
obligation to completely construct the Power Plant in accordance
with the terms and conditions of this Agreement, on the
Effectivity Date the Operator shall post the Construction Bond in
a form acceptable to PNOC-EDC in a sum equivalent to One Hundred
Dollars (US$100) per kilowatt (kW) of total Contracted Capacity for
three Generating Units or its equivalent in Philippine Pesos or
other currencies.
(b) The Construction Bond may be in the form of cash,
irrevocable standby letter of credit issued in a form and by a bank
acceptable to PNOC-EDC, provided that if the letter of credit is
issued by a foreign bank, it must be confirmed by a reputable local
bank or offshore banking unit, a bank draft guarantee authenticated
by a local bank (in case Operator is foreign-owned and bonded by a
foreign bank) acceptable to PNOC-EDC, or a combination thereof. If
the Construction Bond is in the form of a bank guarantee, the
issuing bank shall be an
accredited local bank acceptable to PNOC-EDC. The issuing bank
shall be required to submit itself to the jurisdiction of
Philippine courts.
(c) The Construction Bond shall be valid and in effect until the
date that is six (6) months following the Guaranteed Completion
Date of the third Generating Unit. On the Commercial Operation
Date of the third Generating Unit, to the extent not previously
drawn in accordance with Section 4.10, PNOC-EDC shall return the
Construction Bond to the Operator.
(d) If any surety company furnishing a bond hereunder becomes
unacceptable to PNOC-EDC due to a material decrease in the net
worth of such surety, or if any such surety company fails to
furnish reports as to its financial condition from time to time as
requested by PNOC-EDC, the Operator shall promptly furnish
replacement security in the amount set forth in Section 3.1(a) and
for the duration set forth in Section 3.1(c).
3.2 RESPONSIBILITY FOR DAMAGE AND LOSSES
(a) The Operator shall be responsible for and shall promptly
repair all damage to property belonging to PNOC-EDC, NAPOCOR,
private parties or the Government caused by the Operator, its
employees, agents, representatives, contractors and
subcontractors.
(b) Except as set forth herein, any and all losses and damages to
the Power Plant, due to any cause or causes, whatsoever, during the
prosecution of the Agreement shall not relieve the Operator from
any of its obligations under this Agreement.
(c) Unless specifically provided for in this Agreement, PNOC-EDC
shall not be responsible for any damage due to any increased
difficulty in the performance of the obligations under this
Agreement on account of any hindrance or delay due to any cause
whatsoever in the progress of the development, construction,
operation or maintenance of the Power Plant. Except as otherwise
set forth herein, no adjustment in the prices as set forth in
Article 8 shall be made on account of any such damage, increased
difficulty, hindrance or delay, but said hindrance or delay may
entitle the Operator to an extension of time for completing the
construction of the Power Plant as herein provided.
3.3 ENVIRONMENT
(a) The Operator shall keep the Site in a sanitary condition and
in compliance with the environmental requirements and mitigation
measures specified in the Environmental Compliance Certificate
issued in respect of the Power Plant and in accordance with the
laws of the Philippines.
(b) If it is necessary, in the development, construction,
operation or maintenance of the Power Plant, to interrupt or
obstruct the natural flow of rivers or streams, the drainage of the
surface, or the flow of artificial drains, the Operator shall use
due diligence to prevent damage to either public or private
properties. The Operator shall be liable for all damages caused by
such interruption or obstruction that may occur except to the
extent that such damages arise from the negligence or willful
misconduct of PNOC-EDC.
(c) The Operator shall assume responsibility for any costs and
liabilities arising from any adverse environmental damage or health
impacts that are caused by operation of the Power Plant.
3.4 ORGANISATION
(a) The Operator shall maintain at the Site an efficient and
capable organisation with an adequate capacity and amount of
construction, operating and maintenance equipment and facilities to
satisfactorily develop, construct, operate or maintain the Power
Plant in a safe, efficient, environmentally sound and professional
manner.
(b) The Operator shall assign to the Site English speaking foreign
personnel. Any interpreters required shall be provided by the
Operator at its expense.
(c) The Operator shall employ an engineer(s) appropriately
licensed to practice in the Philippines who shall participate in
the supervision of the development, construction, operation or
maintenance of the Power Plant.
ARTICLE 4 CONSTRUCTION OF THE POWER PLANT
4.1 MILESTONE DATES
(a) The Operator shall in good faith use all reasonable efforts to
construct the Power Plant in accordance with the following
schedule:
Activity
Date
Start of Commissioning for the first Generating Unit
25 March 1996
Start of Commissioning for the second and third Generating Unit 25
March 1997
Guaranteed Completion Date for the first Generating Unit
25 July 1996
Guaranteed Completion Date for the second and third Generating Unit
25 July 1997
The Operator shall diligently commence and prosecute until
completion of the construction of the Power Plant. The Operator
shall cause the Commercial Operation Date of each Generating Unit
to occur on or prior to the relevant Guaranteed Completion Date.
If the Commercial Operation Date of any Generating Unit does not
occur on or before the relevant Guaranteed Completion Date, the
Operator shall be subject to the penalty provisions set forth in
Section 4.10.
(b) Each of the dates set forth in Section 4.1(a) shall be
extended by the duration of any event of Force Majeure or any
breach by PNOC-EDC of any of its obligations under this
Agreement.
4.2 TRANSMISSION LINE AND INTERCONNECTION
(a) PNOC-EDC shall use good faith efforts to ensure that, on or
before each of the dates specified in Section 4.1(a) for the Start
of Commissioning of each Generating Unit, a 230 kV
transmission line, including all interconnection facilities up to
and including the Point of Interconnection on the side of the
transmission line (collectively, the "Transmission Line"), is
installed and is capable of being connected to the Power Plant and
receiving all power generated by those Generating Units of the
Power Plant which are about to be commissioned, plus any Generating
Units already in operation.
(b) The Operator shall construct and maintain all interconnection
facilities on the Power Plant's side of the Point of
Interconnection.
4.3 SITE PROVISION
(a) PNOC-EDC shall make the Site available exclusively to the
Operator for the purpose of building and operating the Power Plant
(and all purposes incidental thereto), free and clear of liens and
encumbrances that could interfere with the Operator's construction
or operation of the Power Plant and at no cost to the Operator, for
the period from the Effectivity Date until the Buyout Date, the
Termination Date or the Transfer Date, whichever shall come first.
PNOC-EDC hereby represents and warrants to the Operator that PNOC-
EDC knows of no reason why the site may not be suitable for the
construction and operation of the Power Plant (and all purposes
incidental thereto).
(b) The Operator shall not obstruct any existing road or
drainage or disturb existing structures and facilities on the land
so furnished for construction purposes unless and until given
written permission by appropriate authorities.
(c) PNOC-EDC shall make available to the Operator, free and clear
of liens and encumbrances that could interfere with the Operator's
construction or operation of the Power Plant (or any other purpose
incidental thereto) and at no cost to the Operator, all other
lands, easements, and rights-of-way including rights-of-way for the
purpose of performing diligence and developing, constructing,
operating or maintaining the Power Plant or such other purposes
which the Parties agree are necessary in the implementation of this
Agreement for the period from the
Effectivity Date until the Buyout Date, the Termination Date or the
Transfer Date, whichever shall come first.
4.4 INGRESS AND EGRESS RIGHTS OF OPERATOR
PNOC-EDC shall ensure that all necessary access to and from the
Site is made available to the Operator, its employees,
contractors, sub-contractors and advisers, at no cost to the
Operator, for the period from the date of this Agreement until the
Buyout Date, the Termination Date or the Transfer Date, whichever
shall come first.
4.5 EQUIPMENT IMPORTATION
(a) The Operator shall be responsible for the importation and
transportation to the Site of all equipment for development, and
construction of the Power Plant. It is the responsibility of the
Operator to secure from the Government, its agencies and
instrumentalities, the necessary permits, licenses, and other
documents for the importation of the Operator-owned construction or
maintenance equipment that it may decide to bring into the country
for use in connection with this Agreement. PNOC-EDC shall use its
best efforts in assisting the Operator with
obtaining all such licenses.
(b) PNOC-EDC shall use its best efforts to cause the Government to
grant the Operator and its contractors and subcontractors
exceptions from all custom duties or other importation or
exportation tax in respect of all items of plant, machinery and
ancillary items, including consumables and spare parts, required
for the construction, operation, maintenance and repair of the
Power Plant.
4.6 PERMITS
The Operator, at its sole cost up to $500,000 for the initial
issuance of such authorisations, licenses and permits, shall be
responsible for procuring all requisite Government
authorizations, licenses and permits for the construction and
initial operation of the Power Plant, excepting the Environmental
Compliance Certificate, Authority to Construct and Permit to
Operate, which shall be obtained by and at the cost of PNOC-EDC.
In the event that the cost of procuring such authorisations,
licenses and permits exceeds $500,000, the Contract Capacity Price
shall be increased to maintain the Operator's economic return on
its investment as if no such costs in excess of
$500,000 were incurred.
4.7 DRAWINGS, DOCUMENTS, DATA & INSTRUCTIONS
The Operator shall comply with the following on matters of
drawings and other documentary information, and PNOC-EDC rights
thereto:
4.7.1 SUBMISSION OF DRAWINGS AND DATA
The Operator shall submit to PNOC-EDC copies of all drawings,
plans, calculations, operating and maintenance instructions and, in
general, copies of all material documents related to the Power
Plant for reference and information. Within thirty (30) working
days following receipt thereof, PNOC-EDC shall describe to the
Operator in writing any flaws perceived by PNOC-EDC in the
designs. Failure by PNOC-EDC to describe any flaws in such designs
within such thirty (30) day period shall be deemed PNOC-EDC's
waiver of its right to describe such flaws.
The Operator shall also advise PNOC-EDC of the names of potential
suppliers of material components or material services who have been
shortlisted by the Operator. Within thirty (30) working days
following receipt of such advice, PNOC-EDC shall advise the
Operator of any such potential suppliers to which PNOC-EDC
objects, together with the reasons for objection and may request
the Operator to exclude such suppliers from the shortlist. The
Operator shall comply with such requests by PNOC-EDC as it shall
deem reasonable.
4.7.2 MODIFICATION RIGHTS
During the same thirty (30) working day period following the
receipt of the documents or list of such suppliers under Section
4.7.1, PNOC-EDC shall have the right to require modifications to
the design as it deems necessary for proper and safe operation of
the Power Plant as it affects the operation of the PNOC-EDC
geothermal fluid collection and disposal system and the NAPOCOR
power system. In the event PNOC-EDC requests any Elective
Modifications, the Parties shall negotiate in good faith (i) to
adjust the Contract Capacity Price to maintain the Operator's
economic return on its investment as if no such Elective
Modifications were performed and (ii) adjust the dates set forth in
Section 4.1 to reflect any delays in designing such Elective
Modifications and any additional time required to make such
Elective Modifications if such Elective Modifications would likely
impair the Operator's ability to perform its obligations hereunder.
In the event the Parties are unable to reach
agreement on such adjustments within sixty (60) days following
PNOC-EDC's request, PNOC-EDC may withdraw such request.
Thereafter, if such request is not withdrawn, either Party may
terminate this Agreement by giving written notice of termination to
the other Party; provided, however, that if the Operator gives such
a written notice of termination to PNOC-EDC, PNOC-EDC shall have
five (5) working days following delivery of such notice of
termination to again withdraw its request. If such request is
withdrawn by PNOC-EDC such written notice of termination will be of
no effect. Upon such termination, the provisions of Article 9
shall apply.
4.7.3 FUTURE MODIFICATION
Except as set forth in Section 4.7.2, neither Party shall have the
right to make or require any changes in the design of the Power
Plant without the prior written consent of the other Party.
4.7.4 CONSTRUCTION SCHEDULE
The Operator shall submit to PNOC-EDC a detailed construction
schedule of the Power Plant within three (3) months following the
Effectivity Date. This schedule shall contain, in particular,
dates for the submission of all drawings, documents and data,
acceptance thereof, witnessing of tests and the overall
procurement schedule. PNOC-EDC shall have the right to review and
approve, which approval shall not be unreasonably withheld, the
construction schedule of the Power Plant. Failure to
disapprove such schedule within thirty (30) days following
receipt of the same shall be deemed PNOC-EDC's approval of the
same.
4.7.5 MONITORING RIGHTS
PNOC-EDC shall be entitled at its own cost to monitor the
progress and quality of the construction and installation work.
For this purpose, the Operator shall:
(a) submit to PNOC-EDC a monthly progress report in such detail
and format as may be reasonably requested by PNOC-EDC;
(b) ensure that PNOC-EDC and any experts appointed by PNOC-EDC in
connection with the Power Plant are afforded reasonable access to
the Site at times to be agreed with PNOC-EDC provided that such
access does not materially interfere with the development,
construction, operation or maintenance of the Power Plant or expose
any person on the Site to any danger; and
(c) make available for inspection at the Site copies of all plans
and designs.
4.7.6 DRAWINGS AND DOCUMENTS TO BE PROVIDED
The Operator shall furnish PNOC-EDC drawings and technical
details that are prepared by or on behalf of the Operator such as,
but not limited to, the following:
(a) arrangement plans for the general layout of machinery and
equipment;
(b) general and detailed drawings and specifications for
electro-mechanical works;
(c) general and detailed drawings and specifications for civil and
architectural works;
(d) test procedures;
(e) correction curves for turbine efficiency and output; and
(f) operation and maintenance manuals
in accordance with the construction schedule as submitted and
approved in accordance with Section 4.7.4.
Within six (6) months following the Commercial Operation Date of
the third Generating Unit, the Operator shall supply PNOC-EDC with
three (3) copies of all "as built" plans, drawings, design
calculations and quality assurance records, one of which copies
shall be reproducible.
4.8 DISCLAIMER
The following disclaimer shall be recognized in this Agreement:
(a) Any engineering review by PNOC-EDC of the Power Plant is
solely for its information. By making such review, PNOC-EDC makes
no representation as to the engineering soundness of the Power
Plant.
(b) The Operator shall in no way represent to any third party the
engineering soundness of the Power Plant as a result of the review
made by PNOC-EDC.
(c) The Operator is solely responsible for the economic and
technical feasibility, operational capability and reliability of
the Power Plant.
(d) PNOC-EDC shall not be liable to the Operator for, and the
Operator shall defend, hold harmless, and indemnify PNOC-EDC from,
any claim, cost, loss, damage, or liability arising from any
contrary representation made by the Operator concerning the effect
of PNOC-EDC's engineering review of the Power Plant.
4.9 RESPONSIBILITY FOR UTILITIES
The Operator and PNOC-EDC shall be each responsible for the
provision of needed utilities, such as electric service, water,
communications and the like, necessary during the construction and
operation of the Power Plant according to the requirements of Annex
B2.3 and Annex B3 respectively.
4.10 PENALTY DUE TO DELAYS
(a) In the event the Commercial Operation Date of any individual
Generating Unit does not occur on or before the relevant
Guaranteed Completion Date (as the same may be extended pursuant to
Section 4.1(b), 4.7.2 or 9.1 or by mutual agreement), the Operator
shall pay PNOC-EDC an amount as defined in Annex E. If the
Operator fails to pay such amount within five (5) days after due,
PNOC-EDC shall have the right to draw on the Construction Bond to
the extent of the amount defined in Annex E.
(b) In the event that the Commercial Operation Date of any
Generating Unit does not occur within ninety (90) calendar days
following the Guaranteed Completion Date for that Generating Unit
(as the same may be extended pursuant to Section 4.1(b), 4.7.2 or
9.1 or by mutual agreement) then Section 15.4.1 shall apply.
4.11 LIGHTS AND BARRIERS
During construction, the Operator shall put up and maintain at the
Site such danger lights and barriers as the Operator deems
reasonably necessary to prevent all accidents in consequence of the
development or construction of the Power Plant. If work is done at
night, the Operator shall maintain from sunset to sunrise such
adequate lighting on or about the Site and on the work area as the
Operator deems necessary for the safety of the
construction forces and for the proper observance and inspection of
the construction and erection activities.
ARTICLE 5 TESTING OF THE FACILITY
5.1 TESTING PROCEDURES
The procedures for the testing of the Power Plant set forth in
Annex F shall be followed by the Operator.
5.2 TEST SCHEDULES
The Operator and PNOC-EDC shall agree on test schedules and
schedules of steam requirements for the tests for the Power Plant.
The schedules shall take into consideration the
operational requirements of PNOC-EDC and NAPOCOR.
5.3 NOTICE OF TESTS
The Operator shall Notify PNOC-EDC at least fifteen (15) calendar
days prior to carrying out any tests on the Power Plant and prior
to:
(a) the initial parallel operation of each of the Operator's
generating units; and
(b) all testing of the Protective Apparatus.
5.4 TESTS BEFORE COMPLETION
(a) PNOC-EDC reserves the right to witness all test, including
equipment testing at the Operator's or other sub-contractor's or
equipment supplier's premises during the course of this
Agreement. NAPOCOR shall have the right to have a representative
present at all tests of the Protective Apparatus.
(b) The representatives of PNOC-EDC shall have the right to be
present during any test activity done by the Operator on the Power
Plant. Tests conducted without the presence of PNOC-EDC's
representatives shall not be valid for the purposes of this
Agreement; provided that if the Operator has complied with the
notice provisions of Section 5.3 and PNOC-EDC fails to be
available for such tests at the scheduled time, the Operator may
conduct such tests and such tests shall be valid for the purpose of
this Agreement and the Operator shall have the right to issue the
certificates required by Section 5.4(c).
(c) Upon completion of any tests, the Operator and PNOC-EDC shall
jointly issue a certificate that testing has been done on the Power
Plant and that agreed testing procedures shown in Annex F had been
followed.
(d) The Operator shall use best efforts to demonstrate the Power
Plant's ability to provide to NAPOCOR on behalf of PNOC-EDC the
Contracted Capacity. If, pursuant to the tests performed
pursuant to Article 5, any Generating Unit of the Power Plant is
unable to demonstrate a capacity equal to one third of the total
Contracted Capacity, then the Operator shall perform the tests
required by this Article 5 at such other capacity as the Operator
elects. Upon completion of such tests, the Parties shall certify
the Commercial Operation Date for the relevant Generating Unit.
(e) No later than seven (7) calendar days after the Commercial
Operation Dates of the first and third Generating Units, the
Operator shall notify PNOC-EDC of the Nominated Capacity of the
Power Plant for the first and second year respectively of
operation.
(f) All costs, excluding steam, incurred during the testing of the
Power Plant shall be borne by the Operator.
(g) Energy generated during testing shall be delivered to
NAPOCOR on behalf of PNOC-EDC and paid for by PNOC-EDC at fifty
percent (50%) of the rate actually paid by NAPOCOR to PNOC-EDC.
The Operator shall bill PNOC-EDC for such energy in accordance with
Section 8.4.
(h) Notwithstanding anything to the contrary in Section 4.2, in
the event that, from and after the date set forth in Section 4.1
for the start of commissioning of a Generating Unit, that
Generating Unit of the Power Plant is capable of being tested, but
performance tests required under Section 5.4(d) cannot be performed
because either steam is not available to the Power Plant in such
quantities as is required hereunder and/or the Transmission Line is
not completed and available to transport all energy produced by the
Power Plant then,
(i) in the event that steam is not available, but the Generating
Unit is capable of being tested, the Commercial Operation Date for
that Generating Unit shall be deemed to be the date after the
performance test required under Section 5.4(d) would have been
completed in accordance with the schedules in Section 5.2 if
commenced on the date the Generating Unit was capable of being
tested; or
(ii) in the event that the Transmission Line is not completed and
available to transport all the energy produced by the
Generating Unit, the Commercial Operation Date for that
Generating Unit shall be deemed to be the Guaranteed Completion
Date for such Generating Unit.
From the Commercial Operation Date as so deemed until such time as
steam and the Transmission Line is available to permit
testing, the Operator shall be entitled to receive the Capacity
Payments set forth in Section 8.3.1 based on the Contracted
Capacity of such affected Generating Unit for each Generating Unit
so affected. At such time as the steam and/or the
Transmission Line is so available to permit testing, the Operator
shall perform the performance tests required under Section 5.4(d)
and advise PNOC-EDC of the Nominated Capacity of the Generating
Unit and thereafter shall receive Capacity Payments based on the
Nominated Capacity.
5.5 TESTS DURING COOPERATION PERIOD
The net plant capacity and the Net Plant Steam Rate shall be tested
every year in the presence of PNOC-EDC personnel following agreed
procedures. This test shall be performed at the Operator's
election within six (6) months after completion of the annual
maintenance on each individual generating unit of the Power Plant
and shall form the basis for determining the Nominated Capacity for
the following year under Section 6.13.
ARTICLE 6 OPERATION OF THE FACILITY
6.1 COMMERCIAL OPERATION DATE
On the Commercial Operation Date of each Generating Unit, the
Operator shall commence the delivery of electric capacity and
energy to NAPOCOR on behalf of PNOC-EDC and shall be paid for such
delivery in accordance with the provisions of Section 8.3. All
other related provisions on the operation of the Power Plant and
the tariffs, discounts, bonuses, and penalties on the regular sale
of electric capacity and energy shall also take effect on this
date.
6.2 POWER RATES FOR INITIAL DELIVERY
In the event that the Commercial Operation Date of any Generating
Unit falls on a date other than the first day of a Billing
Period, PNOC-EDC shall pay the contract Capacity Price for that
Generating Unit to the Operator on a prorated basis based on the
number of days elapsed from the Commercial Operation Date for that
Generating Unit to the first day of the immediately
succeeding Billing Period.
6.3 DEDICATION OF FACILITY
The Operator shall operate and dedicate all energy and capacity of
the Power Plant (net of Operator's and PNOC-EDC's usage allowed
hereunder) to NAPOCOR.
6.4 OPERATING PARAMETERS
The Operator shall operate the Power Plant following the
Operating Parameters.
6.5 DISPATCH PROCEDURE
The Operator shall control and operate the Power Plant consistent
with NAPOCOR's dispatch requirements. Notwithstanding the
foregoing, it is the intent of the Parties that the Power Plant be
designed, constructed and operated as a base load plant.
6.6 ENGINEERING STANDARDS
The Power Plant shall be designed, operated and maintained by the
Operator in accordance with prudent industry standards and good
engineering practices.
6.7 ENVIRONMENTAL STANDARDS
The Power Plant shall be designed, constructed, operated and
maintained by the Operator in accordance with prudent industry
standards and good engineering practices.
6.8 PROTECTIVE DEVICES
The Operator shall install such apparatus (the "Protective
Apparatus") as the Operator deems necessary, generally in
accordance with NAPOCOR's general specifications for such
equipment and as approved by PNOC-EDC and NAPOCOR, to ensure the
NAPOCOR Electrical System Integrity. The Power Plant shall be
operated by the Operator with all of the Protective Apparatus in
service whenever it is connected to or is operated in parallel with
the NAPOCOR electric system.
6.9 INTEGRITY LOSS
If, at any time, NAPOCOR reasonably doubts the integrity of any of
the Operator's Protective Apparatus and reasonably suspects that
such loss of integrity would be hazardous to the NAPOCOR Electric
system Integrity, the Operator shall demonstrate, to NAPOCOR's and
PNOC-EDC's reasonable satisfaction, the correct calibration and
operation of the equipment in question. If not so reasonably
satisfied, NAPOCOR shall have the right to disconnect the Operator
and refuse to receive energy delivered by the Power Plant and, for
the duration of such disconnection, the Power Plant shall be deemed
to have suffered a Forced Outage for billing purposes.
6.10 SETTINGS OF PROTECTIVE DEVICES
All settings of all Protective Apparatus shall be subject to the
reasonable approval of NAPOCOR. Tests and calibration of this
Protective Apparatus shall be at the expense of the Operator.
6.11 SERVICE COMMITMENT
At NAPOCOR's request, the Operator shall make all reasonable
efforts on behalf of PNOC-EDC to deliver energy during periods of
Emergency.
6.12 MAINTENANCE DURING EMERGENCY
In the event that the Operator's Scheduled Maintenance coincides
with an Emergency, the Operator shall make all reasonable efforts
to reschedule such Scheduled Maintenance.
6.13 ANNUAL CAPACITY NOMINATION
(a) The Nominated Capacity of the Power Plant shall be specified
by the Operator for each year of the Cooperation Period no later
than thirty (30) calendar days prior to the anniversary of the
Commercial Operation Date of the first Generating Unit. To assist
the Operator in specifying this figure, but without any binding
effect on the Operator's Nominated Capacity for such year, each
year PNOC-EDC shall advise the Operator no later than thirty-five
(35) calendar days prior to the anniversary of the Commercial
Operation Date of the first Generating Unit of the maximum amount
of capacity expressed in kilowatts (kW) which PNOC-EDC shall
require to be available for the following year.
(b) If, for a particular year, the Operator fails to specify a
Nominated Capacity, then the lower of the Contracted Capacity, the
last Nominated Capacity or the last capacity demonstrated in
testing in accordance with Section 5.5 shall be the Nominated
Capacity for that particular year.
6.14 MAINTENANCE SCHEDULE
The Operator shall submit a written maintenance schedule of the
Power Plant no later than one hundred (100) calendar days prior to
the start of each calendar year following the Commercial Operation
Date of the first Generating Unit setting forth the Operator's
proposed Scheduled Maintenance for such year. The Power Plant
shall not be scheduled for Scheduled Maintenance for more than
forty-five (45) days per year.
6.15 APPROVAL OF MAINTENANCE SCHEDULE
PNOC-EDC shall notify the Operator, within forty-five (45)
calendar days after receipt of each maintenance schedule from the
Operator, whether the requested maintenance schedule is
acceptable. If not acceptable, the Parties shall negotiate a
mutually agreeable maintenance schedule.
6.16 APPROVAL OF OVERHAULS
The Operator shall not schedule major overhauls without the prior
approval of PNOC-EDC which approval shall not be unreasonably
withheld or delayed.
6.17 COMPLIANCE WITH APPROVED MAINTENANCE SCHEDULE
The Operator shall perform Scheduled Maintenance on the Power Plant
during the periods set forth in the maintenance schedule approved
pursuant to Section 6.15, unless such other times are approved by
PNOC-EDC, which approval shall not be unreasonably withheld.
6.18 UNSCHEDULED OUTAGE
The Operator shall immediately notify PNOC-EDC, and NAPOCOR on
behalf of PNOC-EDC, of any Forced Outage and the estimated
duration of such Forced Outage.
6.19 DAILY OPERATING REPORT
For record purposes, the Operator shall keep PNOC-EDC and
NAPOCOR's power management centre regularly informed as to the
daily results of operation and generation capability of the Power
Plant, including, without limitation, any Forced Outage.
6.20 OPERATING RECORDS
The Operator shall maintain an operating log for each generating
unit of the Power Plant with records of:
(a) real and reactive power production,
(b) changes in operating status,
(c) outages,
(d) Protective Apparatus operations, and
(e) any unusual conditions found during inspections.
Changes in the setting of Protective Apparatus shall also be
logged. In addition, the Operator shall maintain customary records
applicable to the Power Plant, including maintenance and overhaul
records, the electrical characteristics of the generator and
settings or adjustments of the generator control equipment and
Protective Apparatus. At the end of the Cooperation Period, such
records shall be turned over to PNOC-EDC at no cost.
6.21 PNOC-EDC ACCESS TO THE POWER PLANT
Upon reasonable notice, PNOC-EDC shall have full rights of access
at all times to the Power Plant for the purpose of monitoring the
Operator's operation and maintenance of the Power Plant, subject
only to any reasonable restrictions that the Operator may impose
for reasons of personnel and equipment safety.
ARTICLE 7 GEOTHERMAL FLUIDS
7.1 STEAM SUPPLY
PNOC-EDC shall supply at no cost to the Operator the total steam
requirements of the Power Plant, subject to a maximum limit as
specified in the Steam Specifications. Such steam shall conform to
the Steam Specifications.
7.2 NON-CONDENSIBLE GASES & NON-GEOTHERMAL WASTE
The Operator shall be responsible for disposal of non-condensible
gases resulting from the operation of the Power Plant and all non-
geothermal related waste arising from the construction, operation
or maintenance of the Power Plant. If requested by the Operator,
PNOC-EDC shall dispose of such waste at the Operator's cost, such
disposal to be in accordance with applicable law.
7.3 SURPLUS CONDENSATE
The Operator shall deliver to PNOC-EDC and PNOC-EDC shall accept
for disposal at no cost to the Operator all surplus condensed
geothermal steam, including cooling tower blowdown; provided,
however, such surplus condensate shall conform to the limits for
condensate return set forth in Annex C.
7.4 OTHER GEOTHERMAL WASTE
Except as set forth in Section 7.2, PNOC-EDC shall be responsible
for the disposal of all waste products related to the geothermal
fluid and/or steam supplied by PNOC-EDC for the operation of the
Power Plant. This disposal shall be in accordance with the
requirements of the Environmental Compliance Certificate issued in
respect of the Power Plant.
7.5 ENERGY MANAGEMENT
The Operator shall use its best efforts to optimise steam and
electricity use and shall exercise due diligence in the operation
and management of main and auxiliary machinery so as to minimise
energy consumption and waste.
ARTICLE 8 DELIVERY OF CAPACITY AND ENERGY
8.1 OBLIGATIONS OF THE PARTIES
(a) The Operator hereby agrees to convert PNOC-EDC's steam into
electric energy and PNOC-EDC hereby agrees to sell to NAPOCOR, at
the Point of Interconnection, the Nominated Capacity and energy
delivered by the Operator to NAPOCOR on behalf of PNOC-EDC during
the Cooperation Period less any usage by the Operator and PNOC-EDC
as allowed hereunder. PNOC-EDC agrees to pay the Operator for the
Nominated Capacity and energy delivered by the Operator at the
Point of Interconnection plus any deliveries made to PNOC-EDC for
its own use to the extent not included in the Nominated Capacity.
(b) During the testing prior to Commercial Operation Date of each
Generating Unit, the Operator shall not receive any payments for
Contracted Capacity or Nominated Capacity for that Generating Unit
but shall receive payments for energy as set forth in
Section 5.4(g).
(c) From and after the Commercial Operation Date of each
Generating Unit, the Operator shall make available electric
capacity of that Generating Unit and shall deliver energy in
accordance with this Agreement and receive the Capacity Payments
and receive or make the payments described in Section 8.3.2.
8.2 METERING
8.2.1 METER MAINTENANCE AND OWNERSHIP
(a) PNOC-EDC shall supply, own and maintain as part of the
interconnection facilities at the Point of Interconnection and at
the point of supply of electric energy for PNOC-EDC's use in the
steamfield, meters and related equipment reasonably satisfactory to
the Operator for the measurement of electric energy in
determining PNOC-EDC's payments to the Operator pursuant to this
Agreement.
(b) NAPOCOR may also supply, own and maintain as part of the
interconnection facilities at the Point of Interconnection, meters
and related equipment for the measurement of electric power and
energy in determining NAPOCOR's payments to PNOC-EDC pursuant to
the Power Purchase Agreement.
(c) PNOC-EDC shall supply, own and maintain meters and related
equipment reasonably satisfactory to the Operator for the
measurement of steam flow in determining PNOC-EDC's payments to the
Operator pursuant to this Agreement.
(d) The Operator shall supply, own and maintain equipment for the
calculation and recording of the theoretical steam
consumption of the Power Plant.
8.2.2 PLANT MONITORING EQUIPMENT
For the purpose of monitoring the Power Plant operation, the
Operator shall make reasonable provisions for the installation of
other metering and telemetering devices at the generation side of
the Point of Interconnection as part of the PNOC-EDC Supervisory
Control and Data Acquisition (SCADA) system.
8.2.3 METER SEALS AND INSPECTION
PNOC-EDC's meters shall be sealed and the seals shall be broken
only when the meters are to be inspected or tested by PNOC-EDC.
The Operator shall be given reasonable notice of such occasions and
shall have the right to have a representative present at such
tests.
8.2.4 METER TESTS
(a) PNOC-EDC's electricity meters, installed in pursuance to this
Agreement, shall be tested by PNOC-EDC at its own expense every six
months. Other tests may be conducted at any reasonable time upon
request by either Party, at the requesting Party's expense (subject
to the next sentence). If the Operator makes such request, the
Operator shall reimburse said expense to PNOC-EDC within thirty
(30) days after presentation of a bill
therefor, unless such tests demonstrate that such meters are
materially incorrect, in which case PNOC-EDC shall bear the expense
for such tests.
(b) The Operator's equipment for the calculation and recording of
theoretical steam consumption shall be tested by the Operator at
its own expense, in the presence of PNOC-EDC, every six
months.
8.2.5 METER ACCURACY
Electric metering equipment found to be inaccurate pursuant to
Section 8.2.4 shall be repaired, adjusted, or replaced by PNOC-EDC
such that the accuracy of said equipment shall be within 100% plus
or minus one percent (1%). Should the inaccuracy exceed plus or
minus one percent (1%), the correct amount of energy delivered
during the previous Billing Period shall be estimated by PNOC-EDC
subject to agreement by the Parties. Adjustments for meter
inaccuracy shall be made only for the current Billing Period and
the Billing Period immediately preceding it except when such meter
inaccuracy is due to fraud.
8.3 TERMS OF PAYMENT
8.3.1 CAPACITY PAYMENTS
The total Capacity Payment (T) to be paid in respect of each
Billing Period shall be the sum of the Capital Cost Recovery Fee,
the Fixed Operating Cost Recovery Fee, and the Service Fee to
reflect Return on Investment and shall be computed on the basis of
the following formulae:
T = A + B + C, where:
(a) Capital Cost Recovery Fee (A) to be paid in United States
dollars:
A = [(CCR x NC)(1 - TFOH/Nh)] - [(y x 1.2(CCR)(CC - NC)]
(b) Fixed Operating Cost Recovery Fee (B) to be paid in
Philippine Peso and United States dollars:
B = [(OCR x NC)(1 - TFOH/Nh)] - [(y x 1.2)(OCR)(CC - NC)]
(c) Service Fee for Return on Investment (C) stated in United
States dollars but payable in equivalent Philippine Pesos using the
prevailing exchange rate at time of payment. In no case shall the
Service Fee be lower than 8% of the sum of the Capacity Cost
Recovery Fee and the Fixed Operating Cost Recovery Fee:
C = {[(SFR x NC) (1 - TFOH/Nh) ] - [(y x 1.2)(SFR)(CC - NC0]} x Px
where,
A = Capacity Payment to recover capital cost for the Billing
Period.
B = Capacity Payment to recover fixed operating cost for the
Billing Period.
C = Capacity Payment to reflect return on investment of the
Operator for the Billing Period.
CCR = the Contracted Capacity rate for capital costs per kW per
month, in United States dollars as set forth for each year in Annex
D.
OCR = the Contract Capacity rate for fixed operating costs per kW
per month in both United States dollars and Philippine Pesos as set
forth in Annex D.
SFR = the Service Fee rate for return on investment per kW per
month in United States dollars as set forth in Annex D.
CC = Contracted Capacity, in kW.
TFOH = Total number of Forced Outage Hours in the Billing Period.
Nh = Total number of hours in the Billing Period.
NC = Nominated Capacity for the year, in kW.
Px = Conversion factor of payments to Philippine Peso quoted by the
Philippine National Bank on the last day of the Billing Period.
y = variable, defined as follows:
if 0.95 x CC < NC < 1.05 x CC, then y = 0,
otherwise, y = 1
8.3.2 EFFICIENCY PAYMENTS
Efficiency payments (D) to be paid by or to the Operator to or by
PNOC-EDC shall reflect variations in the Net Plant Steam Rate. In
the event that "D", as calculated pursuant to this Section 8.3.2,
is greater than zero, PNOC-EDC shall pay such calculated amount to
the Operator in accordance with Section 8.4. In the event that
"D:, as calculated pursuant to this Section 8.3.2 is less than
zero, such calculated amount shall be deducted from amounts owed to
the Operator under Section 8.3.1. Efficiency payments to be paid
with respect to each Billing Period shall be computed on the basis
of the following formula and shall be paid in Philippine Peso:
D = U x (Vg - Vt) x a
where:
D = Efficiency payments for the Billing Period
U = PNOC-EDC;s steam cost in Philippine Pesos per metric tonne as
set forth in Annex D.
Vg = Cumulative theoretical steam consumption for the Billing
Period in metric tonnes computed on the basis of the Guaranteed Net
Plant Steam Rate (SRg), adjusted for variations in steam quality
and atmospheric conditions using the correction curves required to
be delivered by the Operator pursuant to Section 4.7.6, multiplied
by the Energy Delivered (ED) during the Billing Period expressed in
kilowatt hours (kWh) using the formula:
Vg = ED x SRg
Vt = Measured steam consumption for the Billing Period in metric
tonnes.
a = variable defined as follows
if 0.97 x Vg < Vt < 1.03 x Vg, then a = 0
otherwise, a = 1
8.3.3 ESCALATION
In the Billing Periods commencing January 25th and July 25th of
each year (using the indices for the prior months of December and
June, respectively), the amount of:
(i) Fixed Operating Cost Recovery Fee (OCR); and
(ii) Service Fee for Return on Investment (SFR); and
(iii) PNOC-EDC's steam cost (U)
shall be increased proportionately by the increase in the index
applicable to each component, as specified in Annex D as
appropriate, as from the levels of such indices prevailing in June
1993.
8.4 BILLING PROCEDURES
(a) The Operator shall bill PNOC-EDC for the Capacity Payments and
amounts owed to it under Section 8.3.2 on a monthly basis until the
termination of this Agreement. PNOC-EDC shall be required to pay
such bills to Operator within thirty (30) days from receipt of
billing.
(b) If any amount payable by PNOC-EDC hereunder is not paid on or
before the date due, PNOC-EDC shall pay interest thereon,
calculated at the rate of Prime plus one point five percent (1.5%)
per annum if the amount was due in dollars and the T-Bill Rate plus
two percent (2%) per annum if the amount was due in Pesos, from the
date due until the date received by the Operator.
8.5 DISPUTES
If PNOC-EDC disputes the amount specified in any invoice it shall
so inform the Operator within seven (7) days following receipt of
such invoice. If the dispute is not resolved by the due date PNOC-
EDC shall pay the undisputed amount on or before such date and the
disputed amount shall be resolved as soon as is
reasonably practicable following the due date for such invoice and
any sum paid to the Operator shall be paid together with interest
pursuant to Section 8.4 from the due date of such
invoice until the date paid.
8.6 TAXES, SETOFF
(a) All payments made to the Operator pursuant to this Agreement
shall be paid together with all taxes, duties, fees, levies and
other assessments to be paid by the Operator in respect of the
Power Plant or this Agreement, including "value added taxes" and
all other taxes set forth in Section 25.2(l) or (n), but
excluding national income taxes assessed after the expiration of
the tax holiday that would be applicable to the Operator (or the
Operator Philippines) if it were granted pioneer enterprise status
under the Omnibus Investment Code of 1987 (whether or not the
Operator or the Operator Philippines is granted such pioneer
enterprise status) and excluding Philippine Withholding Taxes
imposed on the Operator (or the Operator Philippines) not in excess
of fifteen percent (15%) (which shall be separately stated in all
invoices) in dollars in respect of the dollar portion and in pesos
in respect of the peso portion and each sum payable shall be
increased so as to ensure that after PNOC-EDC has
deducted therefrom any and all taxes or charges required to be
deducted therefrom by PNOC-EDC there remains a sum equal to the
amount that would have been payable to the Operator had there been
no requirement to deduct or withhold such taxes or other charges.
(b) All payments made by PNOC-EDC hereunder shall be made free and
clear of and without any deduction for or on account of any set-
off, counterclaim, tax or otherwise except as required by the law
of the republic of the Philippines.
(c) The Operator shall apply for and shall use good faith
efforts to obtain all exemptions from any such taxes available to
the Operator.
(d) PNOC-EDC shall promptly reimburse the Operator upon demand for
all custom duties, national internal revenue taxes and other taxes
actually paid by the Operator with respect to the
importation of capital equipment or spare parts related to the
Power Plant, to the extent that such duties or taxes would have
been exempted had the provisions of the Omnibus Investment Code
remained in force during the term of this Agreement.
8.7 PAYMENT PROCEDURES
(a) All sums payable to the Operator in dollars shall be payable
in dollars in New York, in immediately available funds not later
than 12:00 noon New York time, on the day such payment is due, to
the account of the Operator specified by the Operator to PNOC-EDC
to such account as the Operator may from time to time specify to
PNOC-EDC.
(b) All sums payable to the Operator in Pesos shall be payable in
Pesos in Manila in immediately available funds not later than 12:00
noon Manila time, on the day such payment is due, to the account of
the Operator specified by the Operator to PNOC-EDC to such account
as the Operator may from time to time specify to PNOC-EDC.
(c) All sums payable by the Operator to PNOC-EDC shall be
payable in immediately available funds not later than 12:00 noon,
on the day such payment is due, to the account of PNOC-EDC with a
bank in Manila specified by PNOC-EDC.
(d) In the event that any payment payable in dollars, upon
transfer to New York does not result in payment of the dollar
amount stipulated in this Agreement, the Operator shall be
entitled to immediate payment in dollars of the difference
between the amount received and the amount due. In the event that,
upon any such transfer, the Operator receives an amount in dollars
greater than the amount stipulated in this Agreement, the Operator
shall repay the excess amount to PNOC-EDC promptly upon the
Operator having knowledge of such overpayment.
ARTICLE 9 BUYOUT OPTION OF PNOC-EDC
9.1 BUYOUT CONDITIONS
(a) Upon either Party's giving of a notice pursuant to the
provisions of Section 4.7.2 or 14.3(c), on the Buyout Date, PNOC-
EDC shall (i) purchase all of the Operator's right, title and
interest in the Power Plant and (ii) return all security held by
PNOC-EDC in connection with this Agreement, including any bid bonds
(including the Construction Bond), letters of credit and bank
guarantees. Upon such purchase, all the Operator's
obligations under this Agreement shall cease.
(b) If in the reasonable opinion of PNOC-EDC or the Operator,
material changes in Government policies, laws and regulations
adversely affect the construction or operation of the Power Plant,
the Parties hereto shall meet and endeavour to make amendments to
this Agreement and agree to such amendments. If, after ninety (90)
calendar days following the date such changes become effective, no
such agreement has been reached, either Party may terminate this
Agreement by giving written notice of termination to the other
Party. On the Buyout Date, PNOC-EDC shall (i) purchase all of the
Operator's right, title and interest in the Power Plant and (ii)
return all security held by PNOC-EDC in connection with this
Agreement, including any bid bonds (including the Construction
Bond), letters of credit and bank guarantees. Upon such purchase,
all the Operator's obligations under this Agreement shall cease.
(c) In the event that any of the approvals, consents,
registrations, exemptions or other rights, laws or regulations
referred to in Section 25.2 is subsequently terminated,
withdrawn, rescinded or amended or any new required extension,
approval, consent or registration cannot be obtained and as a
result thereof the interest of the Operator in the Site, the Power
Plant and/or the Operator's economic rate of return (net of tax or
other imposition) on its investment is materially reduced or
otherwise adversely affected (including, without limitation, any
restriction on the ability to remit funds in dollars outside of the
Philippines) then the Parties hereto shall meet and endeavour to
agree on amendments to this Agreement and if after ninety (90)
calendar days no such agreement has been reached, either Party may
terminate this Agreement by giving written notice of termination to
the other Party. On the Buyout Date, PNOC-EDC shall (i) purchase
all of the Operator's right, title and interest in the Power Plant
and (ii) return all security held by PNOC-EDC in connection with
this Agreement, including any bid bonds (including the Construction
Bond), letters of credit and bank guarantees. Upon such purchase,
all the Operator's obligations under this Agreement shall cease.
9.2 BUYOUT PRICE
(a) If the provisions of Sections 9.1 or 15.4.1 apply prior to the
Commercial Operation Date of the third Generating Unit, the
purchase price payable, in United States dollars, shall be an
amount equal to the aggregate of all the costs and expenses
(including accrued interest and other direct costs incurred in
financing the development of the Power Plant) incurred by the
Operator in connection herewith as estimated by an independent
accountant jointly appointed by the Parties plus an amount equal to
ten percent (10%) of such aggregate provided such additional ten
percent (10%) shall not be payable if the provisions of Section 9.1
are applicable as a result of Force Majeure that is not a Political
FM.
(b) If the provisions of Sections 9.1 or 15.4.1 apply after the
Commercial Operation Date of the third Generating Unit, the
purchase price payable, in United States dollars, shall be the net
present value of the remaining stream of payments for Capital Cost
Recovery Fees (CCR) discounted from the Transfer Date to the date
of completion of the buyout on the basis of the last Nominated
Capacity or the Contracted Capacity, whichever is lower, and using
a discount rate equal to the last published Commercial Interest
Reference Rate (CIRR) having the shortest maturity term for United
States dollars published by the Organization for Economic
Cooperation and Development (OECD) provided however that such
discount rate shall not exceed nine point two six percent (9.26%).
(c) If the provisions of Section 9.1 or 15.4.1 apply on or after
the Commercial Operation Date of the first Generating Unit but
prior to the Commercial Operation Date of the third Generating
Unit, the purchase price, payable in United States dollars, shall
be the sum of (i) the amount calculated with respect to any
Generating Units which are already in commercial operation using
the formula set forth in Section 9.2(b) and using the portion of
the Contracted Capacity relating to such Generating Units, plus
(ii) an amount calculated with respect to the Power Plant using the
formula set forth in Section 9.2(a) but subtracting any costs
incurred solely for construction of any Generating Units already in
commercial operation.
9.3 PAYMENT TERMS
(a) Completion of a buyout pursuant to Sections 9.1 or 15.4.1
shall take place on the date that is sixty (60) days following
delivery of the notice specified in this Agreement (the "Buyout
Date") at which time (i) PNOC-EDC will pay to the Operator the
purchase price calculated in accordance with Section 9.2 payable in
United States dollars and return all security held by PNOC-EDC in
connection with this Agreement, including any bid bonds, the
Construction Bond, letters of credit and bank guarantees, and (ii)
the Operator shall transfer to PNOC-EDC all of the
Operator's rights, title and interest in the Power Plant and shall
warrant that upon such buyout the Power Plant shall be free from
any lien or encumbrance created by the Operator.
(b) In the event that the provisions of Sections 9.1 or 15.4.1
apply as a result of Section 14.3(c), then there shall be
deducted from the sum payable pursuant to Section 9.2 an amount
equal to the value, if any, of any insurance proceeds received by
the Operator in respect of such event of Force Majeure.
9.4 TRANSFER PROVISION
In respect of any transfer of ownership of the Power Plant
pursuant to the conditions stated above, the provisions on
transfer of ownership in Article 13 hereof shall apply thereto.
ARTICLE 10 REPRESENTATIONS & WARRANTIES OF THE PARTIES
10.1 CORPORATE EXISTENCE
(a) The Operator represents for itself that it is a corporation
duly organized and existing under and by virtue of the laws of the
State of Nevada and that it has the corporate power and authority
to execute, deliver and carry out the terms and
conditions of this Agreement.
(b) PNOC-EDC represents that is a wholly owned subsidiary of the
Philippine National Oil Company, a corporation created and
organised under Presidential Decree No. 334, as amended, and that
it has the power and authority to execute, deliver and carry out
the terms and conditions of this Agreement.
10.2 AUTHORISATIONS
(a) The Operator represents and warrants for itself that it has
taken all necessary corporate action to enter into this Agreement
and to perform its obligations hereunder with the exception that it
has not obtained final approval of the terms of this Agreement from
its Board of Directors prior to signing the Agreement. The
Operator represents that it will use its best efforts to obtain
such approval in the shortest possible time following signature.
(b) PNOC-EDC represents and warrants for itself that it has taken
all necessary corporate action to enter into this Agreement and to
perform its obligations hereunder.
10.3 WARRANTY AGAINST CORRUPTION
The Operator hereby warrants for itself that it or its
representative acting on behalf of it has not given or promised to
give any money or gift to any employee or official of PNOC-EDC to
influence the decision regarding the awarding of this
Agreement, nor has it and/or its representatives acting on behalf
of it exerted or utilized any unlawful influence to solicit or
secure this Agreement through any agreement to pay a commission
percentage, brokerage or contingent fee. The Operator agrees that
breach of this warranty shall be sufficient ground for the
Philippine National Oil Company or its affiliate to deduct, at its
discretion, such commission, percentage, brokerage or
contingent fees from the contract price without prejudice to it or
any person's civil or criminal liability under the Anti-Graft Law
and other applicable laws.
ARTICLE 11 INDEMNIFICATION
11.1 OPERATOR INDEMNIFICATION
(a) The Operator shall hold free and harmless and forever defend
PNOC-EDC, its officers, agents and employees from any and all
liabilities, damages, actions, claims and suits, including
reasonable costs and expenses, attributed to PNOC-EDC arising from
the acts or omissions of the Operator in the prosecution of the
Agreement, except to the extent caused by the negligence, gross
negligence or willful misconduct of PNOC-EDC.
(b) The Operator shall hold free and harmless and forever defend
PNOC-EDC, its officers, agents and employees from any and all
liabilities, damages or obligations of any nature or kind,
including costs and expenses, on account of any copyrighted or
uncopyrighted composition, secret process, patented or unpatented
invention, article, method or appliance manufactured or used by the
Operator in the performance of the Agreement.
11.2 PNOC-EDC INDEMNIFICATION
PNOC-EDC shall hold free and harmless and forever defend the
Operator, its officers, agents and employees from any and all
liabilities, damages, actions, claims and suits, including
reasonable costs and expenses, attributed to the Operator arising
from the acts or omissions of PNOC-EDC in the prosecution of the
Agreement, except to the extent caused by the negligence, gross
negligence or willful misconduct of the Operator.
ARTICLE 12 INSURANCE
12.1 APPLICABLE TERMS
The Operator shall, at its own expense, obtain and maintain in
force insurances as specified in Sections 12.2 and 12.3. The
Operator shall provide to PNOC-EDC evidence of these insurances.
In particular, evidence of the insurance specified to be held
during the Cooperation Period shall be furnished prior to
commencing initial testing of the first Generating Unit.
12.2 INSURANCE DURING CONSTRUCTION
From the Effectivity Date until the commissioning of the Power
Plant, the Operator shall, at its own expense, obtain and
maintain in force the following insurances:
(a) All Risk Marine Insurance in respect of plant and equipment to
be imported into the Philippines;
(b) All Risks "Builder's Risk Insurance" to cover the entire works
from any and all kinds of damages arising out of any cause
whatsoever; and
(c) "Third Party Liability Insurance" to cover injury to or death
of persons including those of PNOC-EDC or damages to
property including those of PNOC-EDC caused by the works or by the
Operator's vehicles, tools and/or equipment or personnel including
its subcontractors.
12.3 INSURANCE DURING COOPERATION PERIOD
From the completion of the first Generating Unit, the Operator, at
its own expense, shall keep the Power Plant insured against
accidental damage from all normal risks and to a level normal for
prudent operators of facilities similar to the Power Plant. In
addition, the Operator shall secure adequate insurance cover for
its employees as may be required by law.
ARTICLE 13 TRANSFER OF OWNERSHIP
13.1 TRANSFER OF TITLE
To the extent not previously vested, title to the Power Plant shall
automatically vest to PNOC-EDC on the Transfer Date
provided that PNOC-EDC has made all payments required to be made by
it pursuant to this Agreement. The Operator shall execute such
documents as may be necessary to effect the transfer of the title
to PNOC-EDC, including, without limitation, assignments of all
contract rights, claims and other rights related to the Power
Plant.
13.2 DOCUMENTATION COSTS
The Parties shall pay their own costs and expenses, including but
not limited to documentation, fees and taxes, incurred in
connection with the transfer referred to in Section 13.1 hereof.
13.3 TRAINING OF PNOC-EDC STAFF
(a) During a minimum period of twelve (12) months prior to the
Transfer Date, the Operator shall provide training in operation and
maintenance of the Power Plant for PNOC-EDC's staff. This training
shall be provided in accordance with a programme to be agreed
between PNOC-EDC and the Operator and shall be provided at no cost
to PNOC-EDC.
(b) PNOC-EDC shall endeavour to offer the Operator that PNOC-EDC
take over the employment of such of the Operator's operating and
maintenance staff employed on the Power Plant at the end of the
Cooperation Period as PNOC-EDC may, at its sole discretion,
consider suitable for employment with PNOC-EDC and under such terms
and conditions of employment as PNOC-EDC shall consider acceptable.
13.4 CONDITION OF POWER PLANT ON TRANSFER
(a) Within a period of six (6) months prior to the Transfer Date,
the Operator shall undertake performance and efficiency testing of
the Power Plant as specified in Annex F to demonstrate condition of
the Power Plant at the Transfer Date.
(b) Notwithstanding any testing performed pursuant to Section
13.4(a), the Power Plant and all other equipment transferred
pursuant to this Agreement shall be transferred on an "as is" basis
and any warranties which would otherwise be implied by statute or
otherwise, including, without limitation, warranties as to its
fitness for the purpose, the absence of patent or inherent defects,
description or otherwise of whatsoever nature will be excluded;
provided, however, that upon transfer the Operator shall warrant
that, on the Transfer Date, the Power Plant will be free from all
liens and encumbrances created by the Operator. After the Transfer
Date, the Operator shall be under no liability whatsoever to PNOC-
EDC in respect of the operation or otherwise of the Power Plant by
PNOC-EDC or a person
designated by PNOC-EDC and PNOC-EDC shall indemnify and keep
indemnified the Operator against any liability to any person
arising from the use or operation of the Power Plant after the
Transfer Date, provided, however, that the Operator shall
subrogate or assign to PNOC-EDC any and all rights and benefits
which it is able to subrogate or assign of any unexpired
warranties in respect of the building, plant and equipment of the
Power Plant under applicable laws or otherwise.
ARTICLE 14 FORCE MAJEURE
14.1 FORCE MAJEURE
(a) "Force Majeure" means any event or circumstance beyond the
reasonable control of a Party which materially affects the
performance by such Party of its obligations hereunder including
but not limited to any war, declared or not, or hostilities, or
belligerence, blockade, revolution, insurrection, riot, public
disorder, expropriation, requisition, confiscation or
nationalisation, export or import restrictions by any
governmental authorities, closing of harbours, docks, canals, or
other assistances to or adjuncts of shipping or navigation of or
within any place, rationing or allocation, whether imposed by law,
decree or regulation by, or with the compliance of industry at the
insistence of any governmental authority, or fire, unusual flood,
earthquake, volcanic activity, storm, typhoons, lightning, tide
(other than normal tides), tsunamis, perils of the sea, accidents
of navigation or breakdown or injury of vessels,
accidents to harbours, docks, canals, or other assistances to or
adjuncts of shipping or navigation, epidemic, quarantine, strikes
or combination of workmen, lockouts or other labour disturbances,
or any other event, matter or thing, wherever occurring which shall
not be within the reasonable control of the Party affected thereby.
(b) "Political FM" means any event of Force Majeure to the extent
such event satisfies the following requirements: war, declared or
not, or hostilities occurring in or involving the Republic of the
Philippines, or belligerence, blockade,
revolution, insurrection, riot, public disorder, expropriation,
requisition, confiscation or nationalisation by or occurring in or
involving the Republic of the Philippines, export or import
restrictions by any governmental authorities, regional or
municipal authorities of or within the Republic of the
Philippines, closing of harbours, docks, canals, or other
assistances to or adjuncts of shipping or navigation of or within
the Republic of the Philippines, rationing or allocation, whether
imposed by law, decree or regulation by, or with the compliance of
industry at the insistence of any governmental authority of or
within the Republic of the Philippines, or any other event, matter
or thing, wherever occurring, which shall be within the reasonable
control of PNOC-EDC or The Government or any agency or regional or
municipal authority thereof.
14.2 EFFECT OF FORCE MAJEURE
(a) Neither Party shall be responsible nor liable for nor deemed
in breach hereof because of delay in the performance of their
respective obligations hereunder due solely to Force Majeure
provided that:
(i) The non-performing Party gives the other Party within forty-
eight (48) hours a written notice describing the particulars of the
occurrence;
(ii) The suspension of performance is of no greater scope and of
no longer duration than is required by the Force Majeure;
(iii) The affected Party uses reasonable efforts to remedy its
inability to perform;
(iv) When the affected Party is able to resume performance of its
obligations under this Agreement, that Party shall give the other
Party written notice to that effect; and
(v) The Force Majeure was not primarily cause by any grossly
negligent or intentional act, or omission, or the failure to comply
with any law, rule, regulation, order or ordinance not constituting
Political FM or for any breach or default of this Agreement.
(b) Notwithstanding Section 14.2(a), PNOC-EDC shall not be
entitled to claim for itself Force Majeure in respect of any
Political FM.
(c) Notwithstanding Section 14.2(a), and subject to clauses (ii)
and (iii) of said Section 14.2(a), PNOC-EDC shall not be relieved
of its obligation to make Capacity Payments as provided in
Section 8.3.1 by the occurrence of (i) any Political FM, (ii) any
Force Majeure affecting the ability of PNOC-EDC to deliver under
Section 2.2 steam conforming with the Steam Specifications, or
(iii) any Force Majeure affecting NAPOCOR's ability to accept
deliveries of energy from the Power Plant.
(d) Notwithstanding Section 8.3.1, and subject to Section
14.3(c), PNOC-EDC shall be relieved of its obligations to make
Capacity Payments in respect of any Generating Unit which is unable
to deliver energy due to a Force Majeure affecting that Generating
Unit for the duration of such Force Majeure; provided, however,
that in such an event the Cooperation Period for the affected
Generating Unit shall be extended by the same number of days as the
duration of such Force Majeure.
14.3 REMEDIES
(a) Except as otherwise provide, in no event shall any condition
of Force Majeure extend this Agreement beyond its stated term.
(b) The Parties shall consult with each other and take all
reasonable steps to minimise the losses of either Party resulting
from Force Majeure.
(c) If any condition of Force Majeure delays a Party's
performance for a time period greater than ninety (90) days, either
Party may, after such ninety (90) day period, upon thirty (30) days
written notice, terminate this Agreement and the
provisions of Article 9 shall apply.
ARTICLE 15 SUSPENSION, TERMINATION AND ABANDONMENT
15.1 TERMINATION PRIOR TO EFFECTIVITY DATE
(a) Each Party shall use good faith efforts to cause the
conditions set forth in Article 25 to be satisfied as promptly as
practicable after the date of this Agreement and each Party will
exercise reasonable discretion in electing to terminate this
Agreement pursuant to this section 15.1.
(b) If the Effectivity Date has not occurred within ninety (90)
days following the date this Agreement is executed, or such longer
period as the Parties may agree to, due to a failure of the
conditions set forth in Section 25.1 to have been satisfied prior
to such date, if such conditions have not been waived in writing by
PNOC-EDC, either Party shall have the right to
terminate this Agreement by giving not less than fifteen (15) days
written notice to the other Party. Upon such termination, (i)
PNOC-EDC shall return to the Operator all security held by PNOC-EDC
in connection with this Agreement, including any bid bonds, letters
of credit and bank guarantees and (ii) if such termination shall
have occurred because of a failure in the conditions set forth in
Subsections 25.1(c) or (e) the Operator promptly shall reimburse
PNOC-EDC for all costs and expenses incurred by PNOC-EDC in
connection with this Agreement, except those related to the
preparation of the request for proposals and the bid evaluation,
until such termination, and thereafter, neither Party shall have
any further liability to the other and this Agreement shall
immediately and automatically become null and void.
Notwithstanding anything to the contrary in this Agreement, this
provision shall become effective upon execution of this Agreement
and shall remain effective until the
Effectivity Date.
(c) If the Effectivity Date has not occurred within ninety (90)
days following the date this Agreement is executed, or such longer
period as the Parties may agree to, due to a failure of the
conditions set forth in Section 25.2 to have been satisfied prior
to such date, if such conditions have not been waived in writing by
the Operator, either Party shall have the right to terminate this
Agreement by giving not less than fifteen (15) days written notice
to the other Party. Upon such termination, PNOC-EDC promptly shall
(i) provided such termination shall not have occurred because of a
failure in the conditions set forth in Subsections 25.2(b), (i),
(s) or (t), reimburse the Operator for all costs and expenses,
except those related to bid preparation, incurred by the Operator
in connection with this Agreement until such termination and (ii)
return to the Operator all security held by PNOC-EDC in connection
with this Agreement, including any bid bonds, letters of credit and
bank guarantees, and thereafter, neither Party shall have any
further liability to the other and this Agreement shall immediately
and automatically become null and void. Notwithstanding anything
to the contrary in this Agreement, this provision shall become
effective upon execution of this Agreement and shall remain
effective until the
Effectivity Date.
(d) The amount of costs and expenses to be reimbursed by either
Party to the other Party under this Section 15.1 shall be
estimated by an independent accountant jointly appointed by the
Parties and the costs associated with such estimation shall be paid
by the Party making the reimbursement.
15.2 TERMINATION FOR DEFAULT AND SUSPENSION OF DELIVERY
(a) PNOC-EDC may suspend delivery of energy from the Operator and
shall be exempt from payment of associated energy and
capacity charges during such period of suspension for:
(i) Tampering with meters;
(ii) A condition on the Operator's side of the Point of
Interconnection actually known by PNOC-EDC to be, or which PNOC-EDC
may consider to be, dangerous to life or property; or
(iii) The Operator's inability to deliver the quality of
electricity in accordance with the Operating Parameters.
(b) Subject to the Operator's cure rights set forth in paragraph
(c) below, upon the material breach by the Operator of any of its
obligations hereunder including without limitation under Section
6.6, PNOC-EDC may, as its sole remedy, terminate this Agreement.
Upon such termination, (i) if termination occurs prior to the
Commercial Operation Date of the third Generating Unit, the entire
proceeds of the Construction Bond shall be forfeited in favour of
PNOC-EDC and the Operator shall transfer, at no cost, all of the
Operator's right, title and interest in the Power Plant to PNOC-EDC
and (ii) if termination occurs after the
Commercial Operation Date of the third Generating Unit, the
Operator shall transfer, at no cost, all of the Operator's right,
title and interest in the Power Plant to PNOC-EDC. Upon such
termination and forfeiture and/or transfer, as the case may be, the
Operator shall have no further liability hereunder.
(c) No such termination shall be made by PNOC-EDC without thirty
(30) days (or longer pursuant to this paragraph) prior written
notice to the Operator. Such notice shall be delivered,
personally or by registered mail, stating in particular the
provision of this Agreement which has been violated. If the
Operator fails to correct any default within the thirty (30) day
period from its receipt of the notice, or such reasonable period
exceeding thirty (30) days provided the Operator has commenced
curing such default within such thirty (30) day period and
continues to diligently proceed to cure such default until cured,
PNOC-EDC may terminate this Agreement; provided, however, that any
dispute by the Operator in good faith as to the correctness of any
bill from PNOC-EDC shall not be a cause to terminate this
Agreement. Any suspension of the deliveries of electricity to
NAPOCOR on behalf of PNOC-EDC or termination of this Agreement upon
any authorized grounds shall in no way relieve the Operator of its
liability to compensate PNOC-EDC for any amounts owed by the
Operator to PNOC-EDC.
15.3 SUSPENSION OF PAYMENT
Payments under this Agreement, upon written request of the
Operator, and for a period reasonably required to replace or repair
the Power Plant, may be suspended if the Operator is temporarily
unable to produce the electric capacity or energy contracted for
due to physical destruction of or damage to the Power Plant.
15.4 ABANDONMENT
15.4.1 ABANDONMENT DURING CONSTRUCTION
The construction of any or all of the Generating Units or the Power
Plant shall be deemed abandoned to the extent set forth below under
any of the following circumstances:
(a) If the Operator, through a written notice to PNOC-EDC,
terminates construction of the Power Plant with the intent that
such termination be permanent then the construction of the Power
Plant shall be deemed abandoned;
(b) If the Operator fails to place a confirmed order for each
Generating Unit by the later of (i) one hundred twenty (120) days
following the Effectivity Date, or (ii) thirty (30) months before
the Guaranteed Completion Date of such Generating Unit then the
construction of such Generating Unit shall be deemed abandoned;
(c) If the Operator fails to resume work (i) within one hundred
twenty (120) calendar days following receipt of insurance
proceeds relating to a Force Majeure situation affecting one or
more of the Generating Units, or (ii) in case no material damage to
such Generating Units has occurred, within one hundred twenty (120)
calendar days following the termination or cessation of such Force
Majeure situation, provided that a notice of such termination or
cessation was given by PNOC-EDC to the Operator then the
construction of the affected Generating Units shall be deemed
abandoned; or,
(d) If the Commercial Operation Date of any Generating Unit does
not occur within ninety (90) calendar days following the relevant
Guaranteed Completion Date (as the same may be extended pursuant to
Section 4.1(b), 4.3.2 or 9.1 or by mutual agreement) then the
construction of the such Generating Unit shall be deemed
abandoned.
If construction of one or more Generating Units or the Power Plant
is deemed abandoned as set forth above, PNOC-EDC may
terminate this Agreement by giving the Operator not less than
fifteen (15) days prior written notice of its intention to so
terminate this Agreement. If the Operator has not commenced work
under clause (b) or (c), as the case may be, of this Section 15.4.1
before the expiration of such fifteen (15) day period, this
Agreement shall immediately and automatically terminate. Upon such
termination, the Operator shall forfeit the portion of the
Construction Bond relating to such abandoned Generating Units or
Power Plant to PNOC-EDC and transfer, upon payment by PNOC-EDC of
a purchase price calculated pursuant to Section 9.2 for the
Generating Units not so abandoned, all of the Operator's right,
title and interest in the Power Plant to PNOC-EDC. Upon such
termination, forfeiture and transfer, the Operator shall have no
further liability hereunder.
15.4.2 ABANDONMENT DURING COOPERATION PERIOD
The Power Plant shall be deemed abandoned during the Cooperation
Period under the following circumstances:
(a) If the Operator, through a written notice to PNOC-EDC
terminates operation of the Power Plant with the intent that the
termination be permanent;
(b) If the Operator fails to deliver energy to NAPOCOR on behalf
of PNOC-EDC for a period of one hundred twenty (120) consecutive
calendar days other than as a result of No Fault Outage, without
written notice of temporary suspension; or
(c) If within one hundred twenty (120) calendar days following
receipt of insurance proceeds relating to a Force Majeure
situation, the Operator fails to resume reconstruction of the
damaged Power Plant or, in case no material damage to the Power
Plant has occurred; within one hundred twenty (120) days
following the termination or cessation of a Force Majeure
situation, the Operator fails to resume delivery of energy to
NAPOCOR on behalf of PNOC-EDC, provided that a notice of such
termination or cessation shall have been given by PNOC-EDC to the
Operator.
If the Power Plant is deemed abandoned during the Cooperation
Period, PNOC-EDC may terminate this Agreement by giving the
Operator not less than fifteen (15) days prior written notice of
its intention to so terminate this Agreement. If the Operator has
not commenced work under clause (b) or (c), as the case may be, of
this Section 15.4.2 before the expiration of such fifteen (15) day
period, this Agreement shall immediately and
automatically terminate. Upon such termination, the Operator shall
transfer, at no cost to PNOC-EDC, all of the Operator's right,
title and interest in the Power Plant to PNOC-EDC. Upon such
termination and transfer, the Operator shall have no further
liability hereunder.
ARTICLE 16 SEVERAL OBLIGATIONS
Except where specifically stated in this Agreement to be
otherwise, the duties, obligations, and liabilities of the
Parties 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 among
the Parties. Each Party shall be liable individually and
severally for its own obligations under this Agreement.
ARTICLE 17 COMMUNICATIONS AND NOTICES
17.1 COORDINATION MEETINGS
(a) Coordination meetings between the Operator, PNOC-EDC and
NAPOCOR personnel shall be conducted for purposes of clarifying
problems that may arise during the prosecution of the
construction work and throughout the Cooperation Period. All items
agreed between the Operator and PNOC-EDC at such meetings shall
become part of this Agreement.
(b) The site of such meetings shall be mutually agreed upon by all
Parties. All expenses to be incurred by any Party shall be at such
Party's own account.
17.2 COMMUNICATIONS AMONG PARTIES
All orders and formal communications shall be made in writing. Any
communication made by PNOC-EDC to the Operator's
representative at the Site will be considered as made to the
Operator.
17.3 NOTICES
Any notice or communication required to be in writing hereunder
shall be given by: registered mail, telex, or telefax. Such notice
or communication shall be sent to the respective Parties at the
address listed below. Any notice given by registered mail shall be
considered sent upon posting and the same shall be considered
received upon its acknowledgment.
In the case of Operator to:
President
Magma Power Company
4365 Executive Drive
Suite 900
San Diego, CA 92127
United States of America
Telefax +1-619-622-7822
In the case of PNOC-EDC to:
Executive Vice President (or such other officer of PNOC-EDC as may
be authorized by him in writing and notified to the operator) PNOC-
Energy Development Corporation
Merritt Road
Fort Bonifacio
Makati
Metro Manila
Philippines
Telex No. 22666 EDC PH
Telefax +63-2-817-2747
Either party may, by written notice to the other, change the
representative or the address to which such notices and
communications are to be sent.
ARTICLE 18 NON-WAIVER
None of the provisions of this Agreement shall be considered waived
by either Party except when such waiver is given in
writing. The failure of either Party to insist, in any one or more
instances, upon strict performance of any of the provisions of this
Agreement or to take advantage of any of its rights hereunder shall
not be construed as a waiver of any such
provisions or the relinquishment of any such rights for the future,
but the same shall continue and remain in full force and effect.
ARTICLE 19 ASSIGNMENT
(a) Except as set forth in paragraph (b) below or to the
Operator Philippines, the Operator shall not assign or transfer any
or all of its rights and obligations under this Agreement without
the written consent of PNOC-EDC. Any such assignment or transfer
made without such written consent shall be null and void. Consent
for such assignment or transfer shall not be unreasonably withheld,
provided that, in the opinion of PNOC-EDC, the assignee or
transferee possesses all the legal, financial and technical
qualifications required to operate and maintain the Power Plant.
Upon the assignment of this Agreement by the Operator, the
Operator shall have no further liability hereunder.
(b) Notwithstanding the foregoing, the Operator may assign or
create a security interest over its rights and interests in this
Agreement for the purpose of financing the design, construction,
ownership and operation of the Power Plant. PNOC-EDC agrees to
execute such consents to or acknowledgements of such assignments as
the Operator or its lenders reasonably require, including providing
such lenders reasonable cure rights of the Operator's defaults
hereunder and other customary lender protection
provisions. In addition, PNOC-EDC agrees to reasonably cooperate
with the Operator's proposed lenders and agrees to amend this
Agreement as reasonably required by such lenders provided such
amendments do not materially increase PNOC-EDC's obligations or
materially decrease PNOC-EDC's rights hereunder.
ARTICLE 20 DISPUTE RESOLUTION; JURISDICTION
(a) As much as possible, all disputes shall be settled amicably
between the Parties. However, in the event that either Party shall
take judicial action in order to enforce any of its rights
hereunder, the defaulting Party shall pay the other Party a
reasonable compensation for attorney's fees which shall not, in any
event, be less than twenty percent (20%) of the amount due and
demandable, plus expenses of litigation and cost of suit. The
Parties hereto also agree that, in the event of litigation arising
from or relating to this Agreement, venne for purposes thereof
shall be laid non-exclusively with proper courts in Makati, Metro
Manila having jurisdiction over the same, and that writs of
attachment, injunction, replevin, seizure, or similar orders issued
thereby may be served and enforced anywhere in the Philippines.
(b) To the extent that in any jurisdiction (i) PNOC-EDC may claim
for itself or its assets or revenues immunity from suit, execution,
attachment or other legal process or (ii) there may be attributed
to PNOC-EDC or its assets or revenues such immunity (whether or not
claimed), PNOC-EDC agrees not to claim and
unconditionally and irrevocably waives such immunity to the full
extent permitted by the laws of such jurisdiction. PNOC-EDC
consents generally in respect of the enforcement of any judgment
against it in any such proceedings in any jurisdiction to the
giving of any relief or the issue of any process in connection with
such proceedings (including, without limitation, the making,
enforcement or execution against any property of PNOC-EDC).
ARTICLE 21 ENTIRE AGREEMENT
This agreement constitutes the entire agreement between the Parties
hereto and supersedes all prior negotiations and
agreements, whether written or oral.
ARTICLE 22 GOVERNING LAW
This Agreement shall be governed and construed in accordance with
Philippine Law.
ARTICLE 23 SEPARABILITY
If any part or parts of this Agreement shall be declared invalid by
competent courts, the other parts hereof shall not thereby be
affected or impaired.
ARTICLE 24 DURATION OF THE AGREEMENT
24.1 TERM
Except as set forth in Section 15.1, this Agreement shall be
effective from the Effectivity Date up to the Buyout Date, the
Transfer Date or Termination Date, whichever comes first.
24.2 SURVIVABILITY
Notwithstanding anything to the contrary contained in this
Agreement, (i) the rights and obligations of the Parties set out in
Articles 9, 11, 13 and 15 shall survive the termination of this
Agreement, and (ii) the rights and obligations set out in Sections
8.3 and 8.7 shall survive the termination of this
Agreement until all amounts to be paid by PNOC-EDC and/or the
Operator pursuant to this Agreement have been paid.
ARTICLE 25 EFFECTIVITY
It shall be a condition precedent to the effectivity of this
Agreement that the conditions stated in Sections 25.1 and 25.2 are
satisfied or waived within ninety (90) days following
execution of this Agreement. In the event that all of the
conditions in Sections 25.1 or 25.2 shall not have been satisfied
or waived within such ninety (90) day period, the Parties shall
promptly meet and discuss in good faith means of achieving
effectivity of this Agreement, including, without limitation,
consideration of the extension of the ninety (90) day period.
25.1 PNOC-EDC CONDITIONS
PNOC-EDC's obligations under this Agreement are subject to the
prior satisfaction of each of the following conditions (unless
waived by PNOC-EDC in writing):
(a) The Government shall have approved this Agreement,
(b) PNOC-EDC and NAPOCOR shall have executed the Power Purchase
Agreement,
(c) The Operator Philippines shall have been formed and shall have
correctly filed for registration with the Securities & Exchange
Commission,
(d) The Operator Philippines shall have been registered by the
Securities & Exchanges Commission
(e) The Board of Directors of Magma and Mission respectively shall
have approved the form of this Agreement and ratified the execution
and delivery by the officers executing the same.
(f) The Board of Directors of PNOC-EDC shall have approved the
form of this Agreement and ratified the execution and delivery by
the officers executing the same.
25.2 OPERATOR CONDITIONS
The Operator's obligations under this Agreement are subject to the
prior satisfaction of each of the following conditions
(unless waived by the Operator in writing):
(a) The Operator shall have received copies of such consents,
licenses, permits, approvals and registrations by or with any
governmental agency or other authority in the Philippines as may be
necessary to ensure the effectivity of this Agreement and to permit
performance by PNOC-EDC of its obligations under the Agreement;
(b) All consents, licenses, permits and approvals necessary for
the ownership, development, construction and operation of the Power
Plant by the Operator shall have been granted to the
Operator free from any condition that could reasonably materially
adversely affect the Operator.
(c) The Operator shall have received a certificate of the
corporate secretary of PNOC-EDC confirming that all necessary
corporate and other approvals and actions have been duly obtained
and taken for the execution, delivery and performance by PNOC-EDC
of this Agreement;
(d) The Operator shall have received evidence that PNOC-EDC holds
exclusive rights to develop the Site until the Transfer Date,
subject to warranty against reversion prior to the Transfer Date;
(e) The interest of the Operator in the Site shall have been
recorded in the office of the Registrar of Deeds;
(f) The Operator shall have received a legal opinion of PNOC-EDC's
General Counsel as to the validity, enforceability and binding
effect of this Agreement in form and substance
satisfactory to the Operator;
(g) The Operator shall have received the Government Undertaking
duly executed and delivered by the Government;
(h) The Operator shall have received a legal opinion of the
Secretary of Justice of the Republic of the Philippines as to the
validity, enforceability and binding effect of the Government
Undertaking in form and substance satisfactory to the Operator;
(i) The Operator shall have satisfactorily performed a due
diligence investigation with respect to all aspects of the
development, construction, operation and maintenance of the Power
Plant, including an investigation of real estate matters,
environmental matters and all other matters that the Operator deems
reasonably necessary, provided that if the Operator has not
notified PNOC-EDC within ninety (90) days following execution of
this Agreement that it is not satisfied with its due diligence, the
Operator shall be deemed to be satisfied with such due
diligence;
(j) The Central Bank shall have approved:
(i) all bridge or other loans to be made in foreign currency by
the Operator to the Operator Philippines and for the payment of
interest thereon and the payment of principal thereof in foreign
currency;
(ii) the incurrence by the Operator Philippines of foreign
currency debt from international financial institutions or
agencies, including International Finance Corporation and Asian
Development Bank, for the purpose of repaying any bridge loans
extended by the Operator, and for meeting the balance of capital
requirements of the development, construction, operation and
maintenance of the Power Plant;
(iii) the repatriation of the Operator's investment in the
Operator Philippines and the profits of such investment as
allowed by the laws, rules and regulations of the Republic of the
Philippines on the date the investment is made; and
(iv) the Operator Philippines to receive payment in dollars as
provide herein and to maintain an offshore dollar bank account or
accounts;
(k) The Government shall have approved the employment of foreign
nationals in supervisory, technical and advisory positions and for
officer positions of the Operator Philippines throughout the
Cooperation Period;
(l) The Operator shall have received evidence satisfactory to it
that remittance of dividends by the Operator Philippines to the
Operator will not be subject to Philippine Withholding Tax in
excess of fifteen percent of the amount remitted;
(m) The Central Bank, BOI and all other relevant Philippine
government agencies shall have approved the importation into the
Philippines during the term of this Agreement of all equipment,
machinery and parts for the Power Plant and the payment thereof in
foreign currency;
(n) The Operator shall have received a Certificate of
Registration issued by the BOI in relation to the development,
construction, operation and maintenance of the Power Plant,
confirming that the Operator Philippines is a registered pioneer
enterprise under the Omnibus Investment Code of 1987 (in effect on
the date hereof), containing conditions acceptable to the Operator
and providing;
(i) approval for up to 100% foreign ownership by the Operator of
the Operator Philippines;
(ii) exemption from all national internal revenue taxes by the
Government for a minimum period of six (6) years from the start of
the Cooperation Period with the right to apply for extensions
allowable under law;
(iii) full exemption from custom duties and national internal
revenue taxes on importation of capital equipment and spare parts
as provided by law with the right to apply for extensions
allowable under law;
(iv) tax credit equivalent to 100% of custom duties and national
internal revenue taxes for locally supplied capital equipment;
(v) full exemption from value added tax and local contractor's tax
for the Operator Philippines and for contractors associated with
the development, construction, operation and maintenance of the
Power Plant; and
(vi) exemption from customs duties and national internal revenue
taxes for importation and unrestricted use of the consigned
equipment for the development, construction, operation and
maintenance of the Power Plant;
(o) The Operator shall have received a copy of the Certificate of
the Investment Coordination Committee approving the
development, construction, operation and maintenance of the Power
Plant;
(p) The Operator shall have received a copy of the Certificate of
the National Economic and Development Authority for the
purposes of the Uniform Currency Act of the Philippines;
(q) The Operator shall have received an opinion of the
Securities and Exchange Commission to the effect that the
Operator is not required to obtain a license to do business in the
Philippines;
(r) The Operator shall have received an opinion of the National
Electrification Administration and the Energy Regulatory Board
confirming that the operation by the Operator of the Power Plant
will not constitute a public utility so as to require a
franchise, certificate of public convenience or other similar
license;
(s) The Operator shall have obtained debt financing (such funds
being available to the Operator subject to no conditions to the
initial draw thereunder) on terms consistent with the terms set
forth in Annex H for not less than seventy percent (70%) of the
total costs to complete the development, construction, operation
and maintenance of the Power Plant; and
(t) The Board of Directors of the Operator shall have approved the
form of this Agreement and ratified the execution and
delivery by the officers executing the same.
(u) The Board of Directors of PNOC-EDC shall have approved the
form of this Agreement and ratified the execution and delivery by
the officers executing the same.
EFFECTIVITY DATE
PNOC-EDC and the Operator shall meet and jointly certify that this
Agreement is no longer conditional and stating the date on which
the Effectivity Date occurred.
IN WITNESS WHEREOF, the Parties hereto have set their hands this
10th day of September, 1993 at Makati, Metro Manila, Philippines.
for PNOC-EDC for Magma
/s/ Monico V. Jacob /s/ Jon R. Peele
Signed in the Presence Of:
_________________________
ACKNOWLEDGMENT
Republic of the Philippines
BEFORE ME this 10th day of September 1993, in Makati, M.M.,
Philippines personally appeared MONICO V. JACOB with Res. Cert. No.
17683780 issued on April 7, 1993 at Makati, M.M.; and JON R. PEELE
with Passport No. 022030032 issued on October 23, 1986 at Michigan,
U.S.A representing their respective companies; known to me to be
the same persons who executed the foregoing agreement and they
acknowledged to me that the same is their free corporate act and
deed.
This instrument, consisting of 60 pages, including all annexes
and page on which this acknowledgment is written has been signed
above their respective names on page 42 by the parties and their
witnesses and initialed on the left hand margin of the other pages.
IN WITNESS WHEREOF, I have hereunto set my hand, the day, year
and place above written.
NOTARY PUBLIC
My commission ends on Dec. 31, 199_
Doc. No.____
Page No.____
Book No.____
Series of 1993.
Exhibit 10.106 (Cont.)
FIRST AMENDMENT TO 231 MW POWER PLANT - MALITBOG AGREEMENT
THE FIRST AMENDMENT TO 231 MW POWER PLANT - MALITBOG AGREEMENT
(this "Amendment") is made as of December 8, 1993 between PNOC-
ENERGY DEVELOPMENT CORPORATION, a wholly owned subsidiary of the
Philippine National Oil Company (PNOC-EDC"), and MAGMA POWER
COMPANY, a Nevada corporation ("Operator")/
Recitals
A. PNOC-EDC and Operator are the parties to the certain 231 MW
Power Plant - Malitbog Agreement dated September 10, 1993 (the
"Original Agreement"), concerning the development and operation of
ta 216 MW (net) geothermal power productions facility in Leyte
Province, the Philippines. All capitalized terms not defined
herein shall have the meanings given to them in the Original
Agreement.
B. PNOC-EDC and Operator each acknowledge that some but not all of
the conditions to "Effectivity" of the Original Agreement set forth
in Section 25 of the Original Agreement have been
fulfilled.
C. PNOC-EDC and Operator recognize that additional time is needed
in order to fulfill the remaining conditions to
Effectivity set forth in Section 25 of the Original Agreement.
D. PNOC-EDC and Operator wish to amend the Original Agreement as
more fully set forth in this Agreement.
Agreement
NOW, THEREFORE, the parties hereto, intending to be legally bound,
and to bind their successors and assigns, agree as
follows:
1. Amendment to Termination Provisions. Section 15.1 of the
Original Agreement provides that if the Effectivity Date has not
occurred on or before the date (the "Effectivity Deadline Date")
which is ninety (90) days after the date of the Original
Agreement, or such longer period as the parties may agree to,
either of the Parties may terminate the Original Agreement.
Section 15.1 of the Original Agreement is hereby amended to extend
the Effectivity Deadline Date to March 10, 1994.
2. Amendment to Effectivity Provisions. Article 25 of the
Original Agreement provides that it shall be a condition to the
effectivity of the Original Agreement that each of the conditions
stated in the Section 25.1 and Section 25.2 of the Original
Agreement be satisfied or waived on or before the Effectivity
Deadline Date. Article 25 of the Original Agreement is hereby
amended (i) to extend the Effectivity Deadline Date to March 10,
1994, or such longer period as the parties may agree to and (ii) to
extend the period for the Operator's due diligence
investigation under Section 25.2(i) to March 10, 1994.
3. General Ratification. All the terms and provisions of the
Original Agreement including, without limitation, the "Milestone
Dates" set forth in Section 4.1 of the Original Agreement, as
amended hereby, are hereby ratified and confirmed and remain in
full force and effect.
IN WITNESS WHEREOF, the parties have executed this First
Amendment to 231 MW Power Plant - Malitbog Agreement as of the date
first above written.
PNOC-ENERGY DEVELOPMENT CORPORATION
a wholly owned subsidiary of the
Philippine National Oil Company
By: /s/ Nazario C. Vasquez
Name: NAZARIO C. VASQUEZ
Title: Executive Vice President
MAGMA POWER COMPANY,
a Nevada Corporation
By: /s/ Ralph W. Boeker
Name: RALPH W. BOEKER
Title: President
ACKNOWLEDGEMENT
REPUBLIC OF THE PHILIPPINES)
MAKATI, METRO MANILA )S.S.
BEFORE ME this 8th day of December, 1993, in Makati, Metro
Manila, Philippines, personally appeared Nazario C. Vasquez with
Residence Certificate No. 6471090 issued on March 4, 1993 at
Paranaque, Metro Manila; and Ralph W. Boeker with Passport No.
020938637 issued on April 24, 1984 at Chicago, Ill., USA
representing their respective companies; known to me to be the same
persons who executed the foregoing agreement and they
acknowledged to me that the same is their free corporate act and
deed.
This instrument, consisting of 3 pages, has been signed above their
respective names on page 2 by the parties and initiated on the left
hand margin of the other pages.
IN WITNESS WHEREOF, I have hereunto set my hand, the day, year and
place above written
NOTARY PUBLIC
Doc. No. 76
Page No. 17
Book No. II
Series of 1993
SECOND AMENDMENT TO 231 MW POWER PLANT - MALITBOG AGREEMENT
THE SECOND AMENDMENT TO 231 MW POWER PLANT - MALITBOG AGREEMENT
(this "Amendment") is made as of March 10, 1994 between PNOC-ENERGY
DEVELOPMENT CORPORATION, a wholly owned subsidiary of the
Philippine National Oil Company ("PNOC-EDC"), and Visayas
Geothermal Power Company, a Philippines general partnership
("Operator").
Recitals
A. PNOC-EDC and Operator are the parties to that certain 231 MW
Power Plant - Malitbog Agreement dated September 10, 1993 (the
"Original Agreement), as amended by the First Amendment to 231 MW
Power Plant - Malitbog Agreement dated December 8, 1993 (the "First
Amendment"), concerning the development and operation of a 216 MW
(net) geothermal power productions facility in Leyte Province, the
Philippines. All capitalized terms not defined herein shall have
the meanings given them in the Original
Agreement.
B. PNOC-EDC and Operator each acknowledge that some but not all of
the conditions to "Effectivity" of the Original Agreement set forth
in Section 25 of the Original Agreement have been
fulfilled.
C. PNOC-EDC and Operator recognize that additional time is needed
in order to fulfill the remaining conditions to
Effectivity set forth in Section 25 of the Original Agreement.
D. PNOC-EDC and Operator wish to amend the Original Agreement, as
amended by the First Amendment, as more fully set forth in this
Agreement.
Agreement
NOW, THEREFORE, the parties hereto, intending to be legally bound,
and to bind their successors and assigns, agree as
follows:
1. Amendment to Termination Provisions. Section 15.1 of the
Original Agreement provides that if the Effectivity Date has not
occurred on or before the date (the "Effectivity Deadline Date")
which is ninety (90) days after the date of the Original
Agreement, or such longer period as the parties may agree to,
either of the Parties may terminate the Original Agreement. The
First Amendment amended Section 15.1 of the Original Agreement is
hereby further amended to extend the Effectivity Deadline Date to
April 8, 1994.
2. Amendment to Effectivity Provisions. Article 25 of the
Original Agreement provides that it shall be a condition to the
effectivity of the Original Agreement that each of the conditions
stated in the Section 25.1 and Section 25.2 of the Original
Agreement be satisfied or waived on or before the Effectivity
Deadline Date. The First Amendment amended Article 25 to extend
the Effectivity Deadline Date to March 10, 1994. Article 25 of the
Original Agreement is hereby further amended to extend the
Effectivity Deadline Date to April 8, 1994.
3. General Ratification. All the terms and provisions of the
Original Agreement including, without limitation, the "Milestone
Dates" set forth in Section 4.1 of the Original Agreement, as
amended by the First Amendment and by this Second Amendment, are
hereby ratified and confirmed and remain in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Second
Amendment to 231 MW Power Plant - Malitbog Agreement as of the date
first above written.
PNOC-ENERGY DEVELOPMENT CORPORATION
a wholly owned subsidiary of the
Philippine National Oil Company
By: /s/ Nazario C. Vasquez
Name: NAZARIO C. VASQUEZ
Title: Executive Vice President
VISAYAS GEOTHERMAL POWER COMPANY,
A Philippines general partnership
By: /s/ Ralph W. Boeker
Name: Ralph W. Boeker
Title: Managing Director
Haremhab Investments B.V.
(Magma Netherlands B.V.), a Dutch
corporation acting through its Philippines branch
Exhibit 10.107
Exhibit 10.107
CREDIT AGREEMENT
CREDIT AGREEMENT (this "Agreement"), dated as of November 10, 1994,
among VISAYAS POWER CAPITAL CORPORATION, a corporation organized
and existing under the laws of the State of Delaware ("VPCC"), the
financial institutions listed in Schedule I hereto (each such
financial institution, individually a "Bank" and, collectively the
"Banks") and CREDIT SUISSE, a bank organized and existing under the
laws of Switzerland, in its capacity as agent for the Banks (in
such capacity, together with its successors in such capacity, the
"Bank Agent"), and in its capacity as Project Administrative Agent
under the Intercreditor Agreement referred to in Schedule X hereto
(in such capacity, together with its successors in such capacity,
the "Project Administrative Agent").
W I T N E S S E T H :
WHEREAS, the Partnership intends to construct, own and operate the
Project;
WHEREAS, simultaneously herewith, among other things, (a) the
Partnership, VPCC, the VPCC Agent and the Project Administrative
Agent are entering into the Project Credit Agreement, which
provides for, among other things, the making by VPCC of the Project
Construction Loans to the Partnership and the conversion of such
Project Construction Loans into Project Term Loans to the
Partnership, in each case on the terms and subject to the
conditions set forth in the Project Credit Agreement for the
purpose of financing a portion of the costs of construction of the
Project, (b) VPCC and OPIC are entering into the OPIC Lenders
Insurance Contract, pursuant to which, among other things, OPIC is
agreeing, subject to the terms and conditions set forth therein, to
insure a portion of the payments of principal and interest on the
Project Loans against certain risks described in the OPIC Lenders
Insurance Contract, (c) OPIC and the Partnership are entering into
the OPIC Finance Agreement, which provides for, among other things,
the making by OPIC of the OPIC Construction Loan to the Partnership
and the conversion of such OPIC Construction Loan into the OPIC
Term Loan to the Partnership, in each case on the terms and subject
to the conditions set forth in the OPIC Finance Agreement for the
purpose of financing a portion of the costs of construction of the
Project and (d) the Partnership, VPCC, the VPCC Agent, the Banks,
the Bank Agent, OPIC and the Project Administrative Agent are
entering into the Common Agreement, which provides for, among other
things, certain common conditions precedent to the making of
Project Construction Loans, of disbursements of the OPIC Loan and
of Bank Construction Loans provided for herein, certain common
representations, warranties and covenants of the Partnership to the
other parties thereto and of VPCC to the other parties thereto
(other than the Partnership) and certain common events of default;
WHEREAS, simultaneously herewith, among other things, (a) VPCC and
the Bank Agent are entering into the VPCC Assignment and Security
Agreement, pursuant to which VPCC is granting to the Bank Agent a
security interest in and continuing lien on all of the right,
title and interest of VPCC in, to and under, among other things,
the OPIC Lenders Insurance Contract and (b) Magma and the Bank
Agent are entering into the Political Risk Agreement, which
provides for, among other things, certain sources of supplemental
political risk insurance for a portion of the payments of principal
and interest on the Bank Loans provided for herein; and
WHEREAS, in order to provide a source of funds for the making by
VPCC of the Project Construction Loans to the Partnership pursuant
to the Project Credit Agreement and for the conversion of such
Project Construction Loans into Project Term Loans to the
Partnership pursuant to the Project Credit Agreement, the Banks are
willing to make Bank Construction Loans to VPCC and to convert such
Bank Construction Loans into Bank Term Loans to VPCC, in each case
on the terms and subject to the conditions set forth in this
Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
Section 1
Defined Terms and Principles of Construction
Section 1.1 Defined Terms and Principles of Construction. For all
purposes of this Agreement, (a) capitalized terms used but not
otherwise defined herein shall have the meanings set forth in
Schedule X attached hereto and (b) the principles of construction
set forth in Schedule X shall apply.
Section 2
Amount and Terms of Bank Loans
Section 2.1 The Bank Commitments. (a) Subject to the terms and
conditions of this Agreement, each Bank severally agrees for its
own account to make available to VPCC, during the Bank Financing
Availability Period, such Bank's Applicable Percentage of one or
more loans (each a "Bank Construction Loan" and, collectively, the
"Bank Construction Loans") in the manner provided in Section 2.2(b)
hereof; provided that the aggregate principal amount of Bank
Construction Loans outstanding from any Bank shall at no time
exceed the Bank Commitment of such Bank at such time.
(b) Subject to the terms and conditions of this Agreement, each
Bank severally agrees for its own account to (i) convert on the
Conversion Date its Applicable Percentage of each Bank Construction
Loan into a term loan (each a "Bank Term Loan" and, collectively,
the "Bank Term Loans") and (ii) maintain its Applicable Percentage
of the Bank Term Loans upon such conversion. The agreements made
pursuant to clause (ii) of the immediately preceding sentence shall
(unless earlier terminated in accordance with the terms hereof and
the other Financing Documents) terminate on the Maturity Date.
(c) Bank Construction Loans, the proceeds of which are applied by
VPCC solely to finance Project Construction Loans to the
Partnership for the payment of "value added taxes" with respect to
the Project or import duties on capital equipment provided under
the Construction Contract, are revolving in nature and VPCC may
borrow, repay and reborrow such Bank Construction Loans; provided,
however, that the aggregate outstanding principal amount of such
Bank Construction Loans shall at no time exceed an amount (the
"Special Cost Maximum Amount") equal to the lesser of (i) $4
million and (ii) the Total Bank Commitment less the aggregate
outstanding principal amount of all Bank Construction Loans, the
proceeds of which have been applied by VPCC to finance Project
Construction Loans to the Partnership for the payment of Project
Costs. Except as set forth in this Section 2.1(c), the Bank Loans
are not revolving in nature, and any amounts repaid, prepaid or
canceled pursuant to the terms of this Agreement may not be
reborrowed.
(d) Any and all amounts due to the Banks and the Bank Agent
pursuant to the Bank Loans, the Bank Notes, this Agreement and the
other Financing Documents are entitled to the benefit of the Bank
Financing Collateral which is held for the benefit of the Bank
Financing Secured Parties through the Bank Agent pursuant to the
terms of the Bank Financing Security Documents.
(e) VPCC agrees that the proceeds of the Bank Construction Loans
will be applied only to finance the making by VPCC of Project
Construction Loans to the Partnership strictly in accordance with
the terms of this Agreement, the Project Credit Agreement and the
other Financing Documents.
Section 2.2 Procedures for Fundings. (a) From time to time, but
not more frequently than once per Month, VPCC may request that a
Bank Construction Loan be made available to it by submitting,
jointly with the Partnership, an Application for Funding, properly
executed by each of VPCC and the Partnership, to the Bank Agent,
the VPCC Agent, OPIC and the Project Administrative Agent, which
shall (i) request that a Project Construction Loan be made
available by VPCC to the Partnership in the manner provided in
Section 2.2(b) of the Project Credit Agreement and request the
approval of the Bank Agent, the VPCC Agent, OPIC and the Project
Administrative Agent of such request for such Project Construction
Loan, (ii) request that a Bank Construction Loan be made available
by the Banks to VPCC in the manner provided in Section 2.2(b)
hereof and request the approval of the Bank Agent, the VPCC Agent,
OPIC and the Project Administrative Agent of such request for such
Bank Construction Loan and (iii) request that an OPIC Disbursement
be made available by OPIC to the Partnership in the manner provided
in the OPIC Finance Agreement and request the approval of the Bank
Agent, the VPCC Agent, OPIC and the Project Administrative Agent of
such request for such OPIC Disbursement, in each case for the
payment of Project Costs specified in the Construction Budget which
are then due and payable and, in the case of Project Construction
Loans and Bank Construction Loans, for the payment of "value added
taxes" with respect to the Project or import duties on capital
equipment provided under the Construction Contract which are then
due and payable; provided, however, that (v) no Application for
Funding shall request that a Project Construction Loan or an OPIC
Disbursement be made available to the Partnership on any date prior
to the Credit Date or shall request that a Bank Construction Loan
be made available to VPCC on any date prior to the Credit Date, (w)
each Application for Funding requesting that a Project Construction
Loan be made available to the Partnership on a specified date shall
also request that an OPIC Disbursement be made available to the
Partnership on the same date in an amount necessary so that, after
giving effect to the making of the Project Construction Loan which
is the subject of such Application for Funding and the making of
the OPIC Disbursement which is the subject of such Application for
Funding, the aggregate principal amount of the Project Construction
Loans outstanding (excluding any portion thereof which has been
allocated to the payment of "value added taxes" with respect to the
Project or import duties on capital equipment provided under the
Construction Contract in accordance with the terms of the Project
Credit Agreement) shall not exceed a percentage of the Secured
Principal Amount Outstanding (excluding any portion thereof
representing outstanding principal amounts of Project Construction
Loans, the proceeds of which have been allocated to the payment of
"value added taxes" with respect to the Project or import duties on
capital equipment provided under the Construction Contract in
accordance with the terms of the Project Credit Agreement) equal to
the product of (A) the quotient obtained by dividing 135 by 210
times (B) 100, (x) each Application for Funding requesting that an
OPIC Disbursement be made available to the Partnership on a
specified date shall also request that a Project Construction Loan
be made available to the Partnership on the same date in an amount
necessary so that, after giving effect to the making of the OPIC
Disbursement which is the subject of such Application for Funding
and the making of the Project Construction Loan which is the
subject of such Application for Funding, the aggregate principal
amount of the OPIC Loan outstanding shall not exceed a percentage
of the Secured Principal Amount Outstanding (excluding any portion
thereof representing outstanding principal amounts of Project
Construction Loans, the proceeds of which have been allocated to
the payment of "value added taxes" with respect to the Project or
import duties on capital equipment provided under the Construction
Contract in accordance with the terms of the Project Credit
Agreement) equal to the product of (A) the quotient obtained by
dividing 75 by 210 times (B) 100, (y) each Application for Funding
requesting that a Bank Construction Loan be made available to VPCC
on a specified date shall also request that a Project Construction
Loan be made available to the Partnership on the same date in an
amount necessary so that, after giving effect to the making of the
Bank Construction Loan which is the subject of such Application for
Funding and the making of the Project Construction Loan which is
the subject of such Application for Funding, the aggregate
principal amount of the Bank Construction Loans outstanding shall
equal the aggregate principal amount of the Project Construction
Loans outstanding and (z) each Application for Funding requesting
that a Project Construction Loan be made available to the
Partnership on a specified date shall also request that a Bank
Construction Loan be made available to VPCC on the same date in an
amount necessary so that, after giving effect to the making of the
Project Construction Loan which is the subject of such Application
for Funding and the making of the Bank Construction Loan which is
the subject of such Application for Funding, the aggregate
principal amount of the Project Construction Loans outstanding
shall equal the aggregate principal amount of the Bank Construction
Loans outstanding.
The form of Application for Funding attached hereto as Schedule
2.2(a) shall be used by the Partnership and VPCC for requesting
that a Project Construction Loan be made available to the
Partnership, for requesting that a Bank Construction Loan be made
available to VPCC and for requesting that an OPIC Disbursement be
made available to the Partnership. Each such Application for
Funding shall be submitted to the Bank Agent, the VPCC Agent, OPIC
and the Project Administrative Agent, with a copy to the
Independent Engineer, at least fifteen (15) Business Days prior to
the date on which the Project Construction Loan, the Bank
Construction Loan and the OPIC Disbursement is desired. An
Application for Funding for a Bank Construction Loan (i) shall in
no event request a Bank Construction Loan in an amount in excess of
the then Total Unutilized Bank Commitment (and the aggregate amount
of each Bank Construction Loan shall in no event exceed such
amount), (ii) shall (except with respect to the final unused
portion of the Total Unutilized Bank Commitment) request a Bank
Construction Loan in an amount of at least $1 million and (iii)
shall in no event request a Bank Construction Loan, the proceeds of
which are to be applied by VPCC to make a Project Construction Loan
to the Partnership for the payment of "value added taxes" with
respect to the Project or import duties on capital equipment
provided under the Construction Contract, in an amount in excess of
an amount (the "Unutilized Special Cost Amount") equal to (i) the
Special Cost Maximum Amount less (ii) the outstanding aggregate
principal amounts of Bank Construction Loans which have been
applied by VPCC to make Project Construction Loans to the
Partnership for the payment of "value added taxes" with respect to
the Project or import duties on capital equipment provided under
the Construction Contract.
Furthermore, VPCC hereby irrevocably authorizes the Banks, from
time to time on and after the Credit Date and whether or not an
Application for Funding has been submitted by VPCC, to make Bank
Construction Loans available to VPCC in the manner provided in
Section 2.2(b) hereof for the purposes of making Project
Construction Loans to the Partnership, to the extent that such
Project Construction Loans are necessary to pay any VPCC Financed
Secured Obligations when due and thereby provide a source of funds
for payment by VPCC when due of any of the Bank Financing Secured
Obligations; provided, however, that nothing in this sentence shall
require the making of the Bank Construction Loans authorized to be
made pursuant to this sentence or to limit the provisions of
Section 3.03 of the Disbursement Agreement which permit the
application of amounts on deposit in the Debt Reserve Cash
Collateral Account and drawings under any Debt Service Reserve LC,
in each case to the extent necessary to satisfy the Partnership's
Debt Service obligations when due.
Without restricting the Partnership's ability to amend the
Construction Budget from time to time in accordance with
Section 4.27 of the Common Agreement, no Application for Funding
may request the making of Project Construction Loans for (or the
making of Bank Construction Loans for the purposes of making
Project Construction Loans for), and/or the making of OPIC
Disbursements for, any amounts with respect to any Budget Category
which, together with all prior Project Construction Loans, all
prior OPIC Disbursements and all prior Required Equity
Contributions made with respect to such Budget Category, are in
excess of the amount set forth for such Budget Category (plus any
unutilized contingency) in the Construction Budget as then in
effect.
VPPC hereby acknowledges and agrees that the Bank Agent shall not
be required to disburse all or any part of a Bank Construction Loan
requested in an Application for Funding and the Project
Administrative Agent, the Bank Agent, the VPCC Agent and OPIC shall
not be required to approve all or any part of a request for a Bank
Construction Loan, a Project Construction Loan or an OPIC
Disbursement requested in an Application for Funding (i) for which
all conditions precedent for the making of such Bank Construction
Loan, Project Construction Loan or OPIC Disbursement have not been
satisfied or waived pursuant to the Common Agreement, this
Agreement, the Project Credit Agreement or the OPIC Finance
Agreement, as the case may be, or (ii) as to which documentation
required to be delivered to the Bank Agent, the VPCC Agent, OPIC
and/or the Project Administrative Agent, as the case may be, has
not been timely delivered. VPCC further acknowledges and agrees
that the disbursement by the Bank Agent of any Bank Construction
Loan on the specified day on which such Bank Construction Loan is
desired and the approving by the Project Administrative Agent, the
Bank Agent, the VPCC Agent and OPIC of any request for a Project
Construction Loan, a Bank Construction Loan or an OPIC Disbursement
on the specified day on which such approval of a request for a Bank
Construction Loan, a Project Construction Loan or an OPIC
Disbursement is requested shall be contingent on the Bank Agent's,
the Project Administrative Agent's, the VPCC Agent's and OPIC's
receipt of the Independent Engineer's approval of such matters
expressly delegated to the Independent Engineer in the form of
Application for Funding and Section 3 of the Common Agreement by at
least 11:00 a.m. New York time ten (10) Business Days before the
specified day on which such Bank Construction Loan, Project
Construction Loan or OPIC Disbursement, as the case may be, is
desired.
(b) The Bank Agent shall promptly, but in no event later than
three (3) Business Days prior to the proposed date of a Bank
Construction Loan requested in an Application for Funding, give
each Bank notice of such requested Bank Construction Loan, of the
amount of funds such Bank will have to disburse with respect
thereto (which shall be based on such Bank's Applicable Percentage)
and the proposed date of the requested Bank Construction Loan.
Subject to the satisfaction of the conditions precedent set forth
in Section 3 of the Common Agreement, no later than 10:00 a.m. New
York time on the applicable date specified in each Application for
Funding for a Bank Construction Loan, each Bank will make available
its specified portion of such Bank Construction Loan, in Dollars
and in immediately available funds to the Bank Agent Account, at
12:00 p.m. New York time on the date of receipt thereof (or at such
later time as the Bank Agent shall have received such funds) the
Bank Agent shall make available to VPCC, solely for the purpose of
making Project Construction Loans to the Partnership, the aggregate
of the amounts so made available by the Banks by paying the
aggregate of such amounts to the Dollar Disbursement Account in
immediately available funds.
(c) The Bank Agent may assume that each Bank will make available
to the Bank Agent such Bank's portion of any Bank Construction Loan
to be made on the proposed date of a Bank Construction Loan and the
Bank Agent may, in reliance upon such assumption, make available to
VPCC, in the manner provided in Section 2.2(b) above, a
corresponding amount. If such corresponding amount is not in fact
made available to the Bank Agent by such Bank, the Bank Agent shall
be entitled to recover such corresponding amount from such Bank on
demand. If such Bank does not pay such corresponding amount
forthwith upon the Bank Agent's demand therefor, the Bank Agent
shall promptly notify VPCC, and VPCC shall pay such corresponding
amount to the Bank Agent within such period of time as the Bank
Agent deems reasonable in the circumstances. The Bank Agent shall
also be entitled to recover on demand from such Bank or VPCC, as
the case may be, interest on such corresponding amount in respect
of each day from the date such corresponding amount was made
available by the Bank Agent to VPCC until the date such
corresponding amount is recovered by the Bank Agent at the
following interest rates: (i) with respect to interest from VPCC,
at the applicable Interest Rate selected by VPCC with respect to
such amount pursuant to Section 2.5 (or, if VPCC shall not have
selected an Interest Rate with respect to such amount, at the rate
per annum equal to the Base Rate plus the Base Rate Margin) and
(ii) with respect to interest from such Bank, at the Federal Funds
Rate until the 3rd Business Day, and at the Base Rate plus the Base
Rate Margin thereafter. Nothing in this Section 2.2(c) shall be
deemed to relieve any Bank from its obligation to make Bank
Construction Loans hereunder or to prejudice any rights which VPCC
may have against any Bank as a result of any failure by such Bank
to make Bank Construction Loans hereunder. The amount of any
repayment by VPCC to the Bank Agent pursuant to the third sentence
of this Section 2.2(c) shall not be considered a Bank Construction
Loan hereunder and such repayment shall not be deemed to be a
prepayment of a Bank Construction Loan for purposes of this
Agreement and the other Financing Documents. In addition, in the
event a Bank fails to make its pro rata share of any Bank
Construction Loan available to the Bank Agent as required pursuant
to the terms of this Section 2.2(c) and VPCC has not reimbursed the
Bank Agent with respect to such pro rata share pursuant to the
third sentence of this Section 2.2(c), such Bank for all purposes
of this Agreement hereby agrees to and does hereby assign all its
right, title and interest and delegate all its obligations with
respect to such defaulted obligation to such Person that the Bank
Agent may designate in writing to such Bank, such assignment and
delegation to take effect from the date such designated Person
accepts such assignment and delegation. Such defaulting Bank
hereby agrees to cooperate with the Bank Agent and the designated
assignee and to take all actions necessary, in each case to effect
such assignment and delegation.
Section 2.3 Failure to Make Bank Construction Loans. No Bank
shall be responsible for any default by any other Bank of its
obligation to make Bank Construction Loans hereunder and each Bank
shall be obligated to make the Bank Construction Loans provided to
be made by it hereunder regardless of the failure of any other Bank
to make its Bank Construction Loans hereunder.
Section 2.4 Bank Notes. (a) VPCC's obligation to pay the
principal of, and interest on, each Bank's Applicable Percentage of
the Bank Construction Loans shall be evidenced by one separate
promissory note for each Bank, substantially in the form of
Schedule 2.4(a) with blanks appropriately completed in conformity
herewith (individually, a "Bank Construction Note" and,
collectively, the "Bank Construction Notes"), payable to the order
of such Bank. All Bank Construction Loans made by each Bank, and
all payments and prepayments made on account of the principal
thereof, shall be recorded by such Bank on the schedule attached to
its respective Bank Construction Note, it being understood however
that failure by any Bank to make any such endorsement or any error
therein shall not affect the obligations of VPCC hereunder in
respect of such Bank Construction Loans evidenced thereby.
(b) Each of the Bank Construction Notes shall (i) be dated the
Effective Date, (ii) be in a stated principal amount equal to the
Bank Commitment of the Bank to whom the Bank Construction Note is
payable, and be payable in the principal amount of the Bank
Construction Loans evidenced thereby, (iii) mature on the
Construction Financing Repayment Date, (iv) be subject to
prepayment as provided in this Agreement, (v) bear interest as
provided herein and (vi) be entitled to the benefits of this
Agreement and the Bank Financing Security Documents.
(c) VPCC's obligation to pay the principal of, and interest on,
each Bank's Applicable Percentage of the Bank Term Loans shall be
evidenced by one separate promissory note for each Bank,
substantially in the form of Schedule 2.4(c) with blanks
appropriately completed in conformity herewith (individually, a
"Bank Term Note" and, collectively, the "Bank Term Notes"), payable
to the order of such Bank. The Bank Term Notes shall be executed
by VPCC and delivered by VPCC to the appropriate Bank on the
Conversion Date. Each Bank's Applicable Percentage of the Bank
Term Loans, and all payments and prepayments on the account of the
principal thereof, shall be recorded by such Bank on the Schedule
attached to its respective Bank Term Note, it being understood
however that failure by any Bank to make any such endorsement or
any error therein shall not affect the obligations of VPCC
hereunder in respect of such Bank Term Loans evidenced thereby.
(d) Each of the Bank Term Notes shall (i) be dated the Conversion
Date, (ii) be in a stated principal amount equal to the unpaid
principal amount of the Bank Construction Note of the Bank to whom
such Bank Term Note is payable, (iii) carry the rights to unpaid
interest that were carried by the Bank Construction Note of the
Bank to whom such Bank Term Note is payable, (iv) mature on the
Maturity Date, (v) be subject to prepayment as provided in this
Agreement, (vi) bear interest as provided herein and (vii) be
entitled to the benefits of this Agreement and the Bank Financing
Security Documents.
Section 2.5 Interest. (a) VPCC shall select each Interest Period
and the Interest Rate therefor by giving written notice of such
selection to the Bank Agent by 12:00 noon (New York time) at least
three (3) Business Days before the first day of such Interest
Period, in the case of an Interest Period based on LIBOR, and by
12:00 noon (New York time) at least one (1) Business Day before the
first day of such Interest Period, in the case of an Interest
Period based on the Base Rate; provided that:
(i) 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, in the case of an Interest Period using LIBOR,
such Business Day falls in another Month, in which case such
Interest Period shall end on the next preceding Business Day;
(ii) any Interest Period using LIBOR which begins on the last
Business Day of a Month (or on a day for which there is no
numerically corresponding day in the Month in which such Interest
Period ends) shall, subject to clause (iv) below, end on the last
Business Day of a Month;
(iii) no Bank Construction Loan upon first being made shall be
divided into or allocated among more than two (2) Interest Periods;
(iv) prior to the Conversion Date, no Interest Period for any Bank
Construction Loan shall extend beyond the Construction Financing
Repayment Date and, on and after the Conversion Date, no Interest
Period for any Bank Term Loan shall extend beyond the Maturity
Date;
(v) unless otherwise consented to by the Bank Agent, at no time
shall the outstanding principal amounts of the Bank Loans accrue
interest pursuant to more than six (6) Interest Periods (each
variation in time or in the basis upon which interest is calculated
constituting an Interest Period);
(vi) if any Interest Period chosen by VPCC with respect to any
Bank Term Loan includes a Principal Repayment Date but such
Interest Period would not begin or end on such Principal Repayment
Date, then (x) the portion of the principal amount of the Bank Term
Loan to which such Interest Period applies which is required to be
repaid on such Principal Repayment Date shall have an Interest
Period ending on such Principal Repayment Date and (y) the
remainder, if any, of the outstanding principal amount of the Bank
Term Loan shall have an Interest Period determined as so selected
by VPCC; and
(vii) the Interest Period and the Interest Rate chosen by VPCC
with respect to any Bank Loan or portion of the principal amount
thereof shall at no time be different from the Interest Period and
the Interest Rate chosen by the Partnership with respect to the
Project Loan or portion of the principal amount thereof which
corresponds to such Bank Loan or portion of the principal amount
thereof.
Such notice shall specify the Interest Rate and Interest Period (if
the Interest Rate selected is based on LIBOR) selected by VPCC and
the amount or amounts of each Bank Loan (which shall be, in the
case of an Interest Rate based on LIBOR, not less than $1 million)
that shall bear interest at such Interest Rate for such Interest
Period. In the event VPCC fails to provide such notice to the Bank
Agent within such time, the Interest Rate shall be at the rate per
annum equal to the Base Rate plus the Base Rate Margin.
(b) On each Interest Payment Date, VPCC shall pay to the Bank
Agent in Dollars, for the account of the Banks, interest in respect
of each Interest Period on the daily unpaid principal amounts of
any Bank Loan outstanding during such Interest Period in arrears at
the rates per annum equal to the Interest Rates in effect
applicable to each such period (it being understood and agreed,
however, that (x) pursuant to the Common Agreement (as amended by
the Post Closing Conditions Agreement) VPCC shall irrevocably
instruct all parties required to make any payments to VPCC under
the Interest Rate Cap Agreements to make all such payments directly
to the Bank Agent and (y) the Dollar amount of interest otherwise
payable pursuant to this Section 2.5(b) by VPCC to the Bank Agent
on any Interest Payment Date shall be reduced by an amount equal to
the amount actually received on such Interest Payment Date by the
Bank Agent from such parties under the Interest Rate Cap
Agreements). Interest shall be computed on the basis of the actual
number of days elapsed and (i) a year of 360 days for Interest
Rates based on LIBOR and (ii) a year of 365 or 366 days, as
appropriate, for Interest Rates based on the Base Rate.
(c) Without prejudice to the remedies available to the Banks and
the Bank Agent under this Agreement, or otherwise, VPCC shall pay
in Dollars interest on any principal of or interest on any Bank
Loan, or any other amount (including, without limitation, Bank
Commitment Commission and Bank Agent Fees) payable to the Banks or
the Bank Agent under this Agreement, the Bank Notes or any other
Financing Document which is not paid when due (whether by lapse of
time, acceleration, requirement for mandatory prepayment or
otherwise), for each day that such amounts are overdue until
payment in full thereof, at the rate per annum equal to the Default
Rate computed on the basis of the actual number of days elapsed and
a year of 365 or 366 days, as appropriate. Such interest shall be
payable by VPCC to the Bank Agent, for the account of the Bank
Financing Secured Party to whom the payment obligation giving rise
to the obligation to pay such interest is owed from time to time,
upon demand by the Bank Agent, on each Quarterly Date and on the
date such obligation is paid in full.
(d) The obligation of VPCC to pay interest as provided in Section
2.5(c) shall be without prejudice to its obligation to pay
principal and interest in accordance with Sections 2.5(b), 2.5(e)
and 2.6 and any other amounts payable under this Agreement, the
Bank Notes or any other Financing Document.
(e) VPCC shall pay in Dollars to each Bank, so long as such Bank
shall be required under regulations of the Board of Governors to
maintain reserves with respect to liabilities or assets consisting
of or including Eurocurrency Liabilities ("Required Reserves"),
additional interest on the unpaid principal amount of each Bank
Loan of such Bank which is then outstanding and at such time is
subject to an Interest Period using LIBOR, from the date of the
commencement of each such Interest Period until the end thereof, at
an interest rate per annum equal at all times to the difference
obtained by subtracting (i) LIBOR for such Interest Period from
(ii) the rate obtained by dividing such LIBOR by a percentage equal
to 100% minus the LIBOR Reserve Percentage of such Bank in respect
of such Required Reserves for such Interest Period. Such
additional interest shall be determined by such Bank and notified
to VPCC through the Bank Agent no later than ninety (90) days after
the end of each Interest Period using LIBOR, and shall be due and
payable by VPCC within five (5) days of delivery to VPCC of such
Bank's certificate (a copy of which certificate the Bank Agent
shall also transmit to the Partnership) setting forth the amount of
such additional interest, which certificate shall be final and
conclusive, provided that such determination is made on a
reasonable basis. The foregoing notwithstanding, VPCC shall not be
obligated to make any payment under this Section 2.5(e) to the
extent such payment is duplicative of any payment made by or on
behalf of VPCC pursuant to Section 2.16 hereof as a result of the
same event or circumstances.
(f) The parties hereto acknowledge and confirm that (i) pursuant
to Section 5.14 of the Collateral Agency Agreement, VPCC has
irrevocably instructed the Collateral Agent to transfer or
otherwise pay directly to the Bank Agent all amounts representing
Project Loan Debt Service or other items of VPCC Financed Secured
Obligations owing to VPCC, (ii) amounts representing Project Loan
Debt Service include that portion of interest payable on the
Project Loans representing premiums payable by VPCC to OPIC under
the OPIC Lenders Insurance Contract, (iii) notwithstanding the Bank
Agent's receipt of such interest described in clause (ii) above,
such interest shall not be deemed to be interest on the Bank Loans
and (iv) upon receipt by the Bank Agent of payments of such
interest, the Bank Agent shall transfer such payments to OPIC.
Section 2.6 Repayment. (a) VPCC shall on the Deadline Date, if
the Bank Construction Loans are not converted into Bank Term Loans
on or prior to such date in accordance with the provisions of this
Agreement and the Common Agreement, repay to the Bank Agent the
entire outstanding principal amounts of the Bank Construction
Loans, together with any and all other Bank Financing Secured
Obligations of VPCC to the Bank Financing Secured Parties.
(b) If the Conversion Date shall occur, VPCC shall pay on each
Principal Repayment Date to the Bank Agent an amount (the
"Repayment Amount") equal to the product of (x) the principal
amounts of the Bank Term Loans which are outstanding immediately
after giving effect to the occurrence of the Conversion Date and
(y) the percentage indicated below for such Principal Repayment
Date:
Principal Repayment Date Principal Repayment Date
1 6.09% 17 3.19%
2 3.19% 18 3.19%
3 3.19% 19 3.19%
4 3.19% 20 3.19%
5 3.19% 21 3.19%
6 3.19% 22 3.19%
7 3.19% 23 3.19%
8 3.19% 24 3.19%
9 3.19% 25 3.18%
10 3.19% 26 3.18%
11 3.19% 27 3.18%
12 3.19% 28 3.18%
13 3.19% 29 3.18%
14 3.19% 30 2.32%
15 3.19% 31 2.32%
16 3.19%
On the Maturity Date VPCC shall pay to the Bank Agent an amount
equal to the outstanding principal amounts of the Bank Term Loans
plus accrued and unpaid interest and fees thereon. Any and all
other Bank Financing Secured Obligations of VPCC shall be
immediately due and payable to the Bank Agent on the Maturity Date,
without demand, and shall be paid by VPCC no later than the close
of business on the Maturity Date.
Section 2.7 Bank Financing Fees. (a) VPCC shall pay in Dollars
to the Bank Agent for distribution to each Bank a commitment
commission (the "Bank Commitment Commission") which shall be at the
rate of 0.375% per annum on the daily average of the Total
Unutilized Bank Commitment. The Bank Commitment Commission shall
begin to accrue on the Effective Date. The Bank Commitment
Commission shall be computed on the basis of the actual number of
days elapsed and a year of 365 or 366 days, as appropriate, and
shall be due and payable in Dollars in arrears on each Quarterly
Date, commencing on the first Quarterly Date after the Effective
Date, and on the last day of the Bank Financing Availability Period
or upon such earlier date as the Total Bank Commitment shall be
terminated.
(b) VPCC shall pay to the Bank Agent in Dollars a non-refundable
annual agency fee (the "Bank Agent Fee") as follows: (i) $150,000
per annum payable in advance on the Effective Date and annually
thereafter on each anniversary of the Effective Date occurring
prior to the Conversion Date and (ii) $100,000 per annum payable in
advance on each anniversary of the Effective Date occurring on or
after the Conversion Date. The foregoing annual amounts shall be
escalated on each anniversary of the Effective Date at a rate equal
to the annual percentage increase in the United States Consumer
Price Index during the period (i) commencing on (x) in the case of
the first anniversary of the Effective Date, the Effective Date and
(y) in the case of any subsequent anniversary of the Effective
Date, the immediately preceding annual anniversary of the Effective
Date and (ii) ending on the annual anniversary of the Effective
Date on which such escalation is to occur.
Section 2.8 Payments. (a) Except as otherwise specifically
provided herein, payments of principal, interest, Bank Commitment
Commission, Bank Agent Fees and any other payment due to the Bank
Agent and/or the Banks under this Agreement or any other Financing
Document shall be made to the Bank Agent for its own account or for
the account of the Bank or Banks entitled thereto, as the case may
be, not later than 10:00 a.m. (New York time) on the date when due
and shall be made in Dollars, in immediately available funds, to
the Bank Agent Account.
(b) If any date for any payment under this Agreement shall not be
a Business Day then such payment shall be made on the next
succeeding Business Day and interest (or Bank Commitment
Commission, as the case may be) shall continue to accrue for the
period from such due date to the next succeeding Business Day.
Section 2.9 Payment Allocation. (a) If the amount of any payment
made by VPCC hereunder is less than the total amount due and
payable by VPCC to the Banks and/or the Bank Agent, as relevant, as
of the date on which such payment is actually made by VPCC, such
payment shall be applied in the order of priority set forth in
priorities first through seventh of Section 12(f) of the VPCC
Assignment and Security Agreement; provided, however, that any
payments received from the proceeds of distributions of amounts on
deposit in the Project Reserve Account, liquidations of Cash
Equivalents representing investments of amounts deposited in the
Project Reserve Account or recoveries from Magma on its obligations
under Sections 8(h)(ii) or 8(h)(iii) of the Equity Funding
Agreement shall be applied in inverse order of the priorities set
forth in priorities first through seventh of Section 12(f) of the
VPCC Assignment and Security Agreement.
(b) Payments received by the Bank Agent pursuant to
Section 2.9(a), 2.13 and 2.14 shall be allocated to each Bank based
on each Bank's Applicable Percentage.
Section 2.10 Currency of Payment. The obligation of VPCC to pay
in Dollars the aggregate amount of the principal of, and interest,
Bank Commitment Commission and other charges on, the Bank Loans and
any other amounts payable in Dollars under this Agreement or any
other Financing Document shall not be deemed to have been novated,
discharged or satisfied by any tender of (or recovery under
judgment expressed in) any currency other than Dollars, except to
the extent to which such tender (or recovery) shall result in the
effective payment of such aggregate amount in Dollars at the place
where such payment is to be made and, accordingly, the amount (if
any) by which any such tender (or recovery) shall fall short of
such aggregate amount shall be and remain due to the Banks and/or
the Bank Agent, as relevant, as a separate obligation, unaffected
by judgment having been obtained (if such is the case) for any
other amounts due under or in respect of this Agreement or any
other Financing Document.
Section 2.11 Net Payments. (a) VPCC shall cause all payments
made by VPCC hereunder for the account of the Banks and/or the Bank
Agent to be made without setoff, counterclaim or other defense.
(b) VPCC shall pay or cause to be paid all present and future
Republic Taxes now or at any time hereafter levied or imposed on or
in connection with the payment of any and all amounts due under
this Agreement, the Bank Notes or any other Financing Document, and
all payments of principal, interest and other amounts due under
this Agreement, the Bank Notes or any other Financing Document
shall be made without deduction for or on account of any such
Republic Taxes. If any payment (including one required by this
sentence or by the succeeding sentences of this Section 2.11(b)) is
reduced by a Republic Tax, there shall be due from VPCC together
with it a further payment equal to that reduction. If the Bank
Agent or any Bank becomes liable for any Republic Tax on account of
a payment from which that Republic Tax has not been deducted, or
reasonably incurs a cost in connection with a Republic Tax, there
shall be due from VPCC as an indemnity on demand by the affected
Bank or the Bank Agent, as relevant, a payment equal to that
Republic Tax or cost. In the event VPCC is prevented by operation
of law or otherwise from paying or causing to be paid such Republic
Taxes as aforesaid, the principal, or as the case may be, interest
or other amounts due under this Agreement, the Bank Notes or any
other Financing Document shall be increased to such amount as may
be necessary to yield and remit to each of the Bank Agent and the
Banks the full amount it would have received had such payments been
made without deduction of such Republic Taxes. VPCC will provide
evidence that all Republic Taxes imposed on payments under this
Agreement, the Bank Notes or any other Financing Document have been
fully paid to the appropriate authorities by delivering official
receipts or notarized copies thereof and/or, where applicable, a
report of the Monthly Remittance Return of Income Taxes Withheld
filed with the Bureau of Internal Revenue of the Republic, in each
case within 30 days after payment.
(c) Without limitation to the provisions of Section 2.11(b) above,
payments by VPCC to each of the Bank Financing Secured Parties
under this Agreement, the Bank Notes and any other Financing
Document will be made free and clear of and without deduction for
any and all present or future income, stamp, 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 on any of the Bank Financing
Secured Parties or on payments to be made to or received by any of
them from VPCC hereunder, under the Bank Notes or under any other
Financing Document ("Bank Taxes"), other than Bank Taxes based on
the net income of such Bank (including franchise taxes imposed in
lieu of net income taxes) imposed by (x) the United States federal
government, (y) the jurisdiction where such Bank is organized or
has its principal office or (z) the jurisdiction of the branch of
such Bank maintaining any Bank Loan (unless such jurisdiction is
the Republic), or the branch of the Bank Agent through which it
renders its services as Bank Agent ("Excluded Bank Taxes"). If
VPCC is required by law to deduct Bank Taxes (other than Excluded
Bank Taxes) from such a payment, then the sum payable under the
instrument to which the payment relates will be increased so that
there is no diminution in the amount any Bank Financing Secured
Party actually receives on account of the deduction.
(d) VPCC hereby indemnifies and holds harmless each Bank Financing
Secured Party from and against, and agrees to reimburse each Bank
on an after-tax basis (computed taking into account any deductions
or other benefits available for federal income tax purposes for the
Bank Financing Secured Party if it is a United States taxpayer and
any deductions and benefits available for income tax purposes in
any jurisdiction in which such Bank Financing Secured Party is a
taxpayer) on demand for, any and all Bank Taxes paid or incurred by
such Bank Financing Secured Party in connection with the
transactions contemplated by this Agreement and the other Project
Documents; provided, however, that the foregoing indemnity does not
cover Excluded Bank Taxes. Reimbursement on an "after-tax basis"
means on a basis such that the Bank Financing Secured Party is made
whole after taking into account income taxes that the Bank
Financing Secured Party will owe on the indemnity or reimbursement
payment in any jurisdiction and any related tax benefits, assuming
the Bank Financing Secured Party is subject to income taxes at the
highest marginal rates. Nothing in this paragraph shall interfere
with the right of any Bank Financing Secured Party to arrange its
tax affairs in whatever manner it thinks fit and, in particular, no
Bank Financing Secured Party is under any 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 applicable Bank Financing Secured Party
shall promptly give written notice to VPCC (but in no event later
than sixty (60) days) after such Bank Financing Secured Party has
actual knowledge of the imposition of any Bank Taxes subject to
indemnification hereunder; provided, however, that failure to give
such notice within such sixty (60) day period will not relieve VPCC
of the obligation to indemnify such Bank Financing Secured Party 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 sixty (60) day period.
(e) (i) VPCC will provide evidence that all Bank Taxes imposed on
payments under this Agreement, any Bank Loan, the Bank Notes or any
related instrument have been fully paid to the appropriate
authorities by delivering official receipts or notarized copies to
the Bank Agent within 30 days after payment. VPCC will compensate
any Bank Financing Secured Party that has to pay any Bank Taxes
because VPCC failed to timely furnish such evidence; provided, that
prior to paying such Bank Taxes, such Bank Financing Secured Party
shall have notified VPCC of its intent to make such payment.
(ii) If VPCC requests promptly in writing after receipt of any
notice under Section 2.11(d) hereof, such Bank Financing Secured
Party will contest in good faith the Bank Taxes at VPCC's expense,
keep VPCC fully informed about the progress of the contest, and not
compromise or otherwise settle the contest without VPCC's consent
(which shall not be unreasonably withheld or delayed); provided
that the Bank Financing Secured Party may in its sole discretion
select the forum for the contest and determine whether the contest
will be by resisting payment of the Bank Taxes or by paying the
Bank Taxes and seeking a refund; provided further that the Bank
Financing Secured Party will be under no obligation to contest
unless (A) if the Bank Financing Secured Party requests, VPCC has
provided the Bank Financing Secured Party an opinion of independent
tax counsel selected by VPCC and reasonably acceptable to the Bank
Financing Secured Party to the effect that there is a reasonable
basis for the contest, (B) the amount in controversy is at least
$75,000, (C) the Bank Financing Secured Party has received
satisfactory indemnification and security for any liability, loss,
cost or expense arising out of the contest (including, but not
limited to, all legal and accounting fees and expenses, penalties,
interest and additions to tax), (D) if requested by the Bank
Financing Secured Party, VPCC has admitted in writing its duty to
indemnify the Bank Financing Secured Party for the Bank Taxes if
the contest is lost (but such admission shall not preclude VPCC
from raising a defense to liability if a court of competent
jurisdiction has rendered a decision articulating the cause of such
Bank Taxes, and the cause is not one for which VPCC is responsible
under this Section 2.11), and (E) if the contest is conducted in a
manner that requires paying all or part of the Bank Taxes, VPCC has
paid the amount required.
(f) Upon becoming a party to this Agreement, each Bank agrees that
it will deliver to the Bank Agent and VPCC (i) either (A) a letter
stating that it is incorporated under the laws of the United States
of America or a state thereof or (B) if it is not so incorporated,
two duly completed copies of United States Internal Revenue Service
Form 1001 or 4224 or successor applicable form, as the case may be,
certifying in each case that such Bank is entitled to receive
payments under this Agreement without deduction or withholding of
any United States federal income taxes and (ii) an Internal Revenue
Service Form W-8 or W-9 or successor applicable form, as the case
may be, to establish an exemption from United States backup
withholding tax. If any Bank delivers to VPCC and the Bank Agent
a Form 1001 or 4224 and Form W-8 or W-9 pursuant to the immediately
preceding sentence, it shall deliver to VPCC and the Bank Agent two
further copies of such Form 1001 or 4224, and Form W-8 or W-9, or
successor applicable forms, or other manner of certification, as
the case may be, on or before the date that any such form expires
or becomes obsolete or after the occurrence of any event requiring
a change in the most recent form previously delivered by it to
VPCC, and such extensions or renewals thereof as may reasonably be
requested by VPCC, certifying in the case of a Form 1001 or 4224
that such Bank is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal
income taxes, unless in any such case an event (including, without
limitation, any change in treaty, law or regulation) has occurred
prior to the date on which any such delivery would otherwise be
required that renders all such forms inapplicable or that would
prevent such Bank from duly completing and delivering any such form
with respect to it and such Bank advises VPCC that it is not
capable of receiving payments without any deduction or withholding
of United States federal income tax, and in the case of a Form W-8
or W-9, establishing an exemption from United States backup
withholding tax. The provisions of this Section 2.11(f) shall
apply to any successor holder of a Bank Note.
(g) Notwithstanding the foregoing, if (i) (A) any Bank has
previously delivered to VPCC and the Bank Agent a Form 4224 or
successor applicable form and (B) by virtue of any action taken or
not taken voluntarily by such Bank, such Bank is not lawfully
entitled to deliver a subsequent Form 4224 or applicable successor
form solely as a result of such Bank's failure to be engaged in the
active conduct of a trade or business in the United States or a
determination that all amounts to be paid to such Bank hereunder
are not effectively connected to such trade or business or (ii) any
Bank fails to provide any form required under Section 2.11(f)
hereof at a time when such Bank is qualified to provide such form,
VPCC shall be under no obligation to compensate or indemnify such
Bank under this Section 2.11 or otherwise with respect to any Bank
Tax required to be paid or withheld under United States federal
income tax law that would not have been required to be paid or
withheld had such Bank so delivered such Form 4224, applicable
successor form or other form.
(h) Notwithstanding anything contained in this Section 2.11, VPCC
shall not be required to indemnify or reimburse any Bank who has
failed to make available to the Bank Agent its portion of any Bank
Loan on the date required to be made available to the Bank Agent
pursuant to this Agreement after the Bank Agent has made written
demand upon such Bank for such payment for any additional
documentary stamp taxes or intangibles taxes incurred by such Bank
solely as a result of such failure.
Section 2.12 Termination of Bank Commitments. The Bank
Commitments of the Banks shall automatically terminate in
accordance with the provisions of Section 5 of the Common
Agreement.
Section 2.13 Voluntary Prepayment. Subject to any required
Governmental Approvals having been obtained (including from the
Central Bank), VPCC shall have the right, at any time on at least
(a) ten (10) but not more than forty-five (45) Business Days prior
written notice to the Bank Agent (which notice the Bank Agent shall
promptly transmit to the Banks), to prepay a part of the principal
amounts then outstanding of the Bank Term Loans, and (b) twenty
(20) but not more than forty-five (45) Business Days prior written
notice to the Bank Agent (which notice the Bank Agent shall
promptly transmit to the Banks), to prepay all of the outstanding
principal amount of the Bank Term Loans, in each case, without
premium or penalty; provided that (a) no prepayment of any part of
the principal amount of the Bank Term Loans bearing interest using
LIBOR shall be made on a day which is not the last day of an
Interest Period with respect thereto unless VPCC pays the Bank
Agent the amounts determined by the Banks to be payable pursuant to
Section 2.15 hereof, (b) all accrued interest on the principal
amounts of the Bank Term Loans to be prepaid and all other amounts
then due hereunder are paid at the same time, and (c) in the case
of partial prepayment, such prepayment shall be in an amount equal
to $1 million or whole number multiples thereof. Upon delivery of
any such notice, VPCC shall be obligated to effect prepayment in
accordance with the terms thereof. All partial prepayments of the
Bank Term Loans pursuant to this Section 2.13 shall be applied pro
rata to remaining repayments of principal. Notwithstanding the
generality of the foregoing, VPCC acknowledges and agrees that if
at any time the Partnership prepays a part or all of the principal
amounts then outstanding of Project Term Loans pursuant to Section
2.13 of the Project Credit Agreement, then VPCC shall prepay the
principal amounts then outstanding of Bank Term Loans which
correspond to such Project Term Loans. VPCC further acknowledges
and agrees that it shall not prepay the principal amounts then
outstanding of any Bank Term Loan unless the Partnership, pursuant
to Section 2.13 of the Project Credit Agreement, prepays the
principal amount outstanding of the Project Term Loan which
corresponds to such Bank Term Loan.
Section 2.14 Mandatory Prepayments; Etc. (a) VPCC shall, without
demand or notice, make prepayments to the Bank Agent as follows:
(i) on the applicable dates set forth in Section 3.04(b) of the
Disbursement Agreement, VPCC shall make prepayments of the Bank
Construction Loans using all funds withdrawn and transferred to the
Bank Agent Account from the Project Reserve Account by the
Collateral Agent pursuant to priority FIRST of Section 3.04(b) of
the Disbursement Agreement;
(ii)on any Principal Repayment Date on which the Debt Service
Coverage Ratio is less than 1.2:1, VPCC shall make prepayments of
the Bank Term Loans to the Bank Agent using all funds in the Dollar
Project Control Account made available to the Partnership by the
Collateral Agent pursuant to priority SIXTH of Section 3.02(d)(ii)
of the Disbursement Agreement for the purpose of making mandatory
prepayments of Project Term Loans held by VPCC (it being understood
and agreed that VPCC has irrevocably instructed the Collateral
Agent to transfer all monies which otherwise would have been
transferred to VPCC pursuant to such priority SIXTH directly to the
Bank Agent and that, upon receipt by the Bank Agent of all such
monies, the prepayment required by this Section 2.14(a)(ii) shall
be deemed made);
(iii) on the Conversion Date, immediately prior to the conversion
of the Bank Construction Loans into Bank Term Loans, VPCC shall
make prepayments of the Bank Construction Loans to the Bank Agent
using all funds in the Debt Reserve Cash Collateral Account made
available to the Partnership by the Collateral Agent pursuant to
Section 3.03(a) of the Disbursement Agreement for the purpose of
making a mandatory prepayment of the Project Construction Loans
held by VPCC (it being understood and agreed that VPCC has
irrevocably instructed the Collateral Agent to transfer all monies
which otherwise would have been transferred to VPCC on the
Conversion Date pursuant to such Section 3.03(a) of the
Disbursement Agreement directly to the Bank Agent and that, upon
receipt by the Bank Agent of all such monies, the prepayment
required by this Section 2.14(a)(iii) shall be deemed made);
(iv) on the applicable dates set forth in Section 3.05 of the
Disbursement Agreement, VPCC shall make prepayments of the Bank
Term Loans to the Bank Agent using all funds in the Distribution
Retention Account made available to the Partnership by the
Collateral Agent pursuant to Section 3.05 of the Disbursement
Agreement for the purpose of making mandatory prepayments of the
Project Term Loans held by VPCC (it being understood and agreed
that VPCC has irrevocably instructed the Collateral Agent to
transfer all monies which otherwise would have been transferred to
VPCC on such applicable dates pursuant to such Section 3.05 of the
Disbursement Agreement directly to the Bank Agent and that, upon
receipt by the Bank Agent of all such monies on such applicable
dates, the prepayment required by this Section 2.14(a)(iv) shall be
deemed made);
(v) on the applicable dates set forth in Sections 3.07(a), 3.07(c)
and 3.07(d) of the Disbursement Agreement, VPCC shall make
prepayments of the Bank Construction Loans or the Bank Term Loans,
as the case may be, to the Bank Agent using all funds in the
Contingency Account made available to the Partnership by the
Collateral Agent pursuant to Sections 3.07(a), 3.07(c) and 3.07(d)
of the Disbursement Agreement for the purpose of making mandatory
prepayments of Project Construction Loans or Project Term Loans, as
the case may be, held by VPCC (it being understood and agreed that
VPCC has irrevocably instructed the Collateral Agent to transfer
all monies which otherwise would have been transferred to VPCC on
such applicable dates pursuant to such Section 3.07(a), 3.07(c),
and 3.07(d) of the Disbursement Agreement directly to the Bank
Agent and that, upon receipt by the Bank Agent of all such monies
on such applicable dates, the prepayment required by this Section
2.14(a)(v) shall be deemed made);
(vi) in the event of a casualty loss affecting the Project or a
condemnation of the Project, in each case that is an Event of Loss,
VPCC shall make prepayments of the Bank Construction Loans or the
Bank Term Loans, as the case may be, to the Bank Agent as and when
Insurance Proceeds and/or condemnation proceeds are made available
to the Partnership by the Collateral Agent pursuant to Section 2.03
of the Assignment and Security Agreement for the purpose of making
mandatory prepayments of Project Construction Loans or Project Term
Loans, as the case may be, held by VPCC (it being understood and
agreed that VPCC has irrevocably instructed the Collateral Agent to
transfer all monies which otherwise would have been transferred to
VPCC pursuant to such Section 2.03 of the Assignment and Security
Agreement directly to the Bank Agent and that, upon receipt by the
Bank Agent of all such monies, the prepayment required by this
Section 2.14(a)(vi) shall be deemed made); and
(vii) on each date, if any, on which OPIC makes any prepayment of
the "covered amount" referred to in the OPIC Lenders Insurance
Contract, VPCC shall make prepayments of the Bank Construction
Loans or the Bank Term Loans, as the case may be, using all funds
payable to VPCC by OPIC on account of such prepayment.
(b) All prepayments of the Bank Term Loans pursuant to Section
2.14(a) above shall be applied against remaining repayments of
principal in inverse order of maturity, except that any prepayments
of the Bank Term Loans pursuant to Section 2.14(a) above out of
funds made available to the Partnership by the Collateral Agent
pursuant to Sections 3.07(a) and 3.07(d) of the Disbursement
Agreement for the purpose of making prepayments of Project Loans
shall be applied pro rata to remaining repayments of principal.
(c) Payments received by the Bank Agent from Magma pursuant to
Section 2(a) of the Political Risk Agreement shall be applied
against the scheduled payment, or part thereof, of principal or
interest due under this Agreement which gave rise to the obligation
of Magma to make such payments. Payments received by the Bank
Agent from Magma pursuant to Section 2(b) of the Political Risk
Agreement shall be applied against remaining repayments of
principal in inverse order of maturity.
(d) Payments received by the Bank Agent in respect of the OPIC
Equity Insurance Collateral pursuant to Section 2(c) of the
Political Risk Agreement shall be applied to those scheduled
payments or future scheduled payments, as the case may be, of
principal or interest under this Agreement which Magma is obligated
to pay pursuant to Section 2(a) or 2(b), as the case may be, of the
Political Risk Agreement. Any other payments received by the Bank
Agent in respect of the OPIC Equity Insurance Collateral shall be
used to prepay Bank Construction Loans or Bank Term Loans, as the
case may be, in inverse order of maturity.
Section 2.15 Funding Costs. If, as a result of (a) any failure by
VPCC to pay when due the principal amount of or interest on any
Bank Loan (or portion thereof) having an Interest Rate determined
using LIBOR, (b) any failure by VPCC to make a borrowing of any
Bank Loan having an Interest Rate determined using LIBOR after VPCC
has selected an Interest Rate using LIBOR with respect to such
borrowing pursuant to Section 2.5(a) hereof, (c) any failure by
VPCC to make a conversion of any Bank Loan having an Interest Rate
determined using the Base Rate to a Bank Loan having an Interest
Rate determined using LIBOR after VPCC has given any notice
required hereunder electing such conversion, (d) any failure by
VPCC to make any prepayment of any Bank Loan having an Interest
Rate determined using LIBOR after VPCC has given any notice
required hereunder regarding such prepayment or (e) the making of
a payment or prepayment (including, without limitation, on
acceleration) or the conversion of any Bank Loan having an Interest
Rate determined using LIBOR on a day which is not the last day of
an Interest Period with respect thereto, any Bank shall incur any
costs, expenses or losses, VPCC shall pay, in Dollars, upon request
by such Bank the amount which such Bank shall notify VPCC as being
the aggregate of such costs, expenses and losses. For the purposes
of the preceding sentence, "costs, expenses or losses" shall
include, without limitation, any interest paid or payable to carry
any unpaid amount and any loss, premium, penalty or expense which
may be incurred in liquidating or employing deposits of or
borrowings from third parties in order to make, maintain or fund
the Bank Loans or any portion thereof (but in the case of a late
payment, after taking into account any default interest received
under Section 2.5(c)).
Section 2.16 Maintenance Amount. (a) On each Interest Payment
Date, VPCC shall pay in Dollars, in addition to interest on the
Bank Loans, the amount which any Bank shall from time to time
notify to VPCC and the Bank Agent (which notice the Bank Agent
shall transmit to the Partnership) as being the aggregate of the
Maintenance Amount (as defined in subsection (b) below), if any, of
such Bank accrued and unpaid prior to such Interest Payment Date.
(b) For the purposes of subsection (a) above, the following terms
shall have the following meanings:
(i) "Maintenance Amount" means the amount, if any, certified in
the Maintenance Amount Certification to be the net incremental
costs of the affected Bank with respect to the making or
maintaining of any Bank Loan which result from (A) any change in
Applicable Law and/or (B) any compliance with any request from, or
requirement of, any central bank or other monetary or other
comparable authority, which in either case, subsequent to the date
of this Agreement, shall:
(1) impose, modify or deem applicable any reserve, special deposit
or similar requirements against assets held by, or deposits with or
for the account of, or loans by, such Bank;
(2) impose a cost on such Bank as a result of its having made any
Bank Loan or reduce the rate of return on the overall capital of
such Bank which it would have been able to achieve if it had not
made such Bank Loan;
(3) change the basis of taxation on payments received by such Bank
in respect of its Bank Loans otherwise than by a change in taxation
of the overall net income of such Bank; or
(4) impose on such Bank any other condition regarding the making
or maintaining of the Bank Loans; and
(ii) the term "Maintenance Amount Certification" means a
certification furnished from time to time by any Bank to VPCC and
the Bank Agent, certifying:
(A) the circumstances giving rise to the Maintenance Amount;
(B) that such net costs have increased;
(C) that, in the opinion of such Bank, it has exercised reasonable
efforts to minimize or eliminate such increase; and
(D) the Maintenance Amount.
(c) Notwithstanding anything in Section 2.13, and subject to any
Governmental Approvals having been obtained (including from the
Central Bank), VPCC shall have the right on any Interest Payment
Date for the Bank Loans upon not less than forty-five (45) days'
prior written notice to the Bank Agent and the affected Bank (which
notice shall be irrevocable and shall bind VPCC to make the
prepayment specified below) and upon payment of all accrued
interest and Maintenance Amount (if any) on the amount to be
prepaid, to prepay all or, as the case may be, that portion of the
Bank Loans of which a Bank informs VPCC and the Bank Agent that
Maintenance Amount is then being charged; provided, however, that
no prepayment of any part of any Bank Loan bearing interest using
LIBOR shall be made on any Interest Payment Date which is not the
last day of an Interest Period with respect thereto unless VPCC
pays the affected Bank the amounts determined by such Bank to be
payable pursuant to Section 2.15 hereof.
Section 2.17 Illegality of Participation. (a) Notwithstanding
any other provision of this Agreement, if, subsequent to the date
of this Agreement, the making, funding or continuance of any Bank
Commitment or any Bank Loan has been made (x) unlawful by any
change made in any Applicable Law, (y) impossible by compliance by
a Bank with any request of a Governmental Authority (whether or not
having force of law) or (z) impracticable as a result of a
contingency occurring after the Effective Date which materially and
adversely affects the inter bank Eurodollar market, VPCC shall,
upon notice by the affected Bank or Banks (but subject to the
approval of the appropriate Governmental Authorities (including the
Central Bank), which VPCC agrees to take all reasonable steps to
obtain as quickly as possible, if such approval is then required),
prepay in full and on the next occurring Interest Payment Date
unless the effect of the Applicable Law, request or contingency
requires earlier or immediate repayment, in which case, on such
earlier date or immediately, as relevant, that portion of the
principal amount of the Bank Loans affected thereby together with
all accrued interest and Maintenance Amount (if any) thereon and
all amounts, if any, determined by each affected Bank to be payable
to it pursuant to Section 2.15 hereof. In addition, the Bank
Commitment of the affected Bank or Banks to make Bank Loans similar
to those affected by the foregoing shall terminate immediately.
(b) Notwithstanding any other provision of this Agreement, if,
subsequent to the date of this Agreement, the making, funding or
continuance by any Bank of its proportionate interest in any Bank
Loan bearing interest based on LIBOR has been made (x) unlawful by
any change made in any Applicable Law or (y) impossible by
compliance by such Bank with any request of a Governmental
Authority (whether or not having the force of law), then such Bank
shall promptly give notice thereof to VPCC and the Bank Agent and
the obligation of such Bank to make or continue, or to convert Bank
Loans into, Bank Loans bearing interest based on LIBOR shall be
immediately suspended and during such suspension be converted into
an obligation to do the same with respect to Bank Loans bearing
interest at the rate per annum equal to the Base Rate plus the Base
Rate Margin; provided, however, that if such Bank determines that
it may lawfully continue to maintain and fund any outstanding Bank
Loans bearing interest based on LIBOR until the end of the
applicable Interest Period then in effect with respect thereto,
upon written notice from VPCC to such Bank and the Bank Agent, such
outstanding Bank Loans shall be converted into Bank Loans bearing
interest at the rate per annum equal to the Base Rate plus the Base
Rate Margin on the last day of the then current Interest Period
applicable to such Bank Loans.
Section 2.18 Substitute Basis of Borrowing. If, on or before the
first day of any Interest Period relating to the Bank Loans, either
(a) the Bank Agent determines that, for whatever reason, deposits
in Dollars for a period equal to such Interest Period or in the
relevant amounts are not being offered generally to banks in the
London interbank market or (b) the Bank Agent receives notice from
the Required Banks that the Interest Rate then in effect based on
LIBOR for such Interest Period will not adequately reflect the cost
to such Required Banks of making, funding or otherwise maintaining
their Bank Loans for such Interest Period, the Bank Agent shall
promptly notify VPCC, the Banks and the Partnership of such event
and interest for such Interest Period with respect to a scheduled
Bank Construction Loan and for outstanding Bank Loans for which
interest is then scheduled to be determined shall accrue at the
rate per annum equal to the Base Rate plus the Base Rate Margin.
Section 2.19 Mitigation Provision. Each Bank agrees that (a) as
promptly as practicable after it becomes aware of the occurrence of
an event or the existence of a condition arising after the date
hereof that would cause it to be affected under Section 2.17 and
(b) as promptly as practicable after it has made a determination to
make a claim for amounts under Section 2.11(b), 2.15 or 2.16 with
respect to events or conditions arising after the date hereof, it
shall notify VPCC of the same and use commercially reasonable
efforts (consistent with legal and regulatory restrictions and such
Bank's internal policies) to mitigate the effect of such provisions
on VPCC, including (i) in the case of Sections 2.11(b), 2.16 or
2.17, efforts to make, fund or maintain its Loans through another
office of such Bank and (ii) in the case of Section 2.15, efforts
to reemploy amounts held by such Bank, (x) if as a result thereof
the additional moneys which would otherwise be required to be paid
to such Bank pursuant to any of such provisions of this Agreement
would be reduced, or the illegality or other adverse circumstances
which would otherwise require a prepayment of such Bank Loans
pursuant to any of such provisions would cease to exist, and (y)
if, as determined by such Bank in good faith, the making, funding,
issuing or maintaining of such Bank Loan through such other office
would not otherwise adversely affect such Bank.
Section 3
The Bank Agent
Section 3.1 Appointment. The Banks hereby designate Credit
Suisse, as Bank Agent to act as specified herein, in the Bank
Financing Security Documents, in the Political Risk Agreement, in
the Common Agreement, in any other Financing Document, in the
Intercreditor Agreement and in the IE Engagement Agreement. Each
Bank hereby irrevocably authorizes the Bank Agent to take such
action on its behalf under the provisions of this Agreement, the
Bank Financing Security Documents, the Political Risk Agreement,
the Common Agreement, the other Financing Documents, the
Intercreditor Agreement, the IE Engagement Agreement and any other
instruments and agreements referred to herein or therein and to
exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of the Bank
Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto. The Bank Agent may perform any of
its duties hereunder by or through its officers, directors, agents
or employees.
Section 3.2 Nature of Duties. The Bank Agent shall have no duties
or responsibilities except those expressly set forth in this
Agreement, the Bank Financing Security Documents, the Political
Risk Agreement, the Common Agreement, the other Financing
Documents, the Intercreditor Agreement and the IE Engagement
Agreement. Neither the Bank Agent nor any of its officers,
directors, agents or employees shall be liable for any action taken
or omitted by it or them hereunder, under the Bank Financing
Security Documents, under the Political Risk Agreement, under the
Common Agreement, under any other Financing Document, or in
connection herewith or therewith, unless caused by its or their
gross negligence or willful misconduct. The duties of the Bank
Agent shall be mechanical and administrative in nature; the Bank
Agent shall not have by reason of this Agreement, the Bank
Financing Security Documents, the Political Risk Agreement, the
Common Agreement, any other Financing Document, the Intercreditor
Agreement or the IE Engagement Agreement a fiduciary relationship
in respect of any Bank; and nothing in this Agreement, the Bank
Financing Security Documents, the Political Risk Agreement, the
Common Agreement, any other Financing Document, the Intercreditor
Agreement or the IE Engagement Agreement, expressed or implied, is
intended to or shall be so construed as to impose upon the Bank
Agent any obligations in respect of this Agreement, the Bank
Financing Security Documents, the Political Risk Agreement, the
Common Agreement, any other Financing Document, the Intercreditor
Agreement or the IE Engagement Agreement except as expressly set
forth herein or therein.
Section 3.3 Lack of Reliance on the Bank Agent. Independently and
without reliance upon the Bank Agent, each Bank, to the extent it
deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of
VPCC and the Partnership in connection with the making and the
continuance of the Bank Loans and the taking or not taking of any
action in connection herewith and (ii) its own appraisal of the
creditworthiness of VPCC and the Partnership and the Bank Agent
shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Bank with any credit or other
information with respect thereto, whether coming into its
possession before the making of the Bank Loans or at any time or
times thereafter, except that the Bank Agent shall provide each
Bank with copies of material documents and other material
information provided to the Bank Agent or the Partnership by VPCC
or the Partnership pursuant to this Agreement, the Common Agreement
or any other Financing Document promptly after the Bank Agent's
receipt thereof. The Bank Agent shall not be responsible to any
Bank for any recitals, statements, information, representations or
warranties herein or in any document, certificate or other writing
delivered in connection herewith, with the Bank Financing Security
Documents, the Political Risk Agreement, the Common Agreement, any
other Financing Document, the Intercreditor Agreement or the IE
Engagement Agreement or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility,
priority or sufficiency of this Agreement, the Bank Financing
Security Documents, the Political Risk Agreement, the Common
Agreement, any other Financing Document, the Intercreditor
Agreement or the IE Engagement Agreement or the financial condition
of VPCC or the Partnership or be required to make any inquiry
concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement, the Bank
Financing Security Documents, the Political Risk Agreement, the
Common Agreement, any other Financing Document, the Intercreditor
Agreement or the IE Engagement Agreement or the financial condition
of VPCC or the Partnership or the existence or possible existence
of any Default or Event of Default.
Section 3.4 Certain Rights of the Bank Agent. If the Bank Agent
shall request instructions from the Required Banks with respect to
any act or action (including failure to act) in connection with
this Agreement, the Bank Financing Security Documents, the
Political Risk Agreement, the Common Agreement, any other Financing
Document, the Intercreditor Agreement or the IE Engagement
Agreement, the Bank Agent shall be entitled to refrain from such
act or taking such action unless and until the Bank Agent shall
have received instructions from the Required Banks; and the Bank
Agent shall not incur liability to any Person by reason of so
refraining. Without limiting the foregoing, no Bank shall have any
right of action whatsoever against the Bank Agent as a result of
the Bank Agent acting or refraining from acting hereunder, under
the Bank Financing Security Documents, the Political Risk
Agreement, the Common Agreement, any other Financing Document, the
Intercreditor Agreement or the IE Engagement Agreement in
accordance with the instructions of the Required Banks.
Section 3.5 Reliance. The Bank Agent shall be entitled to rely,
and shall be fully protected in relying, upon any note, writing,
resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order or other document
or telephone message signed, sent or made by any Person that the
Bank Agent believed to be the proper Person, and, with respect to
all legal matters pertaining to this Agreement, the Bank Financing
Security Documents, the Political Risk Agreement, the Common
Agreement, any other Financing Document, the Intercreditor
Agreement or the IE Engagement Agreement and its duties hereunder
and thereunder, upon advice of counsel selected by it.
Section 3.6 Indemnification. To the extent the Bank Agent is not
reimbursed and indemnified by VPCC, the Banks will reimburse and
indemnify the Bank Agent in proportion to their respective
Applicable Percentages of the Total Bank Commitment for and against
any and all liabilities, obligations, losses, damages, penalties,
claims, actions, judgments, suits, costs, expenses or disbursements
of whatsoever kind or nature which may be imposed on, asserted
against or incurred by the Bank Agent in performing its duties
hereunder, under the Bank Financing Security Documents, the
Political Risk Agreement, the Common Agreement, any other Financing
Document, the Intercreditor Agreement or the IE Engagement
Agreement or in any way relating to or arising out of this
Agreement, the Bank Financing Security Documents, the Political
Risk Agreement, the Common Agreement, any other Financing Document,
the Intercreditor Agreement or the IE Engagement Agreement;
provided that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from
the Bank Agent's gross negligence or willful misconduct.
Section 3.7 The Bank Agent in its Individual Capacity. With
respect to any obligation the Bank Agent may have to make Bank
Loans under this Agreement, the Bank Agent shall have the rights
and powers specified herein or in any other Project Document for a
Bank and a Bank Financing Secured Party and may exercise the same
rights and powers as though it were not performing the duties of
the Bank Agent specified herein; and the term "Banks", "Required
Banks", "Bank Financing Secured Parties" or any similar terms
shall, unless the context clearly otherwise indicates, include the
Bank Agent in its individual capacity. The Bank Agent may accept
deposits from, lend money to, and generally engage in any kind of
banking, trust or other business with VPCC, the Partnership or any
Affiliate of VPCC or the Partnership as if it were not performing
the duties specified herein, and may accept fees and other
consideration from VPCC for services in connection with this
Agreement and otherwise without having to account for the same to
the Banks.
Section 3.8 Resignation by the Bank Agent. (a) The Bank Agent
may resign from the performance of all its functions and duties
hereunder and/or under the other Financing Documents at any time by
giving thirty (30) days' prior written notice to VPCC and the
Banks. Such resignation shall take effect upon the appointment of
a successor Bank Agent pursuant to clause (b) or (c) below or as
otherwise provided below.
(b) Upon any such notice of resignation, the Required Banks shall
appoint a successor Bank Agent hereunder or thereunder who shall be
a commercial bank or trust company reasonably acceptable to VPCC,
such acceptance not to be unreasonably withheld or delayed.
(c) If a successor Bank Agent shall not have been so appointed
within such thirty (30) day period, the Bank Agent may then appoint
a successor Bank Agent who shall be a commercial bank or trust
company reasonably acceptable to VPCC, such acceptance not to be
unreasonably withheld or delayed, and who shall serve as Bank Agent
hereunder or thereunder until such time, if any, as the Required
Banks appoint a successor Bank Agent as provided above.
(d) If no successor Bank Agent has been appointed pursuant to
clause (b) or (c) above by the forty-fifth (45th) day after the
date such notice of resignation was given by the Bank Agent, the
Bank Agent or any Bank may petition any court of competent
jurisdiction for the appointment of a successor Bank Agent. Such
court may thereupon, after such notice, if any, as it may deem
proper and prescribe, appoint a successor Bank Agent who shall
serve as Bank Agent hereunder or thereunder until such time, if
any, as the Required Banks appoint a successor Bank Agent as
provided above.
Section 3.9 No Amendment to Duties of Bank Agent or Project
Administrative Agent Without Consent. Neither the Bank Agent nor
the Project Administrative Agent shall be bound by any waiver,
amendment, supplement or modification of this Agreement which
affects its rights or duties under this Agreement unless it shall
have given its prior written consent, as Bank Agent or as Project
Administrative Agent, as the case may be, thereto.
Section 4
Miscellaneous
Section 4.1 Notices. Except as otherwise expressly provided
herein, (a) all notices and other communications provided for
hereunder shall be provided in writing (including telegraphic,
telex, facsimile or cable communication) and shall be sent by
telecopy, telex, telegraph or cable with the original of such
communication dispatched by (if inland) overnight or (if overseas)
international courier and, if such courier service is not
available, by registered airmail (or, if inland, registered first-
class mail) with postage prepaid to VPCC, the Bank Agent and the
Project Administrative Agent at their respective addresses
specified below and to the Banks at their respective addresses
specified in Schedule I, or at such other address as shall be
designated by such Person in a written notice to the other parties
hereto and (b) all such notices and communications shall, when
mailed, telegraphed, telexed, telecopied, or cabled or sent by
overnight courier, be effective seven (7) days after being
deposited in the mails in the manner as aforesaid, when delivered
to the telegraph company or cable company (if inland), one (1) day
or (if overseas) three (3) days after delivery to a courier in the
manner as aforesaid, as the case may be, or when sent by telex
(with the correct answer back) or telecopier:
Addresses:
If to VPCC:
VISAYAS POWER CAPITAL CORPORATION
c/o Lord Securities Corporation
Two Wall Street, 19th Floor
New York, New York 10005
Attn: Kevin P. Burns, Vice President
Tel: (212) 346-9000
Fax: (212) 346-9012
with copies to:
Loeb and Loeb
345 Park Avenue
New York, New York 10154-0037
Attn: Christopher K. Aidun, Esq.
Tel: (212) 407-4000
Fax: (212) 407-4990
If to the Bank Agent or the Project Administrative Agent:
CREDIT SUISSE
Tower 49
12 East 49th Street
New York, New York 10017
Attn: Project Finance
Tel: (212) 238-2000
Fax: (212) 238-5390
Telex: 420149
Section 4.2 English Language. All documents to be furnished or
communications to be given or made under this Agreement or any
other Financing Document by VPCC shall be in the English language
or, if in another language, shall be accompanied by a translation
into English certified by a representative of VPCC or the
Partnership, which translation shall be the governing version among
VPCC, the Banks, the Bank Agent and the Project Administrative
Agent.
Section 4.3 Indemnities and Expenses. (a) VPCC shall, whether or
not the transactions herein contemplated are consummated, pay or
reimburse promptly following demand by any Bank or the Bank Agent,
as the case may be, (i) all costs and expenses (including legal
fees and disbursements) incurred by or charged to such Bank or the
Bank Agent in connection with the preparation, printing, execution,
delivery, administration, registration (where appropriate) or
enforcement of this Agreement, the Common Agreement, the Bank
Construction Notes, the Bank Term Notes and the other Project
Documents or the protection or preservation of any right or claim
of the Bank Agent and/or the Banks, in each case arising out of
this Agreement, the Common Agreement, the Bank Construction Notes,
the Bank Term Notes or any other Project Document, (ii) the fees of
the Independent Engineer and the Insurance Consultant and (iii) all
costs and expenses (including legal fees and disbursements)
incurred by or charged to the Bank Agent and/or the Banks in
connection with, in respect of or incident to the maintenance,
administration and enforcement of this Agreement, the Common
Agreement, the Bank Construction Notes, the Bank Term Notes and the
other Project Documents and the consummation of the transactions
contemplated by this Agreement and the other Project Documents
after the Effective Date (including, without limitation, in
connection with, in respect of or incident to any amendment or
modification to, preservation of rights under, or waiver or consent
relating to any Financing Document or any other documents relating
thereto or in connection with the syndication of the Total Bank
Commitment).
(b) Subject to Section 4.3(j) below, VPCC shall, whether or not
the transactions herein contemplated are consummated, pay and hold
each of the Bank Financing Secured Parties harmless from and
against any and all present and future stamp and other similar
taxes and documentary or registration fees with respect to the
foregoing matters and save each of the Bank Financing Secured
Parties harmless from and against any and all liabilities with
respect to or resulting from any delay or omission (other than to
the extent attributable to such Bank Financing Secured Party) to
pay such taxes or fees.
(c) Without limiting the application of Section 4.3(b) above and
Section 4.3(j) below, VPCC shall indemnify, reimburse and hold each
Bank Financing Secured Party and their respective successors and
assigns and their respective officers, directors, employees,
representatives, attorneys and agents (hereinafter in this Section
4.3 referred to individually as "Indemnitee" and collectively as
"Indemnitees"), harmless on demand from and against any and all
liabilities, obligations, losses, damages, penalties, claims,
actions, judgments, suits, costs, expenses or disbursements
(including reasonable attorney's fees and disbursements) (for the
purposes of this Section 4.3 in its entirety, the foregoing are
collectively called "Expenses") of whatsoever kind or nature which
may be imposed on, asserted against or incurred by any of the
Indemnitees as a result or by reason of or in any way relating to
or arising out of their entering into, or the performance or
enforcement by any Person of its rights under this Agreement, any
Project Security Documents, any Bank Financing Security Document,
any other Project Document or the documents executed in connection
herewith and therewith or in any other way connected with the
performance or the administration of the transactions contemplated
hereby and thereby or the enforcement of any of the terms of or the
preservation or enforcement of any rights, powers and remedies
under any thereof, or in any way relating to or arising out of the
ownership, purchase, delivery, control, acceptance, lease,
financing, possession, operation, condition, sale or other
disposition or use of the Project Collateral or the Bank Financing
Collateral including, without limitation, 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 any contract claim; provided that no Indemnitee shall be
indemnified pursuant to this Section 4.3(c) for Expenses to the
extent caused solely by the gross negligence or willful misconduct
of such Indemnitee, as finally and unappealably determined by a
court of competent jurisdiction.
(d) Without limiting the application of Sections 4.3(b) and 4.3(c)
above and Section 4.3(j) below, VPCC shall pay or reimburse each
Indemnitee, for, any and all fees, taxes and Expenses of whatever
kind or nature incurred in connection with the creation,
preservation or protection of the Project Collateral or the Bank
Financing Collateral, and the Collateral Agent's, the Co-Collateral
Agent's or the Bank Agent's, as the case may be, security interest
in the Project Collateral or the Bank Financing Collateral, or
incurred in connection with the liquidation or sale of any of the
Project Collateral or the Bank Financing Collateral, including,
without limitation, all fees and taxes in connection 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 Project Collateral or the Bank Financing Collateral, premiums
for insurance with respect to the Project Collateral or the Bank
Financing Collateral and all other fees, taxes and Expenses in
connection with protecting, maintaining, preserving, liquidating or
selling any of the Project Collateral or the Bank Financing
Collateral and the Collateral Agent's, the Co-Collateral Agent's or
the Bank Agent's, as the case may be, 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 Project Collateral or the Bank Financing
Collateral.
(e) Without limiting the application of Sections 4.3(b), 4.3(c)
and 4.3(d) above and Section 4.3(j) below, VPCC shall pay,
indemnify, reimburse and hold each Indemnitee, harmless on demand
from and against any and all Expenses which such Indemnitee may
suffer, expend or incur in consequence of or growing out of any
misrepresentation by VPCC or the Partnership in the Common
Agreement, in any officer's certificate, statement or writing
delivered on or before the Effective Date or in any statement or
writing made or delivered after the Effective Date pursuant to or
in connection with the Common Agreement. Without limitation to the
foregoing provisions of this paragraph, the indemnity provided
hereunder shall cover any loss, liability or expense reasonably
incurred arising out of or in connection with claims by third
parties (including without limitation any Bank), to whom a copy of
the Information Memorandum has been distributed with the knowledge
of the Partnership, against the Bank Agent or any other Bank
relating to any alleged inaccuracy of the factual information
(taken as a whole) which, for the avoidance of doubt shall not
include any information by way of projections, estimates or other
expressions of view as to future circumstances (provided that such
projections, estimates or other expression of view are expressed in
good faith and on the basis of assumptions that when made were
viewed by the Partnership to be reasonable) contained in, or any
alleged omission of information which will render such aforesaid
factual information (taken as a whole) inaccurate or misleading in
a material respect from, the Information Memorandum and the Project
Documents.
(f) Without limiting the application of Sections 4.3(b), 4.3(c),
4.3(d) and 4.3(e) above and Section 4.3(j) below, VPCC shall
indemnify each Indemnitee on demand from and against any and all
Expenses growing out of or resulting from any refund or adjustment
of any amount paid or payable to any Bank Financing Secured Party
or their successors or assigns under or in respect of any Project
Collateral or Bank Financing Collateral, or any interest thereon,
which may be ordered or otherwise required by any Person.
(g) Without limiting the application of clauses (b) through (f) of
this Section 4.3, VPCC agrees to defend, protect, indemnify and
hold each Indemnitee harmless on demand against any and all
Expenses (including removal and remedial actions and consultants'
fees and disbursements) imposed on or asserted against such
Indemnitee directly or indirectly based on, or arising or resulting
from, (i) the actual or alleged presence of Hazardous Materials on,
under or at the Plant or the Site, (ii) any Environmental Claim
relating to the Partnership or the Project or arising out of the
use of the Plant or the Site or (iii) the proper exercise of such
Indemnitee's rights under any of the provisions of this Section 4.3
regardless of when any such matters arise, but excluding any matter
based solely on the gross negligence or willful misconduct of such
Indemnitee, as finally and unappealably determined by a court of
competent jurisdiction.
(h) If and to the extent that any of the obligations of VPCC under
clauses (b) through (g) of this Section 4.3 are unenforceable for
any reason, VPCC hereby agrees to make the maximum contribution to
the payment and satisfaction of such obligations which is
permissible by it under Applicable Law.
(i) Any amounts paid by any Indemnitee as to which such Indemnitee
has the right to reimbursement, together with any and all interest
thereon, shall constitute Bank Financing Secured Obligations. The
indemnity obligations of the Partnership contained in clauses (b)
through (g) of this Section 6.3 shall continue in full force and
effect notwithstanding the (i) full repayment of the Bank Financing
Secured Obligations and the discharge thereof, and (ii) prior
termination of this Agreement or any other Project Document.
(j) If (i) the Bank Financing Secured Parties are entitled to
indemnification and reimbursement under this Section 4.3 for
Expenses actually incurred, and (ii) the amount of such Expenses
incurred by one or more Bank Financing Secured Parties is in excess
of its or their respective share of the aggregate amount of
Expenses of the Bank Financing Secured Parties based on its or
their proportionate share of the Bank Financing Secured
Obligations, calculated without giving effect to such excess amount
of expenses incurred by such Bank Financing Secured Parties (the
"Proportionate Share"), then prior to the payment of any
indemnification and reimbursement amounts to any other Bank
Financing Secured Party, VPCC shall first pay to the Bank Financing
Secured Party or Bank Financing Secured Parties that incurred
Expenses in an amount greater than its or their respective
Proportionate Share of the aggregate amount of the Expenses of the
Bank Financing Secured Parties an amount equal to the amount of
their Expenses in excess of their respective Proportionate Share
thereof. Once such payment has been made in full, VPCC shall pay
to the Bank Financing Secured Parties all indemnification and
reimbursement amounts on a pro rata basis based on their respective
Proportionate Share.
(k) In case any action, suit or proceeding shall be brought
against any Bank Financing Secured Party which may result in VPCC
being required to perform any of its indemnity obligations under
this Section 4.3, such Bank Financing Secured Party shall notify
VPCC of the commencement thereof, and VPCC shall be entitled, at
its expense, acting through counsel acceptable to such Bank
Financing Secured Party, to participate in, and, to the extent that
VPCC desires, but subject to the consent of such Bank Financing
Secured Party (such consent not to be unreasonably withheld) to
assume and control the defense thereof. Such Bank Financing
Secured Party shall be entitled, at its expense, to participate in
any action, suit or proceeding the defense of which has been
assumed by VPCC. Notwithstanding the foregoing, VPCC shall not be
entitled to assume and control the defense of any such action, suit
or proceeding if and to the extent that, in the opinion of such
Bank Financing Secured Party and its counsel, such action, suit or
proceeding involves the potential imposition of criminal liability
upon such Bank Financing Secured Party or a conflict of interest
between such Bank Financing Secured Party and VPCC or between such
Bank Financing Secured Party and another Bank Financing Secured
Party or a Project Secured Party, and in such event (other than
with respect to disputes solely between such Bank Financing Secured
Party and another Bank Financing Secured Party or a Project Secured
Party) VPCC shall pay the reasonable expenses (including, without
limitation, attorneys' and consultants' fees and disbursements) of
such Bank Financing Secured Party in such defense.
(l) VPCC shall report to such Bank Financing Secured Party on the
status of any such action, suit or proceeding as developments shall
occur and at least within sixty (60) days of the previous report.
VPCC shall deliver to such Bank Financing Secured Party a copy of
each document filed or served on any party in any such action, suit
or proceeding, and each material document which VPCC possesses
relating to such action, suit or proceeding.
(m) Notwithstanding VPCC's rights hereunder to control certain
actions, suits or proceedings, any Bank Financing Secured Party
against whom any claim is made shall be entitled, upon consultation
with legal counsel wherein such Bank Financing Secured Party is
advised that such claim is reasonably meritorious, and, except in
the case of claims that could give rise to criminal liability,
after consultation with VPCC, to compromise or settle any such
claim if such Bank Financing Secured Party determines in its
reasonable discretion that failure to compromise or settle such
claim is likely to have a material adverse effect on such Bank
Financing Secured Party, the Project or such Bank Financing Secured
Party's interest in the Project. Any such compromise or settlement
shall be binding upon VPCC for purposes of this Section 4.3.
(n) Upon payment of any claim by VPCC pursuant to this Section 4.3
or other similar indemnity provisions contained herein to or on
behalf of a Bank Financing Secured Party, VPCC, without any further
action, shall be subrogated to any and all claims that such Bank
Financing Secured Party may have relating thereto, and such Bank
Financing Secured Party shall cooperate with VPCC to enable the
Partnership vigorously to pursue such claims; provided, however,
that VPCC's subrogation rights under this Section 4.3(n) shall be
limited to any claims that any Bank Financing Secured Party may
have against any Person other than a Bank Financing Secured Party
or a Project Secured Party and in no event shall VPCC be subrogated
to any rights of the Bank Agent to indemnification, contribution or
other reimbursement from the Banks pursuant to this Agreement or
otherwise or any rights of any Bank Financing Secured Party to
reimbursement or contribution from any other Bank Financing Secured
Party or any Project Secured Party.
(o) Any amounts payable by VPCC pursuant to this Section 4.3 shall
be regularly payable within the later to occur of (i) thirty (30)
days after VPCC receives an invoice for such amounts from any
applicable Bank Financing Secured Party or (ii) thirty (30) days
prior to the date on which such Bank Financing Secured Party
reasonably expects to pay such costs on account of which VPCC's
indemnity hereunder is payable, and if not paid by such applicable
date shall bear interest at the Default Rate.
Section 4.4 Survival. All indemnities set forth herein, shall
survive the execution and delivery of this Agreement and the Bank
Notes and the making and repayment of the Bank Loans.
Section 4.5 Governing Law; Submission to Jurisdiction. (a) This
Agreement is a contract made under the laws of the State of New
York of the United States and shall for all purposes be governed by
and construed in accordance with the laws of such State without
regard to the conflict of law rules thereof.
(b) Any legal action or proceeding against VPCC with
respect to this Agreement or any Financing 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, VPCC hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. VPCC
agrees that a judgment, after exhaustion of all available appeals,
in any such action or proceeding shall be conclusive and binding
upon VPCC, and may be enforced in any other jurisdiction, by a suit
upon such judgment, a certified copy of which shall be conclusive
evidence of the judgment. VPCC hereby irrevocably designates,
appoints and empowers The Prentice-Hall Corporation System Inc.,
with offices on the date hereof at 15 Columbus Circle, New York,
New York 10023, as its designee, appointee and agent to receive,
accept and acknowledge for and on its behalf, and in respect of its
property, service of any and all legal process, summons, notices
and documents which may be served in any such action or proceeding.
If for any reason such designee, appointee and agent shall cease to
be available to act as such, VPCC 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 Bank Agent.
VPCC 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 VPCC, at its address set forth in Section 4.1
hereof, such service to become effective 30 days after such
mailing. Nothing herein shall affect the right of any Bank
Financing Secured Party to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise
proceed against VPCC in any other jurisdiction.
(c) VPCC hereby irrevocably waives any objection which it may now
or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this
Agreement or any other Financing Document brought in the courts
referred to in clause (b) above and hereby further irrevocably
waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been
brought in an inconvenient forum.
(d) WITH REGARD TO THIS AGREEMENT, VPCC, EACH BANK, THE BANK AGENT
AND THE PROJECT ADMINISTRATIVE AGENT HEREBY WAIVE THE RIGHT TO A
TRIAL BY JURY.
Section 4.6 Successors and Assigns. (a) This Agreement shall be
binding upon and inure to the benefit of the respective successors
and assigns of the parties hereto, except that VPCC may not assign
or otherwise transfer all or any part of its rights or obligations
under this Agreement without the prior written consent of the
Banks.
(b) Any Bank may at any time (with the consent of the Bank Agent,
such consent not to be unreasonably withheld or delayed), sell to
one or more banks or other entities (a "Purchasing Bank") all or
any part of its rights and obligations under this Agreement, the
Bank Notes (which, except in the case of an assignment to a Person
that, immediately before such assignment, was a Bank, shall be
equal to at least $10 million) and the other Financing Documents
pursuant to a commitment transfer supplement substantially in the
form of Schedule 4.6(b) ("Commitment Transfer Supplement"),
executed by such Purchasing Bank, such transferor Bank and the Bank
Agent. Upon (x) such execution of such Commitment Transfer
Supplement, and (y) delivery of a copy thereof to VPCC and payment
of the amount of its participation to the Bank 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, the other Financing
Documents and the Intercreditor Agreement, to the same extent as if
it were an original party hereto and thereto with the Applicable
Percentage, as set forth in such Commitment Transfer Supplement,
which shall be deemed to amend this Agreement to the extent, and
only to the extent, necessary to reflect the addition of such
percentages 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 the Bank Notes. Upon the
consummation of any transfer pursuant to this Section 4.6, the
transferor Bank, the Bank Agent and VPCC shall make appropriate
arrangements so that, if required, replacement Bank Notes are
issued to such transferor Bank and new Bank Notes, or, as
appropriate, replacement Bank Notes, are issued to such Purchasing
Bank, in each case, in principal amounts reflecting their Bank
Commitment.
(c) VPCC and the Bank Agent may treat each Bank as the owner of
any Bank Loan made by it until written notice of transfer or
assignment shall have been received by it.
(d) Any Bank may, from time to time, sell or offer to sell
participating interests in any Bank Loans owing to such Bank, any
Bank Notes held by such Bank, any Bank 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 VPCC, and the grant of such
participation shall not relieve any Bank of its obligations, or
impair the rights of any Bank, hereunder or under the other
Financing Documents or the Intercreditor Agreement. 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
other Financing Documents and the Intercreditor Agreement, such
Bank shall remain the holder of any such Bank Notes for all
purposes under this Agreement, the other Financing Documents and
the Intercreditor Agreement, VPCC and the Bank Agent will continue
to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement, the other
Financing Documents and the Intercreditor Agreement and such Bank
shall retain the sole right and responsibility to exercise the
rights of such Bank, and enforce the obligations of VPCC relating
to the Bank Loans of such Bank, 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, the other Financing
Documents and the Intercreditor Agreement (provided that such Bank
may agree not to consent to any modification, amendment or waiver
of this Agreement, the other Financing Documents and the
Intercreditor Agreement, without the consent of the Participant,
that would alter the principal of or interest on the Bank Loans,
postpone the date fixed for any payment of principal of or interest
thereon, release any collateral or extend the term of any
commitment). VPCC 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 Bank Notes as set forth
in Section 4.8 hereof to the same extent as if the amount of its
participating interest was owing indirectly to it as a Bank under
this Agreement or any Bank Notes. VPCC also agrees that each
Participant shall be entitled to the benefits of Sections 2.11,
2.15 and 2.16 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.
(e) All fees and expenses which a Bank incurs in connection with
any assignment or grant of participations pursuant to subparagraphs
(b) and (d) of this Section 4.6 shall be for the account of such
Bank; provided that all fees and expenses which Credit Suisse, in
its capacity as Bank Agent or a Bank, incurs in connection with any
assignment or grant of participations pursuant to subparagraphs (b)
and (d) in connection with the syndication of the Total Commitment
after the Effective Date shall be for the account of VPCC.
Section 4.7 Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
agreement.
Section 4.8 Right of Setoff. In addition to any rights now or
hereafter granted under Applicable Law or otherwise, and not by way
of limitation of any such rights, upon the occurrence of an Event
of Default, each Bank is hereby authorized at any time or from time
to time, without presentment, demand, protest or other notice of
any kind to VPCC or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and apply
any and all deposits (general or special) and any other
Indebtedness at any time held or owing by such Bank (including
without limitation by branches and agencies of such Bank, as
relevant, wherever located), to or for the credit or the account of
VPCC against and on account of the Bank Financing Secured
Obligations of VPCC under this Agreement or any of the other
Financing Documents and liabilities of VPCC to such Bank under this
Agreement or any of the other Financing Documents, including,
without limitation, all interests in Bank Financing Secured
Obligations of VPCC under this Agreement purchased by such Bank
pursuant to Section 4.6, and all other claims of any nature or
description arising out of or connected with this Agreement or any
other Financing Document, irrespective of whether or not such Bank
shall have made any demand hereunder and although said Bank
Financing Secured Obligations, liabilities or claims, or any of
them, shall be contingent or unmatured.
Section 4.9 No Waiver; Remedies Cumulative. No failure or delay
on the part of the Bank Agent, any Bank or the Project
Administrative Agent in exercising any right, power or privilege
hereunder or under any other Financing Document and no course of
dealing between VPCC or the Partnership and the Bank Agent or any
Bank or the Project Administrative Agent shall impair any such
right, power or privilege or operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege
hereunder or under any other Financing Document preclude any other
or further exercise thereof or the exercise of any other right,
power or privilege hereunder or thereunder. The rights, powers and
remedies herein or in any other Financing Document expressly
provided are cumulative and not exclusive of any rights, powers or
remedies which the Bank Agent or any Bank or the Project
Administrative Agent would otherwise have. No notice to or demand
on VPCC in any case shall entitle VPCC to any other or further
notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Bank Agent or the Project
Administrative Agent or any Bank to any other or further action in
any circumstances without notice or demand.
Section 4.10 Severability. Any provision of this Agreement, any
Bank Note and any other Financing Document which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability but that shall not invalidate the remaining
provisions of this Agreement, any Bank Note or any other Financing
Document or affect such provision in any other jurisdiction.
Section 4.11 Payments Pro Rata; Sharing. (a) Subject to Section
2.9, the Bank Agent agrees that promptly after its receipt of each
payment from or on behalf of VPCC in respect of any Bank Financing
Secured Obligations of VPCC to the Banks hereunder, it shall
distribute such payment to the Banks pro rata based upon their
respective shares, if any, of the Bank Financing Secured
Obligations with respect to which such payment was received.
(b) Subject to the terms and conditions of the Intercreditor
Agreement, each of the Banks agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon
security, by the exercise of the right of setoff or banker's lien,
by counterclaim or cross action, by the enforcement of any right
under the Financing Documents, any Bank Note or otherwise), which
is applicable to the payment of the principal of, or interest on,
the Bank Loans or Bank Commitment Commission, of a sum which with
respect to the related sum or sums received by other Banks is in a
greater proportion than the total amount of such Bank Financing
Secured Obligations then owed and due to such Bank bears to the
total amount of such Bank Financing Secured Obligations then owed
and due to all the Banks immediately prior to such receipt, then
such Bank receiving such excess payment shall purchase for cash
without recourse or warranty from the other Banks an interest in
the Bank Financing Secured Obligations of VPCC to such Banks in
such amount as shall result in a proportional participation by all
the Banks in such amount; provided, however, that if all or any
portion of such excess amount is thereafter recovered from such
Bank, such purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest.
Section 4.12 Effectiveness. This Agreement shall become effective
on the Effective Date. The commitment of each Bank to make Bank
Construction Loans to VPCC hereunder shall expire on December 31,
1994 unless the Effective Date shall have occurred on or prior to
such date.
Section 4.13 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for
convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
Section 4.14 Amendment or Waiver. Neither this Agreement nor any
terms hereof may be changed, waived, discharged or terminated
unless such change, waiver, discharge or termination is in a
writing signed by the Required Banks and the Bank Agent and (unless
waived by the Required Banks) any and all consents required to be
obtained under numbered paragraph 9 of Section 9.01 of the OPIC
Lenders Insurance Contract shall have been obtained; provided,
however, that no such change, waiver, discharge or termination
shall, without the consent of each Bank, (i) extend the final
maturity of any Bank Loan, or reduce the rate or extend the time of
payment of interest on any Bank Loan or any Bank Commitment
Commission, or reduce the principal amount of any Bank Loan, or
increase the Bank Commitment of any Bank over the amount thereof
then in effect (it being understood that a waiver of any Default or
Event of Default shall not constitute a change in the terms of any
Bank Commitment of any Bank), (ii) provide for the forgiveness of
the principal amount of any Bank Loan or any interest thereon or of
any Bank Commitment Commission or any other amounts payable by VPCC
pursuant to this Agreement, (iii) amend, modify or waive any
provision of this Section 4.14 or Section 3.6, 4.3, 4.6, 4.8 or
4.11, (iv) reduce the percentage specified in the definitions of
Required Banks or Required Project Secured Parties set forth in
Schedule X hereto or otherwise amend the definition of Required
Project Secured Parties in Schedule X hereto or (iv) consent to the
assignment or transfer by VPCC of any of its rights and obligations
under this Agreement.
Section 4.15 Incorporation of Common Agreement. The parties
hereto acknowledge that this Agreement, the Common Agreement and
the other Financing Documents are an integral part of the same
transaction. In furtherance of the foregoing, the terms and
provisions of the Common Agreement (including, without limitation,
all conditions precedent, representations, covenants, remedies and
indemnities set forth therein) are hereby incorporated herein by
reference in all respects.
Section 4.16 Special VPCC Covenants. VPCC hereby covenants and
agrees that, notwithstanding the appointment by VPCC of the VPCC
Agent as agent of VPCC, the right of the VPCC Agent to exercise and
perform the rights, powers and duties conferred on the VPCC Agent
under the Financing Documents and the Intercreditor Agreement shall
be subject to the receipt by the VPCC Agent of instructions from
those Bank Financing Secured Parties who, by the terms of any
Financing Document or the Intercreditor Agreement, as the case may
be, have the right to direct or instruct or exercise other
consensual rights with respect to the exercise and performance by
the VPCC Agent of such rights, powers and duties (and in those
circumstances where the terms of any Financing Document or the
Intercreditor Agreement, as the case may be, are silent as to the
Bank Financing Secured Parties having the right to direct or
instruct or exercise other consensual rights with respect to the
exercise and performance by the VPCC Agent of such rights, powers
and duties, the right of the VPCC Agent to exercise and perform the
rights, powers and duties conferred on the VPCC Agent under such
agreements shall be subject to the receipt by the VPCC Agent of
instructions from the Bank Agent with respect to the exercise and
performance of such rights, power and duties). By its execution of
this Agreement, VPCC hereby confirms that it shall have no right,
and covenants that it shall take no actions, to direct or instruct
or exercise other consensual rights with respect to the exercise
and performance by the VPCC Agent of such rights, powers and
duties. Each party hereto acknowledges to each other party hereto
that it is the respective intention of such party that the Person
acting as VPCC Agent under the Financing Documents and the
Intercreditor Agreement be at all times the same Person who is
acting at such time as Bank Agent under the Financing Documents and
the Intercreditor Agreement. Accordingly, VPCC hereby covenants
and agrees that it will not take any action to remove the VPCC
Agent or appoint a successor VPCC Agent without the prior written
consent of the Required Banks.
4.17 No Recourse. The obligations of VPCC hereunder are solely
the corporate obligations of VPCC and no recourse shall be had
against any stockholder, employee, officer, director, incorporator,
Affiliate, agent or servant of VPCC with respect to this Agreement,
any of the obligations of VPCC hereunder or any obligation of VPCC
for the payment of any fee or other amount payable hereunder for
any claim based on, arising out of or relating to this Agreement or
any Financing Document; provided, however, that nothing in this
Section 4.17 shall be deemed to affect or diminish (i) the rights
and remedies of the Bank Financing Secured Parties (or any of them)
with respect to (and to the extent of) the Pledged Collateral as
set forth in the VPCC Stock Pledge Agreement or (ii) those express
respective obligations of certain Affiliates of VPCC enumerated in
the last sentence of Section 28 of the VPCC Stock Pledge Agreement.
The provisions of this Section 4.17 shall survive the termination
of this Agreement.
IN WITNESS WHEREOF, the parties hereto, acting through their duly
authorized representatives, have caused this Agreement to be signed
in their respective names as of the date first above written.
Signed on: December 21, 1994
VISAYAS POWER CAPITAL CORPORATION
By: /s/ Andrew L. Stidd
Name: Andrew L. Stidd
Title: President
CREDIT SUISSE, as Bank Agent
By: /s/ Markus Christen
Name: Markus Christen
Title: Member of Senior Management
By: /s/ Henry Park
Name: Henry Park
Title: Associate
CREDIT SUISSE, as Project Administrative Agent
By: /s/ Markus Christen
Name: Markus Christen
Title: Member of Senior Management
By: /s/ Henry Park
Name: Henry Park
Title: Associate
BANKS:
CREDIT SUISSE
By: /s/ Markus Christen
Name: Markus Christen
Title: Member of Senior Management
By: /s/ Henry Park
Name: Henry Park
Title: Associate
Exhibit 10.108
FINANCE AGREEMENT
FINANCE AGREEMENT, dated as of November 10, 1994, between
VISAYAS GEOTHERMAL POWER COMPANY, a general partnership organized
and existing under the laws of the Republic of the Philippines (the
"Company"), and OVERSEAS PRIVATE INVESTMENT CORPORATION, an agency
of the United States of America ("OPIC"),
W I T N E S S E T H :
WHEREAS, for purposes of financing in part the development by
the Company of a geothermal power plant to be located in the
Greater Tongonan area of the island of Leyte, Philippines, as more
fully described in the Application (as defined below), the Company
is entering into various agreements, including this Agreement,
setting out the terms and conditions upon which
financing is to be provided for such Project (as defined below);
and
WHEREAS, to secure a portion of the financing for this Project
(as defined below), the Company has requested that OPIC extend a
credit facility pursuant to Section 234(b) of the
Foreign Assistance Act of 1961, as amended, which OPIC is willing
to do upon the terms and conditions set forth in this Agreement and
the other Financing Documents referred to in the Common Terms
Agreement (as defined below);
NOW, THEREFORE, in consideration of the premises and of the
agreements contained herein, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION; FINANCIAL PLAN
Section 1.01. Definitions.
Except as otherwise defined herein, capitalized terms are used
herein as such terms are defined in Schedule X to the Common Terms
Agreement. In addition, the following capitalized terms shall have
the following respective meanings:
"Agreement" means this Finance Agreement between the Company
and OPIC.
"Application" means the Company's application to OPIC for
the Loan, consisting of the Sponsor Disclosure Report, dated
August 4, 1994, and the items described in Schedule 1.01.
"Application for OPIC Authorization" has the meaning set
forth in the Participation and OPIC Guaranty Agreement.
"Authorized Officer" means, with respect to any Person, its
Chairperson, Managing Director, President, Secretary, or Treasurer,
any Vice President, Assistant Secretary, or Assistant Treasurer
thereof, and any other officer designated in writing by such Person
as having been authorized to execute and deliver this Agreement,
the Notes, any of the other Financing Documents to which it is or
will be a party, or any other notice or instrument contemplated
hereunder.
"Cancellation Fee" has the meaning set forth in Section
2.03.
"Commitment" means OPIC's commitment to lend an amount not
to exceed $75,000,000 less the portion thereof that pursuant to
Section 2.03 or Section 5 of the Common Terms Agreement has been
canceled or has been deemed canceled.
"Commitment Fee" has the meaning set forth in Section 2.02.
"Commitment Letter" means the letter agreement among the
Company, the Sponsor and OPIC, dated September 27, 1994 (as
amended by the letter agreement dated November 15, 1994), in which
OPIC and the Company have agreed to enter into this credit
facility, subject to the conditions stated therein.
"Commitment Period" means the period commencing on the date
hereof and ending on the earlier of (i) the first date on which the
amount of the Loan equals the amount of the Commitment or on which
the Commitment has been cancelled or has been deemed cancelled in
full; (ii) the Conversion Date; and (iii) the Deadline Date.
"Common Terms Agreement" means the Agreement as to Certain
Common Representations, Warranties, Covenants and Other Terms,
dated as of November 10, 1994, among the Company, Visayas Power
Capital Corporation, OPIC, Credit Suisse, as Bank Agent, VPCC
Agent, and Project Administrative Agent, and the Banks named
therein.
"Company" means Visayas Geothermal Power Company, a general
partnership organized and existing under the laws of the Republic
of the Philippines.
"Construction Loan" means the aggregate unpaid principal
amount of any loan made pursuant to Sections 2.01(a) and (b).
"Construction Loan Maturity Date" means the earlier of (i)
the Conversion Date and (ii) the Deadline Date.
"Construction Note" means the promissory note issued by the
Company pursuant to this Agreement substantially in the form of
Exhibit A.
"Conversion Date Amount" means the outstanding amount of the
Construction Loan on the Conversion Date (after giving effect to
any mandatory prepayments made on such date).
"Day Count Fraction" has the meaning set forth in the Note.
"Disbursement" means each disbursement of the Construction
Loan.
"Disbursement Date" means any Business Day on which a
Disbursement is made.
"Disbursement Request" means a request for disbursement of
the Construction Loan pursuant to an Application for Funding
substantially in the form of Exhibit B.
"Dollars" or "$" means United States dollars.
"Event of Default" has the meaning set forth in Section 7.01.
"Facility Fee" has the meaning set forth in Section 2.09.
"Financial Plan" has the meaning set forth in Section 1.03.
"Interest Payment Date" at any time has the meaning set
forth in the Note outstanding at such time.
"Interest Period" at any time has the meaning set forth in
the Note outstanding at such time.
"Investor Rate" has the meaning set forth in the Note
outstanding at such time.
"Litigation Payment" has the meaning set forth in Section
8.09.
"Loan" means (i) prior to the Conversion Date, the
Construction Loan, and (ii) on and after the Conversion Date, the
Term Loan.
"Maintenance Fee" has the meaning set forth in Section 2.05.
"Note" means either the Construction Note or the Term Note,
as applicable, and the term "Notes" means both of them.
"Note Rate" at any time has the meaning set forth in the
Note outstanding at such time.
"OPIC" means Overseas Private Investment Corporation, an
agency of the United States of America.
"OPIC Plaintiff" has the meaning set forth in Section 8.09.
"OPIC Prepayment Premium" has the meaning set forth in
Section 2.07.
"OPIC Spread" means three and one-quarter percent (3.25%)
per annum.
"Participation Certificate" has the meaning set forth in the
Participation and OPIC Guaranty Agreement.
"Principal Payment Date" means the first Quarterly Date
falling at least 3 months after the Conversion Date and each
Quarterly Date thereafter.
"Quarterly Date" has the meaning set forth in the Notes.
"Self-Monitoring Questionnaire" means the Annual Self-
Monitoring Questionnaire attached hereto as Exhibit C, as the same
may be revised and supplemented by OPIC from time to time.
"Sponsor" means Magma Power Company, a corporation organized
and existing under the laws of the State of Nevada.
"Taxes" has the meaning set forth in Section 2.10.
"Term Loan" means the aggregate unpaid principal amount of a
loan made on the Conversion Date pursuant to Section
2.01(c).
"Term Loan Maturity Date" means the earlier to occur of (i)
the thirty-first (31st) Principal Payment Date, and (ii) September
15, 2005.
"Term Note" means the promissory note issued by the Company
pursuant to this Agreement substantially in the form of Exhibit B.
Section 1.02. Interpretation.
In this Agreement, unless otherwise indicated or otherwise
required by the context:
(a) Reference to and the definition of any document
(including this Agreement) shall be deemed a reference to such
document as it may be amended, supplemented, revised, or modified
from time to time;
(b) All references to an "Article", "Section", "Schedule", or
"Exhibit" are to an Article or Section hereof or to a Schedule or
an Exhibit attached hereto and made a part hereof;
(c) The table of contents, article, and section headings, and
other captions in this Agreement are for the purpose of reference
only and do not limit or affect its meaning;
(d) Defined terms in the singular shall include the plural
and vice versa, and the masculine, feminine, or neuter gender shall
include all genders;
(e) Accounting terms used herein but not defined in
Section 1.01 shall have the respective meanings given to them under
GAAP;
(f) The words "hereof", "herein", and "hereunder" and words
of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement; and
(g) Any reference herein to a time of day means Washington,
D.C. time.
Section 1.03. Project Cost; Financial Plan.
The total cost of the Project (including provisions for
contingencies) is estimated to be the equivalent of $280,000,000
based on the financial plan set forth in Schedule 1.03 (the
"Financial Plan").
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
Section 2.01. Amount and Disbursement of Construction Loan.
(a) Commitment. Subject to the terms and conditions
hereof, OPIC agrees to make, and the Company agrees to accept, a
loan for the Project in the principal amount of not more than
$75,000,000. Disbursements of the Construction Loan hereunder
shall only be made from the date hereof through the end of the
Commitment Period.
(b) Disbursement. Subject to the satisfaction of the
conditions set forth in Articles IV and V, the Company may from
time to time request a Disbursement of the Construction Loan by
delivering a Disbursement Request to OPIC not less than fifteen
(15) Business Days prior to the Disbursement Date. Each
Disbursement shall be in an amount of not less than $1,000,000.
The amount of the Construction Loan shall not exceed the amount of
the Commitment. The Commitment shall not be revolving, and any
portion of the Construction Loan prepaid shall not be
readvanced to the Company.
(c) Conversion of Construction Loan into Term Loan. The
Company may deliver a notice (the "Conversion Notice") to OPIC not
later than twenty (20) Business Days prior to the date
designated therein (the "Proposed Conversion Date") requesting the
conversion of the Construction Loan into the Term Loan on the
Proposed Conversion Date; provided, however, that the Proposed
Conversion Date must be on or prior to the Deadline Date.
Subject to the satisfaction of the conditions set forth in
Section 3.5 of the Common Terms Agreement, the Construction Loan
shall be converted into the Term Loan on the Conversion Date.
(d) Notes. The Construction Loan shall be evidenced by a
single promissory note of the Company substantially in the form of
Exhibit A, dated the Effective Date. The Term Loan shall be
evidenced by a single promissory note of the Company
substantially in the form of Exhibit B, dated the Conversion Date.
OPIC is hereby irrevocably authorized by the Company to endorse on
Schedule I attached to any Note the principal amount outstanding
from time to time of the related Loan, together with notations of
payments of principal received in respect thereof, which
endorsements shall, in the absence of manifest error, be conclusive
as to the outstanding principal amount of such Loan; provided that
the failure of OPIC to make any such recordation or endorsement
shall not affect the obligations of the Company to make a payment
when due of any amount owing hereunder or under such Note in
respect of such Loan.
Section 2.02. Commitment Fee.
Commencing from September 29, 1994 and continuing through the
Commitment Period, a commitment fee (the "Commitment Fee") shall
accrue at the rate of one-half of one percent (0.50%) per annum on
the difference, calculated for each day during such period, between
(i) the amount of the Commitment, and (ii) the aggregate amount of
the Construction Loan outstanding on such day. The Commitment Fee
shall be payable in arrears to OPIC on each Quarterly Date and on
the last day of the Commitment Period.
Section 2.03. Cancellation of the Commitment.
The Company may cancel all or any part of the Commitment at
any time upon payment to OPIC at the time of such cancellation of
a fee (the "Cancellation Fee") equal to one percent (1%) of the
amount of the Commitment then canceled. Any part of the
Commitment not disbursed at the end of the Commitment Period shall
be deemed to have been canceled and the Cancellation Fee shall be
payable in respect of such amount deemed canceled; provided, that,
if the Conversion Date shall occur, no
Cancellation Fee shall be payable in connection with the
cancellation of any amount of the Commitment that has not been
disbursed.
Section 2.04. Interest.
(a) Interest Rate. The Company shall pay interest on the
principal amount of the Loan from time to time outstanding at the
Note Rate in arrears on each Interest Payment Date, commencing with
the first such date after the date hereof.
(b) Default Interest. If the Company fails to pay in full
when due any amount of principal or interest on any Note, the
Company shall on demand pay OPIC default interest on such unpaid
amount at a rate per annum equal to the sum of (i) the Note Rate,
plus (ii) two percent (2.0%) (to the extent permitted by
applicable law) from the date of such payment default until the
date on which such defaulted amount is paid in full. Such
default interest shall be payable on demand by OPIC and, in any
event, on each date on which interest is paid to OPIC under the
Note.
Section 2.05. Maintenance Fee.
Commencing on December 15, 1995 and continuing through the
OPIC Credit Termination Date, a maintenance fee (the "Maintenance
Fee") in the amount of seven thousand five hundred dollars
($7,500) shall be due and payable to OPIC on December 15 of each
year.
Section 2.06. Repayment of the Loans.
(a) The Construction Loan shall be due and payable in full on
the Construction Loan Maturity Date; provided that on the
Conversion Date OPIC will accept a Term Note in equal principal
amount in exchange for the Construction Note as payment in full of
the outstanding principal amount of the Construction Loan.
(b) If the Construction Loan has been converted into the Term
Loan in accordance with Section 2.01(c), the Company shall, on each
Principal Payment Date repay the Term Loan in part by an amount
equal to (i) the Conversion Date Amount times (ii) the percentage
set forth opposite such Principal Payment Date on Schedule 2.06;
provided, that the entire amount of the Term Loan shall be due and
payable on the Term Loan Maturity Date.
Section 2.07. Voluntary Prepayment.
The Company may, upon thirty (30) Business Days' prior notice
to OPIC, prepay the Loan on any Interest Payment Date, in whole
(but not in part) on or prior to the Conversion Date and in whole
or in part after the Conversion Date, upon the payment to OPIC of
all amounts then due and payable to OPIC, together with a
prepayment premium (the "OPIC Prepayment Premium") of (i) five
percent (5%) of the Loan amount prepaid at any time on or prior to
the Conversion Date (except that no OPIC Prepayment Premium shall
be payable in connection with the prepayment of the Loan on or
prior to the Conversion Date if OPIC has not funded the full amount
of the Disbursements theretofore requested by the Company in
accordance with Section 2.01, whether or not the conditions to such
Disbursements have been met), (ii) three percent (3%) of the Loan
amount prepaid during the year immediately following the Conversion
Date, (iii) two percent (2%) of the Loan amount
prepaid during the year immediately following the first
anniversary of the Conversion Date, and (iv) one percent (1%) of
the Loan amount prepaid during the year immediately following the
second anniversary of the Conversion Date; no OPIC Prepayment
Premium shall be payable following the third anniversary of the
Conversion Date. Any such prepayment made on or prior to the
Conversion Date shall reduce the Conversion Date Amount (and, in
accordance with Section 2.06(b), the amounts payable on each
Principal Payment Date); and the amount of any such voluntary
prepayment made after the Conversion Date shall be applied to the
repayment schedule provided for in Section 2.06 in the inverse
order of maturity; provided that no prepayment shall be effective
to reduce the principal amount of the Loan until the amount so
prepaid is applied to prepay an equal aggregate principal amount of
the Participation Certificates pursuant to the OPIC Funding
Documents. On the date of any such voluntary prepayment, the
Company shall also pay to OPIC an amount equal to any premium or
any other amount payable under any Participation Certificate in
connection with such voluntary prepayment.
Section 2.08. Mandatory Prepayment.
The Company shall reduce the amount of the Loan by:
(a) the amounts required to be paid pursuant to (i)
clause SIXTH of Section 3.02(d)(ii) of the Disbursement
Agreement in respect of amounts held in the Dollar Project
Control Account and (ii) Section 3.05 of the Disbursement
Agreement in respect of amounts held in the Distribution
Retention Account;
(b) the amounts required to be paid pursuant to Section
3.03(a) of the Disbursement Agreement in respect of certain amounts
in the Debt Reserve Cash Collateral Account on the conversion Date;
(c) the amounts required to be paid pursuant to Section
3.07(a) of the Disbursement Agreement (or with respect to an Event
of Loss, Section 2.03 of Part C of the Omnibus Security Agreement)
in respect of Insurance Proceeds and/or condemnation proceeds;
(d) the amounts required to be paid pursuant to Section
3.07(c) of the Disbursement Agreement in respect of delay payments
paid by the Construction Contractor; and
(e) the amounts required to be paid pursuant to Section
3.07(d) of the Disbursement Agreement in respect of Buy-Down
Amounts paid by the Construction Contractor.
The Loan prepayments resulting from this Section 2.08 shall be
made on the applicable date referred to in the provisions of the
Disbursement Agreement or Omnibus Security Agreement referred to
above. Any Loan prepayment resulting from this Section 2.08 shall
have the same effect as if such prepayment occurred pursuant to
Section 2.07, except that no Prepayment Premium shall be due. On
the date of any such Loan prepayment, the Company shall also pay to
OPIC an amount equal to any premium or any other amount payable
under any Participation Certificate in connection with such
prepayment.
Section 2.09. Facility Fee.
The Company shall pay OPIC a facility fee (the "Facility Fee")
in the amount of one percent (1%) of the amount of the Commitment
as of the date hereof or seven hundred and fifty thousand dollars
($750,000), of which five hundred and sixty-two thousand five
hundred dollars ($562,500) has previously been paid to OPIC. The
outstanding balance of one hundred and eighty-seven thousand five
hundred dollars ($187,500) shall be due and payable to OPIC upon
the execution and delivery of this Agreement by the Company.
Section 2.10. Taxes.
(a) All sums payable by the Company hereunder or under any
Note, whether of principal, interest, fees, expenses, or otherwise,
shall be paid in full, free of any deductions or withholdings for
any and all present and future taxes, levies, imposts, stamps,
duties, fees, assessments, deductions, withholdings, and other
governmental charges, and all liabilities with respect thereto
(collectively referred to as "Taxes"). In the event that the
Company is prohibited by law from making payments hereunder or
under any Note free of such deductions or withholdings, then the
Company shall pay such additional amounts as may be necessary in
order that the actual amount received after such deduction or
withholding shall equal the full amount which OPIC would have
received hereunder or under such Note in the absence of such
deduction or withholding.
(b) The Company shall pay directly to all appropriate taxing
authorities any and all present and future Taxes, and all
liabilities with respect thereto imposed by law or by any taxing
authority on or with regard to any aspect of the transactions
contemplated by this Agreement or the execution and delivery of
this Agreement or any Note, except for any Taxes or other
liabilities that the Company is contesting in good faith by
appropriate proceedings, provided, that the Company hereby
indemnifies OPIC and holds OPIC harmless from and against any and
all liabilities, fees, or additional expense with respect to or
resulting from any delay in paying, or omission to pay, Taxes.
Within 30 days after the payment by the Company of any Taxes, the
Company shall furnish OPIC with the original or a certified copy of
the receipt evidencing payment thereof, together with any other
information OPIC may reasonably require to establish to its
satisfaction that full and timely payment of such Taxes has been
made.
(c) OPIC shall notify the Company of any payment of Taxes
required or requested of it and shall give due consideration to any
advice or recommendation given in response thereto by the Company,
and upon notice from OPIC that Taxes or any liability relating
thereto (including penalties and interest) have been paid, the
Company shall pay or reimburse OPIC therefor within 30 days of such
notice.
(d) Without prejudice to the survival of any other agreement
of the Company hereunder, the agreements and obligations of the
Company contained in this Section 2.10 shall survive the payment in
full of principal and interest hereunder and under the Notes.
Section 2.11. Miscellaneous.
(a) Payment or Reimbursement of Expenses. The Company shall
pay or reimburse OPIC, upon request, OPIC's reasonable out-of-
pocket costs and expenses incurred in connection with the
negotiation, preparation, execution and delivery, and
implementation of this Agreement, the Notes, and the other
Financing Documents, including, without limitation, (i) the
reasonable fees and expenses of outside legal counsel and business
advisors and consultants, and (ii) the reasonable costs of
communications, the preparation of any documents, the
authentication, registration, and recordation of any of the
Financing Documents, the preparation of bound volumes of the
Financing Documents (including up to five copies for OPIC's use),
and the termination of the Liens created pursuant to the Security
Documents. The Company shall also reimburse OPIC upon demand for
all reasonable costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses and the reasonable cost of
travel) incurred by OPIC in preserving in full force and effect or
enforcing its rights hereunder or under any of the Financing
Documents or incurred in connection with the modification,
amendment or waiver of any provision of any such document,
including but not limited to release of the Liens in favor of OPIC
arising under the Security Documents.
(b) Currency and Place of Payment. All payments required
hereunder shall be made in Dollars in immediately available funds
without any offset or deduction for Taxes or otherwise, to the
Paying Agent as provided for in the OPIC Funding Documents or to
OPIC, by wire transfer (via a United States domestic bank) as
follows:
U.S. Treasury Department
New York, NY
ABA No. 0210-3000-4 TREAS NYC/CTR/BNF=AC-71000001
OBI=OPIC Loan No. 492-94-196-IG
(c) Computation of Interest on Notes and Fees. Except as
otherwise provided herein or in the OPIC Participation and Guaranty
Agreement or in any Note, interest (including the Floating Rate
Index (as defined in the Note), the Floating Rate Spread (as
defined in the Note) and the OPIC Spread), default interest, the
Commitment Fee and any other fees shall accrue on a daily basis and
shall be computed on the basis of the Day Count Fraction.
(d) Application of Payments to OPIC. Except as expressly
provided in Sections 2.07 and 2.08, payments received by OPIC under
this Agreement or with respect to any Note shall be applied to
amounts due under this Agreement and under such Note in such manner
as OPIC in its sole discretion may determine to be appropriate,
notwithstanding any instruction to the contrary from the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Company represents, covenants and warrants to OPIC that:
Section 3.01. Accuracy of Common Representations and Warranties.
Each of the representations and warranties of the Company set
forth in Section 2 of the Common Terms Agreement is true and
correct.
Section 3.02. Disclosure.
All documents, reports or other written information
pertaining to the Project (including, without limitation, the
Application, this Agreement, and the other Financing Documents)
that have been furnished to OPIC, taken as a whole, are true and
correct and do not contain any material misstatement of fact or
omit to state a material fact or any fact necessary to make the
statements contained herein or therein not materially misleading;
provided, however, that it is understood and agreed that the
foregoing representation and warranty shall not apply to any
statements by way of financial projections furnished hereunder or
any statements contained in any financial projections and budgets
furnished hereunder and that the Company's representations and
warranties with respect to such financial projections and budgets
are those contained in Section 2.22 of the Common Agreement. There
is no fact known to the Company that has not been disclosed to OPIC
in writing, the existence of which have had or could reasonably be
expected to have a Material Adverse Effect.
ARTICLE IV
CONDITIONS PRECEDENT TO FIRST DISBURSEMENT
Unless OPIC otherwise agrees in writing, the obligation of
OPIC to make the first Disbursement of the Construction Loan is
subject to the prior fulfillment, to OPIC's satisfaction in its
sole discretion, of the following conditions precedent and to their
continued fulfillment on the date of the first
Disbursement:
Section 4.01. Satisfaction of Common Terms Agreement.
Each of the conditions precedent to the First Utilization set
forth in Section 3.2 of the Common Terms Agreement shall have been
satisfied.
Section 4.02. Payment of Commitment Fee.
The Company shall have paid to OPIC any accrued Commitment
Fee.
Section 4.03. Funding Arrangements.
Suitable arrangements shall have been made for funding the
Construction Loan, which funding arrangements, together with each
of the OPIC Funding Documents, shall be satisfactory to OPIC in
form and substance, including, without limitation, satisfaction of
all conditions precedent to the obligations of any party (other
than OPIC) to the OPIC Funding Documents, payment by the Company of
all fees required thereunder, performance by the Company of all
other obligations on its part to be performed prior to the making
of the first Disbursement pursuant to any OPIC Funding Document,
and the written approval by OPIC of the Disbursement Request and
the Application for OPIC Authorization covering such Disbursement.
Section 4.04. Government Approvals.
OPIC shall have received copies, certified by an Authorized
Officer of the Company as true and complete and in full force and
effect, of any registration, declaration, filing, governmental
consent, license, approval, authorization, or permit required under
the terms of the Agreement Between the United States of America and
the Republic of the Philippines Effected by Exchange of Notes
Signed at Washington February 18 and 19, 1952, as
supplemented by the Agreement Between the United States of
America and the Philippines Supplementing the Agreement of
February 18 and 19, 1952, Effected by Exchange of Notes Signed at
Manila February 25, 1965 and August 15, 1966, as the same may be
amended or supplemented from time to time (collectively, the
"Bilateral Agreement"), which are, in the opinion of special legal
counsel to OPIC in the Philippines, necessary or advisable for the
approval of the Project by the Government of the
Philippines for purposes of the Bilateral Agreement.
Section 4.05. Other Documents.
OPIC shall have received such other certificates, opinions,
agreements and documents, each satisfactory to OPIC in form and
substance, as it may reasonably request, including, without
limitation, the "Bound Volume Release" attached as Exhibit E.
ARTICLE V
CONDITIONS PRECEDENT TO EACH DISBURSEMENT
Unless OPIC otherwise agrees in writing and save as
otherwise provided herein, it shall be a condition precedent to the
Company's right to each Disbursement (including the first
Disbursement), that each of the following conditions be satisfied
in OPIC's sole discretion on the date of any such Disbursement:
Section 5.01. Satisfaction of Common Terms Agreement.
Each of the conditions precedent to such Utilization
contained in Section 3.3 of the Common Terms Agreement shall have
been satisfied.
Section 5.02. Payment or Reimbursement of Expenses.
All fees and other amounts due to OPIC with respect to the
making of the Construction Loan, and all other amounts payable or
reimbursable by the Company in connection with the making of the
Construction Loan, shall have been paid, including, but not limited
to, (i) fees payable under the OPIC Funding Documents, (ii) the
Commitment Fee, (iii) the Maintenance Fee, (iv) the Facility Fee,
(v) any Taxes payable pursuant to Section 2.10, and (vi) any
amounts payable pursuant to Section 2.11(a), including the fees and
expenses of OPIC legal counsel and business
consultants and the costs of registration and recordation of any of
the Financing Documents.
Section 5.03. Funding Arrangements.
Suitable arrangements shall have been made for funding the
Disbursement, in accordance with the OPIC Funding Documents, which
funding arrangements shall be satisfactory to OPIC in form and
substance, including, without limitation, satisfaction of all
conditions precedent to the obligations of any party (other than
OPIC) to the OPIC Funding Documents, payment by the Company of all
fees required thereunder, performance by the Company of all other
obligations on its part to be performed prior to the making of such
Disbursement pursuant to any OPIC Funding Document, and the written
approval by OPIC of the Application for OPIC
Authorization covering such Disbursement.
Section 5.04. Independent Engineer Certificate.
OPIC shall have received, not less than ten (10) Business Days
prior to each Disbursement Date, a certificate of the
Independent Engineer, substantially in the form of Exhibit B to the
Disbursement Request for such Disbursement.
ARTICLE VI
COVENANTS
Unless OPIC otherwise agrees in writing, so long as the
Commitment shall remain outstanding and until the OPIC Credit
Termination Date, the Company covenants and agrees as follows:
Section 6.01. Compliance With Common Covenants.
The Company will perform and observe for the benefit of OPIC
each of covenants set forth in Section 4 of the Common Terms
Agreement.
Section 6.02. Self-Monitoring Questionnaire.
At its cost, the Company shall furnish to OPIC within 90 days
after the end of each Fiscal Year the Self-Monitoring
Questionnaire, certified by an Authorized Officer of the Company as
true and complete.
Section 6.03. Meetings.
If OPIC so requests, the Company shall give OPIC not less than
15 days' notice of, and shall permit an Authorized Officer of OPIC
to attend, each meeting of its shareholders and of its directors.
Section 6.04. Worker Rights.
The Company shall not take any action to prevent its
employees, and the Company shall cause the Construction
Contractor to refrain from taking any action to prevent its
employees, from lawfully exercising their right of free
association and their right to organize and bargain collectively.
The Company further agrees to observe, and to cause the
Construction Contractor to observe, applicable laws relating to a
minimum age for employment of children, acceptable conditions of
work with respect to minimum wages, hours of work and
occupational health and safety, and not to use forced labor. The
Company is not responsible under this Section 6.04 for the
actions of a government.
ARTICLE VII
DEFAULTS AND REMEDIES
Section 7.01. Events of Default.
The occurrence of any Event of Default set forth in Section 5
of the Common Terms Agreement shall constitute an "Event of
Default" hereunder.
Section 7.02. Remedies upon Event of Default.
(a) Except as otherwise provided in Section 7.02(b), if any
Event of Default has occurred and is continuing, OPIC may at any
time in its sole discretion take any one or more of the actions set
forth in Section 5 of the Common Terms Agreement.
(b) Upon the occurrence of an Event of Default referred to in
Section 5.5 of the Common Terms Agreement, (i) the Commitment shall
automatically be terminated, and (ii) the Loan, together with
interest accrued thereon and all other amounts due under this
Agreement, the Notes and the other Financing Documents, shall
immediately mature and become due and payable, without any other
presentment, demand, diligence, protest, notice of
acceleration, or other notice of any kind, all of which the Company
hereby expressly waives.
Section 7.03. Jurisdiction and Consent to Suit.
(a) Without prejudice to OPIC's right to bring suit in any
appropriate domestic or foreign jurisdiction, any proceeding to
enforce this Agreement, any Note, or any other Financing Document
to which the Company is a party (unless otherwise specified) may be
brought by OPIC in any state or federal court of competent
jurisdiction in the District of Columbia of the United States of
America or in any other jurisdiction where the Company or any of
its property may be found. The Company hereby irrevocably waives
any present or future objection to any such venue, and
irrevocably consents and submits unconditionally to the non-
exclusive jurisdiction for itself and in respect of any of its
property of any such court. The Company further agrees that final
judgment against it in any such action or proceeding
arising out of or relating to this Agreement shall be conclusive
and may enforced in any other jurisdiction within or outside the
United States of America by suit on the judgment, a certified or
exemplified copy of which shall be conclusive evidence of the fact
and of the amount of its obligation.
(b) Prior to the Effective Date, the Company shall
irrevocably designate and appoint an agent satisfactory to OPIC for
service of process in the District of Columbia as the
Company's authorized agent to receive, accept, and acknowledge on
its behalf service of process in any such proceeding, and shall
provide OPIC with evidence of the prepayment in full of the fees of
such agent. The Company agrees that service of process, writ,
judgment, or other notice of legal process upon said agent shall be
deemed and held in every respect to be effective personal service
upon it. The Company shall maintain such appointment (or that of
a successor satisfactory to OPIC) continuously in effect at all
times while the Company is obligated under this Agreement or any
Note. Nothing herein shall affect OPIC's right to serve process in
any other manner permitted by applicable law.
Section 7.04. Judgment Currency.
This is an international loan transaction in which the
specification of Dollars is of the essence, and such currency shall
be the currency of account in all events. The payment obligation
of the Company hereunder and under the Notes shall not be
discharged by an amount paid in another currency, whether pursuant
to a judgment or otherwise, to the extent that the amount so paid
on prompt conversion to Dollars in the United States of America
under normal banking procedures does not yield the amount of
Dollars then due. In the event that any payment by the Company,
whether pursuant to a judgment or otherwise, upon conversion and
transfer, does not result in the payment of such amount of Dollars
at the place such amount is due, OPIC shall be entitled to demand
immediate payment of, and shall have a
separate cause of action against the Company for, the additional
amount necessary to yield the amount of Dollars then due. In the
event OPIC, upon the conversion of such judgment into Dollars,
shall receive (as a result of currency exchange rate
fluctuations) an amount greater than that to which it was
entitled, the Company shall be entitled to reimbursement of the
excess amount.
Section 7.05. Immunity.
The Company represents and warrants that it is subject to
civil and commercial law with respect to its obligations under this
Agreement, the Notes and each of the other Financing
Documents to which it is a party, that the making and performance
of this Agreement, the Notes and such other Financing Documents and
the borrowings by the Company pursuant hereto constitute private
and commercial acts rather than governmental or public acts and
that neither the Company nor any of its properties or revenues has
any right of immunity from suit, court jurisdiction, attachment
prior to judgment, attachment in aid of execution of a judgment,
set-off, execution of a judgment or from any other legal process
with respect to its obligations under this
Agreement, the Notes and such other Financing Documents. To the
extent that the Company may hereafter be entitled, in any
jurisdiction in which judicial proceedings may at any time be
commenced with respect to this Agreement, any Note or any other
Financing Document to which it is a party, to claim for itself or
its revenues or assets any such immunity, and to the extent that in
any such jurisdiction there may be attributed to the Company such
an immunity (whether or not claimed), the Company hereby
irrevocably agrees not to claim and hereby irrevocably waives such
immunity. The foregoing waiver of immunity shall have effect under
the United States Foreign Sovereign Immunities Act of 1976.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Notices.
Each notice, demand, report, or other communication relating
to this Agreement shall be in writing and delivered as provided in
Section 6.1 of the Common Terms Agreement.
Section 8.02. Governing Law.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
UNITED STATES OF AMERICA, WITHOUT REGARD TO ITS CONFLICT OF LAWS
PROVISIONS.
Section 8.03. Succession.
This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of the parties hereto; provided,
that the Company shall not, without the prior written consent of
OPIC, assign or delegate all or any part of its interest herein or
obligations hereunder.
Section 8.04. Survival of Agreements.
Each agreement, representation, warranty and covenant
contained or referred to in this Agreement shall survive any
investigation at any time made by OPIC and shall survive the
Disbursements of the Construction Loan and the conversion of the
Construction Loan into the Term Loan, and, save as otherwise
provided in Section 2.10, shall terminate only when all amounts due
or to become due under this Agreement, the Notes, and the other
Financing Documents are paid in full.
Section 8.05. Integration; Amendments.
This Agreement and the other Financing Documents embody the
entire understanding of the parties hereto and supersede all prior
negotiations, understandings and agreements between them with
respect to the subject matter hereof. The provisions of this
Agreement may be waived, supplemented or amended only by an
instrument in writing signed by Authorized Officers of each of the
Company and OPIC.
Section 8.06. Severability.
If any provision of this Agreement is prohibited or held to be
invalid, illegal or unenforceable in any jurisdiction, the parties
hereto agree to the fullest extent permitted by law that (i) the
validity, legality, and enforceability of the other provisions in
such jurisdiction shall not be affected or impaired thereby, and
(ii) any such prohibition, invalidity, illegality, or
unenforceability shall not render such provision prohibited,
invalid, illegal, or unenforceable in any other jurisdiction.
Section 8.07. No Waiver.
(a) No failure or delay by OPIC in exercising any right,
power or remedy shall operate as a waiver thereof or otherwise
impair any of its rights, powers, or remedies. No single or
partial exercise of any such right shall preclude any other or
further exercise thereof or the exercise of any other legal right.
No waiver of any such right shall be effective unless given in
writing.
(b) The rights or remedies provided for herein are
cumulative and are not exclusive of any other rights, powers or
remedies provided by law. The assertion or employment of any right
or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion of any other appropriate right or remedy.
Section 8.08. Waiver of Jury Trial.
The Company and OPIC each hereby irrevocably waives, to the
fullest extent permitted by law, any right to have a jury
participate in resolving any dispute arising out of, in
connection with, related to, or incidental to the relationship
between them established by this Agreement, any Note, any other
Financing Document and any other instrument, document or
agreement entered into in connection with this Agreement or the
transactions contemplated hereby.
Section 8.09. Waiver of Litigation Payments.
In the event that any action or lawsuit is initiated by or on
behalf of OPIC in the Philippines or elsewhere against the Company
or any other party to any Financing Document, the
Company, to the fullest extent permissible under applicable law,
irrevocably waives its right to, and agrees not to request, plead,
or claim that OPIC and its successors, transfers, and assigns (any
such Person, an "OPIC Plaintiff") post, pay, or offer, any cautio
judicatum solvi bond, litigation bond, or any other bond, fee,
payment, or security measure provided for by any provision of law
applicable to such action or lawsuit (any such bond, fee, payment,
or measure, a "Litigation Payment"), and the Company further waives
any objection that it may now or hereafter have to an OPIC
Plaintiff's claim that such OPIC Plaintiff should be exempt or
immune from posting, paying, making or offering any such Litigation
Payment.
Section 8.10. Further Assurances.
From time to time, the Company shall execute and deliver to
OPIC such additional documents as OPIC may require to carry out the
purposes of this Agreement and the other Financing Documents or to
preserve and protect OPIC's rights as contemplated herein or
therein.
Section 8.11. Counterparts.
This Agreement may be executed in counterparts, each of which
when so executed and delivered shall be deemed an original and all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered on its behalf by its
Authorized Officer as of the date first above written.
Signed On: December 21, 1994
VISAYAS GEOTHERMAL POWER COMPANY
By: /s/ Jon R. Peele
Its: Managing Director
OVERSEAS PRIVATE INVESTMENT
CORPORATION
By: /s/ Tracey Webb
Its: Financial Analyst
Exhibit 10.109
Reserved
Exhibit 10.110
Form 234 KGT 12-85 (Second Revised) NS
OPIC Contract of Insurance No. E093
OVERSEAS PRIVATE INVESTMENT CORPORATION
CONTRACT OF INSURANCE
Against
Inconvertibility
Expropriation
Political Violence
as defined below,
between the Overseas Private Investment Corporation ("OPIC") and
California Energy Company, Inc.
10831 Old Mill Road
Omaha, Nebraska 68154
a corporation organized and existing under the laws of Delaware
through its wholly-owned subsidiaries CE International Ltd. and CE
Mahanagdong Ltd., both corporations organized under the laws of
Bermuda, and its wholly-owned subsidiary American Pacific Finance
Company, Inc., a corporation organized and existing under the laws
of the State of Delaware
(together, the "Investor").
I-1
Article I - Subject of Insurance and Exchange of Promises.
1.01 Subject.
1. Investment. The Investor promises that the Investor
contributed or will contribute up to $70,000,000 in United States
dollars
to
Visayas Geothermal Power Company
6750 Ayala Avenue Building, 24th Floor
Makati, Manila Philippines
a general partnership organized under the laws of Philippines (the
"foreign enterprise")
for which the Investor has acquired or will acquire
a general partnership participation representing a 99 percent
interest in it
(together "the investment").
Ninety percent of each of these interests acquired by the
Investor is insured under this contract (the "insured
investment").
2. Project. The investment will be applied to
the construction and operation of a 231 megawatt geothermal
electric power plant in the Philippines
(the "project").
3. Foreign governing authority means the governmental
authority(ies) in effective control in all or part of
Philippines.
I-2
4. The project will be undertaken pursuant to the following
agreements (collectively, the ("project agreements"):
a) the "231 MW Power Plant - Malitbog Agreement between PNOC-
Energy Development Corporation and Magma Power Company dated 10
September 1993:, as amended by Amendments Nos. 1 and 2 to the 231
MW Power Plant - Malitbog Agreement between PNOC-Energy
Development Corporation and Magma Power Company, dated December 18,
1993 and March 10, 1994, respectively (as amended, including by way
of the consent to the assignment thereof by the
Philippines National Oil Company-Energy Development Corporation,
the "Energy Conversion Agreement");
b) the "Assignment and Assumption Agreement" between Magma Power
Company and Visayas Geothermal Power Company dated February 17,
1994 (the "Assignment and Assumption Agreement"); and
c) the letter dated 3 March 1994 from the Republic of the
Philippines Department of Finance to Magma Power Company, a copy of
which is attached to this contract as Exhibit A, confirming that
the obligations of PNOC-Energy Development Corporation under the
Energy Conversion Agreement carry the full faith and credit of the
Republic of the Philippines (the "Government of the Philippines
Guaranty").
1.02 Promises.
OPIC promises that if acts occur during the term of this contract
which satisfy the requirements for coverage in Article II, IV or
VI, OPIC will pay the Investor the amount of compensation provided
in Article III, V or VII, in accordance with the procedures in
Article VIII.
The Investor promises to comply with the duties in Article IX. If
the Investor violates any of those duties, the Investor may lose
rights, including the right to compensation.
Amendments to Articles I through IX may be contained in Article X.
1.03 Maximum Aggregate Compensation.
OPIC will not pay compensation under this contract in an
aggregate amount that exceeds $200,000,000.
1.04 Full Faith and Credit.
The full faith and credit of the United States of America is
pledged to secure the full payment by OPIC of its obligations under
this contract.
I-3
1.05 Term.
This contract shall enter into force on the date it has been signed
by OPIC and the Investor and shall terminate 15 years afterward;
provided, however, that the Investor may extend the term for an
additional period not to exceed five years with OPIC's approval,
which shall not be unreasonably withheld,
provided that the Investor requests, and OPIC agrees in writing to,
such an extension at least six months prior to the
termination of the initial term.
1.06 Premium and Active Amount Elections.
The Investor shall elect amounts of coverage pursuant to Section
8.06 and pay premiums on or before each semiannual anniversary of
the effective date of this contract, provided, however, that: (i)
if the Insured under OPIC Contract of Insurance No. E187 has
elected to pay premiums on the quarterly anniversary of the date of
the first disbursement of the loan covered under OPIC Contract of
Insurance No. E187, then, at the election of the Investor, the
dates for premium payments under this contract may be adjusted to
correspond to the quarterly anniversary date of OPIC Contract of
Insurance No. E187; and (ii) upon the termination of OPIC
Contract of Insurance No. E187, the Investor shall elect amounts of
coverage pursuant to Section 8.06 and pay premiums on or before
each annual anniversary of the effective date of this contract.
The coverages and premiums for the first semiannual period shall be
as follows:
Equity securities:
Inconvertibility Expropriation Political
Violence
Coverage Ceiling $200,000,000 $200,000,000 $50,000,000
Active Amount $ 63,000,000 $ 63,000,000
$50,000,000
Premium Rate is x .30% x .63% x .54%
Total annual premium is: $189,000.00 $396,900.00
+$270,000.00
=$855,900.00 x .5
$427,950.00
1.07 Administrative Fee. The Investor will pay an annual fee for
contract administration of 0.25% of the Investment amount (Section
1.01.1) on or before the contract effective date and on or before
each annual anniversary of the contract effective date, but only if
the administrative fee exceeds the premium due for the contract for
that period. If the administrative fee exceeds the premium due for
that period, the premium will be waived.
II-1
Article II - Inconvertibility - Scope of Coverage.
2.01 Inconvertibility of Local Currency. Local currency shall be
deemed inconvertible and compensation shall be payable,
subject to the exclusions (Section 2.02) and limitation (Section
3.02), if neither the Investor nor the foreign enterprise is able
legally
(a) to convert earnings from or returns of the insured
investment into United States dollars through any channel during
the 90 days immediately prior to a claim to OPIC, except at an
exchange rate that is less favorable than the then-prevailing
exchange rate described under Section 3.01.2, or
(b) to transfer such converted earnings to the United States
during such period.
2.02 Exclusions. No compensation for inconvertibility shall be
payable if
(a) Pre-existing Restrictions.
(1) An investor in comparable circumstances would have been unable
legally (a) to convert local currency into United States dollars on
the date of this contract or (b) to transfer such dollars to the
United States on the date of this contract; and
(2) The Investor knew or should have known about the
restriction; or
(b) Investor Diligence. The Investor has not made all
reasonable efforts to convert the local currency into United States
dollars or to transfer such dollars to the United States through
all direct and indirect legal mechanisms reasonably available; or
(c) Reconversions. The local currency represents funds which were
previously converted into another currency; or
(d) Provocation. The preponderant cause is unreasonable action
attributable to the Investor, including corrupt practices.
(e) Use Restricted by Expropriation. The use of such local
currency is restricted by an expropriatory action (Section 4.02).
III-1
Article III - Inconvertibility - Amount of Compensation
3.01 Rate of Compensation for Inconvertibility.
1. Date. If the requirements of inconvertibility are satisfied
(Article II), subject to the limitation (Section 3.02), OPIC shall
pay compensation
(a) against prior delivery of the inconvertible local currency, or
(b) if the Investor is unable legally to deliver the local
currency or if OPIC so requests, against prior assignment of the
Investor's right to receive the payment that is the subject of the
claim.
If the Investor delivers local currency or an assignment of rights
denominated in local currency, compensation shall be the United
States dollar equivalent of the local currency at the exchange rate
in effect 90 days before OPIC receives the
completed application for compensation.
If the Investor delivers an assignment of rights denominated in
United States dollars, compensation shall be the United States
dollar amount of the rights so assigned.
2. Exchange Rate.
(a) The exchange rate shall be the official exchange rate
applicable to the type of remittance involved.
(b) If, however,
(1) United States dollars were not generally available at the
applicable official exchange rate; and
(2) exchanges of local currency for United States dollars were
effected legally and customarily through another channel;
then the exchange rate shall be the effective rate obtained through
that channel.
(c) In either case, the exchange rate shall be net of all
deductions for governmentally imposed charges, such as taxes and
commissions.
3.02 Limitation. Compensation shall not exceed the Active Amount
(Section 8.06 in effect 90 days before OPIC receives the
application for compensation.
Article IV - Expropriation - Scope of Coverage.
4.01 Total Expropriation. Compensation is payable for total
expropriation (Section 5.01), subject to the exclusions (Section
4.03) and limitations (Section 5.04), if an act or series of acts
satisfies all of the following requirements:
(a) the acts are attributable to a foreign governing authority
which is in de facto control of the part of the country in which
the project is located;
(b) the acts are violations of international law (without regard
to the availability of local remedies) or material breaches of
local law;
(c) the acts directly deprive the Investor of fundamental rights
in the insured investment (Rights are "fundamental" if without them
the Investor is substantially deprived of the benefits of the
investment.); and
(d) the violations of law are not remedied (Section 9.01.9) and
the expropriatory effect continues for six months.
4.02 Expropriation of Funds. Compensation is payable for an
expropriation of funds that constitute a return of the insured
investment or earnings on the insured investment (Section 5.02) if
an act or series of acts
(a) satisfies the governmental action, illegality and duration
requirements (Section 4.01(a), (b) and (d)); and
(b) directly results in preventing the Investor from
(1) repatriating the funds; and
(2) effectively controlling the funds in the country in which the
project is located.
4.03 Exclusions. No compensation for expropriation shall be
payable if
(a) Provocation. The preponderant cause is unreasonable action
attributable to the Investor including corrupt practices.
(b) Government Action. The action is taken by the foreign
governing authority in its capacity or through its powers as a
purchaser, supplier, creditor, shareholder, director or manager of
the foreign enterprise.
Article V - Expropriation - Amount of Compensation.
5.01 Total Expropriation. For total expropriation (Section 4.01),
OPIC shall pay compensation in United States dollars in the amount
of the book value of the insured investment, subject to adjustments
(Section 5.03) and limitations (Section 5.04).
Compensation is computed as of the date the expropriatory effect
commences (Section 4.01(c)) and is based on financial statements
maintained in accordance with Section 9.01.6 for the foreign
enterprise. However, OPIC may
(1) conform the financial statements to principles of accounting
generally accepted in the United States; and
(2) make adjustments (Section 5.03).
OPIC shall be bound by the Investor's choice among generally
accepted accounting principles, if the choice is consistent with
the Investor's own accounting, unless such choice results in a
substantial overstatement of the fair market value of the insured
investment or the foreign enterprise as an independent entity.
5.02 Expropriation of Funds. For expropriation of funds
(Section 4.02), OPIC shall pay compensation in the amount of the
United States dollar equivalent of the expropriated funds at the
exchange rate determined in accordance with Section 3.01.2,
computed as of the date the expropriation begins. Compensation for
expropriation of funds shall be subject to the adjustments and
limitations (Section 5.03 and Section 5.04).
5.03 Adjustments.
1. Investments of Property. Non-cash items contributed as part of
the investment shall be adjusted if necessary to reflect the fair
market value of the items furnished at the time of
contribution to the project, plus freight, installation and other
reasonable direct costs incurred in furnishing the items to the
project.
2. Non-Insured Contribution. Any direct or indirect
contribution (and retained earnings thereon) by the Investor after
the insured investment is made shall be deducted from the book
value of the foreign enterprise.
3. Special Accounting Rules. Dealings among related parties shall
be adjusted if necessary to reflect transactions as they would have
occurred had they been at arm's length, and
forgiveness of obligations shall be disregarded. Each entity shall
be accounted for as if it were a separate person for income tax
purposes, and the effect of tax shifting arrangements shall be
disregarded. Obsolescence or
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permanent reduction in recoverable values shall be recognized by
adjusting the book value of assets to realizable value. OPIC may
adjust financial statements to reflect the effect of events that
occur before the expropriatory effect commences, such as events of
loss which are later confirmed.
4. Other Compensation and Retained Property. OPIC may reduce
compensation by the amount of
(a) compensation received from other sources on account of the
loss (excluding compensation payable under other insurance
policies, except to the extent necessary to prevent the Investor
from recovering more than the amount of the loss as recognized
under any of the policies under which compensation is due,
without regard to policy limits); and
(b) the book value of commercially viable property which remains
subject to the Investor's effective disposition and control after
the expropriatory effect commences (unless OPIC requires the
Investor to assign the property (Section 8.02)); and
(c) any obligation the Investor is relieved of by the
expropriation.
The reduction shall be proportionate to the extent that these items
are attributable to the insured investment.
5. Start-up Expenses. If the book value of the insured
investment of a new foreign enterprise in the development stage is
less than the insured amount originally contributed, the
accumulated loss will be disregarded if
(a) the foreign enterprise is newly formed for the principal
purpose of undertaking the project,
(b) the foreign enterprise is a going concern as of the date the
expropriatory effect commences,
(c) that date is within three years of the date this contract is
issued, and
(d) it is clear that no adjustment to book value is necessary by
reason of obsolescence or permanent reduction in recoverable values
of productive facilities or assets.
5.04 Limitations. Compensation shall not exceed any of the
following limitations:
(a) Active Amount. The Active Amount (Section 8.06) on the date
the expropriatory effect commences;
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(b) Insolvency. If the liabilities of the foreign enterprise
exceed its assets as of the date the expropriatory effect
commences, the amount that the Investor would have been entitled to
receive an insolvency proceedings with respect to the insured
investment if assets had been liquidated at book value on that
date;
(c) Self-Insurance. The maximum amount which could be received by
the Investor from OPIC without breaching Section 9.01.3.
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Article VI - Political Violence - Scope of Coverage.
6.01 Loss Due to Political Violence. Compensation is payable,
subject to the exclusions (Section 6.02) and limitations (Section
7.02), if political violence is the direct and immediate cause of
the permanent loss (including loss of value by damage or
destruction) of tangible property of the foreign enterprise used
for the project.
"Political violence" means a violent act undertaken with the
primary intent of achieving a political objective, such as
declared or undeclared war, hostile action by national or
international armed forces, civil war, revolution, insurrection,
civil strife, terrorism or sabotage. However, acts undertaken
primarily to achieve labor or student objectives are not covered.
6.02 Exclusions. No compensation for political violence shall be
payable
(a) Excluded Property. For loss of precious metals, gems, works
of art, money or documents;
(b) Minimum loss. If the amount of compensation payable would be
less than $5,000;
(c) Reasonable Protective Measures. If the loss results from the
failure to take reasonable measures to protect or preserve the
property; or
(d) Provocation. If the preponderant cause of the loss is
unreasonable action attributable to the Investor, including corrupt
practices.
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Article VII - Political Violence - Amount of Compensation.
7.01 Basis of Compensation. If the requirements of Article VI are
satisfied, and subject to the limitations (Section 7.02), OPIC
shall pay compensation for a loss in United States dollars in the
amount of
(a) Adjusted Cost. Adjusted cost is the Investor's share
(Section 7.03) of the lowest of
(1) the original cost;
(2) fair market value; or
(3) the reasonable cost of repair;
less anything of value received by the Investor on account of the
property lost and less the Investor's share of any such receipts by
the foreign enterprise; or
(b) Replacement Cost. If the Investor so elects, OPIC will pay
the reasonable cost to repair any item of lost property or to
replace it with equivalent new property, less anything of value
received by the Investor or the foreign enterprise on account of
the property lost. Such compensation shall not exceed 200% of the
original cost of the item. To receive such compensation, the
Investor must repair or replace the lost property to the project
within three years of the loss.
OPIC shall not reduce the compensation payable under subsections
(a) or (b) above by the amount of compensation payable under other
insurance policies on account of the property lost, except to the
extent necessary to prevent the Investor from recovering more than
the amount of the loss as recognized under any of the policies
under which compensation is due, without regard to policy limits.
7.02 Limitations. Compensation shall not exceed any of the
following limitations:
(a) Active Amount. The Active Amount (Section 8.06) on the date
of the loss.
(b) Self-insurance. The maximum amount which could be recovered
by the Investor from OPIC without breaching Section 9.01.3.
(c) Aggregate Adjusted Cost Compensation. Aggregate
compensation for property compensated at adjusted cost shall not
exceed the book value of the insured investment (Section 7.04) at
the time of loss.
7.03 Investor's Share. "Investor's share" means the ratio that
the equity owned by the Investor bears to the total equity of the
foreign enterprise.
7.04 Book Value of Insured Investment.
(a) Book Value. Book value is based on financial statements
maintained by the Investor in accordance with Section 9.01.6 for
the foreign enterprise. However, OPIC may
(1) conform the financial statements to principles of accounting
generally accepted in the United States; and
(2) make adjustments (Section 7.04(b)).
OPIC shall be bound by the Investor's choice among generally
accepted accounting principles, if the choice is consistent with
the Investor's own accounting, unless such choice results in a
substantial overstatement of the fair market value of the insured
investment or the foreign enterprise as an independent entity.
(b) Adjustments.
(1) Investments of Property. Non-cash items contributed to the
investment shall be adjusted if necessary to reflect the fair
market value of the items furnished at the time of contribution to
the project, plus freight, installation and other reasonable direct
costs incurred in furnishing the items to the project.
(2) Non-Insured Contribution. Any direct or indirect
contribution (and retained earnings thereon) by the Investor after
the insured investment is made shall be deducted from book value of
the foreign enterprise.
(3) Special Accounting Rules. Dealings among related parties
shall be adjusted if necessary to reflect transactions as they
would have occurred had they been at arm's length, and
forgiveness of obligations shall be disregarded. Each entity shall
be accounted for as if it were a separate person for income tax
purposes, and the effect of tax shifting arrangements shall be
disregarded. Obsolescence or permanent reduction in
recoverable values shall be recognized by adjusting the book value
of assets to realizable value. OPIC may adjust financial
statements to reflect the effect of events that occur before the
loss of property, such as events of loss which are later
confirmed.
VII-3
(4) Start-up Expenses. If the book value of the insured
investment of a new foreign enterprise in the development stage is
less than the insured amount originally contributed, the
accumulated loss will be disregarded if
(a) the foreign enterprise is newly formed for the principal
purpose of undertaking the project,
(b) the foreign enterprise is a going concern as of the date of
the loss,
(c) that date is within three years of the date this contract is
issued, and
(d) it is clear that no adjustment to book value is necessary by
reason of obsolescence or permanent reduction in recoverable values
of productive facilities or assets.
(c) Insolvency. If the liabilities of the enterprise exceed its
assets as of the date of the loss, book value of the insured
investment shall not exceed the amount that the Investor would have
been entitled to receive in insolvency proceedings with respect to
the insured investment if assets had been liquidated at book value
on the day prior to the loss.
7.05 Appraisal. If OPIC determines that compensation is payable
but OPIC and the Investor are unable to agree on a question of
valuation, either may demand the appointment of an impartial
appraiser. If the parties are unable to agree on the appraiser,
the appointment shall be made by the American Arbitration
Association. The appraiser's itemized appraisal shall be
binding. Appraisal costs shall be borne equally by OPIC and
Investor.
7.06 Estimated Compensation. If OPIC determines that
compensation is payable but conditions in the project country
preclude reasonable efforts by OPIC to determine the precise amount
due, OPIC may pay estimated compensation based on the information
then available. OPIC may revise its estimate and recover any
excess or pay any additional amount due upon receipt of additional
information.
VIII-1
Article VIII - Procedures.
8.01 Application for Compensation. An application for
compensation shall demonstrate the Investor's right to
compensation in the amount claimed. The Investor shall provide
such additional information as OPIC may reasonably require to
evaluate the application. The Investor may amend or withdraw an
application for compensation at any time, but the right to
recover compensation will be lost for any acts covered by a
withdrawn application.
(a) There is no time limit on application for inconvertibility
compensation (Article III); however, compensation shall not exceed
the Active Amount applicable in accordance with Section 3.02.
(b) An application for expropriation compensation (Article V) must
be filed within six months after the Investor has reason to believe
that all requirements of Article IV have been satisfied.
(c) A notice demonstrating the Investor's entitlement to
political violence compensation for loss of assets (Article VI)
must be filed within six months of the loss. The notice together
with proof of the amount of compensation due will be considered a
completed application, which must be filed within three years of
the loss. The Investor may request adjusted cost compensation
(Section 7.01(a)) and later amend the application within three
years of the loss to elect replacement cost compensation (Section
7.01(b)).
(d) OPIC shall have a reasonable time in which to complete
processing of any application for compensation.
8.02 Assignment to OPIC. Within sixty days after OPIC notifies
the Investor of the amount of compensation OPIC will pay under
expropriation or political violence coverage, and concurrent with
payment, the Investor shall transfer to OPIC (a) for
expropriation, all interests attributable to the insured
investment (Section 4.01) or funds (Section 4.02) as of the date
the expropriatory effect commences, including claims arising out of
the expropriation, or (b) for political violence, claims arising
out of the loss due to political violence (Section 6.01). The
Investor shall transfer the interests and claims free and clear of,
and shall agree to indemnify OPIC against, claims, defenses,
counterclaims, rights of setoff and other encumbrances (except
defenses relating to the expropriation).
VIII-2
In connection with an inconvertibility claim, immediately upon
receipt of instructions from OPIC together with notification that
it intends to pay such claim, the Investor shall deliver the local
currency to OPIC by draft subject to collection (or, at OPIC's
option, in cash), or, if the Investor is unable legally to deliver
the local currency or if OPIC so requests, shall instead deliver an
assignment of the Investor's rights with respect to the payment
that is the subject of the claim.
OPIC may decline all or any portion of the Investor's interests or
claims; if so, the Investor's right to compensation shall be
affected only as provided in Section 5.03.4(b).
8.03 Security. As a condition for paying compensation
(including estimated compensation (Section 7.06)) prior to a final
determination of its liability, OPIC may require the
Investor to provide security, satisfactory to OPIC in its
reasonable judgment, for repayment pursuant to Section 9.02(b).
8.04 Excess Salvage Value. With respect to compensated
expropriation and political violence claims, OPIC shall pay to the
Investor any amounts OPIC realizes in United States dollars from
the rights transferred (Section 8.02) in excess of
(a) the compensation paid by OPIC; plus
(b) reasonable interest; plus
(c) OPIC's out-of-pocket expenses in maintaining and realizing
funds from the transferred property.
However, this provision shall not in any way restrict OPIC's
discretion to deal with the rights transferred. OPIC shall have no
obligation to take action with respect to the rights
transferred and shall incur no liability to the Investor for any
actions taken or not taken after the transfer.
8.05 Arbitration. Any controversy relating to this contract shall
be settled by arbitration in Washington, D.C. according to the then
prevailing Commercial Arbitration Rules of the American Arbitration
Association. Unless the Investor initiates
arbitration, OPIC's liability shall expire one year after OPIC
notifies the Investor of its determination concerning an
application for compensation. A decision by arbitrators shall be
final and binding, and any court having jurisdiction may enter
judgment on it.
8.06 Election of Active Amounts and Coverage Ceilings. By prior
notice to OPIC effective as of the next due date for premiums
(Section 1.06), the Investor may increase or decrease the Active
Amount for any coverage for the remainder of the contract term,
subject to the following limitations:
(a) Active Amount shall not exceed the Coverage Ceiling (Section
1.06);
(b) The Coverage Ceiling shall be reduced automatically by
compensation paid by OPIC; Active Amount shall also be reduced
automatically by compensation paid by OPIC; Active Amount shall
also be reduced for the remainder of the annual election period to
which the claim relates (Section 3.02, Section 5.04(a), or Section
7.02(a));
(c) For inconvertibility, expropriation, and political violence
coverages, Active Amount shall not be less than the lesser of book
value (Section 5.01) or the Coverage Ceiling for that
coverage.
8.07 Termination. The Investor may terminate this contract
effective as of any premium due date unless the premium is
already paid. However, termination shall not affect any rights or
obligations of either party relating to prior periods.
8.08 Legal and Miscellaneous. This contract shall be governed by
the law of the District of Columbia, its conflict of law rules
excepted. This contract constitutes the complete agreement between
the parties, superseding any prior understandings. This contract
may be modified, or its terms waived, only in writing.
8.09 Notices. Notices must be in writing and shall be effective
when received. Notices may be given to the Investor at the address
on the title page (unless changed in writing), and to OPIC at
Overseas Private Investment Corporation
Washington, D.C. 20527
Attention: Vice-President, Insurance.
8.10 Refund of Premiums. Upon timely written request, OPIC will
refund premiums pro rata if
(a) excess coverage is elected while a valid claim for
compensation is pending; or
(b) the Investor becomes ineligible for coverage or ceases to hold
all or a portion of the insured investment, in which case any
refund shall be calculated from the later of (i) the date the
Investor becomes ineligible or ceases to hold the insured
investment, or (ii) the date OPIC receives such written request.
IX-1
Article IX - Investor's Duties.
9.01 Duties.
1. Representations and Project Execution. The Investor
understands that OPIC has issued this contract based on statutory
policy goals (22 U.S.C. Section 2191) as well as underwriting
considerations. All statements made by the Investor to OPIC in
connection with this contract are true and complete, and the
investment and the project shall be carried out as described.
2. Ownership and Eligibility. The Investor shall at all times
remain the beneficial owner of the insured investment and shall
remain eligible for OPIC insurance as
(a) a citizen of the United States; or
(b) a corporation or other association created under the laws of
the United States, its states or territories, of which more than
50% of both the total interest and of each class of shares is
beneficially owned by citizens of the United States; or
(c) an entity created under foreign law in which a 95% interest is
owned by entities eligible under (a) or (b).
3. Self-Insurance. The Investor shall continue to bear the risk
of loss of at least 10% of the book value of its interest in the
foreign enterprise.
4. Assignment. The Investor shall not assign this contract, or
any of its rights, without OPIC's written consent, which will not
be withheld unreasonably.
5. Premiums. The Investor shall pay the premiums for this
contract in accordance with Article I. In the event that
premiums are not paid when due, the Investor shall be in default
but may cure this default within sixty days by paying the
premiums plus interest at a rate of 12% per annum.
6. Accounting Records.
(a) The Investor shall maintain the United States true and
complete copies of the records, books of account and current
financial statements for the foreign enterprise necessary to
compute and substantiate compensation, including
(1) records documenting the investment;
(2) annual balance sheets;
IX-2
(3) annual statements of income, retained earnings, cash flow and
related footnotes.
(b) Accounting records shall be maintained and financial
statements prepared in United States dollars in accordance with
principles of accounting generally accepted in the United States
(including principles of currency translation), as modified by the
special accounting rules (Section 5.03.3 and Section
7.04(b)(3)).
(c) Subject to the obligations of the Investor under Section
9.01.6, the Investor or the foreign enterprise shall retain all
accounting records until
(1) the deadline for filing an application for compensation has
expired (Section 8.01); or
(2) final action has been taken on an application for
compensation (including arbitration and judicial appeals).
However, if compensation has been paid, the accounting records
shall be retained for three years after the Investor receives the
compensation.
7. Reports and Access to Information. In order that OPIC may
perform its statutory duties, including settling claims and
reporting to the Congress 22 U.S.C. Section 2200a), the Investor
shall furnish OPIC with such information as OPIC may reasonably
request, including
(a) making available for interviews any persons subject to the
Investor's practical control (including employees of the project
and independent accountants);
(b) making available for inspection and copying of all documents
and accounting records relating to the project (including
workpapers of independent accountants if available);
(c) permitting OPIC to inspect the project; and
(d) furnishing available information concerning the effects of the
project on the economy of the United States, the environment, and
the economic and social development of the country in which the
project is located.
The Investor's duties under this paragraph shall continue for the
periods specified for retention of accounting records (Section
9.01.6(c)).
8. Compulsory Notice. The Investor shall notify OPIC promptly if
it has reason to believe that the Investor or the foreign
enterprise will not be able to convert or transfer local currency
during the waiting period (Article II). The Investor shall notify
OPIC promptly of any acts or threats to act in a manner which may
come within the scope of the expropriation or political violence
coverage (Articles IV and VI) and shall keep OPIC
informed as to all relevant developments,
IX-3
9. Preservation, Transfer and Continuing Cooperation. At OPIC's
request, the Investor shall promptly assign rights with respect to
the investment, as required by Section 8.02. Prior to the
assignment of rights required by Section 8.02, the Investor shall,
in consultation with OPIC, take all reasonable measures to preserve
property, to pursue available administrative and
judicial remedies, and to negotiate in good faith with the
governing authority of the country in which the project is
located and other potential sources of compensation. After a
transfer of rights or delivery of local currency, in exchange for
reimbursement of reasonable out-of-pocket expenses, the Investor
shall take all actions reasonably requested by OPIC to assist OPIC
in preserving the property and rights transferred to OPIC and in
prosecuting related claims.
10. Other Agreements. The Investor shall not enter into any
agreement with any foreign governing authority with respect to
compensation for any acts within the scope of coverage (Article II,
IV or VI) without OPIC's prior written consent.
9.02 Default. Material breach or misrepresentation by the
Investor shall constitute default, and OPIC may:
(a) refuse to make payments to the Investor;
(b) recover payments made; and
(c) terminate this contract effective as of the date of the breach
by giving notice to the Investor.
9.03 Non-Waiver. Neither OPIC's failure to invoke its rights, nor
its acceptance of premiums, shall constitute waiver of any of its
rights, even though OPIC knows of the Investor's breach.
9.04 Cure. OPIC may permit the Investor to cure a breach in a
manner satisfactory to OPIC, but shall have no obligation to allow
breaches to be cured.
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The following amendment is hereby incorporated as part of this
Contract of Insurance No. D945:
10.01 Notwithstanding any other provision of this Contract, the
Investor shall not file applications for compensation and OPIC
shall nave no liability for claims under inconvertibility
coverage (Articles II and III) in excess of $3,000,000 in any 91-
day period; provided, however, that upon the termination of OPIC
shall have no liability for claims under inconvertibility
coverage (Articles II and III) in excess of $6,000,000 in any 91-
day period.
10.02 Notwithstanding any other provision of this Contract, OPIC
shall have no liability for claims related to the wrongful
calling of any standby guaranty or bond posted by the Investor or
its affiliates, assigns or successors in interest in favor of the
Philippine National Oil Company-Energy Development Corporation, its
affiliates, assigns or successors in interest (together, "PNOC-
EDC") or the foreign governing authority.
10.03 Notwithstanding any other provision of this Contract, OPIC
shall have no liability for claims related to the actions or
inactions of any partner or shareholder of the foreign enterprise
or the contractor, Sumitomo Corporation, or any of their
affiliates, assigns or successors in interest.
10.04 If PNOC-EDC fails to make a required payment under the
Energy Conversion Agreement and the foreign governing authority
fails to make payment on demand under the Government of the
Philippines Guaranty, and such failures by PNOC-EDC and the foreign
governing authority cause the foreign enterprise to be unable to
remit earnings from or returns of the insured
investment which could have been remitted if the failures had not
occurred, and;
(i) the Investor demonstrates to OPIC's satisfaction that the
cause of the failure of PNOC-EDC and the foreign governing
authority to meet their respective obligations of payment in U.S.
dollars under the Energy Conversion Agreement and the Government of
the Philippines Guaranty is the existence in the Philippines of
exceptional financial or economic circumstances relating to
availability of foreign exchange; and
(ii) the Investor demonstrates to OPIC's satisfaction that the
foreign enterprise has diligently pursued obtaining payment of the
local currency equivalent of such U.S. dollar obligations under the
Energy Conversion Agreement and the Government of the Philippines
Guaranty, and, for a period of 90 days from the date of request by
the foreign enterprise for such local currency, PNOC-EDC and the
foreign governing authority have failed to tender local currency to
the foreign enterprise in lieu of such U.S. dollar obligation,
then, OPIC shall have the option, at its sole discretion, to deem
that the requirements of Section 2.01(b) have been met, subject to
the exclusions set forth in Section 2.02 and the limitation set
forth in Section 3.02, or, alternatively, require the
Investor to meet the conditions under Article IV for a claim of
expropriation.
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10.05 OPIC reserves the right to make further changes to this
Contract as it may deem necessary in the event that the
Multilateral Investment Guarantee Agency agrees to provide
reinsurance for an increase in the amount of coverage provided to
the Investor under the Contract.
10.06 Section 2.01, "Inconvertibility of Local Currency" is
amended by adding the phrase "or earnings received in U.S.
dollars" after the word "earnings" in Section 2.01(b).
10.07 Section 4.03(b), "Government Action", is amended by
replacing the period with a semi-colon and adding the following:
"provided, however, that a failure of PNOC-EDC and the foreign
governing authority to honor their obligations under the Energy
Conversion Agreement or the Government of the Philippines
Guaranty (Section 1.01.4) in favor of the foreign enterprise and
its affiliates, assigns or successors in interest, may be
considered expropriation under Article IV if the Investor has
demonstrated to OPIC's satisfaction that:
(i) the foreign enterprise is not in material breach of the Energy
Conversion Agreement at the time of the failure of PNOC-EDC to
honor its obligations; and
(ii) the requirements of Section 4.01 are met; and
(iii) the foreign enterprise has exhausted the international
arbitration procedure contained in the Energy Conversion
Agreement, and PNOC-EDC continues to fail to honor its
obligations under the Energy Conversion Agreement; and
(iv) the foreign enterprise has exhausted the international
arbitration procedure contained in the Government of the
Philippines Guaranty and such procedure contained in the
Government of the Philippines Guaranty has yielded a holding in
favor of the foreign enterprise, and PNOC-EDC or the foreign
governing authority fails to pay the foreign enterprise the amount
awarded by the holding within three months of the date of the
holding.
X-3
10.08 Section 5.02, "Expropriation of Funds", is amended by
deleting the first sentence in its entirety and replacing it with
the following:
"For expropriation of funds (Section 4.02), OPIC shall pay
compensation (i) with respect to an expropriation of local
currency, in the amount of the United States dollar equivalent of
the expropriated funds at the exchange rate determined in
accordance with Section 3.01.2, computed as of the date of the
expropriation begins, or (ii) with respect to an expropriation of
United States dollars, in the amount of such United States
dollars."
10.09 Section 5.03. "Adjustments", is amended by adding the
following at the end thereof:
"6. Unearned Payments. Whether or not permitted under generally
accepted accounting principles (Section 9.01.6), the book value of
the insured investment shall not include any amount payable under
the Energy Conversion Agreement, however described, that had not
been earned and accrued by the foreign enterprise as of the date of
expropriation."
10.10 Section 8.06, "Election of Active Amounts and Coverage
Ceilings", is amended by deleting the word "annual" from
Subsection (b) and by deleting Subsection (c) and replacing it with
the following:
"(c) For Inconvertibility, expropriation, and political violence
coverages, Active Amount shall not be less than the least of book
value (Section 5.01), the Coverage Ceiling for the coverage, or
$200,000,000 minus the covered amount under the Contract of
Insurance E187.",
10.11 Section 8.09, "Notices", is amended to add the phrase "to
the attention of the President" after the word "Investor".
10.12 Section 9.01, "Duties", is amended by adding the following
at the end thereof:
"11. Modification of Project Agreements. The Investor or the
foreign enterprise shall not agree to the modification or
amendment of any material project agreement, which modification or
amendment might have a material adverse effect on the risks borne
by OPIC, without OPIC's prior written consent.
X-4
12. Worker Rights. The Investor agrees not to take actions to
prevent employees of the foreign enterprise from lawfully
exercising their right to free association and their right to
organize and bargain collectively. The Investor further agrees to
observe applicable laws relating to a minimum age for
employment of children, acceptable conditions of work with
respect to minimum wages, hours of work, and occupational health
and safety, and not to use forced labor. The Investor is not
responsible under this paragraph for the actions of a foreign
government."
MAGMA NETHERLANDS, B.V.
By: /s/ Jon R. Peele Date: December 20, 1994
Jon R. Peele, Managing Director
Print Name and Title
OVERSEAS PRIVATE INVESTMENT CORPORATION
By: /s/ Ruth R. Harkin Date: December 21, 1994
Ruth R. Harkin, President and CEO
Print Name and Title
Exhibit 10.111
AGREEMENT AS TO CERTAIN COMMON REPRESENTATIONS,
WARRANTIES, COVENANTS AND OTHER TERMS
AGREEMENT AS TO CERTAIN COMMON REPRESENTATIONS, WARRANTIES,
COVENANTS AND OTHER TERMS (this "Agreement"), dated as of November
10, 1994, among VISAYAS GEOTHERMAL POWER COMPANY, a general
partnership organized and existing under the laws of the Republic
of the Philippines (the "Partnership"), VISAYAS POWER CAPITAL
CORPORATION, a corporation organized and existing under the laws of
the State of Delaware ("VPCC"), CREDIT SUISSE, a bank organized and
existing under the laws of Switzerland, in its capacity as agent
for the Banks (as defined below) under the Bank Credit Agreement
referred to below (in such capacity, together with its successors
in such capacity, the "Bank Agent"), in its capacity as agent for
VPCC as lender under the Project Credit Agreement referred to below
(in such capacity, together with its successors in such capacity,
the "VPCC Agent"), and in its capacity as agent for the Banks, OPIC
(as defined below) and VPCC under the Intercreditor Agreement
referred to in Schedule X hereto (in such capacity, together with
its successors in such capacity, the "Project Administrative
Agent"), OVERSEAS PRIVATE INVESTMENT CORPORATION, an agency of the
United States of America ("OPIC"), and each of the financial
institutions listed on the signature pages hereof under the caption
"Banks" (each such financial institution, individually a "Bank"
and, collectively the "Banks").
W I T N E S S E T H :
WHEREAS, the Partnership intends to construct, own and operate
the Project;
WHEREAS, VPCC, the VPCC Agent and the Project Administrative
Agent are willing to enter into the Project Credit Agreement with
the Partnership, which will provide for, among other things, the
making by VPCC of the Project Construction Loans to the
Partnership and the conversion of such Project Construction Loans
into Project Term Loans to the Partnership, in each case on the
terms and subject to the conditions set forth in the Project Credit
Agreement for the purpose of financing a portion of the costs of
construction of the Project;
WHEREAS, OPIC is willing to enter into the OPIC Lenders
Insurance Contract with VPCC, pursuant to which OPIC will agree,
subject to the terms and conditions set forth therein, to insure a
portion of the payments of principal and interest on the
Project Loans against certain risks described in the OPIC Lenders
Insurance Contract;
WHEREAS, in order to provide a source of funds for the making
by VPCC of the Project Construction Loans to the Partnership
pursuant to the Project Credit Agreement and for the conversion of
such Project Construction Loans into Project Term Loans to the
Partnership pursuant to the Project Credit Agreement, the Banks,
the Bank Agent and the Project Administrative Agent are willing to
enter into the Bank Credit Agreement with VPCC, which will provide
for, among other things, the making by the Banks of the Bank
Construction Loans to VPCC and the conversion of such Bank
Construction Loans into Bank Term Loans to VPCC, in each case on
the terms and subject to the conditions set forth in the Bank
Credit Agreement;
WHEREAS, OPIC is willing to enter into the OPIC Finance
Agreement with the Partnership, which will provide for, among other
things, the making by OPIC of the OPIC Construction Loan to the
Partnership and the conversion of such OPIC Construction Loan into
the OPIC Term Loan to the Partnership, in each case on the terms
and subject to the conditions set forth in the OPIC Finance
Agreement for the purpose of financing a portion of the costs of
construction of the Project; and
WHEREAS, the Project Credit Agreement, the OPIC Lenders
Insurance Contract, the Bank Credit Agreement and the OPIC
Finance Agreement are each an integral part of the same
transaction and, accordingly, the respective parties thereto desire
to enter into this Agreement to provide for, among other things,
certain common representations, warranties and covenants of the (i)
Partnership to the other parties hereto and (ii) VPCC to the other
parties hereto (other than the Partnership), certain uniform
conditions precedent to all Utilizations and certain common events
of default;
NOW, THEREFORE, in consideration of the premises and in order
to induce (i) VPCC, the VPCC Agent and the Project
Administrative Agent to enter into the Project Credit Agreement,
(ii) the Bank Agent, the Banks and the Project Administrative Agent
to enter into the Bank Credit Agreement and (iii) OPIC to enter
into the OPIC Finance Agreement and the OPIC Lenders
Insurance Contract, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:
Section 1. Defined Terms and Principles of Construction
1.1 Defined Terms and Principles of Construction. For all
purposes of this Agreement, (a) capitalized terms used but not
otherwise defined herein shall have the meanings set forth in
Schedule X attached hereto and (b) the principles of construction
set forth in Schedule X shall apply.
Section 2. Representations and Warranties of the
Partnership
In order to induce each of VPCC, the VPCC Agent, OPIC, the
Bank Agent, the Project Administrative Agent and the Banks to enter
into this Agreement and each of the other Financing
Documents to which it is a party and in order to induce VPCC to
make the Project Construction Loans, each of the Banks to make the
Bank Construction Loans and OPIC to make the OPIC
Construction Loan, the Partnership makes the following
representations, warranties and agreements to such aforementioned
Persons as of the Effective Date, which representations,
warranties and agreements shall survive the execution and
delivery of this Agreement, the making and repayment of the OPIC
Construction Loan and the OPIC Term Loan, the making and
repayment of the Project Construction Loans and the Project Term
Loans and the making and repayment of the Bank Construction Loans
and the Bank Term Loans:
2.1 Status. The Partnership (a) is a general partnership
duly organized, validly existing and in good standing under the
laws of the Republic, (b) is duly qualified to do business as a
foreign general partnership under the laws of each jurisdiction in
which the character of the properties owned or leased by it or in
which the transaction of its business as presently conducted or as
proposed to be conducted makes such qualification
necessary or desirable and (c) has full power and authority to own
the property and assets owned by it and to lease the
properties leased by it and to transact the business in which it is
engaged or proposes to be engaged and to do all things
necessary or appropriate in respect of the Project and to
consummate the transactions contemplated by the Project Documents
in effect or required to be in effect as of each date this
representation is made or deemed made. Magma Netherlands and TPII
are the sole general partners of the Partnership. Magma
Netherlands is a corporation duly organized, validly existing and
in good standing under the laws of the Netherlands and is the
managing general partner of the Partnership. TPII is a
corporation duly organized, validly existing and in good standing
under the laws of the Republic. Magma Netherlands is duly
qualified to do business and is in good standing under the laws of
the Republic. Each Partner (a) is duly qualified to do
business and is in good standing under the laws of each
jurisdiction in which the character of the properties owned or
leased by it or in which the transaction of its business as
presently conducted or as proposed to be conducted makes such
qualification necessary or desirable and (b) has full power and
authority to own the property and assets owned by it and to lease
the properties leased by it and to transact the business in which
it is engaged or proposes to be engaged.
Section 2.2 Power and Authority. The Partnership and each
Partner has full power and authority to execute and deliver, and to
perform the terms and provisions of, each of the Project Documents
to which it is a party and has taken all necessary and proper
action to authorize the execution, delivery and performance by it
of each of such Project Documents as have been executed and
delivered as of each date this representation and warranty is made
or deemed made. The Partnership and each Partner has duly executed
and delivered each of the Project Documents to which it is party,
and each of such Project Documents constitutes the legal, valid
and binding obligations of the Partnership and/or such Partner, as
the case may be, enforceable in accordance with its respective
terms, except as the enforceability thereof may be limited by (a)
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights
generally and (b) general equitable principles, regardless of
whether the issue of enforceability is considered in a proceeding
in equity or at law.
Section 2.3 No Violation. Neither the execution and
delivery by the Partnership of the Project Documents to which it is
a party, nor the Partnership's compliance with or performance of
the terms and provisions thereof, nor the use by the Partnership of
the proceeds of the Project Construction Loans, the Project Term
Loans and the OPIC Loan as contemplated by the Project Credit
Agreement, the OPIC Finance Agreement, this Agreement or the other
Financing Documents (a) will contravene or violate any provision of
any Applicable Law to which the Partnership, any of its assets or
the Project is subject, (b) 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 (except any Permitted Liens) upon any of the property or
assets of the Partnership pursuant to the terms of any indenture,
mortgage, deed of trust, credit agreement, loan agreement or any
other agreement, contract or instrument to which the Partnership is
a party or by which it or any of its property or assets is bound or
to which it may be subject, (c) will violate any provision of the
Partnership Agreement or any other organizational documents of the
Partnership or either of the Partners or (d) will, except to the
extent set forth in Section 2.12, require any consent or approval
of any Governmental Authority or any other Person which has not
been obtained.
Section 2.4 Capitalization. The respective partnership
interests of Magma Netherlands and TPII in the Partnership and the
respective interests of Magma Netherlands and TPII in the capital
and the profits and distributions of the Partnership are as set
forth in the Partnership Agreement. All such partnership interests
in the Partnership have been duly and validly authorized and
issued. Magma Netherlands and TPII own the partnership interests
in the Partnership set forth in the Partnership Agreement free and
clear of any Liens of any nature on such partnership interests
except for the Liens created pursuant to Part D of the Omnibus
Security Agreement. The Partnership does not have outstanding any
certificates or securities that evidence interests in the
Partnership (except for certificates representing the respective
partnership interests of Magma Netherlands and TPII in the
Partnership), or any securities convertible into or exchangeable
for any of its partnership interests or any rights to subscribe for
or to purchase, or any warrants or options to purchase, or any
agreements providing for the issuance (contingent or otherwise) of,
or any calls, commitments or claims of any character relating to,
any such partnership interests, except for those rights established
pursuant to Part D of the Omnibus Security Agreement and the
Partnership Agreement.
Section 2.5 No Default, Etc. Neither the Partnership nor any
Obligor which is an Affiliate of the Partnership is in default in
the performance, observance or fulfillment of any of its
obligations, covenants or conditions contained in any Project
Document. To the best knowledge of the Partnership, no other party
to any Project Document is in default in any material respect in
the performance, observance or fulfillment of any of its
obligations, covenants or conditions contained therein. No Default
or Event of Default has occurred and is continuing. No Event of
Loss has occurred.
Section 2.6 Subsidiaries. The Partnership has no
Subsidiaries and owns no equity interest in any other Person.
Except as set forth in Schedule 2.6 hereof, neither of the
Partners has any Subsidiaries or owns any equity interest in any
other Person.
Section 2.7 Single-Purpose Partnership. The Partnership (a)
has not engaged in any business other than the design,
development, ownership, financing, construction and operation of
the Project and (b) is not a party to any agreement, contract or
commitment (other than (w) the agreements identified in clauses (i)
through (iv), clause (vi) and clause (xvi) of the definition of the
term Operating Agreements set forth in Schedule X hereto, (x) any
agreement identified in clauses (v), (ix), (x), (xii) or (xiii) of
the definition of the term Operating Agreements set forth in
Schedule X hereto which is entered into after the Effective Date
but on or before any later date on which this representation is
made or deemed made, (y) the Financing Documents and (z)
agreements, contracts and commitments in respect of Permitted
Indebtedness) which, individually, creates an annual financial
obligation of the Partnership in excess of $100,000 (or the
equivalent in other currency) or which would cause the aggregate
annual financial obligations of the Partnership under all
agreements, contracts and commitments (other than those specified
in clauses (w) through (z) immediately above) to which the
Partnership is a party to exceed $300,000 (or the equivalent in
other currency).
Section 2.8 Financial Statements; Financial Condition;
Undisclosed Liabilities; Etc. (a) The unaudited financial
statements of the Partnership at September 30, 1994, heretofore
furnished to the VPCC Agent, the Project Administrative Agent, the
Bank Agent, the Banks and OPIC present fairly the financial
condition of the Partnership at the date of such financial
statements and the results of the operations of the Partnership for
such fiscal year. Such financial statements have been prepared in
accordance with GAAP. Since September 30, 1994, no event,
condition or circumstance (including without limitation "Force
Majeure" as defined in Section 14.1(a) of the Energy Conversion
Agreement, "Political FM" as defined in Section 14.1(b) of the
Energy Conversion Agreement and "Force Majeure" as defined in
Section 1.46 of the Construction Contract) has existed or has
occurred which has had or is reasonably likely to have a Material
Adverse Effect.
(b) Except as fully reflected in the financial statements
referred to in Section 2.8(a), there are no liabilities or
obligations with respect to the Partnership of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due) for the period to which such financial
statements relate which, either individually or in the aggregate,
exceed $1 million (or the equivalent in other currency). The
Partnership does not know of any reasonable basis for the
assertion against the Partnership of any liability or obligation of
any nature whatsoever for such relevant period that is not fully
reflected in the financial statements referred to in
Section 2.8(a) which, either individually or in the aggregate,
exceed $1 million (or the equivalent in other currency).
(c) The unaudited statements of financial condition of Magma
at September 30, 1994, of Magma Netherlands at September 30, 1994
and of TPII at September 30, 1994, heretofore furnished to the VPCC
Agent, the Project Administrative Agent, the Bank Agent, the Banks
and OPIC are true, correct and complete as of the dates specified
therein, fairly present the financial
condition of Magma, Magma Netherlands and TPII, as the case may be,
at the respective dates of such statements of financial condition
and have been prepared in accordance with GAAP.
Section 2.9 Litigation. Except as disclosed in Part A of
Schedule 2.9 hereto, there is no action, suit, investigation or
proceeding by or before any court, arbitrator, administrative
agency or other Governmental Authority pending or, to the best of
the Partnership's knowledge, threatened against or affecting the
Partnership or any of its properties, revenues or assets or the
Project or the Site which has had or is reasonably likely to have
a Material Adverse Effect. The Partnership is not in default with
respect to any order of any court, arbitrator, administrative
agency or other Governmental Authority. There is no injunction,
writ, preliminary restraining order or any order of any nature
issued by an arbitrator, court or other Governmental Authority
directing that any material aspect of the transactions provided for
in any of the Project Documents not be consummated as herein or
therein provided. To the best of the Partnership's knowledge,
there is no action, suit, investigation or proceeding by or before
any court, arbitrator, administrative agency or other Governmental
Authority pending or threatened against or affecting any party to
any Project Document which is an Affiliate of the Partnership or
any of their properties, revenues or assets, and the Partnership
does not have actual knowledge of any such action, suit,
investigation or proceeding pending or threatened against or
affecting any other party to any Project Document or any of their
properties, revenues or assets, in each case described in this
sentence which has had, or as to which there is a reasonable
possibility of an adverse decision which could result in, a
Material Adverse Effect.
Section 2.10 True and Complete Disclosure. No
representation, warranty or other statement made by the Partnership
or any Affiliate of the Partnership in this Agreement or in any
other Project Document, or in any other document furnished from
time to time by the Partnership or any Affiliate of the Partnership
in connection herewith or therewith (including the Information
Memorandum and the Application (as defined in the OPIC Finance
Agreement)) contains or when furnished will contain any untrue
statement of a material fact or omits or when furnished will omit
to state (as of the date made or furnished) any material fact
necessary to make the statements herein or therein not misleading
in light of the context (including other representations,
warranties and statements in such documents) in which they were or
are made and the circumstances under which they were or are made;
provided, however, that it is understood and agreed that the
foregoing representation and warranty shall not apply to any
statements by way of financial projections furnished hereunder or
any statements contained in any financial projections and budgets
furnished hereunder and that the Partnership's representations and
warranties with respect to such financial projections and budgets
are those contained in Section 2.22 hereof. To the best of the
Partnership's knowledge, there are no facts known to the
Partnership which have not been disclosed in writing to the Bank
Agent, the VPCC Agent, the Project Administrative Agent and OPIC
and which have had or could reasonably be expected to have a
Material Adverse Effect. There are in existence no documents or
agreements which have not been disclosed to the Bank Agent, the
VPCC Agent, the Project Administrative Agent and OPIC which are
material in the context of the Project Documents or which have the
effect of varying any of the Project Documents. Except as set
forth in the Energy Conversion Agreement and the ECA Construction
Performance Bond, neither Magma, the Partnership nor any other
Affiliate of Magma is a party to any agreement with, or has
incurred any liability or obligation to, or has entered into any
commitment or undertaking in favor of, PNOC-EDC, in any such case
relating to the Project.
Section 2.11 Tax Returns and Payments. The Partnership has
filed or caused to be filed all tax returns required by
Applicable Law to be filed by it, has paid all taxes shown to be
due and payable by it on such tax returns or on any assessments
made against it or any of its properties and all other taxes, fees
or other charges imposed on it by any Governmental
Authority, other than taxes, fees, assessments and other charges
which are not delinquent and remain payable without penalty or are
the subject of a Good Faith Contest by the Partnership, and the
Partnership has no knowledge of any actual or additional assessment
in connection therewith in a material amount.
Section 2.12 Governmental Approvals. All Governmental
Approvals necessary under Applicable Law in connection with (a) the
due execution and delivery of, and performance by the Partnership
of its obligations and the exercise of its rights under, the
Project Documents in effect or required to be in effect as of each
date this representation is made or deemed made, (b) the grant by
each of the Partnership, Magma Netherlands and TPII of the Liens
created pursuant to the Project Security Documents and the Bank
Financing Security Documents and the validity, enforceability and
perfection thereof and the exercise by the Collateral Agent, the
Co-Collateral Agent or the Bank Agent, as the case may be, of its
rights and remedies thereunder and (c) the construction, operation,
maintenance and ownership of the Project as contemplated by the
Project Documents, to be obtained by the Partnership are, and to be
obtained by any other Person (to the best knowledge of the
Partnership) are, set forth in Part 1 of Schedule 2.12 hereto.
Each of the Governmental Approvals set forth in Part A of Part 1 of
Schedule 2.12 hereto and each other Governmental Approval obtained
after the date hereof but on or prior to the date this
representation is made or deemed made, has been duly obtained or
made, is validly issued, is in full force and effect, is not
subject to appeal and is free from conditions or requirements
compliance with which is reasonably likely to have a Material
Adverse Effect or which the Partnership does not reasonably expect
to be able to satisfy. There is no proceeding pending or, to the
best knowledge of the Partnership, threatened which is reasonably
likely to result in the recission, revocation, material
modification, suspension or determination of invalidity or
limitation of effectiveness of any such Governmental Approval. The
information set forth in each application and other written
material submitted by the Partnership to the applicable
Governmental Authority in connection with each such Governmental
Approval is accurate and complete in all material respects. The
Governmental Approvals set forth in Part B of Part 1 of Schedule
2.12 hereto are required solely in connection with later stages of
construction and operation of the Project. The Partnership has no
reason to believe that any Governmental Approval that has not been
obtained, but which will be required in the future, will not be
granted in due course, on or prior to the date when required and
free from any condition or requirement compliance with which is
reasonably likely to have a Material Adverse Effect or which the
Partnership does not reasonably expect to be able to satisfy. The
Project, if constructed in accordance with the Construction
Contract and the other Project Documents, will conform to and
comply in all material respects with all covenants, conditions,
restrictions and reservations in the Governmental Approvals and
the Project Documents applicable thereto and all Applicable Laws.
The Partnership has no reason to believe that the Collateral Agent,
the Co-Collateral Agent or the Bank Agent, as the case may be, will
not be entitled, without undue expense or delay, to the benefit of
each Governmental Approval set forth in Part 1 of Schedule 2.12
hereto upon the exercise of remedies under the Project Security
Documents or the Bank Financing Security Documents, as the case may
be. The Bank Agent, the VPCC Agent, the Project Administrative
Agent and OPIC have received a true and complete copy of each
Governmental Approval heretofore obtained or made.
Section 2.13 Compliance with Statutes, Etc. (a) The
Partnership has been and is in compliance in all material
respects with all Applicable Laws in respect of the conduct of its
business and the ownership of its property (including,
without limitation, Applicable Laws relating to environmental
standards and controls and resettlements and Applicable Laws
(including, without limitation, the Board of Investments
Approval) relating to the maintenance of debt to equity ratios).
(b) Without limitation to the foregoing clause (a), the
Partnership's business and the Project are being carried out in
compliance in all material respects with applicable Republic
environmental guidelines.
Section 2.14 Environmental Matters. To the best of the
Partnership's knowledge, neither the Site nor the Plant (nor any
other property with respect to which the Partnership has retained
or assumed liability either contractually or by operation of the
law) has been affected by any Hazardous Material in a manner which
does or is reasonably likely to give rise to any material liability
of the Partnership under any Environmental Law or which has had or
is reasonably likely to have a Material Adverse Effect.
Section 2.15 Patents, Licenses, Franchises and Formulas. No
patents, trademarks, service marks, trade names, copyrights,
licenses, franchises, formulas or agreements with respect to the
usage of technology or other permits are necessary for the
construction, ownership, operation or maintenance of the Project,
except for the patents, trademarks, service marks, trade names,
copyrights, licenses, franchises, formulas, agreements or permits
which the Partnership owns and has good title to, free and clear of
all Liens (other than Permitted Liens), or which the Partnership
has the right to use to the extent necessary to permit the
construction, ownership, operation and maintenance of the Project
in the manner contemplated by the Project Documents.
Section 2.16 Submission to Law and Jurisdiction. The choice
of governing law for each of the respective Project Documents in
effect or required to be in effect as of the date this
representation is made or deemed made is recognized in the courts
of the Republic, and those courts will recognize and give effect to
any judgment in respect of such Project Document obtained by or
against the Partnership in the courts the jurisdictions of which
the Partnership has submitted to.
Section 2.17 Status of the VPCC Financed Secured Obligations
and the OPIC Secured Obligations. The VPCC Financed Secured
Obligations and the OPIC Secured Obligations constitute direct,
unconditional and general obligations of the Partnership and rank
not less than pari passu as to priority of payment to all other
Indebtedness of the Partnership. Except as permitted by Section
4.17 of this Agreement, neither the Partnership nor any Partner has
secured or agreed to secure any such other Indebtedness by any Lien
upon any of its present or future revenues or assets or upon any
partnership interests in the Partnership.
Section 2.18 Documents; Sufficiency of Project Documents.
(a) The Bank Agent, the VPCC Agent, the Project Administrative
Agent and OPIC have received a complete copy of each Project
Document executed on or prior to the date on which this
representation is made or deemed made (including all exhibits,
schedules and disclosure letters referred to therein or delivered
pursuant thereto, if any). Each Project Document is in full force
and effect. None of the Project Documents which have been executed
and delivered has been amended, modified or terminated, except as
disclosed in writing to the Bank Agent, the VPCC Agent, the Project
Administrative Agent and OPIC and as amended, modified or
terminated in accordance with the terms hereof.
(b) The representations and warranties of the Partnership
contained in each Project Document were true and correct on the
date made and continue to be true and correct.
(c) To the best of the Partnership's knowledge, the
services to be performed, the materials to be supplied and the
easements, licenses and other rights granted or to be granted to
the Partnership pursuant to the terms of the Project Documents
provide or will provide the Partnership with all rights and
property interests required to enable the Partnership to obtain all
services, materials or rights (including access) required for the
design, construction, start-up, operation and maintenance of the
Project, including the Partnership's full and prompt performance of
its obligations, and full and timely satisfaction of all conditions
precedent to the performance by others of their obligations, under
the Project Documents, other than those services, materials or
rights that reasonably can be expected to be obtainable in the
ordinary course of business without material additional expense or
material delay.
Section 2.19 Fees and Enforcement. Other than amounts that
have been paid in full, no fees or taxes, including without
limitation stamp, transaction, registration or similar taxes, are
required to be paid for the legality, validity, or enforceability
of this Agreement or any of the other Project Documents in effect
or required to be in effect as of each date this representation is
made or deemed made. This Agreement and each of such Project
Documents are each in proper legal form under the laws of the
Republic, and under the respective governing laws selected in such
Project Documents, for the enforcement thereof in such jurisdiction
without any further action on the part of the Bank Agent, the VPCC
Agent, the Project Administrative Agent, OPIC, the Co-Collateral
Agent, the Collateral Agent or the Banks.
Section 2.20 Utility Availability. Arrangements reflected
accurately and completely in the Construction Budget have been made
under the Construction Contract, the Energy Conversion Agreement or
otherwise on commercially reasonable terms for the provision of all
services, materials and utilities necessary for the construction of
the Project as contemplated by the Project Documents. Arrangements
have been made under the Energy Conversion Agreement, the
Administrative and Technical Services Agreement or otherwise on
commercially reasonable terms for the provision of all services,
materials and utilities necessary for the operation and maintenance
of the Project as contemplated by the Project Documents.
Section 2.21 Availability and Transfer of Foreign Currency.
Except as disclosed in Schedule 2.21, all requisite foreign
exchange control approvals and other authorizations, if any, by the
Republic or any department or agency thereof have been validly
obtained and will be kept current and in full force and effect to
assure (a) the ability of the Partnership to receive, and the
ability of any other party to make, any and all payments to the
Partnership contemplated by the Project Documents, (b) the
availability of Dollars to enable the Partnership to perform all of
its obligations hereunder and under the other Project Documents, as
the case may be, in accordance with their respective terms, and (c)
the ability of the Partnership to convert all sums received in Peso
amounts from PNOC-EDC under the Energy Conversion Agreement and the
PNOC-EDC Consent Agreement and from the Republic under the
Performance Undertaking and the Republic Consent Agreement from
Pesos to Dollars, immediately upon receipt thereof, and to use the
Dollars as necessary to perform all of its obligations under the
Project Documents, in accordance with their respective terms.
Except as disclosed in Schedule 2.21, there are no restrictions or
requirements which limit the availability or transfer of foreign
exchange, or the conversion to a foreign exchange, for the purpose
of the performance by the Partnership of its obligations under this
Agreement or under any of the other Project Documents.
Section 2.22 Construction Budget; Base Case Forecast. (a)
The Construction Budget as in effect on the Effective Date is
attached hereto as Schedule 2.22. The Construction Budget
accurately specifies, to the best of the Partnership's knowledge,
all Project Costs incurred and anticipated to be incurred through
and including the Conversion Date. In addition, to the best of the
Partnership's knowledge, the amount of all Project Costs required
to be paid or incurred through and including the Conversion Date
does not exceed the amount reflected in the Construction Budget.
(b) All projections and budgets (including the Construction
Budget and the Base Case Forecast) furnished or to be furnished to
the Bank Agent, the VPCC Agent, the Project Administrative Agent,
OPIC, the Collateral Agent or the Banks by or on behalf of the
Partnership and the significant assumptions related thereto (i)
have been and will be prepared in good faith with due care, (ii)
taken as a whole, fairly present, and will fairly present, to the
best of the Partnership's knowledge, the Partnership's expectations
as to the matters covered thereby as of their date, (iii) are based
on, and will be based on, reasonable assumptions as to all factual
and legal matters material to the estimates therein (including
interest rates and costs) and (iv) are in all material respects
consistent with, and will be in all material respects consistent
with, the material provisions of the Project Documents. The Base
Case Forecast as in effect on the Effective Date is attached hereto
as Schedule 2.22(b).
Section 2.23 Titles; Liens. The Partnership (i) is the legal
and beneficial owner of the Right to Use the Site (as defined in
Section 1.01 of Part B of the Omnibus Security Agreement) and (ii)
is the legal and beneficial owner of, with good, marketable and
valid title to, all of its properties and assets (it being
understood, however, that the Partnership's Right to Use the Site
(as defined in Section 1.01 of Part B of the Omnibus Security
Agreement) is solely as set forth in the Energy Conversion
Agreement), in each case, free and clear of all Liens other than
Permitted Liens. No mortgage or financing statement or other
instrument or recordation executed or authorized to be filed by the
Partnership or, to the best of the Partnership's knowledge, by any
other Person covering all or any part of the property or assets of
the Partnership is on file in any recording office, except such as
relate only to Permitted Liens described in clauses (b) and (c) of
Section 4.17 hereof.
Section 2.24 Transactions with Affiliates. The Partnership
is not a party to any contracts or agreements with, or any other
commitments to, whether or not in the ordinary course of business,
any Affiliate, except for the Equity Funding Agreement, the Omnibus
Security Agreement, the Administrative and Technical Services
Agreement, the Assignment and Assumption Agreement and the O&M
Agreement (if such agreement shall have been entered into on or
prior to the date this representation is made or deemed made).
Section 2.25 No Additional Fees. Other than as expressly set
forth in the Construction Budget, the Partnership has not paid or
become obligated to pay any fee or commission to any broker, finder
or intermediary for or on account of arranging the financing of the
transactions contemplated by the Project
Documents.
Section 2.26 Regulation of Parties. None of the Partnership,
its Affiliates, any of the Project Secured Parties nor any of the
Bank Financing Secured Parties is or will be, solely as a result of
the participation by such parties separately or as a group in the
transactions contemplated hereby or by any other Project Document,
or as a result of the ownership, use or operation of the Project,
subject to regulation by any Governmental Authority of the United
States as a "public utility", an "electric utility", an "electric
utility holding company", a "public utility holding company", a
"holding company", or an "electrical corporation" or a subsidiary
or affiliate of any of the foregoing under any Applicable Law of
the United States (including, without limitation, PUHCA and FPA) or
by any Governmental Authority of the Republic as a "public
utility" under any Applicable Law of the Republic. So long as the
owner and operator of the Project is an "exempt wholesale
generator" under Section 32 of PUHCA or a "foreign utility
company" under Section 33 of PUHCA, none of the Project Secured
Parties or the Bank Financing Secured Parties will by reason of its
or their ownership or operation of the Project upon the exercise of
remedies under the Project Security Documents or the Bank Financing
Security Documents be subject to regulation by any Governmental
Authority of the United States as a "public utility", an "electric
utility", an "electric utility holding company", a "holding
company", or an electric corporation" or a subsidiary or affiliate
of any of the foregoing under any Applicable Law of the United
States (including, without limitation, PUHCA and FPA).
Section 2.27 Regulatory Status. The Partnership is not
subject to regulation as a "subsidiary company" of a holding
company under PUHCA.
Section 2.28 ERISA and Employees. The Partnership does not
sponsor, maintain, administer, contribute to, participate in, or
have any obligation to contribute to or any liability under, any
Plan nor since the date which is six years immediately preceding
the Credit Date has the Partnership established, sponsored,
maintained, administered, contributed to, participated in, or had
any obligation to contribute to or liability under, any Plan. A
Termination Event has not occurred with respect to any Plan the
occurrence of which has had or is reasonably likely to have a
Material Adverse Effect. Neither the Partnership nor any ERISA
Affiliate has failed to make a required contribution or payment to
a Multiemployer Plan when due, the failure of which has had or is
reasonably likely to have a Material Adverse Effect. To the
Partnership's knowledge, no accumulated funding deficiency as
defined in Section 412 of the Code has been incurred nor has any
funding waiver from the Internal Revenue Service been received or
requested with respect to any Pension Plan, nor has the Partnership
or any ERISA Affiliate failed to make any contribution or to pay
any amount due and owing as required by Section 412 of the Code,
Section 302 of ERISA or the terms of any Pension Plan, nor has
there been any event requiring disclosure under Section
4041(c)(3)(C) or Section 4063 of ERISA with respect to any Pension
Plan, the event or occurrence of which has had or is reasonably
likely to have a Material Adverse Effect. To the Partnership's
knowledge, the Partnership and each ERISA Affiliate has met its
minimum funding requirements under ERISA and the Code with respect
to the Plans and all benefit liabilities under each Pension Plan
are being funded in accordance with applicable legal requirements
and reasonable actuarial assumptions and methods as set forth in
ERISA and the Code. To the Partnership's knowledge, no material
proceeding, claim, lawsuit and/or investigation exists or, to the
best of the Partnership's knowledge, is threatened concerning any
(a) Pension Plan or (b) Multiemployer Plan the occurrence of which
has had or is reasonably likely to have a Material Adverse Effect.
Neither the Partnership nor to the Partnership's knowledge, any
ERISA Affiliate has incurred any liability to the PBGC other than
for insurance premiums with respect to a Pension Plan, the payment
of which is not yet due.
Section 2.29 Investment Company Act. Neither the Partnership
nor any of its Affiliates is an "investment company" or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
Section 2.30 Project Completion. The Partnership's good
faith estimate of the date on which (i) Final Completion with
respect to Unit 2 and Unit 3 will occur is no later than the
Deadline Date, (ii) the Commercial Operation Date for Unit 1 will
occur is no later than the Guaranteed Completion Date for Unit 1,
(iii) the Commercial Operation Date for Unit 2 will occur is no
later than the Guaranteed Completion Date for Unit 2 and (iv) the
Commercial Operation Date for Unit 3 will occur is no later than
the Guaranteed Completion Date for Unit 3.
The Partnership warrants to VPCC, the VPCC Agent, the Bank
Agent, the Project Administrative Agent, OPIC and the Banks that
each of the foregoing representations is true and correct in all
material respects as of the Effective Date and that none of them
omits any matter necessary to make such representation not
misleading. The rights and remedies of VPCC, the VPCC Agent, the
Bank Agent, the Project Administrative Agent, OPIC and the Banks in
relation to any misrepresentations or breach of warranty on the
part of the Partnership shall not be prejudiced by any
investigation by or on behalf of any of VPCC, the VPCC Agent, the
Bank Agent, the Project Administrative Agent, OPIC and the Banks or
any of them into the affairs of the Partnership, by the execution,
delivery or performance of this Agreement or any other Financing
Document or by any other act or thing which may be done by or on
behalf of VPCC, the VPCC Agent, the Bank Agent, the Project
Administrative Agent, OPIC and the Banks or any of them in
connection with this Agreement or any other Financing Document and
which might, apart from this Section, prejudice such rights or
remedies.
Section 2A. Representations and Warranties of VPCC
In order to induce each of the Bank Agent, the VPCC Agent, the
Project Administrative Agent, OPIC and the Banks to enter into this
Agreement and each of the other Financing Documents to which it is
a party and in order to induce the Banks to make the Bank
Construction Loans and OPIC to make the OPIC Construction Loan and
to enter into the OPIC Lenders Insurance Contract, VPCC makes the
following representations, warranties and agreements to such
aforementioned Persons as of the Effective Date, which
representations, warranties and agreements shall survive the
execution and delivery of this Agreement, the making and repayment
of the OPIC Construction Loan and the OPIC Term Loan and the making
and repayment of the Bank Construction Loans and the Bank Term
Loans:
Section 2A.1 Status. VPCC (a) is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware, (b) is duly qualified to do business as a
foreign corporation under the laws of each jurisdiction in which
the character of the properties owned or leased by it or in which
the transaction of its business as presently conducted or as
proposed to be conducted makes such qualification necessary or
desirable and (c) has full power and authority to own the
property and assets owned by it and to lease the properties leased
by it and to transact the business in which it is engaged or
proposes to be engaged and to consummate the transactions
contemplated by the Project Documents to which it is a party in
effect or required to be in effect as of each date this
representation is made or deemed made.
Section 2A.2 Power and Authority. VPCC has full power and
authority to execute and deliver, and to perform the terms and
provisions of, each of the Project Documents to which it is a party
and has taken all necessary and proper action to authorize the
execution, delivery and performance by it of each of such Project
Documents as have been executed and delivered as of each date this
representation and warranty is made or deemed made. VPCC has duly
executed and delivered each of the Project Documents to which it is
party, and each of such Project Documents constitutes the legal,
valid and binding obligations of VPCC, enforceable in accordance
with its respective terms, except as the enforceability thereof may
be limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (b) general
equitable principles, regardless of whether the issue of
enforceability is considered in a proceeding in equity or at law.
Section 2A.3 No Violation. Neither the execution and
delivery by VPCC of the Project Documents to which it is a party,
nor VPCC's compliance with or performance of the terms and
provisions thereof, nor the use by VPCC of the proceeds of the
Bank Construction Loans and the Bank Term Loans as contemplated by
the Bank Credit Agreement, this Agreement or the other Financing
Documents (a) will contravene or violate any provision of any
Applicable Law to which VPCC or any of its assets is subject, (b)
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 (except any
Lien permitted to be incurred, created or assumed or permitted to
exist in accordance with Section 4A.13 of this Agreement) upon any
of the property or assets of VPCC pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement, loan
agreement or any other agreement, contract or instrument to which
VPCC is a party or by which it or any of its property or assets is
bound or to which it may be subject, (c) will violate any provision
of the Articles of Incorporation or By-Laws of VPCC or (d) will
require any consent or approval of any Governmental Authority or
any other Person which has not been obtained.
Section 2A.4 Capitalization. The authorized capital stock of
VPCC consists of 1,000 shares of common stock, par value $1.00 per
share, of which 1,000 shares are issued, outstanding, fully paid
and non-assessable. All of such issued and outstanding shares of
common stock are owned and held by Broad Street. VPCC does not
have outstanding (i) any securities convertible into or
exchangeable for its capital stock or (ii) any rights to subscribe
for or to purchase, or any options for the purchase of, or any
agreements, arrangements or understandings providing for the
issuance (contingent or otherwise) of, or any calls, commitments or
claims of any character relating to, its capital stock, except for
those rights established by the VPCC Stock Pledge Agreement.
Section 2A.5 No Default, Etc. Neither VPCC nor any Obligor
which is an Affiliate of VPCC is in default in the performance,
observance or fulfillment of any of its obligations, covenants or
conditions contained in any Project Document.
Section 2A.6 Subsidiaries. VPCC has no Subsidiaries and owns
no equity interest in any other Person.
Section 2A.7 Single-Purpose Corporation. VPCC (a) has not
engaged in any business other than the financing of the Project
strictly in accordance with the Financing Documents and (b) is not
a party to any agreement, contract or commitment other than this
Agreement, the Project Credit Agreement, the Bank Credit Agreement,
the Bank Notes, the Collateral Agency Agreement, the VPCC
Assignment and Security Agreement, the OPIC Lenders Insurance
Contract, the Equity Funding Agreement, the Intercreditor
Agreement, the Post Closing Conditions Agreement, the Credit Suisse
Fee Letter Agreement, the Management Agreement and the Loan
Services Agreement.
Section 2A.8 Financial Statements; Financial Condition;
Undisclosed Liabilities; Etc. (a) The unaudited financial
statements of VPCC at December 1, 1994, heretofore furnished to the
Bank Agent, the VPCC Agent, the Project Administrative Agent, the
Banks and OPIC present fairly the financial condition of VPCC at
the date of such financial statements and the results of the
operations of VPCC for such fiscal year. Such financial statements
have been prepared in accordance with GAAP. Since December 1,
1994, no event, condition or circumstance has existed or has
occurred which has had or is reasonably likely to have a Material
Adverse Effect.
(b) Except as fully reflected in the financial statements
referred to in Section 2A.8(a), there are no liabilities or
obligations with respect to VPCC of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether or not due)
for the period to which such financial statements relate. VPCC
does not know of any reasonable basis for the assertion against
VPCC of any liability or obligation of any nature whatsoever for
such relevant period that is not fully reflected in the financial
statements referred to in Section 2A.8(a).
Section 2A.9 Litigation. There is no action, suit,
investigation or proceeding by or before any court, arbitrator,
administrative agency or other Governmental Authority pending or,
to the best of VPCC's knowledge, threatened against or affecting
VPCC or any of its properties, revenues or assets. VPCC is not in
default with respect to any order of any court, arbitrator,
administrative agency or other Governmental Authority. There is no
injunction, writ, preliminary restraining order or any order of any
nature issued by an arbitrator, court or other Governmental
Authority directing that any material aspect of the transactions
provided for in any of the Project Documents to which VPCC is a
party not be consummated as herein or therein provided. To the
best of VPCC's knowledge, there is no action, suit, investigation
or proceeding by or before any court, arbitrator, administrative
agency or other Governmental Authority pending or threatened
against or affecting any party to any Project Document which is an
Affiliate of VPCC or any of their properties, revenues or assets,
in each case which has had, or as to which there is a reasonable
possibility of an adverse decision which could result in, a
Material Adverse Effect.
Section 2A.10 True and Complete Disclosure. No
representation, warranty or other statement made by VPCC or any
Affiliate of VPCC in this Agreement or in any other Project
Document, or in any other document furnished from time to time by
VPCC or any Affiliate of VPCC in connection herewith or therewith
contains or when furnished will contain any untrue statement of a
material fact or omits or when furnished will omit to state (as of
the date made or furnished) any material fact necessary to make the
statements herein or therein not misleading in light of the context
(including other representations, warranties and statements in
such documents) in which they were or are made and the
circumstances under which they were or are made. There are in
existence no documents or agreements which have not been disclosed
to the Bank Agent, the VPCC Agent, the Project Administrative Agent
and OPIC which are material in the context of the Project Documents
to which VPCC or any Affiliate of VPCC is a party or which have the
effect of varying any of the Project Documents to which VPCC or any
Affiliate of VPCC is a party.
Section 2A.11 Tax Returns and Payments. VPCC has filed or
caused to be filed all tax returns required by Applicable Law to be
filed by it, has paid all taxes shown to be due and payable by it
on such tax returns or on any assessments made against it or any of
its properties and all other taxes, fees or other charges imposed
on it by any Governmental Authority, other than taxes, fees,
assessments and other charges which are not delinquent and remain
payable without penalty or are the subject of a Good Faith Contest
by VPCC, and VPCC has no knowledge of any actual or additional
assessment in connection therewith in a material amount.
Section 2A.12 Governmental Approvals. All Governmental
Approvals necessary under Applicable Law in connection with (a) the
due execution and delivery of, and performance by VPCC of its
obligations and the exercise of its rights under, the Project
Documents in effect or required to be in effect as of each date
this representation is made or deemed made and (b) the grant by
each of VPCC, Broad Street and Magma Netherlands of the Liens
created pursuant to the Bank Financing Security Documents and the
validity, enforceability and perfection thereof and the exercise by
the Bank Agent of its rights and remedies thereunder, to be
obtained by VPCC are, and to be obtained by any other Person (to
the best knowledge of VPCC) are, set forth in Part 2 of Schedule
2.12 hereto. Each of the Governmental Approvals set forth in Part
2 of Schedule 2.12 hereto and each other Governmental Approval
obtained in connection with the matters described in the first
sentence of this Section 2A.12 after the date hereof but on or
prior to the date this representation is made or deemed made, has
been duly obtained or made, is validly issued, is in full force and
effect, is not subject to appeal and is free from conditions or
requirements compliance with which is reasonably likely to have a
Material Adverse Effect or which VPCC does not reasonably expect to
be able to satisfy. There is no proceeding pending or, to the best
knowledge of VPCC, threatened which is reasonably likely to result
in the recission, revocation, material modification, suspension or
determination of invalidity or limitation of effectiveness of any
such Governmental Approval. The information set forth in each
application and other written material submitted by VPCC to the
applicable Governmental Authority in connection with each such
Governmental Approval is accurate and complete in all material
respects. The Bank Agent, the VPCC Agent, the Project
Administrative Agent and OPIC have received a true and complete
copy of each Governmental Approval set forth on Part 2 of Schedule
2.12.
Section 2A.13 Compliance with Statutes, Etc. VPCC has been
and is in compliance in all material respects with all Applicable
Laws in respect of the conduct of its business and the ownership of
its property.
Section 2A.14 Status of the Bank Financing Secured
Obligations. The Bank Financing Secured Obligations constitute
direct, unconditional and general obligations of VPCC. VPCC has
not incurred any Indebtedness other than Indebtedness constituting
Bank Financing Secured Obligations.
Section 2A.15 Documents; Sufficiency of Project Documents.
(a) The Bank Agent, the VPCC Agent, the Project Administrative
Agent and OPIC have received a complete copy of each Project
Document executed by VPCC on or prior to the date on which this
representation is made or deemed made (including all exhibits,
schedules and disclosure letters referred to therein or delivered
pursuant thereto, if any). Each such Project Document is in full
force and effect. None of the Project Documents which has been
executed and delivered by VPCC has been amended, modified or
terminated, except as disclosed in writing to the Bank Agent, the
VPCC Agent, the Project Administrative Agent and OPIC and as
amended, modified or terminated in accordance with the terms
hereof.
(b) The representations and warranties of VPCC contained in
each Project Document were true and correct on the date made and
continue to be true and correct.
Section 2A.16 Fees and Enforcement. Other than the amounts
set forth on Schedule 2A.16, all of which have been paid in full,
no fees or taxes, including without limitation stamp, transaction,
registration or similar taxes, are required to be paid for the
legality, validity, or enforceability of this Agreement or any of
the other Project Documents executed and delivered by VPCC or
required to have been executed and delivered by VPCC on or before
each date this representation is made or deemed made. Each of this
Agreement and such Project Documents is in proper legal form under
the respective governing laws selected in such Project Documents,
for the enforcement thereof in such jurisdiction without any
further action on the part of the Bank Agent, the VPCC Agent, the
Project Administrative Agent, OPIC, the Co-Collateral Agent, the
Collateral Agent or the Banks.
Section 2A.17 Titles; Liens. VPCC is the legal and
beneficial owner of, with good, marketable and valid title to, all
of its properties and assets free and clear of all Liens other than
any Lien permitted to be incurred, created or assumed or permitted
to exist in accordance with Section 4A.13 hereof. No mortgage or
financing statement or other instrument or recordation executed or
authorized to be filed by VPCC, or, to the best of VPCC's
knowledge, by any other Person covering all or any part of the
property or assets of VPCC, is on file in any recording office,
except such as relate only to Liens described in clause (b) of
Section 4A.13 hereof.
Section 2A.18 Transactions with Affiliates. VPCC is not a
party to any contracts or agreements with, or any other commitments
to, whether or not in the ordinary course of business, any
Affiliate, except for the Management Agreement.
Section 2A.19 No Additional Fees. Other than as expressly
set forth in the Bank Credit Agreement, VPCC has not paid or become
obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of arranging the financing of the
transactions contemplated by the Project
Documents.
Section 2A.20 ERISA and Employees. Neither VPCC nor any
ERISA Affiliate sponsors, maintains, administers, contributes to,
participates in, or has any obligation to contribute to or any
liability under, any Plan nor since the date which is six years
immediately preceding the Credit Date has VPCC or any ERISA
Affiliate established, sponsored, maintained, administered,
contributed to, participated in, or had any obligation to
contribute to or liability under, any Plan. A Termination Event
has not occurred with respect to any Plan. Neither VPCC nor any
ERISA Affiliate has failed to make a required contribution or
payment to a Multiemployer Plan when due, the failure of which has
or could result in any liability on the part of VPCC. No
accumulated funding deficiency as defined in Section 412 of the
Code has been incurred nor has any funding waiver from the
Internal Revenue Service been received or requested with respect to
any Pension Plan, nor has VPCC or any ERISA Affiliate failed to
make any contribution or to pay any amount due and owing as
required by Section 412 of the Code, Section 302 of ERISA or the
terms of any Pension Plan, nor has there been any event requiring
disclosure under Section 4041(c)(3)(C) or Section 4063 of ERISA
with respect to any Pension Plan, the event or occurrence of which
has or could result in any liability on the part of VPCC. VPCC and
each ERISA Affiliate has met its minimum funding requirements under
ERISA and the Code with respect to the Plans and all benefit
liabilities under each Pension Plan are being funded in accordance
with applicable legal requirements and reasonable actuarial
assumptions and methods as set forth in ERISA and the Code. No
proceeding, claim, lawsuit and/or investigation exists or is
threatened concerning any (a) Pension Plan or (b) Multiemployer
Plan the occurrence of which has or could result in any liability
on the part of VPCC. Neither VPCC nor any ERISA Affiliate has
incurred any liability to the PBGC.
Section 2A.21 Investment Company Act. Neither VPCC nor any
of its Affiliates is an "investment company" or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
VPCC warrants to the Bank Agent, the VPCC Agent, the Project
Administrative Agent, OPIC and the Banks that each of the foregoing
representations is true and correct in all material respects as of
the Effective Date and that none of them omits any matter necessary
to make such representation not misleading. The rights and
remedies of the Bank Agent, the VPCC Agent, the Project
Administrative Agent, OPIC and the Banks in relation to any
misrepresentations or breach of warranty on the part of VPCC shall
not be prejudiced by any investigation by or on behalf of any of
the Bank Agent, the VPCC Agent, the Project Administrative Agent,
OPIC and the Banks or any of them into the affairs of VPCC, by the
execution, delivery or performance of this Agreement or any other
Financing Document or by any other act or thing which may be done
by or on behalf of the Bank Agent, the VPCC Agent, the Project
Administrative Agent, OPIC and the Banks or any of them in
connection with this Agreement or any other Financing Document and
which might, apart from this Section, prejudice such rights or
remedies.
Section 3. Conditions Precedent
Section 3.1 Conditions to Effectivity. The obligation of (i)
VPCC, the VPCC Agent and the Project Administrative Agent to close
the transactions contemplated by this Agreement and the Project
Credit Agreement, (ii) the Bank Agent, the Project Administrative
Agent and the Banks to close the transactions contemplated by this
Agreement and the Bank Credit Agreement and (iii) OPIC to close the
transactions contemplated by this Agreement and the OPIC Finance
Agreement shall be subject to the satisfaction of the following
conditions on or prior to the date of such closing (and after
giving effect to such closing) (such date, the "Effective Date"):
(a) Project Documents. Each of the Project Documents
(excluding the O&M Agreement, the Debt Service Reserve LC, the PCA
Letter of Credit, the Commercial Insurance Contracts set forth in
Part 3 of Schedule 3.1(b) hereto, the Governmental Approvals set
forth in Part B of Part 1 of Schedule 2.12 hereto, the Chemical
Supply Contracts, the Accommodation Village Contracts, the Bank
Term Notes, the Project Term Note, the OPIC Term Note and any
Replacement Operating Agreements) shall have been entered into by
the respective parties thereto, shall be unconditional and fully
effective in accordance with their respective terms (except for
this Agreement having become unconditional and fully effective, if
that is a condition of effectiveness of any of such documents) and
shall be in form and substance satisfactory to the Bank Agent, the
Banks, the VPCC Agent, the Project Administrative Agent and OPIC.
In addition, (i) the Partnership shall have provided to the Bank
Agent, the VPCC Agent, the Project Administrative Agent and OPIC
executed copies of the Power Purchase Agreements and, in the PNOC-
EDC Consent Agreement, PNOC-EDC shall have furnished its
acknowledgment and agreement that effectivity under each of the
Power Purchase Agreements has occurred and that the same are in
full force and effect, and (ii) (w) the Partnership shall have
submitted to PNOC-EDC detailed plans showing anticipated
construction working areas and PNOC-EDC shall have approved the
same, in each case as contemplated by Section B3.2 of Annex B to
the Energy Conversion Agreement, and the Bank Agent, the VPCC
Agent, the Project Administrative Agent, OPIC and the Independent
Engineer shall have received copies of such plans and evidence,
reasonably satisfactory to the Bank Agent, the VPCC Agent and OPIC,
of PNOC-EDC's approval of the same, (x) PNOC-EDC and the
Partnership shall have agreed to any additions to interface points
and any modifications to interface parameters, as contemplated by
Sections C1 and C2, respectively, of Annex C to the Energy
Conversion Agreement and any such additions and modifications shall
have been incorporated as an addendum to the Energy Conversion
Agreement, which addendum shall be in form and substance reasonably
satisfactory to OPIC, the VPCC Agent and the Bank Agent with the
advice of the Independent Engineer, (y) PNOC-EDC and the
Partnership shall have finalized all condensate return
specifications as contemplated by Section C2.2 of Annex C to the
Energy Conversion Agreement and an agreement evidencing the
finalization of such specifications shall have been incorporated as
an addendum to the Energy Conversion Agreement, which addendum
shall be in form and substance reasonably satisfactory to OPIC, the
VPCC Agent and the Bank Agent with the advice of the Independent
Engineer, and (z) as contemplated by Annex I to the Energy
Conversion Agreement, PNOC-EDC and the Partnership shall have
developed an expanded version of such Annex showing the Guaranteed
Net Plant Steam Rate (as defined in the Energy Conversion
Agreement) for each Billing Period (as defined in the Energy
Conversion Agreement), which expanded Annex I shall have been
incorporated as an addendum to the Energy Conversion Agreement in
form and substance reasonably satisfactory to the Bank Agent, the
VPCC Agent and OPIC with the advice of the Independent Engineer.
(b) Insurance. (i) The Partnership shall have caused the
Construction Contractor to have obtained the insurances described
in Part 2 of Schedule 3.1(b) hereto with financially sound and
reputable insurers satisfactory to the Secured Parties and
pursuant to policies (w) naming the Collateral Agent as sole loss
payee thereunder (except in the case of third-party liability,
worker's compensation and automobile liability insurances), (x)
naming, in the case of all insurances, the Collateral Agent as
additional insured thereunder, (y) naming, in the case of third
party liability insurances, the Collateral Agent, the Bank Agent,
the Banks, the VPCC Agent, the Project Administrative Agent, VPCC,
and OPIC as additional insureds thereunder and (z) containing cut-
through endorsements to reinsurers and provisions requiring that
the Bank Agent, the VPCC Agent, OPIC and the Collateral Agent shall
receive notices of any non-payment of premiums. None of the
policies for insurances described in subparagraphs (a), (b), (c)
and (d) of Part 2 of Schedule 3.1(b) hereto shall contain any
cancellation provision. The Partnership shall have caused the
Construction Contractor to have furnished to the Bank Agent, the
VPCC Agent and OPIC certificates of insurance relating to the
insurances required by Part 2 of Schedule 3.1(b) (together with
copies of the policies relating to such insurances, if and to the
extent then available) from the insurers or insurance brokers for
such insurance, which certificates shall indicate the type of
insurance, amounts and risks covered, names of the beneficiaries,
expiration dates, names of the insurers and special features of the
policies and shall be accompanied by written confirmation of
premium payments.
(ii) The Partnership shall have obtained the insurances
described in Part 1 of Schedule 3.1(b) hereto with financially
sound and reputable insurers satisfactory to the Project Secured
Parties, and pursuant to policies (x) naming, in the case of all
insurances, the Collateral Agent as additional insured thereunder,
(y) naming, in the case of third party liability insurances, the
Collateral Agent, the Bank Agent, the Banks, the VPCC Agent, the
Project Administrative Agent, VPCC and OPIC as additional insureds
thereunder and (z) containing cut-through endorsements to
reinsurers and provisions requiring that the Bank Agent, the VPCC
Agent, OPIC and the Collateral Agent shall receive notices of any
non-payment of premiums. None of the policies for insurances
referred to in subparagraphs (a), (b), (c) and (d) of Part 1 of
Schedule 3.1(b) hereto shall contain any cancellation provision.
The policies for the other insurances described in Part 1 of
Schedule 3.1(b) hereto, if cancelable, shall only be cancelable for
non-payment of premiums and then only upon sixty (60) days prior
written notice to the Bank Agent, the VPCC Agent, OPIC and the
Collateral Agent. The Partnership shall have furnished to the Bank
Agent, the VPCC Agent and OPIC certificates of insurance relating
to the insurances required by Part 1 of Schedule 3.1(b) (together
with copies of the policies relating to such insurances, if and to
the extent then available) from the insurers or insurance brokers
for such insurance, which certificates shall indicate the type of
insurance, amounts and risks covered, names of the beneficiaries,
expiration dates, names of the insurers and special features of the
policies and shall be accompanied by written confirmation of
premium payments.
(c) Opinions of Counsel. The Bank Agent, the VPCC Agent,
OPIC, the Project Administrative Agent, the Banks, the Collateral
Agent and the Co-Collateral Agent shall have received signed legal
opinions of counsel to the Partnership, VPCC, each of the Obligors
and the Republic and each such other Person as the Bank Agent, the
VPCC Agent, OPIC, the Project Administrative Agent, the Co-
Collateral Agent, the Collateral Agent or any Bank may reasonably
require, each of which shall be in form and substance reasonably
satisfactory to the Bank Agent, the VPCC Agent, OPIC, the Project
Administrative Agent, the Banks, the Collateral Agent and the Co-
Collateral Agent and shall be dated the Effective Date.
(d) Organizational Documents; Proceedings.
(i)The Bank Agent, the VPCC Agent, OPIC, the Project
Administrative Agent, VPCC and the Banks shall have received a
certificate, dated the Effective Date, signed by a Financial
Officer of the Partnership, and attested to by the Secretary or any
Assistant Secretary of the Managing General Partner, in form and
substance satisfactory to the Bank Agent, the VPCC Agent and OPIC,
together with copies of the Partnership Agreement and other
organizational documents of the Partnership and resolutions of the
Board of Directors of the Managing General Partner reasonably
requested by the Bank Agent, the VPCC Agent or OPIC.
(ii) The Bank Agent, the VPCC Agent, OPIC, the Project
Administrative Agent, VPCC and the Banks shall have received a
certificate, dated the Effective Date, signed by a Financial
Officer of each Obligor (other than PNOC-EDC, the VPCC Manager and
Broad Street) and attested to by the Secretary or any Assistant
Secretary of the Obligor, in form and substance satisfactory to the
Bank Agent, the VPCC Agent and OPIC, together with copies of the
Articles of Incorporation and By-Laws or equivalent organizational
documents of the Obligor and resolutions of the Obligor reasonably
requested by the Bank Agent, the VPCC Agent or OPIC (it being
understood that neither the Bank Agent, the VPCC Agent or OPIC
shall require resolutions of the Construction Contractor or shall
require that the certificate of a Financial Officer of the
Construction Contractor referred to in this clause (ii) be attested
to).
(iii) The Bank Agent, the VPCC Agent, OPIC, the Project
Administrative Agent, VPCC and the Banks shall have received
evidence, in form and substance satisfactory to the Bank Agent, the
VPCC Agent and OPIC, indicating that the Committee (as defined in
the Partnership Agreement) has, in accordance with Section 12 and
Section 14 of the Partnership Agreement, (x) consented to the grant
of a security interest in, and pledge of, the Pledged Interests of
each Partner under Part D of the Omnibus Security Agreement, (y)
consented to the transfer of such Pledged Interests to any designee
of the Collateral Agent in accordance with Part D of the Omnibus
Security Agreement and to the granting to any such designee of the
right to become a substituted partner in the Partnership and (z)
been authorized by the Partners to admit as a general partner to
the Partnership any designee of the Collateral Agent in accordance
with Part D of the Omnibus
Security Agreement.
(iv) Arrangements satisfactory to the Bank Agent, the
VPCC Agent and OPIC shall have been made for the appointment of
Coopers & Lybrand or such other firm of independent public
accountants acceptable to the Required Project Secured Parties, as
Auditors.
(v) The Bank Agent, the VPCC Agent, OPIC, the Project
Administrative Agent and the Banks shall have received a
certificate, dated the Effective Date, signed by a Financial
Officer of VPCC, and attested to by the Secretary or any Assistant
Secretary of VPCC, in form and substance satisfactory to the Bank
Agent, the VPCC Agent and OPIC, together with copies of the
Articles of Incorporation and By-Laws of VPCC and resolutions of
the Board of Directors of VPCC reasonably requested by the Bank
Agent, the VPCC Agent or OPIC.
(vi) The Bank Agent, the VPCC Agent, OPIC, the Project
Administrative Agent and the Banks shall have received a
certificate, signed by an officer of PNOC-EDC, to the effect that
(i) PNOC-EDC is a corporation duly formed and validly existing
under the laws of the Republic, (ii) PNOC-EDC has the power and
authority to execute, deliver and perform its obligations under the
Energy Conversion Agreement, (iii) the Energy Conversion Agreement
has been duly authorized, executed and delivered by PNOC-EDC and
(iv) PNOC-EDC has no knowledge of any default, breach or
abandonment by the Partnership in any respect in the performance of
any provision of the Energy Conversion Agreement (including under
Section 15.4.1 thereof and any violation of the definition of
"Operator Philippines" contained therein).
(e) Auditors. The Bank Agent, the VPCC Agent and OPIC
shall have received a copy of the authorization to the Auditors
referred to in Section 4.2(b).
(f) ECA Construction Performance Bond. The Partnership
shall have caused the Construction Contractor and Magma to
establish, as co-principal obligors, the ECA Construction
Performance Bond in favor of PNOC-EDC.
(g) Consent Letters. The Bank Agent, the VPCC Agent and
OPIC shall have received a letter, in form and substance
satisfactory to each of them, from The Prentice-Hall Corporation
Systems Inc., presently located at 15 Columbus Circle, New York,
New York 10023, indicating (i) the consent of The Prentice-Hall
Corporation Systems, Inc. to its appointment by the Partnership,
Magma, Magma Netherlands, TPII and VPCC as their agent to receive
service of process as specified in Section 6.5(b) hereof and in the
Collateral Agency Agreement, in the case of the Partnership, in the
Equity Funding Agreement, the Project Completion Agreement, the
Political Risk Agreement and the VPCC Stock Pledge Agreement, in
the case of Magma, in the Equity Funding Agreement and the Omnibus
Security Agreement, in the case of Magma Netherlands and TPII, and
in Section 6.5(b) hereof and in the VPCC Assignment and Security
Agreement, in the case of VPCC, and (ii) the receipt by the
Prentice-Hall Corporation Systems Inc. of payment of all agency
fees payable to it by the Partnership, Magma, Magma Netherlands,
TPII and VPCC for the period commencing on the Effective Date and
ending on September 15, 2005. OPIC shall have received a letter,
in form and substance satisfactory to it, from the Prentice-Hall
Corporation Systems Inc., presently located at 1090 Vermont Avenue,
N.W., Washington, D.C. 20005, indicating (i) the consent of the
Prentice-Hall Corporation Systems Inc. to its appointment by the
Partnership and Magma as their agent to receive service of process
in accordance with Section 7.03(b) of the OPIC Finance Agreement
and Section 9.06 of the OPIC Participation and Guaranty Agreement,
in the case of the Partnership, and in accordance with the Project
Completion Agreement, in the case of Magma, and (ii) the receipt by
the Prentice-Hall Corporation Systems Inc. of payment of all agency
fees payable to it by the Partnership and Magma for the period
commencing on the Effective Date and ending on September 15, 2005.
(h) Energy Conversion Agreement Effectiveness. In the
PNOC-EDC Consent Agreement, PNOC-EDC shall have represented that
the Effectivity Date (as defined in the Energy Conversion
Agreement) has occurred. In addition, the Partnership shall have
issued to the Bank Agent, the VPCC Agent, OPIC, the Project
Administrative Agent and the Banks a certification confirming that
the Effectivity Date (as defined in the Energy Conversion
Agreement) has occurred.
(i) Certificates. The Bank Agent, the VPCC Agent, OPIC,
the Project Administrative Agent and the Banks shall have received
copies of each executed Project Document, together with (i) a
certificate of a Financial Officer of the Partnership certifying
that (x) neither the Partnership nor any Obligor which is an
Affiliate of the Partnership is in default in the performance,
observance or fulfillment of any of its obligations, covenants or
conditions contained therein and, to the best of the Partnership's
knowledge, no other party to any such Project Document is in
default in any material respect in the performance, observance or
fulfillment of any of its obligations, covenants or conditions
contained therein and (y) in the case of each such document to
which any of the Bank Agent, the VPCC Agent, the Project
Administrative Agent or OPIC is not a party, (A) that such document
is in full force and effect, (B) that, to the best of the
Partnership's knowledge, no force majeure has occurred thereunder
and that (C) the copy thereof delivered to the Bank Agent, the VPCC
Agent, the Project Administrative Agent, OPIC and the Banks is
true, correct and complete and (ii) a certificate of a Financial
Officer of VPCC certifying that (x) neither VPCC nor the VPCC
Manager nor Broad Street is in default in the performance,
observance or fulfillment of any of its obligations, covenants or
conditions contained in any Project Document to which VPCC, the
VPCC Manager or Broad Street, as the case may be, is a party and
(y) in the case of each such document to which any of the Bank
Agent, the VPCC Agent, the Project Administrative Agent or OPIC is
not a party and to which VPCC, the VPCC Manager or Broad Street is
a party, (A) that such document is in full force and effect, (B)
that, to the best of VPCC's knowledge, no force majeure has
occurred thereunder and that (C) the copy thereof delivered to the
Bank Agent, the VPCC Agent, the Project Administrative Agent, OPIC
and the Banks is true, correct and complete. The Bank Agent, the
VPCC Loan Agent and OPIC shall have received evidence or copies of
all Governmental Approvals set forth in Schedule 2.12 hereof (other
than those set forth in Part B of Part 1 thereof), certified by (i)
in the case of all Governmental Approvals set forth in Part A of
Part 1 of Schedule 2.12, a Financial Officer of the
Partnership as being in full force and not subject to appeal and
(ii) in the case of all Governmental Approvals set forth in Part 2
of Schedule 2.12, a Financial Officer of VPCC as being in full
force and not subject to appeal.
(j) Construction Budget; Base Case Forecast. The Bank
Agent, the VPCC Agent, OPIC, the Project Administrative Agent and
each Bank shall have received the Construction Budget and the Base
Case Forecast, each of which shall be in form and substance
satisfactory to the Bank Agent, the VPCC Agent, OPIC, the
Administrative Agent, the Banks and the Independent Engineer.
(k) Reports of Consultants. The Bank Agent, the VPCC
Agent, OPIC, the Project Administrative Agent and each Bank shall
have received the Independent Engineer's Report. The Bank Agent,
the VPCC Agent and each Bank shall also have received the
Environmental Consultant's Permitting Report and the Environmental
Consultant's Site Assessment, each of which shall be in form and
substance reasonably satisfactory to the Bank Agent, the VPCC Agent
and each Bank and shall either (i) be addressed to the Bank Agent,
the VPCC Agent and each Bank or (ii) be accompanied by a letter
addressed to each Person described in the immediately preceding
clause (i), which letter shall be in form and substance reasonably
satisfactory to such Persons, to the effect that each such Person
shall be entitled to rely on such report and assessment to the same
extent as if the same had been addressed to such Person on the date
thereof.
(l) Financial Statements. The Bank Agent, the VPCC
Agent, OPIC, the Project Administrative Agent and each Bank shall
have received copies of the most recent audited financial
statements of Magma and the Construction Contractor and of the most
recent unaudited financial statements of the Partnership, VPCC,
Magma Netherlands and TPII, in each case showing, for each such
Person, no material adverse change in the financial condition of
such Person since the date of the last financial statements
provided to the Bank Agent, the VPCC Agent, the Project
Administrative Agent and OPIC prior to the date of this Agreement,
(i) certificates dated the Effective Date and signed by a Financial
Officer of each such Person (other than the Construction
Contractor) stating that (x) such financial statements of such
Person are true, complete and correct and (y) no material adverse
change in the financial condition, operations, properties, business
or prospects of such Person has occurred since the date of such
financial statements and (ii) a certificate dated the Effective
Date and signed by a Financial Officer of the Construction
Contractor stating that no material adverse change in the financial
condition, operations, properties, business or prospects of the
Construction Contractor has occurred since the date of such
financial statements of the Construction Contractor that could have
a material adverse effect on the Construction Contractor's ability
to perform its obligations under the Construction Contract.
(m) Evidence of Authority. The Bank Agent, the VPCC
Agent, the Project Administrative Agent and OPIC shall have
received evidence, reasonably satisfactory to the Bank Agent, the
VPCC Agent, the Project Administrative Agent and OPIC (i) of the
authority of the Partnership to enter into this Agreement, the
Project Credit Agreement, the OPIC Finance Agreement and the other
documents required by this Agreement to be entered into by the
Partnership as of the Effective Date, (ii) of the authority of VPCC
to enter into this Agreement, the Bank Credit Agreement and the
other documents required by this Agreement to be entered into by
VPCC as of the Effective Date, (iii) of the names, specimen
signatures and authority of the Persons signing, on behalf of the
Partnership, this Agreement, the Project Credit Agreement, the
Project Construction Note, the OPIC Finance Agreement, the OPIC
Construction Note and the other documents required by this
Agreement to be entered into by the Partnership as of the Effective
Date, and who, as of the Effective Date, will act as
representatives of the Partnership in the operation of the credit
facilities provided under the Project Credit Agreement and the OPIC
Finance Agreement and (iv) of the names, specimen signatures and
authority of the Persons signing, on behalf of VPCC, this
Agreement, the Bank Credit Agreement, the Bank Construction Notes,
the Project Credit Agreement and the other documents required by
this Agreement to be entered into by VPCC as of the Effective Date,
and who, as of the Effective Date, will act as representatives of
VPCC in the operation of the credit facilities provided under the
Bank Credit Agreement.
(n) No Violation of Law, etc. No Applicable Law,
regulation, ruling, guideline or other governmental action or
inaction of any Governmental Authority shall be in effect or shall
have occurred or be proposed, the effect of which is to prevent,
directly or indirectly, the Bank Agent, the VPCC Agent, the Project
Administrative Agent, OPIC, any Bank, the Partnership, VPCC or any
other party to any Project Document from fulfilling their
respective obligations hereunder or under any other Project
Document, where, in the reasonable judgment of the Bank Agent, the
VPCC Agent or OPIC, the failure to fulfill such obligations would
have a Material Adverse Effect, or which would subject any Project
Secured Party or any Bank Financing Secured Party to any
unreimbursed liability by reason of the performance of its
obligations hereunder or under any other Project Document (other
than taxes levied on the income of such Project Secured Party or
such Bank Financing Secured Party which do not constitute Republic
Taxes) or make it illegal for any Project Secured Party or any Bank
Financing Secured Party to perform its obligations under the
Financing Documents. In addition, the Project, the Partnership,
VPCC, each Partner and Magma shall each be in compliance in all
material respects with all Applicable Laws.
(o) No Legal Proceedings. There shall be no (i)
injunction, writ, preliminary restraining order or any order of any
nature issued by an arbitrator, court or other Governmental
Authority directing that the transactions provided for herein or in
any of the other Project Documents not be consummated as herein or
therein provided or (ii) action, suit, litigation, investigation or
proceeding of or before any arbitrator, court, administrative
agency or other Governmental Authority pending or threatened
against or affecting any party to any Project Document, or any of
their properties, revenues or assets, or with respect to this
Agreement or the other Project Documents or any of the transactions
contemplated hereby or thereby or with respect to the Plant or the
Site which, in the instance of clause (i) or (ii) above, in the
reasonable opinion of the Bank Agent, the VPCC Agent or OPIC has
had or is reasonably likely to have a Material Adverse Effect.
(p) Interest Rate Hedging Instruments. VPCC shall have
entered into one or more interest rate cap agreements providing
interest rate hedging protection to VPCC with respect to not less
than 100% of the Total Bank Commitment, the form and substance of
which agreements shall have been approved by the Bank Agent, the
VPCC Agent and OPIC, which approvals shall not be unreasonably
withheld.
(q) Notice to Proceed and Construction Contractor's
Representation. The Partnership shall have delivered to the Bank
Agent, the VPCC Agent, the Project Administrative Agent and OPIC a
copy of the Final Notice to Proceed (as defined in the Construction
Contract) with respect to Unit 1 and the Final Notice to Proceed
(as so defined) with respect to Phase 2 (as defined in the
Construction Contract), each of which shall have been issued on or
prior to the Effective Date. The Bank Agent, the VPCC Agent, OPIC,
the Project Administrative Agent and each Bank shall have received
a certification of the Construction Contractor, contained in the
Construction Contractor Consent Agreement, to the effect that (i)
as of the date of the Construction Contractor Consent Agreement,
the First Unit Performance Test Completion Deadline (as defined in
the Construction Contract) is June 1, 1996, (ii) as of the date of
the Construction Contractor Consent Agreement, each of the Second
Unit Performance Test Completion Deadline and the Third Unit
Performance Test Completion Deadline (each of such terms as defined
in the Construction Contract) is June 1, 1997, (iii) the
Construction Contractor has no knowledge of any default by the
Partnership in any respect in the performance of any provision of
the Construction Contract, (iv) the Construction Contractor is not
entitled to any Change Orders under the Construction Contract
(other than any Change Orders previously disclosed to the Bank
Agent, the VPCC Agent, the Project Administrative Agent and OPIC in
writing as of the date of the Construction Contractor Consent
Agreement) and is not as of the date of the Construction Contractor
Consent Agreement aware of any other Change Orders required under
the Construction Contract (however, the Construction Contractor and
the Partnership are currently discussing amendments to the Work
Scope (as defined in the Construction Contract) which may result in
the deletion from the Work Scope of the requirement for, or
modifications of the specifications of, the hydrogen sulfide
abatement system and/or the addition of the Malitbog 230-kv
switchyard to the Work Scope) and (v) to the Construction
Contractor's knowledge, no event of Force Majeure (as defined in
the Construction Contract) has occurred.
(r) No Default; Representations and Warranties.
(i) No Default or Event of Default shall have
occurred and be continuing.
(ii) All representations and warranties made by the
Partnership, VPCC and any Obligor which is an Affiliate of the
Partnership or VPCC and contained herein or in the other Project
Documents shall be true and correct in all material respects with
the same effect as though such representations and warranties had
been made on and as of the Effective Date, except where expressed
to be made only as of an earlier date.
(s) Security. The Project Security, in form and
substance satisfactory to the Bank Agent, the VPCC Agent and OPIC,
shall have been duly created, perfected and, where appropriate,
registered, to create a first priority security interest and charge
over the Project Collateral in existence at the Effective Date, and
the Bank Financing Security, in form and substance satisfactory to
the Bank Agent, shall have been duly created, perfected and, where
appropriate, registered, to create a first priority security
interest and charge over the Bank Financing Collateral. Without
limitation to the preceding sentence, the Partnership, VPCC, Broad
Street, Magma Netherlands and TPII, as the case may be, shall have
duly authorized, executed and delivered or, as the case may be,
provided:
(i) acknowledgment copies of proper financing
statements or other instruments duly filed under the Applicable Law
of each jurisdiction as (A) may be necessary or, in the reasonable
opinion of the Bank Agent, the VPCC Agent or OPIC, desirable to
perfect the charges and security interests purported to be created
by the Project Security Documents and (B) may be necessary or, in
the reasonable opinion of the Bank Agent, desirable to perfect the
charges and security interests purported to be created by the Bank
Financing Security Documents;
(ii) certified copies of requests for information or
copies, or equivalent reports, listing the financing statements and
instruments referred to in clause (i) above and all other
effective financing statements that name the Partnership, VPCC,
Broad Street, Magma Netherlands and TPII, as the case may be, as
debtor and that are filed in the jurisdictions referred to in said
clause (i), together with copies of such other financing statements
and instruments (none of which shall cover the Project Collateral
except to the extent evidencing Permitted Liens and none of which
shall cover the Bank Financing Collateral except to the extent
evidencing Liens created pursuant to the Bank Financing Security
Documents);
(iii) evidence of (A) the completion of all other
recordings and filings of, or with respect to, the Bank Financing
Security Documents as may be necessary or, in the reasonable
opinion of the Bank Agent, desirable to perfect the security
interests purported to be created by the Bank Financing Security
Documents and (B) the completion of all other recordings and
filings of, or with respect to, the Project Security Documents as
may be necessary or, in the reasonable opinion of the Bank Agent,
the VPCC Agent or OPIC, desirable to perfect the security
interests purported to be created by the Project Security
Documents; and
(iv) evidence that (A) all other actions necessary or,
in the reasonable opinion of the Bank Agent, desirable to perfect
and protect the security interests purported to be created by the
Bank Financing Security Documents have been taken and (B) all other
actions necessary or, in the reasonable opinion of the Bank Agent,
the VPCC Agent or OPIC, desirable to perfect and protect the
security interests purported to be created by the Project Security
Documents have been taken.
(t) Consents and Approvals. There shall have been
obtained, or there shall have been made arrangements, reasonably
satisfactory to the Bank Agent, the VPCC Agent and OPIC, for
obtaining, in addition to the Project Documents, all other
governmental, corporate, creditors', shareholders' and other
necessary licenses, approvals or consents (other than any board or
other internal approval or consents to be obtained by any Bank or
OPIC from the management or shareholders of its respective
institution or any approval which a Bank or OPIC is required by the
laws or applicable regulations of its domicile to obtain prior to
the making of a Bank Construction Loan or an OPIC Disbursement, as
the case may be) for: (i) the financing by each of the Banks under
the Bank Credit Agreement, the financing by VPCC under the Project
Credit Agreement and the financing by OPIC under the OPIC Finance
Agreement; (ii) the carrying on of the respective business of the
Partnership and VPCC as it is presently carried on and is
contemplated to be carried on; (iii) the carrying out of the
Project; (iv) the due execution and delivery of, and performance
under, each Project Document which has been entered into at the
Effective Date, the Project Security, the Bank Financing Security,
and any documents in implementation of any thereof; and (v) the
remittance to the Collateral Agent and by the Collateral Agent to
the Project Secured Parties or their respective assignees, in
Dollars, of all monies payable pursuant to each Project Document
which has been entered into at the Effective Date, and any
documents in implementation of any thereof. In addition, a true
and complete copy of each material license, approval or consent
described in this Section 3.1(t) shall have been delivered by the
Partnership to the Bank Agent, the VPCC Agent and OPIC.
(u) Force Majeure. No event of "Force Majeure" (as
defined in either of the Energy Conversion Agreement or the
Construction Contract) or "Political FM" (as defined in the Energy
Conversion Agreement) shall have occurred which has had, or in the
reasonable judgment of the Bank Agent, the VPCC Agent or OPIC is
reasonably likely to have, a Material Adverse Effect. No events
shall have occurred pursuant to which a claim could be made by VPCC
under the OPIC Lenders Insurance Contract or pursuant to which a
claim could be made by Magma or Magma Netherlands under the OPIC
Equity Insurance Contract.
(v) Energy Conversion Agreement. The Bank Agent, the
VPCC Agent and OPIC shall have received from the Partnership a
certification, in form and substance satisfactory to the Bank
Agent, the VPCC Agent and OPIC, signed by an authorized
representative of the Partnership and expressed to be effective as
of the Effective Date, stating that the Partnership is in
compliance in all material respects with all provisions of the
Energy Conversion Agreement.
(w) No Material Adverse Effect. No event or events
shall have occurred which, in the reasonable judgment of the Bank
Agent, the VPCC Agent or OPIC, has had or is reasonably likely to
have a Material Adverse Effect.
(x) Costs; Construction Progress. The Bank Agent, the
VPCC Agent, the Project Administrative Agent and OPIC shall be
satisfied (and the Independent Engineer shall have delivered a
certificate to the Bank Agent, the VPCC Agent, the Project
Administrative Agent and OPIC stating that it is satisfied) that
(i) all the Project Costs to be paid or incurred through the
Conversion Date are not likely to exceed $280,000,000; (ii) Final
Completion with respect to Unit 2 and Unit 3 is likely to occur by
the Deadline Date; (iii) the Commercial Operation Date for Unit 1
is likely to occur by the Guaranteed Completion Date for Unit 1;
(iv) the Commercial Operation Date for Unit 2 is likely to occur by
the Guaranteed Completion Date for Unit 2; and (v) the Commercial
Operation Date for Unit 3 is likely to occur by the Guaranteed
Completion Date for Unit 3.
(y) Fees and Expenses. Each of the Partnership and VPCC
shall have paid or arranged for payment of all fees, expenses and
other charges then payable by it under the Financing Documents and
the Partnership shall have paid or arranged for payment of all fees
then payable by it under the Credit Suisse Fee Letter Agreement.
(z) Certificates of Partnership Interests and VPCC
Stock; Project Construction Note. Magma Netherlands and TPII shall
have delivered to the Collateral Agent, as pledgee, certificates
evidencing all of the respective partnership interests of Magma
Netherlands and TPII in the Partnership, together with undated and
duly executed instruments of transfer, Broad Street shall have
delivered to the Bank Agent, as pledgee, certificates representing
all of the outstanding capital stock of VPCC, together with duly
executed and undated stock powers, and VPCC shall have delivered to
the Bank Agent, as pledgee, the Project Construction Note, together
with a duly executed instrument of transfer.
(aa) Confirmation of Operative Date Occurrence. The
VPCC Agent, VPCC and the Bank Agent shall have received written
confirmation from OPIC that the "operative date" referred to in the
OPIC Lenders Insurance Contract has occurred.
(bb) Governmental Approval Schedule. The Partnership
and PNOC-EDC shall have agreed to the schedule for submission of
permit applications and issuance of permits referred to in
subparagraph (u) of the PNOC-EDC Consent Agreement and the Bank
Agent, the VPCC Agent, the Project Administrative Agent and OPIC
shall have received evidence of such agreement in form and
substance reasonably satisfactory to the Bank Agent, the VPCC Agent
and OPIC.
(cc) VPCC Authority to Do Business. The Bank Agent, the
VPCC Agent, the Project Administrative Agent and OPIC shall have
received a good standing certificate issued by the New York
Department of State certifying that VPCC is authorized to
transact business in the State of New York as a foreign
corporation and is in good standing under the laws of the State of
New York.
(dd) OPIC Funding Documents. OPIC shall have received
duly executed copies of the OPIC Funding Documents in form and
substance satisfactory to OPIC.
(ee) Certificates. The Partnership and VPCC shall each
have delivered to the Bank Agent, the VPCC Agent, the
Project Administrative Agent and OPIC a certification, signed by a
Financial Officer of the Partnership or VPCC, as the case may be,
and expressed to be effective as of the Effective Date with respect
to the satisfaction of the foregoing conditions of this Section
3.1.
Section 3.2 Conditions of First Utilization. The
initial Utilization, whether it be the making of a Project
Construction Loan, a Bank Construction Loan or an OPIC
Disbursement, shall be subject to the satisfaction of the
following conditions on or prior to the date of such initial
Utilization (such date, the "Credit Date"):
(a) Equity Contributions; Debt Service Reserve LC.
Magma shall have caused (i) the Partners to make cash equity
contributions to the Partnership in an aggregate amount equal to
the Funding Amount and (ii) the Debt Service Reserve LC to be
issued to the Collateral Agent.
(b) Confirmation of Conditions to Effectivity. Each
condition precedent set forth in Section 3.1 hereof that was
fulfilled on the Effective Date shall be fulfilled on and as of the
Credit Date and the Bank Agent, the VPCC Agent and OPIC shall have
received such evidence as they deem necessary to confirm the same
including, without limitation, (i) a confirmation from (x) the
Independent Engineer that the conclusions in the Independent
Engineer's Report issued by it and described in Section 3.1(k)
hereof are reaffirmed as of the Credit Date and (y) the
Environmental Consultant that the conclusions in the
Environmental Consultant's Permitting Report and the
Environmental Consultant's Site Assessment issued by it and
described in Section 3.1(k) hereof are reaffirmed as of the Credit
Date, (ii) signed bring-downs, dated the Credit Date, of the
opinions of counsel delivered on the Effective Date pursuant to
Section 3.1(c) hereof (it being understood and agreed that no
bring-downs of the opinions of counsel to PNOC-EDC, the Republic
and the Construction Contractor shall be required), (iii) a signed
bring-down, dated the Credit Date, of the certification of the
Construction Contractor described in the last sentence of Section
3.1(q) hereof and (iv) a signed bring-down, dated the Credit Date,
of the certificate of a Financial Officer of the Partnership and of
the certificate of a Financial Officer of VPCC, in each case
delivered on the Effective Date pursuant to Section 3.1(i) hereof.
(c) Cut-through Endorsements. The Insurance
Commission of the Republic shall have approved all cut-through
endorsements contained in any insurance policy required to be in
effect on the Credit Date, and the Bank Agent, the VPCC Agent and
OPIC shall have received evidence, in form and substance
reasonably satisfactory to each of them, of such approvals.
(d) Board of Investments Approval. The Partnership
shall have obtained an amendment to the Board of Investments
Approval, in form and substance reasonably satisfactory to the Bank
Agent, the VPCC Agent and OPIC, providing (i) that the Partnership
shall commence operation of the Plant in October 1996, (ii) that
the Partnership's six-year income tax holiday shall commence on the
later to occur of July 1996 and the actual date of commencement of
commercial operation of Unit 1, (iii) permission for the
Partnership to make investments in accordance with the Financing
Documents and to make loans to its Affiliates and (iv) permission
for the pledge of the partnership interests in the Partnership
pursuant to Part D of the Omnibus Security Agreement and the
transfer of such partnership interests upon the exercise of
remedies in accordance with Part D of the Omnibus Security
Agreement.
(e) ECA Construction Performance Bond. The
Partnership shall have delivered to the Bank Agent, the VPCC Agent
and OPIC evidence, in the form of the certificate attached hereto
as Exhibit E, of PNOC-EDC's acceptance of the ECA
Construction Performance Bond.
(f) Additional Conditions. The requirements of Section
3.3 hereof shall have been satisfied.
Section 3.3 Conditions of Each Utilization. Each
Utilization shall be subject to the satisfaction of the following
conditions:
(a) No Default; Representations and Warranties.
Immediately before and after giving effect to such Utilization:
(i) no Default or Event of Default shall have
occurred and be continuing;
(ii)all representations and warranties made by the Partnership,
VPCC and any Obligor which is an Affiliate of the Partnership or
VPCC and contained herein (other than the representations made
pursuant to Section 2.8(b) and Section 2A.8(b) hereof) or in the
other Project Documents shall be true and correct in all material
respects with the same effect as though such representations and
warranties had been made on and as of the date of such
Utilization, except where expressed to be made only as of an
earlier date (it being understood that the representations and
warranties made by the Partnership in Section 2 of this Agreement
and the representations and warranties made by VPCC in Section 2A
of this Agreement shall not be deemed to be made only as of an
earlier date notwithstanding that the preamble to each such Section
states that such representations and warranties are made as of the
Effective Date);
(iii) the following representations and warranties
shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made
on and as of the date of such Utilization: (A) except as fully
reflected in each financial statement delivered prior to such
Utilization pursuant to Sections 4.1(a) and 4.1(b), there has been,
as of the date of such financial statement, no liabilities or
obligations with respect to the Partnership of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in the aggregate,
exceed $1 million (or the equivalent in other currency) and (B) the
Partnership does not know of any reasonable basis for the assertion
against the Partnership of any liability or obligation of any
nature whatsoever that is not fully reflected in the financial
statements delivered pursuant to Sections 4.1(a) and 4.1(b) which,
either individually or in the aggregate, exceed $1 million (or the
equivalent in other
currency); and
(iv) the following representations and warranties
shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made
on and as of the date of such Utilization: (A) except as fully
reflected in each financial statement delivered prior to such
Utilization pursuant to Sections 4A.1(a) and 4A.1(b), there has
been, as of the date of such financial statement, no
liabilities or obligations with respect to VPCC of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due) and (B) VPCC does not know of any
reasonable basis for the assertion against VPCC of any liability or
obligation of any nature whatsoever that is not fully
reflected in the financial statements delivered pursuant to
Sections 4A.1(a) and 4A.1(b).
(b) Security. The Project Security, in form and
substance satisfactory to the Project Administrative Agent, shall
have been duly created, perfected and, where appropriate,
registered, to create a first priority security interest and charge
over the Project Collateral in existence at the date of such
Utilization, and the Bank Financing Security, in form and substance
satisfactory to the Bank Agent, shall have been duly created,
perfected and, where appropriate, registered, to create a first
priority security interest and charge over the Bank Financing
Collateral. Without limitation to the preceding sentence, the
Partnership, VPCC, Broad Street, Magma Netherlands and TPII, as the
case may be, shall have duly authorized, executed and delivered or,
as the case may be, provided:
(i) acknowledgment copies of proper financing
statements or other instruments duly filed under the Applicable Law
of each jurisdiction as (A) may be necessary or, in the reasonable
opinion of the Project Administrative Agent, desirable to perfect
the charges and security interests purported to be created by the
Project Security Documents and (B) may be necessary or, in the
reasonable opinion of the Bank Agent, desirable to perfect the
charges and security interests purported to be created by the Bank
Financing Security Documents;
(ii) certified copies of requests for information or
copies, or equivalent reports, listing the financing statements and
instruments referred to in clause (i) above and all other effective
financing statements that name the Partnership, VPCC, Broad Street,
Magma Netherlands and TPII, as the case may be, as debtor and that
are filed in the jurisdictions referred to in said clause (i),
together with copies of such other financing statements and
instruments (none of which shall cover the Project Collateral
except to the extent evidencing Permitted Liens and none of which
shall cover the Bank Financing Collateral except to the extent
evidencing Liens created pursuant to the Bank
Financing Security Documents);
(iii) evidence of (A) the completion of all other
recordings and filings of, or with respect to, the Bank Financing
Security Documents as may be necessary or, in the reasonable
opinion of the Bank Agent, desirable to perfect the security
interests purported to be created by the Bank Financing Security
Documents and (B) the completion of all other recordings and
filings of, or with respect to, the Project Security Documents as
may be necessary or, in the reasonable opinion of the Project
Administrative Agent, desirable to perfect the security interests
purported to be created by the Project Security Documents;
(iv) evidence, in form and substance reasonably
satisfactory to each of the Bank Agent, the VPCC Agent, the Project
Administrative Agent and OPIC, of the execution, delivery and
registration of each Mortgage Supplement (as defined in Section
1.01 of Part B of the Omnibus Security Agreement)
required to have been executed, delivered and registered at the
time of such Utilization in accordance with Sections 3.03(b),
4.03(b) and 5.01 of Part B of the Omnibus Security Agreement (it
being understood that if the Project Administrative Agent shall not
have received written notice from OPIC, on or before the date which
is six (6) Business Days after the OPIC Confirmed Receipt Date with
respect to the Application for Funding of which such Utilization is
the subject, stating that in OPIC's judgment the conditions set
forth in this clause (iv) have not been satisfied, then without
prejudice to the rights of the Bank Agent, the VPCC Agent and the
Project Administrative Agent under this clause (iv) to make their
own respective determinations as to the
satisfaction of the conditions set forth in this clause (iv), OPIC
shall be deemed to have determined that such conditions have been
satisfied); and
(v)evidence that (A) all other actions necessary or, in the
reasonable opinion of the Bank Agent, desirable to perfect and
protect the security interests purported to be created by the Bank
Financing Security Documents have been taken and (B) all other
actions necessary or, in the reasonable opinion of the Bank Agent,
OPIC or the Project Administrative Agent, desirable to perfect and
protect the
security interests purported to be created by the Project
Security Documents have been taken.
(c) Consents and Approvals. There shall have been
obtained, or there shall have been made arrangements, reasonably
satisfactory to the Bank Agent, the VPCC Agent, the Project
Administrative Agent and OPIC, for obtaining, in addition to the
Project Documents, all other governmental, corporate, creditors',
shareholders' and other necessary licenses, approvals or consents
(other than any board or other internal approval or consents to be
obtained by any Bank or OPIC from the management or shareholders of
its respective institution or any approval which a Bank or OPIC is
required by the laws or applicable regulations of its domicile to
obtain prior to the making of a Bank Construction Loan or an OPIC
Disbursement, as the case may be) for: (i) the financing by each
of the Banks under the Bank Credit Agreement, the financing by VPCC
under the Project Credit Agreement and the financing by OPIC under
the OPIC Finance Agreement; (ii) the carrying on of the respective
business of the Partnership and VPCC as it is presently carried on
and is contemplated to be carried on; (iii) the carrying out of the
Project; (iv) the due execution and delivery of, and performance
under, each Project Document which has been entered into at the
time of such Utilization, the Project Security, the Bank
Financing Security and any documents in implementation of any
thereof; and (v) the remittance to the Collateral Agent and by the
Collateral Agent to the Project Secured Parties or their respective
assignees, in Dollars, of all monies payable pursuant to each
Project Document which has been entered into at the time of such
Utilization, and any documents in implementation of any thereof.
In addition, a true and complete copy of each material license,
approval or consent described in this Section 3.3(c) shall have
been delivered by the Partnership to the Bank Agent, the VPCC Agent
and OPIC.
(d) No Project Document Default; Governmental
Approvals. Each of the Project Documents which has been entered
into or which is required to have been entered into at the time of
such Utilization shall be in full force and effect and no material
breach or default shall have occurred under any such Project
Document. No event of "Force Majeure" (as defined in either of the
Energy Conversion Agreement or the Construction Contract) or
"Political FM" (as defined in the Energy Conversion Agreement)
shall have occurred which has had, or in the
reasonable judgment of the Bank Agent, the VPCC Agent or OPIC is
reasonably likely to have, a Material Adverse Effect. No events
shall have occurred pursuant to which a claim could be made by VPCC
under the OPIC Lenders Insurance Contract or pursuant to which a
claim could be made by Magma or Magma Netherlands under the OPIC
Equity Insurance Contract.
(e) Limitations on Indebtedness; Pro Rata Fundings.
Immediately before and after giving effect to such Utilization, (i)
the Secured Principal Amount Outstanding shall not exceed the
lesser of $210 million or 75% of the Total Funded Amount, (ii) the
aggregate principal amount of the Project Construction Loans
outstanding (excluding any portion of the outstanding principal
amount of the Project Construction Loans allocated to the payment
of "value added taxes" in respect of the Project or import duties
on capital equipment provided under the Construction Contract)
shall not exceed a percentage of the Secured Principal Amount
Outstanding (excluding any portion of the outstanding principal
amount of the Project Construction Loans allocated to the payment
of "value added taxes" in respect of the Project or import duties
on capital equipment provided under the Construction Contract)
equal to the product of (x) the quotient obtained by dividing 135
by 210 times (y) 100, (iii) the aggregate principal amount of the
OPIC Loan outstanding shall not exceed a percentage of the
Secured Principal Amount Outstanding (excluding any portion of the
outstanding principal amount of the Project Construction Loans
allocated to the payment of "value added taxes" in respect of the
Project or import duties on capital equipment provided under the
Construction Contract) equal to the product of (x) the quotient
obtained by dividing 75 by 210 times (y) 100 and (iv) the
respective aggregate principal amounts of the Project
Construction Loans outstanding and the Bank Construction Loans
outstanding shall be equal.
(f) Energy Conversion Agreement. The Bank Agent, the
VPCC Agent and OPIC shall have received from the Partnership the
certification contained in the form of Application for Funding
attached to each of the Bank Credit Agreement, the Project Credit
Agreement and the OPIC Finance Agreement, stating that the
Partnership is in compliance in all material respects with all
provisions of the Energy Conversion Agreement.
(g) No Material Adverse Effect. Since the Effective
Date, no event or events shall have occurred which, in the
reasonable judgment of the Bank Agent, the VPCC Agent or OPIC, has
had or is reasonably likely to have a Material Adverse
Effect.
(h) Costs; Construction Progress. The Bank Agent, the
VPCC Agent, the Project Administrative Agent and OPIC shall be
satisfied that (i) all the Project Costs to be paid or incurred
through the Conversion Date are not likely to exceed
$280,000,000; (ii) Final Completion with respect to Unit 2 and Unit
3 is likely to occur by the Deadline Date; (iii) the
Commercial Operation Date for Unit 1 is likely to occur by the
Guaranteed Completion Date for Unit 1; (iv) the Commercial
Operation Date for Unit 2 is likely to occur by the Guaranteed
Completion Date for Unit 2; and (v) the Commercial Operation Date
for Unit 3 is likely to occur by the Guaranteed Completion Date for
Unit 3 (it being understood that if the Project
Administrative Agent shall not have received a written notice from
OPIC, on or before the date that is five (5) Business Days prior to
the date of the relevant Utilization, stating that OPIC is not so
satisfied, then without prejudice to the rights of the Bank Agent,
the VPCC Agent and the Project Administrative Agent under this
clause (h), OPIC shall be deemed to have acknowledged its
satisfaction as to the matters set forth in subclauses (i) through
(v) of this clause (h)).
(i) Insurance. Unless the Bank Agent, the VPCC Agent
and OPIC shall notify the Partnership otherwise, the Bank Agent,
the VPCC Agent and OPIC shall have received a certificate from the
Insurance Consultant stating that the insurance policies required
pursuant to Section 4.3 hereof to be in effect on the date of such
Utilization are in full force and effect.
(j) Financing Fees and Expenses. Each of the
Partnership and VPCC shall have paid or arranged for payment
(including, to the extent permitted, arrangement for payment out of
Utilizations) of all fees, expenses and other charges then payable
by it under the Financing Documents.
(k) Lien Waivers. The Bank Agent, the VPCC Agent, OPIC
and the Project Administrative Agent shall have received invoices
showing full payment, except for any applicable
retention, of all subcontractors whose subcontract is valued at
$50,000 or more or who can claim a Lien of $50,000 or more for
which a prior Utilization or a prior Required Equity Contribution
has been made who have not been paid directly by the Collateral
Agent or, in lieu thereof, (i) conditional Lien waivers for the
Utilization requested and unconditional Lien releases for all prior
Utilizations and Required Equity Contributions from such
subcontractors or (ii) a certificate executed by the Construction
Contractor to the effect that all such subcontractors have been
paid to the extent that such amounts are then due or that payment
is subject to a good faith contest which is being diligently
pursued by the Construction Contractor; provided, however, that (x)
in any case in which payment of not more than $2 million is subject
to such a contest, such contest is being pursued in a manner and on
a basis acceptable to the Project Administrative Agent and (y) in
any case in which payment of more than $2
million is subject to such a contest, such contest is being pursued
in a manner and on a basis acceptable to each of the Bank Agent,
the VPCC Agent and OPIC.
(l) Application for Funding. The Bank Agent, the VPCC
Agent, the Project Administrative Agent and OPIC shall have
received a fully completed Application for Funding with respect to
such Utilization (including fully completed and executed copies of
Exhibit B thereto and all other exhibits thereto) and shall have
approved the same (it being understood that if the Project
Administrative Agent shall not have received a written notice from
OPIC, on or before the date which is five (5)
Business Days after the OPIC Confirmed Receipt Date with respect to
any fully completed Application for Funding (other than the
Application for Funding with respect to the initial Utilization and
any Application for Funding with respect to an OPIC
Designated Funding), to the effect that OPIC has disapproved such
Application for Funding, then without prejudice to the
independent approval and disapproval rights of the Bank Agent, the
VPCC Agent and the Project Administrative Agent under this clause
(l), OPIC shall be deemed to have acknowledged its
approval of such Application for Funding).
(m) No Violation of Law, etc. No Applicable Law,
regulation, ruling, guideline or other governmental action or
inaction of any Governmental Authority shall be in effect or shall
have occurred or be proposed, the effect of which is, or if enacted
or taken would be, to prevent, directly or indirectly, the Bank
Agent, the VPCC Agent, the Project Administrative Agent, OPIC, any
Bank, the Partnership, VPCC or any other party to any Project
Document from fulfilling their respective obligations hereunder or
under any other Project Document, where, in the reasonable judgment
of the Bank Agent, the VPCC Agent or OPIC, the failure to fulfill
such obligations would have a Material Adverse Effect, or which
would subject any Project Secured Party or any Bank Financing
Secured Party to any unreimbursed liability by reason of the
performance of its obligations hereunder or under any other
Project Document (other than taxes levied on the income of such
Project Secured Party or Bank Financing Secured Party which do not
constitute Republic Taxes) or make it illegal for any Project
Secured Party or any Bank Secured Party to perform its obligations
under the Financing Documents. In addition, the Project, the
Partnership, VPCC, each Partner and Magma shall each be in
compliance in all material respects with all Applicable Laws.
(n) No Legal Proceedings. There shall be no (i)
injunction, writ, preliminary restraining order or any order of any
nature issued by an arbitrator, court or other Governmental
Authority directing that the transactions provided for herein or in
any of the other Project Documents not be consummated as herein or
therein provided or (ii) action, suit, litigation, investigation or
proceeding of or before any arbitrator, court, administrative
agency or other Governmental Authority pending or threatened
against or affecting any party to any Project
Document, or any of their properties, revenues or assets, or with
respect to this Agreement or the other Project Documents or any of
the transactions contemplated hereby or thereby or with
respect to the Plant or the Site which, in the instance of clause
(i) or (ii) above, in the reasonable opinion of the Bank Agent, the
VPCC Agent or OPIC has had or is reasonably likely to have a
Material Adverse Effect.
(o) Other Conditions. The obligation of the Banks, VPCC
and OPIC to make any Utilization shall also be subject to the
conditions that:
(i) the Partnership shall have the partnership
authority to borrow the amount of each Project Construction Loan
and OPIC Disbursement requested to be disbursed and VPCC shall have
the corporate authority to borrow the amount of each Bank
Construction Loan requested to be disbursed;
(ii) after giving effect to such Utilization, the
Partnership shall not be in violation of the Partnership
Agreement or any of its organizational documents, any provision
contained in any document to which the Partnership is a party
(including this Agreement) or by which the Partnership is bound, or
any Applicable Law directly or indirectly limiting or otherwise
restricting the Partnership's borrowing power or authority or its
ability to borrow (including, without limitation, any Applicable
Law (including, without limitation, the Board of Investments
Approval) requiring the maintenance of a debt to equity ratio); and
(iii) the Partnership shall have delivered to the Bank
Agent, the VPCC Agent and OPIC evidence of all partnership and
legal proceedings necessary in the reasonable judgment of the Bank
Agent, the VPCC Agent or OPIC to authorize the transactions
contemplated in this Agreement.
(p) Certificates. Each of the Partnership and VPCC
shall have delivered to the Bank Agent, the VPCC Agent, the Project
Administrative Agent and OPIC a certification, signed by one of its
respective Financial Officers and expressed to be effective as of
the date of the relevant Utilization with respect to the
satisfaction of the foregoing conditions of this Section 3, each of
which certifications shall be substantially in the form of the
appropriate exhibit to the Application for Funding in respect of
such Utilization. Such certification shall also include: (i) such
other evidence as to the proposed utilization of the proceeds of
the relevant Utilization and the utilization of the proceeds of any
prior Utilization as the Bank Agent, the VPCC Agent or OPIC shall
reasonably require; and (ii) if the Bank Agent, the VPCC Agent or
OPIC shall so reasonably request, a legal opinion or opinions, in
form and substance satisfactory to the Bank Agent, the VPCC Agent
and OPIC and, of counsel
acceptable to the Bank Agent, the VPCC Agent and OPIC, with respect
to any matters incident to the Utilization.
Section 3.4 No Waivers. (a) No course of dealing or
waiver by the Bank Agent, the VPCC Agent, the Project
Administrative Agent, OPIC or the Banks in connection with any
condition of Utilization under this Agreement shall impair any
right, power or remedy of the Bank Agent, the VPCC Agent, the
Project Administrative Agent, OPIC or the Banks with respect to any
other condition of Utilization, or be construed to be a waiver
thereof; nor shall the action of the Bank Agent, the VPCC Agent,
the Project Administrative Agent, OPIC or the Banks in respect of
any Utilization affect or impair any right, power or remedy of the
Bank Agent, the VPCC Agent, the Project
Administrative Agent, OPIC or the Banks in respect of any other
Utilization.
(b) Unless otherwise notified to the Partnership by the
Project Administrative Agent and without prejudice to the
generality of subsection (a) above, the right of the Bank Agent,
the VPCC Agent, the Project Administrative Agent, OPIC or the Banks
to require compliance with any condition under this Agreement which
may be waived by the Bank Agent, the VPCC Agent, the Project
Administrative Agent, OPIC or the Banks in respect of any
Utilization is expressly preserved for the purposes of any
subsequent Utilization.
(c) The acceptance of the benefits of any Utilization
shall constitute a representation and warranty by the Partnership
and VPCC to the Bank Agent, the Project Administrative Agent, the
VPCC Agent, OPIC and each of the Banks that all the conditions
specified in this Section 3 have been satisfied (unless waived in
accordance with this Agreement) as of that time. All the
certificates, legal opinions, bylaws, articles of incorporation and
other documents and papers referred to in this Section 3, unless
otherwise specified, shall be delivered to the parties entitled to
receive the same at their addresses specified in Section 6.1 of
this Agreement, or at such other office as any of them may
hereafter designate in writing to the other parties hereto, in
sufficient counterparts for the Bank Agent, the
Project Administrative Agent, the VPCC Agent, OPIC and each of the
Banks, and shall be satisfactory in form and substance to the Bank
Agent, the VPCC Agent and OPIC.
Section 3.5 Conditions Precedent to Conversion. The
occurrence of the conversion of the Project Construction Loans into
the Project Term Loans as contemplated by the Project Credit
Agreement, the occurrence of the conversion of the Bank
Construction Loans into the Bank Term Loans as contemplated by the
Bank Credit Agreement and the conversion of the OPIC
Construction Loan into the OPIC Term Loan as contemplated by the
OPIC Finance Agreement, are subject to the fulfillment of each of
the conditions precedent set forth below on the Conversion Date
(and after giving effect to the transactions to be consummated
hereunder on the Conversion Date):
(a) No Default. No Default or Event of Default shall
have occurred and be continuing and each of VPCC and the
Partnership shall have delivered to the Bank Agent, the VPCC Agent
and OPIC a certificate dated the Conversion Date to such effect.
(b) Correctness and Representations. All
representations and warranties contained in each Project Document
and in any writing delivered to any of the Project Secured
Parties or any of the Bank Financing Secured Parties pursuant
hereto or thereto made by the Partnership, VPCC and each Obligor
which is an Affiliate of the Partnership or VPCC shall be true and
correct in all material respects as of the Conversion Date with the
same effect as though such representations and
warranties had been made on and as of the Conversion Date (other
than those representations and warranties expressly made only as of
an earlier date (it being understood that the representations and
warranties made by the Partnership in Section 2 hereof and by VPCC
in Section 2A hereof shall not be deemed to be made only as of an
earlier date notwithstanding that the preamble to each such Section
states that such representations and warranties are made as of the
Effective Date)), and each of the Partnership and VPCC shall have
delivered to the Bank Agent, the VPCC Agent and OPIC a certificate
to such effect of its Financial Officer
dated the Conversion Date.
(c) Real Estate Mortgage. Section 3.01(d) of Part B of
the Omnibus Security Agreement shall have been modified to specify
the actual principal amount secured by the Real Estate Mortgage (as
defined in Section 1.01 of Part B of the Omnibus Security
Agreement) and any other matters reasonably required to reflect the
conversion.
(d) Project Documents. Each of the Project Documents
shall be in full force and effect and all conditions precedent to
the material unperformed obligations of the parties to the
Project Documents then required to be fulfilled shall have been
fulfilled.
(e) Material Adverse Effect. Since the Effective Date,
no event or events shall have occurred which, in the
reasonable judgment of the Bank Agent, the VPCC Agent or OPIC, has
had or could reasonably be expected to have a Material Adverse
Effect.
(f) Governmental Requirements. The Bank Agent, the VPCC
Agent and OPIC shall have received, in form and substance
reasonably satisfactory to them and the Independent Engineer,
originals (or copies certified by a Financial Officer to be true
copies) or evidence otherwise reasonably satisfactory to the Bank
Agent, the VPCC Agent, OPIC and the Independent Engineer of all
Governmental Approvals referred to in Sections 2.12 and 2A.12
hereof not previously provided to the Bank Agent, the VPCC Agent,
OPIC and the Independent Engineer, other than those Governmental
Approvals referred to in Section 2.12 as to which the Bank Agent,
the VPCC Agent and OPIC shall have received a certificate of a
Financial Officer of the Partnership to the effect that (i) each of
such Governmental Approvals are required solely in connection with
later stages of operation of the Plant and (ii) the Partnership has
no reason to believe that any such Governmental Approval will not
be granted in due course, on or prior to the date required and free
from any condition or requirement compliance with which is
reasonably likely to have a Material Adverse Effect or which the
Partnership does not reasonably expect to be able to satisfy.
(g) Perfected First-Priority Interests. The execution
and delivery of the Project Security Documents and the Bank
Financing Security Documents, the filing of financing statements or
other instruments and any other necessary action on the part of the
Partnership, VPCC, TPII, Magma Netherlands or Broad Street, as the
case may be, shall have created, as security for the Project
Secured Obligations or the Bank Financing Secured Obligations, as
the case may be, valid and perfected first- priority security
interests in and liens on the Project Collateral or the Bank
Financing Collateral, as the case may be, in each case with
priority dating from no later than the Effective Date.
(h) Insurance. The Bank Agent, the VPCC Agent and OPIC
shall have received (i) a certified copy of each of the insurance
policies (or duly issued binders therefor) required by Section 4.3
hereof, such policies to be in form and substance, and issued by
companies, satisfactory to the Required Project Secured Parties,
together with evidence reasonably satisfactory to the Bank Agent,
the VPCC Agent and OPIC that such insurance complies with the
provisions of Section 4.3 hereof and with the provisions of each of
the Project Documents, and that all premiums then due with respect
to such insurance have been paid, and (ii) a written report of the
Insurance Consultant describing the insurance obtained by the
Partnership as of the Conversion Date with respect to the Project
and stating that the insurance required to be obtained as of the
Conversion Date pursuant to the Project Documents is in full force
and effect and provides reasonable and adequate coverage for the
Project.
(i) Completion Certificate. The Independent Engineer
shall have delivered a certificate certifying that:
(i) Final Completion of each of Unit 1, Unit 2 and
Unit 3 has occurred and the Plant has been completed in a good and
workmanlike manner in accordance with good construction and
engineering practices and the requirements and specifications of
the Construction Contract;
(ii) all facilities necessary for the
interconnection of the Plant to the electrical system of NAPOCOR
have been completed and the Plant is fully and properly
interconnected with the electrical system of NAPOCOR and has been
safely placed in commercial operation;
(iii) the Commercial Operation Date for each of Unit 1,
Unit 2 and Unit 3 has occurred;
(iv) no known defective or uncompleted work exists
that can reasonably be expected to materially and adversely affect
the electrical output or steam efficiency of the Facility;
(v) the Plant as constructed complies in all
material respects with all Applicable Laws, and all Governmental
Approvals set forth in Schedule 2.12 hereof that are required for
the operation of the Plant have been obtained and are in full force
and effect, other than those which are required solely in
connection with later stages of operation of the Plant and as to
which the Independent Engineer has no reason to believe will not be
granted in due course, on or prior to the date required and free
from any condition or requirement compliance with which is
reasonably likely to have a Material Adverse Effect or which the
Independent Engineer does not reasonably expect the Partnership to
be able to satisfy; and
(vi) the performance tests conducted pursuant to the
Construction Contract demonstrate that the Plant, as built, is
capable of operating for the full term of the Cooperation Period
(as defined in the Energy Conversion Agreement) at a level which,
after giving effect to the application, in accordance with
Section 3.07(d) of the Disbursement Agreement, of all Buy-Down
Amounts paid by the Construction Contractor, will allow the
financial projections set forth in the Base Case Forecast as in
effect on the Effective Date to be met or exceeded.
(j) Projections and Operating Budget. The Bank Agent,
the VPCC Agent, OPIC and the Independent Engineer shall have
received from the Partnership and approved the current Annual
Budget. In the reasonable judgment of the Bank Agent, the VPCC
Agent and OPIC there shall be no reason to believe that the Base
Case Forecast, as in effect on the Effective Date, if restated to
reflect the Partnership's financial performance and circumstances
since the date of such projections and the Partnership's then-
current financial condition would demonstrate a change in such
financial performance, changed circumstances or financial
condition which constitutes or can reasonably be expected to
constitute a Material Adverse Effect and the Bank Agent, the VPCC
Agent and OPIC shall have received a certificate from the
Independent Engineer to the foregoing effect.
(k) Occurrence of Certain Dates. The Conversion Date
shall be no later than the Deadline Date.
(l) Opinions of Counsel. The Bank Agent, the VPCC
Agent, the Project Administrative Agent, the Banks and OPIC shall
have received opinions, in form and substance reasonably
satisfactory to the Bank Agent, the VPCC Agent and OPIC, of (1)
Sycip Salazar Hernandez & Gatmaitan or other special counsel for
the Partnership satisfactory to the Bank Agent, the VPCC Agent and
OPIC to the effect that the Partnership has obtained all
Governmental Approvals that are then required for operation of the
Plant and as to other matters incident to the transactions
occurring on the Conversion Date as the Bank Agent, the VPCC Agent,
the Project Administrative Agent or OPIC may reasonably request
(including, without limitation, the execution and delivery of the
Project Term Note and the OPIC Term Note) and (ii) United States
counsel to VPCC and the Partnership as to such matters incident to
the transactions occurring on the Conversion Date as the Bank
Agent, the VPCC Agent, the Project Administrative Agent or OPIC may
reasonably request (including, without limitation, the execution
and delivery of the Project Term Note, the Bank Term Notes and the
OPIC Term Note).
(m) Construction Contractor's Liquidated Damages. All
liquidated damages (excluding PNOC-EDC Delay Liquidated Damages (as
defined in Section 20.1 of the Construction Contract)) then
required to be paid pursuant to the Construction Contract shall
have been paid in full by the Construction Contractor to the
Collateral Agent for deposit in the Contingency Account.
(n) Additional Conditions. The requirements set forth
in Sections 3.3(m) and 3.3(n) hereof shall have been satisfied.
(o) Term Notes. The Project Term Note shall have been
duly executed and delivered by the Partnership to VPCC, the OPIC
Term Note shall have been duly executed and delivered by the
Partnership to OPIC and the Bank Term Notes shall have been duly
executed by VPCC and delivered to the appropriate Banks. VPCC
shall have delivered to the Bank Agent, as pledgee, the Project
Term Note, together with a duly executed instrument of transfer.
(p) Other Information. Each of the Partnership and VPCC
shall have used reasonable efforts to provide such other
statements, certificates, opinions, documents and information with
respect to the Plant, the Site or matters contemplated by this
Agreement or the other Financing Documents as the Bank Agent, the
VPCC Agent or OPIC may reasonably request relating to events or
circumstances arising after the Credit Date.
Section 4. Covenants of the Partnership
The Partnership covenants and agrees that until the
Project Termination Date, and unless otherwise waived in writing
by the Required Project Secured Parties:
Section 4.1 Information Covenants. The Partnership
shall furnish to the Bank Agent (in sufficient quantities for each
of the Banks), to the VPCC Agent, to the Project
Administrative Agent and to OPIC:
(a) Quarterly Financial Statements of Partnership. As
soon as available but, in any event, within sixty (60) days after
the close of each of the first three quarterly accounting periods
in each Fiscal Year,
(i) complete unaudited financial statements of the
Partnership as at the end of such quarterly period with related
statements of income and retained earnings and statements of
changes in financial position for such quarterly period and for the
elapsed portion of the Fiscal Year ended with the last day of such
quarterly period, in each case setting forth comparative figures
for the related periods in the prior Fiscal Year, all of which
shall be in form reasonably satisfactory to the Bank Agent, the
VPCC Agent and OPIC and certified as to fairness of
presentation, United States generally accepted accounting
principles and consistency by the chief financial officer of the
Managing General Partner of the Partnership, subject to normal
year-end audit adjustments;
(ii) a report on any event or condition which has had
or which is reasonably likely to have a Material Adverse Effect;
and
(iii) a statement of all financial transactions in such
Quarter between the Partnership and any Affiliate of the
Partnership, including a certification that such transactions were
on ordinary commercial terms negotiated on an arms-length basis.
(b) Annual Financial Statements of Partnership. As soon
as available but, in any event, within one hundred twenty (120)
days after the close of each Fiscal Year, the following, all in
form reasonably satisfactory to the Bank Agent, the VPCC Agent and
OPIC: (i) financial statements of the Partnership as at the end of
such Fiscal Year with the related statements of income and retained
earnings and statements of changes in financial position for such
Fiscal Year, in each case setting forth comparative figures for the
preceding Fiscal Year and certified without material exception by
the Auditors (all such statements being in agreement with the
Partnership's books of account and prepared in accordance with
GAAP), and (ii) a report of the Auditors stating that in the course
of its regular audit of the financial statements of the
Partnership, which audit was conducted in accordance with United
States generally accepted auditing standards, the Auditors obtained
no knowledge of any Default or Event of Default which has occurred
and is continuing or, if in the opinion of the Auditors such a
Default or Event of Default has occurred and is continuing, a
statement as to the nature thereof.
(c) Annual Financial Statements of Magma and Other
Obligors. As soon as available and in any event within one hundred
twenty (120) days after the end of each fiscal year of such Obligor
(other than PNOC-EDC, the Construction Contractor, the VPCC Manager
and Broad Street) and within one hundred eighty (180) days after
the end of each fiscal year of the Construction Contractor, (i) a
balance sheet of such Obligor as of the end of such fiscal year,
and the related statements of income, equity and changes in
financial position or cash flows for such fiscal year setting forth
in each case in comparative form the figures for the previous
fiscal year, and prepared in accordance with GAAP (in the case of
the financial statements of Magma, Magma Netherlands and TPII) and
generally accepted Japanese accounting principles (in the case of
the financial statements of the Construction Contractor), in each
case consistently applied, and with respect to each of the Obligors
to be audited by, and to carry the unqualified report of,
independent certified public accountants of nationally recognized
standing, and (ii) such additional financial information as shall
be reasonably required by the Bank Agent, the VPCC Agent or OPIC
from time to time with respect to the Project; provided, however,
that so long as Magma Netherlands or TPII, as the case may be,
engage in no business other than the holding of their respective
partnership interests in the Partnership, the Partnership shall be
deemed to have complied with its obligations under clause (i) of
this Section 4.1(c) to deliver audited financial statements of such
Person if the Partnership instead furnishes unaudited financial
statements of such Person which have been reviewed by independent
certified public accountants of nationally recognized standing,
together with a certificate of the chief financial officer of such
Person certifying that such Person is engaged in no other business.
(d) Quarterly Financial Statements of Magma and Other
Obligors. As soon as available and in any event within sixty (60)
days after the end of each of the first three fiscal quarters of
each fiscal year of such Obligor (other than PNOC-EDC, the
Construction Contractor, the VPCC Manager and Broad Street), (i) an
unaudited balance sheet of such Obligor as of the end of such
quarter, and the related statements of income, equity and changes
in financial position or cash flows for such quarter and for the
portion of the year ended at the end of such quarter, setting forth
in each case in comparative form the figures for the corresponding
portion of the previous year, all certified (subject to normal
year-end adjustments) as to fairness of presentation, generally
accepted United States accounting principles and consistency by the
chief financial officer, treasurer or chief accounting officer of
such Person, and (ii) such additional financial information as
shall be reasonably required by the Bank Agent, the VPCC Agent or
OPIC from time to time with respect to the Project.
(e) Management Letters. Promptly after the
Partnership's receipt thereof, a copy of any "management letter"
or other similar communication received by the Partnership from the
Auditors in relation to the Partnership's financial,
accounting and other systems, management and accounts.
(f) Annual Operating Budget. As soon as available but,
in any event, within sixty (60) days prior to (i) the
Operation Date of Unit 1 and, thereafter, (ii) the commencement of
each Fiscal Year, an annual cash operating budget (the "Annual
Budget") prepared by the Partnership and accompanied by a
statement of the chief financial officer of the Managing General
Partner of the Partnership to the effect that, to the best of his
or her knowledge, the Annual Budget is a reasonable estimate for
the period covered thereby. The first Annual Budget shall cover
the period from the Operation Date of Unit 1 through the end of the
Fiscal Year in which the Operation Date of Unit 1 occurs and, if
such period consists of less than six (6) months, for the
immediately succeeding Fiscal Year. Each Annual Budget shall
contain complete, fair and accurate estimates (by principal
components) of Delivery Proceeds (with Dollar-denominated and Peso-
denominated Delivery Proceeds stated separately), Operating and
Maintenance Costs (with Dollar-denominated and Peso-denominated
Operating and Maintenance Costs stated separately) and Debt Service
for each Month covered by such Annual Budget based on the
Partnership's best projections at such time. Unless otherwise
consented to by the Bank Agent (or, if a change therein, in the
reasonable judgment of the Bank Agent, has had or is reasonably
likely to have a Material Adverse Effect, the Required Banks), the
VPCC Agent and OPIC, which consents shall not be unreasonably
withheld, the Annual Budget from year to year shall be based on the
same format as the Base Case Forecast and be maintained on the same
basis and provide sufficient detail to permit a meaningful
comparison. The Bank Agent, the VPCC Agent, OPIC and the
Independent Engineer shall have the right to approve (such
approvals not to be unreasonably withheld) each Annual Budget. The
Bank Agent, the VPCC Agent, OPIC and the Independent Engineer will
endeavor to notify the Partnership of their approval or disapproval
of an Annual Budget within thirty (30) days of their receipt
thereof. If the Bank Agent, the VPCC Agent, OPIC and the
Independent Engineer do not approve an Annual Budget, the Project
Administrative Agent shall notify the Partnership of the items
which are disapproved and the reason for such disapproval. Until
such Annual Budget is so approved, the Annual Budget most recently
in effect shall continue to apply, except that any items of the
then proposed Annual Budget that have been approved shall also be
given effect. From time to time, but not more frequently than once
per Quarter, the Partnership may propose amendments to an Annual
Budget, and the Bank Agent, the VPCC Agent, OPIC and the
Independent Engineer may reject such proposal if in their
reasonable judgment such amendment is not reasonably necessary or
advisable for operation of the Project. The Bank Agent, the VPCC
Agent, OPIC and the Independent Engineer will endeavor to notify
the Partnership of their acceptance or rejection of such proposal
within ten (10) Business Days from the date the Partnership submits
such proposal. If in the reasonable judgment of the Bank Agent,
any such amendment proposed by the Partnership has had or is
reasonably likely to have a Material Adverse Effect, the Bank Agent
will so notify the Partnership and promptly provide such proposal
to the Banks and the Required Project Secured Parties may reject
the same in their reasonable judgment. The Banks will endeavor to
notify the Partnership, through the Bank Agent, of their acceptance
or rejection of such proposal within ten (10) Business Days from
the date the Bank Agent provides such proposal to such Persons.
Not later than three (3) Business Days after the effective date of
each Annual Budget and of any amendment thereto, the Partnership
shall provide a copy of the same to the Collateral Agent.
(g) Officer's Certificates. At the time of the
delivery of the financial statements provided for in Section 4.1(a)
and (b), a certificate of a Financial Officer of the Partnership to
the effect that, to the best of his or her knowledge, (i) no
Default or Event of Default has occurred and is continuing and (ii)
no breach or default (or event that with the passage of time, the
giving of notice or both would constitute a breach or default) with
respect to the Partnership under any of the other Financing
Documents or Project Documents exists or is imminent on the date of
such certificate or has occurred and is continuing since the date
of the immediately preceding certificate, or if any such Default,
Event of Default, breach, default or event has occurred or is
imminent, setting forth the details thereof and what action the
Partnership has taken, is taking or proposes to take in response
thereto.
(h) Notice of Default, Litigation, etc. (i) As soon as
practicable but in no event more than three (3) Business Days after
the occurrence of any Default or Event of Default or any breach or
default (or event that with the passage of time, the giving of
notice or both would constitute a breach or default) hereunder or
under any of the other Project Documents by the Partnership or
(where the Partnership has knowledge) by any other party thereto,
a certificate of the chief financial officer, treasurer or chief
accounting officer of the Partnership setting forth the details
thereof and the action which the Partnership is taking and proposes
to take with respect thereto; and (ii) as soon as practicable but
in no event more than five (5) Business Days after the Partnership
obtains knowledge thereof, written notice of:
(A) any information, development or knowledge of
any adverse change in the business, prospects, properties,
condition (financial or otherwise) or operations, present or
prospective, of any party to any of the Project Documents which are
material to such party's ability to perform thereunder or which has
had or could have a Material Adverse Effect and of any other event
which has had, or may reasonably be expected to have, a Material
Adverse Effect;
(B) (x) any material dispute involving the
Partnership or any other party to any of the Project Documents and
relating to any of the transactions contemplated by any such
document (and promptly upon any decision relating to any such
dispute having been made, a copy of such decision), and (y) any
litigation, investigation, proceeding, material claim or material
controversy (1) involving or affecting the Partnership or any of
its properties, revenues or assets, or the Site or the Plant, (2)
involving or affecting any Partner, or any of their properties,
revenues or assets, in each case which relate to the Site or the
Plant and as to which there is a reasonable possibility of a
Material Adverse Effect, (3) involving or affecting any other party
to any of the Project Documents or any of their properties,
revenues or assets and as to which there is a reasonable
possibility of a Material Adverse Effect, (4) which could cause a
Default or an Event of Default, or (5) for the purpose of
revoking, terminating, withdrawing, suspending, modifying or
withholding any Governmental Approvals necessary for the
performance by any party to any Project Documents of their
respective obligations, or the exercise of their respective rights,
under the Project Documents, or for the construction, operation or
maintenance of the Project in the manner
contemplated by the Project Documents;
(C) any proposal by any Governmental Authority to
acquire compulsorily the Partnership, any of the Project Collateral
or a substantial part of the Partnership's business or assets;
(D) any fire or other casualty affecting the Site
or the Plant;
(E) any substantial dispute between the
Partnership, any Partner or Magma and any Governmental Authority
relating to the Project;
(F) any change in (x) the authorized
representatives of the Partnership referred to in Section 3.1(m)
above, which notice shall be accompanied by certified specimen
signatures of any new representatives so appointed and, if
requested by the VPCC Agent or OPIC, satisfactory evidence of the
authority of such new representatives and (y) the Auditors, which
notice shall be accompanied by a copy of an authorization to the
replacement Auditors satisfying the requirements of Section 4.2(b);
(G) any actual or proposed termination,
rescission, discharge (otherwise than by performance), amendment or
waiver or indulgence under, any material provision of any Project
Document;
(H) any material notice or correspondence
received or initiated by the Partnership relating to a
Governmental Approval or other license or authorization
necessary for the performance by it of its obligations under the
Project Documents;
(I) any Lien (other than a Permitted Lien)
becoming enforceable over any of the Partnership's assets;
(J) any proposed material change in the nature or
scope of the Project or the business or operations of the
Partnership and any one or more events, conditions or
circumstances (including without limitation "Force Majeure" as
defined in Section 14.1(a) of the Energy Conversion Agreement,
"Political FM" as defined in Section 14.1(b) of the Energy
Conversion Agreement or "Force Majeure" as defined in Section 1.46
of the Construction Contract) that exist or have occurred which are
reasonably likely to have a Material Adverse Effect;
(K) the occurrence of any event or act which could
reasonably be expected to qualify as the basis for a claim by VPCC
under the OPIC Lenders Insurance Contract or a claim by Magma or
Magma Netherlands under the OPIC Equity Insurance
Contract;
(L) and/or copies of: (x) each funding waiver
request filed with respect to any Pension Plan and all
communications received or sent by the Partnership or any ERISA
Affiliate with respect to such request; and (y) the failure of the
Partnership or any ERISA Affiliate to make a required installment
or payment under Section 412 of the Code, Section 302 of ERISA or
the terms of any Pension Plan by the due date (other than the
quarterly contributions described in Section 302(e) of ERISA or
Section 412(m) of the Code);
(M) the occurrence of any Termination Event which
has had or is reasonably likely to have a Material Adverse Effect
and is in connection with any Pension Plan or any trust
thereunder, specifying the nature thereof, what action the
Partnership or the ERISA Affiliate has taken, is taking or
proposes to take with respect thereto and, when known, any action
taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto;
(N) and copies of: (x) all notices of the PBGC's
intent to terminate any Pension Plan or to have a trustee
appointed to administer any Pension Plan; and (y) all notices
received by the Partnership from a Multiemployer Plan sponsor
concerning the imposition or amount of withdrawal liability
pursuant to Section 4202 of ERISA;
(O) the filing of an intent to terminate any
Pension Plan under a distress termination within the meaning of
Section 4041(c) of ERISA;
(P) and a copy of each agreement, commitment or
understanding (whether or not subject to the approval of any of the
other parties to this Agreement pursuant to any other
provision of this Agreement) executed by or on behalf of the
Partnership (excluding the agreements set forth in clauses (i)
through (vi) and clause (xvi) of the definition of the term
"Operating Agreements" in Schedule X hereto but including
replacements thereof), which notice shall specifically refer to
this Section 4.1(h)(ii)(P) and request that the Bank Agent, the
VPCC Agent and OPIC confirm whether or not such agreement,
commitment or understanding shall constitute an Operating
Agreement, in which case such agreement, commitment or
understanding shall only constitute an Operating Agreement if the
Bank Agent, the VPCC Agent or OPIC shall designate it as an
Operating Agreement in a writing delivered to the Partnership
within sixty (60) days of the Bank Agent's, the VPCC Agent's or
OPIC's receipt thereof; and
(Q) and copies of all communications between the
Partnership and the Construction Contractor relating to any contest
by the Construction Contractor as contemplated by Section 3.8.23 of
the Construction Contract or by subparagraph (w) of the
Construction Contractor Consent Agreement.
(i) Reports to Governmental Authorities. (i) As soon as
is practicable but in no event more than five (5) Business Days
after the filing by the Partnership, and as soon as is practicable
but in no event more than five (5) Business Days after receipt by
the Partnership of knowledge of the filing by any party to any
Project Document, of any material information or material report
with any Governmental Authority regarding any Generating Unit, the
Plant, the Project or any Project Document, or any of such party's
obligations thereunder, a copy of such information or report, and
(ii) as soon as is practicable but in no event more than five (5)
Business Days after receipt by the Partnership, copies of any
material request for information by a Governmental Authority and of
each material Governmental Approval obtained by the Partnership or
by the Construction Contractor pursuant to the Construction
Contract or PNOC-EDC pursuant to the Energy Conversion Agreement.
(j) Base Case Forecasts. Not less than forty-five (45)
days prior to the commencement of each calendar year, the Base Case
Forecast for the Project proposed by the Partnership for the
forthcoming Fiscal Years during the term of this Agreement, year by
year. The Base Case Forecasts to be furnished by the Partnership
and any significant assumptions related thereto shall (i) be
prepared in good faith with due care, (ii) taken as a whole, fairly
present, to the best of the Partnership's knowledge, the
Partnership's expectations as to the matters covered thereby as of
their date, (iii) be based on reasonable assumptions as to all
factual and legal matters material to the estimates therein
(including interest rates and costs), and (iv) be in all material
respects consistent with the material provisions of the Project
Documents. Each Base Case Forecast submitted by the Partnership
pursuant to this Section 4.1(j) shall, among other things
reasonably required by the Bank Agent, the VPCC Agent or OPIC,
specify the estimated (i) electricity deliveries pursuant to the
Energy Conversion Agreement, (ii) rates and revenues for
electricity deliveries (with Dollar-denominated and Peso-
denominated rates and revenues stated separately), (iii) periodic
inspection, maintenance and repair schedule, (iv) cash flow
projections, (v) amount of necessary capital expenditures and short
term working capital needs in connection with the Project and (vi)
income statements and balance sheets. Each Base Case Forecast
submitted by the Partnership shall contain complete, fair and
accurate projections taken as a whole (by principal component) of
Debt Service, Operating and Maintenance Costs (with Dollar-
denominated and Peso-denominated Operating and Maintenance Costs
stated separately) and Delivery Proceeds (with Dollar-denominated
and Peso-denominated Delivery Proceeds stated separately).
(k) Insurance Report. Within thirty (30) days after the
end of each Fiscal Year, a certificate signed by the Insurance
Consultant (i) listing all insurance being carried by or on behalf
of the Partnership pursuant to the Project Documents, (ii)
certifying that all insurance required to be maintained pursuant to
the Project Documents is in full force and effect and all premiums
therefore have been fully paid and (iii) setting forth a summary of
all losses in excess of $25,000 incurred with respect to the Plant
or the Site during the preceding Fiscal Year.
(l) Project Status Reports. Until the Conversion Date,
as part of each Application for Funding or, if no Application for
Funding shall have been submitted during any Month, not later than
the last Business Day of such Month, a project status report with
regard to the construction and operation of the Project for the
preceding Month in such detail as the Bank Agent, the VPCC Agent,
OPIC and the Independent Engineer may reasonably request from time
to time, including (i) a report of any delay in construction or in
achieving First Unit Performance Test Completion (as defined in the
Construction Contract) by the First Unit Performance Test
Completion Deadline (as defined in the Construction Contract),
Second Unit Performance Test Completion (as defined in the
Construction Contract) by the Second Unit Performance Test
Completion Deadline (as defined in the Construction Contract),
Third Unit Performance Test Completion (as defined in the
Construction Contract) by the Third Unit Performance Test
Completion Deadline (as defined in the Construction Contract), the
Commercial Operation Date of any of Unit 1, Unit 2 or Unit 3 by the
respective Guaranteed Completion Date for such Generating Unit or
Final Completion of either of Unit 2 or Unit 3 by the Deadline
Date, (ii) a report of any event of Force Majeure (as defined in
the Construction Contract or the Energy Conversion Agreement) and
any event of Political FM (as defined in the Energy Conversion
Agreement) and (iii) copies of any reports received by the
Partnership from any outside technical consultant identifying any
matter that is of material adverse significance to the construction
or operation of the Project.
(m) Quarterly Operating Reports. On or before the 20th
day after the commencement of each Quarter commencing after the
Operation Date of Unit 1 (i) a report with respect to the operation
of the Plant for the preceding Quarter substantially in the form
of, and containing all matters required by, Schedule 4.1(m) hereto
and (ii) a certificate of a Financial Officer of the Partnership
certifying (A) that no withdrawals from the Dollar Project Control
Account or from the O&M Peso Account to pay Operating and
Maintenance Costs during any Month in the preceding Quarter
required the prior written consent of the Required Project Secured
Parties pursuant to Section 3.02(d) or 3.02(e) of the Disbursement
Agreement or, if such consent was so required, that it was duly
obtained and (B) as to whether or not the Partnership expects any
withdrawals from the Dollar Project Control Account or from the O&M
Peso Account to pay Operating and Maintenance Costs during the then
current calendar year will require the prior written consent of the
Required Project Secured Parties pursuant to Section 3.02(d) or
3.02(e) of the Disbursement Agreement. If such certificate
certifies that the Partnership does expect that such withdrawals
during the then current calendar year will require such consent,
the Partnership shall submit to the Bank Agent, the VPCC Agent and
OPIC concurrently therewith a proposed amendment to the Annual
Budget (which will be subject to the consent of the Bank Agent, the
VPCC Agent, OPIC, the Required Project Secured Parties and the
Independent Engineer, as applicable, in accordance with Section
4.1(f) hereof).
(n) Independent Engineering Report. On each annual
anniversary of the Conversion Date, an engineering report prepared
by the Independent Engineer, in form and scope reasonably
satisfactory to the Bank Agent, the VPCC Agent and OPIC, assessing
whether or not the construction, operation and maintenance of the
Project during the preceding annual period was in compliance in all
material respects with all Applicable Laws and the requirements of
the Project Documents (it being understood that the Bank Agent, the
VPCC Agent and OPIC shall have the right to request and receive an
engineering report as described in this clause (n) more frequently
than annually where circumstances reasonably require and that the
Partnership shall not unreasonably deny any request by the Bank
Agent, the VPCC Agent or OPIC for such more frequent reports).
(o) Performance Tests. Reasonable advance notice of the
commencement of all performance tests under the Construction
Contract.
(p) Operation Date Notices. Promptly, and in any event
within two (2) Business Days after the occurrence thereof, notice
of (i) the occurrence of the Commercial Operation Date of any of
Unit 1, Unit 2 or Unit 3 and (ii) the Commercial Operation Date (as
defined in the Energy Conversion Agreement) of any of Unit 1, Unit
2 or Unit 3 having been deemed to occur pursuant to Section 5.4(h)
of the Energy Conversion Agreement, together with information as to
the circumstances giving rise to the same and the actions which the
Partnership (and, to the extent known, PNOC-EDC) is taking or
proposes to take with respect thereto (which information shall be
updated periodically at the request of the Bank Agent, the VPCC
Agent or OPIC with reports of the status of such actions and the
implementation thereof).
(q) Energy Conversion Agreement. As soon as
practicable, but in no event more than five (5) Business Days after
(i) the Partnership delivers to PNOC-EDC any report pursuant to
Section 4.7.5(a) of the Energy Conversion Agreement, a copy of such
report, (ii) the occurrence of any inability of the Partnership to
deliver power to NAPOCOR other than as a result of a No Fault
Outage (as defined in the Energy Conversion Agreement), notice
thereof and an explanation of the cause thereof, (iii) the
submission or receipt of any material notice under the Energy
Conversion Agreement, a copy thereof and (iv) the occurrence of any
event of Force Majeure (as defined in the Energy Conversion
Agreement) or Political FM (as defined in the Energy Conversion
Agreement), notice thereof and an explanation of the cause thereof.
(r) Other Notices. As soon as is practicable but in no
event more than five (5) Business Days after receipt thereof, a
copy of each material notice, demand or other communication
delivered to the Partnership pursuant to or concerning any
Operating Agreement or delivered by the Partnership to any Partner
under the Partnership Agreement.
(s) Legal Opinions. Within 90 days after the end of
each Annual Period, an opinion or opinions of counsel addressed to
each Project Secured Party and each Bank Financing Secured Party
(i) stating that all action has been taken with respect to the
filing, recording, re-filing and re-recording of the Project
Security Documents and/or financing statements and continuation
statements (and/or other instruments similar in effect under the
laws of any jurisdiction) with respect thereto as is necessary to
protect and preserve the rights and interests of the Collateral
Agent or the Co-Collateral Agent, as the case may be, in and to the
Project Collateral and the Liens on and in the Project Collateral
created by the Project Security Documents and reciting the details
of such action or referring to prior opinions of counsel in which
such details are given and (ii) stating what, if any, filings,
recordings, re-filings and re-recordings of the aforementioned
agreements, statements and instruments may reasonably be expected
to become necessary during the next fifteen months in order to
protect and preserve the rights and interests of the Collateral
Agent or the Co-Collateral Agent, as the case may be, in and to the
Project Collateral and the Liens on and in the Project Collateral
created by the Project Security Documents.
(t) Annual Budget Reconciliations. As soon as
available but, in any event, within ninety (90) days after (i) the
close of the Fiscal Year in which the Operation Date of Unit 1
occurs and (ii) the close of each Fiscal Year commencing after the
Operation Date of Unit 1 occurs, a certificate of the chief
financial officer of the Managing General Partner which shall (i)
state the Dollar amount and Peso amount, if any, by which the
Delivery Proceeds during such Fiscal Year were in excess of or less
than the estimate of the Dollar amount and Peso amount of such
Delivery Proceeds contained in the Annual Budget for such Fiscal
Year, (ii) state the Dollar amount and Peso amount, if any, by
which, for each principal component, the Operating and Maintenance
Costs incurred during such Fiscal Year were in excess of or less
than the estimate of the Dollar amount and Peso amount of such
Operating and Maintenance Costs contained in the Annual Budget for
such Fiscal Year, (iii) state the Dollar amount, if any, by which
Debt Service for such Fiscal Year was in excess of or less than the
estimate of the Dollar amount of Debt Service contained in the
Annual Budget for such Fiscal Year and (iv) contain an explanation
of the cause of the variances, if any, described in clauses (i),
(ii) and (iii) of this Section 4.1(t).
(u) Information Required Under OPIC Lenders Insurance
Contract. Promptly after (i) receipt of notice from VPCC, the VPCC
Agent, the Project Administrative Agent or the Bank Agent of OPIC's
request therefor, such information as OPIC shall have requested be
provided to it pursuant to numbered paragraph 5 of Section 9.01 of
the OPIC Lenders Insurance Contract, (ii) obtaining knowledge
thereof, notice of any circumstance which may render OPIC liable
under the OPIC Lenders Insurance Contract and of any defaults
(regardless of cause) in making scheduled payments (or any part
thereof) under the Project Credit Agreement (which notices shall be
updated periodically so as to permit VPCC to comply with its
obligations under numbered paragraph 6 of Section 9.01 of the OPIC
Lenders Insurance Contract to keep OPIC informed as to all relevant
developments with respect to the foregoing matters) and (iii) the
Partnership obtains any information or knowledge which leads it to
believe that it will not be able to convert and/or transfer Pesos
during the waiting period referred to in numbered paragraph 6 of
Section 9.01 of the OPIC Lenders Insurance Contract, notice
thereof. In addition, the Partnership shall (i) provide the VPCC
Agent and the Bank Agent updates of VPCC's good faith estimates of
scheduled payments in Exhibit A to the OPIC Lenders Insurance
Contract, at such frequency as is necessary to fulfill VPCC's
obligations in said Exhibit A to provide such updates to OPIC, and
(ii) provide VPCC, the VPCC Agent and the Bank Agent such
information as and when required to allow VPCC (and the VPCC Agent)
to choose under Section 8.08 of the OPIC Lenders Insurance Contract
the amount to be covered thereunder from time to time.
(v) Additional Information. Within a reasonable time
but in no event more than five (5) Business Days after request
therefor, such additional information regarding the business,
prospects, properties, condition (financial or otherwise) or
operations, present or prospective, of the Partnership, any
Partner, Magma or any Obligor as the Bank Agent, the VPCC Agent or
OPIC may reasonably request, taking into account, in the case of
such information regarding the business, prospects, properties,
condition or operations of Magma, the nature and extent of its
obligations under the Project Documents.
Section 4.2 Books, Records and Inspections; Accounting
and Audit Matters; Plans. (a) The Partnership will keep proper
books of record and account adequate to reflect truly and fairly
the financial condition and results of operations of the
Partnership (including the progress of the Project) in which full,
true and correct entries in conformity with GAAP and all Applicable
Laws shall be made of all dealings and transactions in relation to
its business and activities. The Partnership will permit officers
and designated representatives of the Bank Agent, the VPCC Agent,
the Project Administrative Agent, OPIC, the Banks, the Co-
Collateral Agent, the Collateral Agent and/or the Independent
Engineer to visit and inspect any of the properties of the
Partnership, and to examine and make copies of the books of record
and account of the Partnership and discuss the affairs, finances
and accounts of the Partnership with, and be advised as to the same
by, its officers, all at such reasonable times and intervals and to
such reasonable extent as the Bank Agent, the VPCC Agent, the
Project Administrative Agent, OPIC, the Banks, the Co-Collateral
Agent or the Collateral Agent may request (it being understood that
officers and representatives of the
Independent Engineer shall be permitted to visit and inspect the
properties of the Partnership at least three (3) times per Month
during the period prior to the Conversion Date and at least
annually thereafter, that officers and representatives of the Bank
Agent, the VPCC Agent, the Project Administrative Agent, OPIC, the
Banks, the Collateral Agent and the Co-Collateral Agent shall be
permitted to visit and inspect the properties of the Partnership at
least annually during the term of this Agreement, that the
frequency of the aforesaid visits and inspections are subject to
increase where circumstances reasonably require and that the
reasonable out-of-pocket expenses (including, without limitation,
travel and accommodation expenses) incurred by the aforesaid
Persons (other than any Bank) in connection with any of the
aforesaid visits and inspections shall be for the account of the
Partnership).
(b) The Partnership shall authorize the Auditors to
communicate directly with the representatives of the Bank Agent,
the VPCC Agent, the Project Administrative Agent, OPIC and the
Independent Engineer at reasonable intervals, but if a Default or
an Event of Default has occurred or is continuing, then at any
time, regarding the Partnership's accounts and operations and
furnish to the Bank Agent, the VPCC Agent, the Project
Administrative Agent and OPIC a copy of such authorization, which
shall be in form and substance satisfactory to the Bank Agent, the
VPCC Agent, the Project Administrative Agent and OPIC;
provided, however, that the Bank Agent, the VPCC Agent, the Project
Administrative Agent and OPIC will provide the
Partnership with (i) copies of any correspondence between their
respective representatives and the Auditors; and (ii) reasonable
notice of any meeting between their respective representatives and
the Auditors, with a description of the matters to be
discussed at such meeting, and allow the Partnership to attend any
such meeting.
(c) The Partnership shall make arrangements reasonably
satisfactory to the Required Project Secured Parties for
oversight over the financial operations of the Partnership,
including its cash management, accounting and financial
reporting, and for oversight over the Partnership's relationship
with its lenders and with the Auditors. Such arrangements may
include, but shall not be limited to, employing a chief financial
officer to oversee the financial operations of the Partnership.
(d) The Partnership will at all times cause a complete
set of the current and (when available) as-built plans (and all
supplements thereto) relating to the Plant to be maintained at the
Plant for inspection by the Independent Engineer, the Bank Agent,
the VPCC Agent, the Project Administrative Agent and OPIC.
Section 4.3 Maintenance of Property; Insurance. (a)
The Partnership will (i) keep all property useful and necessary in
its business in good working order and condition and (ii) keep its
present and future properties and business insured with financially
sound and reputable insurers satisfactory to the Required Project
Secured Parties against loss or damage in such manner, at such
times and to the same extent as required in Parts 1 and 3 of
Schedule 3.1(b) hereto and pursuant to policies (w) naming the
Collateral Agent as sole loss payee thereunder (except in the case
of third-party liability, worker's compensation and automobile
liability insurances), (x) naming, in the case of all insurances,
the Collateral Agent as additional insured
thereunder, (y) naming, in the case of third party liability
insurances, the Collateral Agent, the Bank Agent, the VPCC Agent,
the Project Administrative Agent, the Banks, VPCC and OPIC as
additional insureds thereunder and (z) containing cut-through
endorsements to reinsurers and provisions requiring that the
Collateral Agent, OPIC the Bank Agent and the VPCC Agent shall
receive notices of any non-payment of premiums. None of the
policies for insurances referred to in subparagraphs (a), (b), (c)
and (d) of Part 1 of Schedule 3.1(b) hereto shall contain any
cancellation provision. The policies for the other insurances
described in Part 1 of Schedule 3.1(b) hereto, if cancelable, shall
only be cancelable for non-payment of premiums and then only upon
sixty (60) days prior notice to the Collateral Agent, OPIC, the
Bank Agent and the VPCC Agent. Evidence of payment of premiums for
such policies shall be delivered to the Bank Agent, the VPCC Agent
and OPIC at least ten (10) Business Days prior to the expiration
thereof. Promptly upon the request of the Bank Agent, the VPCC
Agent or OPIC, the Partnership will submit to the Bank Agent, the
VPCC Agent and OPIC certificates of insurance relating to the
insurances required by Parts 1 and 3 of Schedule 3.1(b) hereto
(together with copies of such insurance policies) from the
Partnership's insurers and insurance brokers, which certificates
shall indicate the properties insured, amounts and risks covered,
names of the beneficiaries, expiration dates, names of the insurers
and special features of the insurance policies and shall be
accompanied by confirmation of premium payments.
(b) The Partnership will cause the Construction
Contractor to keep the insurances described in Part 2 of Schedule
3.1(b) hereto with financially sound and reputable insurers
satisfactory to the Required Project Secured Parties against loss
or damage in such manner, at such times and to the same extent as
so described and pursuant to policies (w) naming the Collateral
Agent as sole loss payee thereunder (except in the case of third-
party liability, worker's compensation and automobile liability
insurances), (x) naming, in the case of all insurances, the
Collateral Agent as additional insured thereunder, (y) naming, in
the case of third party liability insurances, the Collateral Agent,
the Bank Agent, the Banks, the VPCC Agent, the Project
Administrative Agent, VPCC and OPIC as additional insureds
thereunder and (z) containing cut-through endorsements to
reinsurers and provisions requiring that the Collateral Agent,
OPIC, the Bank Agent and the VPCC Agent shall receive notices of
any non-payment of premiums. None of the policies for insurances
described in subparagraphs (a), (b), (c) and (d) of Part 2 of
Schedule 3.1(b) hereto shall contain any cancellation provision.
The policies for the other insurances described in Part 2 of
Schedule 3.1(b) hereto, if cancelable, shall only be cancelable for
non-payment of premiums and then only upon sixty (60) days prior
written notice to the Bank Agent, the VPCC Agent, OPIC and the
Collateral Agent. Evidence of payment of premiums for such
policies shall be delivered to the Bank Agent, the VPCC Agent and
OPIC at least ten (10) Business Days prior to the expiration
thereof. Promptly upon the request of the Bank Agent, the VPCC
Agent or OPIC, the Partnership will cause the Construction
Contractor to submit to the Bank Agent, the VPCC Agent and OPIC
certificates of insurance relating to the insurances required by
Part 2 of Schedule 3.1(b) (together with copies of such insurance
policies, if and to the extent then available) from the insurers or
insurance brokers for such insurances, which certificates shall
indicate the type of insurance, amounts and risks covered, names of
the beneficiaries, expiration dates, names of the
insurers and special features of the insurance policies and shall
be accompanied by confirmation of premium payments.
(c) In the event that any insurance whatsoever is
purchased, taken or otherwise obtained by the Partnership with
respect to the Project otherwise than as required hereunder or if
not properly endorsed to the Collateral Agent as the sole loss
payee and additional insured or beneficiary or otherwise made upon
the terms required in this Section 4.3, without limitation to any
provision of Part C of the Omnibus Security Agreement, such
insurance shall be considered assigned hereunder to the Collateral
Agent with the right of the Collateral Agent to make, settle,
compromise and liquidate any and all claims thereunder, without
prejudice to the exercise of any other rights and
remedies that the Collateral Agent may have under any of the
Financing Documents or under any Applicable Law.
Section 4.4 Maintenance of Existence; Privileges; Etc.
The Partnership shall at all times (a) preserve and maintain in
full force and effect (i) its existence as a general partnership
and good standing under the laws of the Republic, (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 or desirable and (iii)
all of its powers, rights, privileges and franchises
necessary for the construction, ownership, maintenance and
operation of the Project and the maintenance of its existence, (b)
obtain in a timely manner and maintain in full force and effect (or
where appropriate, renew) all Governmental Approvals (including,
without limitation, those under Environmental Laws) and all other
licenses, registrations, waivers, consents and approvals required
at any time or advisable in connection with the construction,
maintenance, ownership or good and orderly operation of the Project
and all licenses, consents and approvals necessary for the
conversion to Dollars of all Peso amounts payable under the Energy
Conversion Agreement, the PNOC-EDC Consent Agreement, the
Performance Undertaking and the Republic Consent Agreement and for
the remittance to the Collateral Agent in the United States in
Dollars of any amounts paid or payable in connection with any
Project Document or the transactions
contemplated thereby and (c) preserve and maintain good and
marketable title to its properties and assets (it being
understood that the Partnership's rights with respect to the Site
are solely as set forth in the Energy Conversion Agreement) subject
to no Liens other than Permitted Liens.
Section 4.5 Compliance with Statutes and Regulatory
Matters. (a) The Partnership will comply in all material
respects with all Applicable Laws in respect of the conduct of its
business and the ownership, construction, operation and use of its
property (including, without limitation, Applicable Laws relating
to environmental standards and controls and Applicable Laws
(including, without limitation, the Board of Investments Approval)
relating to the maintenance of debt to equity ratios).
(b) The Partnership, at its sole cost and expense, shall
make such alterations to the Plant as may be required from time to
time to comply in all material respects with all
Applicable Laws ("Required Alterations"). The Partnership shall
install any Required Alterations promptly; provided, however, that
the Partnership may at its sole cost and expense contest the
validity and applicability of any Applicable Laws as may entail the
installation of any such Required Alterations, if and so long as
adequate reserves are maintained in accordance with applicable
accounting principles with respect to such Required Alterations and
if, in the reasonable opinion of the Required Project Secured
Parties based on consultations with the Independent Engineer,
failure to make such Required Alteration does not materially
adversely affect the productive capacity, value, or utility or
remaining useful life of the Plant or materially adversely affect
the rights or interests of the Project Secured Parties. All such
alterations shall comply in all material respects with all
Applicable Laws.
(c) If any litigation, investigation or proceeding is
commenced which causes, or may reasonably be expected to cause, or
any Governmental Authority issues any order, judgment,
regulation, decision or interpretation the effect of which is, or
may cause (i) a Material Adverse Effect or (ii) a rescission,
termination, repeal, invalidation, suspension, injunction or a
material amendment or modification of any Project Document, or any
part thereof, then the Partnership shall so notify the Bank Agent,
the VPCC Agent and OPIC and if, as a result of such
regulatory change, there shall exist in the reasonable opinion of
the Bank Agent, the VPCC Agent or OPIC a reasonable possibility
that such litigation, investigation or proceeding or action by any
Governmental Authority could have a Material Adverse Effect, the
Bank Agent, the VPCC Agent or OPIC shall give the Partnership
reasonable notice thereof and the Partnership shall diligently and
in a timely fashion (i) make all filings, (ii) pursue all remedies
and appeals and (iii) take such other lawful action, in each case
as the Required Project Secured Parties in their reasonable opinion
determine to be necessary or desirable to prevent such litigation,
investigation or proceeding or such action by any Governmental
Authority from becoming final and non- appealable or otherwise
irrevocable, to attempt to postpone the effectiveness of such
litigation, investigation or proceeding or such action by any
Governmental Authority and to cause such litigation, investigation
or proceeding or such action by any Governmental Authority to be
terminated, revoked or amended or modified so as to eliminate the
reasonable likelihood of such effect. If, no later than ten (10)
days after the Bank Agent, the VPCC Agent or OPIC so notifies the
Partnership, the Partnership notifies the Bank Agent, the VPCC
Agent or OPIC that it has decided not to pursue any of the actions
described in clause (i), (ii) or (iii) immediately above and the
Required Project Secured Parties believe that there exists a
reasonable probability of success if any such actions are taken,
the Required Project Secured Parties may pursue such actions on
behalf of the Partnership, at the Partnership's sole cost and
expense, provided that so long as the Required Project Secured
Parties are themselves pursuing such actions (prior to resolution
thereof) no Event of Default shall exist based solely on the
existence of such litigation, investigation or proceeding.
(d) No part of the proceeds of the Project Loans or the
OPIC Loan will be used to purchase "margin stock" (as defined in
the regulations referred to below) or for any other purpose which
would result in a violation (whether by the Partnership, VPCC, the
Banks or OPIC) of Regulation G, T, U or X of the Board of Governors
or to extend credit to others for any such purpose. Neither the
Partnership nor any of its Affiliates is engaged in, nor will any
of them engage in, the business of extending credit for the purpose
of purchasing or carrying any "margin stock".
(e) The Partnership shall comply, and shall cause the
Construction Contractor and all tenants, licensees, invitees and
occupants of the Project to comply, in all material respects, with
every applicable Environmental Law. The Partnership shall not, and
shall not permit any such other party to, generate, store, handle,
process, transport, ship, dispose, or otherwise use Hazardous
Materials at, in, on, under or from the Project, or onto any other
property, in a manner that would lead to the imposition on the
Partnership, any Project Secured Party, any Bank Financing Secured
Party or the Project of any Environmental Claim or pose a material
risk to human health or the environment. The Partnership shall
promptly notify the Bank Agent, the VPCC Agent and OPIC when it
becomes aware of any spill or any other release of any Hazardous
Material (whether or not such spill or release occurred prior to,
on or after the Effective Date) at, in, on, under or from the
Project which is required to be
reported to a Governmental Authority, which could result in any
Environmental Claim or which could pose a material risk to human
health or the environment. The Partnership shall promptly, but in
no event later than two (2) Business Days, forward to the Bank
Agent, the VPCC Agent and OPIC copies of any notices, complaints,
summons, or any other notifications received by the Partnership
relating to alleged violations of any applicable Environmental Law
at the Plant or the Site which would have a Material Adverse
Effect. The Partnership will promptly pay when due any fine,
penalty, judgment, or assessment arising under any Environmental
Law against either the Partnership or the Project or against any
Project Secured Party or any Bank Financing Secured Party to the
extent the same arises in connection with the Project, except to
the extent subject to a Good Faith Contest by the Partnership. If,
at any time, the condition, operation or use of the Project
violates in any material respect any applicable Environmental Law
or could reasonably be expected to result in any Environmental
Claim, or there are Hazardous Materials located at, in, on, under
or from the Project for which material cleanup or corrective action
of any kind is required under any Environmental Law or because of
any spill or release of Hazardous Material, material cleanup of or
corrective action with respect to such Hazardous Material is
authorized under any Environmental Law or may be necessary to
prevent or eliminate a material risk to human health or the
environment, the Partnership shall, within ten (10) days after
discovering such condition, operation or use, notify the Bank
Agent, the VPCC Agent and OPIC and promptly initiate, at its own
sole cost and expense, such actions as may be necessary to comply
in all material respects with all Environmental Laws and to
alleviate any material risk to human health or the environment.
Once the Partnership commences such actions, the Partnership shall
thereafter diligently and expeditiously proceed to comply in all
material respects and in a timely manner with all Environmental
Laws and to eliminate any material risk to human health or the
environment. If an Event of Default exists which in the reasonable
determination of the Bank Agent, the VPCC Agent or OPIC would have
a Material Adverse Effect, or the Project Secured Parties intend to
commence an action to foreclose on the Project Collateral, the Bank
Agent, the VPCC Agent or OPIC may cause an environmental audit of
the Project or portions thereof to be conducted to confirm the
Partnership's compliance with the provisions of this Section
4.5(e), and the Partnership shall cooperate in all reasonable ways
with the Bank Agent, the VPCC Agent or OPIC in connection with any
such audit, and all costs and expenses incurred in connection
therewith shall be treated as set forth in Section 6.3 hereof. If
the foreclosure occurs, the Partnership shall deliver the Project
to the purchaser at foreclosure or to the Collateral Agent or the
Co-Collateral Agent or the nominee of any of them, as the case may
be, in a condition that complies in all material respects with all
Environmental Laws, and that does not contain Hazardous Materials
for which material cleanup or corrective action is required under
any Environmental Law or because of any spill or release of
Hazardous Material, cleanup of or corrective action with respect to
such Hazardous Material is authorized under any Environmental Law
or may be necessary to prevent or eliminate a material risk to
human health or the environment.
(f) In the event that any product, process, method,
substance, part or other material sold, used or employed, or
contemplated to be sold, used or employed, by the Partnership in
connection with its business or the Project does or will infringe
any patent, trademark, service mark, trade names, copyright,
license or other right owned by any other Person or any claim or
litigation is pending or threatened against or affecting the
Partnership contesting the Partnership's right to sell, use or
employ any such product, process, method, substance, part or other
material, the Partnership shall give the Bank Agent, the VPCC Agent
and OPIC notice promptly, but in no event more than five (5) days
after obtaining knowledge thereof and the Partnership shall
effectively eliminate such infringement within thirty (30) days of
giving such notice to the Bank Agent, the VPCC Agent and OPIC or
such longer period as in the reasonable judgment of the Required
Project Secured Parties would not have a Material Adverse Effect
unless such infringement is the subject of a Good Faith Contest by
the Partnership, provided that such Good Faith Contest would not
impair the value of the Project Secured Parties' security interest
in the Project Collateral.
Section 4.6 Consultations Regarding Independent
Engineer's Reports. The Partnership agrees that (a) in addition to
any other consultation required hereunder, following the end of
each Month, upon the request of the VPCC Agent, the Bank Agent or
OPIC, the Partnership shall consult with the VPCC Agent, the Bank
Agent and OPIC regarding any materially adverse event or condition
identified by the Independent Engineer in the reports provided by
the Independent Engineer for such Month pursuant to the IE
Engagement Agreement, (b) in addition to any other consultation
required hereunder, upon the request of the VPCC Agent, the Bank
Agent or OPIC, the Partnership shall consult with the VPCC Agent,
the Bank Agent and OPIC regarding any materially adverse event or
condition identified by the Independent Engineer in any report
provided by the Independent Engineer as contemplated by Section
4.1(n) hereof or Part I.C. of the IE Engagement Agreement and (c)
in the event the Partnership fails to hold any such consultations
within thirty (30) days of such request, such event or condition
shall be deemed to have a
Material Adverse Effect.
Section 4.7 Project Implementation. (a) The
Partnership shall (i) carry out the Project and conduct its
business with due diligence and efficiency and in accordance with
sound engineering, financial and business practices, (ii) use the
proceeds of all OPIC Disbursements and Project Construction Loans
(excluding any portion of the outstanding principal amounts of the
Project Construction Loans allocated to the payment of "value added
taxes" with respect to the Project or import duties on capital
equipment provided under the Construction Contract) only for the
payment of Project Costs strictly in accordance with the
Construction Budget, as the same may be amended in accordance with
Section 4.27 hereof and (iii) use the proceeds of all
Project Construction Loans allocated (as specified in the
Application for Funding with respect to such Project Construction
Loans) to the payment of "value added taxes" with respect to the
Project or import duties on capital equipment provided under the
Construction Contract only for the payment of such "value added
taxes" or import duties, as the case may be.
(b) Without limiting the generality of the preceding
clause (a), the Partnership will cause the construction of the
Project to be prosecuted and completed with due diligence and
continuity (except for interruptions due to events of force
majeure, which the Partnership will use its best efforts to
mitigate), in a good and workmanlike manner and (i) in accordance
with sound generally accepted building and engineering practices,
(ii) in compliance in all material respects with all Governmental
Approvals and Applicable Laws applicable to the Site, the Plant or
the Partnership, (iii) in accordance with the Construction Contract
and (iv) in accordance with the Construction Budget. In the
Construction Budget, the Partnership will allocate $10.6 million to
the Budget Category entitled "Hard Cost Contingency" and (w) except
with the prior written approval of the Independent Engineer, will
not make any expenditures of funds allocated to such Budget
Category (x) except with the prior written approval of the Project
Administrative Agent, will not make any
expenditures of funds allocated to such Budget Category for any
single line item within such Budget Category if, after giving
effect thereto, the aggregate amount of all funds allocated to such
Budget Category and expended for such line item would exceed $1
million, (y) except with the prior written approval of the Project
Administrative Agent and OPIC, will not make any
expenditures of funds allocated to such Budget Category for any
single line item within such Budget Category if, after giving
effect thereto, the aggregate amount of all funds allocated to such
Budget Category and expended for such line item would exceed $3
million (it being understood that if the Project
Administrative Agent shall not have received a written notice from
OPIC, on or before the date which is six (6) Business Days after
the OPIC Confirmed Receipt Date with respect to the
Partnership's proposal for the making of such expenditure, to the
effect that OPIC has disapproved the making of such expenditure,
then without prejudice to the independent approval rights of the
Project Administrative Agent, OPIC shall be deemed to have given
its prior written approval to the making of such expenditure) and
(z) except with the prior written approval of the Project
Administrative Agent and OPIC, will not make any expenditures of
funds allocated to such Budget Category if, after giving effect
thereto, the aggregate amount of all expenditures of funds
allocated to such Budget Category would exceed $7.5 million. In
the Construction Budget, the Partnership will allocate an
additional $10.4 million to the Budget Category entitled "Soft Cost
Contingency". Subject to the prior written approval of the Project
Administrative Agent and OPIC, the Partnership may make
expenditures of up to $2.5 million of the funds allocated to such
Budget Category (it being understood that if the Project
Administrative Agent shall not have received a written notice from
OPIC, on or before the date which is six (6) Business Days after
the OPIC Confirmed Receipt Date with respect to the
Partnership's proposal for the making of any such expenditure, to
the effect that OPIC has disapproved the making of such
expenditure, then without prejudice to the independent approval
rights of the Project Administrative Agent, OPIC shall be deemed to
have given its prior written approval to the making of such
expenditure). If, after giving effect to any expenditure of funds
allocated to the Budget Category entitled "Soft Cost Contingency",
the aggregate amount of all expenditures of funds allocated to such
Budget Category would exceed $2.5 million, the Partnership shall
not make any such expenditure without the prior written approval of
the Required Project Secured Parties.
(c) With respect to the Construction Contract, (i) the
Partnership shall, from time to time and upon the reasonable
request of the VPCC Agent, the Bank Agent or OPIC, pursuant to
Section 6 of said contract request from the Construction
Contractor evidence of the Construction Contractor's tangible net
worth and, to the extent permitted under such Section, upon the
request of the Required Project Secured Parties request the
performance and payment bonds contemplated in said Section; (ii)
any approval by the Partnership of test procedures under Section
13.3.1 of the Construction Contract shall be subject to the prior
approval of the Independent Engineer, the Bank Agent, the VPCC
Agent and OPIC, such approval not to be unreasonably withheld or
delayed; (iii) any approval by the Partnership of the Construction
Contractor's request, under Section 14.1 of the Construction
Contract, for extension of the Performance Test Completion
Deadline(s) (as defined in the Construction Contract) and/or the
Final Completion Deadline(s) (as defined in the Construction
Contract) shall be subject to the prior approval of the Required
Project Secured Parties, such approval not to be unreasonably
withheld or delayed; (iv) in the event the Project Schedule (as
defined in the Construction Contract) shall at any time and for any
reason call for the Performance Test Completion Deadline (as
defined in the Construction Contract) for any Generating Unit to
occur later than the Guaranteed Completion Date for such Generating
Unit, upon the request of the Required Project Secured Parties, the
Partnership shall under Section 14.4.1 of the Construction Contract
direct a change in the Project Schedule (as defined in the
Construction Contract) so that the former deadline occurs no later
than the latter deadline; (v) the Partnership shall not, without
the consent of the Required Project Secured Parties, which consent
shall not be unreasonably withheld or delayed, certify Performance
Test Completion (as defined in the Construction Contract) of a
Generating Unit pursuant to the last sentence of Section 17.1 of
the Construction Contract; (vi) the Partnership's certification
under Section 17.3 of the Construction Contract that Final
Completion of any Generating Unit has occurred shall be subject to
the prior approval of the Project Administrative Agent and the
Independent Engineer, such approval not to be unreasonably
withheld or delayed; (vii) the Partnership shall not take steps
under Section 19.2.3 of the Construction Contract to reduce the
Construction Contractor's obligation to repair or correct any
Defects or Deficiencies (as defined in the Construction
Contract), or to have the Partnership, in lieu of the Construction
Contractor, make such repairs or corrections, for a reduction of
the Contract Price (as defined in the Construction Contract)
without the prior written approval of the Project Administrative
Agent and the Independent Engineer, such approval not to be
unreasonably withheld or delayed; (viii) the Partnership shall not
approve any bond issued by a surety pursuant to Section 20.3.1 of
the Construction Contract without the prior approval of the Project
Administrative Agent, such approval not to be unreasonably withheld
or delayed; (ix) the Partnership shall exercise the option under
clause (i) (rather than clause (ii)) of Section 20.3.2 of the
Construction Contract to have the Construction Contractor pay the
Buy-Down Amount rather than continue to attempt to meet the
performance guaranty, unless otherwise instructed by the Required
Project Secured Parties; provided, however, the Partnership shall
have the right to elect the option under clause (ii) of Section
20.3.2 of the Construction Contract to have the Construction
Contractor continue to attempt to meet the performance guaranty if
the sum of (A) the Buy-Down Amount for such Generating Unit that
would be computed on the basis of the most recently completed
performance test and (B) the maximum amount of Delay Liquidated
Damages (as defined in the Construction Contract) that could accrue
with respect to such Generating Unit, is less than the Maximum
Aggregate Damages (as defined in the Construction Contract) with
respect to such Generating Unit; and (x) the Partnership shall
obtain the consent of the Required Project Secured Parties with
respect to any approval the "Lender" (as defined in the
Construction Contract) is to provide under such contract.
(d) Without limiting the generality of clause (a) of
this Section 4.7, the Partnership will operate and maintain the
Project, and retain and maintain staff sufficient to operate and
maintain the Project, in accordance with the O&M Parameters and
will otherwise comply with and satisfy the requirements of the O&M
Parameters.
(e) The Partnership shall use reasonable efforts to
become a member of the multi-partite monitoring team described in
paragraph 1 of Section IV of the Environmental Compliance
Certificate; provided, however, that the Partnership need not
become a member of such monitoring team if, in the reasonable
judgment of the Partnership, after consultation with its counsel,
the Partnership's participation in the activities conducted by such
monitoring team could reasonably be expected to expose the
Partnership to additional liability under Applicable Laws of the
Republic.
(f) Without limiting the generality of the foregoing
clauses, the Partnership shall use, maintain and operate the Plant
and the Site in compliance in all material respects with all
Applicable Laws and Governmental Approvals, the Project Documents
and the provisions of this Agreement. The Partnership shall
inspect, maintain, service, preserve and repair the Plant so as to
keep the Plant (i) in good operating condition (ordinary wear and
tear excepted), (ii) in good order and repair in conformity with
prudent alternative energy standards and commercial practice, (iii)
in material compliance with any requirements under the Project
Documents, and (iv) in such condition that the Plant will have the
capacity and functional ability to perform, in normal commercial
operation, the functions and at the nameplate ratings set forth in
the Project Documents for the remaining useful life of the Plant.
The Partnership shall comply with any standards imposed by any
Commercial Insurance Contract in effect with respect to the Plant
or the Site.
(g) Provided the Collateral Agent has made available
pursuant to Section 3.07(a) of the Disbursement Agreement the
Insurance Proceeds, in the event of any damage to or destruction of
the Plant or the Site, or any part thereof, by fire or other
casualty, the Partnership shall, at its own expense and whether or
not such damage or destruction is covered by a Commercial Insurance
Contract, with reasonable promptness, repair, restore, replace or
rebuild the same, except where such, in the reasonable judgment of
the Required Project Secured Parties, is not necessary or advisable
for the conduct of the Partnership's business, so that upon the
completion of such repair, restoration, replacement or rebuilding,
the Plant and Site shall be in the condition required by the
foregoing provisions of this Section 4.7 and so that the productive
capacity, value, utility and remaining useful life of the Plant
shall be at least equal to the greater of (i) the actual productive
capacity, value, utility and remaining useful life of the Plant
immediately prior to the happening of such casualty, or (ii) the
productive capacity, value, utility and remaining useful life the
Plant would have had if it were used, maintained and operated in
accordance with the requirements of this Section 4.7.
(h) The Partnership shall, at its sole cost and
expense (i) maintain at the Plant daily operating logs showing,
among other things, the electrical output of the Plant, (ii) keep
maintenance and repair reports in sufficient detail to indicate the
nature and date of all work done, (iii) maintain a current
operating manual and a complete set of plans, accounting records
and specifications reflecting all alterations and (iv) maintain all
other records, logs and other materials required to comply in all
material respects with any Applicable Law or Governmental Approval.
(i) The Partnership shall maintain a tracking system to
monitor the status of, the conditions contained in, and compliance
with, Governmental Approvals required to be obtained by or on
behalf of the Partnership or required to be complied with by the
Partnership. The Partnership shall promptly amend and deliver to
the Bank Agent, the VPCC Agent and OPIC a revised Schedule 2.12
hereto in the event of any material change in the Governmental
Approvals applicable to the Partnership or the Project.
(j) The Partnership shall promptly inform the Project
Administrative Agent and OPIC if at any time PNOC-EDC tenders or
offers to tender Pesos in lieu of Dollars as payment under the
Energy Conversion Agreement, and upon and to the extent described
in the instruction of the Required Project Secured Parties, the
Partnership shall accept such tender.
Section 4.8 Auditors. In the event that Coopers &
Lybrand should cease to be the Auditors of the Partnership for any
reason, the Partnership shall appoint and maintain as the Auditors
another firm of independent public accountants reasonably
acceptable to the Required Project Secured Parties.
Section 4.9 Taxes, Duties, Etc. The Partnership will
pay and discharge all taxes, duties, fees, assessments and other
governmental charges imposed on it, on its income or profits, on
any of its property, or in connection with the execution, issue,
delivery, registration, notarization, assignment or transfer of any
interest in or for the legality, validity or enforceability of any
Project Document prior to the date on which penalties attach
thereto, and all claims, levies or liabilities (including, without
limitation, claims for labor, services, materials and supplies) for
sums which have become due and payable and which have or, if unpaid
might become, a Lien upon the property of Partnership (or any part
thereof). The Partnership shall have the right, however, to
contest in good faith the validity or amount of any such tax,
assessment, governmental charge or claim by proper proceedings
timely instituted, and may permit the taxes, assessments,
governmental charges or claims so contested to remain unpaid during
the period of such contest if (i) the Partnership diligently
prosecutes such contest, (ii) during the period of such contest the
enforcement of any contested item is effectively stayed, (iii) in
the case of (x) any contest involving not more than $2 million,
adequate cash reserves or bonds in an amount reasonably
satisfactory to the Project Administrative Agent are established in
accordance with GAAP with respect to the contested items and (y)
any contest involving more than $2 million, adequate cash reserves
or bonds in an amount reasonably satisfactory to the Required
Project Secured Parties are established in accordance with GAAP
with respect to the contested items and (iv) such contest does not,
in the reasonable discretion of the Project Administrative Agent
(in the case of any contest involving not more than $2 million) or
the Required Project Secured Parties (in the case of any contest
involving more than $2 million), involve a material risk of the
sale, forfeiture or loss of any of the Project Collateral (other
than the cash reserved pursuant to clause (i) of this sentence).
The Partnership will promptly pay or cause to be paid any valid,
final judgment enforcing any such tax, duty, fee, assessment, other
governmental charge or claim and cause the same to be satisfied of
record.
Section 4.10 Independent Engineer; Insurance Consultant.
The Partnership (a) agrees to the Independent Engineer carrying out
the role described in the IE Engagement Agreement, (b) confirms and
agrees to the terms of the provisions of the IE Engagement
Agreement which are binding on it, which terms are incorporated
herein by reference as if fully set forth herein and (c) will
ensure that the Insurance Consultant will be provided with all
information reasonably required by the Insurance Consultant and
will exercise due care to ensure that any information which it may
supply to the Insurance Consultant is materially accurate and not,
by omission of information or otherwise, misleading in any material
respect.
Section 4.11 Performance of Obligations. The
Partnership will perform all of its material obligations under the
terms of each mortgage, indenture, security agreement and other
debt instrument by which it is bound and will perform all of its
material obligations under the terms of the Financing Documents,
the Energy Conversion Agreement and each of the other Project
Documents. The Partnership will maintain in full force and effect
each of the Project Documents to which it is a party. The
Partnership will preserve, protect, defend and enforce the rights
granted to it under or in connection with the Project Documents.
The Partnership shall take all action within its control required
or in the reasonable opinion of the Bank Agent, the VPCC Agent or
OPIC advisable to ensure that each of the Project Documents is in
proper legal form under the laws of the Republic or under the
respective governing laws selected in such Project Documents, for
the enforcement thereof in such
jurisdictions without any further action on the part of the Bank
Agent, the VPCC Agent, OPIC, the Project Administrative Agent, the
Collateral Agent, the Co-Collateral Agent or the Banks.
Section 4.12 Name Changes; Etc. The Partnership shall
not change its name without the prior written consent of the
Required Project Secured Parties. The Partnership shall not adopt
or change any trade name or fictitious business name
without the prior written consent of the Required Project Secured
Parties. The Partnership shall execute and deliver to the VPCC
Agent, OPIC, the Collateral Agent and the Co-Collateral Agent any
additional documents or certificates necessary or advisable to
reflect any permitted adoption of or change in its name, trade name
or fictitious business name.
Section 4.13 Consolidation, Merger, Sale of Assets,
Transfers of Partnership Interests, Etc. The Partnership will not
(a) wind up, liquidate, terminate, dissolve or reorganize (or
suffer any winding-up, liquidation, termination, dissolution or
reorganization) or enter into any transaction of merger or
consolidation; (b) convey, sell, lease or otherwise dispose of (or
agree to do any of the foregoing at any future time) all or any
part of its property or assets (other than electricity and any
chemical by-products produced by the Plant) except, in the ordinary
course of business, or sales of equipment which is uneconomic or
obsolete or sales of assets that are no longer used by or useful to
the Partnership and which are promptly replaced by adequate
substitutes of substantially equivalent utility to the replaced
assets; (c) purchase or otherwise acquire (in one or a series of
related transactions) any part of the property or assets of any
Person (other than purchases or other acquisitions of inventory or
materials or capital expenditures, each in the ordinary course of
business); (d) admit any additional partners into the Partnership
other than by reason of a transfer of the general partnership
interests in the Partnership, which transfer (x) is consummated
with the prior written consent of the Required Project Secured
Parties, (y) would not result in the occurrence of an Event of
Default described in either of clauses (a) and (b) of Section 5.9
hereof and (z) is consummated simultaneously with a pledge, on
terms substantially similar to those contained in Part D of the
Omnibus Security Agreement, by the transferee to the Collateral
Agent of all the general partnership interests in the Partnership
which are the subject of such transfer and the execution and
delivery of such documentation (including, without limitation, the
documentation referred to in clause (w) of Section 7(a) of Part D
of the Omnibus Security Agreement) to the Collateral Agent as the
VPCC Agent, OPIC or the Collateral Agent may reasonably request in
connection therewith; or (e) permit or consent to the transfer (by
sale, assignment or otherwise) of any partnership interest in the
Partnership other than in connection with a transfer of the general
partnership interests in the Partnership, which transfer (x) s
consummated with the prior written consent of the Required Project
Secured Parties, (y) would not result in the occurrence of an Event
of Default described in either of clauses (a) and (b) of Section
5.9 hereof and (z) is consummated simultaneously with a pledge, on
terms substantially similar to those contained in Part D of the
Omnibus Security Agreement, by the transferee to the Collateral
Agent of all the general partnership interests in the Partnership
which are the subject of such transfer and the execution and
delivery to the Collateral Agent of such documentation (including,
without limitation, the documentation referred to in clause (w) of
Section 7(a) of Part D of the Omnibus Security Agreement) as the
VPCC Agent, OPIC or the Collateral Agent may reasonably request in
connection therewith.
Section 4.14 Distributions to Partners. The
Partnership will not return any capital to its Partners or
authorize or make or incur or assume any obligation to make any
other distribution, payment or delivery of property or cash
including, without limitation, for salaries, commissions,
bonuses, management fees, consulting fees, technical assistance
fees or debt service, to any Partner or any other Affiliate, except
for distributions (including, if and to the extent the Partnership
shall have received the approval of the Board of Investments of the
Republic for the same, distributions in the form of loans) of
monies permitted to be withdrawn and
transferred to or at the direction of the Partnership pursuant to
the terms of priority EIGHTH of Section 3.02(d)(ii) of the
Disbursement Agreement or the last sentence of Section 3.05 of the
Disbursement Agreement, distributions of monies permitted to be
withdrawn and transferred to or as directed by Magma (through the
Partnership) pursuant to the terms of priority SECOND of Section
3.04(b) of the Disbursement Agreement and distributions of monies
permitted to be withdrawn and transferred pursuant to the terms of
the Disbursement Agreement for payments under the Administrative
and Technical Services Agreement and the O&M Agreement (if such
agreement shall then be in effect).
Section 4.15 Leases. The Partnership will not enter
into any agreement or arrangement to acquire by lease the use of
any property or equipment of any kind, except lease arrangements
permitted pursuant to Section 4.16(b) hereof.
Section 4.16 Indebtedness. The Partnership will not
contract, create, incur, assume or suffer to exist any
Indebtedness, except for the following types of Indebtedness
("Permitted Indebtedness"):
(a) Indebtedness of the Partnership incurred under the
Financing Documents;
(b) Indebtedness incurred after the Operation Date of
Unit 1 with respect to equipment financing, conditional sales or
lease arrangements entered into in the ordinary course of
business, which Indebtedness shall not exceed $1 million in the
aggregate at any one time; and
(c) Indebtedness incurred after the Operation Date of
Unit 1 which is not at any time in an aggregate amount in excess of
$1 million and is accrued expenses or current trade accounts
payable incurred in the ordinary course of business, or
obligations under trade letters of credit incurred by the
Partnership in the ordinary course of business, which are to be
repaid in full not more than ninety (90) days after the date on
which such Indebtedness is originally incurred to finance the
purchase of goods by the Partnership.
Section 4.17 Liens. The Partnership will not, and will
not agree to, create, incur, assume or suffer to exist any Lien
upon or with respect to any property or assets (real,
personal or mixed, tangible or intangible) of the Partnership,
whether now owned or hereafter acquired, provided that the
provisions of this Section 4.17 shall not prevent the creation,
incurrence, assumption or existence of the following Liens (each,
a "Permitted Lien"):
(a) Liens for current taxes, assessments and other
governmental charges, the payment of which is being contested by a
Good Faith Contest as permitted pursuant to Section 4.9;
(b) Liens created pursuant to the Project Security
Documents;
(c) purchase money security interests in discrete items
of equipment acquired after the Operation Date of Unit 1 and not
comprising an integral part of the Project when the obligation
secured is incurred for the purchase of such equipment and does not
exceed one hundred percent (100%) of the lesser of cost or fair
market value thereof at the time of acquisition, and the security
interest does not extend beyond the equipment
involved; provided, that such Liens and the amount of materials,
equipment and fixtures supplied or purchased pursuant to Section
4.16 hereof shall not, taken together, at any time exceed the
maximum aggregate amount of $1 million; and
(d) mechanics', materialmen's, carrier's and similar
Liens securing obligations incurred in the ordinary course of
business which (i) are not past due or which are the subject of a
Good Faith Contest by the Partnership (unless during the pendency
of such contest or as a result thereof there is a reasonable
possibility that the Liens of the Project Security Documents could
be endangered or there is a reasonable possibility that any
material portion of the Site, the Plant or the Project could become
subject to loss or forfeiture) and (ii) which do not in the
aggregate detract from the value of the Site, the Plant or the
Project or other assets of the Partnership or materially impair the
use thereof; provided that upon the commencement of any proceeding
to foreclose or enforce any such Permitted Lien, the Collateral
Agent or the Co-Collateral Agent, as appropriate, may take such
action as it reasonably deems necessary to protect its interest in
the Site, the Plant or the Project including, without limitation,
payment of amounts reasonably necessary to release any such Lien,
and in such event the Partnership shall reimburse the Collateral
Agent or the Co-Collateral Agent, as appropriate, upon demand for
the cost thereof together with interest thereon at the rate per
annum equal to the Default Rate.
Section 4.18 Guarantees. The Partnership will not enter
into any Contingent Obligations including, without
limitation, any agreement or arrangement to guarantee or, in any
way or under any condition, become obligated for all or any part of
any Indebtedness or other obligation of another Person;
provided, however, that nothing in this Section 4.18 shall be
deemed to prohibit the execution, delivery, declaring effective and
performance by the Partnership of the Assignment and
Assumption Agreement or any Financing Document.
Section 4.19 Subsidiaries; Advances, Investments and
Loans. The Partnership will not form or have any Subsidiaries,
lend money or credit or make deposits (other than deposits in the
Accounts and deposits in relation to the payment for goods and
equipment in the ordinary course of business) with or advances
(except as specifically required by the Construction Contract) to
any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital
contribution to, any other Person, except that the Partnership may
(a) use idle cash to acquire and hold Cash Equivalents solely to
give employment to its idle resources in accordance with the
Disbursement Agreement and (b) make loans to its Affiliates of
monies permitted to be withdrawn and transferred to or at the
direction of the Partnership pursuant to the terms of priority
EIGHTH of Section 3.02(d)(ii) of the Disbursement Agreement or the
last sentence of Section 3.05 of the Disbursement Agreement, if and
to the extent the Partnership shall have received the approval of
the Board of Investments of the Republic for such loans.
Section 4.20 Transactions. The Partnership will not (a)
enter into any transaction or series of related transactions with
any Person other than in the ordinary course of business and on an
arm's-length basis or (b) establish any sole and exclusive
purchasing or sales agency, or enter into any transaction whereby
the Partnership might receive less than the full ex-works
commercial price (subject to normal trade discounts) for
electricity or pay more than ex-works commercial price for
products of others, provided, however, that nothing in this Section
4.20 shall be deemed to prohibit the execution, delivery, declaring
effective and performance by the Partnership of the Energy
Conversion Agreement, the Construction Contract, the Administrative
and Technical Services Agreement, the O&M
Agreement and any Financing Document. Without limiting the
generality of the immediately preceding sentence, the Partnership
shall not, directly or indirectly, purchase, acquire, exchange or
lease any property from, or sell, transfer or lease any property
to, or borrow any money from, or enter into any agreement with, any
of its Affiliate or any of its own officers, directors or employees
or any of the officers, directors or employees of any of its
Affiliates, except for the transactions expressly provided for
under the Equity Funding Agreement, the Administrative and
Technical Services Agreement, the Assignment and Assumption
Agreement, the Omnibus Security Agreement, any other Financing
Document and the O&M Agreement or transactions entered into with
the prior written consent of the Required Project Secured Parties
in the ordinary course of business and upon fair and reasonable
terms no less favorable than the Partnership could obtain, or could
become entitled to, in an arm's-length transaction with a Person
which is not an Affiliate. In addition, the Partnership shall not
select any arbitrator under any arbitration clause in any Project
Document to which an Affiliate of the Partnership is party without
the prior written consent of the Required Project Secured Parties,
which consent shall not be unreasonably withheld or delayed.
Section 4.21 Other Transactions. The Partnership will
not enter into any partnership, profit-sharing, or royalty
agreement or other similar arrangement whereby the Partnership's
income or profits are, or might be, shared with any other Person,
or enter into any management contract or similar arrangement
whereby its business or operations are managed by any other Person,
provided, however, that nothing in this Section 4.21 shall be
deemed to prohibit the execution, delivery, declaring effective and
performance by the Partnership of the
Administrative and Technical Services Agreement, the O&M
Agreement, the Equity Funding Agreement and any other Financing
Document.
Section 4.22 Fiscal Year; Modifications and
Assignments of Agreements; Additional Agreements; Etc. (a) The
Partnership will not change its Fiscal Year.
(b) The Partnership will not, without the prior
written consent of (i) the Project Administrative Agent, become a
party to any agreement, contract or commitment (other than (x) the
agreements identified in clauses (i) through (vi), clause (ix) and
clause (xvi) of the definition of the term Operating Agreements set
forth in Schedule X hereto, but not replacements thereof, (y) the
Financing Documents and (z) agreements, contracts or commitments in
respect of Permitted Indebtedness) which, individually, creates an
annual financial obligation of the Partnership in excess of
$100,000 (or the equivalent in other currency) or which would cause
the aggregate annual financial obligations of the Partnership under
all agreements, contracts and commitments (other than those
specified in clauses (x) through (z) immediately above) to which
the Partnership is a party to exceed $300,000 (or the equivalent in
other currency) and (ii) the Required Project Secured Parties,
become a party to any agreement, contract or commitment (other than
(x) the agreements identified in clauses (i) through (vi), clause
(ix) and clause (xvi) of the definition of the term Operating
Agreements set forth in Schedule X hereto, but not replacements
thereof, (y) the Financing Documents and (z) agreements,
contracts or commitments in respect of Permitted Indebtedness)
which, individually, creates an annual financial obligation of the
Partnership in excess of $300,000 (or the equivalent in other
currency) or which would cause the aggregate annual financial
obligations of the Partnership under all agreements, contracts and
commitments (other than those specified in clauses (x) through (z)
immediately above) to which the Partnership is a party to exceed
$500,000 (or the equivalent in other currency).
(c) The Partnership shall not issue, direct, authorize,
consent to or permit to be effective any Change Order under the
Construction Contract without the prior written approval of the
Independent Engineer and the Required Project Secured Parties,
except for Change Orders which (i) do not change the plans and
specifications therein in any material respect, (ii) do not
materially alter the construction schedule and do not postpone or
cause a postponement of the First Unit Performance Test Completion
Deadline (as defined in the Construction Contract) beyond June 1,
1996, the Second Unit Performance Test Completion Deadline (as
defined in the Construction Contract) beyond June 1, 1997 or the
Third Unit Performance Test Completion Deadline (as defined in the
Construction Contract) beyond June 1, 1997, (iii) do not alter in
any respect the performance or availability guarantees set forth in
the Construction Contract or the test methods for determining any
Generating Unit's capability to meet such performance or
availability guarantees, (iv) do not change the Contract Price (as
defined in the Construction Contract) by more than $3 million in
the aggregate (taking into account all previous Change Orders under
the Construction Contract) and (v) do not violate any material
provision of any Project Document. The Partnership shall not
issue, direct, authorize, consent to or permit to be effective any
Change Order under the Construction Contract which does not require
the consent of the Required Project Secured Parties pursuant to the
preceding sentence and which changes the Contract Price (as defined
in the Construction Contract) by more than $1 million as to any one
change without the prior written approval of the Independent
Engineer and the Project Administrative Agent (which approvals
shall not be unreasonably withheld or delayed).
(d) Without the prior written consent of the Bank Agent,
the VPCC Agent and OPIC, the Partnership shall not,
directly or indirectly, terminate, cancel or suspend, or permit or
consent to any termination, cancellation or suspension of, or enter
into or consent to or permit the assignment of the rights or
obligations of any party to, any of the Project Documents and,
without the prior written consent of the Required Banks, the
Partnership shall not exercise its option under Section 2.03 of the
OPIC Finance Agreement to cancel all or any part of the Commitment
(as defined in the OPIC Finance Agreement). The Partnership shall
not, directly or indirectly, amend, modify, supplement or waive, or
permit or consent to the amendment, modification, supplement or
waiver of, any of the provisions of, or give any consent under, any
of the Project Documents, except for Change Orders under the
Construction Contract (provided that the provisions of clause (c)
of this Section 4.22 are complied with in each case), without (i)
first submitting to the VPCC Agent, the Bank Agent, the Project
Administrative Agent and OPIC a copy of such proposed amendment,
supplement, waiver, or consent and (ii) the prior written consent
of the VPCC Agent, the Bank Agent, the Project Administrative Agent
and OPIC (it being
understood that if the Project Administrative Agent shall not have
received a written notice from OPIC, on or before the date which is
ten (10) Business Days after the OPIC Confirmed Receipt Date with
respect to such proposed amendment, supplement, waiver or consent,
to the effect that OPIC is withholding its consent to (or requires
additional time to examine) such proposed amendment, supplement,
waiver or consent, then without prejudice to the independent
consensual rights of the VPCC Agent, the Bank Agent and the Project
Administrative Agent under this sentence, OPIC shall be deemed to
have given its prior written consent to such proposed amendment,
supplement, waiver or consent); provided, however, that (x) if in
any Project Document, the consent of the Partnership to an
assignment by the other party thereto cannot be unreasonably
withheld, the consent of the VPCC Agent, the Bank Agent, OPIC and
the Project Administrative Agent to such an assignment shall not be
unreasonably withheld and (y) the
Partnership need not obtain the prior written consent of the VPCC
Agent, the Bank Agent, OPIC and the Project Administrative Agent to
an amendment to the Partnership Agreement (but shall provide the
VPCC Agent, the Bank Agent, the Project
Administrative Agent and OPIC with copies of any such amendment
prior to execution thereof) made solely to memorialize the
changes in ownership interests in the Partnership in connection
with a transfer of partnership interests permitted pursuant to
Sections 4.13(d) and (e) hereof. Notwithstanding the foregoing,
(A) without the prior written consent of each of the Bank Agent,
the VPCC Agent, the Banks and OPIC, the Partnership shall not, (i)
directly or indirectly, amend, modify, supplement or waive, or
permit or consent to the amendment, modification, supplement or
waiver of, (x) any provision of Article 9 of the Energy
Conversion Agreement or (y) any other provision of the Energy
Conversion Agreement governing the terms and conditions of, or the
events or circumstances giving rise to the Partnership's or PNOC-
EDC's right to require, a Buyout or (ii) enter into or permit or
grant any amendment or modification of the Energy Conversion
Agreement or any supplement to or waiver thereunder which is
reasonably likely to have an adverse financial impact on the
Partnership (including, without limitation, on the amounts of,
currency of or timing of payments to the Partnership under the
Energy Conversion Agreement) and (B) without the prior written
consent of the Banks, the Partnership shall not modify or amend the
Energy Conversion Agreement, the PNOC-EDC Consent Agreement, the
Assignment and Assumption Agreement or the Performance Undertaking
without first obtaining any consent of OPIC required under numbered
paragraph 12 of Section 9.01 of the OPIC Lenders Insurance Contract
or numbered paragraph 11 of Section 9.01 of the OPIC Equity
Insurance Contract.
(e) Other than the assignment as security of the Project
Documents to the Collateral Agent as security for the benefit of
the Project Secured Parties, the Partnership will not assign
(except with respect to Permitted Liens) any of its rights or
obligations under any Project Document without the prior written
consent of the Required Project Secured Parties.
(f) The Partnership will not take any action under
Article 9 of the Energy Conversion Agreement to require a Buyout
without the prior written consent of the Required Project Secured
Parties.
(g) The Partnership shall not claim for itself "Force
Majeure" or "Political FM" as provided in Article 14 of the Energy
Conversion Agreement without the prior written consent of the
Project Administrative Agent and the Independent Engineer, which
consents shall not be unreasonably withheld or delayed.
Section 4.23 No Other Business. Without the prior
written consent of the Required Project Secured Parties, except as
contemplated by Section 4.19 hereof, the Partnership will not carry
on any business other than the development, design, ownership,
financing, construction and operation of the Project strictly in
accordance with the Project Documents and will take no action
whether by acquisition or otherwise which would constitute or
result in any alteration to the nature of that business or the
nature or scope of the Project.
Section 4.24 Abandonment. The Partnership will not
abandon or agree to abandon the Project or place it or agree to
place it on a "care and maintenance" basis for more than 14 days in
any calendar year, provided, however, that (i) nothing in this
Section 4.24 shall prevent the Partnership from shut-downs
necessary for repairs and maintenance at the Plant or from
putting the Plant on a "care and maintenance basis" during any
"Force Majeure" or "Political FM" (as defined in the Energy
Conversion Agreement) not within the control of the Partnership,
which "Force Majeure" or "Political FM" prevents the Partnership
from developing, constructing or operating the Plant; and (ii)
nothing in this Section 4.24 shall be deemed to waive or limit in
any way the right of any of the Banks, the Bank Agent, OPIC or the
VPCC Agent to declare an Event of Default as provided in Section 5
hereof including, without limitation, Sections 5.6 and 5.7 hereof.
Section 4.25 Improper Use. The Partnership will not
use, maintain, operate or occupy, or allow the use, maintenance,
operation or occupancy of, any portion of the Site or the Project
for any purpose:
(a)which may be dangerous, unless safeguarded as
required by Applicable Law (provided, however, that this clause (a)
shall not be deemed to prohibit the Partnership from carrying out
the Project in accordance with the terms of the Energy
Conversion Agreement and the Construction Contract in a
reasonable and prudent manner);
(b)which violates any Applicable Law in any material
respect;
(c)which may constitute a public or private nuisance
resulting in a Material Adverse Effect;
(d)which may make void, voidable, or cancelable or
increase the premium of, any insurance then in force with respect
to the Site or the Project or any part thereof unless, in the case
of an increase in premium, the Partnership gives proof of payment
of such increase; or
(e)otherwise than for the intended purpose thereof in the
construction, operation and maintenance of the Plant.
Section 4.26 Capital Expenditures. The Partnership
shall not, without the prior written consent of the Required
Project Secured Parties, make any capital expenditures in excess of
the amounts contemplated by the Construction Budget and the Annual
Budget (it being understood that the Partnership shall not, without
the prior written consent of the Required Project Secured Parties,
make any discretionary capital expenditures in excess of the
amounts contemplated by priority SEVENTH of Section 3.02(d)(ii)
ofthe Disbursement Agreement).
Section 4.27 Amendment of Construction Budget. The
Partnership will not, directly or indirectly, amend, modify,
allocate, re-allocate or supplement or permit or consent to the
amendment, modification, allocation, re-allocation or supplement
of, any of the provisions of the Construction Budget, except with
the prior written approval of the Required Project Secured
Parties. Notwithstanding the foregoing, the Partnership may make
such allocations and re-allocations with respect to the
Construction Budget (other than such portions thereof allocated to
the Budget Categories entitled "Hard Cost Contingency" and "Soft
Cost Contingency") as are approved in writing by the
Project Administrative Agent and the Independent Engineer.
Section 4.28 Bank Accounts. The Partnership shall
maintain all its bank accounts with the Collateral Agent, except
that the Partnership may maintain, in accordance with the
Disbursement Agreement, (a) the Excess Peso Account, (b) the O&M
Peso Account and (c) the Dollar Operating Cost Account. On each
date prior to the Conversion Date on which any Cash Receipts from
PNOC-EDC or the Republic are deposited into the Dollar Project
Control Account, the Partnership shall notify each of the Bank
Agent, the VPCC Agent, the Collateral Agent and OPIC of the
portion, if any, of such Cash Receipts which represent Cash
Receipts received from PNOC-EDC pursuant to Sections 8.6(a) and/or
8.6(d) of the Energy Conversion Agreement (or the Republic under
the Performance Undertaking) on account of "value added taxes" with
respect to the Project and/or import duties on
capital equipment provided under the Construction Contract
(which, for the avoidance of doubt, shall include that portion of
Cash Receipts received under the Energy Conversion Agreement and
the Performance Undertaking representing a gross-up for "value
added taxes" on the goods and services provided under the Energy
Conversion Agreement which otherwise would have been remitted to
the appropriate Governmental Authorities of the Republic but for
the payment by the Partnership of other "value added taxes" with
respect to the Project).
Section 4.29 Syndication Efforts. During the period
commencing on the Effective Date and terminating on the first
anniversary of the Credit Date, the Partnership shall make itself
reasonably available to assist the Bank Agent in syndicating the
Total Bank Commitment under the Bank Credit Agreement. Without
limiting the generality of the foregoing, the Partnership shall, at
the request of the Bank Agent, assist the Bank Agent and otherwise
cooperate with the Bank Agent in the preparation of the Information
Memorandum (which assistance may include reviewing and commenting
on drafts of the Information Memorandum and drafting portions
thereof) to facilitate the preparation and printing of the
Information Memorandum within twenty-one (21) days after the
Effective Date.
Section 4.30 Press Releases; Advertising. Neither the
Partnership, nor the Bank Agent, the VPCC Agent, the Project
Administrative Agent, any Bank nor any Affiliate of the Partnership
shall issue or consent to the issuance of any press release or
other announcement or advertisement that refers to the provision of
financing by the Project Secured Parties or the Bank Financing
Secured Parties for the Project without the prior written consent
of the Partnership, OPIC, the VPCC Agent, the Project
Administrative Agent and the Bank Agent, which consent shall not be
unreasonably withheld or delayed, except that no consent shall be
required where the issuance of any such press release, announcement
or advertisement is required by Applicable Law.
Section 4.31 Additional Documents; Filings and
Recordings. The Partnership shall execute and deliver, from time
to time as reasonably requested by the Bank Agent, the VPCC Agent,
OPIC, the Collateral Agent or the Co-Collateral Agent, at the
Partnerships expense, such other documents as shall be
necessary or advisable or that the Bank Agent, the VPCC Agent,
OPIC, the Collateral Agent or the Co-Collateral Agent may
reasonably request in connection with the rights and remedies of
the Project Secured Parties granted or provided for by the Project
Documents, as applicable, and to consummate the transactions
contemplated therein. The Partnership shall, at its own expense,
take all reasonable actions that have been or shall be requested by
the Bank Agent, the VPCC Agent, OPIC, the Collateral Agent or the
Co-Collateral Agent or that the Partnership knows are necessary to
establish, maintain, protect, perfect and continue the perfection
of the first priority security interests of the Project Secured
Parties created by the Project Security Documents and shall furnish
timely notice of the necessity of any such action, together with
such instruments, in execution form, and such other information as
may be required to enable the Bank Agent, the VPCC Agent, OPIC and
any other appropriate Project Secured Party to effect any such
action. Without limiting the generality of the foregoing, the
Partnership shall (a) execute or cause to be executed and shall
file or cause to be filed such financing statements, continuation
statements, fixture filings and mortgages or deeds of trust in all
places necessary or advisable (in the opinion of counsel for the
Bank Agent, the VPCC Agent, OPIC, the Collateral Agent or the Co-
Collateral Agent) to establish, maintain and perfect such security
interests and in all other places that the Bank Agent, the VPCC
Agent, OPIC, the Collateral Agent or the Co-Collateral Agent shall
reasonably request and (b) do everything necessary in the
reasonable judgment of the Bank Agent, the VPCC Agent, OPIC, the
Collateral Agent or the Co-Collateral Agent to (i) create and
perfect the Project Security with respect to future assets
covered by Part B of the Omnibus Security Agreement, (ii)
maintain the Project Security in full force and effect at all times
and (iii) preserve and protect the Project Collateral and protect
and enforce its rights and title and the rights and title of the
Project Secured Parties to the Project Collateral.
Section 4.32 Employees and Employee Plans. The
Partnership shall not adopt, establish, maintain, sponsor,
administer, contribute to, participate in, or incur any liability
under or obligation to contribute to, any Plan or incur any
liability to provide post-retirement welfare benefits other than
liability resulting from the Partnership being an ERISA Affiliate
with respect to such Plan.
Section 4.33 Debt Service Coverage Ratio. On each
Calculation Delivery Date, the Partnership shall deliver to the
Project Administrative Agent, the VPCC Agent, the Bank Agent and
OPIC its calculation of the Debt Service Coverage Ratio for the
Principal Repayment Date immediately following such Calculation
Delivery Date. A sample calculation of the Debt Service Coverage
Ratio is contained in Schedule 4.33. Each such calculation shall
be made by the Partnership reasonably and in good faith.
Section 4.34 Optional Prepayments. The Partnership
shall not make any optional prepayment of any of the Project Term
Loans pursuant to Section 2.13 of the Project Credit Agreement or
make any optional prepayment of the OPIC Term Loan pursuant to
Section 2.07 of the OPIC Finance Agreement unless, after giving
effect to such prepayment, the outstanding principal amounts of the
Project Term Loans and the OPIC Term Loan shall be reduced pro rata
in proportion to the respective share of the Secured Principal
Amount Outstanding which the Project Term Loans and the OPIC Term
Loan represented immediately prior to such prepayment; provided,
however, that nothing herein shall be deemed or
construed to prohibit a prepayment of any of the Project Term Loans
in connection with the application of proceeds of the OPIC Equity
Insurance Contract or of amounts received under the
Political Risk Agreement notwithstanding that no such proceeds are
applied to the repayment of the OPIC Term Loan; and provided
further that notwithstanding anything to the contrary contained
herein, (x) in connection with any optional prepayment of the OPIC
Term Loan pursuant to Section 2.07 of the OPIC Finance Agreement,
the Required Banks shall have the sole right to waive the
provisions of this Section 4.34 which would require that the
Partnership also make a pro rata prepayment of the Project Term
Loans and (y) in connection with any optional prepayment of the
Project Term Loans pursuant to Section 2.13 of the Project Credit
Agreement, OPIC shall have the sole right to waive the provisions
of this Section 4.34 which would require that the Partnership also
make a pro rata prepayment of the OPIC Term Loan.
Section 4.35 Foreign Exchange Registrations.
Following the making of each Utilization, the Partnership shall
promptly cause such Utilization to be duly registered or recorded
with the Central Bank and shall furnish to the VPCC Agent and OPIC
a copy of each such registration or recording.
Section 4.36 Accommodation Village. The Partnership
shall obtain the written consent of the Bank Agent, the VPCC Agent
and OPIC prior to entering into any Accommodation Village
Contracts, which consent shall not be unreasonably withheld. The
Partnership shall demonstrate to the Bank Agent, the VPCC Agent and
OPIC that the Partnership, or alternatively, the
developer, joint venture, lessor and/or owner of the
Accommodation Village, has insured the Accommodation Village and
the construction thereof against loss or damage, in each case
pursuant to policies issued by financially sound and reputable
insurers satisfactory to the Bank Agent, the VPCC Agent and OPIC
and containing provisions regarding the scope and amount of
insurance coverage, the identity of loss payees and additional
insureds and other insurance matters satisfactory to the Bank
Agent, the VPCC Agent and OPIC. To the extent that the
Partnership's interest in the Accommodation Village is
mortgageable, the Bank Agent, the VPCC Agent and OPIC may
require, but are not obligated to require, that the Partnership
grant to or for the benefit of the Project Secured Parties a
security interest in the Partnership's interest in the
Accommodation Village and execute all documents necessary or
reasonably advisable in connection therewith. In connection with
the Partnership's execution and delivery of any Accommodation
Village Contracts, the Partnership shall deliver to the Secured
Parties such opinions of counsel and consents to assignment as may
be reasonably requested by the Project Administrative Agent.
Section 4A. Covenants of VPCC
VPCC covenants and agrees that until the Bank Financing
Termination Date, and unless otherwise waived in writing by the
Required Banks:
Section 4A.1 Information Covenants. VPCC shall
furnish to the Bank Agent (in sufficient quantities for each of the
Banks) and to OPIC:
(a) Quarterly Financial Statements of VPCC. As soon as
available but, in any event, within sixty (60) days after the close
of each of the first three quarterly accounting periods in each
Fiscal Year,
(i) complete unaudited financial statements of VPCC
as at the end of such quarterly period with related statements of
income and retained earnings and statements of changes in
financial position for such quarterly period and for the elapsed
portion of the Fiscal Year ended with the last day of such
quarterly period, in each case setting forth comparative figures
for the related periods in the prior Fiscal Year, all of which
shall be in form reasonably satisfactory to the Bank Agent and
certified as to fairness of presentation, generally accepted
accounting principles and consistency by the chief financial
officer of VPCC, subject to normal year-end audit adjustments;
(ii) a report on any event or condition which has had
or which is reasonably likely to have a Material Adverse Effect;
and
(iii) a statement of all financial transactions in such
Quarter between VPCC and any Affiliate of VPCC, including a
certification that such transactions were on ordinary commercial
terms negotiated on an arm's-length basis.
(b) Annual Financial Statements of VPCC. As soon as
available but, in any event, within one hundred twenty (120) days
after the close of each Fiscal Year, the following, all in form
reasonably satisfactory to the Bank Agent: (i) financial
statements of VPCC as at the end of such Fiscal Year with the
related statements of income and retained earnings and statements
of changes in financial position for such Fiscal Year, in each case
setting forth comparative figures for the preceding Fiscal Year and
certified without material exception by independent certified
public accountants of nationally recognized standing (all such
statements being in agreement with VPCC's books of account and
prepared in accordance with GAAP), and (ii) a report of VPCC's
independent certified public accountants stating that in the course
of its regular audit of the financial statements of VPCC, which
audit was conducted in accordance with United States generally
accepted auditing standards, the accountants obtained no knowledge
of any Default or Event of Default which has
occurred and is continuing or, if in the opinion of the
accountants such a Default or Event of Default has occurred and is
continuing, a statement as to the nature thereof.
(c) Officer's Certificates. At the time of the
delivery of the financial statements provided for in Section
4A.1(a) and (b), a certificate of a Financial Officer of VPCC to
the effect that, to the best of his or her knowledge, (i) no
Default or Event of Default has occurred and is continuing and (ii)
no breach or default (or event that with the passage of time, the
giving of notice or both would constitute a breach or default) with
respect to VPCC under any of the other Financing Documents or
Project Documents exists or is imminent on the date of such
certificate or has occurred and is continuing since the date of the
immediately preceding certificate, or if any such Default, Event of
Default, breach, default or event has occurred or is imminent,
setting forth the details thereof and what action VPCC has taken,
is taking or proposes to take in response
thereto.
(d) Notice of Default, Litigation, etc. (i) As soon as
practicable but in no event more than three (3) Business Days after
the occurrence of any Default or Event of Default or any breach or
default (or event that with the passage of time, the giving of
notice or both would constitute a breach or default) hereunder or
under any of the other Project Documents by VPCC or (where VPCC has
knowledge) by any other party thereto, a
certificate of the chief financial officer, treasurer or chief
accounting officer of VPCC setting forth the details thereof and
the action which VPCC is taking and proposes to take with respect
thereto; and (ii) as soon as practicable but in no event more than
five (5) Business Days after VPCC obtains knowledge thereof,
written notice of:
(A) any information, development or knowledge of
any adverse change in the business, prospects, properties,
condition (financial or otherwise) or operations, present or
prospective, of VPCC;
(B) (x) any material dispute involving VPCC (and
promptly upon any decision relating to any such dispute having been
made, a copy of such decision), and (y) any litigation,
investigation, proceeding, material claim or material controversy
(1) involving or affecting VPCC or any of its properties,
revenues or assets, (2) which could cause a Default or an Event of
Default, or (3) for the purpose of revoking, terminating,
withdrawing, suspending, modifying or withholding any
Governmental Approvals necessary for the performance by VPCC of its
obligations, or the exercise by VPCC of its rights, under the
Project Documents;
(C) any proposal by any Governmental Authority to
acquire compulsorily VPCC, any of the Bank Financing Collateral or
any part of VPCC's business or assets;
(D) any substantial dispute between VPCC and any
Governmental Authority relating to the Project;
(E) any change in the authorized representatives of
VPCC referred to in Section 3.1(m) above, which notice shall be
accompanied by certified specimen signatures of any new
representatives so appointed and, if requested by the Bank Agent,
satisfactory evidence of the authority of such new
representatives;
(F) any actual or proposed termination,
rescission, discharge (otherwise than by performance), amendment or
waiver or indulgence under, any material provision of any Project
Document to which VPCC is a party;
(G) any material notice or correspondence
received or initiated by VPCC relating to a Governmental Approval
or other license or authorization necessary for the performance by
it of its obligations under the Project Documents;
(H) any Lien (other than a Lien permitted to be
created, assumed or incurred, or permitted to exist, in
accordance with Section 4A.13 hereof) becoming enforceable over any
of VPCC's assets;
(I) any proposed material change in the nature or
scope of the business or operations of VPCC and any one or more
events, conditions or circumstances that exist or have occurred
which are reasonably likely to have a Material Adverse Effect;
(J) the occurrence of any event or act which could
reasonably be expected to qualify as the basis for a claim by VPCC
under the OPIC Lenders Insurance Contract;
(K) and/or copies of: (x) each funding waiver
request filed with respect to any Pension Plan and all
communications received or sent by VPCC or any ERISA Affiliate with
respect to such request; and (y) the failure of VPCC or any ERISA
Affiliate to make a required installment or payment under Section
412 of the Code, Section 302 of ERISA or the terms of any Pension
Plan by the due date (other than the quarterly
contributions described in Section 302(e) of ERISA or Section
412(m) of the Code);
(L) the occurrence of any Termination Event which
has or could result in any liability of VPCC in connection with any
Pension Plan or any trust thereunder, specifying the nature
thereof, what action VPCC or the ERISA Affiliate has taken, is
taking or proposes to take with respect thereto and, when known,
any action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto;
(M) and copies of: (x) all notices of the PBGC's
intent to terminate any Pension Plan or to have a trustee
appointed to administer any Pension Plan; and (y) all notices from
a Multiemployer Plan sponsor concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA;
(N) the filing of an intent to terminate any
Pension Plan under a distress termination within the meaning of
Section 4041(c) of ERISA; and
(O) and a copy of each agreement, commitment or
understanding (whether or not subject to the approval of any party
hereto pursuant to any other provision of this Agreement) executed
by or on behalf of VPCC.
(e) Reports to Governmental Authorities. (i) As soon as
is practicable but in no event more than five (5) Business Days
after the filing by VPCC of any material information or material
report with any Governmental Authority, a copy of such information
or report and (ii) as soon as is practicable but in no event more
than five (5) Business Days after receipt by VPCC, copies of any
material request for information by a Governmental Authority and of
each material Governmental Approval obtained by VPCC.
(f) Legal Opinions. Within 90 days after the end of
each Annual Period, an opinion or opinions of counsel addressed to
each Bank Financing Secured Party (i) stating that all action has
been taken with respect to the filing, recording, re-filing and re-
recording of the Bank Financing Security Documents and/or financing
statements and continuation statements (and/or other instruments
similar in effect under the laws of any jurisdiction) with respect
thereto as is necessary to protect and preserve the rights and
interests of the Bank Agent in and to the Bank
Financing Collateral and the Liens on and in the Bank Financing
Collateral created by the Bank Financing Security Documents and
reciting the details of such action or referring to prior
opinions of counsel in which such details are given and (ii)
stating what, if any, filings, recordings, re-filings and re-
recordings of the aforementioned agreements, statements and
instruments may reasonably be expected to become necessary during
the next fifteen months in order to protect and preserve the rights
and interests of the Bank Agent in and to the Bank
Financing Collateral and the Liens on and in the Bank Financing
Collateral created by the Bank Financing Security Documents.
(g) Additional Information. Within a reasonable time
but in no event more than five (5) Business Days after request
therefor, such additional information regarding the business,
prospects, properties, condition (financial or otherwise) or
operations, present or prospective, of VPCC as the Bank Agent or
OPIC may reasonably request.
Section 4A.2 Books and Records. VPCC will keep proper
books of record and account adequate to reflect truly and fairly
the financial condition and results of operations of VPCC in which
full, true and correct entries in conformity with GAAP and all
Applicable Laws shall be made of all dealings and
transactions in relation to its business and activities. VPCC will
permit officers and designated representatives of the Bank Agent
and the Banks to examine and make copies of the books of record and
account of VPCC and discuss the affairs, finances and accounts of
VPCC with, and be advised as to the same by, its officers, all at
such reasonable times and intervals and to such reasonable extent
as the Bank Agent or the Banks may request.
Section 4A.3 Maintenance of Existence; Privileges; Etc.
VPPC shall at all times (a) preserve and maintain in full force and
effect (i) its existence as a corporation and good standing under
the laws of the State of Delaware, (ii) its
qualification to do business in and good standing under the laws of
the State of New York and of 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 or desirable and (iii)
all of its powers, rights, privileges and franchises
necessary for the financing by VPCC of the Project in the manner
contemplated by the Financing Documents and the maintenance of its
existence, (b) obtain in a timely manner and maintain in full force
and effect (or where appropriate, renew) all Governmental Approvals
and all other licenses, registrations, waivers,
consents and approvals required at any time or advisable in
connection with the financing by VPCC of the Project in the manner
contemplated by the Financing Documents and (c) preserve and
maintain good and marketable title to its properties and assets
subject to no Liens other than any Lien permitted to be created,
incurred or assumed or permitted to exist pursuant to Section 4A.13
hereof.
Section 4A.4 Compliance with Statutes and Regulatory
Matters. (a) VPCC will comply in all material respects with all
Applicable Laws in respect of the conduct of its business and the
ownership and use of its property.
(b) No part of the proceeds of the Bank Loans will be
used to purchase "margin stock" (as defined in the regulations
referred to below) or for any other purpose which would result in
a violation (whether by VPCC or the Banks) of Regulation G, T, U or
X of the Board of Governors or to extend credit to others for any
such purpose. Neither VPCC nor any of its Affiliates is engaged
in, nor will any of them engage in, the business of extending
credit for the purpose of purchasing or carrying any "margin
stock".
Section 4A.5 Business Implementation. (a) VPCC shall
(i) conduct its business with due diligence and efficiency and in
accordance with sound financial and business practices and
(ii) use the proceeds of all Bank Construction Loans only for the
purpose of making Project Construction Loans strictly in
accordance with the Financing Documents.
(b) VPCC shall maintain a tracking system to monitor the
status of, the conditions contained in, and compliance with,
Governmental Approvals required to be obtained by or on behalf of
VPCC or required to be complied with by VPCC. VPCC shall
promptly amend and deliver to the Bank Agent, the VPCC Agent and
OPIC a revised Schedule 2.12 hereto in the event of any material
change in the Governmental Approvals applicable to VPCC.
Section 4A.6 Taxes, Duties, Etc. VPCC will pay and
discharge all taxes, duties, fees, assessments and other
governmental charges imposed on it, on its income or profits, on
any of its property, or in connection with the execution, issue,
delivery, registration, notarization, assignment or transfer of any
interest in or for the legality, validity or enforceability of any
Project Document prior to the date on which penalties attach
thereto, and all claims, levies or liabilities for sums which have
become due and payable and which have or, if unpaid might become,
a Lien upon the property of VPCC (or any part thereof). VPCC shall
have the right, however, to contest in good faith the validity or
amount of any such tax, assessment,
governmental charge or claim by proper proceedings timely
instituted, and may permit the taxes, assessments, governmental
charges or claims so contested to remain unpaid during the period
of such contest if (i) VPCC diligently prosecutes such contest,
(ii) during the period of such contest the enforcement of any
contested item is effectively stayed, (iii) adequate cash
reserves or bonds in an amount reasonably satisfactory to the Bank
Agent are established with respect to the contested items and (iv)
such contest does not, in the reasonable discretion of the Bank
Agent, involve a material risk of the sale, forfeiture or loss of
any of the Bank Financing Collateral (other than the cash reserved
pursuant to clause (iii) of this sentence). VPCC will promptly pay
or cause to be paid any valid, final judgment enforcing any such
tax, duty, fee, assessment, other governmental charge or claim and
cause the same to be satisfied of record.
Section 4A.7 Performance of Obligations. VPCC will
perform all of its obligations under the terms of the Project
Documents to which it is a party. VPCC will maintain in full force
and effect each of the Project Documents to which it is a party.
VPCC will preserve, protect, defend and enforce the rights granted
to it under or in connection with the Project Documents to which it
is a party. VPCC shall take all action within its control required
or in the reasonable opinion of the Bank Agent advisable to ensure
that each of the Project Documents to which it is a party is in
proper legal form under the
respective governing laws selected in such Project Documents, for
the enforcement thereof in such jurisdictions without any further
action on the part of the Bank Agent, the Project Administrative
Agent or the Banks.
Section 4A.8 Name Changes; Etc. VPCC shall not change
its name without the prior written consent of the Required Banks.
VPCC shall not adopt or change any trade name or fictitious
business name without the prior written consent of the Required
Banks. VPCC shall execute and deliver to the Bank Agent any
additional documents or certificates necessary or advisable to
reflect any permitted adoption of or change in its name, trade name
or fictitious business name.
Section 4A.9 Consolidation, Merger, Sale of Assets.
VPCC will not (a) wind up, liquidate, terminate, dissolve or
reorganize (or suffer any winding-up, liquidation, termination,
dissolution or reorganization) or enter into any transaction of
merger or consolidation; (b) convey, sell, lease or otherwise
dispose of (or agree to do any of the foregoing at any future time)
all or any part of its property or assets; or (c) purchase or
otherwise acquire (in one or a series of related transactions) any
part of the property or assets of any Person.
Section 4A.10 Dividends; Capital Stock. VPCC will not
declare or pay any dividends, or return any capital, to its
stockholders or authorize or make any other distribution, payment
or delivery of property or cash to its stockholders as such, or
redeem, retire, purchase or otherwise acquire, directly or
indirectly, for consideration, any shares of any class of its
capital stock now or hereafter outstanding (or any options or
warrants issued by VPCC with respect to its capital stock), or set
aside any funds for any of the foregoing purposes. VPCC shall not
allow the capital stock of VPCC to be other than as follows: (a)
the authorized capital stock of VPCC shall consist of 1,000 shares
of common stock, par value $1.00 per share, all of which 1,000
shares will be issued and outstanding and (b) all such outstanding
shares will be duly and validly issued, fully paid and non-
assessable.
Section 4A.11 Leases. VPCC will not enter into any
agreement or arrangement to acquire by lease the use of any
property or equipment of any kind.
Section 4A.12 Indebtedness. VPCC will not contract,
create, incur, assume or suffer to exist any Indebtedness, except
Indebtedness of VPCC incurred under the Financing Documents.
Section 4A.13 Liens. VPCC will not, and will not agree
to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets (real, personal or mixed,
tangible or intangible) of VPCC, whether now owned or hereafter
acquired, provided that the provisions of this Section 4A.13 shall
not prevent the creation, incurrence, assumption or existence of
the following Liens:
(a) Liens for current taxes, assessments and other
governmental charges, the payment of which is being contested by a
Good Faith Contest as permitted pursuant to Section 4A.6; and
(b) Liens created pursuant to the Bank Financing
Security Documents.
Section 4A.14 Guarantees. VPCC will not enter into any
Contingent Obligations including, without limitation, any agreement
or arrangement to guarantee or, in any way or under any condition,
become obligated for all or any part of any
Indebtedness or other obligation of another Person; provided,
however, that nothing in this Section 4A.14 shall be deemed to
prohibit the execution, delivery, declaring effective and
performance by VPCC of any Financing Document.
Section 4A.15 Subsidiaries; Advances, Investments and
Loans. VPCC will not form or have any Subsidiaries, lend money or
credit or make deposits with or advances to any Person, or purchase
or acquire any stock, obligations or securities of, or any other
interest in, or make any capital contribution to, any other Person,
except that VPCC may perform its obligations under the Financing
Documents strictly in accordance with the terms thereof.
Section 4A.16 Transactions. VPCC will not (a) enter
into any transaction or series of related transactions with any
Person or (b) establish any sole and exclusive purchasing or sales
agency, provided, however, that nothing in this Section 4A.16 shall
be deemed to prohibit the execution, delivery,
declaring effective and performance by VPCC of any Financing
Document or of the Management Agreement or the Loan Services
Agreement. Without limiting the generality of the immediately
preceding sentence, VPCC shall not, directly or indirectly,
purchase, acquire, exchange or lease any property from, or sell,
transfer or lease any property to, or borrow any money from, or
enter into any agreement with, any Person, except for the
transactions expressly provided for under the Financing
Documents, the Management Agreement or the Loan Services
Agreement or transactions entered into with the prior written
consent of the Required Banks.
Section 4A.17 Other Transactions. VPCC will not enter
into any partnership, profit-sharing, or royalty agreement or other
similar arrangement whereby VPCC's income or profits are, or might
be, shared with any other Person, or enter into any management
contract or similar arrangement whereby its business or operations
are managed by any other Person, provided, however, that nothing in
this Section 4A.17 shall be deemed to prohibit the execution,
delivery, declaring effective and performance by VPCC of any
Financing Document, the Management Agreement and the Loan Services
Agreement strictly in accordance with the terms thereof.
Section 4A.18 Fiscal Year; Modifications and
Assignments of Agreements; Additional Agreements; Etc. (a) VPCC
will not (i) amend or modify its Articles of Incorporation or By-
Laws or (ii) change its Fiscal Year.
(b) VPCC will not, without the prior written consent of
the Bank Agent, become a party to any agreement, contract or
commitment (other than the Financing Documents to which it is a
party on the date hereof, the Management Agreement and the Loan
Services Agreement).
(c) Without the prior written consent of the Required
Banks, VPCC shall not, directly or indirectly, terminate, cancel or
suspend, or permit or consent to any termination, cancellation or
suspension of, or enter into or consent to or permit the assignment
of the rights or obligations of any party to, any of the Project
Documents. VPCC shall not, directly or indirectly, amend, modify,
supplement or waive, or permit or consent to the amendment,
modification, supplement or waiver of, any of the provisions of, or
give any consent under, any of the Project Documents without (i)
first submitting to the Bank Agent a copy of such proposed
amendment, supplement, waiver, or consent and (unless waived by the
Required Banks) obtaining any and all consents required to be
obtained under numbered paragraph 9 of Section 9.01 of the OPIC
Lenders Insurance Contract and numbered paragraph 11 of Section
9.01 of the OPIC Equity Insurance
Contract and (ii) the prior written consent of the Bank Agent,
unless in the reasonable judgment of the Bank Agent, such
proposed amendment, supplement, waiver, or consent is reasonably
likely to have a Material Adverse Effect, in which case, the
express prior written consent of the Required Banks thereto.
(d) Other than pursuant to the VPCC Assignment and
Security Agreement, VPCC will not assign any of its rights or
obligations under any Project Document without the prior written
consent of the Required Banks.
Section 4A.19 No Other Business. VPCC will not carry on
any business other than the financing of the Project strictly in
accordance with the Financing Documents and will take no action
whether by acquisition or otherwise which would constitute or
result in any alteration to the nature of that business.
Section 4A.20 Press Releases; Advertising. Neither
VPCC, nor the Bank Agent, the VPCC Agent, the Project
Administrative Agent, any Bank nor any Affiliate of VPCC shall
issue or consent to the issuance of any press release or other
announcement or advertisement that refers to the provision of
financing by the Project Secured Parties or the Bank Financing
Secured Parties for the Project without the prior written consent
of VPCC, OPIC, the VPCC Agent, the Project Administrative Agent and
the Bank Agent, which consent shall not be unreasonably withheld or
delayed, except that no consent shall be required where the
issuance of any such press release, announcement or advertisement
is required by Applicable Law.
Section 4A.21 Additional Documents; Filings and
Recordings. VPCC shall execute and deliver, from time to time as
reasonably requested by the Bank Agent, at VPCC's expense, such
other documents as shall be necessary or advisable or that the Bank
Agent may reasonably request in connection with the rights and
remedies of the Bank Financing Secured Parties granted or provided
for by the Project Documents and to consummate the transactions
contemplated therein. VPCC shall, at its own expense, take all
reasonable actions that have been or shall be requested by the Bank
Agent or that VPCC knows are necessary to establish, maintain,
protect, perfect and continue the perfection of the first priority
security interests of the Bank Financing Secured Parties created by
the Bank Financing Security Documents and shall furnish timely
notice of the necessity of any such action, together with such
instruments, in execution form, and such other information as may
be required to enable the Bank Agent and any other appropriate Bank
Financing Secured Party to effect any such action. Without
limiting the generality of the foregoing, VPCC shall (a) execute or
cause to be executed and shall file or cause to be filed such
financing statements, continuation statements, fixture filings and
mortgages or deeds of trust in all places necessary or advisable
(in the opinion of counsel for the Bank Agent) to establish,
maintain and perfect such security interests and in all other
places that the Bank Agent shall reasonably request and (b) do
everything necessary in the reasonable judgment of the Bank Agent
to (i) maintain the Bank Financing Security in full force and
effect at all times and (ii) preserve and protect the Bank
Financing Collateral and protect and enforce its rights and title
and the rights and title of the Bank Financing Secured Parties to
the Bank Financing Collateral.
Section 4A.22 Employees and Employee Plans. Neither
VPCC nor any ERISA Affiliate shall adopt, establish, maintain,
sponsor, administer, contribute to, participate in, or incur any
liability under or obligation to contribute to, any Plan or incur
any liability to provide post-retirement welfare benefits.
Section 5. Events of Default
Notwithstanding anything herein or in any of the
Financing Documents or elsewhere to the contrary, upon the
occurrence of any of the following events (each of the following
events, an "Event of Default"):
Section 5.1 Payments. (a) The Partnership shall
default in the payment when due of any principal of, or interest
(including the OPIC Spread (as defined in the OPIC Finance
Agreement)) on, any Project Loan or the OPIC Loan or of any other
amounts owing to any of the Project Secured Parties under the
Project Credit Agreement, the Project Construction Note, the
Project Term Note, the OPIC Finance Agreement, the OPIC
Construction Note, the OPIC Term Note or any other Financing
Document; or
(b) VPCC shall default in the payment when due of any
principal of, or interest on, any Bank Loan or of any other amounts
owing to any of the Bank Financing Secured Parties under the Bank
Credit Agreement, any of the Bank Construction Notes, any of the
Bank Term Notes, or any other Financing Document; or
Section 5.2 Representations, Etc. Any statement,
representation or warranty by the Partnership, VPCC or any
Affiliate of the Partnership or VPCC in any of the Financing
Documents, any of the other Project Documents, any financial
statement or any other writing delivered to any of the Project
Secured Parties or any of the Bank Financing Secured Parties in
connection with any of the Financing Documents and the
transactions contemplated herein and in the other Project
Documents shall prove to have been false, incorrect, incomplete or
misleading in any material respect on or as of the date made,
deemed made, confirmed or furnished; or
Section 5.3 Covenants. (a) The Partnership shall fail
to perform or observe any covenant, term or agreement
contained in Sections 4.4(a) (Maintenance of Existence;
Privileges; Etc.), 4.13 (Consolidation, Merger, Sale of Assets,
Transfers of Partnership Interests, Etc.), 4.14 (Distributions to
Partners), 4.15 (Leases), 4.16 (Indebtedness), 4.17 (Liens), 4.18
(Guarantees), 4.19 (Subsidiaries; Advances, Investments and Loans),
4.20 (Transactions), 4.21 (Other Transactions), 4.22 (Fiscal Year;
Modifications and Assignments of Agreements;
Additional Agreements; Etc.), 4.23 (No Other Business), 4.24
(Abandonment), 4.25 (Improper Use), 4.26 (Capital Expenditures) or
4.32 (Employees and Employee Plans) hereof, any covenant, term or
agreement contained in Section 3 of the Disbursement
Agreement, any covenant, term or agreement contained in Section
6.04 (Worker Rights) of the OPIC Finance Agreement or any
covenant, term or agreement contained in Section 4.17 (Special OPIC
Representations of the Partnership) of the Project Credit
Agreement; or
(b) The Partnership shall fail to perform or observe any
covenant, term or agreement contained in the Energy
Conversion Agreement; provided, however, that such failure shall
not be deemed an Event of Default if the Partnership commences to
diligently cure such failure within ten (10) days of the
occurrence thereof and the Partnership cures such failure within
thirty (30) days of the occurrence thereof; or
(c) VPCC shall fail to perform or observe any
covenant, term or agreement contained in Sections 4A.3(a)
(Maintenance of Existence; Privileges; Etc.), 4A.9
(Consolidation, Merger, Sale of Assets), 4A.10 (Dividends;
Capital Stock), 4A.11 (Leases), 4A.12 (Indebtedness), 4A.13
(Liens), 4A.14 (Guarantees), 4A.15 (Subsidiaries; Advances,
Investments and Loans), 4A.16 (Transactions), 4A.17 (Other
Transactions), 4A.18 (Fiscal Year; Modifications and Assignments of
Agreements; Additional Agreements; Etc.), 4A.19 (No Other Business)
or 4A.22 (Employees and Employee Plans) hereof or any covenant,
term or agreement contained in Section 4.16 of the Bank Credit
Agreement; or
(d) The Partnership, VPCC or any Obligor which is an
Affiliate of the Partnership or VPCC shall fail to perform or
observe any other covenant, term or agreement binding on it and
contained in this Agreement or any other Project Document and such
failure shall not be remediable or, if remediable, shall continue
unremedied beyond the period of cure or grace, if any, extended to
such Person with respect to such covenant, term or agreement, as
specified in the Project Document in which such covenant, term or
agreement is contained; provided that if (i) such failure cannot be
cured within the period of cure or grace, if any, extended to such
Person with respect to such covenant, term or agreement, as
specified in the Project Document in which such covenant, term or
agreement is contained, or, in the case of any term covenant or
agreement contained in this Agreement (other than those specified
in clause (a) or clause (c) of this Section 5.3), as to which no
period of cure or grace is extended to the Partnership or VPCC, as
the case may be, (ii) such failure is susceptible of cure, (iii)
the Partnership, VPCC or such Obligor, as the case may be, is
proceeding with diligence and in good faith to cure such failure,
(iv) the existence of such failure in the reasonable judgment of
each of the Bank Agent, the VPCC Agent or OPIC has not had and is
not reasonably likely to have a
Material Adverse Effect and (v) the Project Administrative Agent
shall have received an officer's certificate signed by a
Financial Officer of the Partnership, VPCC or such Obligor, as the
case may be, to the effect of clauses (i), (ii) and (iii) above and
stating what action the Partnership, VPCC or such Obligor, as the
case may be, is taking to cure such failure, then, so long as the
Partnership, VPCC or such Obligor, as the case may be, shall be
diligently proceeding to cure such failure, the Partnership, VPCC
or such Obligor, as the case may be, shall have such additional
time, not to exceed (x) in the case of any such failure on the part
of VPCC, fifteen (15) days and (y) in the case of any such failure
on the part of the Partnership or such Obligor, ninety (90) days,
in each case as shall be
reasonably necessary for such Person to diligently cure such
failure; and provided, further, that notwithstanding anything
contained in the immediately preceding proviso, if an Event of
Default shall occur as a result of the Partnership's failure to
operate and maintain the Plant in accordance with the O&M
Parameters and the others terms and conditions of this Agreement,
the Required Project Secured Parties shall have the right to
require that the Partnership enter into the O&M Agreement,
regardless of any other action the Partnership may have taken, be
taking or propose to take with respect to such failure, whereupon
the Partnership shall execute and deliver the O&M Agreement and
provide and/or cause to be provided to the Secured Parties such
opinions of counsel and consents to assignment as the Project
Administrative Agent shall reasonably request in connection
therewith; or
Section 5.4 Default Under Other Agreements. (a) The
Partnership, VPCC or any Partner shall (i) default in any payment
of any Indebtedness For Borrowed Money (other than the Project
Loans, the Bank Loans or the OPIC Loan) beyond the period of grace,
if any, provided in the instrument or agreement under which such
Indebtedness For Borrowed Money was created or (ii) default (other
than in the manner referred to in clause (i)) in the observance or
performance of any agreement or condition relating to any
Indebtedness For Borrowed Money (other than the Project Loans, the
Bank Loans or the OPIC Loan) or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other
event shall occur or condition shall exist, the effect of which
such default or other event or condition is to (x) cause any such
Indebtedness For Borrowed Money to become due prior to its stated
maturity or (y) permit the Person to whom such Indebtedness For
Borrowed Money is owed to declare the same due and payable prior to
the stated maturity thereof; or
(b) any Indebtedness For Borrowed Money of the
Partnership, VPCC or any Partner shall be declared to be due and
payable, or required to be prepaid other than by a regularly
scheduled required prepayment, prior to the stated maturity
thereof; or
(c) the Construction Contractor, at any time prior to
the date on which it shall cease to be an Obligor, shall (i)
default in any payment of any Indebtedness For Borrowed Money in an
aggregate amount exceeding 50 billion yen (or the equivalent in
other currency) beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness For Borrowed
Money was created or (ii) default in the observance or performance
of any agreement or condition relating to any Indebtedness For
Borrowed Money in an aggregate amount exceeding 50 billion yen (or
the equivalent in other currency) or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default
or other event or condition is to cause any such Indebtedness For
Borrowed Money in an aggregate amount exceeding 50 billion yen (or
the equivalent in other currency) to become due prior to its stated
maturity; provided, however, that notwithstanding the occurrence of
one or more of the events described in this clause (c), the
occurrence of such event or events shall not be deemed an Event of
Default unless, in the reasonable judgment of the Bank Agent, the
VPCC Agent or OPIC, the occurrence of such event or events has had
or is reasonably likely to have a Material Adverse Effect; or
(d) at any time prior to the date on which the
Construction Contractor shall cease to be an Obligor, any
Indebtedness For Borrowed Money in an aggregate amount exceeding 50
billion yen (or the equivalent in other currency) of the
Construction Contractor shall be declared to be due and payable, or
required to be prepaid other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof and the existence
of the aforesaid event, in the reasonable judgment of the Bank
Agent, the VPCC Agent or OPIC, has had or is reasonably likely to
have a Material Adverse Effect; or
(e) at any time prior to the later to occur of (i) the
date on which Required Equity Contributions in an aggregate amount
equal to the Funding Amount shall have been contributed to the
Partnership by the Partners, (ii) the date on which all obligations
of Magma under Sections 3 and 8(h) of the Equity Funding Agreement
shall have been satisfied in full or expired, (iii) the date on
which the ECA Construction Performance Bond shall no longer be
required to be in full force and effect and (iv) the date on which
all obligations of Magma under the Project Completion Agreement
shall have been satisfied in full or expired, Magma shall (x)
default in any payment of any Indebtedness For Borrowed Money in an
aggregate amount exceeding $5 million (or the equivalent in other
currency) beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness For Borrowed
Money was created or (y) default in the observance or performance
of any agreement or condition relating to any Indebtedness For
Borrowed Money in an aggregate amount exceeding $5 million (or the
equivalent in other currency) or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default
or other event or condition is to cause any such Indebtedness For
Borrowed Money in an aggregate amount exceeding $5 million (or the
equivalent in other currency) to become due prior to its stated
maturity; or
(f) at any time prior to the later to occur of (i) the
date on which Required Equity Contributions in an aggregate amount
equal to the Funding Amount shall have been contributed to the
Partnership by the Partners, (ii) the date on which all obligations
of Magma under Sections 3 and 8(h) of the Equity Funding Agreement
shall have been satisfied in full or expired, (iii) the date on
which the ECA Construction Performance Bond shall no longer be
required to be in full force and effect and (iv) the date on which
all obligations of Magma under the Project Completion Agreement
shall have been satisfied in full or
expired, any Indebtedness For Borrowed Money in an aggregate amount
exceeding $5 million (or the equivalent in other currency) of Magma
shall be declared to be due and payable, or required to be prepaid
other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof; or
Section 5.5 Bankruptcy, Etc. (a) the Partnership or
any Partner shall fail to discharge (or to post an adequate bond or
other security acceptable to the Required Project Secured Parties
in their sole discretion) or VPCC shall fail to discharge (or to
post an adequate bond or other security acceptable to the Required
Banks in their sole discretion), in each case within a period of
sixty (60) days of any attachment, sequestration or similar writ
levied upon any material property or assets of the Partnership, any
Partner or VPCC, as the case may be; or
(b) the Partnership, VPCC or any Obligor (other than
PNOC-EDC):
(i) becomes insolvent or does not pay its
Indebtedness as it becomes due or is unable to pay, or admits in
writing its inability to pay its Indebtedness as it becomes due or
makes an assignment for the benefit of creditors; or
(ii) commences any case, proceeding or other action
under any Debtor Relief Law; or
(iii) in any involuntary case, proceeding or other
action commenced against it under any Debtor Relief Law, (A) fails
to obtain a dismissal of such case, proceeding or other action
within sixty (60) days of its commencement, or (B)
converts the case from one chapter of the Bankruptcy Reform Act of
1978, as amended, to another chapter, or (C) is the subject of an
order for relief or an adjudication or appointment is made under
any Debtor Relief Law; or
(iv) conceals, removes or permits to be concealed or
removed, any part of its property, with intent to hinder, delay or
defraud its creditors or any of them, or makes or suffers a
transfer of any of its property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law; or
(v) makes any transfer of its property to or for the
benefit of a creditor at a time when other creditors
similarly situated have not been paid; or
(vi) suffers or permits, while insolvent, any
creditor to obtain a Lien upon any of its property through legal
proceedings which are not vacated within sixty (60) days from the
date thereof; or
(vii) commences any case, proceeding or other action
for the appointment of a trustee, receiver, custodian or other
official for or to take possession of all or any part of its
property or assets or to have any court take jurisdiction of any of
its property or assets; or
(viii) takes any corporate, partnership or other (as the
case may be) action indicating its authorization of, consent to,
approval of or acquiescence in any case, proceeding, action or
event described in clause (i), (ii), (iii), (iv), (v), (vi) or
(vii) above; or
(ix) has a trustee, receiver, custodian or other
official appointed for or take possession of all or any part of its
property or assets or has any court take jurisdiction of any of its
property or assets, which action remains undismissed for a period
of sixty (60) days; or
Section 5.6 Project Events. (a) The Partnership shall
cease to have the right to possess and use the Site; or
(b) Any event shall have occurred which entitles the
Partnership or PNOC-EDC to give a notice which will result in a
Buyout; or
(c) The Partnership shall (except as permitted by
Section 4.13 hereof) sell or otherwise dispose of any of its
interest in the Project; or
(d) An event or circumstance described in subclause (a),
(b), (c) or (d) of Section 15.4.1 of the Energy Conversion
Agreement shall have occurred, it being understood that for
purposes of this Section 5.6(d), (i) the words "one-hundred twenty
(120)" contained in subclauses (b) and (c) of Section 15.4.1 of the
Energy Conversion Agreement shall be replaced with the words "sixty
(60)" in each place where such words appear, the words "ninety
(90)" contained in subclause (d) of Section 15.4.1 of the Energy
Conversion Agreement shall be replaced with the words "forty-five
(45)" in each place where such words appear and the words "thirty
(30) months" contained in subclause (b) of Section 15.4.1 of the
Energy Conversion Agreement shall be
replaced by the words "twenty four (24) months" in each place in
subclause (b) of Section 15.4.1 of the Energy Conversion
Agreement in which such words appear; or
(e) An event or circumstance described in subclause (a),
(b) or (c) of Section 15.4.2 of the Energy Conversion
Agreement shall have occurred, it being understood that for
purposes of this Section 5.6(e), the words "one hundred twenty
(120)" contained in subclauses (b) and (c) of Section 15.4.2 of the
Energy Conversion Agreement shall be replaced with the words "sixty
(60)" in each place where such words appear; or
(f) Any suspension under Section 15.2(a) of the Energy
Conversion Agreement has occurred and has continued for thirty (30)
consecutive days, or for forty-five (45) days within any
consecutive 365-day period; or
(g) PNOC-EDC shall have delivered to the Partnership a
notice of termination pursuant to Section 15.2(c) of the Energy
Conversion Agreement; or
Section 5.7 Material Adverse Effect. One or more
events, conditions or circumstances (including without limitation
"Force Majeure" as defined in Section 14.1(a) of the Energy
Conversion Agreement and "Political FM" as defined in Section
14.1(b) of the Energy Conversion Agreement) shall exist or shall
have occurred which, in the reasonable judgment of the Bank Agent,
the VPCC Agent or OPIC, is reasonably likely to have a Material
Adverse Effect; or
Section 5.8 Project Documents. (a) This Agreement or
any of the other Financing Documents or any provision hereof or
thereof (i) is or becomes invalid, illegal or unenforceable or any
party thereto shall so assert, or (ii) ceases to be in full force
and effect, or shall cease to give the Project Secured Parties the
Liens, rights, powers and privileges purported to be created
thereby or hereby or any party thereto shall so assert or shall
cease to give the Bank Financing Secured Parties the Liens, rights,
powers and privileges purported to be created thereby or hereby or
any party thereto shall so assert; or
(b) Except as permitted by Section 4.17 hereof, the
Project Security or any material portion thereof for any reason
fails to constitute a valid and perfected first priority Lien or
ceases to be in full force and effect or the Partnership or the
grantor or pledgor thereof shall so assert; or
(c) The Bank Financing Security or any portion thereof
for any reason fails to constitute a valid and perfected first
priority Lien or ceases to be in full force and effect or VPCC or
the grantor or pledgor thereof shall so assert; or
(d) (i) Any Operating Agreement (other than an
Operating Agreement described in clause (vii) of the definition of
the term "Operating Agreement" in Schedule X hereto), or any
material provision thereof, shall (x) at any time for any reason
cease to be valid and binding or in full force and effect (except
upon expiration of its stated term or upon a termination
permitted in accordance with Section 4.22 hereof), (y) be
declared by an arbitrator, court or other Governmental Authority of
competent jurisdiction to be null and void or (z) be
terminated (except upon expiration of its stated term or upon a
termination permitted in accordance with Section 4.22 hereof) or
(ii) any party (other than the Partnership, VPCC or any Obligor
which is an Affiliate of the Partnership or VPCC) shall be in
material default under any Operating Agreement (other than an
Operating Agreement described in clause (vii) of the definition of
the term "Operating Agreement" in Schedule X hereto);
provided, however, that no Event of Default shall be declared as a
result of the occurrence of any event described in this Section
5.8(d) if: (A) the Partnership or VPCC, as the case may be,
obtains a Replacement Operating Agreement for the affected
Operating Agreement within 90 days of the occurrence of such event
and (B) in the reasonable judgment of each of the Bank Agent, the
VPCC Agent and OPIC, the occurrence of such event has not had a
Material Adverse Effect and does not have a Material Adverse Effect
prior to the Partnership's or VPCC's, as the case may be, so
obtaining a Replacement Operating Agreement; or
Section 5.9 Ownership of the Partnership and VPCC;
Operations of the Project. (a) Magma shall cease to maintain
Control (as defined below) of the Partnership or shall cease to
own, directly or indirectly, at least 51% of the ownership
interests in the Partnership free and clear of all Liens (it being
understood that for purposes of this Section 5.9(a), (x) "Control"
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a
Person, whether through ownership of voting
securities or partnership or other ownership interests, by
contract or otherwise and (y) if Magma owns ownership interests in
the Partnership indirectly, the percentage of its ownership in the
Partnership shall be the product of the percentage ownership it has
in any intermediate subsidiary or other entity and the percentage
ownership which the subsidiary or other entity owning ownership
interests in the Partnership directly has in the
Partnership); or
(b) Magma shall cease to have control, direct or
indirect, over the management and operation of the Project; or
(c) Except as permitted pursuant to Section 4.13 hereof,
either of the Partners shall convey, pledge or otherwise encumber
any of its interests in the Partnership other than pursuant to
Part D of the Omnibus Security Agreement; or
(d) Broad Street shall cease to maintain Control (as
defined below) of VPCC or shall cease to own, directly, 100% of the
shares of capital stock of VPCC free and clear of all Liens other
than the Liens created pursuant to the VPCC Stock Pledge Agreement
(it being understood that for purposes of this Section 5.9(d), (x)
"Control" means the possession, directly, of the power to direct or
cause the direction of the management and policies of a Person,
through ownership of voting securities and (y) no Event of Default
shall be declared as a result of the occurrence of an event
described in the foregoing provisions of this Section 5.9(d) which
occurs as a result of a sale of the Pledged Collateral made in
accordance with Section 7C(g) of the VPCC Stock Pledge Agreement);
or
(e) VPCC shall, without the prior consent of the
Required Banks, issue or have outstanding any securities
convertible into or exchangeable for its capital stock or issue or
grant or have outstanding any rights to subscribe for or to
purchase, or any options or warrants for the purchase of, or any
agreements, arrangements or understandings providing for the
issuance (contingent or otherwise) of, or any calls, commitments or
claims of any character relating to, its capital stock; or
Section 5.10 Judgments. (a) One or more judgments or
decrees shall be entered (a) against the Partnership or any Obligor
which is an Affiliate of the Partnership involving in the aggregate
a liability of $500,000 (or the equivalent in other currency) or
more; or (b) against VPCC; or (c) prior to the date on which the
Construction Contractor shall cease to be an Obligor, against the
Construction Contractor involving in the aggregate a liability (not
paid or fully covered by insurance) of 50 billion yen (or the
equivalent in other currency) or more; and (i) in any such case all
such judgments or decrees shall not have either been discharged or
stayed pending appeal within 30 days after the entry thereof or
(ii) in the case of any such judgment or decree which has been
stayed pending appeal, such judgment shall not have been discharged
within 30 days after the expiration of such stay; provided,
however, that not withstanding the occurrence of an event described
in clause (c) of this Section 5.10, the occurrence of such event
shall not be deemed an Event of Default unless, in the reasonable
judgment of the Required Project Secured Parties, the occurrence of
such event has had or is reasonably likely to have a Material
Adverse Effect; or
(b) Any order or decree is entered by any court or
Governmental Authority of competent jurisdiction directly or
indirectly enjoining the construction or operation of the Project
or any substantial portion thereof and such order or decree is not
vacated or dismissed, and the proceedings out of which such order
or decree arose are not dismissed or stayed, in each case within
thirty (30) days after the entry of such order or decree; or
Section 5.11 Governmental Action. Any government or
Governmental Authority shall have condemned, nationalized,
seized, or otherwise expropriated all or any substantial part of
the property or other assets of the Partnership or VPCC or of the
ownership interests in the Partnership or VPCC or shall have
assumed custody or control of such property or other assets or of
the business or operations of the Partnership or VPCC or of the
ownership interests in the Partnership or VPCC or shall have taken
any action for the dissolution or disestablishment of the
Partnership or VPCC or any action that would prevent the
Partnership, the Partners or its or their officers from carrying on
the business or operations of the Partnership or a substantial part
thereof or any action that would prevent VPCC or its
officers from carrying on the business or operations of VPCC or any
part thereof; or
Section 5.12 Permits and Other Regulatory Matters. (a)
Any of the material Governmental Approvals required or obtained in
connection with the Bank Loans, the Project Loans, the OPIC Loan,
this Agreement or any Project Document or any of the material
Governmental Approvals required to be obtained or obtained by any
Obligor in connection with the full performance of the Project
Documents to which it is a party shall be rejected or otherwise
denied or shall expire (without being timely
renewed) or be revoked, rescinded, suspended, held invalid or
otherwise limited in effect; provided, however, that (i) if the
applicable rejection, denial, expiration, revocation, suspension,
invalidation or limitation, as the case may be, is reasonably
susceptible of cure, (ii) the Partnership is proceeding with
diligence and in good faith to effect such cure, (iii) the
occurrence of such rejection, denial, expiration, revocation,
suspension, invalidation or limitation, as the case may be, could
not reasonably be expected to have a Material Adverse Effect and
(iv) the Project Administrative Agent shall have received an
officer's certificate signed by a Financial Officer of the
Partnership to the effect of clauses (i), (ii) and (iii) above and
stating what actions the Partnership is taking to effect such cure,
then the Required Project Secured Parties shall grant the
Partnership such additional time, not to exceed a period of ninety
(90) days from the date of the occurrence of the applicable
rejection, denial, expiration, revocation, suspension, invalidation
or limitation, as the case may be, as shall be reasonably necessary
for the Partnership diligently to effect such cure; or
(b) The passage or promulgation of, or any change in any
statute, ordinance or regulation affecting the Project that, in the
reasonable judgment of the VPCC Agent, the Bank Agent or OPIC, has
a Material Adverse Effect; or
(c) Any of the Partnership, its Affiliates, VPCC, its
Affiliates, any of the Project Secured Parties or any of the Bank
Financing Secured Parties shall, solely as a result of the
participation by such parties, separately or as a group, in any
transaction contemplated hereby or by any other Project Document,
become subject to regulation by any Governmental Authority of the
United States as an "electric utility," "electrical corporation,"
"electric company," "public utility," "electric utility holding
company," "holding company" or "public utility holding company" or
a subsidiary or affiliate of any of the foregoing under any
Applicable Law of the United States (including, without limitation,
PUHCA and FPA) or by any Governmental Authority of the Republic as
a "public utility" under any Applicable Law of the Republic; or
(d) Any requirement or any modification not previously
approved by the Required Project Secured Parties (including,
without limitation, establishment of new requirements or
revocation of any exemption or waiver) of any Governmental
Approval which, in the reasonable judgment of the Bank Agent, the
VPCC Agent or OPIC, could reasonably be expected to have a
Material Adverse Effect; or
Section 5.13 Transfer of Collateral; Event of Loss;
Diminution of Property Rights. (a) Title to or any right in all
or any part of (i) the Mortgage Collateral, (ii) the Plant, (iii)
any other Project Collateral purported to be covered by the Project
Security Documents (other than as permitted pursuant to this
Agreement, including Section 4.13 hereof) shall become vested in
any party other than the party named as owner and/or holder thereof
in the applicable Project Security Documents, whether by operation
of law or otherwise; or
(b) Title to or any right in all or any part of any Bank
Financing Collateral purported to be covered by the Bank Financing
Security Documents shall become vested in any party other than the
party named as owner and/or holder thereof in the applicable Bank
Financing Security Document, whether by operation of law or
otherwise; or
(c) There shall have occurred an Event of Loss; or
(d) Except as otherwise permitted pursuant to this
Agreement, the Partnership hereafter grants any easement or
dedication, files any plat, declaration or restriction or enters
into any lease or sub-lease concerning the Site, the Mortgage
Collateral or the Plant and the effect thereof is determined by the
Required Project Secured Parties, in their reasonable discretion,
to be material and adverse to the Site, the Mortgage Collateral,
the Plant or the Partnership; or
Section 5.14 Costs; Construction Progress. A
determination by the Required Project Secured Parties or the
Independent Engineer, in each case in their reasonable judgment,
that (a) the Project is not reasonably likely to be completed
within the Construction Budget, (b) Final Completion with respect
to either of Unit 2 or Unit 3 is not likely to occur by the
Deadline Date, (c) the Commercial Operation Date for Unit 1 is not
likely to occur by the Guaranteed Completion Date for Unit 1, (d)
the Commercial Operation Date for Unit 2 is not likely to occur by
the Guaranteed Completion Date for Unit 2 or (e) the Commercial
Operation Date for Unit 3 is not likely to occur by the Guaranteed
Completion Date for Unit 3; provided, that such Event of Default
shall be waived if all of the following conditions are met: (i)
within 30 days after notice by the Project Administrative Agent to
the Partnership of such determination, the Partnership submits to
the Project Administrative Agent a plan, in form and substance
acceptable to the Required Project Secured Parties, specifying the
plan of action the Partnership intends to take to remedy the
condition described herein that would result in an Event of Default
and (ii) the Partnership proceeds diligently in implementing such
plan to the Required Project Secured Parties' reasonable
satisfaction, provides periodic reports to the Bank Agent, the VPCC
Agent and OPIC of the status of such implementation and from time
to time amends such plan with the Required Project Secured Parties'
consent (which shall not be unreasonably withheld) so that such
plan remains likely to achieve its aims; or
Section 5.15 Equity Funding Agreement; Project
Completion Agreement; Political Risk Agreement. (a) The failure
by Magma to cause the Partners to make any Required Equity
Contribution or any other equity contribution required to be made
in accordance with Sections 8(g), 8(h)(i), 8(h)(ii) and 8(h)(iii)
of the Equity Funding Agreement or the failure by Magma to pay any
amount required to be paid by it under or otherwise to comply with
any of the terms of the Equity Funding Agreement, the VPCC Stock
Pledge Agreement or the Project Completion Agreement; or
(b) The Required Banks shall have given written notice
to Magma or Magma Netherlands that its failure to pay any amount
required to be paid by it under the Political Risk Agreement and/or
its failure to comply with any one or more of the terms of the
Political Risk Agreement has resulted in the occurrence of an Event
of Default; or
Section 5.16 Regulatory Status. The Partnership shall
fail to remain continuously exempt from all regulation under PUHCA
as a result of being a "foreign utility company" under Section 33
of PUHCA or otherwise; or
Section 5.17 ERISA. (a) Any of the following events
occur or exist with respect to the Partnership or, in the case of
(i) through (v) below, any ERISA Affiliate: (i) any Termination
Event with respect to any Plan; or (ii) any event or circumstance
that is reasonably likely to constitute grounds entitling the PBGC
to institute proceedings under Section 4042 of ERISA for the
imposition of liability in respect of any Pension Plan (other than
a liability to the PBGC for insurance premiums the payment of which
is not yet due); (iii) any Pension Plan shall have an accumulated
funding deficiency as defined in Section 412 of the Code or Section
302 of ERISA; (iv) any Plan intended to be
qualified under Section 401(a) or 401(k) of the Code shall be
disqualified; (v) any Plan shall be subject to an excise tax
pursuant to Code Section 4980B or shall fail to comply with
Sections 601-606 (inclusive) of ERISA; (vi) the Partnership
provides employee welfare benefits to retirees other than
statutorily required or pursuant to Section 601 et seq. of ERISA
and Section 4980B of the Code; or (vii) the Partnership incurs
liability under or relating to any Plan resulting from a
violation of ERISA, the Code and/or any other applicable law,
including without limitation the Age Discrimination in Employment
Act, the Americans With Disabilities Act and Title VII of the Civil
Rights Act, each as amended; and in each case above, such event or
condition, individually or in the aggregate together with all other
such events or conditions, if any, is reasonably likely to subject
the Partnership to any tax, penalty, or other liability to a Plan,
a Multiemployer Plan, the PBGC, or otherwise (or any combination
thereof) which in the aggregate, in the reasonable judgment of the
Bank Agent, the VPCC Agent or OPIC, has had or is reasonably likely
to have a Material Adverse
Effect; or the Partnership or any ERISA Affiliate shall fail to pay
when due an amount or amounts which it shall have become liable to
pay under Title IV or ERISA or as a contribution to a Pension Plan
and/or Multiemployer Plan which, as a result, has had or is
reasonably likely to have a Material Adverse Effect; or
(b) Any of the following events occur or exist with
respect to VPCC or any ERISA Affiliate: (i) any Termination Event
with respect to any Plan; or (ii) any event or circumstance that
could constitute grounds entitling the PBGC to institute
proceedings under Section 4042 of ERISA for the imposition of
liability in respect of any Pension Plan (other than a liability to
the PBGC for insurance premiums the payment of which is not yet
due); (iii) any Pension Plan shall have an accumulated
funding deficiency as defined in Section 412 of the Code or Section
302 of ERISA; (iv) any Plan intended to be qualified under Section
401(a) or 401(k) of the Code shall be disqualified; (v) any Plan
shall be subject to an excise tax pursuant to Code Section 4980B or
shall fail to comply with Sections 601-606 (inclusive) of ERISA;
(vi) VPCC or any ERISA Affiliate provides employee welfare benefits
to retirees; or (vii) VPCC or any ERISA Affiliate incurs liability
under or relating to any Plan
resulting from a violation of ERISA, the Code and/or any other
applicable law, including without limitation the Age
Discrimination in Employment Act, the Americans With Disabilities
Act and Title VII of the Civil Rights Act, each as amended; and in
each case above, such event or condition, individually or in the
aggregate together with all other such events or conditions, if
any, could subject VPCC to any tax, penalty, or other
liability to a Plan, a Multiemployer Plan, the PBGC, or otherwise
(or any combination thereof) which potential tax, penalty or
liability is not bonded or otherwise collateralized to the
satisfaction of the Required Banks within five (5) calendar days;
or VPCC or any ERISA Affiliate shall fail to pay when due an amount
or amounts which it shall have become liable to pay under Title IV
or ERISA or as a contribution to a Pension Plan and/or
Multiemployer Plan; or
Section 5.18 Authorities to Construct. Prior to the
Credit Date, the Authorities to Construct shall not have been
obtained by or on behalf of the Partnership on terms free from
conditions or requirements not contemplated by the Construction
Budget; or
Section 5.19 Dissolution of the Partnership or VPCC.
The liquidation, dissolution or termination of the Partnership or
VPCC or the merger or consolidation of the Partnership or VPCC with
or into any other Person; or
Section 5.20 Environmental Claims. Any Environmental
Claim shall have been asserted against the Partnership or any other
party to any Financing Document and such Environmental Claim could
have a Material Adverse Effect; then, and in any such event, and at
any time thereafter, if such event is continuing,
(i) the Bank Agent, on behalf of the Bank Financing
Secured Parties, upon receiving the consent of the Required Banks,
may, and upon the request of the Required Banks, shall (w) take any
actions necessary to cure such Event of Default and/or declare an
Event of Default, (x) declare, without presentment, demand, protest
or notice of any kind, all of which are hereby expressly waived by
VPCC, the Bank Commitment of each Bank terminated, irrespective of
any other provision of any Financing Document, whereupon such Bank
Commitment of each Bank shall immediately terminate (provided, that
if an Event of Default specified in Section 5.5 shall have occurred
or a Buyout shall have occurred, all such Bank Commitments shall
automatically be immediately terminated without any declaration,
presentment, demand, protest or notice or any act of any kind by
any of the Bank Financing Secured Parties whatsoever), (y) declare,
without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived by VPCC, the entire amount of
VPCC's outstanding Bank Financing Secured Obligations to be
immediately due and payable, irrespective of any other provision of
any Financing Document, whereupon the same shall be and become
immediately due and payable (provided, that if an Event of
Default specified in Section 5.5 shall have occurred or a Buyout
shall have occurred, the entire amount of VPCC's outstanding Bank
Financing Secured Obligations shall be automatically immediately
due and payable without any declaration, presentment, demand,
protest or notice or other act of any kind by the Bank Agent or any
of the Bank Financing Secured Parties whatsoever) and (z) proceed
to enforce any remedies provided to the Bank Agent or the Bank
Financing Secured Parties under any of the Financing Documents;
and/or
(ii) the VPCC Agent, on behalf of the VPCC Secured
Parties, upon receiving the consent of the Required Banks, may, and
upon the request of the Required Banks, shall (w) take any actions
necessary to cure such Event of Default and/or declare an Event of
Default, (x) declare, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived by
the Partnership, the VPCC Commitment terminated, irrespective of
any other provision of any Financing Document, whereupon the VPCC
Commitment shall immediately terminate (provided, that if an Event
of Default specified in Section 5.5 shall have occurred or a Buyout
shall have occurred, the VPCC Commitment shall automatically be
terminated without any declaration, presentment, demand, protest or
notice or any act of any kind by the VPCC Agent whatsoever), (y)
declare, without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived by the Partnership,
the entire amount of the Partnership's outstanding VPCC Financed
Secured Obligations to be immediately due any payable, irrespective
of any other provision of any Financing Document, whereupon the
same shall be and become immediately due and payable (provided,
that if an Event of Default specified in Section 5.5 shall have
occurred or a Buyout shall have occurred, the entire amount of the
Partnership's outstanding VPCC Financed Secured Obligations shall
be automatically immediately due and payable without any
declaration, presentment, demand, protest or notice or other act of
any kind by the VPCC Agent whatsoever) and (z) subject to the terms
of the Collateral Agency Agreement, proceed to enforce or cause or
instruct the Collateral Agent to enforce any remedies provided to
the Collateral Agent or the VPCC Secured Parties, as the case may
be, under any of the Financing Documents; and/or
(iii) OPIC may (w) take any actions necessary to cure such
Event of Default and/or declare an Event of Default, (x) declare,
without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived by the Partnership, the OPIC
Commitment terminated, irrespective of any other provision of any
Financing Document, whereupon the OPIC Commitment shall immediately
terminate (provided, that if an Event of Default specified in
Section 5.5 shall have occurred or a Buyout shall have occurred,
the OPIC Commitment shall automatically be terminated without any
declaration, presentment, demand, protest or notice or any act of
any kind by OPIC whatsoever), (y) declare, without presentment,
demand, protest or notice of any kind, all of which are hereby
expressly waived by the Partnership, the entire amount of the
Partnership's outstanding OPIC Secured Obligations to be
immediately due any payable, irrespective of any other provision of
any Financing Document, whereupon the same shall be and become
immediately due and payable (provided, that if an Event of Default
specified in Section 5.5 shall have occurred or a Buyout shall have
occurred, the entire amount of the Partnership's outstanding OPIC
Secured Obligations shall be automatically immediately due and
payable without any declaration, presentment, demand, protest or
notice or other act of any kind by OPIC whatsoever) and (z) subject
to the terms of the Collateral Agency Agreement, proceed to enforce
or cause or instruct the Collateral Agent to enforce any remedies
provided to the Collateral Agent or the OPIC Secured Parties, as
the case may be, under any of the Financing Documents; and/or
(iv) the Required Project Secured Parties may, if the
Operation Date of Unit 1 shall have occurred, require the
Partnership to enter into one or more interest rate cap or collar
agreements, in which event the Partnership shall use its best
efforts to enter into any and all of such agreements as required by
the Required Project Secured Parties.
If an event or occurrence constitutes an Event of Default
or Default under more than one of the provisions of this Section 5,
each of the Bank Agent (on behalf of the Bank Financing Secured
Parties), the VPCC Agent (on behalf of the VPCC Secured Parties)
and OPIC, may during the continuance of such Event of Default take
all actions and remedies provided to such party hereunder and/or
under the other Financing Documents upon expiration of the shortest
grace period, if any, applicable to such Default or Event of
Default (subject, in the case of the taking of such action and
remedies by the Bank Agent, to any consent or request of the
Required Banks and, in the case of the taking of such action and
remedies by the VPCC Agent, to any consent or request of VPCC given
or made with the consent or at the direction of the Required
Banks).
Section 6. Miscellaneous
Section 6.1 Notices. Except as otherwise expressly
provided herein, (a) all notices and other communications provided
for hereunder shall be provided in writing (including telegraphic,
telex, facsimile or cable communication) and shall be sent by
telecopy, telex, telegraph or cable with the original of such
communication dispatched by (if inland) overnight or (if overseas)
international courier and, if such courier service is not
available, by registered airmail (or, if inland, registered first-
class mail) with postage prepaid to the Partnership, VPCC, the Bank
Agent, the VPCC Agent, the Project Administrative Agent and OPIC at
their respective addresses specified below and to the Banks at
their respective addresses specified on the signature pages hereto,
or at such other address as shall be designated by such Person in
a written notice to the other parties hereto and (b) all such
notices and communications shall, when mailed, telegraphed,
telexed, telecopied, or cabled or sent by overnight courier, be
effective seven (7) days after being deposited in the mails in the
manner as aforesaid, when delivered to the telegraph company or
cable company (if inland), one (1) day or (if overseas) three (3)
days after delivery to a courier in the manner as aforesaid, as the
case may be, or when sent by telex (with the correct answer back)
or telecopier:
If to the Partnership:
VISAYAS GEOTHERMAL POWER COMPANY
c/o Magma Netherlands B.V.
6750 Ayala Avenue Building
24th Floor
Makati, Metro Manila, Philippines
Attn: President
Tel : 011-632-892-0276
Fax : 011-632-892-5825
with copies to:
Magma Power Company
4365 Executive Drive
Suite 900
San Diego, California 92122
Attn: General Counsel
Tel : (619) 622-7800
Fax : (619) 622-7822
If to VPCC:
VISAYAS POWER CAPITAL CORPORATION
c/o Lord Securities Corporation
Two Wall Street, 19th Floor
New York, New York 10005
Attn: Kevin P. Burns, Vice President
Tel : (212) 346-9000
Fax : (212) 346-9012
with copies to the VPCC Agent at:
CREDIT SUISSE
Tower 49
12 East 49th Street
New York, New York 10017
Attn: Project Finance
Tel : (212) 238-2000
Fax : (212) 238-5390
Telex: 420149
If to OPIC:
OVERSEAS PRIVATE INVESTMENT CORPORATION
1100 New York Avenue, N.W.
Washington, D.C. 20527
Attn: Vice President for Finance
(with a copy to the Treasurer
and to Ms. Tracey Webb)
Tel : (202) 336-8485
Fax : (202) 408-9866
Section 6.2 English Language. All documents to be
furnished or communications to be given or made under this
Agreement or any other Financing Document shall be in the English
language or, if in another language, shall be accompanied by a
translation into English certified by a representative of the
Partnership or VPCC, as the case may be, which translation shall be
the governing version among the Partnership or VPCC, as the case
may be, and the other parties hereto or to such other
Financing Document.
Section 6.3 Indemnities and Expenses. (a) The
Partnership shall, whether or not the transactions herein
contemplated are consummated, pay or reimburse promptly following
demand by OPIC or the VPCC Agent (on behalf of itself or VPCC), as
the case may be, (i) all costs and expenses (including legal fees
and disbursements) incurred by or charged to OPIC, the VPCC Agent
or VPCC (including costs and expenses charged to VPCC pursuant to
Section 4.3 of the Bank Credit Agreement) in connection with the
preparation, printing, execution, delivery, administration,
registration (where appropriate) or enforcement of this Agreement,
the Project Credit Agreement, the Bank Credit Agreement, the OPIC
Finance Agreement, the OPIC Funding Documents, the Project
Construction Note, the Project Term Note, the Bank Construction
Notes, the Bank Term Notes, the OPIC Construction Note, the OPIC
Term Note and the other Project Documents or the protection or
preservation of any right or claim of OPIC, the VPCC Agent or VPCC
against the Partnership or of any right or claim of the Bank Agent
and/or the Banks against VPCC, in each case arising out of this
Agreement, the Project Credit Agreement, the Bank Credit Agreement,
the OPIC Finance Agreement, the OPIC Funding Documents, the Project
Construction Note, the Project Term Note, the Bank Construction
Notes, the Bank Term Notes, the OPIC Construction Note, the OPIC
Term Note or any other Financing Document, (ii) the fees of the
Independent Engineer and the Insurance Consultant and (iii) all
costs and expenses (including legal fees and disbursements)
incurred by or charged to OPIC, the VPCC Agent or VPCC (including
costs and expenses charged to VPCC pursuant to Section 4.3 of the
Bank Credit Agreement) in connection with, in respect of or
incident to the maintenance, administration and enforcement of this
Agreement, the Project Credit Agreement, the Bank Credit
Agreement, the OPIC Finance Agreement, the OPIC Funding
Documents, the Project Construction Note, the Project Term Note,
the Bank Construction Notes, the Bank Term Notes, the OPIC
Construction Note, the OPIC Term Note and the other Project
Documents and the consummation of the transactions contemplated by
this Agreement and the other Project Documents after the Effective
Date (including, without limitation, in connection with, in respect
of or incident to any amendment or modification to, preservation of
rights under, or waiver or consent relating to any Financing
Document or any other documents relating thereto or in connection
with the syndication of the Total Bank
Commitment).
(b) Subject to Section 6.3(j) below and without
limiting the indemnity obligations of the Partnership under the
Project Credit Agreement, the Partnership shall, whether or not the
transactions herein contemplated are consummated, pay and hold each
of the Project Secured Parties harmless from and against any and
all present and future stamp and other similar taxes and
documentary or registration fees with respect to the foregoing
matters and save each of the Project Secured Parties harmless from
and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable
to such Project Secured Party) to pay such taxes or fees.
(c) Without limiting the application of Section 6.3(b)
above and Section 6.3(j) below and without limiting the indemnity
obligations of the Partnership under the Project Credit
Agreement, the Partnership shall indemnify, reimburse and hold each
Project Secured Party and their respective successors and assigns
and their respective officers, directors, employees,
representatives, attorneys and agents (hereinafter in this
Section 6.3 referred to individually as "Indemnitee" and
collectively as "Indemnitees"), harmless on demand from and against
any and all liabilities, obligations, losses, damages, penalties,
claims, actions, judgments, suits, costs, expenses or disbursements
(including reasonable attorney's fees and
disbursements) (for the purposes of this Section 6.3 in its
entirety, the foregoing are collectively called "Expenses") of
whatsoever kind or nature which may be imposed on, asserted against
or incurred by any of the Indemnitees as a result or by reason of
or in any way relating to or arising out of their entering into, or
the performance or enforcement by any Person of its rights under
this Agreement, any Project Security Document, any Bank Financing
Security Document, any other Project Document or the documents
executed in connection herewith and therewith or in any other way
connected with the performance or the
administration of the transactions contemplated hereby and
thereby or the enforcement of any of the terms of or the
preservation or enforcement of any rights, powers and remedies
under any thereof, or in any way relating to or arising out of the
ownership, purchase, delivery, control, acceptance, lease,
financing, possession, operation, condition, sale or other
disposition or use of the Project Collateral or the Bank
Financing Collateral including, without limitation, 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 any contract claim;
provided that no Indemnitee shall be indemnified pursuant to this
Section 6.3(c) for Expenses to the extent caused solely by the
gross negligence or willful misconduct of such Indemnitee, as
finally and unappealably determined by a court of competent
jurisdiction, except that VPCC shall be indemnified pursuant to
this Section 6.3(c) notwithstanding its own gross negligence or
willful misconduct or the gross negligence or willful misconduct of
its officers, directors, employees, representatives and
agents, if and to the extent that the action or actions taken or
omitted to be taken by such Persons which gave rise to Expenses
were taken or omitted to be taken otherwise than at the direction
of the Bank Financing Secured Parties having the right to direct
VPCC with respect to the taking or refraining from taking such
actions pursuant to the terms of any Financing Document or the
Intercreditor Agreement.
(d) Without limiting the application of Sections 6.3(b)
and 6.3(c) above and Section 6.3(j) below or the indemnity
obligations of the Partnership under the Project Credit
Agreement, the Partnership shall pay or reimburse each
Indemnitee, for, any and all fees, taxes and Expenses of whatever
kind or nature incurred in connection with the creation,
preservation or protection of the Project Collateral or the Bank
Financing Collateral, and the Collateral Agent's, the Co-
Collateral Agent's or the Bank Agent's, as the case may be,
security interest in the Project Collateral or the Bank Financing
Collateral, or incurred in connection with the liquidation or sale
of any of the Project Collateral or the Bank Financing Collateral,
including, without limitation, all fees and taxes in connection
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 Project Collateral or the Bank
Financing Collateral, premiums for insurance with respect to the
Project Collateral or the Bank Financing Collateral and all other
fees, taxes and Expenses in connection with protecting,
maintaining, preserving, liquidating or selling any of the
Project Collateral or the Bank Financing Collateral and the
Collateral Agent's, the Co-Collateral Agent's or the Bank
Agent's, as the case may be, 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
Project Collateral or the Bank Financing Collateral.
(e) Without limiting the application of Sections 6.3(b),
6.3(c) and 6.3(d) above and Section 6.3(j) below or the indemnity
obligations of the Partnership under the Project Credit Agreement,
the Partnership shall pay, indemnify, reimburse and hold each
Indemnitee, harmless on demand from and against any and all
Expenses which such Indemnitee may suffer, expend or incur in
consequence of or growing out of any misrepresentation by the
Partnership in this Agreement, in any officer's certificate,
statement or writing delivered on or before the Effective Date or
in any statement or writing made or delivered after the Effective
Date pursuant to or in connection with this Agreement. Without
limitation to the foregoing provisions of this paragraph, the
indemnity provided hereunder shall cover any loss, liability or
expense reasonably incurred arising out of or in connection with
claims by third parties (including without limitation any Bank), to
whom a copy of the Information Memorandum has been
distributed with the knowledge of the Partnership, against VPCC,
the VPCC Agent, the Bank Agent or any other Bank relating to any
alleged inaccuracy of the factual information (taken as a whole)
which, for the avoidance of doubt shall not include any
information by way of projections, estimates or other expressions
of view as to future circumstances (provided that such
projections, estimates or other expression of view are expressed in
good faith and on the basis of assumptions that when made were
viewed by the Partnership to be reasonable) contained in, or any
alleged omission of information which will render such aforesaid
factual information (taken as a whole) inaccurate or misleading in
a material respect from, the Information Memorandum and the Project
Documents.
(f) Without limiting the application of
Sections6.3(b), 6.3(c), 6.3(d) and 6.3(e) above and Section6.3(j)
below or the indemnity obligations of the Partnership under the
Project Credit Agreement, the Partnership shall indemnify each
Indemnitee on demand from and against any and all Expenses
growing out of or resulting from any refund or adjustment of any
amount paid or payable to any Project Secured Party or Bank
Financing Secured Party or their successors or assigns under or in
respect of any Project Collateral or Bank Financing
Collateral, or any interest thereon, which may be ordered or
otherwise required by any Person.
(g) Without limiting the application of clauses (b)
through (f) of this Section 6.3 or the indemnity obligations of the
Partnership under the Project Credit Agreement, the
Partnership agrees to defend, protect, indemnify and hold each
Indemnitee harmless on demand against any and all Expenses
(including removal and remedial actions and consultants' fees and
disbursements) imposed on or asserted against such Indemnitee
directly or indirectly based on, or arising or resulting from, (i)
the actual or alleged presence of Hazardous Materials on, under or
at the Plant or the Site, (ii) any Environmental Claim relating to
the Partnership or the Project or arising out of the use of the
Plant or the Site or (iii) the proper exercise of such Indemnitee's
rights under any of the provisions of this Section 6.3 regardless
of when any such matters arise, but excluding any matter based
solely on the gross negligence or willful misconduct of such
Indemnitee, as finally and unappealably determined by a court of
competent jurisdiction, except that VPCC shall be indemnified
pursuant to this Section 6.3(g) notwithstanding its own gross
negligence or willful misconduct or the gross negligence or willful
misconduct of its officers, directors, employees, representatives
and agents, if and to the extent that the action or actions taken
or omitted to be taken by such Persons which gave rise to Expenses
were taken or omitted to be taken otherwise than at the direction
of the Bank Financing Secured Parties having the right to direct
VPCC with respect to the taking or refraining from taking such
actions pursuant to the terms of any Financing Document or the
Intercreditor Agreement.
(h) If and to the extent that any of the obligations of
the Partnership under clauses (b) through (g) of this Section 6.3
are unenforceable for any reason, the Partnership hereby agrees to
make the maximum contribution to the payment and
satisfaction of such obligations which is permissible by it under
Applicable Law.
(i) Any amounts paid by any Indemnitee as to which such
Indemnitee has the right to reimbursement, together with any and
all interest thereon, shall constitute Project Secured
Obligations. The indemnity obligations of the Partnership
contained in clauses (b) through (g) of this Section 6.3 shall
continue in full force and effect notwithstanding the (i) full
repayment of the Project Secured Obligations and the discharge
thereof, and (ii) prior termination of this Agreement or any other
Project Document.
(j)If (i) the Project Secured Parties are entitled to
indemnification and reimbursement under this Section 6.3 for
Expenses actually incurred, and (ii) the amount of such Expenses
incurred by one or more Project Secured Parties is in excess of its
or their respective share of the aggregate amount of Expenses of
the Project Secured Parties based on its or their proportionate
share of the Project Secured Obligations, calculated without giving
effect to such excess amount of expenses incurred by such Project
Secured Parties (the "Proportionate Share"), then prior to the
payment of any indemnification and reimbursement amounts to any
other Project Secured Party, the Partnership shall first pay to the
Project Secured Party or Project Secured Parties that incurred
Expenses in an amount greater than its or their respective
Proportionate Share of the aggregate amount of the Expenses of the
Project Secured Parties an amount equal to the amount of their
Expenses in excess of their respective Proportionate Share thereof.
Once such payment has been made in full, the Partnership shall pay
to the Project Secured Parties all indemnification and
reimbursement amounts on a pro rata basis based on their respective
Proportionate Share.
(k) In case any action, suit or proceeding shall be
brought against any Project Secured Party which may result in the
Partnership being required to perform any of its indemnity
obligations under this Section 6.3, such Project Secured Party
shall notify the Partnership of the commencement thereof, and the
Partnership shall be entitled, at its expense, acting through
counsel acceptable to such Project Secured Party, to participate
in, and, to the extent that the Partnership desires, to assume and
control the defense thereof (except that the Partnership shall have
no right to assume and control the defense of any action, suit or
proceeding on behalf of OPIC). Such Project Secured Party shall be
entitled, at its expense, to participate in any action, suit or
proceeding the defense of which has been assumed by the
Partnership. Notwithstanding the foregoing, the Partnership shall
not be entitled to assume and control the defense of any such
action, suit or proceeding if and to the extent that, in the
opinion of such Project Secured Party and its counsel, such action,
suit or proceeding involves the potential imposition of criminal
liability upon such Project Secured Party or a conflict of interest
between such Project Secured Party and the Partnership or between
such Project Secured Party and another Project Secured Party or a
Bank Financing Secured Party, and in such event (other than with
respect to disputes solely between such Project Secured Party and
another Project Secured Party or a Bank Financing Secured Party)
the Partnership shall pay the reasonable expenses (including,
without limitation, attorneys' and consultants' fees and
disbursements) of such Project Secured Party in such defense.
(l) The Partnership shall report to such Project Secured
Party on the status of any such action, suit or
proceeding as developments shall occur and at least within sixty
(60) days of the previous report. The Partnership shall deliver to
such Project Secured Party a copy of each document filed or served
on any party in any such action, suit or proceeding, and each
material document which the Partnership possesses relating to such
action, suit or proceeding.
(m) Notwithstanding the Partnership's rights hereunder
to control certain actions, suits or proceedings, any Project
Secured Party against whom any claim is made shall be entitled,
upon consultation with legal counsel wherein such Project Secured
Party is advised that such claim is reasonably meritorious, and,
except in the case of claims that could give rise to criminal
liability, after consultation with the Partnership, to compromise
or settle any such claim if such Project Secured Party determines
in its reasonable discretion that failure to compromise or settle
such claim is likely to have a material adverse effect on such
Project Secured Party, the Project or such Project Secured
Party's interest in the Project. Any such compromise or
settlement shall be binding upon the Partnership for purposes of
this Section 6.3. The foregoing provisions shall not restrict the
control by OPIC of any litigation
against it.
(n) Upon payment of any claim by the Partnership
pursuant to this Section 6.3 or other similar indemnity
provisions contained herein to or on behalf of a Project Secured
Party, the Partnership, without any further action, shall be
subrogated to any and all claims that such Project Secured Party
may have relating thereto, and such Project Secured Party shall
cooperate with the Partnership to enable the Partnership
vigorously to pursue such claims; provided, however, that the
Partnership's subrogation rights under this Section 6.3(n) shall be
limited to any claims that any Project Secured Party may have
against any Person other than a Project Secured Party or a Bank
Financing Secured Party and in no event shall the Partnership be
subrogated to any rights of the Collateral Agent or the Co-
Collateral to indemnification, contribution or other
reimbursement from the Secured Parties pursuant to the Collateral
Agency Agreement or otherwise, any rights of the Project
Administrative Agent to indemnification, contribution or other
reimbursement from the Secured Parties pursuant to the
Intercreditor Agreement or otherwise or any rights of any Project
Secured Party to reimbursement or contribution from any other
Project Secured Party or any Bank Financing Secured Party.
(o) Any amounts payable by the Partnership pursuant to
this Section 6.3 shall be regularly payable within the later to
occur of (i) thirty (30) days after the Partnership receives an
invoice for such amounts from any applicable Project Secured Party
or (ii) thirty (30) days prior to the date on which such Project
Secured Party reasonably expects to pay such costs on account of
which the Partnership's indemnity hereunder is
payable, and if not paid by such applicable date shall bear
interest at the Default Rate.
Section 6.4 Survival. All indemnities,
representations and warranties set forth herein shall survive the
execution and delivery of this Agreement, the Project Credit
Agreement, the Bank Credit Agreement, the OPIC Finance Agreement,
the OPIC Funding Documents, the Project Construction Note, the
Project Term Note, the Bank Construction Notes, the Bank Term
Notes, the OPIC Construction Note, the OPIC Term Note and the other
Financing Documents, the making and repayment of the OPIC Loan, the
making and repayment of the Project Loans and the making and
repayment of the Bank Loans.
Section 6.5 Governing Law; Submission to Jurisdiction.
(a) This Agreement is a contract made under the laws of the State
of New York of the United States and shall for all purposes be
governed by and construed in accordance with the laws of such State
without regard to the conflict of law rules thereof.
(b) Any legal action or proceeding against the
Partnership or VPCC with respect to this Agreement or any other
Financing 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 or, in the case of the
Partnership, in any competent court in Makati, Metro Manila,
Republic of the Philippines and, by execution and delivery of this
Agreement, each of the Partnership and VPCC hereby
irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid
courts. The Partnership and VPCC agree that a judgment, after
exhaustion of all available appeals, in any such action or
proceeding shall be conclusive and binding upon the Partnership or
VPCC, as the case may be, and may be enforced in any other
jurisdiction, including, in the case of the Partnership, the
Republic, by a suit upon such judgment, a certified copy of which
shall be conclusive evidence of the judgment. Each of the
Partnership and VPCC hereby irrevocably designates, appoints and
empowers The Prentice-Hall Corporation System Inc., with offices
on the date hereof at 15 Columbus Circle, New York, New York 10023,
as its designee, appointee and agent to receive, accept and
acknowledge for and on its behalf, and in respect of its property,
service of any and all legal process, summons, notices and
documents which may be served in any such action or
proceeding brought in any of the aforementioned New York courts.
If for any reason such designee, appointee and agent shall cease to
be available to act as such, each of the Partnership and VPCC
agrees to designate a new designee, appointee and agent in New York
City on the terms and for the purposes of this provision by written
notice to the Bank Agent, the VPCC Agent, OPIC and the Collateral
Agent, which designee, appointee and agent shall be satisfactory to
the Required Project Secured Parties, and to notify the Bank Agent,
the VPCC Agent, OPIC and the Collateral Agent in writing of such
new designees, appointee and agent. Each of the Partnership and
VPCC further irrevocably consents to the service of process out of
any of the aforementioned New York courts in any such action or
proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to the Partnership or VPCC, as the
case may be, at its respective
address set forth in Section 6.1 hereof, such service to become
effective thirty (30) days after such mailing. Nothing herein
shall affect the right of any Project Secured Party or Bank
Financing Project Secured Party to serve process in any other
manner permitted by law or to commence legal proceedings or
otherwise proceed against the Partnership or VPCC in the Republic
or in any other jurisdiction.
(c) Each of the Partnership and VPCC hereby
irrevocably waives any objection which it may now or hereafter have
to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or
any other Financing Document brought in the New York or
Philippine courts referred to in clause (b) above and hereby
further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
(d) WITH REGARD TO THIS AGREEMENT, THE PARTNERSHIP,
VPCC, THE BANK AGENT, THE VPCC AGENT, THE PROJECT ADMINISTRATIVE
AGENT, OPIC AND EACH BANK HEREBY WAIVES THE RIGHT TO A TRIAL BY
JURY.
Section 6.6 Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of the respective
successors and permitted assigns of the parties hereto, except that
the Partnership may not assign or otherwise transfer all or any
part of its rights or obligations under this Agreement
without the prior written consent of OPIC and each Bank and VPCC
may not assign all or any part of its rights and obligations under
this Agreement without the prior written consent of each Bank;
provided, however, that it is understood and agreed that the
provisions of this Section 6.6 shall not be deemed to
prohibit the execution, delivery and performance by VPCC under the
VPCC Assignment and Security Agreement.
Section 6.7 Counterparts. This Agreement may be
executed in several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same agreement.
Section 6.8 No Waiver; Remedies Cumulative. No
failure or delay on the part of any Project Secured Party or Bank
Financing Secured Party in exercising any right, power or
privilege hereunder or under any other Financing Document and no
course of dealing between the Partnership or VPCC and any Project
Secured Party or Bank Financing Secured Party shall impair any such
right, power or privilege or operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege
hereunder or under any other Financing Document
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege hereunder or thereunder. The
rights, powers and remedies herein or in any other Financing
Document expressly provided are cumulative and not exclusive of any
rights, powers or remedies which any Project Secured Party or Bank
Financing Secured Party would otherwise have. No notice to or
demand on the Partnership or VPCC in any case shall entitle the
Partnership or VPCC to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights
of any Project Secured Party or Bank Financing Secured Party to any
other or further action in any circumstances without notice or
demand.
Section 6.9 Severability. Any provision of this
Agreement and any other Financing Document which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability but that shall not invalidate the remaining
provisions of this Agreement or any other Financing Document or
affect such provision in any other jurisdiction.
Section 6.10 Calculation. All financial calculations to
be made under, or for the purposes of, this Agreement shall be
determined in accordance with United States generally accepted
accounting principles, applied on a consistent basis and, except as
otherwise required to conform to the definitions contained in
Schedule X of this Agreement or any other provisions of this
Agreement, shall be calculated from the then most recently issued
quarterly financial statements which the Partnership is obligated
to furnish hereunder from time to time, as provided hereunder;
provided, however, that (a) if the relevant quarterly financial
statements should be in respect of the last quarter of a Fiscal
Year then, at the option of the Required Project Secured Parties,
such calculations may instead be made from the audited financial
statements for the relevant Fiscal Year, and (b) if there should
occur any material adverse change in the financial condition or
results of operations of the Partnership after the end of the
period covered by the relevant financial statements, then such
material adverse change shall also be taken into account in
calculating the relevant figures.
Section 6.11 Headings Descriptive. The headings of the
several sections and subsections of this Agreement are
inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.
Section 6.12 Amendment or Waiver. Neither this
Agreement nor any terms hereof may be changed, waived, discharged
or terminated unless such change, waiver, discharge or
termination is in a writing signed by the Bank Agent, the VPCC
Agent, the Project Administrative Agent, VPCC, the Required Banks
and OPIC and (unless waived by the Required Banks) any and all
consents required to be obtained under numbered paragraph 9 of
Section 9.01 of the OPIC Lenders Insurance Contract and numbered
paragraph 11 of Section 9.01 of the OPIC Equity Insurance
Contract shall have been obtained; provided, however, that no such
change, waiver, discharge or termination shall, without the consent
of each Bank, (i) amend, modify or waive any provision of this
Section 6.12 or Section 6.3, 6.6 or 6.8, (ii) reduce the respective
percentages specified in the definitions of the terms Required
Project Secured Parties or Required Banks set forth in Schedule X
hereto or otherwise amend the definition of the term Required
Project Secured Parties set forth in Schedule X hereto or (iii)
consent to the assignment or transfer by the Partnership or VPCC of
any of its rights and obligations under this
Agreement.
Section 6.13 No Recourse. The obligations of VPCC
hereunder are solely the corporate obligations of VPCC and no
recourse shall be had against any stockholder, employee, officer,
director, incorporator, Affiliate, agent or servant of VPCC with
respect to this Agreement, any of the obligations of VPCC
hereunder or any obligation of VPCC for the payment of any fee or
other amount payable hereunder for any claim based on, arising out
of or relating to this Agreement or any Financing Document;
provided, however, that nothing in this Section 6.13 shall be
deemed to affect or diminish (i) the rights and remedies of the
Bank Financing Secured Parties (or any of them) with respect to
(and to the extent of) the Pledged Collateral as set forth in the
VPCC Stock Pledge Agreement or (ii) those express respective
obligations of certain Affiliates of VPCC enumerated in the last
sentence of Section 28 of the VPCC Stock Pledge Agreement. The
provisions of this Section 6.13 shall survive the termination of
this Agreement.
IN WITNESS WHEREOF, the parties hereto, acting through
their duly authorized representatives, have caused this Agreement
to be signed in their respective names as of the date first above
written.
Signed on: December 21, 1994
VISAYAS GEOTHERMAL POWER COMPANY
By: Magma Netherlands B.V.,
as Managing General Partner
By: /s/ Jon R. Peele
Name: Jon R. Peele
Title: Managing Director
VISAYAS POWER CAPITAL CORPORATION
By: /s/ Andrew L. Stidd
Name: Andrew L. Stidd
Title: President
CREDIT SUISSE, as Bank Agent, as
Project Administrative Agent and as VPCC Agent
By: /s/ Markus Christensen
Name: Markus Christensen
Title: Member of Senior Management
By: /s/ Henry Park
Name: Henry Park
Title: Associate
OVERSEAS PRIVATE INVESTMENT CORPORATION
By: /s/ Tracey Webb
Name: Tracey Webb
Title: Financial Analyst
BANKS:
CREDIT SUISSE
By: /s/ Markus Christensen
Name: Markus Christensen
Title: Member of Senior Management
By: /s/ Henry Park
Name: Henry Park
Title: Associate
Address for Notices:
Tower 49
12 East 49th Street
New York, New York 10017
Attn : Project Finance
Tel : (212) 238-2000
Fax : (212) 238-5390
Telex: 420149
Exhibit 10.112
CREDIT AND REIMBURSEMENT AGREEMENT
THIS CREDIT AND REIMBURSEMENT AGREEMENT, dated as of February 28,
1994, is made by and among (i) SALTON SEA POWER GENERATION L.P., a
California limited partnership ("SSPG"), SALTON SEA BRINE
PROCESSING L.P., a California limited partnership ("SSBP"), jointly
and severally (each of the foregoing parties,
individually, a "Borrower" and, collectively, "Borrowers"), (ii)
CREDIT SUISSE, THE FUJI BANK, LIMITED, THE SUMITOMO BANK,
LIMITED, Los Angeles Branch, THE BANK OF NOVA SCOTIA, BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION and each
Purchasing Lender (hereinafter defined), as lenders (each of the
lenders, individually, a "Lender", and, collectively, "Lenders"),
(iii) CREDIT SUISSE, as issuing bank ("Issuing Bank"), (iv) CREDIT
SUISSE, as lead agent for Lenders and Issuing Bank ("Lead Agent"),
(v) THE FUJI BANK, LIMITED, as co-agent ("Co-Agent") and (vi) THE
SUMITOMO BANK, LIMITED, Los Angeles Branch, THE BANK OF NOVA
SCOTIA, BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION as "Lead Managers" in respect of a Term Loan
Commitment (hereinafter defined) and in the case of THE FUJI BANK,
LIMITED and CREDIT SUISSE, as working capital lenders ("Working
Capital Lenders") in respect of a Working Capital Loan Commitment
(hereinafter defined).
IN CONSIDERATION of their mutual covenants and agreements
hereinafter set forth and intending to be legally bound hereby,
Borrowers, Lenders, Working Capital Lenders, Issuing Bank, "Lead
Managers", Lead Agent and Co-Agent covenant and agree as follows:
ARTICLE 1 - DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings assigned to them:
Abandonment.
The term "Abandonment" means: (a) the permanent cessation of
operation of any Facility pursuant to the decision of Borrowers
(such abandonment shall be deemed to occur either upon receipt by
Lead Agent of notice from Borrowers of such decision or upon the
date specified in such notice, such date to be no later than 30
days after such decision); or (b) the cessation of operation of any
Facility for a continuous period of at least 60 days, which period
shall be extended for an additional 90 day period if such cessation
is caused by force majeure and the Majority Lenders shall have
determined that such event of force majeure will terminate within
such period; provided, however, that this clause (b) shall not
apply if Borrowers are diligently pursuing a remedy for such
cessation or such force majeure pursuant to a plan submitted to
Lead Agent prior to the expiration of such 60 day period which is
reasonably likely to succeed, in the opinion of the Majority
Lenders (after consultation with the Independent Engineer), and no
other Event of Default shall have occurred and be continuing.
Accounts.
The term "Accounts" means each and every of the New Well Reserve
Account, Pre-Funded Well Account, Project Account, Debt Service
Reserve Account, General LOC Debt Account and Special LOC Debt
Account and any and all other Accounts established by Borrowers
hereunder.
Advance.
The term "Advance" means (a) the initial disbursement by Lenders of
any of the proceeds of the Term Loan on the Closing Date, (b) the
issuance by Issuing Bank of any Letters of Credit, (c) a
disbursement by Lenders of any of the proceeds of the Term Loan to
repay Reimbursement Obligations with respect to the Letters of
Credit, or (d) any disbursement by the Working Capital Lenders of
funds pursuant to the Working Capital Loan Commitment.
Affiliate.
The term "Affiliate" means, with respect to a Person, any other
Person that, directly or indirectly through one or more
intermediaries, Controls, is Controlled by or is under common
Control with such first Person; provided, however, that The Dow
Chemical Company shall not be deemed to be an Affiliate for
purposes of this Agreementso long as The Dow Chemical Company does
not own more than 50% of the voting stock of Magma or
otherwise hold more than 50% of the voting control of Magma.
Agreement.
The term "Agreement" means this Credit and Reimbursement
Agreement, dated as of February 28, 1994, among Borrowers,
Lenders, Issuing Bank, "Lead Managers", Lead Agent, Co-Agent and
Working Capital Lenders, as the same may be supplemented or amended
from time to time.
Amount Supported.
The term "Amount Supported" means the total initial face amount of
any Letter of Credit at its date of issuance as such initial face
amount may be (a) reduced from time to time (i) to reflect any
amounts properly paid by Issuing Bank to a beneficiary
entitled to drawings thereunder in accordance with the terms of the
Letter of Credit, or (ii) as otherwise provided in accordance with
the terms of the Letter of Credit and (b) increased from time to
time in accordance with Section 3.4(b) hereof, as such Letter of
Credit (including the face amount thereof) may be amended,
supplemented or extended in accordance with its terms; provided,
however, that in no event shall the amount hereunder exceed the
Term Loan Facility.
Assignment of Agreement.
The term "Assignment of Agreement" means each Collateral Assignment
of Agreement of each Material Project Document by Borrowers in
favor of Lead Agent (for the benefit of the Secured Parties), in
form and substance satisfactory to Lead Agent, as each may be
supplemented or amended from time to time.
Authorized Officer.
The term "Authorized Officer" means the president, chief
financial officer, chief operating officer, vice president,
treasurer, assistant treasurer or secretary of a corporation or, in
the case of a partnership, any such officer of the managing general
partner (or other Person responsible for managing such partnership)
or, in the case of each Borrower, any such officer of General
Partner.
Available Cash Flow.
The term "Available Cash Flow" has the meaning set forth in Section
6.1(c)(vi) hereof.
Banking Day.
The term "Banking Day" means any day that (a) is not a Saturday,
Sunday or legal holiday in the State of New York or the State of
California, (b) is not a day on which banking institutions
chartered by the State of New York, State of California or the
United States are legally required or authorized to close, and (c)
when used in connection with LIBOR, is a day on which
dealings in foreign currencies and exchange between banks may be
carried on in London, England.
Base Rate.
The term "Base Rate" means, as of any date, for each Loan or unpaid
Reimbursement Obligation (or, where the context so
requires, the aggregate of the Loans then outstanding or
Reimbursement Obligations then unpaid), a rate per annum equal to
the greater of (a) the Federal Funds Rate as in effect at such time
plus one-half of one percent (0.50%) and (b) the per annum rate of
interest from time to time publicly announced by Credit Suisse (New
York Branch) as its base lending rate for domestic (United States)
commercial loans, the Base Rate to change when and as such rates
change. The Base Rate is not necessarily the lowest rate of
interest charged by Lead Agent in connection with extensions of
credit to its other customers.
Base Rate Margin.
The term "Base Rate Margin" means:
(a) With respect to the Term Loan, fifty basis points (0.50%); and
(b) With respect to the Working Capital Loan, fifty basis points
(0.50%).
Blocked Account Agreements.
The term "Blocked Account Agreements" means any Blocked Account
Agreement, between Borrowers and any bank with which Borrowers
maintain a depository account, which bank is acceptable to Lead
Agent, and which agreement is in form and substance reasonably
satisfactory to Lead Agent, as the same may be supplemented or
amended from time to time.
Borrowers.
The term "Borrowers" means the parties defined as Borrowers in the
preamble of this Agreement.
Calculation Delivery Date.
The term "Calculation Delivery Date" means the date on which the
Debt Service Coverage Ratio calculation for the next succeeding
Term Loan Repayment Date shall be delivered by Borrowers to Lead
Agent, which date shall be no less than fifteen (15) days before
the applicable Term Loan Repayment Date, provided, that if any such
day is not a Banking Day, the relevant Calculation Delivery Date
shall be the next succeeding Banking Day.
Cash Expenses.
The term "Cash Expenses" means, for any period, (i) the amounts
actually paid by Borrowers during such period for the operation and
maintenance of the Project (but excluding income taxes of the
Partners and non-cash items such as depreciation and
amortization), including, without limitation, (a) the Operator's
fee and other payments due under the O&M Agreement, and (b) costs
for labor, maintenance, materials, commodity supply, by-product
transportation and handling, operating and maintenance
subcontracts, operating material, waste disposal, water,
utilities, administration, premiums for Insurance Policies, taxes,
non-discretionary capital expenditures permitted hereunder and
necessary to repair or maintain the Project and payment of amounts
required to be paid under the Service Agreement, the Easement Grant
Deed and the Ground Leases and (ii) the reasonable out-of-pocket
expenses otherwise reimbursable hereunder and incurred by Lenders
in connection with this Agreement, any other Loan Instrument and
any Project Document.
Cash Revenues.
The term "Cash Revenues" means, for any period, the Borrowers'
revenues or income actually received, pursuant to the terms of the
Project Documents or otherwise, and including, without
limitation, (a) interest and other income earned on the amounts in
the Project Account, (b) interest and other income earned on any
amount in the Debt Service Reserve Account and withdrawn therefrom
for deposit into the Project Account as an item of Cash Revenues,
and (c) any rebates, refunds or other payments to Borrowers
pursuant to any of the Project Documents.
CD Rate.
The term "CD Rate" means, for each Interest Period, for each Loan
(or, where the context so requires, the aggregate of the Loans then
outstanding), the sum (rounded upward to the nearest one one-
hundredth of one percent (0.01%)) as determined by Lead Agent to be
the weighted average of the prevailing rates per annum offered at
10:00 a.m. New York time (or as soon thereafter as is practicable)
on the first day of such Interest Period by the Reference Banks for
the purchase at face value of certificates of deposit of the
Reference Banks for a period and in an amount comparable to the
Interest Period and principal amount of the Loans with respect to
which Borrower has chosen the CD Rate.
CD Rate Margin.
The term "CD Rate Margin" means:
(a) With respect to the Term Loan, one hundred twenty-five basis
points (1.25%); and
(b) With respect to the Working Capital Loan, one hundred
twenty-five basis points (1.25%).
Certificate.
The term "Certificate" means the Certificate as defined in
Section 6.17 hereof.
Closing Date.
The term "Closing Date" means the date on which this Agreement is
executed and all the conditions precedent set forth in Section 4.1
hereof have been fulfilled or waived and the Initial Advance is
made.
Co-Agent.
The term "Co-Agent" means the Co-Agent named in the preamble to
this Agreement.
Code.
The term "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor statute and all rules and
regulations promulgated thereunder.
Collateral.
The term "Collateral" means all items identified as Collateral, as
defined in the Security Documents.
Commercial Paper Notes.
The term "Commercial Paper Notes" means the short term promissory
notes of Borrowers issued in lieu of Advances of portions of the
Term Loan pursuant to the terms and conditions of this Agreement
and the Depositary Agreement, in form and substance reasonably
satisfactory to Lead Agent. Commercial Paper Notes shall
constitute LOC Debt of Borrowers and shall have terms not greater
than 270 days and shall not have a maturity date occurring after
the earlier of (i) the Credit Expiration Date and (ii) the
Tranche A Maturity Date or the Tranche B Maturity Date, as
applicable. Commercial Paper Notes shall not be issued in lieu of
Working Capital Loan Advances.
Commitment Transfer Supplement.
The term "Commitment Transfer Supplement" means a commitment
transfer supplement substantially in the form of Exhibit 9.2(a)
hereto.
Consenting Party.
The term "Consenting Party" means each of the parties to the
Material Project Documents (other than Borrowers) that has
executed and delivered a Consent in favor of the Lead Agent.
Consents.
The term "Consents" means collectively, the SCE Consent, the
Operator Consent, the Magma Consents, the Magma Land Company I
Consent, the IID Consent and the Desert Valley Consent.
Consolidated Tangible Net Worth.
The term "Consolidated Tangible Net Worth" means, on any date of
determination, the total assets of such Person and its
Subsidiaries on a consolidated basis less (a) intangibles
(including, without limitation, (i) the goodwill of such Person and
its Subsidiaries on a consolidated basis, (ii) the
exploration and development costs of such Person and its
Subsidiaries on a consolidated basis, (iii) the Power Purchase
Contracts and (iv) the acquisition and new project costs), but
excluding prepaid expenses and costs and (b) the total
liabilities of such Person and its Subsidiaries on a consolidated
basis, in each instance determined in accordance with GAAP.
Control.
The term "Control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of voting
securities or partnership or other ownership interests, by
contract or otherwise.
CP Dealer.
The term "CP Dealer" shall mean any Person appointed as a CP Dealer
in a CP Dealer Agreement with the prior written consent of Lead
Agent, which consent shall not be unreasonably withheld.
CP Dealer Agreement.
The term "CP Dealer Agreement" means each Commercial Paper Dealer
Agreement between the Borrowers and a CP Dealer, in form and
substance reasonably satisfactory to Lead Agent.
CPN Letter of Credit.
The term "CPN Letter of Credit" means an irrevocable letter of
credit on the terms set forth in Section 3.4 hereof issuable during
the period from and after the Closing Date to, but
excluding, the Tranche A Maturity Date or the Tranche B Maturity
Date, as applicable, in a maximum face amount equal to the
Tranche A Term Loan Commitment then in effect, or the Tranche B
Term Loan Commitment then in effect, as applicable, in form and
substance reasonably satisfactory to Lead Agent, as such letter of
credit may be amended, supplemented or extended in accordance with
its terms.
Credit Expiration Date.
The term "Credit Expiration Date" shall have the meaning set forth
in Section 3.10 hereof.
Credit Payment.
The term "Credit Payment" shall have the meaning set forth in
Section 3.5 hereof.
Credit Reduction.
The term "Credit Reduction" shall have the meaning set forth in
Section 3.5 hereof.
Credit Suisse.
The term "Credit Suisse" means Credit Suisse, a bank organized and
existing under the laws of Switzerland, acting through its New York
branch.
Dealer.
The term "Dealer" means any CP Dealer or MTN Dealer.
Debt.
The term "Debt" of any Person means, at any time, without
duplication, (a) all obligations of such Person for borrowed money,
(b) 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), (c) all obligations of such Person to pay the deferred
purchase price of property or services (except for trade accounts
payable arising in the ordinary course of business which are not
more than 90 days past due or are the subject of a Good Faith
Contest by such Person), (d) all obligations of such Person as
lessee under capital leases, (e) all obligations of others
guaranteed by such Person, whether or not secured by a Lien on any
asset of such Person, (f) all obligations secured by a Lien on any
asset of such Person, whether or not such obligation is assumed by
such Person, (g) all obligations under letters of credit issued for
the account of such Person and all drafts drawn thereunder, (h) all
obligations under agreements providing for swaps, ceiling rates,
ceiling and floor rates, contingent
participation or other hedging mechanisms with respect to the
payment of interest, and (i) liabilities of such Person in
respect of unfunded vested benefits under plans covered by Title IV
of ERISA.
Debt Service.
The term "Debt Service" means, without duplication, for any period,
an amount equal to the aggregate of (a) principal and interest
actually due on the Term Loan during such period
pursuant to this Agreement, (b) principal and interest payable by
Borrowers during such period in respect of Reimbursement
Obligations, (c) amounts, if any, payable by Borrowers during such
period under any Swap Agreement, (d) such portion of the Face
Amount of LOC Debt supported by the Letters of Credit
maturing during such period as shall constitute the discount
payable with respect thereto, and (e) any L/C Fees, other fees
specified in Sections 2.6(d)(i), (ii) and (iv) and fees which
Borrowers are obligated to pay in connection with the LOC Debt
(excluding payments to the Debt Service Reserve Account), all as
calculated by Lead Agent.
Debt Service Coverage Ratio.
The term "Debt Service Coverage Ratio" means, for any period, the
ratio of (a) the Net Revenues during such period to (b) Debt
Service for such period, as calculated in accordance with Section
6.2 hereof by Borrowers and approved by Lead Agent.
Debt Service Required Balance.
The term "Debt Service Required Balance" has the meaning provided
in Section 6.1(d) hereof.
Debt Service Reserve Account.
The term "Debt Service Reserve Account" has the meaning provided in
Section 6.1(d) hereof.
Debtor Relief Laws.
The term "Debtor Relief Laws" means any applicable liquidation,
dissolution, conservatorship, receivership, bankruptcy,
moratorium, arrangement, insolvency, reorganization, adjustment of
debt or similar laws affecting the rights or remedies of creditors
generally, as in effect from time to time.
Deed of Trust.
The term "Deed of Trust" means the Deed of Trust and Security
Agreement, dated as of the date hereof, given by Borrowers to
Trustee for the use and benefit of the Secured Parties, as the same
may be supplemented, amended and re-recorded from time to time.
Default.
The term "Default" means an event which with the giving of notice
or lapse of time or both as specified in Section 7.1 hereof would
become an Event of Default.
Default Interest Rate.
The term "Default Interest Rate" means, for any day, the Base Rate
(as in effect from time to time) plus (a) the Base Rate Margin and
(b) two percent (2%) per annum.
Depositary.
The term "Depositary" means the Person to be designated as
depositary under the Depositary Agreement.
Depositary Agreement.
The term "Depositary Agreement" means the Depositary Agreement,
among the Depositary, Lead Agent, Issuing Bank and Borrowers, in
form and substance reasonably satisfactory to Lead Agent, as the
same may be supplemented or amended from time to time.
Desert Valley.
The term "Desert Valley" means Desert Valley Company, a
California corporation.
Desert Valley Consent.
The term "Desert Valley Consent" means the Consent to Assignment of
Agreement by Desert Valley in form and substance satisfactory to
Lead Agent, as the same may be supplemented or amended from time to
time.
Easement Grant Deed.
The term "Easement Grant Deed" means the Amended and Restated
Easement Grant Deed and Agreement Regarding Rights for Geothermal
Development, dated as of February 23, 1994 by and among Magma Land
Company I and SSBP, as the same may be supplemented,
modified or amended from time to time.
EBIDAT.
The term "EBIDAT" means, without duplication, for any period, the
following, each calculated for such period: (a) Net Income (before
any provision for or benefit from income and franchise taxes
determined in accordance with GAAP), plus (b) interest expense
deducted in the determination of Net Income, plus (c) amortization
and depreciation deducted in determining Net Income.
Environmental Indemnity Agreement.
The term "Environmental Indemnity Agreement" means the
Environmental Indemnity Agreement dated as of the date hereof from
Magma in favor of Lead Agent (on behalf of the Secured Parties), in
substantially the form of Exhibit 4.1(aa) hereto.
Environmental Requirement.
The term "Environmental Requirement" has the meaning set forth in
Section 5.25 hereof.
ERISA.
The term "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time, and any successor statute
and all rules and regulations promulgated thereunder.
ERISA Affiliate.
The term "ERISA Affiliate" means (a) a corporation which is a
member of a controlled group of corporations with either Borrower
within the meaning of Section 414(b) of the Code, (b) a trade or
business (including a sole proprietorship, partnership, trust,
estate, or corporation) which is under common control with either
Borrower within the meaning of Section 414(c) of the Code, (c) a
member of an affiliated service group with either Borrower within
the meaning of Section 414(m) of the Code or (d) an entity which is
treated as a single employer with either Borrower pursuant to
Section 414(o) of the Code.
Event of Default.
The term "Event of Default" means the occurrence of any of the
events set forth in Section 7.1 hereof.
Event of Loss.
The term "Event of Loss" means any of the following events: (a)
loss of all or substantially all of any Facility or the use thereof
due to destruction, damage beyond economical repair or rendition of
any Facility permanently unfit for normal use for any reason
whatsoever (other than if it is merely not
economically feasible to maintain, use or operate); (b) anything
which results in an insurance settlement with respect to such
Facility on the basis of a total loss or constructive total loss;
and (c) the condemnation or taking or requisitions of title or use
for an indefinite period or a period in excess of 12 months by any
Governmental Authority which constitutes the taking of all or
substantially all of such Facility or all or such a
substantial portion of such Property such that the remainder is not
sufficient to permit operation of such Facility on a
commercially feasible basis.
Face Amount.
The term "Face Amount" means, when used with reference to LOC Debt,
the aggregate of (a) principal amount stated therein, which
principal amount shall reflect the full amount of any discount to
maturity on such LOC Debt, and (b) an amount equal to other returns
to holders not reflected in such principal amount as so stated and
for which Borrowers are obligated (including any interest thereon).
Facilities.
The term "Facilities" means collectively, the Unit 1 Facility, the
Unit 2 Facility and the Unit 3 Facility.
Federal Funds Rate.
The term "Federal Funds Rate" means, as of any date, for any amount
under this Agreement with respect to which the terms of this
Agreement state that such amount shall bear interest at the Federal
Funds Rate, the rate determined by Lead Agent to be the prevailing
rate per annum (rounded upward, if necessary, to the nearest 1/100
of 1%) bid at approximately 11:00 a.m. New York time (or as soon
thereafter as is practicable) on such day based on quotations by
two (2) or more New York Federal funds dealers of recognized
standing, selected by Lead Agent, for the purchase at face value of
Federal funds in the secondary market in an amount comparable to
the principal amount of the related Loan or unpaid Reimbursement
Obligation and with a maturity of one (1) day.
Fee Letter Agreement.
The term "Fee Letter Agreement" means the Fee Letter Agreement,
dated the date hereof, from Borrowers and agreed to and accepted by
Credit Suisse, as the same may be supplemented or amended from time
to time.
FERC.
The term "FERC" means the Federal Energy Regulatory Commission, an
agency of the United States government, or any successor thereof.
Final Maturity Date.
The term "Final Maturity Date" means March 15, 2000.
Financial Statements.
The term "Financial Statements" means the information required to
be furnished pursuant to Section 6.8 hereof.
Financing Statements.
The term "Financing Statements" means the financing statements and
such other documents, instruments or certificates required to be
filed with the appropriate offices of Governmental Authorities in
connection with the perfection of the security interests granted
under the Security Documents.
FPA.
The term "FPA" means the Federal Power Act of 1920, as amended from
time to time and all rules and regulations promulgated thereunder.
Fronting Fee.
The term "Fronting Fee" means the fronting fee to be paid to the
Issuing Bank pursuant to Section 2.6(c)(i) hereof.
Funding Agreement.
The term "Funding Agreement" means the Funding Agreement, dated
June 15, 1988 between SCE and SSPG (as successor-in-interest to
Earth Energy, Inc.), as the same may be supplemented, modified or
amended from time to time.
Funding and Construction Agreement.
The term "Funding and Construction Agreement" means the Funding and
Construction Agreement, dated as of June 29, 1987 by and among IID
and Chevron Geothermal Company of California, Del Ranch, L.P., SSPG
(as successor-in-interest to Earth Energy, Inc. and Desert Power
Company), Elmore, L.P., GEO East Mesa Limited Partnership, Heber
Geothermal Company, Imperial Resources
Recovery Associates, L.P., Leathers, L.P., Ormesa Geothermal,
Ormesa Geothermal II, Union Oil Company of California, Union
Geothermal Division and Vulcan/BN Geothermal Power Company, as
amended by Amendment No. 1, dated as of September 1, 1987,
Amendment No. 2, dated October 1, 1988, Amendment No. 3, dated as
of April 1, 1989 and Amendment No. 4, dated as of March 26, 1991,
as the same may be supplemented, modified or amended from time to
time.
General LOC Debt Account.
The term "General LOC Debt Account" has the meaning set forth in
Section 3.3(a) hereof.
General Partner.
The term "General Partner" means Salton Sea Power Company, a
wholly-owned subsidiary of Magma, in its capacity as general
partner of each Borrower, or Salton Sea Power Company's
successors and permitted assigns, and any other Person in its
capacity as general partner of Borrowers.
Geothermal Sales Contracts.
The term "Geothermal Sales Contracts" means collectively, (i) the
Geothermal Sales Contract for Salton Sea Units 1 and 2, dated
September 6, 1988 between SSPG (as successor-in-interest to Earth
Energy, Inc.) and Union Oil Company of California, Union
Geothermal Division and (ii) the Geothermal Sales Contract for
Salton Sea Unit 3, dated June 1, 1989 between SSPG (as successor-
in-interest to Desert Power Company) and SSBP (as successor-in-
interest to Union Oil Company of California, Union Geothermal
Division), as each may be supplemented, modified or amended from
time to time.
Good Faith Contest.
The term "Good Faith Contest" means the contest of an item if the
item is diligently contested in good faith by appropriate
proceedings timely instituted and (i) adequate cash reserves or
bonds, if reasonably determined by Lead Agent to be necessary, in
an amount reasonably satisfactory to Lead Agent are established
with respect to the contested item, (ii) during the period of such
contest, the enforcement of any contested item is
effectively stayed and (iii) such contest does not involve any
material risk of the sale, forfeiture or loss of any of the
collateral covered by the Security Documents (other than the cash
reserved pursuant to clause (i) above).
Governmental Approvals.
The term "Governmental Approvals" means all authorizations,
consents, approvals, waivers, exemptions, variances,
registrations, leases, certifications, franchises, permissions,
permits and licenses of, and rulings by any Governmental
Authority (in each case pertaining to the Project).
Governmental Authority.
The term "Governmental Authority" means the government of any
nation or state or federal, state, municipal or other political
subdivision in which the Properties or the Facilities are
located, and any other government or political subdivision
thereof exercising jurisdiction over the Project, the Facilities
(including leasing, ownership, construction, operation or
maintenance thereof), Borrowers, or any other party to any of the
Project Documents or other Loan Instruments, including all
agencies, courts and instrumentalities of such governments and
political subdivisions exercising executive, legislative,
judicial, regulatory or administrative functions.
Governmental Requirements.
The term "Governmental Requirements" means all Governmental
Approvals and Laws (including, without limitation, those with
respect to zoning, variance, subdivision and non-conforming uses),
all as presently in effect and as the same may hereafter be issued,
promulgated or amended from time to time, applicable to the
Properties, the Facilities (including, without limitation, leasing,
ownership, operation or maintenance thereof), Borrowers, or, with
respect to any other party to any of the Project
Documents or Loan Instruments, applicable to such party's ability
to perform its respective obligations under such document or
instrument.
Gross Revenues.
The term "Gross Revenues" means, for any period, Borrowers'
revenues or income calculated in accordance with generally
accepted United States accounting principles, and recognized
pursuant to the terms of the Project Documents or otherwise,
including, without limitation, revenues from the sale of
electrical capacity and energy, and including (a) interest and
other income earned on amounts in the Project Account, the New Well
Reserve Account and the Pre-Funded Well Account and (b) interest
and other income earned on any amount in the Debt
Service Reserve Account and withdrawn therefrom for deposit in the
Project Account.
Ground Leases.
The term "Ground Leases" means collectively, (i) the Ground Lease,
dated November 24, 1993 by and between IID, as landlord, and
Borrowers, as tenant, and (ii) the Ground Lease, dated March 31,
1993 by and between Magma Land Company I, as landlord, and
Borrowers, as tenant, as each may be supplemented, modified or
amended from time to time.
Hazardous Material.
The term "Hazardous Material" has the meaning set forth in
Section 5.25 hereof.
IID.
The term "IID" means Imperial Irrigation District, an irrigation
district organized under the Water Code of the State of
California.
IID Consent.
The term "IID Consent" means the Consent to Assignment of
Agreement by IID in form and substance satisfactory to Lead Agent,
as the same may be supplemented or amended from time to time.
Independent Engineer.
The term "Independent Engineer" means R.W. Beck and Associates, or
another nationally recognized engineering firm appointed as
independent engineer by Lead Agent and reasonably satisfactory to
Borrowers.
Initial Advance.
The term "Initial Advance" means the initial Advance of the Term
Loan or the initial issuance of any Letters of Credit on the
Closing Date made pursuant to the terms of this Agreement.
Insufficiency.
The term "Insufficiency" means, with respect to any employee
benefit plan, the amount, if any, by which the present value of the
vested and non-vested benefits under such plan (determined as of
the latest actuarial valuation date for such plan and
determined in accordance with the same assumptions and methods as
used in the most recent actuarial valuation for such plan) exceed
the fair market value of the assets of such plan allocable to such
benefits.
Insurance Advisor.
The term "Insurance Advisor" means Gale, Smith & Co., Inc., or
another nationally recognized insurance advisory firm appointed as
insurance advisor by Lead Agent and reasonably satisfactory to
Borrowers.
Insurance Policies.
The term "Insurance Policies" means the insurance policies
specified in Schedule 6.16 hereto that are approved by Insurance
Advisor and acceptable to Lead Agent.
Interest Coverage.
The term "Interest Coverage" means, for any period, EBIDAT
divided by Interest Expenses.
Interest Expenses.
The term "Interest Expenses" means, without duplication, for any
period, all GAAP interest expenses of any Person and its
Subsidiaries on a consolidated basis with respect to all
interest, fees and costs payable with respect to such Person's
consolidated debt.
Interest Payment Date.
The term "Interest Payment Date" means, (a) with respect to
interest (accruing at any Interest Rate) on any Loan, each
Quarterly Date, and (b) with respect to interest on any Loan based
on LIBOR or a CD Rate, the final date of each Interest Period using
LIBOR or a CD Rate.
Interest Period.
The term "Interest Period" means, in the first instance, the period
commencing on and including the date of a Loan and, in the case of
each subsequent Loan, each successive Interest Period applicable to
such Loan, commencing on the last day of the
immediately preceding Interest Period, and (subject to Sections
2.6(a)(i)(A) and (B) hereof) ending, (a) in the case of an
Interest Period based on LIBOR, on the same date in the first
(1st), second (2nd), third (3rd) and sixth (6th) calendar month
thereafter, and (b) in the case of an Interest Period based on the
CD Rate, thirty (30), sixty (60), ninety (90) or one hundred eighty
(180) days thereafter, and (c) in the case of an Interest Period
based on Base Rate, on the next following Banking Day, in each case
counting the first but not the last day of each such Interest
Period.
Interest Rate.
The term "Interest Rate" means a rate of interest per annum on
Loans outstanding at the commencement of the relevant Interest
Period, equal to:
(a) LIBOR for such Interest Period plus the applicable LIBOR
Margin;
(b) the CD Rate for such Interest Period plus the applicable CD
Rate Margin; or
(c) the Base Rate for such Interest Period plus the applicable
Base Rate Margin.
Investment Indemnity Agreement.
The term "Investment Indemnity Agreement" means the Indemnity
Agreement dated as of the date hereof from Magma in favor of Lead
Agent (on behalf of the Secured Parties), with respect to
perfection of Permitted Investments.
Issuance Agreements. The term "Issuance Agreements" means,
collectively, each CP Dealer Agreement, the Depositary Agreement
and each MTN Distribution Agreement.
Issuing Bank.
The term "Issuing Bank" means the party named as Issuing Bank in
the preamble of this Agreement and any other financial
institution acting as an Issuing Bank pursuant to Sections 3.4(a)
or 3.11(d) hereof.
Issuing Bank's Account.
The term "Issuing Bank's Account" shall have the meaning set forth
in the Depositary Agreement.
Joint Funding Agreement.
The term "Joint Funding Agreement" means the Joint Funding
Agreement, dated as of June 29, 1987 by and among Chevron
Geothermal Company of California, SSPG (as successor-in-interest to
Desert Power Company and Earth Energy, Inc.), GEO East Mesa No. 2,
Inc., GEO East Mesa No. 3, Inc., Heber Geothermal Company, Magma,
Ormesa Geothermal, Ormesa Geothermal II, Union Oil Company of
California, Union Geothermal Division and Vulcan/BN Geothermal
Power Company, as the same may be supplemented, modified or amended
from time to time.
L/C Margin Fee.
The term "L/C Margin Fee" means the fee to be paid to Lead Agent by
Borrowers pursuant to Section 2.6(c)(ii) hereof.
Law.
The term "Law" means any constitution, treaty, law, statute, code,
ordinance, decree, regulation, order, writ, rule, judicial or
arbitral decision, and any voluntary restraint, policy or guideline
not having the force of law, with which the party referred to in
the context in which the term is used must
reasonably comply, or any of the provisions of the foregoing that
are binding on or affect such party, all as presently in effect and
as the same may hereafter be issued, promulgated or amended from
time to time.
L/C Fees.
The term "L/C Fees" means the fees to be paid by Borrowers
pursuant to Section 2.6(c) hereof (consisting of the Fronting Fee
and the L/C Margin Fee).
Lead Agent.
The term "Lead Agent" means the party named Lead Agent in the
preamble of this Agreement, or any successor Lead Agent selected
pursuant to Section 8.7 hereof, acting as Lead Agent for Lenders
and Issuing Bank hereunder.
Lender.
The term "Lender" means (i) with respect to the Term Loans and the
Letters of Credit, each Lender named in the preamble of this
Agreement and any Purchasing Lender and (ii) with respect to the
Working Capital Loans, the Working Capital Lenders.
Letter of Credit Participation.
The term "Letter of Credit Participation" means the participation
of a Lender in each of the Letters of Credit pursuant to Section
3.1(a) hereof, each Lender (including Issuing Bank) being deemed to
have a participation in each of the Letters of Credit in the amount
of its Proportionate Share of the Term Loan Facility.
Letters of Credit.
The term "Letters of Credit" means each direct-pay letter of credit
issued by Issuing Bank for the account of Borrowers
supporting payment obligations under the LOC Debt, including,
without limitation, any CPN Letters of Credit and any letter of
credit to be issued by Issuing Bank for the account of Borrowers in
connection with the Medium Term Notes, each such letter of credit
to be in form and substance reasonably satisfactory to Issuing Bank
and Lead Agent, as any such letter of credit may be amended,
supplemented or extended in accordance with its terms. Unless the
context requires otherwise, each reference to Letters of Credit in
any Loan Instrument shall be deemed to be a
reference to the Letters of Credit issued and outstanding at such
time.
LIBOR.
The term "LIBOR" means, for each Interest Period, for each Loan
(or, where the context so requires, the aggregate of the Loans then
outstanding), the per annum rate of interest at which dollar
deposits in such amount are, or would be, offered for such
Interest Period in the London interbank market at 11 a.m. (London
time) two (2) Banking Days prior to the commencement of such
Interest Period, by the Reference Banks to prime banks (and if any
Reference Bank does not timely furnish such information for
determination of the Interest Rate based on LIBOR, Lead Agent shall
determine such rate on the basis of information timely furnished by
the other Reference Bank(s)), and in case of
variations in rates, the highest rate as between the Reference
Banks, and adjusted for applicable reserve costs actually
incurred by Lenders pursuant to regulations issued from time to
time by the Governors of the Federal Reserve System for
determining the maximum reserve requirement (including, without
limitation, any marginal, emergency, supplemental, special or other
reserves required by applicable Law) with respect to
Eurocurrency funding or liabilities.
LIBOR Margin
The term "LIBOR Margin" means:
(a) With respect to the Term Loan, one hundred twenty-five basis
points (1.25%); and
(b) With respect to the Working Capital Loan, one hundred
twenty-five basis points (1.25%).
Lien.
The term "Lien" means any security interest, deed of trust,
mortgage, pledge, hypothecation, assignment, deposit arrangement,
charge, encumbrance, lien (statutory or other), or preference,
priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, any
conditional sale or other retention agreement, any lease having
substantially the same effect as any of the foregoing, and any
filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction).
Limited Partners.
The term "Limited Partners" means (i) SSBP, in its capacity as
limited partner of SSPG, and (ii) Magma, in its capacity as limited
partner of SSBP, in each case, including any of its successors and
permitted assigns and any other limited partner properly admitted
into SSPG or SSBP, or any of their successors and permitted
assigns.
Loan.
The term "Loan" means any of the Term Loan or Working Capital Loan.
Loan Instruments.
The term "Loan Instruments" means (a) this Agreement, the
Security Documents, Notes, Letters of Credit, Fee Letter
Agreement, Reserve Account Guaranty, the Environmental Indemnity
Agreement, the Investment Indemnity Agreement, the Sinclair
Indemnity Agreement, Commercial Paper Notes, Medium Term Notes,
Issuance Agreements, any Swap Agreement in effect from time to
time, and (b) such other instruments evidencing, securing or
pertaining to all or any part of the Total Commitment, as shall
from time to time be executed and delivered to any of the Secured
Parties by Borrowers, or any other party, pursuant to or as
contemplated by this Agreement.
LOC Debt.
The term "LOC Debt" means Commercial Paper Notes and Medium Term
Notes (a) with a maturity date not later than the Tranche A
Maturity Date or the Tranche B Maturity Date, as applicable, (b)
the proceeds of which are used to repay a corresponding principal
amount of the Term Loan and (c) that are supported by Letters of
Credit.
LOC Disbursement.
The term "LOC Disbursement" means any payment made by the Issuing
Bank pursuant to a drawing under a Letter of Credit.
Magma.
The term "Magma" means Magma Power Company, a Nevada corporation.
Magma Consents.
The term "Magma Consents" means each Consent to Assignment of
Agreement by Magma in form and substance satisfactory to Lead
Agent, as the same may be supplemented or amended from time to
time.
Magma Land Company I Consent.
The term "Magma Land Company I Consent" means the Consent to
Assignment of Agreement by Magma Land Company I dated as of the
date hereof in form and substance satisfactory to Lead Agent, as
the same may be supplemented or amended from time to time.
Majority Lenders.
The term "Majority Lenders" means those Lenders that have
advanced or have committed to advance in the aggregate fifty-one
percent (51%) or more of the total amount (reflecting the
aggregate principal amount of Loans outstanding and the aggregate
face amount of issued and Outstanding Letters of Credit) of the
Total Commitment.
Material Adverse Effect.
The term "Material Adverse Effect" means a material adverse effect
on (a) the condition (financial or otherwise), business, operations
or prospects of the Project (taken as a whole) or Borrowers, (b)
the ability of either of Borrowers to observe and perform its
obligations under this Agreement, the Loan
Instruments or any other Material Project Documents to which it is
a party, (c) the rights or interests of the Lenders which could
prevent the Lenders from realizing in any material respect the
benefits of the Loan Instruments or (d) any material part of the
security interests or Collateral provided to Lead Agent for the
benefit of the Secured Parties under the Security Documents.
Material Project Documents.
The term "Material Project Documents" means collectively each of
the Project Documents (other than Permitted Contracts and any non-
material consent and any non-material agreement within the ambit of
items (p) and (q) respectively of the definition of Project
Documents).
Maturity Event.
The term "Maturity Event" means a date on which any LOC Debt
outstanding is scheduled to mature.
Medium Term Notes.
The term "Medium Term Notes" means the interest bearing medium term
notes of Borrowers issued in lieu of Advances of portions of the
Term Loan pursuant to the terms and conditions of this
Agreement. Medium Term Notes shall constitute LOC Debt of
Borrowers and shall have terms ending not earlier than 270 days
from the date of issuance and not later than the Tranche A
Maturity Date or the Tranche B Maturity Date, as applicable.
Medium Term Notes shall not be issued in lieu of Working Capital
Loan Advances.
Moody's.
The term "Moody's" means Moody's Investors Service, Inc., a
Delaware corporation, and its successors and assigns and, if such
corporation shall be dissolved or liquidated or shall no longer
perform the functions of a securities rating agency, "Moody's"
shall be deemed to refer to (other than with respect to Permitted
Investments) any other nationally recognized statistical rating
organization designated by Borrowers.
MTN Dealer.
The term "MTN Dealer" means any Person appointed as an MTN Dealer
in an MTN Distribution Agreement with the prior written consent of
Lead Agent, which consent shall not be unreasonably withheld.
MTN Distribution Agreement.
The term "MTN Distribution Agreement" means each Medium-Term Note
Distribution Agreement between Borrowers and an MTN Dealer, in form
and substance reasonably satisfactory to Lead Agent.
Multiemployer Plan.
The term "Multiemployer Plan" means a plan described in Section
4001(a)(3) of ERISA.
Net Income.
The term "Net Income" means, for any period, the net income (or
loss) of any Person and its Subsidiaries on a consolidated basis
after provision for or benefit from income and franchise taxes
determined in accordance with GAAP, but excluding: (a) the income
(or loss) of any entity (other than Subsidiaries of such Person) in
which such Person or any of its Subsidiaries has an ownership
interest unless received by such Person or its
Subsidiary in a cash distribution; and (b) the income (or loss) of
any entity accrued prior to the date it became a Subsidiary of such
Person or is merged into or consolidated with such Person or that
entity's assets are acquired by such Person or any of its
Subsidiaries.
Net Revenues.
The term "Net Revenues" means with respect to the Facilities, for
any period, Gross Revenues for such period, less Operating Costs
for such period.
New Well Reserve Account.
The term "New Well Reserve Account" has the meaning provided in
Section 6.1(e) hereof.
Notes.
The term "Notes" means the (a) Secured Notes and (b) Working
Capital Note.
Notice of LOC Debt Issuance.
The term "Notice of LOC Debt Issuance" means the notice to be given
by Borrowers to Lead Agent in respect of each proposed issuance of
LOC Debt pursuant to Section 3.2 hereof, in form and substance
reasonably satisfactory to Lead Agent.
Notice of Security Interest.
The term "Notice of Security Interest" has the meaning assigned to
that term in Section 3(b)(ii) of the Security Agreement.
Notional Amount.
The term "Notional Amount" means the amount underlying the
transactions contemplated in the Swap Agreement, upon which the
calculation of swap payments is based.
O&M Agreement.
The term "O&M Agreement" means the Amended and Restated Operating
and Maintenance Agreement dated as of February 23, 1994 by and
among Borrowers and Operator, as the same may be supplemented,
amended or replaced from time to time.
Obligations.
The term "Obligations" means all of Borrowers' obligations under
the Loan Instruments, including, without limitation, all
Obligations (as defined in the Security Agreement and the Deed of
Trust).
Operating Costs.
The term "Operating Costs" means, for any period, the amounts
expensed by Borrowers with respect to such period, for operation
and maintenance of the Facilities and calculated in accordance with
generally accepted United States accounting principles (but
excluding income taxes and non-cash items such as depreciation and
amortization), including, without limitation, premiums for
Insurance Policies, principal and interest payment obligations for
the Working Capital Loan, utilities, payments under the O&M
Agreement, Easement Grant Deed, the Service Agreement and the
Ground Leases, property, real estate, sales and excise taxes,
general and administrative expenses, and service fees to Service
Provider and capital expenditures necessary to maintain the
Facilities.
Operator.
The term "Operator" means Magma Operating Company, and its
successors and permitted assigns, as operator pursuant to the O&M
Agreement.
Operator Consent.
The term "Operator Consent" means the Consent to Assignment of
Agreement by Operator in form and substance satisfactory to Lead
Agent, as the same may be supplemented or amended from time to
time.
Outstanding.
The term "Outstanding" means (a) when used with respect to LOC
Debt, the aggregate amount of all LOC Debt issued and
authenticated pursuant to the Depositary Agreement, less the LOC
Debt that has been paid in full or for the payment of which funds
equal to the Face Amount thereof are on deposit in the Special LOC
Debt Account, (b) when used with respect to Reimbursement
Obligations, the aggregate amount of all Reimbursement
Obligations which became owing and have not been paid in full by
Borrowers or for which a Loan has not been made, and (c) when used
with respect to Loans, the aggregate principal amount of the Loans
less principal amounts repaid or prepaid by Borrowers.
Participant.
The term "Participant" has the meaning set forth in Section 9.2(b)
hereof.
Partners.
The term "Partners" means, collectively, General Partner and
Limited Partners.
Partnership Agreements.
The term "Partnership Agreements" means collectively, (i) the
Limited Partnership Agreement of SSBP, dated as of March 31, 1993
by and among Magma and General Partner and (ii) the Limited
Partnership Agreement of SSPG, dated as of March 31, 1993 by and
among SSBP and General Partner, as each may be supplemented,
modified or amended from time to time.
Payment Notice.
The term "Payment Notice" has the meaning set forth in Section
3.7(a) hereof.
Payment Period.
The term "Payment Period" means each successive period occurring
between the Closing Date and the Tranche A Maturity Date or Tranche
B Maturity Date, as applicable; the first such period shall begin
on the Closing Date and terminate on the day
immediately preceding the first Term Loan Repayment Date and each
succeeding such period shall begin on a Term Loan Repayment Date
and terminate on the day immediately prior to the next succeeding
Term Loan Repayment Date or the Tranche A Maturity Date or
Tranche B Maturity Date, as applicable, in the case of the last
Payment Period.
PBGC.
The term "PBGC" means the Pension Benefit Guaranty Corporation, or
any entity succeeding to any or all of its functions under ERISA.
Permitted Contract.
The term "Permitted Contract" means any agreement of Borrowers with
respect to the Project entered into after the Closing Date in the
ordinary course of business of Borrowers (including the term of
such agreement).
Permitted Investments.
The term "Permitted Investments" means (a) marketable direct
obligations issued or unconditionally guaranteed by the United
States of America maturing within one year from the date of
acquisition thereof, (b) commercial paper maturing no more than 270
days from the date of creation thereof and as at any date of
determination rated "A-1"/"P-1" or better by Standard & Poor's
Corporation and Moody's, (c) certificates of deposit maturing
within one year from the date of acquisition thereof issued by
commercial banks incorporated under the laws of the United States
of America or any state thereof or the District of Columbia, each
having as at any date of determination combined capital and surplus
of not less than $250,000,000; provided, that with
respect to the credit ratings specified above, if neither Moody's
nor Standard & Poor's Corporation is in the business of rating the
relevant Permitted Investment, such Permitted Investment shall have
received a rating equivalent to that specified above for such
Permitted Investment by another nationally recognized credit rating
agency of similar standing.
Permitted Liens.
The term "Permitted Liens" means the Liens permitted to be
incurred by Borrowers pursuant to Section 6.13 hereof.
Person.
The term "Person" means an individual, corporation, partnership,
joint venture, trust or unincorporated organization, or a
government or any agency or political subdivision thereof.
Plant Connection Agreements.
The term "Plant Connection Agreements" means collectively, (i) the
Plant Connection Agreement for the Earth Energy Unit No. 2, dated
October 3, 1989 between IID and SSPG (as successor-in-interest to
Earth Energy, Inc.) and (ii) the Plant Connection Agreement for the
Desert Power Company Unit No. 3, dated August 2, 1988 between IID
and SSPG (as successor-in-interest to Desert Power Company), as
each may be supplemented, modified or amended from time to time.
Pledge Agreements.
The term "Pledge Agreements" means collectively, (i) the General
Partner Pledge Agreement, dated as of the date hereof, between the
General Partner of SSPG and Lead Agent, (ii) the General Partner
Pledge Agreement, dated as of the date hereof, between the General
Partner of SSBP and Lead Agent, (iii) the Limited Partner Pledge
Agreement, dated as of the date hereof, between Magma and Lead
Agent and (iv) the Limited Partner Pledge
Agreement, dated as of the date hereof, between SSBP and Lead
Agent, as each may be supplemented, modified or amended from time
to time.
Power Purchase Agreements.
The term "Power Purchase Agreements" means collectively, the (i)
The Contract for the Purchase and Sale of Electric Power from the
Salton Sea Geothermal Generating Facility, dated May 8, 1987
between SCE and SSPG (as successor-in-interest to Earth Energy,
Inc.) and Amendment No. 1 thereto, dated March 30, 1993, (ii) The
Power Purchase Contract, dated April 16, 1985 between SCE and SSPG
(as successor-in-interest to Earth Energy, Inc.) and
Amendment No. 1 thereto, dated December 18, 1987, and (iii) The
Power Purchase Contract, dated April 16, 1985 between SCE and SSPG
(as successor-in-interest to Union Oil Company of
California, Union Geothermal Division and Desert Power Company), as
each may be supplemented or amended from time to time.
Pre-Funded Well Account.
The term "Pre-Funded Well Account" means a new well account
established for a new injection well for the Unit 1 Facility and
the Unit 2 Facility which account shall be funded with $3,400,000
on the Closing Date.
Pro Forma.
The term "Pro Forma" means the pro forma delivered on the Closing
Date substantially in the form of Exhibit 5.14 hereto and
satisfying the provisions of Section 6.8(g) hereof, prepared by
Borrowers, as the same shall be updated in accordance with
Section 6.8(g) hereof.
Project.
The term "Project" means, collectively, each of the Facilities,
Properties, and all rights thereunder with respect to the
financing, operation and management of each of the Facilities and
the Properties.
Project Account.
The term "Project Account" has the meaning set forth in Section
6.1(b) hereof.
Project Documents.
The term "Project Documents" means all of the following,
including all exhibits, schedules and attachments thereto, as any
of them may be supplemented or amended from time to time:
(a) Partnership Agreements;
(b) Power Purchase Agreements;
(c) O&M Agreement;
(d) Transmission Services Agreements;
(e) Consents;
(f) Funding and Construction Agreement;
(g) Easement Grant Deed;
(h) Plant Connection Agreements;
(i) Joint Funding Agreement;
(j) Ground Leases;
(k) Geothermal Sales Contracts;
(l) Service Agreement;
(m) Waste Disposal Agreement;
(n) Technology Transfer Agreement;
(o) Funding Agreement;
(p) The consent of each party (other than Borrowers) to each of
the above Project Documents (other than the Consents), where
applicable, to the assignment thereof by Borrowers to Lead Agent
for the account of Secured Parties; and
(q) Any other agreement executed by (or on behalf of) Borrowers in
connection with the Project or any of the Project Documents.
Properties.
The term "Properties" means the right, title and interest of
Borrowers under the Easement Grant Deed and the Ground Leases, and
all tenements, hereditaments, easements, rights-of-way, rights,
privileges and appurtenances relating thereto, along with all other
property, rights and interests constituting the Trust Property as
defined and used in the Deed of Trust.
Proportionate Share.
The term "Proportionate Share" means, with respect to each
Lender, as applicable, the percentage set forth opposite such
Lender's name on Schedule 2.1 hereto under the captions (i)
"Proportionate Share of Term Loan Facility", (ii) "Proportionate
Share of Working Capital Facility", (iii) "Proportionate Share of
the Total Commitment", or in the Commitment Transfer Supplement to
which such Lender is a party, as the case may be.
PUC.
The term "PUC" means The Public Utilities Commission of the State
of California.
PUHCA.
The term "PUHCA" means the Public Utility Holding Company Act of
1935, as amended from time to time, and all rules and regulations
promulgated thereunder.
Purchasing Lender.
The term "Purchasing Lender" has the meaning specified in Section
9.2(a) hereof.
PURPA.
The term "PURPA" means the Public Utility Regulatory Policies Act
of 1978, as amended from time to time, and all rules and
regulations adopted thereunder.
QF
The term "QF" means a qualifying small power production facility
under PURPA.
QF Certificate.
The term "QF Certificate" means (i) the filing of a Notice of
Qualifying Small Power Production Facility status in Docket No. QF
87-51-00, dated June 30, 1987, and the filing of a Notice of
Qualifying Small Power Production Facility status in Docket No. QF
87-511-003, dated February 25, 1994, in each case for the Unit 1
Facility, (ii) the filing of a Notice of Qualifying Small Power
Production Facility status in Docket No. QF 89-297-000, dated April
21, 1989, and the filing of a Notice of Qualifying Small Power
Production Facility status in Docket No. QF 89-297-002, dated
February 25, 1994, in each case of the Unit 2 Facility, and (iii)
the filing of a Notice of Qualifying Small Power Production
Facility status in Docket No. QF 86-1043-000, dated September 3,
1986, and the filing of a Notice of Qualifying Small Power
Production Facility status in Docket No. QF 86-1043-002, dated
February 25, 1994, in each case for the Unit 3 Facility.
Quarterly Date
The term "Quarterly Date" means the fifteenth (15th) day of each
March, June, September and December during the term of this
Agreement.
Reference Banks.
The term "Reference Banks" means the Lead Agent and the Co-Agent.
Reimbursement Obligations.
The term "Reimbursement Obligations" has the meaning set forth in
Section 3.6 hereof.
Request for Working Capital.
The term "Request for Working Capital" means a written request to
Lead Agent to draw funds under the Working Capital Facility,
substantially in the form of Exhibit 2.5(a) hereto.
Reserve Account Guaranty.
The term "Reserve Account Guaranty" means a financial guaranty
issued by Magma (or another party reasonably satisfactory to
Majority Lenders) in favor of Lead Agent for the benefit of the
Secured Parties pursuant to Section 6.1(g) in form and substance
reasonably satisfactory to Majority Lenders.
Reserve Account Letter of Credit.
The term "Reserve Account Letter of Credit" means one or more
unconditional and irrevocable letters of credit issued to Lead
Agent for the benefit of the Lenders pursuant to Section 6.1(g),
such letters of credit to be in form and substance reasonably
satisfactory to Majority Lenders.
Reservoir Consultant.
The term "Reservoir Consultant" means GeothermEx, Inc., or
another nationally recognized consultant appointed as reservoir
consultant by Lead Agent and reasonably satisfactory to
Borrowers.
Resource Easement Rights Properties.
The term "Resource Easement Rights Properties" means the Resource
Easement Rights Properties as defined in the Easement Grant Deed.
Salton Sea-CS Payment Account
The term "Salton Sea-CS Payment Account" has the meaning provided
in Section 6.1(a) hereof.
SCE.
The term "SCE" means Southern California Edison Company, a
California corporation (or its successors and permitted assigns).
SCE Consent.
The term "SCE Consent" means the Consent to Assignment of
Agreements by SCE in form and substance satisfactory to Lead Agent,
as the same may be supplemented or amended from time to time.
Secured Note.
The term "Secured Note" means the Tranche A Notes, the Tranche B
Notes and any other secured notes from Borrowers to Lead Agent for
the account of Lenders, dated the date of the Initial
Advance, evidencing the Term Loan, in the form of Exhibit
2.11(a)-1 or 2.11(a)-2 hereto, as such Secured Notes may from time
to time be amended, modified or divided into various Secured Notes
to evidence each Lender's Proportionate Share of such Secured Note.
Secured Parties.
The term "Secured Parties" means Lead Agent, the Issuing Bank,
Working Capital Lenders and the Lenders (including any of the
aforementioned, or any party secured pari passu with the
aforementioned, in their capacities as counterparties or
intermediaries to any Swap Agreement).
Security Agreement.
The term "Security Agreement" means the Assignment and Security
Agreement, dated as of the date hereof, between Borrowers and Lead
Agent, for the benefit of the Secured Parties, as the same may be
supplemented or amended from time to time.
Security Documents.
The term "Security Documents" means all of the following, as any of
them may be supplemented or amended from time to time:
(a) Deed of Trust;
(b) Security Agreement;
(c) Financing Statements;
(d) Blocked Account Agreements;
(e) Pledge Agreements;
(f) Notice of Security Interest;
(g) The Environmental Indemnity Agreement;
(h) The Sinclair Indemnity Agreement;
(i) The Investment Indemnity Agreement;
(j) The Consents and consents to assignment listed in the
definition of Project Documents as item (p);
(k) The collateral assignments of each Material Project
Document; and
(l) Any other agreement executed in connection with the security
interests granted hereunder or under the other Loan Instruments or
to secure the Loans or any obligations under the Loan
Instruments.
Semi-Annual Date.
The term "Semi-Annual Date" means September 15, 1994 and the
fifteenth (15th) day of each March and September thereafter.
Service Agreement.
The term "Service Agreement" means the Amended and Restated
Administrative Services Agreement, dated as of February 23, 1994 by
and among Magma, SSPG and SSBP, as the same may be
supplemented, modified or amended from time to time.
Service Provider.
The term "Service Provider" means Magma or its successors and
permitted assigns, as provider of services pursuant to the
Service Agreement.
Sinclair Indemnity Agreement.
The term "Sinclair Indemnity Agreement" means the Indemnity
Agreement dated as of the date hereof from Magma in favor of Lead
Agent (on behalf of the Secured Parties), in substantially the form
of Exhibit 4.1(bb).
Special LOC Debt Account.
The term "Special LOC Debt Account" has the meaning set forth in
Section 3.3(b) hereof.
Subsidiary.
The term "Subsidiary" means, with respect to any Person, any
corporation (whether now existing or hereafter organized) at least
a majority of the securities of which having ordinary voting power
for the election of directors (other than securities having such
power only by reason of the happening of a
contingency) are at the time owned by such Person or one or more
Subsidiaries of such Person or any combination thereof.
Swap Agreement.
The term "Swap Agreement" means an interest rate hedge agreement in
form and substance satisfactory to Credit Suisse and otherwise on
terms and conditions which are reasonably consistent with standard
interest rate swap agreements at the time such agreement is made.
Taxes.
The term "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 on
any of the Secured Parties or on payments to be made to or received
by any of them from Borrowers.
Technology Transfer Agreement.
The term "Technology Transfer Agreement" means the Technology
Transfer Agreement, dated as March 31, 1993 by and among Magma,
SSPG and SSBP, as it may be supplemented, modified or amended from
time to time.
Term Loan.
The term "Term Loan" means the Tranche A Term Loan and/or the
Tranche B Term Loan, as applicable.
Term Loan Commitment.
The term "Term Loan Commitment" means the sum of the Tranche A Term
Loan Commitment plus the Tranche B Term Loan Commitment.
Term Loan Facility.
The term "Term Loan Facility" means the sum of (a) the maximum
amount of the Term Loan Commitment then in effect and (b) the face
amount of the Letters of Credit, the foregoing sum of (a) and (b)
to be in the maximum principal sum of One Hundred Thirty Million
dollars ($130,000,000).
Term Loan Repayment Date.
The term "Term Loan Repayment Date" means the Tranche A Repayment
Date or the Tranche B Repayment Date, as applicable.
Title Company.
The term "Title Company" means, collectively, the title companies
set forth on Schedule 4.1(l) hereto, or any successors thereto,
whether as co-insurers, reinsurers or otherwise as approved by Lead
Agent.
Title Insurance.
The term "Title Insurance" means a title insurance policy
conforming to the requirements of Section 4.1(l) hereof and in the
form of Schedule 4.1(l) hereof.
Total Commitment.
The term "Total Commitment" means the sum of the Term Loan
Facility plus the Working Capital Facility.
Tranche A Maturity Date.
The term "Tranche A Maturity Date" means March 15, 2000.
Tranche A Notes.
The term "Tranche A Notes" means the Secured Notes referred to in
Section 2.11(i) of the Credit Agreement.
Tranche A Repayment Date.
The term "Tranche A Repayment Date" means the first date
occurring on or after the Closing Date which is a Semi-Annual Date
and each Semi-Annual Date thereafter, provided that if any such
date is not a Banking Day, the relevant Tranche A Repayment Date
shall be the next succeeding Banking Day.
Tranche A Term Loan.
The term "Tranche A Term Loan" means the aggregate of all amounts
which will be outstanding pursuant to Section 2.1 hereof. Such
amounts shall not include the face amount of any Letters of Credit.
Tranche A Term Loan Commitment.
The term "Tranche A Term Loan Commitment" means the commitment,
subject to the terms and conditions contained herein, of each
Lender to Borrowers to make such Lender's Proportionate Share of
the Tranche A Term Loan up to but not exceeding the respective
amounts set for each Lender in Schedule 2.1 hereto, as the same may
be revised from time to time; or, where the context so
requires, the aggregate commitment of all Lenders to make the
Tranche A Term Loan and to maintain the Tranche A Term Loan up to
the aggregate maximum principal sum of Thirty-Seven Million dollars
($37,000,000).
Tranche B Maturity Date.
The term "Tranche B Maturity Date" means January 31, 1999.
Tranche B Notes.
The term "Tranche B Notes" means the Secured Notes referred to in
Section 2.11(ii) of the Credit Agreement.
Tranche B Repayment Date.
The term "Tranche B Repayment Date" means the first date
occurring on or after the Closing Date which is a Semi-Annual Date
and each Semi-Annual Date thereafter, provided that if any such
date is not a Banking Day, the relevant Tranche B Repayment Date
shall be the next succeeding Banking Day.
Tranche B Term Loan.
The term "Tranche B Term Loan" means the aggregate of all amounts
which will be outstanding pursuant to Section 2.2 hereof. Such
amounts shall not include the face amount of any Letters of Credit.
Tranche B Term Loan Commitment
The term "Tranche B Term Loan Commitment" means the commitment,
subject to the terms and conditions contained herein, of each
Lender to Borrowers to make such Lender's Proportionate Share of
the Tranche B Term Loan up to but not exceeding the respective
amounts set forth for each Lender in Schedule 2.1 hereto, as the
same may be revised from time to time; or, where the context so
requires, the aggregate commitment of all Lenders to make the
Tranche B Term Loan and to maintain the Tranche B Term Loan up to
the aggregate maximum principal sum of Ninety-Three Million dollars
($93,000,000).
Transmission Service Agreements.
The term "Transmission Service Agreements" means collectively, (i)
the Transmission Service Agreement for the Earth Energy Unit No. 2,
dated as of October 3, 1989 between IID and SSPG (as successor-in-
interest to Earth Energy, Inc.)and (ii) the
Transmission Service Agreement for the Desert Power Unit No. 3,
dated as of August 2, 1988 between IID and SSPG (as successor-in-
interest to Desert Power Company), as each may be supplemented,
modified or amended from time to time.
Trustee.
The term "Trustee" has the meaning set forth in the Deed of Trust.
Unit 1 Facility.
The term "Unit 1 Facility" means the 10 megawatt (nameplate rating)
geothermal plant in Imperial County, California owned by Borrowers,
together with all appurtenant structures, equipment, piping,
wiring, controls, interconnection facilities,
transmission lines, and all additions and replacements thereto, for
the purpose of supplying electric energy and capacity to SCE,
pursuant to, and as more fully described in, the Project
Documents.
Unit 2 Facility.
The term "Unit 2 Facility" means the 20 megawatt (nameplate rating)
geothermal plant in Imperial County, California owned by Borrowers,
together with all appurtenant structures, equipment, piping,
wiring, controls, interconnection facilities,
transmission lines, and all additions and replacements thereto, for
the purpose of supplying electric energy and capacity to SCE,
pursuant to, and as more fully described in, the Project
Documents.
Unit 3 Facility.
The term "Unit 3 Facility" means the 49.8 megawatt (nameplate
rating) geothermal plant in Imperial County, California owned by
Borrowers, together with all appurtenant structures, equipment,
piping, wiring, controls, interconnection facilities,
transmission lines, and all additions and replacements thereto, for
the purpose of supplying electric energy and capacity to SCE,
pursuant to, and as more fully described in, the Project
Documents.
Waste Disposal Agreement.
The term "Waste Disposal Agreement" means the Amended and
Restated Waste Disposal Agreement, dated as of February 23, 1994 by
and among Desert Valley, SSPG and SSBP, as the same may be
supplemented, modified or amended from time to time.
Working Capital Facility.
The term "Working Capital Facility" means the maximum amount of the
Working Capital Loan Commitment in the maximum principal sum of
Five Million dollars ($5,000,000).
Working Capital Lenders.
The term "Working Capital Lenders" means, collectively, Credit
Suisse and The Fuji Bank, Limited and each of their successors and
assigns.
Working Capital Loan.
The term "Working Capital Loan" means the aggregate of all
Outstanding amounts advanced by Working Capital Lenders to
Borrowers under this Agreement under the Working Capital Loan
Commitment not to exceed at any one time, in the aggregate, the
Working Capital Loan Commitment.
Working Capital Loan Advance.
The term "Working Capital Loan Advance" means a disbursement by
Working Capital Lenders of funds pursuant to the Working Capital
Loan Commitment.
Working Capital Loan Commitment.
The term "Working Capital Loan Commitment" means the commitment,
subject to each of the terms and conditions contained herein, of
Working Capital Lenders to lend to Borrowers sums up to but not
exceeding the respective amounts set forth for each such Working
Capital Lender in Schedule 2.1 hereto, as the same may be revised
from time to time or, where the context so requires, the
aggregate Working Capital Commitments for both such Working Capital
Lenders up to the aggregate maximum principal sum of Five Million
dollars ($5,000,000).
Working Capital Loan Repayment Date.
The term "Working Capital Loan Repayment Date" means February 27,
1995, unless such date is extended hereunder in accordance with
Section 2.3.
Working Capital Note.
The term "Working Capital Note" means the secured promissory note
from Borrowers to Lead Agent for the account of Working Capital
Lenders, dated the date of the Initial Advance, evidencing the
Working Capital Loan, in the form of Exhibit 2.11(a)-3 hereto, as
such may from time to time be amended, modified or divided into
various Working Capital Notes to evidence each such Working Capital
Lender's Proportionate Share of such Working Capital Note.
ARTICLE 2 - COMMITMENTS, PAYMENT AND RELATED TERMS
2.1 Tranche A Term Loan Commitment.
Subject to the terms and conditions of this Agreement, each Lender
severally commits for its own account to make Advances up to but
not exceeding such Lender's Proportionate Share of the Tranche A
Term Loan Commitment as in effect from time to time, to or for the
account of Borrowers. Subject to the terms and
conditions of this Agreement, Issuing Bank commits to issue, and
maintain participation and funding commitments under, the Letters
of Credit to or for the account of Borrowers up to the Tranche A
Term Loan Commitment. The Tranche A Term Loan Commitment made
under this Section 2.1 shall (unless earlier terminated in
accordance with the terms hereof) terminate on the Tranche A
Maturity Date.
2.2 Tranche B Term Loan Commitment.
Subject to the terms and conditions of this Agreement, each Lender
severally commits for its own account to make Advances up to but
not exceeding such Lender's Proportionate Share of the Tranche B
Term Loan Commitment, as in effect from time to time, to or for the
account of Borrowers up to the Tranche B Term Loan Commitment.
Subject to the terms and conditions of this
Agreement, Issuing Bank commits to issue, and maintain
participation and funding commitments under, the Letters of Credit
to or for the account of Borrowers up to the Tranche B Term Loan
Commitment. The Tranche B Term Loan Commitments made under this
Section 2.2 shall (unless earlier terminated in
accordance with the terms hereof) terminate on the Tranche B
Maturity Date.
2.3 Working Capital Loan Commitment.
Subject to the terms and conditions of this Agreement, each of the
Working Capital Lenders severally commits for its own account to
make Working Capital Loan Advances up to but not exceeding such
Working Capital Lender's Proportionate Share of the Working Capital
Loan Commitment as in effect from time to time, to or for the
account of Borrowers. The Commitment made under this Section 2.3
shall terminate (unless earlier terminated or extended in
accordance with the terms hereof) on the Working Capital Loan
Repayment Date; provided that unless previously terminated, the
term of the Working Capital Facility shall with the prior written
consent of the Working Capital Lenders, be renewable for
additional periods of 364 days from each anniversary of the Closing
Date but in no event beyond the Final Maturity Date. To so renew
the Working Capital Facility, the Lead Agent shall, at least twenty
(20) days prior to any such anniversary, give
written notice to Borrowers that the Working Capital Facility shall
be extended beyond the day immediately preceding such anniversary.
2.4 Loans in Respect of Letters of
Credit Reimbursement Obligations.
Without limiting the obligations of Borrowers under Section 3.6
hereof, each Lender severally agrees that, during the period from
and including the date of the Initial Advance to but excluding the
Final Maturity Date, upon making any payment to Issuing Bank
pursuant to Section 3.7 hereof in respect of any Outstanding
Reimbursement Obligations arising from payments by Issuing Bank
under the Letters of Credit and, if Borrowers have elected to
continue such Reimbursement Obligations in the form of a Term Loan,
such Lender shall, without any notice or other action on the part
of Borrowers, automatically be deemed to have made a Term Loan to
Borrowers in an amount equal to such Lender's
payment to Issuing Bank pursuant to Section 3.7 hereof.
2.5 Procedure for Advances and
Working Capital Loan Advances.
(a) Requests for Working Capital Loan Advances. From time to time
commencing on the Closing Date and concluding on the day
immediately preceding the termination of the Working Capital
Facility, Borrowers may submit a Request for Working Capital in the
form attached hereto as Exhibit 2.5(a) to Lead Agent
requesting a Working Capital Loan Advance for the payment of short
term working capital needs of Borrowers. Each such Request for
Working Capital shall be submitted to Lead Agent at least one (1)
Banking Day (in the case of Working Capital Loans bearing interest
at the Base Rate and three (3) Banking Days in the case of Working
Capital Loans bearing interest at LIBOR or the CD Rate) prior to
the day on which the Working Capital Loan Advance is desired,
provided that, with respect to such Advances, the minimum amount of
each Advance disbursed at any time shall be $250,000. Each Request
for Working Capital shall be properly executed and shall
constitute, unless such Request for Working Capital is withdrawn
prior to the making of the Working Capital Loan Advance requested
in such Request for Working Capital, a representation and warranty
by Borrowers that, as of the date of the requested Working Capital
Loan Advance, they will be in compliance, subject only to the
reasonable satisfaction of Lead Agent, with all the conditions
precedent to such Working Capital Loan Advance. Borrowers shall
pay all reasonable fees, expenses, liabilities and losses incurred
by each of the Working Capital Lenders as a consequence of any
withdrawal of a Request for Working Capital.
(b) Disbursement of all Advances. Subject to the terms and
conditions of this Agreement, Lead Agent shall make Advances
available to Borrowers in immediately available funds not later
than 5:00 p.m. (New York time) on the day in question for credit on
such day to the Project Account. All sums advanced hereunder shall
be disbursed under the Loan Instruments and shall be
secured by the Security Documents.
2.6 Interest and Fees.
(a) Current Interest. (i) Borrowers shall select each Interest
Period by giving written notice of such selection to Lead Agent by
1:00 p.m. (New York time) on the day of any such notice at least
three (3) Banking Days before the first day of such
Interest Period, in the case of an Interest Period using LIBOR or
based on CD Rate, and by 1:00 p.m. (New York time) on the date of
any such notice at least one (1) Banking Day before the first day
of such Interest Period, in the case of an Interest Period based on
the Base Rate; provided, however, that
(A) any Interest Period which would otherwise end on a day which
is not a Banking Day shall be extended to the next succeeding
Banking Day unless, in the case of an Interest Period using LIBOR,
such Banking Day falls in another calendar month, in which case
such Interest Period shall end on the next preceding Banking Day;
(B) any Interest Period which begins on the last Banking Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month in which such Interest
Period ends) shall, subject to clause (D) below, end on the last
Banking Day of a calendar month;
(C) no Interest Period for any Loan shall extend beyond the Final
Maturity Date (or the Tranche B Maturity Date in the case of
Tranche B Term Loan);
(D) if any Interest Period chosen by Borrowers with respect to the
Term Loan includes a Term Loan Repayment Date but such
Interest Period would not begin or end on such Term Loan
Repayment Date, then (1) the portion of the principal amount of the
Term Loan to which such Interest Period applies which is required
to be repaid on such Term Loan Repayment Date shall have an
Interest Period ending on such Term Loan Repayment Date, and (2)
the remainder (if any) of the outstanding principal amount of the
Term Loan shall have an Interest Period determined as so selected
by Borrowers; and
(E) at no time shall the outstanding principal amount of the Term
Loan, in the aggregate, accrue interest pursuant to more than
twelve (12) Interest Periods (each variation in time or in the
basis upon which interest is calculated constituting an Interest
Period).
(ii) The notice described in Section 2.6(a) hereof shall specify
the Interest Rate and Interest Period (if the Interest Rate
selected is based on LIBOR or the CD Rate) selected by Borrowers
and the amount or amounts of each portion of a Loan (which shall be
in the case of an Interest Rate based on LIBOR or the CD Rate, not
less than (x) with respect to the Term Loan, $500,000 and in
$100,000 increments and (y) with respect to Working Capital Loans,
$250,000 and in $50,000 increments) that shall bear
interest at such Interest Rate for such Interest Period provided,
however, that Borrowers may not select an Interest Period using
LIBOR or based on the CD Rate during the occurrence and
continuance of any Event of Default hereunder. In the event
Borrowers fail to provide such notice to Lead Agent within such
time, the Interest Rate shall be, in the case of a new Loan and in
the case of a previously outstanding Loan, the Base Rate plus the
applicable Base Rate Margin.
iii) On each Interest Payment Date, Borrowers shall pay to Lead
Agent for the account of Lenders interest in respect of each
Interest Period on the daily unpaid principal amount of the Loans
outstanding during such Interest Period in arrears at the rate per
annum equal to the Interest Rates then in effect. Interest shall
be computed on the basis of the actual number of days elapsed and
(i) a year of three hundred sixty (360) days for all Interest Rates
other than the Base Rate, and (ii) a year of three hundred sixty-
five (365) or three hundred sixty-six (366) days, as appropriate,
for the Base Rate.
(b) Default Interest and L/C Fee. Borrowers shall pay, upon
demand by Lead Agent, interest on any principal of or interest on
any Loan, any unpaid Reimbursement Obligation or any other amount
(including, without limitation, fees set forth in Section 2.6(d)
hereof) payable under this Agreement or any other Loan Instrument
which is not paid when due (whether by lapse of time,
acceleration or otherwise), for each day that such amounts are
overdue until payment in full thereof, at the rate per annum equal
to the Default Interest Rate computed as described herein. In
addition (and without duplication), upon the occurrence of an Event
of Default, Borrowers shall pay, upon notice from Lead Agent to
Borrowers given at the request of the Majority Lenders, interest on
the Outstanding principal amount of the Loans (and shall pay fees
on the amounts described in Section 2.6(c) hereof with respect to
Letters of Credit) from and including the date of the Event of
Default at the Default Interest Rate until maturity or until such
Event of Default is remedied, whichever shall occur first (and as
frequently as Lead Agent directs) (or, in the case of Letters of
Credit, at the L/C Fee plus two percent (2%) per annum); provided
that, in the case of Loans bearing interest at LIBOR or the CD Rate
(in each case plus the applicable margin) upon the expiration of
the Interest Period in effect at the time of the Event of Default,
such Loans bearing interest at LIBOR or the CD Rate shall thereupon
become Base Rate Loans at the Default Interest Rate. The foregoing
amounts shall be computed on the basis (i) described in Section
2.6(a) hereof with respect to such interest and (ii) of the actual
number of days elapsed and a year of three hundred sixty (360) days
with respect to such fees. In addition to the payment of such
interest (or, in the case of Letters of Credit, such fees),
Borrowers shall pay to Lead Agent for the account of Lenders any
funding and yield protection costs, as provided in Section 2.7
hereof, resulting from the failure of Borrowers to pay any amounts
under this Agreement when due.
(c) L/C Fees. (i) Borrowers shall pay to Lead Agent, for the
account of the Issuing Bank, a fronting fee with respect to
Outstanding Letters of Credit on the average daily Amount
Supported with respect to the Outstanding Letters of Credit, at the
rate of fifteen basis points (.15%) per annum (the "Fronting Fee").
The Fronting Fee shall be payable in arrears on each Quarterly
Date. The Fronting Fee shall be computed on the basis of the
actual number of days elapsed and a year of three hundred sixty
(360) days; and (ii) Borrowers shall pay to Lead Agent, for the pro
rata account of the Lenders (based on each Lender's Proportionate
Share of the Term Loan Commitment), a letter of credit fee at a
rate equal to one hundred and twenty-five basis points (1.25%) per
annum multiplied by the average daily Amount Supported of all
outstanding Letters of Credit (the "L/C Margin Fee") computed on
the basis of the actual number of days elapsed and a year of 360
days, and payable in arrears on each Quarterly Date;
(d) Other Fees. Borrowers shall also pay the following fees:
(i) Agency Fee. Borrowers shall pay to Lead Agent, for its own
account, an annual agency fee of $60,000 (the "Agency Fee"),
payable in advance on the Closing Date and on each anniversary of
the Closing Date until all obligations are paid in full;
provided, however, the Agency Fee payable to Lead Agent on the
sixth anniversary of the Closing Date shall be in an amount equal
to $60,000 multiplied by a fraction, the numerator of which is the
number of days from the sixth anniversary of the Closing Date to
but not including the Tranche A Maturity Date and the
denominator of which is 365; provided however, that in the event
that Borrowers have not indefeasibly paid in full all of the
Obligations on the Tranche A Maturity Date, then Borrowers shall
immediately pay to Lead Agent for its own account an amount equal
to (a) $60,000 less (b) the amount of the Agency Fee Borrowers paid
to Lead Agent on the sixth anniversary of the Closing Date and
thereafter, during the continuance of an Event of Default,
Borrowers shall continue paying the full $60,000 Agency Fee on each
subsequent anniversary of the Closing Date until such
Obligations are indefeasibly paid in full.
(ii) Intermediation Fee. Borrowers shall pay to any Lender who is
the intermediary and counterparty under any Swap Agreement, the fee
to be paid to such intermediary and counterparty under any such
Swap Agreement, which fee shall be paid at such time as interest
payments are made under the Swap Agreement.
(iii) Closing Fee. Borrowers shall pay to Lead Agent on the
Closing Date for the pro rata account of the Lenders who are
Lenders on the Closing Date (based on each Lender's Proportionate
share of the Total Commitment) a non-refundable closing fee in the
amount of $1,687,500.00;
(iv) Working Capital Loan Commitment Fee. For purposes of this
clause (v), the portion of the Working Capital Loan Commitment
which is not advanced prior to the cancellation of the Working
Capital Facility is referred to herein as the "Unadvanced Working
Capital Loan Commitment". A Working Capital Loan Commitment Fee
shall be paid on the Unadvanced Working Capital Loan Commitment (A)
at the rate of thirty-seven and one-half basis points
(0.375%) per annum for the period from and including the Closing
Date to but excluding the Working Capital Loan Repayment Date. The
Working Capital Loan Commitment Fee shall be payable in arrears on
each Quarterly Date. For periods commencing after the Closing Date
and ending on or prior to the Working Capital Loan Repayment Date,
the Working Capital Loan Commitment Fee shall be computed as of the
date each payment thereof is due and payable on the basis of the
average daily amount of the Unadvanced
Working Capital Loan Commitment from and including the
immediately preceding date on which a payment of the Working
Capital Loan Commitment Fee was due and payable to but excluding
the date such payment is due and payable. In all such cases, the
Working Capital Loan Commitment Fee shall be computed on the basis
of the actual number of days elapsed and a year of three hundred
sixty (360) days.
(v) Standard Fees and Charges. Borrowers shall pay to Lead Agent
for the account of the Issuing Bank and payable on demand of Lead
Agent or the Issuing Bank, the Issuing Bank's standard fees and
charges in respect of Letters of Credit, including, without
limitation, fees for issuances and amendments thereof and drawings
thereunder.
(e) Additional Fees. Borrowers shall pay when due to Credit
Suisse such arrangement fees as shall have been agreed to
separately pursuant to the Fee Letter Agreement, and any other fees
expressly provided for herein and Borrowers' obligations with
respect thereto shall be subject to and secured by all of the
provisions of the Loan Instruments.
2.7 Funding and Yield Protection.
(a) Taxes.
(i) Borrowers shall make all payments of all amounts payable
hereunder and under the Notes net, free and clear of all Taxes, and
shall reimburse each Secured Party, upon the written request of
Lead Agent on behalf of such Secured Party (which request Lead
Agent shall promptly make after receiving a written request from
such Secured Party setting forth the basis for requesting such
reimbursement), for the cost of any Taxes other than Taxes based on
the gross or net income or capital of such Secured Party (including
franchise taxes and other similar taxes) imposed on such Secured
Party or on any payment under or with respect to any aspect of the
Loans, Notes or Letters of Credit or the making, execution or
enforcement thereof. From and after the Closing Date, upon request
of and notification from Borrowers, each Secured Party shall
provide to Borrowers all forms and documents appropriate under the
circumstances that are required to
establish that payments hereunder by Borrowers are exempt from
withholding for or on account of Taxes. The forms to be provided
by each Secured Party organized outside the United States shall
include, if appropriate under the circumstances, Internal Revenue
Service Form 4224 (if such Secured Party is acting through a branch
or office in the United States) or Form 1001 (if such Secured Party
is acting through a branch of office outside of the United States).
Borrowers' obligation to reimburse Lenders as aforesaid shall not
include any obligation to reimburse any Secured Party for
penalties, fines, assessments or other costs and expenses which are
incurred by such Secured Party due to such Secured Party's failure
to provide the forms and documents
described above.
(ii) If Borrowers are prohibited or prevented by Law or
otherwise from making any such payment net, free and clear of any
Taxes or from reimbursing any Secured Party for the cost of any
such Taxes (as provided above), then the amount of such payment to
be made by Borrowers shall be increased by such additional amount
or amounts as may be necessary to ensure that each Secured Party
shall receive a net amount which after payment of any Taxes imposed
shall be equal to the amount each Secured Party would have received
had no such imposition been made.
(iii) Borrowers shall provide evidence that all Taxes imposed on
all payments under or with respect to any Loan, Loan Instrument or
any related instrument that are due and payable by Borrowers shall
have been paid in full to the appropriate authorities by delivery
of official receipts or notarized copies thereof to Lead Agent
within thirty (30) days after payment thereof. If
Borrowers shall request, any Secured Party in respect of which the
Taxes have been imposed or claimed shall in good faith
contest the imposition or amount of such Taxes, keep Borrowers
fully informed in respect thereof, and consult in good faith with
Borrowers' counsel regarding such contest, and shall not
compromise or otherwise settle such contest without Borrowers'
consent, which consent shall not be unreasonably withheld;
provided, that such Secured Party may in its sole discretion select
the forum for such contest and determine whether any such contest
shall be by resisting payment of such Taxes, paying such Taxes
under protest or paying such Taxes and seeking a refund thereof;
provided, further, that such Secured Party shall not be required to
contest any claim unless (A) if such Secured Party requests,
Borrowers have delivered to such Secured Party an opinion of
independent tax counsel selected by Borrowers and reasonably
acceptable to such Secured Party to the effect that there is a
reasonable possibility of success, (B) such Secured Party shall
have received from Borrowers satisfactory to Lenders,
indemnification and security for any liability, loss, cost or
expense arising out of or relating to such Taxes or the contest
thereof, including, but not limited to, all legal and
accountants' fees and expenses, penalties, interest and additions
to tax, and (C) if the contest shall be conducted in a manner
requiring the payment of the Taxes, Borrowers shall have paid the
amount required. If any Secured Party shall obtain a refund of any
Taxes which Borrowers shall have paid for such Secured Party or for
which Borrowers shall have reimbursed such Secured Party, such
Secured Party shall pay to Borrowers an amount which, after
subtracting any net tax savings realized by such Secured Party as
a result of such Secured Party's payment thereof, is equal to the
sum of the amount of such refund, plus any interest received on
such refund fairly attributable to the Taxes paid by Borrowers to
or for such Secured Party, less any taxes paid or incurred by such
Secured Party by reason of the receipt or accrual of such refund
and interest.
(iv) Each of the Secured Parties shall (consistent with its
internal policies and legal and regulatory restrictions) use its
reasonable efforts to avoid the imposition of any Taxes on
payments to Lead Agent, or to any Secured Party, by (A) giving
Borrowers prompt notice thereof and granting Borrowers the
opportunity to convert such Lender's Proportionate Share of the
Term Loan or the Working Capital Loan, as applicable, to an
alternate basis (LIBOR, CD Rate or Base Rate), provided, however,
that Borrowers promptly pay when due all reasonable fees and
expenses of such Secured Party incurred or to be incurred in
connection with such conversion to an alternate basis, or (B)
designating a different lending office for such Lender's
Proportionate Share of the Term Loan or the Working Capital Loan,
as applicable, or such Issuing Bank's obligations with respect to
Letters of Credit which results in such imposition if the
designation will avoid the imposition of or, if unavoidable, reduce
the amount of such Taxes and will not, in the sole opinion of such
Secured Party, be disadvantageous to such Secured Party, provided,
however, that such Secured Party shall have no
obligation to so designate a lending office in the United States or
in a manner which is not consistent with its internal policies or
legal and regulatory restrictions. If Borrowers so request within
fifteen (15) Banking Days after notice to Borrowers of the
imposition of any Taxes on payments to Lead Agent or to any Secured
Party (which notice shall be given promptly by Lead Agent, but no
more than fifteen (15) Banking Days after Lead Agent becomes aware
of such imposition), Lead Agent shall,
subject to Section 9.2(a) hereof, use reasonable efforts to arrange
an assignment of such Lender's Proportionate Share of the Term Loan
or Working Capital Loan, as applicable, or such Issuing Bank's
obligations with respect to Letters of Credit which
results in such imposition, to an assignee selected by Lead Agent
or by Borrowers (in which latter case such assignee shall be
reasonably acceptable to Lead Agent and, if applicable, Issuing
Bank) and such assigning Lender or Issuing Bank hereby consents to
any such assignment; provided, however, that Borrowers shall
promptly pay when due all reasonable fees and expenses of such
Secured Parties incurred or to be incurred in connection with such
assignment. If an assignment of all or part of any Loan or such
obligations with respect to Letters of Credit is agreed upon, such
assignment shall be made without recourse to, or representation or
warranty by, the assignor (other than the representation or
warranty that assignor is the legal and
beneficial owner of the interest being assigned, free and clear of
any adverse claim), and the terms of such assignment shall provide
that assignee shall pay in immediately available funds to Lead
Agent for and on behalf of the assignor all amounts
outstanding or payable to such assignor under this Agreement and
the other Loan Instruments.
(b) Increased Costs. If, after the date hereof, with respect to
this Agreement, the Loans or Letters of Credit or any of the other
Loan Instruments and/or to the issuance of the Letters of Credit by
Issuing Bank or the making or the maintenance by any Lender of its
Proportionate Share of the Loans, including the obligations of any
Lender to reimburse Issuing Bank for such Lender's Proportionate
Share of any of the Letters of Credit when drawn,
(i) the compliance by any Lender or Issuing Bank with (A) any Law
enacted after the date hereof and (B) any voluntary
restraint, policy, or guideline not having the force of law
promulgated after the date hereof with which such Lender or Issuing
Bank must reasonably comply; or
(ii) any change in the interpretation or application of any Law or
the enactment of any Law imposing or modifying any reserve,
deposit, capital adequacy or similar requirement with respect to
any class of assets or liabilities of, deposits with or for the
account of, or loans by any Lender or Issuing Bank (or with respect
to any change therein or in the amount thereof); or
(iii) the occurrence after the date hereof of any other
condition or circumstance with respect to this Agreement and/or to
the maintenance by any Lender or Issuing Bank of its
Proportionate Share of the Loans or Letters of Credit;
shall (A) result in any increase in cost to any Secured Party in
connection with or arising out of this Agreement, the Loans,
Letters of Credit or any of the other Loan Instruments, (B) result
in any reduction in the amount of any payment receivable by such
Secured Party hereunder or thereunder, or (C) result in any
reduction of the rate of the return on any Secured Party's capital
as a consequence of its obligations hereunder or its issuance and
maintenance of the Letters of Credit below that which such Lender
or Issuing Bank could have achieved but for such circumstances,
then in each such case Borrowers shall fully reimburse such Secured
Party for the amount of such increase in cost, reduction in payment
receivable or reduction in rate of return promptly after written
notification thereof to Borrowers and Lead Agent by such Secured
Party, which notification shall include such Secured Party's
relevant calculations and all
additional facts, relevant assumptions and information that such
Secured Party should reasonably provide or customarily provides in
like circumstances. Each Secured Party shall (consistent with its
internal policies and legal and regulatory restrictions) use its
reasonable efforts to avoid such costs and reductions by (x) giving
Borrowers prompt notice thereof and granting Borrowers the
opportunity to convert such Lender's Proportionate Share of the
Term Loan or Working Capital Loan, as applicable, to an alternate
basis (LIBOR, CD Rate or Base Rate); provided, however, that
Borrowers promptly pay when due all reasonable fees, costs and
expenses of such Secured Party incurred or to be incurred in
connection with such conversion to a Loan bearing interest at an
alternate basis, or (y) designating a different lending office for
such Lender's Proportionate Share of the Term Loan or Working
Capital Loan, as applicable, or such Issuing Bank's obligations
with respect to Letters of Credit which results in such costs or
reductions if the designation will avoid such costs or reductions
or, if unavoidable, reduce the amount of such costs or reductions
and will not, in the sole opinion of such Secured Party, be
disadvantageous to such Secured Party; provided, however, that such
Secured Party shall have no obligation to so designate a lending
office in the United States or act in a manner which is not
consistent with its internal policies or legal and regulatory
restrictions. If Borrowers so request within fifteen (15)
Banking Days after notice to Borrowers of any such costs or
reductions (which notice shall be given promptly by Lead Agent, but
no more than fifteen (15) Banking Days after Lead Agent becomes
aware of such costs or reductions) Lead Agent shall, subject to
Section 9.2(a) hereof, use reasonable efforts to arrange an
assignment of such Lender's Proportionate Share of the Term Loan or
Working Capital Loan or such Issuing Bank's
obligations with respect to Letters of Credit which results in such
costs or reductions, to an assignee selected by Lead Agent or by
Borrowers (in which latter case such assignee shall be reasonably
acceptable to Lead Agent and, if applicable, Issuing Bank) and such
assigning Secured Party hereby consents to any such assignment;
provided, however, that Borrowers shall promptly pay when due all
reasonable fees and expenses of Lead Agent and such Secured Party
incurred or to be incurred in connection with such assignment. If
an assignment of all or part of the Loans or such obligations with
respect to Letters of Credit is agreed upon, such assignment shall
be made without recourse to, or representation or warranty by, the
assignor (other than the representation or warranty that assignor
is the legal and
beneficial owner of the interest being assigned, free and clear of
any adverse claim), and the terms of such assignment shall provide
that assignee shall pay in immediately available funds to Lead
Agent for and on behalf of the assignor all amounts
outstanding or payable under this Agreement and the other Loan
Instruments to such assignor.
(c) Change of Law. After the date hereof if any change in
applicable Law or the interpretation thereof by any Governmental
Authority makes it unlawful for any Lender to make or continue its
Proportionate Share of any Loan based on LIBOR or the CD Rate
provided for hereunder, then such Lender shall promptly give notice
of such change together with evidence thereof to Borrowers and Lead
Agent, and Borrowers shall require the affected Lender to make
immediately or convert such Lender's Proportionate Share of such
Loan as or into a Loan using an Interest Rate not
affected by such change. Borrowers shall promptly pay when due all
funding and yield protection costs as set forth in Section 2.7(e)
hereof incurred or to be incurred by any such Lender in connection
with such change or interpretation.
(d) Non-Availability; Accurate Reference.
(i) If at any time, when the Interest Rate then in effect is based
on LIBOR, dollar deposits in the principal amount of any Lender's
Proportionate Share of, or obligation under, the Term Loan or
Working Capital Loan are not available to any Lender in the London
interbank market for the next Interest Period, such Lender shall so
notify Lead Agent, who shall so notify Borrowers, and the LIBOR
basis for such Loan shall be suspended or, at Borrowers' option,
the obligation of such affected Lender to advance or to continue
its Proportionate Share of the Term Loan or Working Capital Loan
shall be suspended. Such Lender shall (consistent with its
internal policies and legal and regulatory restrictions) use its
reasonable efforts to avoid such suspension and shall grant
Borrowers the opportunity to convert such
Lender's Loan affected by the unavailability of such dollar
deposits to an alternate basis (CD Rate or Base Rate).
(ii) If at any time the Interest Rate then in effect based on
either LIBOR or the CD Rate does not serve as an accurate
reference, in the reasonable judgment made in good faith of any
Lender, for such Lender to determine the cost of advancing or
maintaining its respective Proportionate Share of the Term Loan or
Working Capital Loan during any Interest Period, then such Lender
shall notify Lead Agent, who shall so notify Borrowers, and such
Lender's Proportionate Share of the Term Loan or Working Capital
Loan, as the case may be, shall be converted into a loan accruing
interest at an Interest Rate determined by Borrowers by reference
to an alternate basis (LIBOR, CD Rate or Base Rate) (or if
Borrowers do not select an Interest Rate, the Base Rate plus the
applicable Base Rate Margin); provided, however, that if neither
the LIBOR nor CD Rate serves as an accurate reference for such
Lender, then such Lender shall so notify Lead Agent, who shall so
notify Borrowers, and such Lender's Proportionate Share of the Term
Loan or Working Capital Loan, as the case may be, shall thereafter
accrue at the Interest Rate determined by the Base Rate. Borrowers
shall promptly pay when due all funding and yield protection costs
as set forth in Section 2.7(e) hereof of such Lender incurred or to
be incurred in connection therewith.
(e) Funding Costs. Together with any repayment or prepayment of
the Loans or any portion thereof on a date other than an Interest
Payment Date applicable to such repaid or prepaid amount, for any
reason, Borrowers shall pay all interest accrued on the principal
amount so repaid or prepaid to the date of actual payment, plus all
fees, expenses, liabilities and losses incurred by each Lender as
a consequence of such repayment or prepayment (as calculated by
Lenders, such calculations to be conclusive, absent manifest
error). In the case of payment of any amount made prior to the
last day of the Interest Period applicable to such amount,
Borrowers shall pay the amount by which the interest that would
have been payable by Borrowers to such Lender on the amount repaid
or prepaid from the date of repayment or prepayment until such last
day of such Interest Period exceeds the interest
payable on a deposit of such amount at the rate as offered to Lead
Agent or the appropriate Lender in the London interbank market or
in certificates of deposit, as the case may be, one (1) Banking Day
after receipt for value of such amount from Borrowers for the
period from the date three (3) Banking Days after such receipt to
the last day of such Interest Period. Any Loan
bearing an interest rate based on a Base Rate may be prepaid at any
time without penalty.
2.8 Repayment.
(a) Repayment of Tranche A Term Loan. Borrowers shall repay the
Tranche A Term Loan, plus accrued and unpaid interest and fees
thereon, to Lead Agent for the pro rata account of Lenders, in
twelve (12) consecutive semi-annual installments, the first such
installment being due on the first Tranche A Repayment Date
(subject to the proviso set forth immediately below) and each of
which installments of principal shall be equal to the amounts
indicated on Schedule 2.8(a) hereof for such Tranche A Repayment
Date; provided, that (i) Borrowers shall repay any remaining
outstanding principal balance of the Tranche A Term Loan, plus
accrued and unpaid interest and fees thereon, to Lead Agent for the
pro rata account of Lenders (based on each Lender's
Proportionate share of the Tranche A Term Loan Commitment), on the
Tranche A Maturity Date, and (ii) all partial prepayments of the
Tranche A Term Loan shall be applied to remaining repayments of
principal of the Tranche A Term Loan in the inverse order of
maturity.
(b) Repayment of Tranche B Term Loan. Borrowers shall repay the
Tranche B Term Loan, plus accrued and unpaid interest and fees
thereon, to Lead Agent for the pro rata account of Lenders (based
on each Lender's Proportionate Share of the Tranche B Term Loan
Commitment), in ten (10) consecutive installments, the first such
installment being due on the first Tranche B Repayment Date
(subject to the proviso set forth immediately below) and each of
which installments of principal shall be equal to the amounts
indicated on Schedule 2.8(b) hereof for such Tranche B Repayment
Date; provided, that (i) Borrowers shall repay any remaining
outstanding principal balance of the Tranche B Term Loan, plus
accrued and unpaid interest and fees thereon, to Lead Agent for the
pro rata account of Lenders, on the Tranche B Maturity Date and
(ii) all partial prepayments of the Tranche B Term Loan shall be
applied to remaining repayments of principal of the Tranche B Term
Loan in the inverse order of maturity.
(c) Repayment of Working Capital Loan; Cancellation of Working
Capital Facility. Borrowers may repay at any time, or from time to
time, the outstanding principal amount of the Working Capital Loan,
or from time to time any part thereof equal to Two Hundred Fifty
Thousand dollars ($250,000) or whole number multiples thereof and
no repayment fee shall be payable on any repayment of principal
amounts outstanding under the Working Capital Loan other than
breakage costs. No partial repayments of principal of the Working
Capital Loan pursuant to this Section 2.9(a) shall reduce the
Working Capital Loan Commitment and amounts so repaid may be
reborrowed (subject to the terms and conditions of this Agreement)
unless such repayment is on the Working Capital Loan Repayment Date
or unless Borrowers simultaneously with such partial repayment
cancel the Working Capital Commitment in its entirety. Subject to
the terms and conditions of this Agreement, Borrowers shall repay
the Working Capital Loan in full, plus accrued and unpaid interest
and fees thereon, to Lead Agent for the pro rata account of the
Working Capital Lenders (based on each Working Capital Lenders
Proportionate Share of the Working Capital Loan Commitment) on the
Working Capital Loan Repayment Date.
2.9 Prepayment.
(a) Optional Prepayment of the Term Loan; (i) By giving
irrevocable written notice, which is received by Lead Agent at
least ten (10) but not more than forty-five (45) Banking Days in
advance, Borrowers may, at their option, make prepayments on an
Interest Payment Date to Lead Agent for the account of Lenders of
all the outstanding principal amount of the Term Loan, or from time
to time any part thereof equal to One Million dollars
($1,000,000) or whole number multiples thereof. All partial
prepayments of the Tranche A Term Loan pursuant to this Section
2.9(a) are to be applied to remaining repayments of principal of
the Tranche A Term Loan in the inverse order of maturity and shall
permanently reduce the Tranche A Term Loan Commitment. All partial
prepayments of the Tranche B Term Loan pursuant to this Section
2.9(a) are to be applied to remaining repayments of principal of
the Tranche B Term Loan in the inverse order of maturity and shall
permanently reduce the Tranche B Term Loan Commitment. No
prepayment fee shall be payable on any prepayment of principal
amounts outstanding under the Term Loan other than breakage costs.
(b) Partial Release. Upon any prepayment in full of the Tranche
A Term Loan, Lenders agree, without recourse and without any
representation and warranty, to release in accordance with the
provisions (and subject to the conditions) of Schedule 2.9(b)
hereto (all of such provisions and conditions of which are hereby
incorporated by reference) certain Collateral as provided for in
Schedule 2.9(b).
2.10 General Terms of Payment.
(a) General. All sums payable to Lead Agent, Lenders or Issuing
Bank hereunder shall be paid without deduction, set-off or
counterclaim in New York City in immediately available funds not
later than 2:00 p.m. (New York time) on the day in question to the
Federal Reserve Bank of New York, for credit to the account of
Credit Suisse, ABA No. 0260-0917-9 CR SUISSE NY, Attention: Loan
Department, Re: Salton Sea.
(b) Priority of Application. Unless otherwise allowed herein, any
payments made to Lead Agent for its account or for the
benefit of Lenders or Issuing Bank shall be applied first against
costs, expenses and indemnities due hereunder and under any other
Loan Instruments; then against interest at the Default Interest
Rate, if any; then against payments described in Section
6.1(c)(ii) hereof (Reimbursement Obligations); then against
payments described in Section 6.1(c)(iii) hereof (Payment of Fees
(other than L/C Fees)); then against payments described in
Section 6.1(c)(iv) hereof (L/C Fees; Interest on Loans and Swap
Agreement Payments) and then against payments described in
Section 6.1(c)(v) hereof (Principal of Loans), provided that, upon
any acceleration of the Obligations, such principal payments shall
be applied to the remaining repayments of principal of the Loans in
the inverse order of maturity and shall permanently reduce the
amount of the Term Loan Commitment.
(c) Non-Banking Day. Whenever any payment hereunder shall be due,
or any calculation shall be made, on a day which is not a Banking
Day, the date for payment or calculation, as the case may be, shall
be extended to the next succeeding Banking Day, and any interest on
any payment shall be payable for such extended time at the
specified rate.
(d) Lead Agent's Calculations. All calculations of interest, L/C
Fees, Default Interest Rate, fees, increased costs, funding costs
or gross up costs due hereunder calculated by Lead Agent or Issuing
Bank, as the case may be, shall be conclusive as to the amount
thereof absent manifest error. Lead Agent or Issuing Bank, as the
case may be, shall upon request promptly provide Borrowers with a
certificate as to the basis and amount of any interest, L/C Fees,
Default Interest, fees, gross up, funding, yield protection or
increased costs requested by any Lender or Issuing Bank under
Section 2.7 hereof setting forth the
calculation of such amounts in reasonable detail.
(e) General Due Date. If no due date is specified for the payment
of any amount payable by Borrowers hereunder, such amount shall be
due and payable not later than thirty (30) days after receipt of
written demand by Lead Agent to Borrower for payment thereof.
2.11 Notes.
On or prior to the Closing Date, Borrowers shall execute and
deliver to each of the Lenders (i) a duly executed Secured Note,
with maturity conforming to that of the Tranche A Term Loan, in the
form attached as Exhibit 2.11(a)-1 hereto, (ii) a duly
executed Secured Note, with maturity conforming to that of the
Tranche B Term Loan, in the form attached as Exhibit 2.11(a)-2
hereto and (iii) a duly executed Working Capital Note, with
maturity conforming to that of the Working Capital Loan, in the
form attached as Exhibit 2.11(a)-3 hereto. Borrowers hereby
irrevocably authorize each Lender to enter and initial on each of
the Notes (or a schedule or grid attached thereto) the date and
amount of each Advance hereunder, all payments and prepayments of
principal, the applicable Interest Rate and such other
information as specified in each such Note. At the reasonable
request of Lead Agent, Borrowers will execute and deliver one or
more Notes, representing in the aggregate the balance then
Outstanding of the Term Loan or Working Capital Loan, as the case
may be, payable to Lead Agent or Lenders, in substitution for but
not in payment of the Note or Notes held prior thereto, which
latter Note or Notes shall be canceled and be simultaneously
delivered to Borrowers.
2.12 LOC Debt Option.
From time to time following the execution and delivery of the
Issuance Agreements, in each case in form and substance
satisfactory to Lead Agent, Borrowers shall have the option of
issuing LOC Debt, in accordance with the terms of Article 3 hereof
and to apply the proceeds thereof to reduce the
Outstanding amount of the Term Loan or to repay the LOC Debt as the
same becomes due. Upon the maturity of the LOC Debt so issued, and
upon payment of any interest due prior to the
maturity of such LOC Debt, Borrowers shall satisfy resulting
Reimbursement Obligations pursuant to the terms of Section 3.7(b)
hereof.
ARTICLE 3 - LETTERS OF CREDIT, LOC DEBT
3.1 LOC Debt.
(a) Sale, Issuance and Participation. Borrowers propose to sell
and issue LOC Debt in the United States. Issuing Bank hereby
agrees, subject to the terms and conditions hereof and of the
Issuance Agreements, to issue the Letters of Credit to provide for
the payment of the LOC Debt at its maturity. Each Lender severally
agrees with Issuing Bank to participate in the
extension of credit arising from the issuance of the Letters of
Credit and the Borrowers' related Reimbursement Obligation in an
amount equal to such Lender's Proportionate Share of the Amount
Supported by the Letter of Credit as it is outstanding from time to
time. Each Lender further agrees that the issuance of the Letters
of Credit shall be deemed to be confirmation by Issuing Bank and
such Lender of such participation in such amount.
(b) LOC Debt. The maximum aggregate Face Amount of LOC Debt
issuable and outstanding at any one time under the terms of this
Agreement shall not exceed the Amount Supported at such time of the
Letters of Credit.
(c) Maximum Maturity Events. No LOC Debt shall be issued if,
after giving effect thereto, the number of Maturity Events then in
effect exceeds thirty (30).
(d) Conditions to Issuance. Each issuance of LOC Debt and each
increase in the amount available to be drawn under the Letters of
Credit pursuant to Section 3.4(b) hereof may be made only if each
of the following conditions precedent is met:
(i) the Letters of Credit shall have been issued in accordance
with Section 3.4 hereof;
(ii) no Default or Event of Default shall have occurred and be
continuing on the date of such issuance; and
(iii) in the case of the first issuance of LOC Debt, Lead Agent
shall have received evidence that the LOC Debt shall have
received a rating of not less than the rating attributable to the
Issuing Bank by Standard and Poor's Corporation or Moody's,
respectively (or an equivalent rating by another nationally
recognized credit rating agency of similar standing if neither of
such corporations is in the business of rating debt instruments
comparable to the LOC Debt.)
3.2 Procedure for Issuance of LOC Debt.
(a) Execution and Delivery. Borrowers shall execute LOC Debt and
deliver it to Depositary for authentication, completion and
delivery, all in accordance with the terms of the Depositary
Agreement. LOC Debt shall not be issued if the aggregate Face
Amount of LOC Debt that is Outstanding immediately after such
issuance would exceed the Term Loan Commitment then in effect less
the sum of (i) the amount of the Term Loan that is
Outstanding plus (ii) the amount of Reimbursement Obligations that
are Outstanding.
(b) Notice of LOC Debt Issuance. Borrowers shall give to Lead
Agent (which shall give to each Lender prompt notice thereof), with
a copy thereof to Issuing Bank, a Notice of LOC Debt
Issuance, which notice shall be given not later than 2:00 p.m. (New
York time) two (2) Banking Days prior to each proposed issuance of
LOC Debt. Each such Notice of LOC Debt Issuance shall be by telex,
direct computer link (if available), telecopy or cable, in any case
confirmed immediately in writing, and shall be duly completed and
signed by an Authorized Officer of
Borrowers. Each Notice of LOC Debt Issuance, to be effective,
shall include (i) a statement that the applicable conditions set
forth in Section 3.1(d) hereof have been satisfied and that such
issuance will not cause a breach of Section 3.1(c) hereof, (ii)
computations reasonably necessary to demonstrate compliance with
the requirements set forth in the immediately preceding clause (i),
and (iii) a statement as to which tranche of debt the LOC Debt is
attributable. If Lead Agent has knowledge that such conditions
have not been satisfied or that such requirement has not been
satisfied, it may (but shall not be obligated to) so notify
Depositary and instruct Depositary not to authenticate, complete
and deliver the LOC Debt.
(c) Issuance. Borrowers shall not issue LOC Debt on any date (i)
to the extent that the aggregate Face Amount of such LOC Debt
exceeds the maximum amount specified therefor in the Notice of LOC
Debt Issuance in respect thereof, (ii) to the extent that, after
giving effect to the proposed issuance of LOC Debt, the aggregate
Face Amount of LOC Debt which shall mature on a single day exceeds
Fifty Million Dollars ($50,000,000), (iii) to the extent that the
number of dates on which LOC Debt is scheduled to mature exceeds
thirty (30), or (iv) to the extent that
immediately after receipt of the proceeds of such issuance and the
crediting of such proceeds and any other funds as provided in the
Depositary Agreement to the Issuing Bank's Account for the purpose
of reimbursing Issuing Bank for drawings made under the Letter of
Credit and the application of funds from the General LOC Debt
Account on the date of computation as provided in the Depositary
Agreement for the purpose of repaying the Term Loan, the aggregate
Face Amount of Outstanding LOC Debt maturing after any Term Loan
Repayment Date shall be greater than (x) the amount of the Term
Loan Facility scheduled to be in effect during the Payment Period
that commences on the Closing Date or such Term Loan Repayment Date
and that ends after the Closing Date or such Term Loan Repayment
Date, minus (y) the sum of (i) the aggregate principal amount of
the Term Loan that is Outstanding plus
(ii) the amount of Reimbursement Obligations that are Outstanding
plus (iii) the Amount Supported.
(d) Notice to Lead Agent. Promptly after each issuance of LOC
Debt by Borrowers (but in any event no later than 1:00 p.m. (New
York time) on the date of such issuance), Borrowers shall notify
Lead Agent of (i) the maturity of the LOC Debt comprising such
issuance, (ii) the discount payable or other return to holders with
respect thereto for which Borrowers are obligated, (iii) the
aggregate Face Amount of such LOC Debt, (iv) the number of dates on
which such LOC Debt shall mature and (v) the tranche of debt to
which such LOC Debt is attributable.
3.3 Accounts.
(a) General LOC Debt Account. As provided in the Depositary
Agreement, Borrowers shall maintain an account with Depositary
designated the "Salton Sea General LOC Debt Account" (the
"General LOC Debt Account") and from time to time shall cause funds
to be deposited therein, either by the deposit of the proceeds from
the sale of LOC Debt (in accordance with the next succeeding
sentence hereof) or by deposit of other funds by Borrowers, in
amounts such that immediately after any payment under the Letters
of Credit and receipt of proceeds of sale of LOC Debt issued on the
date of such payment there will be
sufficient funds for reimbursement of such payment, as provided in
Section 3.7 hereof and in the Depositary Agreement. Each issuance
of LOC Debt shall be deemed an assignment by Borrowers to Lead
Agent, for the benefit of Issuing Bank or Lenders, as the case may
be, of the proceeds of the sale of such LOC Debt (i) to the extent
needed to reimburse Issuing Bank for payments made by Issuing Bank
under the Letters of Credit and not theretofore reimbursed by
Borrowers or Lenders in accordance with Section 3.6 or 3.7 hereof
(in which case such proceeds shall be transferred from the General
LOC Debt Account to the Issuing Bank's Account), (ii) to the extent
needed to reimburse Lenders for payments made by Lenders to Issuing
Bank under the Letters of Credit and the Letter of Credit
Participations therein (in which case such proceeds shall be
transferred from the General LOC Debt Account to the Issuing Bank's
Account for further transfer to Lead Agent for the account of
Lenders), and (iii) to the extent such
proceeds are to be applied to prepay Loans in accordance with the
applicable Notice of LOC Debt Issuance. The right of withdrawal
from the General LOC Debt Account shall be vested solely in
Depositary and shall be exercised by Depositary only as provided in
the Depositary Agreement. In exercising its authority under the
Depositary Agreement, Lead Agent shall at all times, and Borrowers
hereby authorize Lead Agent, (x) to direct that
withdrawals from the General LOC Debt Account be paid to Lead Agent
for application in accordance with Section 2.9(a) hereof, to the
extent that the proceeds of an issuance of LOC Debt are to be
applied to prepay the Term Loan in accordance with the
applicable Notice of LOC Debt Issuance, and (y) to direct that all
other withdrawals from the General LOC Debt Account be
deposited in the Project Account, to be applied as contemplated in
Section 6.1 of this Agreement.
(b) Special LOC Debt Account. As provided in the Depositary
Agreement, Depositary shall open a special purpose trust account
designated "Salton Sea Special LOC Debt Account" (the "Special LOC
Debt Account"). The sole purpose of the Special LOC Debt Account
shall be to hold moneys deposited therein by Depositary as provided
in the Depositary Agreement, in trust for the benefit of the
holders of LOC Debt, for the purpose of paying LOC Debt. The right
of withdrawal from the Special LOC Debt Account shall be vested
solely in Depositary and shall be exercised by
Depositary only to pay matured LOC Debt presented to it for payment
until all LOC Debt has been paid in full. Borrowers shall not have
any legal, equitable or beneficial interest in the Special LOC Debt
Account.
3.4 Letters of Credit.
(a) Terms. Subject to the terms and conditions hereof, Issuing
Bank commits to issue and deliver to Depositary, (i) the CPN Letter
of Credit and (ii) the Letter of Credit with respect to Medium Term
Notes concurrently with the execution and delivery of the
Depositary Agreement by the parties thereto; provided,
however, that the amounts available to be drawn under all such
Letters of Credit shall be reduced in proportion to the
amortization schedule set forth in Schedule 2.8(a) and (b) (as
applicable) hereof; and provided further, that if Issuing Bank is
unable, as contemplated by Section 3.11, to issue the Letters of
Credit in the applicable maximum face amount of the Letters of
Credit, Issuing Bank or Borrowers may arrange for another
suitable financial institution to act contemporaneously with, or as
a substitute for, Credit Suisse as an Issuing Bank in a manner
permitting the issuance of the maximum face amount of the Letters
of Credit, such suitability to be reasonably determined by each of
Lead Agent and Borrowers. Effective upon the issuance of the
Letters of Credit and without further action on the part of Lead
Agent or any Lender, each Lender shall automatically acquire a
Letter of Credit Participation in Issuing Bank's liability under
the Letters of Credit in an amount equal to such Lender's
Proportionate Share of the Amount Supported by the Letters of
Credit outstanding from time to time.
(b) Available Amount Under Letters of Credit. At the time of each
payment by Issuing Bank under a Letter of Credit, the amount
available to be drawn under such Letter of Credit shall be
reduced by the amount of such payment in accordance with the terms
of such Letter of Credit. Upon (i) the payment by or on behalf of
Borrowers of any Reimbursement Obligation that is Outstanding
resulting from each payment by Issuing Bank under a Letter of
Credit (by means other than from the proceeds of the sale of LOC
Debt assigned as provided in Section 3.3(a) hereof) or (ii) the
assignment to Lead Agent, for the benefit of Lenders, of proceeds
from the sale of LOC Debt pursuant to Section 3.3(a) of this
Agreement on the day of such payment by Issuing Bank under such
Letter of Credit, the amount available to be drawn under such
Letter of Credit shall be increased by the amount of such payment
or assignment (except that the aggregate amount of such increases
shall not exceed the amount of such payment under such Letter of
Credit), all in accordance with the terms of such Letter of Credit;
provided that Lead Agent may (but shall not be obligated to) notify
Depositary that the amount available to be drawn under such Letter
of Credit shall not be so increased if Lead Agent believes in good
faith that the conditions precedent to the issuance of LOC Debt set
forth in Section 3.1(d) hereof and in Section 4.2 hereof are not
then satisfied. At the request of Borrowers, Issuing Bank shall
deliver a notice to Depositary to confirm any increase pursuant to
this Section 3.4(b) in the amount available to be drawn under a
Letter of Credit.
3.5 Notice of Payments and Reductions
Under the Letters of Credit .
Issuing Bank will give Borrowers and each Lender prompt telecopy,
cable or telex notice of each demand for a payment ("Credit
Payment") received by Issuing Bank under, and of each notice of
reduction ("Credit Reduction") of, any of the Letters of Credit,
specifying (a) the amount of such Credit Payment or Credit
Reduction, (b) the date such Credit Payment is to be made or Credit
Reduction is to take effect, and (c) such Lender's
Proportionate Share of the amount of such Credit Payment or Credit
Reduction. Borrowers shall promptly provide Lead Agent and Issuing
Bank with copies of any and all notices that
Borrowers receive from any beneficiary under any Letter of Credit
stating such beneficiary's intent to draw upon any Letter of
Credit.
3.6 Borrowers' Obligations.
(a) Reimbursement Obligations. On any day on which Issuing Bank
makes any Credit Payment to any beneficiary under any Letter of
Credit in accordance with the terms and conditions thereof, without
duplication (i) an extension of credit from Issuing Bank to
Borrowers in the form of Issuing Bank's payment under such Letter
of Credit shall, to the extent of such Credit Payment, be deemed to
have occurred and shall be automatically continued in the form of
an obligation of Borrowers (a "Reimbursement
Obligation") to reimburse Issuing Bank for such Credit Payment, and
(ii) an extension of credit from each Lender to Borrowers in the
form of its Letter of Credit Participation with respect to such
Letter of Credit shall, to the extent of such Lender's
Proportionate Share of such Credit Payment, be deemed to have
occurred and shall be automatically continued in the form of a
participation (in the amount of its Proportionate Share) in the
related Reimbursement Obligation.
(b) Borrowers' Satisfaction of Reimbursement Obligations.
Reimbursement Obligations arising upon any Credit Payment by
Issuing Bank in respect of any Letter of Credit shall either (A) be
paid, or caused to be paid, by Borrowers to Lead Agent solely from
the proceeds of the issuance of LOC Debt or as provided in clause
(B) below (1) for the account of Issuing Bank or (2) if Lenders
shall have made the payments to Lead Agent specified in Section
3.7(a) hereof for the account of Lenders, an amount equal to all
Reimbursement Obligations not continued in the form of a Term Loan
as provided for below in this Section 3.6(b), such payment to be
made immediately upon Borrowers' receipt of notice from Issuing
Bank of the Credit Payment related thereto as set forth in Section
3.5 hereof, or (B) subject to Section 2.4 hereof and at Borrowers'
option to the extent of all or any part of such Reimbursement
Obligations, be automatically added to the
principal amount of the Term Loan to be held by each Lender in a
principal amount equal to such Lender's Proportionate Share of such
Credit Payment by Issuing Bank in respect of the Letter of Credit;
provided, however, that no addition to the Term Loan shall be made
to the extent that, after giving effect to such addition to the
Term Loan, the aggregate of the sum of (i) the principal amount of
the Term Loan that is Outstanding plus (ii) the Face Amount of LOC
Debt that is Outstanding plus (iii) the amount of Reimbursement
Obligations that are Outstanding
hereunder would at any time exceed the Term Loan Commitment then in
effect.
(c) Obligations Absolute. Borrowers' obligations to pay or
otherwise satisfy Reimbursement Obligations in accordance with
Section 3.6(b) hereof are absolute and unconditional, shall not be
affected by any circumstance whatsoever, including, without
limiting the effect of the foregoing but subject to Section 3.8
hereof, the existence or assertion of any claim or defense on the
part of Borrowers against any Person or the failure of any Lender
to make any payment to be made by it under Section 3.7 hereof, and
shall not be reduced by any offset, abatement, withholding or
reduction whatsoever.
(d) Interest on Outstanding Reimbursement Obligations.
Borrowers agree to pay interest on the unpaid principal balance of
Outstanding Reimbursement Obligations, for the period
commencing on the date of the related Credit Payment by Issuing
Bank under the appropriate Letter of Credit until such
Reimbursement Obligations are (i) paid in full by Borrowers or (ii)
in the case of Reimbursement Obligations arising under any Letter
of Credit, converted into a Term Loan pursuant to Sections 3.6(b)
or 3.7(b) hereof (but only to the extent so converted), at a rate
per annum equal to the Base Rate plus two percent (2%) per annum.
Accrued interest on such unpaid Reimbursement Obligations shall be
paid by Borrowers to Lead Agent for the account of Issuing Bank
from time to time upon demand by Lead Agent and on the Credit
Expiration Date and on the date such amount is paid in full or
converted into a Term Loan as specified above (but only to the
extent so converted).
3.7 Lender Payments in Respect of Letters
of Credit .
(a) Payments by Lenders. As promptly as practicable upon
becoming aware that it has not or will not be reimbursed by
Borrowers in cash for any Reimbursement Obligation resulting from
any Credit Payment by Issuing Bank under any Letter of Credit
(including Reimbursement Obligations resulting from Credit
Payments in respect of any Letter of Credit), which Reimbursement
Obligations Borrowers have opted to continue in the form of a Term
Loan, on or before 3:30 p.m. (New York time) on the date of the
Credit Payment giving rise to such unpaid Reimbursement Obligation,
Issuing Bank shall notify Lead Agent of the amount of such unpaid
Reimbursement Obligation and the date of the related Credit
Payment. Such notification may be given telephonically, but shall
in all events be confirmed promptly by telecopy or other written
notice. Lead Agent shall thereupon notify each Lender (other than
Issuing Bank) promptly by telecopy or
telephone (promptly confirmed by telecopy) (in each case, a
"Payment Notice") of the amount of such Lender's Proportionate
Share of such unpaid Reimbursement Obligation and forthwith upon
receipt of such Payment Notice each such Lender shall make
available its Proportionate Share of such unpaid Reimbursement
Obligation to Lead Agent for the account of Issuing Bank at Lead
Agent's office indicated in Section 9.1(a) hereof in immediately
available funds, not later than 3:30 p.m. (New York time) on the
day such Payment Notice from Lead Agent is received (when the
relevant Payment Notice is received at or prior to 2:00 p.m. (New
York time) on any day), and before 1:00 p.m. (New York time) on the
next succeeding Banking Day (when the relevant Payment Notice is
received after 2:00 p.m. (New York time) on any day). Each Lender
(other than Issuing Bank) shall indemnify and hold
harmless Issuing Bank from and against any and all losses,
liabilities (including liabilities for penalties), actions, suits,
judgments, demands, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) resulting from
any failure on the part of such Lender to provide, or from any
delay in providing, Lead Agent for the account of Issuing Bank with
its Proportionate Share of the amount of any such unpaid
Reimbursement Obligation in accordance with the provisions of the
preceding sentence, but no such Lender shall be so liable for any
such failure on the part of or caused by any other Lender or Lead
Agent. Each Lender shall be required to pay interest to Lead Agent
for the account of Issuing Bank on its Proportionate Share of such
unpaid Reimbursement Obligation at the Federal Funds Rate from the
date such Lender's payment is due until the date it is received by
Lead Agent for the account of Issuing Bank. If Lead Agent for the
account of Issuing Bank receives a Lender's Proportionate Share of
any such unpaid Reimbursement Obligation on the date of the related
Credit Payment by Issuing Bank, or if Lead Agent for the account of
Issuing Bank receives interest on any late payment from such Lender
in accordance with the provisions of the preceding sentence, such
Lender shall receive interest on its Proportionate Share of such
unpaid
Reimbursement Obligation in accordance with Section 3.7(e) hereof
from such date. If Lead Agent for the account of Issuing Bank does
not receive a Lender's Proportionate Share of such unpaid
Reimbursement Obligation on the date of the related Credit
Payment by Issuing Bank and does not receive interest on any such
late payment from such Lender in accordance with the provisions of
this paragraph, such Lender shall receive interest on its
Proportionate Share of such unpaid Reimbursement Obligation in
accordance with Section 3.7(e) hereof from the date on which such
Lender's payment is received by Lead Agent for the account of
Issuing Bank.
(b) Loans in Respect of Reimbursement Obligations. Subject to
Sections 2.4 and 3.6(b) hereof, upon any payment in accordance with
Section 3.7(a) hereof by any Lender to Lead Agent for the account
of the Issuing Bank in respect of Reimbursement
Obligations arising under any Letter of Credit (to the extent
Borrowers have opted to continue such Reimbursement Obligations
with respect to the Letter of Credit in the form of a Term Loan),
the extension of credit from such Lender to Borrowers in the form
of their participation in such Reimbursement Obligation shall be
automatically continued in the form of a Term Loan held by such
Lender hereunder in the principal amount equal to such Lender's
Proportionate Share of the Reimbursement Obligations so
continued.
(c) Payment Notice Conclusive. Each Payment Notice shall be
conclusive absent manifest error.
(d) Obligations Absolute and Unconditional. Each Lender's
obligation to make the payments specified in this Section 3.7 to
Issuing Bank, and Issuing Bank's right to receive the same, are
absolute and unconditional and shall not be affected by any
circumstance whatsoever, including, without limiting the effect of
the foregoing or Section 3.8 hereof, (i) the occurrence or
continuance of a Default or an Event of Default under this
Agreement or any other Loan Instrument, (ii) the failure of any
other Lender to make any payment under this Section 3.7, (iii) any
lack of validity or enforceability of this Agreement, any Letter of
Credit, the Issuance Agreements or any of the other Loan
Instruments, (iv) any amendment or waiver of, or consent to
departure from, all or any of the Loan Instruments, (v) the
existence of any claim, set-off, defense or other right which
Borrowers may have at any time against any beneficiary or any
transferee of any Letter of Credit (or any persons or entities for
whom any such beneficiary or any such transferee may be acting),
Lead Agent, Issuing Bank, Lenders or any other person or entity,
whether in connection with this Agreement, any of the other Loan
Instruments or any unrelated transactions, (vi) any statement or
any other document presented under any Letter of Credit proving to
be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or
inaccurate in any respect whatsoever, (vii) payment by Issuing Bank
under any Letter of Credit against presentation of a draft or
certificate which does not comply with the terms thereof, provided,
that such payment shall not have constituted gross negligence or
willful misconduct of Issuing Bank, or (viii) any other
circumstances or happening whatsoever, whether or not similar to
any of the foregoing, provided, that the same shall not have
constituted gross negligence or willful misconduct of Issuing Bank.
Each Lender further agrees that each such payment shall (subject to
Section 3.7(e) hereof) be made without any offset, abatement,
withholding or reduction whatsoever.
(e) Payments to Lenders. Whenever Lead Agent shall receive any
payment in the form of reimbursement from, or on behalf of,
Borrowers in respect of any unpaid Reimbursement Obligation or any
payment of interest on any unpaid Reimbursement Obligation, which
payment relates to an amount for which Lead Agent for the account
of Issuing Bank has received reimbursement from Lenders pursuant to
this Agreement, Lead Agent will pay to each Lender in immediately
available funds such Lender's Proportionate Share of such payment
(i) before the close of business on the day such payment is
received, if such payment is received at or prior to 1:00 p.m. (New
York time), or (ii) on the next succeeding Banking Day if such
payment is received after 1:00 p.m. (New York time) on such day;
provided that each Lender shall only be entitled to share in
payments relating to interest in accordance with the provisions of
Section 3.7(b) hereof and provided further, that Lead Agent may
offset the amount of any such payment to any Lender against the
amount of any payment required to be made by such Lender to Lead
Agent under this Section 3.7 (whether or not Lead Agent shall have
furnished a Payment Notice to such Lender), and only the net amount
shall be paid by Lead Agent. Any amounts received by Lead Agent
that are due and owing to Lenders and remaining unpaid to Lenders
after the times for payment set forth in the preceding sentence
shall bear interest, payable by Lead Agent at the Federal Funds
Rate.
3.8 Borrowers' and Lenders' Agreements.
Borrowers and each Lender agree with Issuing Bank that:
(a) Payments. Issuing Bank is authorized to make payments under
any Letter of Credit upon the presentation of the documents
provided for therein and without regard to whether Borrowers or any
other Person has failed to fulfill any of its obligations with
respect to any Loan Instrument, Issuance Agreement or
Project Document or any other default has occurred thereunder or
hereunder.
(b) Actions or Omissions in Good Faith. Any action, inaction or
omission on the part of Issuing Bank under or in connection with
any Letter of Credit or any related certificates or other
documents, shall be taken or omitted in good faith and in
conformity with such laws, regulations or customs as Issuing Bank
may reasonably deem to be applicable, and, if so taken or
omitted, shall be binding upon Borrowers and each Lender (and shall
not place Issuing Bank under any liability to Borrowers or any
Lender or limit or otherwise affect Borrowers' or any
Lender's obligations under this Agreement).
(c) Binding on Borrowers. Notwithstanding any change or
modification, with or without the consent of Borrowers, in any
instruments or documents called for in any Letter of Credit,
including waiver of noncompliance of any such instruments or
documents with the terms of any such Letter of Credit, this
Agreement shall, subject to Section 3.8(b) hereof, be binding on
Borrowers with regard to such Letter of Credit, and to any action
taken by Issuing Bank relative thereto, provided that such
instrument or documents, upon their face, conform to the terms of
such Letter of Credit.
(d) Nature of Issuing Bank's Duties. As among Borrowers,
Issuing Bank, Lenders and Lead Agent, Borrowers hereby assume all
risks of the acts, omissions or misuse of any Letter of Credit by
the beneficiary thereof or any successor to such beneficiary.
Subject to Section 3.8(b) hereof, Issuing Bank, Lenders and Lead
Agent shall not be responsible: (i) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the
application for and issuance of, or the making of any drawing
under, any Letter of Credit, even if it should in fact prove to be
in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged, (ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or
assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason, (iii) for failure of any
beneficiary to comply fully with the conditions required in order
to effect a drawing, (iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, (v) for any loss or delay in the
transmission or otherwise of any document or draft
required in order to make any drawing under any Letter of Credit,
and (vi) for any consequences arising from causes beyond the
control of Issuing Bank, Lenders or Lead Agent, except only that
Borrowers shall have a claim against Issuing Bank, and Issuing Bank
shall be liable to Borrowers only to the extent of any direct, as
opposed to consequential, damages suffered by
Borrowers caused by (A) Issuing Bank's willful misconduct or gross
negligence in determining whether documents presented under a
Letter of Credit comply with the terms of such Letter of
Credit, or (B) Issuing Bank's failure to pay under a Letter of
Credit in accordance with its terms after the presentation to it by
the beneficiary of a sight draft and certificate strictly complying
with the terms and conditions of such Letter of Credit. In
furtherance and not in limitation of the foregoing, Issuing Bank
may accept documents that appear on their face to be in order,
without responsibility for further investigation,
regardless of any notice or information to the contrary. None of
the above shall affect, impair, or prevent the vesting of any of
Issuing Bank's rights or powers hereunder.
3.9 Expiration of Letters of Credit.
Expiration Date. The Letters of Credit shall expire with respect
to any LOC Debt on the earlier of (i) payment of such LOC Debt, and
(ii) 3:00 p.m. (New York time) on the fifteenth (15th) day after
the maturity date of such LOC Debt (or if such day shall not be a
Banking Day, at 3:00 p.m. (New York time) on the first Banking Day
thereafter), all in accordance with the terms of the applicable
Letter of Credit. In no event shall Issuing Bank be required to
permit the Letter of Credit to remain in effect after 3:00 p.m.
(New York time) on the Tranche A Maturity Date or the Tranche B
Maturity Date, as applicable (based on the tranche of debt to which
the LOC Debt was attributable).
3.10 Credit Expiration Date.
As used herein, "Credit Expiration Date" shall mean the earlier of
(i) Tranche A Maturity Date or the Tranche B Maturity Date, as
applicable (based on the tranche of debt to which the LOC Debt was
attributable) and (ii) the date of any notice provided
pursuant to Section 3.11(a) hereof; provided, however, that if Lead
Agent shall have rescinded the notice delivered pursuant to Section
3.11(a) hereof, the Credit Expiration Date shall be the date
specified in clause (i) above.
3.11 Suspension of Certain Obligations.
(a) Restrictions Imposed on Lenders. In the event that in the
opinion of counsel to Lead Agent or any of the Lenders,
(i) any restrictions are imposed on any Lender which would make it
unlawful or improper for any Letter of Credit or such Lender's
Letter of Credit Participation with respect thereto to be issued or
to remain in effect or for demands for payment thereunder to be
honored, or as a result of any Letter of Credit or its Letter of
Credit Participation with respect thereto any Lender would become
subject to regulation by any governmental body other than state and
federal banking authorities; or
(ii) the ability of any Lender to conduct a general banking
business is required to be restricted because of its issuance of
any Letter of Credit or its Letter of Credit Participation with
respect thereto, its commitment to honor demands for payment under
any Letter of Credit or otherwise as a result of any Letter of
Credit or its Letter of Credit Participation with respect thereto,
then Lead Agent may give notice to Borrowers and Depositary that to
the extent any additional LOC Debt shall be issued after the
occurrence of any event in clause (i) or (ii) above, then the
amount of such LOC Debt available to be issued hereunder shall be
reduced pro rata based on such restricted Lender's Letter of Credit
Participation and such Lender's Commitment hereunder as it relates
to the issuance of LOC Debt shall be suspended; provided, however,
that no such notice shall have the effect of suspending,
terminating, reducing or altering in any respect the terms of any
Letter of Credit with respect to LOC Debt Outstanding at the time
or the obligations of any Lender to make payments pursuant to
Section 3.7 hereof or to make Term Loans hereunder. If at any time
after the giving of the notice referred to in this Section 3.11(a),
in the sole judgment of Lead Agent or such Lender, as the case may
be, the conditions which are cause for the giving of notice under
this Section 3.11(a) no longer exist, Lead Agent shall rescind such
notice and Borrowers may resume the issuance of LOC Debt subject to
the terms of this Agreement.
(b) Cooperation by Borrowers. Borrowers shall comply
immediately with any such instructions from Lead Agent pursuant to
Section 3.11(a) above with respect to a pro rata reduction in
connection with any future issuances of LOC Debt.
(c) Prepayment of Obligations of Restricted Lenders. If Lead
Agent shall not have rescinded the notice delivered pursuant to
Section 3.11(a) above within fifteen (15) Banking Days after
delivery thereof (or if Lenders shall determine that the
conditions that are the cause for the giving of notice under
Section 3.11(a) above are not reasonably likely to cease to exist
prior to the termination of such period), Borrowers may prepay in
full all Loans then Outstanding of any Lenders affected by the
restrictions specified in Section 3.11(a) above in accordance with
Section 2.9 hereof; provided, however, that (i) on or prior to the
date of such prepayment such Lenders shall have been paid in full
by Borrowers all other amounts in respect of all
outstanding obligations of Borrowers to such Lenders, (ii)
Borrowers, Lead Agent and Lenders shall have agreed in their sole
discretion to amend this Agreement and each other Loan Instrument
to which such Lenders are a party to provide for the termination of
the rights and obligations hereunder and under each such Loan
Instrument of such Lenders and the assumption of such rights and
obligations by (A) the other Lenders and/or (B) a bank acceptable
to each of Borrowers, Lead Agent, Issuing Bank and such other
Lenders, and (iii) Lead Agent, Issuing Bank and each such other
Lender shall have received such certificates and opinions of
counsel with respect to the matters covered by Section 3.1(d)
hereof as it may request.
(d) Replacement of Issuing Bank. If the Issuing Bank defaults in
making any required LOC Disbursement hereunder, Borrowers may
request another Lender to act as Issuing Bank for a replacement
letter of credit with terms and conditions substantially similar to
the applicable Letter of Credit. The use of any such
replacement letter of credit and the respective obligations of
Borrowers and the Lender acting as the replacement Issuing Bank
thereunder shall thereafter be governed by the terms of this
Agreement applicable to the Letter of Credit; provided, however,
that in no event shall such replacement letter of credit extend
beyond the Tranche A Maturity Date or the Tranche B Maturity Date,
as applicable (based on the tranche of debt to which it was
attributable), or provide for drawings thereunder exceeding the
maximum that would have been applicable to the Letter of Credit;
and provided further that the terms and conditions of such
replacement letter of credit shall be satisfactory to Lead Agent in
all material respects.
ARTICLE 4 - CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Advance.
The obligations of each Lender to make the Initial Advance, and of
Issuing Bank to issue the Letters of Credit are subject to the
fulfillment, subject only to the satisfaction of Lead Agent and Co-
Agent, of each of the conditions precedent set forth below on the
date of the Initial Advance (and after giving effect to the Initial
Advance):
(a) Proof of Authorizing Action. Lenders shall have received, in
form and substance satisfactory to Lenders:
(i) certified copies of the (A) certificate of incorporation,
certificate of limited partnership, certificate of formation, by-
laws, partnership agreement, limited liability company agreement,
or other equivalent organizational documents of Borrowers,
General Partner and Magma, and (B) resolutions of the General
Partner of Borrowers, acting in its capacity as the managing
general partner of Borrowers, and resolutions of the board of
directors (or other equivalent body) of Magma, in each such case
authorizing the execution, delivery and performance of this
Agreement, each other Loan Instrument and each Project Document to
which such Person is or is intended to be a party and copies of all
documents, consents and approvals evidencing other
necessary action with respect thereto;
(ii) certificates signed by an Authorized Officer of each such
Person certifying the name, incumbency and signature of each
individual authorized to sign this Agreement, and each other Loan
Instrument and Project Document to which such Person is a party and
the other documents or certificates to be delivered pursuant hereto
or thereto, which may be conclusively relied upon until a revised
certificate is similarly so delivered; and
(iii) good standing certificates, certificates of authority to
transact business as a foreign corporation, partnership or
limited liability company, as the case may be, and certificates, to
the extent available, as to tax status with respect to each such
Person for such Person's state of organization or
incorporation, as the case may be, and California, if
qualification in California is necessary or desirable for such
Person in light of the character of the properties owned or leased
by such Person or the business conducted or proposed to be
conducted by such Person.
(b) Environmental Information. Lenders shall have received (i) a
report in form reasonably satisfactory to Lead Agent and Co-Agent
by a qualified independent firm, selected by Borrowers, containing
the results of such firm's environmental audit of the Properties,
and (ii) such other information as to the past
ownership and use and the present condition of the Properties as
Lenders may have requested; and such information shall not
disclose any unusual or, in the opinion of Lead Agent and
Co-Agent, significant risks associated with the Properties
relating to environmental, pollution, sanitation and similar laws.
(c) Independent Engineer's Report. Lenders shall have received a
report of Independent Engineer detailing to the satisfaction of
Lead Agent and Co-Agent such matters as Lead Agent and Co-Agent may
reasonably request.
(d) Reservoir Consultant's Report. Lenders shall have received a
report of Reservoir Consultant detailing to the satisfaction of
Lead Agent and Co-Agent such matters as Lead Agent may reasonably
request.
(e) Pro Forma. Lenders shall have received from Borrowers (i) the
Pro Forma which is attached hereto as Schedule 4.1(e); and (ii) a
certificate, satisfactory in form and substance to Lead Agent and
Co-Agent, of an Authorized Officer of General Partner of Borrowers
stating that such Pro Forma was prepared in good faith by Borrowers
and is based upon assumptions which Borrowers consider to be
reasonable.
(f) Opinions of Counsel. Lenders shall have received the legal
opinions, each dated the Closing Date, of (i) Latham & Watkins,
special counsel to Borrowers, and (ii) such other opinions of
counsel as the Lead Agent and Co-Agent may reasonably request, each
in form and substance reasonably satisfactory to Lead Agent and Co-
Agent.
(g) Correctness of Representations. All representations and
warranties (other than any made by Lenders, Lead Agent or Issuing
Bank) contained herein and in each other Loan Instrument and
Material Project Document and in any writing delivered to Lead
Agent by Borrowers, Magma or General Partner pursuant hereto or
thereto, shall be true and correct in all material respects with
the same effect as though such representations and warranties had
been made on and as of the date of the Initial Advance, and
Borrowers shall have delivered a certificate dated the date of the
Initial Advance to such effect (i) with respect to all such
representations and warranties made by Borrowers, and (ii) to
Borrowers' knowledge, with respect to such representations and
warranties made by any party other than Borrowers.
(h) No Default. There shall exist no Default or Event of
Default.
(i) Loan Instruments. Each of the Loan Instruments, including,
without limitation, each of the Security Documents, has been duly
and validly executed and delivered by each Borrower and has been
executed and delivered by each other Person which is a party
thereto and is in full force and effect. Lenders shall have
received an executed original of each such Loan Instrument.
(j) Project Documents. Each of the Material Project Documents
shall be in form and substance satisfactory to Lead Agent and Co-
Agent and they shall have received evidence satisfactory to them
that each of the such Project Documents (i) was duly and validly
executed and delivered by each Person which is a party thereto,
(ii) is in full force and effect, (iii) represents the legal, valid
and binding obligation of each party thereto, enforceable in
accordance with its terms, (iv) no default or event of default
exists thereunder, and (v) has not been breached by any party
thereto. Lenders shall have received a copy of an executed
original of each such document, certified by a certificate of
Borrowers as being true, correct and complete.
(k) Security Interest; Recordings and Perfection. Lenders shall
have received (i) the Consents, the collateral assignments of each
Material Project Document and all other consents and
documents necessary to collaterally assign to Lead Agent (for the
ratable benefit of the Secured Parties) as security each of the
Project Documents that is required by Lead Agent to be so
assigned, each such document to be in form and substance
satisfactory to Lead Agent and Co-Agent (ii) copies of Uniform
Commercial Code and other judgment and lien search reports with
respect to Borrowers, General Partner and Magma in each
jurisdiction in which Financing Statements are to be filed, and
(iii) evidence satisfactory to Lead Agent and Co-Agent that the
Financing Statements and Deed of Trust have been duly recorded and
filed and that all other documents requiring filing or
recording have been duly recorded or filed or are in form for
recording and filing in all places wherein such recording or filing
is necessary to perfect the interests of Lead Agent and each Lender
in and to the Collateral covered thereby. The
execution and delivery of the Security Documents, the filing of the
Financing Statements and any other necessary action on the part of
Borrowers shall have created, as security for the
obligations of Borrowers hereunder and under the Loan
Instruments, legal, valid and enforceable security interests and
will constitute a perfected lien on or in all right, title, estate
and interest of Borrowers, Magma or General Partner in the
Collateral described therein, now owned by Borrowers, Magma or
General Partner or hereafter acquired, prior and superior to all
other Liens other than Permitted Liens with priority dating from no
later than the date of the Initial Advance.
(l) Title Insurance; Surveys. Lead Agent shall have received (i)
an ALTA extended coverage loan policy of title insurance (form
10-17-92) issued by one of the entities comprising the Title
Company, in the form of Schedule 4.1(l) hereto and
otherwise in form and substance satisfactory to Lead Agent, in an
amount equal to the aggregate of the Term Loan Facility and Working
Capital Facility, with such endorsements and affirmative coverage
as Lead Agent may request, together with such ALTA Facultative
Reinsurance Agreements (form 4-6-90) or commitments therefor as
Lead Agent may request, insuring Lead Agent (on behalf of the
Secured Parties) that (A) good and marketable title to the Ground
Leases and the Easement to Develop Geothermal Rights (as defined in
the Easement Grant Deed) is vested in Borrowers subject only to
exceptions approved by Lead Agent and (B) the Deed of Trust
constitutes a valid and enforceable first deed of trust on the
Ground Leases and the Easement to Develop Geothermal Rights subject
only to exceptions approved by Lead Agent, and (ii) a currently-
dated 1992 ALTA/ACSM survey of the Properties, prepared and
certified to Lead Agent, the Secured Parties, Title Company and
Borrowers by a surveyor licensed in the State of California who is
satisfactory to Lead Agent and Title Company, which survey shows
(A) all easements benefiting or burdening said property, (B) no
state of facts unsatisfactory to Lead Agent and the Secured Parties
or Title Company and (C) such details as Lead Agent may require.
(m) Insurance. Lenders shall have received (i) a certified copy
of each of the insurance policies required by Section 6.16 hereof
or certificates of insurance or binders with respect thereto, such
policies, certificates or binders, as the case may be, to be in
form and substance, and issued by companies, satisfactory to Lead
Agent and Co-Agent, together with evidence satisfactory to Lead
Agent and Co-Agent that such insurance complies with the provisions
of Section 6.16 hereof and with the provisions of each of the
Project Documents, covering the risks referred to therein, and that
all premiums then due with respect to such insurance have been
paid, (ii) a written report of Insurance Advisor
describing the insurance to be obtained by Borrowers as of the date
of the Initial Advance with respect to the Facilities and stating
that the insurance required to be obtained as of the date of the
Initial Advance is in full force and effect, and (iii) if the
Facilities, or any portion thereof (A) are located in a Federally
designated "special flood hazard area", in addition to the other
Insurance Policies required herein, a flood insurance policy or (B)
is not located in a Federally designated "special flood hazard
area", a certificate in form satisfactory to Lead Agent from a
licensed surveyor, appraiser or professional
engineer or other qualified person substantiating such fact.
(n) Governmental Approvals. Borrowers shall have duly obtained
and there shall be in full force and effect, and Lead Agent shall
have received evidence or copies of, all Governmental Approvals set
forth in Schedule 5.6 hereto.
(o) Filing, Registration and Recording Fees. Each of Co-Agent and
Lead Agent shall have received evidence satisfactory to it that all
filing, recordation, subscription and inscription fees and all
recording and other similar fees, and all taxes and other expenses
related to such filings, registrations and recordings necessary for
the consummation of the transactions contemplated by this
Agreement, the Security Documents and the Project
Documents have been paid in full by or on behalf of Borrowers.
(p) Financial Statements; Material Adverse Change. Borrowers
shall have delivered to Lenders (i) audited annual Financial
Statements (satisfying the requirements of Section 6.8(a) hereof)
in form acceptable to Lead Agent and Co-Agent, for fiscal year 1992
for Magma, (ii) unaudited quarterly Financial Statements for Magma
(satisfying the requirements of Section 6.8(b) hereof) in form
acceptable to Lead Agent and Co-Agent, for the period
through and including December 31, 1993 and (iii) unaudited
Financial Statements for Borrowers (on a consolidated basis), in
form acceptable to Lead Agent and Co-Agent, for the period
through and including December 31, 1993. There shall have been no
material adverse change in the financial condition of
Borrowers and Magma since the date of their latest Financial
Statements delivered to Lenders. Borrowers shall have delivered to
Lenders (1) certificates, dated the date of the Initial
Advance and signed by an Authorized Officer of each Borrower and
each Partner, respectively, stating that no material adverse change
has occurred in its financial condition since the date of its
latest Financial Statements, delivered to Lenders, and (2) a
certificate dated the date of the Initial Advance and signed by an
Authorized Officer of each Borrower stating that, to the best
knowledge of each Borrower, no material adverse change in the
financial condition of any other party to any of the Project
Documents has occurred (except as heretofore disclosed to Lead
Agent in a writing delivered by or on behalf of Borrowers or such
Person) since the date which is one (1) month prior to the
Closing Date.
(q) No Violation of Law, Etc. No Law, regulation, ruling,
guideline or other governmental action or inaction of any
Governmental Authority shall be in effect or shall have occurred,
the effect of which would (i) result in a Material Adverse
Effect, (ii) subject the Lenders to any unreimbursed liability
under the Loan Instruments, or (iii) make it illegal for any Lender
hereunder to perform its obligations hereunder.
(r) Payments to Secured Parties. Borrowers shall have paid, or
shall pay to Lead Agent out of the proceeds of the Initial
Advance, all amounts then due to each of the Secured Parties
pursuant to the Loan Instruments.
(s) No Legal Proceedings. There shall be no (i) injunction, writ,
preliminary restraining order or any order of any nature issued by
an arbitrator, court or other Governmental Authority directing that
the transactions provided for in any of the
Project Documents not be consummated as herein or therein
provided or (ii) action, suit, investigation or proceeding of or
before any court, arbitrator, administrative agency or other
Governmental Authority pending or threatened against or affecting
any party to any Project Document, or any of their properties,
revenues or assets or the Facilities or the Properties which, in
the reasonable opinion of the Lead Agent and Co-Agent (A) has had
or could have a Material Adverse Effect or (B) could result in any
adjustment pursuant to the Power Purchase Agreement in the amount
or rate of payments required to be made by SCE under the Power
Purchase Agreements (taking into account the merits of the action,
suit, investigation or proceeding).
(t) Regulation as Utility. None of the making of any Advance, the
maintenance of any Loan, the conversion of the applicable Interest
Rate of any Loan, the issuance of any Letter of Credit, the
securing of any obligation by Liens pursuant to the Security
Documents, the exercise of remedies under the Loan Instruments, any
other transaction contemplated by any of the Loan
Instruments, nor Borrowers' ownership or operation of the
Facilities shall cause Borrowers or any Secured Party to become
subject to regulation by any Governmental Authority as a "public
utility", an "electric utility", an "electric utility holding
company", a "public utility holding company", or an "electrical
corporation" under any Law or Governmental Requirements
(including, without limitation, PUHCA, FPA or PURPA).
(u) QF Status. Each Facility shall be a QF and Borrowers shall
have obtained QF Certificates for each of the Facilities.
(v) Consent Letter. The Lead Agent shall have received a letter
or letters from The Prentice Hall Corporation System, Inc.,
currently located at 15 Columbus Circle, New York, New York 10023,
indicating its consent to its appointment by Borrowers as their
Process Agent to receive service of process as specified in Section
9.12(b)(ii).
(w) Equity Contributions. Magma shall have contributed at least
$81,400,000 in equity to the Borrowers to be used in connection
with the Project, and Borrowers shall have provided Lenders with
evidence of such contribution reasonably satisfactory to Co-Agent
and Lead Agent.
(x) Force Majeure, Cancellation, Suspension, Termination, etc. No
event of force majeure or other event or condition shall exist
which permits or requires any party to any of the Project
Documents or Loan Instruments to cancel, suspend or terminate its
performance of such document in accordance with its terms or which
could excuse any such party from liability for
nonperformance thereof.
(y) Reserve Deposits. Borrowers shall have (i) established the
reserve accounts required under Section 6.1 and (ii) contributed
$3,400,000 to the Pre-Funded Well Account and Borrowers shall have
provided Lenders with evidence of such contribution
reasonably satisfactory to Lead Agent and Co-Agent.
(z) Additional Conditions. The requirements of Section 4.2 hereof
shall have been satisfied.
(aa) Environmental Indemnity. Borrowers shall have delivered to
Lenders the duly executed Environmental Indemnity Agreement.
(bb) Sinclair Indemnity. Borrowers shall have delivered to
Lenders the duly executed Sinclair Indemnity Agreement.
(cc) Other Information. Lead Agent shall have received such other
statements, certificates, documents and information with respect to
the Project or matters contemplated by this Agreement as Lead Agent
may reasonably request.
4.2 Conditions Precedent to All Advances.
The obligation of each Lender to make any Advance, including the
Initial Advance and any subsequent Advance, is subject to the
fulfillment, subject only to the satisfaction of Lead Agent, of
each of the conditions precedent set forth below, on the date of
each such Advance (and after giving effect to such Advance):
(a) No Violation of Law, etc. No Law, regulation, ruling,
guideline or other governmental action or inaction of any
Governmental Authority shall be in effect or shall have occurred
(or be proposed if the enactment of such proposal in Lead Agent's
reasonable judgment is imminent and if enacted would have a
material effect), the effect of which is to prevent, directly or
indirectly, Lead Agent, Lender or an Issuing Bank, Borrowers or any
party to any Material Project Document or Loan Instrument from
fulfilling their respective obligations hereunder or
thereunder, where the failure to fulfill such obligations would
have a Material Adverse Effect, or which would subject any Lender
or Issuing Bank to any unreimbursed liability by reason of the
performance of its obligations hereunder (other than taxes levied
on the income of such Lender or such Issuing Bank). In addition,
the Project, Borrowers and each Partner and, with respect to the
Project, Operator, shall each be in full compliance with all
Governmental Requirements except where non-compliance would not
have a Material Adverse Effect.
(b) No Legal Proceedings. There shall be no (i) injunction, writ,
preliminary restraining order or any order of any nature issued by
an arbitrator, court or other Government Authority directing that
the transactions provided for herein or in the other Loan
Instruments or Material Project Documents or any of them not be
consummated as herein or therein provided, or (ii) litigation,
investigation or proceeding of or before any
arbitrator, court or other Government Authority pending or
threatened against any party to any Loan Instrument or Material
Project Document, or any of their properties, revenues or assets,
with respect to this Agreement, the other Loan Instruments or the
Material Project Documents or any of the transactions
contemplated hereby or thereby and which, in the instance of clause
(i) or (ii) above, is reasonably likely to have a Material Adverse
Effect.
(c) Material Adverse Change. Since the date of the most recent
financial statements, there has been no event or events which (i)
materially adversely affect Borrowers' ability to meet its
obligations under any of the Loan Instruments or the Project
Documents or (ii) would have a Material Adverse Effect on the
security interests of Lenders and Issuing Bank in the Collateral,
all as determined by (x) Lead Agent in the reasonable exercise of
its discretion or (y) the Majority Lenders if they have
previously so notified the Lead Agent in writing, in the
reasonable exercise of their discretion.
(d) Other Information. Lead Agent shall have received such other
statements, certificates, documents and information with respect to
the Project or matters contemplated by this Agreement as Lead Agent
may reasonably request.
(e) No Default. There shall exist no Default or Event of
Default.
4.3 Conditions Precedent to Release of
Moneys from Pre-Funded Well Account
or the New Well Reserve Account .
Borrowers shall be entitled to withdraw funds from the Pre-Funded
Well Account and the New Well Reserve Account, subject to the
satisfaction of the following conditions precedent:
(a) No Default. There shall exist no Default or Event of
Default.
(b) Notice. Borrowers shall have notified the Lead Agent in
writing at least 1 (one) Banking Day prior to any release of funds,
such notification to contain detailed information
reasonably satisfactory to Lead Agent as to the manner in which the
funds will be expended.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES
Each Borrower hereby, represents, warrants and certifies to Lead
Agent, each Lender and Issuing Bank that each of the following
representations and warranties is true and correct.
5.1 Organization and Existence.
Each Borrower is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of
California. Each Borrower is in good standing and duly qualified
as a foreign limited partnership in each other jurisdiction in
which the failure to qualify would have a Material Adverse
Effect. As of the Closing Date, General Partner is the sole
general partner of each Borrower, Magma is the sole limited partner
of SSBP, and SSBP is the sole limited partner of SSPG. Except as
set forth on Schedule 5.1 hereto, neither the Borrowers nor the
General Partner has any direct or indirect Subsidiaries. General
Partner is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada. Magma is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada. Each
Partner is duly qualified to do business and is in good standing
under the laws of the State of California and each jurisdiction in
which the character of the properties owned or leased by it or in
which the transaction of its business as presently conducted or
proposed to be conducted makes such qualification necessary or
desirable. Each Borrower and each Partner has full power and
authority to own its property and to carry on its business as now
being conducted and as proposed to be conducted.
5.2 Power and Authority.
As of the Closing Date, each Borrower has full power and
authority to enter into and perform this Agreement, the other Loan
Instruments and each Project Document to which it is a party, and
the entering into and performance of such agreements by each
Borrower and each Partner have been duly authorized by all proper
and necessary action.
5.3 Binding Effect.
This Agreement and each other Loan Instrument and Project
Document to which each Borrower and each Partner is a party when
executed and delivered, will constitute the legal, valid and
binding obligations of each Borrower and each Partner,
enforceable in accordance with their respective terms.
5.4 No Breach.
The execution, delivery and performance by each Borrower of each of
the Loan Instruments and Project Documents to which it is a party
when executed, delivered and being performed will not (a) require
any consent or approval of any Person which has not been obtained
or made, (b) violate the Partnership Agreements or any other
organization documents of Borrowers or any of the Partners, (c)
violate the provisions of any Law, regulation or order of any
governmental or regulatory authority applicable to Borrowers, any
of their assets or the Facilities, (d) contravene, violate or
result in any breach of any provision of, or constitute a default
under, any mortgage, indenture, contract, agreement or other
undertaking to which either Borrower is a party or which purports
to be binding upon either Borrower or upon any of Borrowers'
assets, or (e) result in the creation or imposition of any Lien
(other than Permitted Liens) on any of the assets of Borrowers
pursuant to the provisions of, any mortgage, indenture, contract,
agreement or other undertaking to which either Borrower is a party
or which purports to be binding upon either Borrower or upon any of
Borrowers' assets.
5.5 No Default by Borrowers.
Neither Borrowers nor any Partner is in default in the
performance, observance or fulfillment of any of its obligations,
covenants or conditions contained in any Loan Instrument or Project
Document. To the knowledge of Borrowers, no other party to any
Loan Instrument or Project Document is in default in any material
respect in the performance, observance or fulfillment of any of its
obligations, covenants or conditions contained
therein. To the knowledge of Borrowers, no Default or Event of
Default has occurred and is continuing. No Event of Loss has
occurred.
5.6 Compliance with Laws; Governmental
Requirements and Approvals .
As of the date of the Initial Advance, Borrowers have been and are
in compliance with all Governmental Requirements, except where non-
compliance would not have a Material Adverse Effect. As of the
date of the Initial Advance, no Governmental Approvals will be
required to be obtained by Borrowers in connection with the making
of any Loans, the execution and delivery of this Agreement, each
other Loan Instrument, the Material Project Documents or the
performance by Borrowers of their obligations hereunder or
thereunder, or in connection with the participation by Borrowers in
the transactions contemplated hereby or thereby or with respect to
the participation by Borrowers in the
operation, maintenance, alteration or repair of the Project in
accordance with the Loan Instruments and Project Documents, except
(i) where the absence of such Governmental Approvals would not have
a Material Adverse Effect and except as otherwise
disclosed in Schedule 5.6 hereto, and (ii)(A) for the
Governmental Approvals set forth in Part I of Schedule 5.6
hereto, each of which has been duly obtained or made and is in full
force and effect, is final and is not the subject of any pending
or, to the best of Borrowers' knowledge, threatened judicial or
administrative proceeding, and (B) for the
Governmental Approvals set forth in Part II of Schedule 5.6, which,
in light of the status of the operation of the Project as of the
date this representation is made, are not presently
required to have been obtained or made and each of which is
expected to be obtained or made in the ordinary course of
construction or operation of the Project but not later than
required or advisable.
5.7 No Litigation.
There is no action, suit, investigation or proceeding by or before
any court, arbitrator, administrative agency or other Governmental
Authority pending or, to the best knowledge of Borrowers,
threatened against or affecting Borrowers, the Project or any of
their properties, (a) which involves the Project or any of the
transactions contemplated by the Project Documents and (b) which is
reasonably likely to have a Material Adverse Effect.
5.8 Title; Liens.
Borrowers own and have good and marketable (i) leasehold title to
the properties demised under the Ground Leases, (ii) interests
under the Easement Grant Deed and (iii) title to the Facilities
subject to Permitted Liens, and Borrowers either lease or rent,
pursuant to legal, valid and binding agreements, or own and have
good title to all of their other properties and assets, free and
clear of all Liens other than Permitted Liens. Except as
otherwise provided in this Section 5.8, no deed of trust,
mortgage or financing statement or other instrument or
recordation covering all or any part of the Facilities,
Properties or any of the other properties or assets of Borrowers is
on file in any recording office, except such as may have been filed
in favor of Lead Agent or with respect to those Permitted Liens set
forth in Section 6.13(e) hereof.
5.9 Security Interests.
The security interests created in favor of Lead Agent on behalf of
the Secured Parties under the Security Documents are valid and
perfected, first-priority security interests (subject only to
Permitted Liens) superior and prior to the rights of all Persons,
whether the property subject to the security interests is now owned
by Borrowers or is hereafter acquired. The Security
Documents (including the Financing Statements) have been duly
filed, recorded and/or registered in each office and in each
jurisdiction where required to create and perfect the lien and
security interest described above. Borrowers have properly
delivered to Lead Agent all Collateral that requires perfection of
the Lien and security interest described above by possession. The
principal place of business and the chief executive office of each
Borrower is located in the State of California, at the address set
forth in Section 9.1 hereof.
5.10 Taxes.
Borrowers have filed or caused to be filed all tax returns which
are required to be filed by them, and have paid all taxes shown to
be due and payable by Borrowers on said returns or on any
assessments made against them or any of their assets and all other
taxes, fees or other charges imposed on them by any
Governmental Authority other than taxes, fees, assessments and
other charges which are not delinquent and remain payable without
penalty or are the subject of a Good Faith Contest by either
Borrower, and Borrowers have no knowledge of any actual or
additional assessment in connection therewith in material
amounts.
5.11 Project Documents.
(a) Delivery. Except as set forth in Schedule 5.11(a) hereto,
Lead Agent has received a complete copy of each Material Project
Document executed on or prior to the date on which this
representation is made (including all exhibits, schedules and
disclosure letters referred to therein or delivered pursuant
thereto, if any). Each Project Document is in full force and
effect. None of the Project Documents which has been executed and
delivered has been amended, modified or terminated, except as
disclosed in writing to Lead Agent or as amended, modified or
terminated in accordance with the terms hereof.
(b) Representations and Warranties. The representations and
warranties of Borrowers contained in each Project Document and Loan
Instrument were true and correct on the date when made and in the
case of the Material Project Documents and the Loan
Instruments continue to be true and correct.
(c) Sufficiency. Except as disclosed in Schedule 5.11(c)
hereto, based on facts and circumstances existing as of the date
hereof, the services to be performed, the materials to be
supplied and the easements, licenses and other rights granted or to
be granted to Borrowers pursuant to the terms of the Project
Documents provide or will provide Borrowers with all rights and
property interests required to enable Borrowers to obtain all
services, materials or rights (including access) required for the
operation and maintenance of the Facilities, including Borrowers'
full and prompt performance of its obligations under the Material
Project Documents, other than those services, materials or rights
that reasonably can be expected to be obtainable in due course
without material expenses or delay.
(d) No Defaults. To the knowledge of Borrowers, no other party to
any Material Project Document is in default thereunder.
5.12 Agreements and Licenses.
No licenses, trademarks, patents, copyrights or agreements with
respect to the usage of technology or other permits are necessary
for the ownership, operation or maintenance of the Project, except
for the licenses, trademarks, patents, agreements or permits which
Borrowers own and have good title to, free and clear of all Liens
(other than Permitted Liens) or which
Borrowers will have the right to use.
5.13 Financial Statements.
The Financial Statements of Borrowers (on a consolidated basis) and
Magma provided or to be provided hereunder or under any of the
other Loan Instruments are or will be prepared in accordance with
generally accepted United States accounting principles,
consistently applied and are or will be upon delivery true, correct
and complete as of the dates specified therein and fairly present
the financial condition of each Borrower, Magma and General Partner
as of the dates and for the periods specified. Except as set forth
in Schedule 5.13 hereto, Borrowers do not have any liabilities or
obligations (either accrued, absolute, contingent or otherwise),
except for those reflected or otherwise reserved for in the
Financial Statements of Borrowers which, in accordance with
generally accepted United States accounting principles, would not
be required to be disclosed in footnotes of a balance sheet of
Borrowers. Financial Statements of General Partner will be
provided in accordance with the provisions of this Section 5.13 in
the event General Partner ceases to be wholly-owned by Magma.
5.14 Pro Forma.
The Pro Forma which is attached hereto as Exhibit 5.14 furnished to
Lead Agent by Borrowers and the significant assumptions
related thereto have been prepared in accordance with the
standards set forth in Section 6.8(g) hereof.
5.15 Operation of the Facilities.
To the best of Borrowers' knowledge, the Facilities have been and
will continue to be able to be operated on a safe basis and in
accordance with sound practices in the power generation industry in
compliance with all Material Project Documents and currently
existing Governmental Requirements (except where non-compliance
would not have a Material Adverse Effect), so that the
performance levels of the Facilities reflected in the Pro Forma can
be substantially met during the term of this Agreement and
Borrowers can duly and punctually meet their material obligations
under the Material Project Documents and the Loan Instruments in
accordance with the terms thereof.
5.16 Disclosure.
No representation, warranty or other statement made by Borrowers in
this Agreement or in any other Loan Instrument or Project Document,
or in any other document furnished from time to time by Borrowers
in connection herewith or therewith (including the Information
Memorandum dated November 26, 1993 prepared by J.P. Morgan
Securities, Inc.) contains or when furnished will contain any
untrue statement of a material fact or omits or when
furnished will omit to state (as of the date made or furnished) any
material fact necessary to make the statements herein or therein
not misleading in light of the context (including other
representations, warranties and statements in such instruments or
documents) in which they were or are made and the circumstances
under which they were or are made. To the best of Borrowers'
knowledge, there are no facts known to Borrowers on the date hereof
which have not been disclosed in writing to Lead Agent and which
could reasonably be expected to have a Material Adverse Effect.
5.17 Transactions with Affiliates.
As of the date of the Initial Advance, and after giving effect to
the transactions contemplated thereby, Borrowers are not parties to
any contract, agreement or binding commitment, whether or not in
the ordinary course of business, with any Affiliate, except as set
forth on Schedule 5.17, which agreements conform to the
requirements of Section 6.23 hereof.
5.18 No Additional Fees.
Except for the fees paid to J.P. Morgan Securities, Inc. for
advisory services, Borrowers have not paid or become obligated to
pay any fee or commission to any broker, finder or intermediary for
or on account of arranging the financing of the transactions
contemplated by the Loan Instruments.
5.19 Burdensome Obligations.
Neither Borrowers nor any of their properties are subject to any
Law (including without limitation, any enacted law the effective
date of which has not yet occurred), or are subject to any
restriction under either Borrower's organization documents or under
any agreement or instrument to which each Borrower is a party or by
which Borrowers or their properties (now owned or hereafter
acquired) are subject or bound, which is so unusual or burdensome
as to have a Material Adverse Effect.
5.20 Regulation.
(a) FERC Status. Each Facility is and will be a QF.
(b) Public Utility Status. Neither Borrowers, their Affiliates
nor any of the Secured Parties is or will be, solely as a result of
the participation by such parties separately or as a group in the
transactions contemplated hereby or by any other Project Documents,
or by the ownership, use or operation of the
Facilities, including as a result of the sale of general or limited
partnership interests in Borrowers to the extent
permitted hereby, be subject to regulation by any Governmental
Authority as a "public utility", an "electric utility", an
"electric utility holding company", a "public utility holding
company", a "holding company", or an "electrical corporation" or a
subsidiary or affiliate of any of the foregoing under any
Governmental Requirements (including, without limitation, PUHCA,
FPA, and PURPA). So long as each Facility remains a QF, none of
the Secured Parties will solely by reason of its or their
ownership or operation of the Facilities upon the exercise of
remedies under the Security Documents be subject to financial,
organizational or rate regulation by any Governmental Authority as
a "public utility", an "electric utility", an "electric
utility holding company", a "holding company", or an "electric
corporation" or a subsidiary or affiliate of any of the foregoing
under any Governmental Requirements (including, without
limitation, PUHCA, FPA, any California public utility law and
PURPA).
5.21 Power Purchase Agreements.
The PUC has approved the rates and terms of the services under each
of the Power Purchase Agreements.
5.22 Nature of Business.
Borrowers have not engaged in any business other than the
acquisition, development, construction or operation of the
Project and the leasing of certain of its lands for agricultural
purposes pursuant to a lease form approved by Lead Agent which
lease would not reasonably be expected to have a Material Adverse
Effect.
5.23 Documents to which Borrower is a Party.
Borrowers are not a party to any agreements other than the
Project Documents and Loan Instruments, and any agreement
permitted by Section 6.19 hereof.
5.24 ERISA.
As of the Closing Date, neither Borrower nor any ERISA Affiliate
has or has had any obligation to contribute to or liability under
any Multiemployer Plan. As of the Closing Date, neither Borrower
has any liability under any employee benefit plan. Each employee
benefit plan within the meaning of Section 3(3) of ERISA (other
than a Multiemployer Plan) (including without limitation each
employee benefit plan of an ERISA Affiliate) as to which either
Borrower may have any liability complies in all material respects
with all applicable requirements of law and regulations, and (i) no
reportable event (as defined in Section 4043 of ERISA other than an
event for which the 30-day notice provision is waived under
subsection .13, .14, .18, .19 or .20 of Department of Labor
Regulation Section 2516) has occurred with respect to any such
plan, (ii) there has been no withdrawal from any such plan or
formal steps, or informal steps reasonably expected to result in
formal action, taken to do so which have resulted or could result
in material liability for either Borrower, (iii) no formal steps,
or informal steps reasonably expected to result in formal action,
have been taken to terminate any such plan which have resulted or
could result in material liability for either Borrower, (iv) no
contribution failure has occurred with respect to any such plan
sufficient to give rise to a lien against either Borrower under
Section 302(f) of ERISA or Section 412 of the Code and (v) no
condition exists or event or transaction has occurred with
respect to any such plan which individually or in the aggregate
have resulted in or could result in material liability for either
Borrower.
5.25 Environmental Matters.
For the purposes of this Agreement, the following terms shall have
the following meanings: (i) the term "Hazardous Material" means
any material or substance that, whether by its nature or use, is
subject to regulation under any Environmental
Requirement, and (ii) the term "Environmental Requirement" means
any Governmental Requirement or Governmental Approval addressing
environmental, health, or safety issues or requirements of or by
any Governmental Authority, including but not limited to the
Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 (42 U.S.C. U 9601 et seq.) ("CERCLA"), the Hazardous
Materials Transportation Act (49 U.S.C. U 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. U 6901 et seq.),
the Toxic Substances Control Act (15 U.S.C. U 2601 et seq.), the
Clean Air Act (42 U.S.C. U 7401 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. U 1251 et seq.), and the Safe
Drinking Water Act (42 U.S.C. U 300f et seq.), all as
presently in effect and as the same may hereafter be amended from
time to time, and any regulation pursuant thereto, and also
including, but not limited to, any obligations, duties, or
requirements arising from or related to hazardous materials under
common law. As of the Closing Date, and except as disclosed in
Schedule 5.25, to Borrowers' knowledge: (i) no Hazardous
Material is located at, in, on, under or from the Properties in a
manner which violates any Environmental Requirement in any
material respect, or for which material cleanup or corrective
action of any kind is required under any Environmental
Requirement or because of any spill or release of Hazardous
Material, material cleanup of or corrective action with respect to
such Hazardous Material is authorized under CERCLA or any similar
state or local law; (ii) no risk to human health or the environment
exists as a result of any condition on the Properties which would
have a Material Adverse Effect; (iii) no releasing, emitting,
discharging, leaching, dumping, or disposing of any Hazardous
Material from the Properties onto or into any other property or
from any other property onto or into the Properties is occurring in
violation of any Environmental Requirement, or for which material
cleanup or corrective action of any kind is required under any
Environmental Requirement or because of any spill or release of
Hazardous Material, material cleanup of or corrective action with
respect to such Hazardous Material is authorized under CERCLA or
any similar state or local law, or which could pose a risk to human
health or the environment which would have a Material Adverse
Effect. No notice of violation, Lien, complaint, suit, order or
other notice with respect to the environmental condition of the
Properties or regarding the
disposal or release of Hazardous Materials from the Properties onto
any other property is outstanding or anticipated, nor has any such
notice been issued which has not been fully satisfied and complied
with in a timely manner so as to bring the Properties into material
compliance with every Environmental Requirement.
5.26 Federal Reserve Regulations; Foreign
Assets Control Regulations, Etc.
(a) Borrowers are not engaged, directly or indirectly,
principally, or as one of its important activities, in the business
of extending, or arranging for the extension of, credit for the
purposes of purchasing or carrying any margin stock, within the
meaning of Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System. No part of the proceeds of any Loans will
be used for "purchasing" or "carrying" any "margin stock" as so
defined, or for extending credit to others for the purpose of
purchasing or carrying margin stock, or for any purpose which would
violate, or cause a violation of, any such regulation.
(b) Neither the making of the Loans or the issuance of any Letter
of Credit nor the issuance of the Notes by Borrowers nor its use of
the proceeds thereof will violate the Foreign Assets Control
Regulations, the Foreign Funds Control Regulations, the Cuban
Assets Control Regulations, the Iranian Assets Control Regulations,
the Nicaraguan Trade Control Regulations, the Libyan Sanctions
Regulations, the Iranian Transactions Regulations or the Panamanian
Transactions Regulations of the United States Treasury Department
(31 CFR, Subtitle B, Chapter V, as amended) or Executive Orders
12722 and 12724 (55 Fed. Reg. 31803 and 55 Fed. Reg. 33089)
Blocking Iraqi Government Property and Prohibiting Transactions
with Iraq.
5.27 1933 Act.
Borrowers shall sell and offer to sell LOC Debt only in compliance
with the registration provisions of the Securities Act of 1933, as
amended, or pursuant to an exemption under Section 3 or Section 4
thereof, and in compliance with the registration or qualification
provisions of the securities law of any state or territory having
jurisdiction.
5.28 Private Offering by Borrowers.
Provided that the transactions contemplated by this Agreement and
the other Loan Instruments, including but not limited to the
execution and delivery by Borrowers of the Notes, are intended to
be loans by institutional lenders for commercial purposes and are
not intended to be investments in a business enterprise, the Notes
do not constitute "securities" within the meaning of Section 2(1)
of the Securities Act of 1933, as amended, or Section 3(a)(10) of
the Securities Exchange Act of 1934, as amended, and it is not
required in connection with the execution and delivery of the Notes
on the Closing Date or the purchase of partnership interests in
Borrowers by the Partners pursuant to the Partnership Agreements to
register the Notes or such partnership interests under the
Securities Act of 1933, as amended.
5.29 Investment Company Act.
Neither Borrower is an "investment company" or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
5.30 Payment Instructions.
Borrowers shall promptly deposit or cause to be deposited all
payments of Cash Revenues into the Project Account. In the event
that Lead Agent determines, in its reasonable discretion, that a
lock box maintained by Borrowers or an Affiliate thereof is subject
to rights of a secured party other than Lead Agent, Borrowers will,
at Lead Agent's request, arrange for payments to be made directly
to Borrowers or arrange for payment into another lock box to be
established by Borrowers at their expense and not subject to such
rights of any such other secured party.
5.31 Consents; Agreements.
Borrowers have obtained (i) all consents or agreements requested by
Lead Agent and Co-Agent in connection with the transactions
contemplated by this Agreement (including, without limitation,
agreements from geothermal lessors or holders of overriding or
other royalty interests) and (ii) conforming modifications to the
permits allowing for disposal of certain residue materials from the
plants at the Imperial County Monofill Facility operated by Desert
Valley, except those consents, agreements or
modifications, the failure of which to obtain would not
reasonably be expected to result in a Material Adverse Effect.
ARTICLE 6 - COVENANTS AND AGREEMENTS OF BORROWERS
Each Borrower hereby covenants and agrees that from the date of
this Agreement (A) until Issuing Bank is no longer obligated to
issue any Letter of Credit and has no liability under any Letter of
Credit, (B) until all amounts payable by Borrowers hereunder or
under any of the other Loan Instruments are paid in full, and (C)
the Total Commitment has been terminated, each Borrower shall
faithfully observe and fulfill, and shall cause to be observed and
fulfilled, each and all of the following covenants:
6.1 The Accounts.
(a) Salton Sea-CS Payment Account. Credit Suisse shall maintain
a special depository account (the "Salton Sea-CS Payment Account")
(Account No. 350877-01) at Credit Suisse (and such account shall be
titled appropriately so as to identify the nature of such account).
Borrowers agree and shall cause the Salton Sea-CS Payment Account
to be funded with (i) all insurance proceeds payable to Lead Agent
in accordance with Section 6.17 and (ii) following and during the
continuance of an Event of Default, with all moneys deposited into
the Pre-Funded Well Account, the New Well Reserve Account and the
Project Account, and all other moneys payable to Borrowers by any
third parties or Affiliates.
(b) Project Account. Borrowers shall maintain a special
depository account (the "Project Account") (Account No. 14501-
04275) at Bank of America, San Diego Commercial Banking Group, 450
B Street, Suite 100, San Diego, California 92101 (and such account
shall be titled appropriately so as to identify the nature of such
account). All Cash Revenues and Working Capital Loan Advances
shall be deposited in the Project Account. Except as otherwise
provided for in Section 5.30 hereof, Borrowers agree to cause any
and all payments from the parties to the Project Documents to be
made payable to Borrowers and such payments shall be remitted by
Borrowers to the Project Account. Borrowers shall not make any
withdrawal or transfer from the Project Account except in strict
adherence to the provisions of this Agreement and the Security
Documents.
(c) Withdrawals from Project Account. Borrowers shall make
withdrawals from the Project Account pursuant to the terms of this
Agreement and for the purposes of satisfying the provisions of this
Section 6.1, in the following order of priority:
(i) Payment of Operating Costs: on any day after the Closing
Date, withdraw and transfer, all amounts necessary as Borrowers
reasonably determine are necessary in order to pay Operating Costs
(including Cash Expenses) due and payable;
(ii) Payments of Reimbursement Obligations under Letters of
Credit: after making the withdrawals specified in clause (i)
above, on any day after the Closing Date upon which payment thereof
is required, withdraw and transfer amounts for the
payment of unpaid Reimbursement Obligations under the Letters of
Credit;
(iii) Payment of Fees (other than L/C Fees): after making the
withdrawals specified in clauses (i) and (ii) above, on each
Quarterly Date upon which payment thereof is required, withdraw and
transfer amounts to pay fees then due pursuant to Section 2.6(d)
hereof;
(iv) Payments of L/C Fees; Interest on the Term Loan; Swap
Agreement Payments and Other Debt Service: after making the
withdrawals specified in clauses (i) through (iii) above, on each
Quarterly Date or any other date as required, withdraw and transfer
amounts to pay on a pro rata basis (A) accrued interest on the Term
Loan, (B) the L/C Fees, (C) any interest and fees under the Swap
Agreement, and (D) Debt Service (but excluding Debt Service
otherwise referred to in this Section 6.1) in each instance then
due;
(v) Principal of the Term Loan: after making the withdrawals
specified in clauses (i) through (iv) above, on each Term Loan
Repayment Date, withdraw and transfer amounts necessary to repay
principal amounts due under the Term Loan;
(vi) Funding of Debt Service Reserve Account: after making the
withdrawals specified in clauses (i) through (v) above, on each
Term Loan Repayment Date, withdraw and transfer amounts due for
deposit in the Debt Service Reserve Account up to the Debt Service
Required Balance, as follows: (A) fifty percent (50%) of the
Available Cash Flow and (B) one hundred percent (100%) of the
remaining Available Cash Flow as of such date in an amount equal to
the difference between (1) the sum of amounts previously withdrawn
from such account to satisfy Borrowers' payment obligations under
the Loan Instruments, less (2) the sum of all amounts previously
deposited in such account pursuant to this clause (B). For
purposes of this Agreement, the term "Available Cash Flow" means,
as of any Term Loan Repayment Date, Cash Revenues for the period
ending on such Term Loan Repayment Date and commencing on the date
which is six (6) months prior to such ending date, less the sum of
all payments made for such period pursuant to clauses (i) through
and including (v) of this Section 6.1(c);
(vii) Discretionary Capital Expenditures: after making the
withdrawals specified in clauses (i) through (vi) above, on each
Term Loan Repayment Date, withdraw and transfer amounts to pay for
discretionary capital expenditures, in an aggregate amount not to
exceed, in any calendar year, the lesser of (a) the amount of
actual discretionary capital expenditures to be made during such
period to or in respect of the Project and (b) $2,000,000;
(viii) New Well Reserve Account: after making the withdrawals
specified in clauses (i) through (vii) above, on each Term Loan
Repayment Date, subject to satisfaction of the conditions precedent
set forth in Section 4.3 hereof, withdraw and transfer amounts to
fund a new well with respect to the Unit 3 Facility in an amount
equal to $900,000 per annum plus any prior years shortfall, up to
a maximum balance in such account equal to (x) $4,500,000 minus (y)
any permitted withdrawals actually made under Section 4.3;
(ix) Distribution to Borrowers: (A) if the Debt Service
Coverage Ratio is at least 1.2:1.0, (B) so long as no Default or
Event of Default has occurred and is continuing, and (C) after
making the withdrawals and retentions specified in clauses (i)
through (viii) above, then on each Term Loan Repayment Date,
withdraw and transfer the monies remaining in the Project Account
to such account as Borrowers shall direct, or for such other use as
Borrowers shall direct.
(d) Debt Service Reserve Account. Commencing on the Closing Date,
Borrowers shall maintain a special depository account ("the Debt
Service Reserve Account") (Account No. 350877-02) at Credit Suisse
(and such account shall be titled appropriately so as to identify
the nature of such account). The Debt Service Reserve Account
shall be funded as set forth in Section 6.1(c)(vi) and this Section
6.1(d) up to a maximum amount equal to the aggregate projected Debt
Service to become due on the next Term Loan Repayment Date
(calculated based on an Interest Period using 6 month LIBOR and the
applicable LIBOR margin) (the "Debt Service Required Balance").
Lenders shall be entitled to use the balance in the Debt Service
Reserve Account to satisfy payment obligations of Borrowers under
this Agreement and the other Loan Instruments. The use of the Debt
Service Reserve Account to satisfy such payment obligations shall
not in and of itself constitute a Default or an Event of Default.
So long as no Event of Default has occurred and is continuing, ten
(10) days prior to each Term Loan Repayment Date, Lead Agent shall
withdraw any amount in excess of the Debt Service Required Balance
for deposit in the Project Account as an item of Cash Revenues.
(e) New Well Reserve Account. Borrowers shall maintain a special
depository account ("New Well Reserve Account") (Account No.
14506-04768) at Bank of America (and such account shall be titled
appropriately so as to identify the nature of such account). All
of the monies listed in Section 6.1(c)(viii) shall be deposited in
the New Well Reserve Account. Subject to the satisfaction of the
conditions precedent set forth in Section 4.3 hereof, Borrowers may
withdraw and transfer the monies in the New Well Reserve Account to
fund a new production well for the Unit 3 Facility.
(f) Pre-Funded Well Account. Borrowers shall maintain a special
depository account, the Pre-Funded Well Account, Account No.
14504-04769, at Bank of America (and such account shall be titled
appropriately so as to identify the nature of such account).
Borrowers shall deposit all of the pre-funded amount of $3,400,000
in the Pre-Funded Well Account. Subject to the satisfaction of the
conditions precedent set forth in Section 4.3 hereof, Borrowers may
withdraw and transfer the monies in the Pre-Funded Well Account to
fund the new injection well for the Unit 1 Facility and the Unit 2
Facility.
(g) Reserve Account Guaranty; Reserve Account Letter of Credit.
(i) Borrowers may, at their option, deliver to Lead Agent a Reserve
Account Guaranty in the form attached hereto as Exhibit 6.1(g)
satisfying the conditions set forth in clause (ii) below or a
Reserve Account Letter of Credit, in each case in an amount
sufficient to fund, in whole or in part, the respective aggregate
amounts otherwise required to be maintained in the Debt Service
Reserve Account. On the date any such guaranty or letter of credit
shall become effective, Borrowers shall be entitled to release any
amount that, because of the existence of any guaranty or letter of
credit, is in excess of the amount required to be maintained in the
Debt Service Reserve Account; provided,
however, that in the event any Person that issues the Reserve
Account Guaranty has not satisfied or does not continue to satisfy
the conditions set forth in clause (ii) below then the Borrowers
shall be required to immediately (on the date such conditions are
not satisfied) fund the Debt Service Reserve Account in the amount
of the Debt Service Required Balance. Borrowers may, at their
option, replace any such guaranty or letter of credit with a cash
deposit or another letter of credit, all such documents or
replacements thereof to be in form and substance reasonably
satisfactory to Majority Lenders.
(ii) From and after the date of the delivery of an executed
Reserve Account Guaranty:
(a) Any entity that delivers a Reserve Account Guaranty shall have
and maintain a minimum Consolidated Tangible Net Worth of at least
$170,000,000, as calculated on the last day of each fiscal quarter
for the quarterly period then ended; and
(b) Any entity that delivers a Reserve Account Guaranty shall have
and maintain an Interest Coverage of at least 3.0:1.0, as
calculated on the last day of each fiscal quarter of each fiscal
year for the period from the beginning of such fiscal year through
and including the last day of such fiscal quarter.
(c) Borrowers shall cause any entity that delivers a Reserve
Account Guaranty to deliver Financial Statements with respect to
such entity as described in Section 6.8(a) and (b) of the Credit
Agreement and to simultaneously therewith deliver a certificate
from the chief financial officer of such entity setting forth the
calculations described in clauses (a) and (b) above and such other
information as may reasonably be requested by Lead Agent.
(h) Permitted Investments. Pending the application of funds in
the Project Account, Debt Service Reserve Account, Pre-Funded Well
Account or New Well Reserve Account in accordance with Sections
6.1(c), (d), (e) or (f) hereof, respectively, such funds shall be
invested, reinvested and liquidated (at the risk and expense of
Borrowers) in accordance with instructions given by Borrowers
(except upon the occurrence and during the continuance of an Event
of Default when such investments, reinvestments and liquidations
shall be determined by Lead Agent); provided, however, that no such
investment shall be made other than in Permitted Investments. With
respect to (i) the Debt Service Reserve Account in all cases and
(ii), the New Well Reserve Account, the Pre-Funded Well Account and
the Project Account upon the occurrence and during the continuance
of an Event of Default, Lead Agent shall not be liable for any loss
resulting from any Permitted Investment or the sale or redemption
thereof (other than such loss resulting from Lead Agent's gross
negligence or willful misconduct). If and when cash is required
for disbursement in accordance with Section 6.1(c), (d), (e) or (f)
hereof, Lead Agent is authorized, without instructions from
Borrowers, to the extent necessary, to cause Permitted Investments
to be sold or otherwise liquidated into cash (without regard to
maturity) in such manner as Lead Agent shall deem reasonable and
prudent under the circumstances. Any funds held by Lead Agent
(other than the Salton Sea-CS Payment Account), and all such
Permitted Investments made in respect thereof, shall be held by
Lead Agent, and the interest of Borrowers therein, until withdrawn,
shall constitute part of the security subject to the security
interests created by the Security Documents; provided, that if at
any time any funds held by Lead Agent are to be invested in
Permitted Investments in accordance with this paragraph (h) but
Lead Agent is unable or unwilling at such time to purchase or hold
the Permitted Investments selected, then such funds shall be
transferred to Swiss American Securities, Inc., a subsidiary of
Credit Suisse ("SASI") (or any successor custodian thereto
requested by Borrowers and approved by Lead Agent), so that the
selected investments may be made and held while permitting the
Secured Parties to maintain their perfected and prior security
interests in the funds and/or investments in a manner and pursuant
to documentation satisfactory to Lead Agent. Borrowers shall pay
Lead Agent or SASI (or its successor) the published fees applicable
at the time to the transactions then effected pursuant to this
paragraph (h).
6.2 Debt Service Coverage Ratio.
Commencing on the Calculation Delivery Date immediately preceding
the first Term Loan Repayment Date, and on every other Calculation
Delivery Date thereafter, Borrowers shall deliver to Lead Agent
their calculation of the Debt Service Coverage Ratio calculated for
the period ending on June 30 for each Term Loan Repayment Date
occurring on September 15 of such year, and December 31 for each
Term Loan Repayment Date occurring on March 15 of the following
year, each such period commencing on the later of (i) the date
which is twelve (12) months prior to such ending date, and (ii) the
Closing Date. A sample calculation of the Debt Service Coverage
Ratio is contained in Schedule 6.2 hereto. Each such calculation
shall be made by Borrowers reasonably and in good faith.
6.3 Maintenance of Existence, Privileges, Etc.
Except as set forth on Schedule 2.9(b), each Borrower shall at all
times (a) preserve and maintain in full force and effect (i) its
existence as a limited partnership in good standing under the laws
of the State of California, (ii) its qualification to do business
in each jurisdiction in which the character of the properties owned
or leased by it or on which the transaction of its business as
conducted or proposed to be conducted makes such qualification
necessary, and (iii) all of its powers, rights, privileges and
franchises which are necessary for the ownership and operation of
the Project, (b) obtain and use its best efforts to maintain in
full force and effect all Governmental Approvals including, without
limitation, the Governmental Approvals set forth in Part I of
Schedule 5.6 hereto (or any revised Schedule 5.6 hereto required to
be delivered to Lead Agent by Borrowers pursuant to Section 6.7(a)
hereof) or Part II of such schedule (or any such revised schedule)
which are required or advisable, as specified in Section 5.6
hereto, to be obtained or made at the time such Governmental
Approvals are required or advisable, as specified in Section 5.6
hereto, to be obtained or made and other consents and approvals
required at any time in connection with the ownership and operation
of the Project, (c) maintain each Facility as a QF and (d) preserve
and maintain good and marketable title to its properties and assets
(subject to no Liens other than Permitted Liens).
6.4 Performance of Project Documents;
Payment of Obligations .
(a) General. Except as set forth on Schedule 2.9(b) each Borrower
shall (i) perform and observe all of its covenants and agreements
contained in any of the Project Documents to which it is a party,
except where the failure to do so would not have a Material Adverse
Effect, (ii) preserve, protect and defend the rights of each
Borrower contained in any of the Project Documents to which it is
a party, and (iii) take all such actions as are reasonably
necessary to maintain in full force and effect each of the Material
Project Documents.
(b) Payment of Obligations. Without limiting the generality of
Section 6.4(a), Borrowers shall pay, discharge or otherwise satisfy
at or before maturity or before they become delinquent (after
taking into consideration any applicable grace periods), as the
case may be, all of their Debt and all other obligations of
whatever nature, except in the case of such other obligations, when
the amount or validity thereof is the subject of a Good Faith
Contest by either Borrower.
(c) Power Purchase Agreements. Without limiting the generality of
Section 6.4(a) hereof, Borrowers shall (A) fully and timely comply
with any and all of their material obligations under each of the
Power Purchase Agreements, (B) notify Lead Agent as soon as is
practicable but in no event more than five (5) days after the
occurrence of any Forced Outage and Uncontrollable Force (as
defined in each of the Power Purchase Agreements), including an
explanation of the cause thereof, and (C) notify Lead Agent as soon
as is practicable but in no event more than five (5) days after the
submission or receipt of all material notices under each of the
Power Purchase Agreements and after any event of Uncontrollable
Force (as defined therein). In addition, the General Partner or
such other Person as shall be granted the authority under the
Partnership Agreements, other than the Operator, shall make
decisions under the Power Purchase Agreements as to whether certain
events may be deemed Uncontrollable Force or Forced Outages.
6.5 Operation and Maintenance.
(a) Operations. Each Borrower shall use, maintain and operate the
Facilities and Properties in material compliance with all
applicable material Governmental Requirements, Project Documents
and provisions of this Agreement. Each Borrower shall inspect,
maintain, service, preserve and repair the Facilities so as to keep
the Facilities (i) in good operating condition (ordinary wear and
tear excepted), (ii) in good order and repair in conformity with
prudent alternative energy standards and commercial practice, (iii)
in material compliance with any requirements under the Project
Documents, and (iv) in such condition that each Facility will have
the capacity and functional ability to perform, in normal
commercial operation, the functions and at the nameplate ratings
set forth in the Project Documents for the remaining useful life of
each Facility. Borrowers shall not permit Operator without the
prior written consent of Lead Agent (A) to enter into any
subcontract with respect to which either Borrower has rights of
approval pursuant to the O&M Agreement, or (B) to enter into any
subcontract for which Operator is to be reimbursed by either
Borrower if such subcontract is not entered into in the ordinary
course of business. Each Borrower shall comply with such repair,
service and maintenance standards and schedules as are required to
enforce rights against Operator and any standards imposed by any
Insurance Policies in effect with respect to the Facilities or
Properties.
(b) Repair and Replacement. Provided Lead Agent has made
available pursuant to Section 6.17 hereof the Proceeds (as defined
in said Section), in the event of any damage to or destruction of
any Facility or any Property, or any part thereof, by fire or other
casualty, Borrowers shall, at their own expense and whether or not
such damage or destruction is covered by an Insurance Policy, with
reasonable promptness, repair, restore, replace or rebuild the
same, except where such, in Lead Agent's reasonable judgment, is
not necessary or advisable for the conduct of Borrowers' business,
so that upon the completion of such repair, restoration,
replacement or rebuilding, the applicable Facility and applicable
Property shall be in the condition required by the foregoing
provisions of this Section 6.5 and so that the productive capacity,
value, utility and remaining useful life of the applicable Facility
shall be at least equal to the greater of (i) the actual productive
capacity, value, utility and remaining useful life of the
applicable Facility immediately prior to the happening of such
casualty, or (ii) the productive capacity, value, utility and
remaining useful life the applicable Facility would have had if it
were used, maintained and operated in accordance with the
requirements of this Section 6.5.
(c) Capital Expenditures. Borrowers shall not, without the prior
written consent of Majority Lenders, make any capital expenditures
in excess of the amounts contemplated by Section 6.1.
(d) Pro Forma. Each Pro Forma submitted by Borrowers pursuant to
Section 6.8(g) shall, among other things reasonably required by
Lead Agent, specify the estimated (i) power sales pursuant to the
Power Purchase Agreement, (ii) the estimated rates and revenues for
each such category, (iii) periodic inspection, maintenance and
repair schedule, setting forth all material tasks necessary to
comply with Borrowers' obligations hereunder, (iv) cash flow
projections and (v) amount of necessary capital expenditures and
short term working capital needs in connection with the Project.
Each Pro Forma submitted by Borrowers shall contain complete, fair
and accurate projections taken as a whole (by principal items) of
Gross Revenues, Operating Costs and Debt Service.
6.6 Operating Logs.
Borrowers shall, at their sole cost and expense (i) maintain at
each of the Facilities daily operating logs showing, among other
things, the electrical output of each Facility, (ii) keep
maintenance and repair reports in sufficient detail to indicate the
nature and date of all work done, (iii) maintain a current
operating manual and a complete set of Plans, accounting records
and specifications reflecting all alterations, and (iv) maintain
all other records, logs and other materials required by the O&M
Agreement or any material Governmental Requirements.
6.7 Compliance with Laws and Regulatory Matters.
(a) Generally. Borrowers shall comply in all material respects,
and shall ensure that the Project is operated and administered in
compliance with, all applicable Governmental Requirements.
Borrowers shall take no action which would have a material adverse
impact upon the status of any Facility as a QF. Without limiting
the generality of the foregoing, Borrowers shall not take or omit
to take (or suffer such taking or omission of) any action (unless
ordered to do so by a competent Governmental Authority having
jurisdiction) in respect of Borrowers or Borrowers' business if, as
a consequence directly or indirectly of such action or omission,
either Borrower would become subject to regulation by any
Governmental Authority as a "public utility," an "electric
utility," an "electric utility holding company," a "public utility
holding company," or a subsidiary or affiliate of any of the
foregoing under any material Governmental Requirement (including,
without limitation, PUHCA, FPA and PURPA) or as a "holding company"
within the meaning of PUHCA. Upon Lead Agent's reasonable request,
Borrowers shall deliver to Lead Agent evidence of Borrowers'
compliance with all applicable material Governmental Requirements,
and if not available, certify to Lead Agent that Borrowers are in
compliance therewith in all material respects. Borrowers shall
promptly amend and deliver a revised Schedule 5.6 hereto to Lead
Agent in the event of any material change in the Governmental
Approvals applicable to Borrowers or the Project.
(b) Required Alterations. Borrowers, at their sole cost and
expense, shall make such alterations to each Facility as may be
required from time to time to meet any material Governmental
Requirements ("Required Alterations"). Borrowers shall install any
Required Alterations promptly; provided, however, that Borrowers
may at their sole cost and expense contest the validity and
applicability of any Governmental Requirements as may entail the
installation of any Required Alterations, if and so long as
adequate reserves are maintained in accordance with applicable
accounting principles with respect to such Required Alterations and
if, in Lead Agent's reasonable opinion based on consultations with
Independent Engineer, failure to make such Required Alteration does
not materially adversely affect the productive capacity, value, or
utility or remaining useful life of such Facility or materially
adversely affect the rights or interests of Lenders, Issuing Bank
or Lead Agent. All such alterations shall comply with all material
Governmental Requirements.
(c) Resistance of Regulatory Change. If any litigation,
investigation or proceeding is commenced which causes, or may
cause, or any Governmental Authority to issue any order, judgment,
regulation, decision or interpretation the effect of which is, or
may cause (i) a Material Adverse Effect or (ii) a rescission,
termination, repeal, invalidation, suspension, injunction or a
material amendment or modification of any Material Project Document
or Loan Instrument, or any part thereof, then Borrowers shall so
notify Lead Agent and if, as a result of such regulatory change,
there shall exist in the reasonable opinion of Lead Agent a
reasonable likelihood that such litigation, investigation or
proceeding or action by any Governmental Authority could have a
Material Adverse Effect, Lead Agent shall give Borrowers reasonable
notice thereof and Borrowers shall diligently and in a timely
fashion (i) make all filings, (ii) pursue all remedies and appeals,
and (iii) take such other lawful action, in each case as Lead Agent
in its reasonable opinion determines to be necessary or desirable
to prevent such litigation, investigation or proceeding or such
action by any Governmental Authority from becoming final and non-
appealable or otherwise irrevocable, to attempt to postpone the
effectiveness of such litigation, investigation or proceeding or
such action by any Governmental Authority and to cause such
litigation, investigation or proceeding or such action by any
Governmental Authority to be terminated, revoked or amended or
modified so as to eliminate the reasonable likelihood of such
effect. If, no later than ten (10) days after Lead Agent so
notifies Borrowers, either Borrower notifies Lead Agent that it has
decided not to pursue any of the actions described in clause (i),
(ii) or (iii) immediately above and Lead Agent believes that there
exists a reasonable probability of success if any such actions are
taken, Lead Agent may pursue such actions on behalf of Borrowers,
at Borrowers' sole cost and expense provided that so long as Lead
Agent is itself pursuing such actions (prior to resolution thereof)
no Event of Default shall exist based solely on the existence of
such litigation, investigation or proceeding.
(d) Regulatory Applications. Borrowers shall not, unless ordered
to do so by a competent Governmental Authority having jurisdiction,
make any application to or filing with FERC, PUC or any other
applicable regulatory body to change or modify any Power Purchase
Agreement in any manner which would materially reduce the amounts
payable thereunder to Borrowers. In the event FERC, PUC or any
other applicable regulatory body issues an order revoking,
modifying or amending either such agreement in any respect,
Borrowers will give prompt notice of such order to Lead Agent and,
in the event of such revocation or any such modification or
amendment reducing the amounts payable thereunder, Borrowers will
contest such revocation, modification or amendment and, if
reasonably required by Lead Agent, will appeal any such order in
the manner and to the full extent permitted by applicable Law. In
the event the PUC issues an order that would materially adversely
affect the transactions contemplated by any of the Power Purchase
Agreements or any Loan Instrument, Borrowers will give prompt
notice of such order to Lead Agent and will contest such order and,
if reasonably required by Lead Agent, will appeal any such order in
the manner and to the full extent permitted by applicable Law.
Borrowers will promptly furnish to Lead Agent (i) notice of any
application or filing submitted by Borrowers to FERC or the PUC or
any other applicable regulatory body, and (ii) copies of any final
rulings, decisions or orders of FERC or the PUC or any other
applicable regulatory body in proceedings to which either Borrower
is a party or by which it is bound and which would materially
adversely affect the transactions contemplated by any Power
Purchase Agreement.
(e) Compliance with Margin Stock Rules. No part of the proceeds
of the Loans will be used to purchase "margin stock" (as defined in
the regulations referred to below) or for any other purpose which
would result in a violation (whether by Borrower, Lead Agent,
Lenders or Issuing Bank) of Regulations G, T, U or X of the Board
of Governors of the Federal Reserve System or to extend credit to
others for any such purpose. Neither Borrowers nor any of their
Affiliates is engaged in, nor will any of them engage in, the
business of extending credit for the purpose of purchasing or
carrying any "margin stock".
(f) Securities Act. Borrowers shall sell and offer to sell LOC
Debt only in compliance with the registration provision of the
Securities Act of 1933, as amended, or pursuant to an exemption
under Section 3 or Section 4 thereof, and in compliance with the
registration or qualification provisions of the securities law of
any state or territory having jurisdiction.
(g) Environmental Matters. Borrowers shall comply, and shall
cause all tenants, licensees, invitees, Operator or occupants of
the Project to comply, in all material respects, with every
applicable Environmental Requirement. Borrowers shall not, and
shall not permit any such other party to, generate, store, handle,
process, transport, ship, dispose, or otherwise use Hazardous
Materials at, in, on, under or from the Project, or onto any other
property, in a manner that would lead to the imposition on
Borrowers (in a material way), Lead Agent, any Lender, Issuing Bank
or the Project of any cleanup obligation, corrective action,
liability, judgment, order or Lien of any nature whatsoever under
any Environmental Requirement, or pose a material risk to human
health or the environment. Each Borrower shall promptly notify
Lead Agent when it learns of any information that would have
resulted in a breach of Section 5.25 hereof if such information was
known and not disclosed at the time such representation was made,
or when it becomes aware of any spill or any other release of any
Hazardous Material (whether or not such spill or release occurred
prior to, on or after the Closing Date) at, in, on, under or from
the Project which is required to be reported to a Governmental
Authority, which could result in any material cleanup obligation,
corrective action, or any liability under any Environmental
Requirement, or which could pose a risk to human health or the
environment which would have a Material Adverse Effect. Borrowers
shall promptly, but in no event later than two (2) Banking Days,
forward to Lead Agent copies of any notices, complaints, summons,
or any other notifications received by either Borrower relating to
alleged violations of any applicable Environmental Requirement at
the Property which would have a Material Adverse Effect. Borrowers
will promptly pay when due any fine, penalty, judgment, or
assessment arising under any Environmental Requirement against
either Borrower or the Project or against Lead Agent, any Lender or
Trustee to the extent the same arises in connection with the
Project, except to the extent subject to a Good Faith Contest by
either Borrower. If, at any time, the condition, operation or use
of any Project violates or could reasonably be expected to result
in any material liability under any applicable Environmental
Requirement, or there are Hazardous Materials located at, in, on,
under or from the Project for which material cleanup or corrective
action of any kind is required under any Environmental Requirement
or because of any spill or release of Hazardous Material, material
cleanup of or corrective action with respect to such Hazardous
Material is authorized under CERCLA or any similar state or local
law or may be necessary to prevent or eliminate a material risk to
human health or the environment, Borrowers shall, within ten (10)
days after discovering such condition, operation or use, notify
Lead Agent and promptly initiate, at their sole cost and expense,
such actions as may be necessary to comply in all material respects
with all Environmental Requirements and to alleviate any risk to
human health or the environment which would have a Material Adverse
Effect. Once Borrowers commence such actions, Borrowers shall
thereafter diligently and expeditiously proceed to comply in all
material respects and in a timely manner with all Environmental
Requirements and to eliminate any material risk to human health or
the environment. If an Event of Default exists which in the
reasonable determination of Lead Agent would have a Material
Adverse Effect, or Lead Agent intends to commence an action to
foreclose, or to take a deed in lieu or otherwise acquire title to
any Property, Lead Agent may cause an environmental audit of such
Property or portions thereof to be conducted to confirm Borrowers'
compliance with the provisions of this Section 6.7(g), and
Borrowers shall cooperate in all reasonable ways with Lead Agent in
connection with any such audit, and all costs and expenses incurred
in connection therewith shall be treated as set forth in Section
7.2(d) hereof. If the Deed of Trust is foreclosed or Borrowers
tender a deed or assignment in lieu of foreclosure, Borrowers shall
deliver the applicable Property to the purchaser at foreclosure or
to Lead Agent or the nominee of either, as the case may be, in a
condition that complies in all material respects with all
Environmental Requirements, and that does not contain Hazardous
Materials for which material cleanup or corrective action is
required under any Environmental Requirements or because of any
spill or release of Hazardous Material, cleanup of or corrective
action with respect to such Hazardous Material is authorized under
CERCLA or any similar state or local law or may be necessary to
prevent or eliminate a material risk to human health or the
environment.
(h) Report of QF Status. Borrowers shall provide to Lead Agent on
an annual basis and at any other time when reasonably requested by
Lead Agent, a report demonstrating in reasonable detail that
Borrowers are maintaining each of the Facility's status as a QF.
Borrowers shall monitor the activities of each Facility pertinent
to the maintenance of its status as a QF in the manner deemed
necessary or advisable from time to time by any Governmental
Authority or Lead Agent.
(i) Intellectual Property Infringement. In the event that any
product, process, method, substance, part or other material sold,
used or employed, or contemplated to be sold, used or employed, by
Borrowers in connection with its business or the Facilities does or
will infringe any patent, trademark, service mark, trade names,
copyright, license or other right owned by any other Person or any
claim or litigation is pending or threatened against or affecting
Borrowers contesting their right to sell, use or employ any such
product, process, method, substance, part or other material,
Borrowers shall give Lead Agent notice promptly, but in no event
more than five days after obtaining knowledge thereof and Borrower
shall effectively eliminate such infringement within 30 days of
giving such notice to Lead Agent or such longer period as in the
reasonable judgment of Lead Agent would not have a Material Adverse
Effect unless such infringement is the subject of a Good Faith
Contest by either Borrower,
provided that such Good Faith Contest would not impair the value of
the Secured Parties' security interest in the Collateral.
(j) Tracking of Permits. Borrowers shall maintain a tracking
system to monitor the status of, the conditions contained in, and
compliance with, Governmental Approvals required to be obtained by
Borrowers.
6.8 Information.
Borrowers will deliver to Lead Agent the following information:
(a) Annual Financial Statements. As soon as available and in any
event within one hundred twenty (120) days after the end of each
fiscal year of such Person (i) with respect to Borrowers (on a
consolidated basis) and Magma, a balance sheet as of the end of
such fiscal year, and the related statements of income, equity and
changes in financial position or cash flows for such fiscal year
setting forth in each case in comparative form the figures for the
previous fiscal year, and prepared in accordance with generally
accepted United States accounting principles, consistently applied,
and with respect to each of the foregoing Persons to be audited by,
and to carry the unqualified report of, independent certified
public accountants of nationally recognized standing, (ii) such
additional financial information as shall be reasonably required by
Lead Agent from time to time with respect to the Project.
Financial Statements of General Partner will be provided in
accordance with this Section 6.8(a) in the event General Partner
ceases to be wholly-owned by Magma;
(b) Quarterly Financial Statements. As soon as available and in
any event within sixty (60) days after the end of each of the first
three fiscal quarters of each fiscal year, (i) with respect to
Borrowers (on a consolidated basis) and Magma an unaudited balance
sheet as of the end of such quarter, and the related statements of
income, equity and changes in financial position or cash flows for
such quarter and for the portion of the year ended at the end of
such quarter, setting forth in each case in comparative form the
figures for the corresponding portion of the previous year, all
certified (subject to normal year-end adjustments) as to fairness
of presentation, generally accepted United States accounting
principles and consistency by the chief financial officer,
treasurer or chief accounting officer of such person, (ii) such
additional financial information as shall be reasonably required by
Lead Agent from time to time, with respect to the Project.
Financial Statements of General Partner will be provided in
accordance with this Section 6.8(b) in the event General Partner
ceases to be wholly-owned by Magma;
(c) Certificate of No Default. Simultaneously with the delivery
of each set of financial statements referred to in paragraphs (a)
and (b) above, a certificate of the chief financial officer,
treasurer or chief accounting officer of each Borrower stating
that, to the best of such officer's knowledge (i) no Default or
Event of Default has occurred and is continuing and (ii) no breach
or default (or event that with the passage of time, the giving of
notice or both would constitute a breach or default) with respect
to either Borrower under any of the other Loan Instruments or
Material Project Documents exists or is imminent on the date of
such certificate or has occurred and is continuing since the date
of the last such certificate, or if any such Default or Event of
Default breach, default or event has occurred or is imminent,
setting forth the details thereof and the action which such person
has taken, is taking or proposes to take with respect thereto, and
with the delivery of each set of financial statements of Borrowers
referred to in paragraph (a) above, a statement of the independent
certified public accountants making the report thereon to the
effect that in making the examination necessary for said report
they obtained no knowledge, except as specifically stated, of any
failure of Borrowers to fulfill or observe any of the covenants
contained in this Article 6;
(d) Notice of Default. As soon as is practicable but in no event
more than three (3) Banking Days after the occurrence of any
Default or Event of Default hereunder or any Default or Event of
Default under any other Loan Instrument or any breach, Default or
Event of Default, or event that with the passage of time, the
giving of notice or both would constitute a breach or Event of
Default, under any of the Material Project Documents by either
Borrower or by any other party thereto (and, in each case, of which
either Borrower has knowledge), a certificate of the chief
financial officer, treasurer or chief accounting officer of either
Borrower setting forth the details thereof and the action which
Borrowers are taking or proposes to take with respect thereto;
(e) Material Adverse Change. (i) Promptly and in no event more
than five (5) Banking Days after either Borrower becomes aware of
any information, development or knowledge of any adverse change,
business, prospects, properties, condition (financial or otherwise)
or operations, present or prospective, of any party to any of the
Project Documents which are material to such party's ability to
perform thereunder or which has had or could have a Material
Adverse Effect, a copy of such notice for delivery to Lead Agent,
and promptly upon any development in Borrowers' affairs, financial
or otherwise, which may, in the reasonable judgment of Borrowers,
have a Material Adverse Effect or written notice thereof;
(f) Reports to Governmental Authorities. (i) As soon as is
practicable but in no event more than five (5) Banking Days after
the filing by either Borrower, and as soon as is practicable but in
no event more than five (5) Banking Days after receipt by either
Borrower of knowledge of the filing by any party to any Material
Project Documents, of any material information or material report
with any Governmental Authority regarding any Facility, the
Project, any of the Loan Instruments or Material Project Documents,
or any of such party's obligations thereunder which would
reasonably be expected to have a Material Adverse Effect, a copy of
such information or report, and (ii) as soon as is practicable but
in no event more than five (5) Banking Days after receipt by either
Borrower, copies of each material Governmental Approval obtained by
either Borrower;
(g) Pro Forma. Not less than thirty (30) days prior to the
commencement of each calendar year, the Pro Forma for the Project
proposed by Borrowers for the forthcoming fiscal years during the
term of this Agreement, year by year and for the forthcoming fiscal
year, quarter by quarter setting forth in each case in comparative
form the Pro Forma figures for the previous fiscal year or fiscal
quarter, as applicable;
(h) Reports from Operator. As soon as is practicable but in no
event more than five (5) Banking Days after receipt thereof from
any Operator which is not an Affiliate of Borrowers, a copy of each
annual, monthly and other material report to be provided by such
Operator pursuant to the O&M Agreement, if any, including any
report as to significant operating, maintenance, and management
events;
(i) [Intentionally Omitted.]
(j) Notices. As soon as is practicable but in no event more than
five (5) Banking Days after receipt thereof, a copy of each
material notice, demand or other communication delivered to
Borrower pursuant to or concerning any Project Document or
delivered by Borrowers to any Partner under the Partnership
Agreements;
(k) Standards with Respect to Pro Forma and Reports. The Pro
Forma to be furnished to Lead Agent by Borrowers and any
significant assumptions related thereto shall (i) be prepared in
good faith with due care, (ii) taken as a whole, fairly present, to
the best of Borrowers' knowledge, Borrowers' expectations as to the
matters covered thereby as of their date, (iii) be based on
reasonable assumptions as to all matters material to the estimates
therein (including interest rates), and (iv) be consistent with the
material provisions of the Loan Instruments and Material Project
Documents;
(l) Insurance Report. Within thirty (30) days after the end of
each fiscal year of Borrowers, a certificate signed by Insurance
Advisor (i) listing all insurance being carried by or on behalf of
Borrowers pursuant to the Project Documents or the Loan
Instruments, (ii) certifying that all insurance required to be
maintained pursuant to the Loan Instruments and Project Documents
is in full force and effect and all premiums therefore have been
fully paid and (iii) setting forth a summary of all losses in
excess of $25,000 incurred with respect to the Facilities or the
Properties during the preceding fiscal year;
(m) Casualty or Condemnation. Promptly and in no event later than
five (5) days after either Borrower obtains knowledge thereof,
written notice of any fire or other casualty or any notice of
taking or eminent domain action or similar proceeding materially
affecting the Properties or the Facilities;
(n) Disputes and Litigation. Promptly but in no event later than
five (5) Banking Days after obtaining knowledge thereof (i) written
notice of any material dispute involving either Borrower or any
other party to any of the Material Project Documents or Loan
Instruments and relating to any of the transactions contemplated by
any such document or instrument (and promptly upon any decision
relating to any such dispute having been made, a copy of such
decision), and (ii) written notice of any litigation,
investigation, proceeding, claim or controversy (A) involving or
affecting Borrowers or any of their properties, revenues or assets,
or the Properties or the Facilities, (B) involving or affecting any
Partner, or any of their properties, revenues or assets, in each
case which relate to the Properties or the Facilities and which
would reasonably be expected to have a Material Adverse Effect (C)
involving or affecting any other party to any of the Material
Project Documents or Loan Instruments or any of their properties,
revenues or assets and which would reasonably be expected to have
a Material Adverse Effect, (D) which could cause a Default or an
Event of Default, or (E) for the purpose of revoking, terminating,
withdrawing, suspending, modifying or withholding any Governmental
Approvals necessary for the performance by any party to any
Material Project Documents or Loan Instruments of their respective
obligations, or the exercise of their respective rights, under the
Material Project Documents or Loan Instruments, or for the
operation or maintenance of the Facilities in the manner
contemplated by the Material Project Documents or Loan Instruments;
(o) Independent Engineering Report. Upon the request of Lead
Agent but no more frequently than once in any 12 month period, an
engineering report prepared by Independent Engineer, in form and
scope reasonably satisfactory to Lead Agent, assessing whether or
not the construction, operation and maintenance of each Facility
during the preceding quarterly or annual period was in compliance
in all material respects with all Governmental Requirements and the
requirements of the Project Documents;
(p) Employee Benefit Plans.
Promptly and in any event within five (5) Banking Days upon knowing
or having reason to know of the occurrence of any of the following
with respect to any employee benefit plan within the meaning of
Section 3(3) of ERISA (including without limitation any employee
benefit plan of an ERISA Affiliate) as to which either Borrower may
have liability, either Borrower shall deliver to the Lead Agent
written notice thereof, describing the same and steps being taken
by either Borrower with respect thereto: (i) the acquisition of an
ERISA Affiliate, (ii) the occurrence of a reportable event (as
defined in Section 4043 of ERISA other than an event for which the
30-day notice provision is waived under subsection .13, .14, .18,
.19 or .20 of Department of Labor Regulation Section 2516) with
respect to any such plan, (iii) the institution of formal steps, or
informal steps reasonably expected to result in formal action to
withdraw from any such plan which have resulted or could result in
material liability for either Borrower, (iv) the institution of any
formal steps, or informal steps reasonably expected to result in
formal action to terminate any such plan which have resulted or
could result in material liability for either Borrower, (v) the
failure to make a required contribution to any such plan if such
failure is sufficient to give rise to a lien against either
Borrower under Section 302(f) of ERISA or Section 412 of the Code,
(vi) the taking of any action with respect to any such plan which
could result in the requirement that either Borrower furnish a bond
or other security to the PBGC or such plan, (vii) the occurrence of
any event or events with respect to any such plan or plans which
individually or in the aggregate could result in material
liability for either Borrower or (viii) either Borrower or any
ERISA Affiliate has any obligation to contribute to or liability
under any Multiemployer Plan; and
(q) Additional Information. Within a reasonable time but in no
event more than five (5) Banking Days after request therefor, such
additional information regarding the business, prospects,
properties, condition (financial or otherwise) or operations,
present or prospective, of Borrowers, General Partner or Magma, and
any other party to any Material Project Document as Lead Agent may
reasonably request.
6.9 Bank Accounts.
Borrowers shall maintain all their Accounts at the banks and in the
amounts set forth in Section 6.1 hereof.
6.10 Maintenance of Records; Inspection.
(a) Maintenance of Records. At all times Borrowers shall
maintain proper books and records of all of their business and
financial affairs in accordance with generally accepted United
States accounting principles consistently applied with those
reflected in the Financial Statements referred to in Section 6.8
hereof. Borrowers shall keep all books of accounts and records
concerning the collateral covered by the Security Documents at
their principal place of business.
(b) Inspection. During normal business hours and upon
reasonable notice, at least annually and more often if Lead Agent
shall reasonably request, Borrowers shall permit any authorized
representative designated by Lead Agent to visit and inspect the
Properties and Facilities, including Borrowers' books and
records, and to make extracts from such books and to discuss
Borrowers' affairs, finances and accounts with their officers and
independent certified public accountants or other parties
preparing statements for or on behalf of Borrowers.
6.11 Other Debt; Investments.
Borrowers shall not, directly or indirectly, create, incur, assume
or otherwise become or be liable with respect to any Debt, except
for the following:
(i) Debt incurred pursuant to this Agreement, under any Swap
Agreement or permitted pursuant to Section 6.12 hereof, if any;
(ii) Debt incurred with respect to equipment financing,
conditional sales or lease arrangements entered into in the
ordinary course of business not to exceed $1,000,000 in the
aggregate at any one time;
(iii) Unsecured Debt incurred in the ordinary course of business
up to $500,000 at any one time; and
(iv) Additional unsecured Debt that is fully subordinated to all
of Borrowers' obligations under this Agreement and the other Loan
Instruments pursuant to documents in form and substance
satisfactory to Lead Agent and containing the subordination
provisions set forth in Exhibit 6.11 hereto.
6.12 Guarantees.
Borrowers will not agree, contingently or otherwise, to purchase or
repurchase the Debt of, or assume, guaranty (directly or indirectly
or by instrument having the effect of assuring
another's payment or performance of any obligation or capability of
so doing, or otherwise), endorse or otherwise become or remain
liable, directly or indirectly, in connection with the
obligations, stock or dividends of any Person except (i) by
endorsement of negotiable instruments for deposit or collection in
the ordinary course of business, (ii) indemnities to federal, state
or local governmental agencies or authorities relating to any
expenses incurred that are incidental to obtaining easements for
the benefit of the Project, and (iii) indemnities, guarantees or
other similar obligations set forth in the Project Documents or any
Permitted Contract.
6.13 Liens.
Borrowers shall not create, assume or suffer to exist any Lien on
any asset now owned or hereafter acquired by it, including, without
limitation, the Facilities, Properties and any funds due to
Borrowers (including, without limitation, Cash Revenues) except the
following Liens (collectively, the "Permitted Liens"):
(a) Liens in favor of Lead Agent (on behalf of the Secured
Parties) and other Liens specifically permitted by this
Agreement, or the other Loan Instruments;
(b) Liens for current taxes, assessments and governmental
charges which are not delinquent and remain payable without penalty
or are the subject of a Good Faith Contest by either Borrower;
(c) purchase money security interests in discrete items of
equipment not comprising an integral part of the Project when the
obligation secured is incurred for the purchase of such equipment
and does not exceed one hundred percent (100%) of the lesser of
cost or fair market value thereof at the time of acquisition, and
the security interest does not extend beyond the equipment
involved; provided, that such Liens and the amount of materials,
equipment and fixtures supplied or purchased pursuant to Section
6.11 hereof shall not, taken together, at any time exceed the
maximum aggregate amount of One Million dollars ($1,000,000);
(d) mechanics', materialmen's, carrier's and similar Liens
securing obligations incurred in the ordinary course of business
which (i) are not past due for more than 30 days or which are the
subject of a Good Faith Contest by Borrowers (unless during the
pendency of such contest or as a result thereof the Liens of the
Security Documents will be expected to be endangered or any
material portion of the Properties or the Facilities could
reasonably be expected to become subject to loss or forfeiture) and
(ii) which do not in the aggregate detract from the value of the
Properties or the Facilities or other assets of Borrowers or
materially impair the use thereof; provided that upon the
commencement of any proceeding to foreclose or enforce any such
Permitted Lien, Lead Agent may take such action as it reasonably
deems necessary to protect its interest in the Properties and the
Facilities, including, without limitation, payment of amounts
reasonably necessary to release any such Lien, and in such event
Borrowers shall reimburse Lead Agent upon demand for the cost
thereof together with interest thereon at a rate per annum equal to
the Default Interest Rate;
(e) exceptions to title contained in the Title Insurance and
accepted by Lead Agent; and
(f) Liens described in or otherwise permitted by Schedule 2.9(b)
and/or the Magma Land Company I Consent.
Borrowers shall not sign or file under the Uniform Commercial Code
of any jurisdiction a financing statement which names either
Borrower as a debtor, or sign any security agreement authorizing
any secured party thereunder to file such financing statement,
except with respect to Permitted Liens described in clauses (a),
(c), (e) and (f) above.
6.14 Issuance Agreements. Borrowers shall not modify any
provision of any Issuance Agreement, without the prior written
consent of Lead Agent.
6.15 Consolidations, Mergers, Sales of
Assets; Transfers of Partnership
Interests; Other Business, etc.
(a) Merger, etc. Except as permitted under Schedule 2.9(b)
hereof, Borrowers shall not (i) liquidate, wind-up, terminate,
dissolve or reorganize (or suffer any liquidation, winding-up,
termination, dissolution or reorganization), (ii) consolidate or
merge with or into any other Person, (iii) admit any additional
Partners into either Borrower other than by reason of a transfer of
up to but not exceeding 20% of the limited partnership
interests in either Borrower which (x) transfer is consented to in
writing by the Majority Lenders prior to such transfer and (y)
limited partnership interests are concurrently pledged to Lead
Agent by the new Partner, together with such documentation as may
be reasonably requested by Lead Agent, or (iv) permit or consent to
the transfer (by sale, assignment or otherwise) of any
partnership interest in either Borrower other than by reason of a
transfer of up to but not exceeding 20% of the limited
partnership interests in either Borrower which (x) transfer is
consented to in writing by the Majority Lenders prior to such
transfer and (y) limited partnership interests are concurrently
pledged to Lead Agent by the new Partner, together with such
documentation as may be reasonably requested by Lead Agent.
(b) Other Business. Borrowers shall not engage in any business
other than the acquisition, development, construction and
operation of the Project strictly in accordance with the Loan
Instruments and Project Documents and the leasing of certain of its
lands for agricultural purposes pursuant to a lease form approved
by Lead Agent which would not reasonably be expected to result in
a Material Adverse Effect.
(c) Chief Executive Office; Place of Business. Borrowers shall
not change the location of their chief executive office or
principal place of business without the prior written consent of
Lead Agent. Borrowers shall not adopt or change any trade name or
fictitious business name without the prior written consent of Lead
Agent. Borrowers shall execute and deliver to Lead Agent any
additional documents or certificates necessary or advisable to
reflect any permitted adoption of or change in chief executive
office, trade name or fictitious business name.
(d) Fiscal Year. Each Borrower's fiscal year shall be the
calendar year.
6.16 Insurance.
Borrowers shall maintain or cause to be maintained the required
Insurance Policies from the dates indicated in and in accordance
with, Schedule 6.16 hereto, and such other insurance policies as
Lead Agent may reasonably require and that are available on
commercially reasonable terms to cover new, materially different or
increased risks or contingencies arising or occurring after the
Closing Date. Borrowers shall, upon the request of the Lead Agent,
promptly provide a schedule indicating the policies
maintained by Borrowers, coverage limits of liability, effective
dates of coverage, insurance carrier names and policy numbers.
Borrowers shall cause Lead Agent to be named as sole loss payee and
as an additional insured, for the account of the Secured Parties as
their interest may appear, under all Insurance
Policies. All Insurance Policies shall contain the standard New
York mortgagee non-contribution clause endorsement or its
equivalent and shall provide for at least 30 days written notice
(or 10 days in the case of non-payment of premiums) to Lead Agent
of cancellation, reduction in amount or material change in
coverage. Evidence of payment of premiums for Insurance Policies
shall be delivered to Lead Agent at least 10 days prior to the
expiration thereof and Borrowers shall deliver the Insurance
Policies to Lead Agent promptly upon its request. All insurance
carried pursuant to Schedule 6.16 shall conform to the relevant
provisions of the respective Project Documents and be with
insurance companies rated "A-" or better by Best's Insurance Guide
and Key Ratings or other insurance companies of recognized
responsibility satisfactory to Lead Agent.
6.17 Obligations Upon Casualty.
In the event of a casualty loss affecting any Facility or a
condemnation of any Facility or Property, if the restoration of
such Facility or Property is feasible, in the opinion of
Independent Engineer and Lead Agent, after deducting from any such
insurance or condemnation proceeds (the "Proceeds") the reasonable
expenses incurred by Lead Agent and Borrowers in collecting and
disbursing such Proceeds or otherwise in
connection therewith, the Proceeds (all of which shall be payable
to Lead Agent directly into the Salton Sea-CS Payment Account) may
be released to Borrowers from time to time upon the consent of Lead
Agent in installments sufficient to pay for restoration as it
progresses upon the conditions set forth below (except that the
following provisions shall not apply to Proceeds of less than
$1,000,000 or events hereunder which would not have a Material
Adverse Effect and in both such cases, such proceeds shall be
released directly to Borrowers for the prompt payment of the cost
of repair or restoration of the damage giving rise to such
proceeds, provided that Borrowers shall have sent Lead Agent prior
notice of such events):
(a) Lead Agent shall have received reasonably satisfactory
assurances that all payments required to be made hereunder in
connection with the Loan Instruments shall continue to be made by
Borrowers in a timely manner and that no Event of Default shall
occur during or as a result of such restoration.
(b) Lead Agent, prior to the initial release of Proceeds,
receives evidence satisfactory to it that:
(i) The Proceeds are sufficient to complete the restoration of the
Facility or Property to the condition that is required
pursuant to Section 6.5(b) hereof, or Borrowers provide
assurances acceptable to Lead Agent that the amount of any
deficiency will be available to Borrowers when needed for such
completion;
(ii) The capability of the Facility and Property to operate in a
manner so as to allow Borrowers to fulfill its obligations under
the Project Documents, and the productive capacity, utility and
remaining useful life of the Facility after restoration will not be
materially less than such characteristics immediately prior to the
casualty; and
(iii) A restoration budget and work plan satisfactory to Lead
Agent based on consultation with Independent Engineer has been
prepared for the complete restoration of the Facility and/or
Property.
(c) For all subsequent releases of Proceeds, in addition to that
which is required by Sections 6.17(a) and (b) hereof, Lead Agent
receives:
(i) A certificate (the "Certificate") of Borrowers dated not more
than ten (10) Banking Days prior to the application for such
release stating the progress of the work up to the date of the
Certificate and certifying that:
(A) The sum then requested to be released either has been paid by
Borrowers and/or is justly due to contractors, subcontractors,
materialmen, engineers, architects or other persons (whose names
and addresses shall be stated) who have rendered services or
furnished materials in connection with the approved restoration
budget and work plan;
(B) The sum then requested to be released, plus all sums
previously withdrawn, does not exceed the cost of the work
insofar as actually accomplished up to the date of the
Certificate, and that the remainder of the funds then held by Lead
Agent will be sufficient to pay in full for the completion of the
work (or Borrowers provide assurances reasonably
acceptable to Lead Agent that the amount of any deficiency will be
available to Borrowers when needed for such completion);
(C) No part of the cost of the services and materials described in
the Certificate has been the basis for the release of any funds in
any previous application;
(D) All materials and all property described in the Certificate
are free and clear of all deeds of trust (other than the Deed of
Trust or any deeds of trust for the benefit of Lenders),
mortgages, Liens, charges or encumbrances; and
(E) After giving effect to the payment to contractor of the
Proceeds in respect of amounts payable to contractor, there is no
outstanding indebtedness known, after due inquiry, which is then
due and payable for work, labor, services or materials in
connection with the work which is not likely to be paid and as a
result is likely to become the basis of a vendor's, mechanic's,
laborer's or materialman's statutory or other similar Lien upon the
Facility, Property or any part thereof.
(ii) Evidence reasonably satisfactory to Lead Agent that
Borrowers have fulfilled such additional conditions as Lead Agent
may reasonably impose to provide assurance that the Proceeds will
be used to restore the Facility or Property to the condition that
is required pursuant to Section 6.5(b) hereof including, without
limitation, Lead Agent's prior approval (after consultation with
the Independent Engineer) of plans, specifications and
construction contracts for such restoration, such approval not to
be unreasonably withheld or delayed, and Lead Agent's or
Independent Engineer's periodic inspections of such restoration
work as it progresses.
(d) Prior to the final release (in addition to that which is
required by Section 6.17(c) hereof) Lead Agent receives:
(i) Evidence reasonably satisfactory to Lead Agent that the
restoration has been completed and the Facility and Property
conform to all applicable Governmental Requirements;
(ii) A certification by Independent Engineer that the
restoration has been completed in accordance with the budget and
the work plan delivered pursuant to Section 6.17(b)(iii) hereof (as
such budget and work plan may have been modified from time to time
with the approval of Lead Agent) and has satisfied a
performance test that has been negotiated by Borrowers and Lead
Agent in good faith; and
(iii) A certificate from Borrowers that they have taken the
necessary action to assure that all Governmental Approvals
necessary for continued operation of the restored Facility will be
obtained as and when required under applicable Law.
(e) The release of Proceeds shall be made within ten (10)
Banking Days after Lead Agent receives a proper application
therefor. All releases of Proceeds (except for final payment)
shall be subject to an appropriate retainage to be reasonably
determined by Lead Agent, taking into account the anticipated cost
of the work to be done and prudent industry standards and
commercial practice.
(f) If the amount of Proceeds exceeds the amount necessary to
effect restoration and reimburse Lead Agent for its expenses, then
such excess shall be paid over to Borrower after such
restoration is completed and Lead Agent shall, at Borrowers'
request, pay out of the funds held by it, to the persons named in
the Certificate, the amounts stated in such Certificate to be due
to them and/or shall pay to Borrowers the amount stated in said
Certificate to have been paid by Borrowers; and
(g) Any business interruption insurance proceeds and all
other excess proceeds, to the extent paid, shall be payable to Lead
Agent. So long as no Event of Default has occurred and is
continuing, Lead Agent shall promptly deliver, or cause to be
delivered, such proceeds to Borrowers for deposit into the
Project Account.
6.18 Taxes.
Each Borrower shall pay and discharge all taxes, assessments and
governmental charges upon it, its income and properties prior to
the date on which penalties are attached thereto, and all lawful
claims for taxes thereto which, if unpaid, might become a Lien upon
the property of Borrowers. Borrowers shall have the right,
however, to contest in good faith the validity, applicability or
amount of any such tax, assessment or governmental charge by proper
proceedings, timely instituted, and may permit the taxes,
assessments or governmental charges so contested to remain unpaid
during the period of such Good Faith Contest. Borrowers will
promptly pay or cause to be paid any valid final judgment
enforcing any such tax, assessment and governmental charges and
cause the same to be satisfied of record.
6.19 Other Contracts.
(a) Additional Contracts. Borrowers shall not become a party to
any contract, operating lease agreement or commitment, other than
(i) the Loan Instruments, (ii) the agreements identified in items
(a) through (q) of the definition of the term Project Documents,
(iii) any Permitted Contract, provided, that Lead Agent shall
receive notice of the execution of any such agreements of greater
than $500,000 in any one fiscal year (including a description
thereof), and shall receive a copy thereof upon Lead Agent's
request, and, upon Lead Agent's further reasonable request, shall
be granted a security interest therein (with the consent of the
non-assigning party, if reasonably obtainable) and (iv) any
contract or agreement permitted under Schedule 2.9(b).
(b) Amendments; Waivers. Borrowers shall not cancel or
terminate or permit or consent to the amendment, modification,
cancellation or termination of (i) any Power Purchase Agreements or
Loan Instruments without the prior written consent of all of the
Lenders or (ii) any other Material Project Documents without the
prior written consent of the Majority Lenders, except for any (A)
non-material amendment of any Material Project Document, (B)
material amendment to the Partnership Agreement or Borrowers'
organization documents permitted hereunder, or (C) amendment of any
Permitted Contract (if such amendment does not cause such contract
to cease being a Permitted Contract); and in the case of (B)
Borrowers shall give Lead Agent thirty (30) Banking Days' prior
notice of such amendment. Borrowers shall not suffer or permit any
material breach or default to occur in any of the obligations of
Borrowers under the Project Documents nor suffer or permit the
termination, cancellation, modification or, in the case of
Insurance Policies, non-renewal of any of such documents, in each
case by reason of any failure of Borrowers to meet any requirement
or, in the case of Insurance Policies, to exercise any renewal
option. Borrowers shall not waive any material default or event of
default of any party to any Material Project Document without the
prior written consent of Majority Lenders.
(c) Acquisition of Property. (i) Except as provided in clause
(ii) below, if Borrowers shall at any time anticipate the
acquisition of or acquire any real property or leasehold or other
interests therein not covered by the Deed of Trust, Borrowers
shall, in addition to fulfilling the requirements set forth in
Section 6.19(a) above and no less than thirty (30) days prior to
such acquisition notify Lead Agent and promptly upon the request of
Lead Agent execute, deliver and record an additional deed of trust
or a supplement to the Deed of Trust, satisfactory in form and
substance to Lead Agent, subjecting such real property or leasehold
or other interests to the loan and security interest created by the
Deed of Trust and obtain from the Title Company a date down on the
Title Insurance and endorsements to the Title Insurance reasonably
satisfactory to Lead Agent to insure such acquisition. In
addition, Borrowers shall, at their own expense, deliver a
currently-dated 1992 ALTA/ACSM survey of such additional property
prepared and certified to Lead Agent, Secured Parties, Title
Company and Borrowers by a surveyor licensed in the State of
California who is satisfactory to Lead Agent and Title Company,
which survey shows (A) all easements benefiting or burdening such
additional property, (B) no state of facts unsatisfactory to Lead
Agent, any Secured Parties or Title Company and (C) such additional
details as Lead Agent may reasonably require.
(ii) If Borrowers shall at any time acquire rights under the
Easement Grant Deed to the "McKelvey" and/or "Elmore Section 7"
properties described in Exhibit "A" to the Easement Grant Deed as
Parcels B Tract II and Parcel C, respectively (the
"McKelvey/Elmore Acquisition"), then (A) Borrowers shall give
notice to Lead Agent, whereupon Lead Agent shall be entitled to
cause the Deed of Trust and the Easement Grant Deed to be re-
recorded and (B) following such re-recordation, Borrowers shall
cause Title Company to re-issue the Title Insurance (including,
without limitation all endorsements thereto) originally provided to
Secured Parties on the Closing Date; provided, however, that said
re-issued Title Insurance may include such additional
exceptions applicable to said McKelvey and/or Elmore Section 7
properties as shall have resulted from documents placed of record
between the date of recordation of the Deed of Trust and the time
of re-recordation of the Easement Grant Deed. No other
obligations under Section 6.19(c)(i) shall apply in connection with
any McKelvey/Elmore Acquisition.
(d) Burdensome Obligations. Notwithstanding anything to the
contrary contained herein, Borrowers shall not enter into any
contract or agreement or acquire any property that is subject to
any Law (including without limitation, any enacted law the
effective date of which has not yet occurred), which is so
unusual or burdensome as to have a Material Adverse Effect.
6.20 Additional Documents; Filings and Recordings.
Additional Documents; Filings and Recordings. Borrowers shall
execute and deliver to Lead Agent, from time to time as requested
by Lead Agent, such other documents as shall reasonably be
necessary or advisable in connection with the rights and remedies
of Lenders and Issuing Bank granted or provided for by the Loan
Instruments or Project Documents and to consummate the
transactions contemplated therein. Borrowers shall, at their own
expense, take all actions within Borrowers' power and control that
have been or shall be reasonably requested by Lead Agent or that
Borrowers know are necessary to establish, maintain,
protect, perfect and continue the perfection of the security
interests of Lead Agent, Lenders and Issuing Bank prior and
superior to all other Liens other than Permitted Liens created by
the Security Documents and shall furnish timely notice of the
necessity of such action to the extent known to Borrowers,
together with such instruments, in execution form, and such other
information as may be required. Without limiting the generality of
the foregoing, Borrowers shall execute or cause to be executed and
shall file or cause to be filed such financing statements,
continuation statements and fixture filings and such mortgages or
deeds of trust in all places necessary or advisable (in the
reasonable opinion of counsel for Lead Agent) to establish,
maintain and perfect such security interests and in all other
places that Lead Agent shall reasonably request.
6.21 Permitted Investments.
Except as set forth on Schedule 2.9(b), hereof, Borrowers shall
not, directly or indirectly, make, retain or have outstanding any
investments (whether through the purchase of stock or obligations
or otherwise) in, or loans or advances to, any other Person or
acquire all or any part of the assets or business of any other
Person other than Permitted Investments.
6.22 Prohibition on Assignment of
Borrowers' Interest .
Except as permitted pursuant to Section 6.13 hereof or on
Schedule 2.9(b) hereof, Borrowers shall not assign any of their
rights or obligations hereunder or under any of the other Loan
Instruments or under any of the Project Documents, nor shall
Borrowers assign or encumber any interest hereunder, under any
other Loan Instrument or under any of the Project Documents,
without the prior written consent of all of the Lenders.
6.23 Transactions with Affiliates and Others.
Except as set forth on Schedule 2.9(b), hereof, Borrowers shall
not, directly or indirectly, purchase, acquire, exchange or lease
any property from, or sell, transfer or lease any property to, or
borrow any money from, or enter into any arrangement with, any
Affiliate or any officer, director or employee of Borrowers or any
Affiliate thereof, except as set forth on Schedule 5.17 and except
for the transactions contemplated to be consummated on the date of
the Initial Advance or transactions in the ordinary course of
business and upon fair and reasonable terms no less favorable than
Borrowers could obtain, or could become entitled to, in an arm's
length transaction with a Person which is not an Affiliate;
provided, however, that Borrowers shall give Lead Agent prompt
notice of any such material transaction and the material terms
thereof. In addition, Borrowers shall not select any arbitrator
under any arbitration clause in any Project
Document to which an Affiliate of Borrowers is party without the
prior written consent of Lead Agent, which consent shall not be
unreasonably withheld or delayed.
6.24 Offering Circular.
Without the prior written approval of Lead Agent, any Lender or
Issuing Bank, Borrowers shall not include any material relating to
any such party in any offering circular used in the offering or
sale of LOC Debt.
6.25 Notice of Litigation, Claims and
Financial Change .
Borrowers shall timely respond to, and as soon as practicable but
in no event more than five (5) Banking Days after receipt by
Borrowers, inform Lead Agent of receipt of, (a) notice of any
litigation, claim or controversy against or involving Borrowers or
any Partner or affecting the Project, or any litigation of which
Borrowers have knowledge involving any other party to any of the
Loan Instruments or Project Documents, which litigation, claim or
controversy is reasonably likely to have a Material Adverse Effect
or which might cause an Event of Default, (b) any official notice
or claim by any Governmental Authority received by Borrowers or
General Partner or actually known to Borrowers or General Partner
pertaining to the Project, any of the Project Documents or Loan
Instruments or any of the parties to either of the foregoing,
having a Material Adverse Effect or which might cause an Event of
Default, (c) notice of any fire or other
casualty or any notice of taking or eminent domain action or
similar proceeding affecting the Project which would have a
Material Adverse Effect, and (d) knowledge of any adverse change in
the business or condition (financial or otherwise) of any party to
any of the Loan Instruments or Material Project
Documents that is material to such party's ability to perform
thereunder or that is material to the Project.
6.26 [Intentionally Omitted.]
6.27 Use of Proceeds.
Borrowers shall use the proceeds of the (a) Term Loan solely for
purposes of repaying the existing loan from Magma (which shall in
turn repay the bridge financing from Morgan Guaranty) and (b)
Working Capital Loans solely for short term working capital needs
of Borrowers. Borrowers shall use the proceeds from the sale of
LOC Debt to prepay the Term Loan in accordance with the terms
hereof.
6.28 Distributions to Partners.
Borrowers shall not make any distributions to any of the Partners
except for distributions of monies permitted to be withdrawn and
transferred by Borrowers pursuant to the terms of Section 6.1(c)
hereof.
6.29 ERISA.
(a) ERISA Liabilities. Each Borrower shall pay and discharge
promptly any liability or lien with respect to any employee benefit
plan imposed upon it pursuant to the provisions of ERISA, the Code
or any other Federal law; provided, however, that such Borrower
shall not be required to pay any such liability or discharge any
such lien if the amount, applicability or validity thereof shall be
the subject of a Good Faith Contest by either Borrower.
(b) Employee Benefit Plans. Neither Borrower shall establish,
sponsor, maintain, administer, participate in, incur any
obligation to contribute to or any liability under or related to,
or permit to the extent within either Borrower's control, any ERISA
Affiliate to establish, sponsor, maintain, administer, participate
in or incur any obligation to contribute to or any liability under
or related to (i) any Multiemployer Plan or (ii) any single
employer plan (as defined in Section 3(41) of ERISA that is subject
to Title IV of ERISA or (iii) any retiree welfare benefit plan
without the prior written consent of the Majority Lenders. In the
event either Borrower or any ERISA Affiliate establishes, sponsors,
maintains, administers, participates in or incurs any obligation to
contribute to or any liability under or related to, any employee
benefit plan, such Borrower shall not (a) engage in any prohibited
transaction under Section 4975 of the Code or Section 406 which is
not exempt under Section 4975 of the Code or Section 408 of ERISA
with respect to any such plan, or (b) with respect to any employee
benefit plan other than a Multiemployer Plan fail, or permit to the
extent within such Borrower's control, any ERISA Affiliate to fail,
to establish, maintain and operate each such plan in compliance in
all material respects with the provisions of the Code, ERISA and
all other applicable laws and the regulations and interpretations
thereof, or (c) with respect to any Multiemployer Plan, to the
extent within Borrower's control, fail or permit any subsidiary
that is an ERISA Affiliate to fail to establish, maintain and
operate such plan in compliance with all material respects with the
provisions of the Code, ERISA and all other applicable law and the
regulations and interpretions thereof.
6.30 Swap Agreement.
Borrowers may hedge their floating interest rate exposure only. If
the Borrowers elect to hedge their interest rate exposure through
a Swap Agreement, any counterparty or intermediary will be required
to have at the inception of the transaction a long term unsecured
senior bank debt rating from Moody's, Standard & Poor's Corporation
or Dominion Bond Rating Service of at least A. Such swap
counterparty may be assigned a ratable interest in the security
interests created in favor of Lenders, to secure the counterparty's
net exposure as defined by the International Swap Dealers
Association ("ISDA") without Lenders' consent being required,
provided that the counterparty and the Borrowers use standard ISDA
documentation, and provided that a counterparty who is not also a
Lender hereunder does not receive any voting rights under the Loan
Instruments or otherwise have the right to direct or restrict the
exercise of remedies or any other action of the Lead Agent and a
counterparty who is also a Lender will not, as a result of being a
counterparty, have greater voting rights or additional rights to
direct or restrict the exercise of remedies or any other action of
the Lead Agent. Borrowers shall allow each of the Lenders the
opportunity to match the terms being offered by a non-Lender
counterparty and will accept any such matching offer from a Lender.
6.31 Consents; Agreements; Modifications to Permit.
Borrowers shall use their best efforts to obtain on a post-
closing basis (i) any consents or agreements requested by Lenders
in connection with the transactions contemplated by this
Agreement (including, without limitation, agreements from
geothermal lessors or holders of overriding or other royalty
interests) and (ii) conforming modifications to the permits
allowing for disposal of certain residue materials from the Plants
at the Imperial County Monofill Facility operated by Desert Valley
Company, unless the failure to obtain such
modifications would not have a Material Adverse Effect.
6.32 Disbursement of Funds.
Borrowers shall comply with the disbursement schedule set forth in
Section 6.1 with respect to the priority of payments.
6.33 Syndication Efforts.
Borrowers shall be reasonably available to assist Lead Agent in
syndicating the Total Commitment hereunder.
6.34 Fees, Costs and Expenses;
Indemnity and Exculpation.
(a) Fees, Costs and Expenses. Borrowers shall pay to Lead Agent
(for the account of Lenders and/or Issuing Bank as appropriate),
when due, (i) all fees (payable to third parties), costs and
expenses incurred by Lead Agent (excluding salary and overhead
expenses) in connection with the consummation of the transactions
contemplated by this Agreement as of or prior to the date of the
Initial Advance, (ii) all reasonable fees (payable to third
parties), costs and expenses incurred by Lead Agent (excluding
salary and overhead expenses) in connection with any Loan, the
maintenance and administration of the Loans, any Letter of Credit
and the consummation of the transactions contemplated by this
Agreement after the date of the Initial Advance (including, without
limitation, all renewals, extensions, modifications, increases,
conversions or refinancings thereof), (iii) Lead Agent's reasonable
legal fees and expenses with respect to the syndication of each
such Loan if any syndication is pursued, (iv) (without duplication
with respect to (i) immediately above) all reasonable fees, costs
and expenses incurred by Lead Agent in connection with the
negotiation, preparation and execution of this Agreement and the
other Loan Instruments, the issuance of the Notes and Letters of
Credit (including Lead Agent's, Issuing Bank's and Lenders'
reasonable legal fees and expenses), and (v) all reasonable fees,
costs and expenses of each Lender, Issuing Bank and Lead Agent
(including reasonable legal fees, allocated costs of internal
counsel, and expenses of Lenders, Issuing Bank and/or Lead Agent),
incident to the exercise of any right, power or remedy, or the
enforcement of payment and other terms; in each of the aforesaid
instances, as appropriate, including, without limitation, (A) all
fees for filing, recording, amending or modifying the Loan
Instruments, (B) all reasonable fees and expenses of Independent
Engineer, Reservoir Consultant,
Environmental Consultant and Insurance Advisor (such reasonable
fees and expenses to be paid on the date of the Initial Advance to
the extent then due), (C) all title insurance and title
examination charges, including premiums for title insurance, (D)
all costs and expenses of surveys required to be delivered
pursuant to the terms of this Agreement, and (E) all premiums for
the Insurance Policies provided, however, that with respect to
clauses (C) and (D) above, Lead Agent shall use reasonable
efforts to contain such costs, expenses and charges. Lead Agent
shall give Borrowers written notice of all Advances made pursuant
to this provision. Unless otherwise agreed to in this Section
6.34(a) or elsewhere in this Agreement, all accrued or incurred
fees and expenses payable to third parties and to Lead Agent shall
be paid on the date of the Initial Advance.
(b) Indemnification. Borrowers hereby agree to indemnify and hold
harmless Lenders, Issuing Bank and Lead Agent and, in their
capacity as such, their officers, directors, shareholders,
controlling persons, employees, Lead Agents (including, without
limitation, Independent Engineer, Reservoir Consultant,
Environmental Consultant and Insurance Advisor) and servants (each
an "Indemnified Party") from and against any and all
claims, damages, losses, liabilities, costs or expenses
(including, without limitation, reasonable attorneys' fees and
expenses, investigation and laboratory fees and expenses, court
costs, and litigation expenses) whatsoever which any Indemnified
Party may incur (or which may be claimed against any Indemnified
Party by any person or entity whatsoever) (unless due to the gross
negligence or willful misconduct of such Indemnified Party) by
reason of, in connection with or in any way relating to this
Agreement, any other Loan Instrument, the issuance of any LOC Debt
or any of the Project Documents, including, without
limitation, (i) any breach by Borrowers of any of the provisions of
this Section 6.34(b), (ii) the presence, disposal, spillage,
discharge, emission, leakage, release, or threatened release of any
Hazardous Material which is at, in, on, under, from or
affecting the Project, including, without limitation, any damage or
injury resulting from any such Hazardous Material, (iii) any
personal injury (including wrongful death), property damage (real
or personal) or natural resources damage arising out of or
related to any such Hazardous Material, (iv) any lawsuit brought or
threatened, settlement reached, or order or directive of or by any
Governmental Authority or any other party, relating to such
Hazardous Material, or (v) any violation of or liability
resulting from any Environmental Requirement. Any Indemnified
Party shall, as soon as possible after the receipt by it of notice
of the actual or threatened commencement of any action in respect
to which indemnity may be sought on account of the
indemnity agreement contained herein, notify Borrowers thereof, and
Borrowers shall thereafter have the right to assume the defense of
such action, and such Indemnified Party, upon
Borrowers' assumption of such defense, shall have the right (but
not the obligation) to participate in (but not control) the defense
of such action. Lead Agent shall use its reasonable efforts to
notify Borrowers of any actual or threatened
commencement of any such action known to Lead Agent; provided,
however, Lead Agent's failure to so notify Borrowers shall have no
effect whatsoever on Borrowers' obligations under this Section
6.34, nor shall it create any liability to Borrowers on Lead
Agent's part. Each Indemnified Party shall use its reasonable
efforts to cooperate as reasonably requested by Borrowers in the
defense of any such action. No Indemnified Party shall
compromise or settle any action for which indemnification is or may
be sought hereunder without the prior consent of Borrowers, which
consent shall not be unreasonably withheld.
(c) No Liability of Lenders, Issuing Bank or Lead Agent. Except
as provided in Schedule 2.9(b) and/or the Magma Land Company I
Consent, none of the Secured Parties shall have any liability,
obligation or responsibility whatsoever, jointly or severally, to
Borrowers or any third party with respect to any Property or the
operation of the Facilities, except to make Loans, to maintain the
Loans and to issue and/or participate in the Letters of Credit, in
each case subject to the conditions and pursuant to the terms set
forth in this Agreement. None of the Secured Parties shall be
obligated to inspect the Properties or the operation of the
Facilities, nor be liable for the performance or default of
Borrowers or any other party, or for any failure to operate,
protect or insure the Properties, Facilities or any other property
of any other person, or for the payment of costs of labor,
materials or services supplied for the operation of the Facilities
or for the performance of any obligation of Borrowers or of any
other party to any of the Project Documents. Nothing, including,
without limitation, the making of any Loan, the
maintenance of the Loans and acceptance of any document or
instrument, shall be construed as a representation or warranty,
express or implied, to any party by any of the Secured Parties
except as may be expressly made herein or in any other Loan
Instrument.
(d) Survival. Nothing in this Section 6.34 is intended to limit
Borrowers' other obligations contained in this Agreement, the other
Loan Instruments and the Project Documents. The provisions of this
Section 6.34 shall survive the payment in full of the Loans, LOC
Debt, the Reimbursement Obligations, the release of the Deed of
Trust and of all Collateral under the Security
Documents.
ARTICLE 7 - RIGHTS AND REMEDIES OF LENDERS
7.1 Events of Default.
Each of the following events and occurrences shall constitute an
Event of Default under this Agreement:
(a) Non-Payment. (i) Any principal of the Loans or any
indebtedness of Borrowers evidenced hereunder or by any of the Loan
Instruments is not paid when due, whether by acceleration or
otherwise, (ii) any Reimbursement Obligation is not paid when due,
(iii) any interest on any indebtedness of Borrowers
evidenced by any of the Loan Instruments is not paid when due,
whether by acceleration or otherwise, and remains outstanding for
three (3) or more days, or (iv) any of the fees or any other
amounts payable under any of the Loan Instruments is not paid when
due, whether by acceleration or otherwise, and such default is not
remedied or waived within ten (10) days after receipt by either
Borrower of notice from Lead Agent of such default.
(b) Breach of Credit Agreement Covenants. Borrowers shall fail to
perform or observe the covenants set forth in Section 6.1
(Accounts), Section 6.11 (Other Debt), 6.12 (Guarantees), 6.13
(Liens), 6.14 (Issuance Agreements), 6.15 (Consolidations,
Mergers, Etc.), 6.19 (Other Contracts), 6.21 (Permitted
Investments), 6.22 (Prohibition on Assignment), 6.23
(Transactions with Affiliates), 6.28 (Distributions) and 6.29
(ERISA).
(c) Breach of Other Covenants. Borrowers shall fail to perform or
observe any other covenant, term or agreement (other than those
referred to in paragraphs (a) and (b) above) contained in this
Agreement or any other Loan Instruments and such failure shall not
be remediable or, if remediable, shall continue
unremedied for a period terminating on the last day of the
applicable cure period; provided, if (A) such failure cannot be
cured within a certain cure period, (B) such failure is
susceptible of cure, (C) Borrowers are proceeding with diligence
and in good faith to cure such failure, (D) the existence of such
failure could not be reasonably expected to have a Material Adverse
Effect and (E) Lead Agent shall have received an
officer's certificate signed by an Authorized Officer of
Borrowers, to the effect of clauses (A), (B), (C) and (D) above and
stating what action Borrowers, are taking to cure such
failure, then, Lead Agent shall grant Borrowers such additional
time as may be reasonably necessary to effect a cure, provided that
Borrowers are diligently proceeding to cure such failure or breach.
(d) Misrepresentations. Any statement, representation or
warranty by either Borrower, or any Partner, in any of the Loan
Instruments, any of the Project Documents, any Financial
Statement or any other writing delivered to Lead Agent in
connection with any of the Loan Instruments and the transactions
contemplated herein and therein, shall prove to have been false,
incorrect, incomplete or misleading on or as of the date made,
deemed made, confirmed or furnished and such false, incorrect,
incomplete or misleading statement, representation or warranty
could reasonably be expected to have a Material Adverse Effect.
(e) Failures under Project Documents, etc. (i) The Material
Project Documents, any applicable Governmental Requirements or the
requirements of any of the Insurance Policies are not fully and
timely complied with by Borrowers in any respect or are the subject
of a breach or an event of default, in each case by Borrowers as
determined by Majority Lenders in their reasonable discretion, and
such failure to comply, breach or event of
default shall not be remediable or, if remediable, shall continue
unremedied for a period terminating on the last day of the
applicable cure period, if any, specified in the relevant Project
Document, Governmental Requirement or Insurance Policy; provided,
if (A) such failure cannot be cured within a certain cure period,
(B) such failure is susceptible of cure, (C) Borrowers are
proceeding with diligence and in good faith to cure such failure,
(D) the existence of such failure could not be reasonably
expected to have a Material Adverse Effect and (E) Lead Agent shall
have received an officer's certificate signed by an
Authorized Officer of Borrowers, to the effect of clauses (A), (B),
(C) and (D) above and stating what action Borrowers are taking to
cure such failure, then, Majority Lenders shall grant Borrowers
such additional time as may be reasonably necessary to effect a
cure, provided that Borrowers are diligently proceeding to cure
such failure or breach;
(ii) any Material Project Document or any material provision of
any Material Project Document, shall (a) at any time for any reason
cease to be valid and binding or in full force and effect (except
upon expiration of its stated term) or any Material Project
Document shall be declared by a court or other
Governmental Authority of competent jurisdiction to be null and
void or be terminated (except upon expiration of its stated term)
or (b) any party (other than Borrowers) shall be in material
default under any Material Project Document; provided, however,
that no default shall exist hereunder with respect to this
Section, if (i) the Borrowers are diligently proceeding to cure
such default and (ii) no other Event of Default exists hereunder or
under any of the other Loan Instruments.
(f) Non-Maintenance of Governmental Approvals. (i) Any of the
material Governmental Approvals required or obtained in
connection with the Loans, this Agreement or any of the other
Project Documents or any of the material Governmental Approvals
required to be obtained or obtained by Borrowers, Magma or
General Partner in connection with the full performance of the
Project Document to which it is a party shall be rejected or
otherwise denied or shall expire (without being timely renewed) or
be revoked, rescinded, suspended, held invalid or otherwise limited
in effect;
(ii) the passage or promulgation of, or any change in, any
statute, ordinance or regulation affecting the Project that has a
Material Adverse Effect; or
(iii) the Lead Agent or any Lender shall, solely as a result of
any transaction contemplated hereby, become subject to regulation
as an "electric utility," "electric corporation," "electric
company," "public utility," "gas utility," "natural gas company,"
"public service company," "electric utility company" or "holding
company" under the Public Utility Holding Company Act of 1935, as
amended, the Federal Power Act, as amended, the Natural Gas Act, as
amended, PURPA, or any comparable state law or regulation.
(g) Governmental Approvals. Any requirement or any modification
not previously approved by Majority Lenders (including, without
limitation, establishment of new requirements or revocation of any
exemption or waiver) of any Governmental Approval which, in the
reasonable judgment of Majority Lenders, could reasonably be
expected to have a Material Adverse Effect.
(h) Reduction in Rates. The purchase price for energy as set out
in any of the Power Purchase Agreements shall be reduced by any
Governmental Authority pursuant to a final non-appealable order (or
by Borrowers pursuant to such an order), and such reduction would
have a Material Adverse Effect.
(i) Debtor Relief Events. Either Borrower, Magma or General
Partner:
(i) becomes insolvent or does not pay its Debts as they become due
or is unable to pay, or admits in writing its inability to pay its
Debts as they become due or makes an assignment for the benefit of
creditors; or
(ii) commences any case, proceeding or other action under any
Debtor Relief Law; or
(iii) in any involuntary case, proceeding or other action
commenced against it under any Debtor Relief Law, (A) fails to
obtain a dismissal of such case, proceeding or other action within
sixty (60) days of its commencement, or (B) converts the case from
one chapter of the Bankruptcy Reform Act of 1978, as amended, to
another chapter, or (C) is the subject of an order for relief or an
adjudication or appointment is made under any Debtor Relief Law; or
(iv) conceals, removes or permits to be concealed or removed, any
part of its property, with intent to hinder, delay or defraud its
creditors or any of them, or makes or suffers a transfer of any of
its property which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar law; or makes any transfer of its
property to or for the benefit of a creditor at a time when other
creditors similarly situated have not been paid; or suffers or
permits, while insolvent, any creditor to obtain a Lien upon any of
its property through legal proceedings which are not vacated within
sixty (60) days from the date thereof; or
(v) commences any case, proceeding or other action for the
appointment of a trustee, receiver, custodian or other official for
or to take possession of all or any part of its property or assets
or to have any court take jurisdiction of any of its property or
assets; or
(vi) takes any corporate, partnership or other (as the case may
be) action indicating its authorization of, consent to, approval of
or acquiescence in any case, proceeding, action or event described
in clauses (i), (ii), (iii), (iv) or (v) above; or
(vii) (A) a judgment or judgments in an amount in excess of
$250,000 shall be rendered against the Borrowers or the General
Partner, and, within thirty (30) days after entry thereof, such
judgment shall not be discharged or execution thereof stayed
pending appeal, or within thirty (30) days after the expiration of
any such stay, such judgment shall not be discharged, (B) any order
or decree is entered by any court of competent jurisdiction
directly or indirectly enjoining the operation of the Project, and
such order or decree is not vacated or stayed, and the
proceedings out of which such order or decree arose are not
dismissed or stayed, within thirty (30) days after the entry
thereof, or (C) a judgment or judgments in excess of $500,000 shall
be rendered against either Borrower or the General Partner which
impairs the ability of such party to perform its
obligations under the Loan Instrument or Project Document to which
it is a party and, within thirty (30) days after the entry thereof,
such judgment shall not be discharged or the execution thereof
stayed pending appeal, or within thirty (30) days after any such
stay, such judgment shall not be discharged; or
(viii) with respect to any of Borrowers, General Partner or Magma
(A) it fails to pay any indebtedness for borrowed money or
deferred purchase prices (unless the subject of a Good Faith
Contest) or any interest or premium thereon, when due (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the applicable
grace period, if any, specified in the agreement or instrument
relating to such indebtedness, or (B) defaults under any
agreement or instrument relating to any such indebtedness, and such
default shall not be waived and shall continue after the applicable
grace period, if any, if the effect of such is to accelerate the
maturity of such indebtedness, in the case of clause (A) or (B),
having an aggregate principal amount of
$250,000 with respect to Borrowers or General Partner or
$1,000,000 with respect to Magma; or any such indebtedness shall be
declared to be due and payable or be required to be prepaid (other
than by a regularly scheduled required prepayment), prior to the
stated maturity thereof; or
(ix) has a trustee, receiver, custodian or other official
appointed for or take possession of all or any part of its
property or assets or has any court take jurisdiction of any of its
property or assets, which action remains undismissed for a period
of sixty (60) days; or
(x) with respect to Borrower and General Partner, fails to
discharge (or to post a bond or other security acceptable to Lead
Agent in its sole discretion) within a period of thirty (30) days
any attachment, sequestration or similar writ levied upon any
material property or assets of such person.
(j) Dissolution of Borrowers. Except to the extent permitted in
clause (d) of Schedule 2.9(b), the liquidation, dissolution,
termination, merger or consolidation of Borrowers, or the
transfer of all or substantially all of the assets of either
Borrower to any other Person.
(k) Transfer of Collateral; Event of Loss. (i) Borrowers' good
and marketable title to the Property (subject to Permitted Liens)
or Borrowers' good title to or any right of Borrowers in all or any
part of the Project, any Collateral purported to be covered by the
Security Documents, including, without limitation,
Borrower's rights in the Material Project Documents, other than as
permitted pursuant to Section 6.15(a) hereof or the applicable
Security Document, shall become vested in any party other than the
party named as owner and/or holder thereof in the applicable
Security Document, whether by operation of Law or otherwise, or
(ii) an Event of Loss shall occur.
(l) Impairment of Security Interests. (i) Any provision in any
Security Document shall for any reason cease to be valid and
binding on the parties thereto and the effect thereof is to impair
the security purported to be covered thereby, or any such party
shall so state in writing, or (ii) any Security Document shall
cease to be in full force and effect, or shall for any reason cease
to create a valid security interest or Lien having the priority and
perfected in the manner contemplated by Section 5.9 hereof in any
of the Collateral purported to be covered thereby other than
security interests or Liens that are perfected by possession of the
secured party.
(m) ERISA Plans. With respect to any employee benefit plan
(including without limitation any employee benefit plan of an ERISA
Affiliate) as to which either Borrower may have liability, (i)
there shall exist an Insufficiency with respect to such plan which
could result in a material liability to either Borrower and formal
steps, or informal steps reasonably expected to result in formal
action, are or have been taken to terminate such plan or such plan
is terminated, either Borrower withdraws from or
institutes formal steps, or informal steps reasonably expected to
result in formal action, to withdraw from such plan or any
reportable event (as defined in Section 4043 of ERISA other than an
event for which the 30-day notice provision is waived under
subsection .13, .14, .18, .19 or .20 of Department of Labor
Regulation Section 2516) with respect to such plan shall occur or
(ii) a contribution failure occurs with respect to such plan which
is sufficient to give rise to a lien against either
Borrower under Section 302(f) of ERISA or Section 412 of the Code
or (iii) with respect to any such plan that is a Multiemployer Plan
either Borrower shall have incurred withdrawal liability to such
plan in an amount which, when aggregated with all other amounts
required to be paid to Multiemployer Plans in connection with
withdrawal liabilities of the Borrowers (determined as of the date
of notification of withdrawal liability) exceeds 150,000 or
requires payments exceeding 150,000 per year or (iv) any event or
events shall exist or transaction shall occur with respect to any
such plan or plans which individually or in the aggregate results
a material liability to either Borrower.
(n) QF Status. Borrowers shall fail to maintain each Facility's
status as a QF or any action by either Borrower, any Partner or any
Affiliate thereof causes a loss of the QF Status of any Facility.
(o) Assignment by Partners. Except to the extent permitted in
Schedule 2.9(b) hereto or as permitted in Section 6.15(a) hereof,
any of the Partners shall convey, pledge or otherwise encumber any
of its interests in the Borrowers.
(p) Ownership by Magma. Failure of Magma to maintain 100%
ownership and Control, direct or indirect, of each Borrower.
(q) Operator. If, during the term of this Agreement, Operator or
another reasonably qualified wholly-owned subsidiary of Magma,
shall cease to be the Operator or cease to exercise substantial
control over the operation and management of the Project or cease
to be bound by the terms of the O&M Agreement.
(r) Grantor Under Easement Grant Deed. If, during the term of
this Agreement, either Magma Land Company I or another reasonably
qualified wholly-owned subsidiary of Magma shall cease to be the
grantor under the Easement Grant Deed.
(s) Additional Capacity. Borrowers develop additional megawatts
of power generating capacity within the Resource Easement Rights
Properties and both (A) Magma no longer retains ultimate control
over the ownership and use of such additional power generating
capacity and the Resource Easement Rights (as defined in the
Easement Grant Deed) and (B) the development of such additional
power generating capacity would cause a Material Adverse Effect, or
(C) in any event such additional generation exceeds forty (40)
megawatts (net).
(t) Geothermal Facilities. Magma Land Company I or an Affiliate
thereof uses the Surface Properties (as defined in the Easement
Grant Deed) and both (A) Magma no longer retains ultimate control
over the ownership and use of the rights conveyed by the
Geothermal Rights Documents (as defined in the Easement Grant Deed)
in the Reserved Geothermal Lands (as defined in the
Easement Grant Deed) and (B) such use would cause a Material
Adverse Effect.
(u) Merger. SSPG and SSBP are merged or otherwise combined into
a single entity and both (A) Magma Power no longer retains
ultimate control over the ownership and use of the Resource
Easement Rights and (B) such merger or combination would cause a
Material Adverse Effect.
(v) Development of Future Non-Easement Area Plants. Magma Land
Company I or an Affiliate thereof develops Future Non-Easement Area
Plants (as defined in the Easement Grant Deed) on the
Reserved Geothermal Lands and both (A) Magma no longer retains
ultimate control over the ownership and use of the rights
conveyed by the Geothermal Rights Documents in the Reserved
Geothermal Lands and (B) the development of such Future Non-
Easement Area Plants would cause a Material Adverse Effect.
(w) Formation or Amendment of Geothermal Operating Unit. Magma
Land Company I or an Affiliate thereof forms or amends a
geothermal operating unit and both (A) Magma no longer retains
ultimate control over the ownership and use of the Resource
Easement Rights and (B) such formation or amendment would cause a
Material Adverse Effect.
7.2 Remedies Upon Event of Default, etc.
(a) Right to Cure; Acceleration. If an Event of Default occurs
and has not been remedied during the applicable grace period, if
any, Lead Agent, for the account of Lenders and Issuing Bank, may
in its sole discretion take all actions necessary to cure such
Event of Default, but shall be under no obligation to continue such
action once commenced. Lead Agent shall give Borrowers prior
written notice of all Loans payments made by Lead Agent pursuant to
this provision. All sums advanced and disbursed hereunder, shall
be disbursed under the Loan Instruments and shall be secured by the
Security Documents. If an Event of Default occurs and has not been
remedied during the applicable grace period, if any, Lead Agent may
in addition to the foregoing declare an Event of Default and, by
giving notice to Borrowers, and upon receiving consent of the
Majority Lenders, (i) declare the entire amount of Borrowers'
Obligations to be immediately due and payable, irrespective of any
other provision of such
agreements, (ii) give notice (which may be telephonic notice if
confirmed in writing) to Depositary of the occurrence of an Event
of Default (accompanied by notice given in the same manner to cease
the issuance, authentication and delivery of LOC Debt, in which
case the date of giving of such notice shall become the Credit
Expiration Date hereunder and no further LOC Debt shall be issued,
and Lenders' obligations to increase the amount of the Letters of
Credit pursuant to Section 3.4(b) hereof shall be terminated
(provided that in the case of LOC Debt issued on the same date as
notice is given pursuant to this Section 7.2(a), but prior to the
receipt of such notice, or on such date but prior to the receipt of
such notice by Depositary, for purposes of
determining pursuant to the Depositary Agreement whether LOC Debt
matures later than fifteen (15) days prior to the Credit
Expiration Date in effect at the time of its issuance, the Credit
Expiration Date shall be deemed to be the Credit Expiration Date in
effect at the time of issuance and not the Credit Expiration Date
as accelerated pursuant to this Section 7.2(a)), or (iii) direct
Depositary to make a drawing under the Letters of Credit in an
amount required to pay in full all Outstanding LOC Debt entitled to
the benefit of the Letters of Credit upon maturity and require from
Borrowers immediate reimbursement for payments pursuant to such
drawing (provided, however, that if, with
respect to Borrowers, an Event of Default occurs pursuant to
Section 7.1(i) the accelerations provided for in the immediately
preceding clauses (i) and (ii) directly above shall be deemed to
have been made upon the occurrence of such Event of Default without
any notice from Lead Agent or Lenders to Borrowers), without any
presentment, demand, protest or any other notice of any kind, all
of which are hereby expressly waived. No such action taken by Lead
Agent shall have the effect of terminating, reducing or altering in
any respect the terms of the Letters of Credit with respect to LOC
Debt Outstanding at the time.
Simultaneously with any declaration, requirement, the giving of any
notice to Borrowers and any direction by Lead Agent under this
Section 7.2(a), Lead Agent shall notify each Lender of such action.
(b) Foreclosure. In the event that Borrowers' Obligations shall
become due and payable by acceleration as provided in paragraph (a)
above, all sums payable shall become immediately due and payable
without presentment, demand, protest or notice of any kind other
than the notice specifically required (if any) by this Section 7.2,
all other notice being expressly waived by
Borrowers, and Lead Agent, Lenders and Issuing Bank shall have the
right to take all funds in the Accounts and to otherwise enforce
their security interests and Liens as provided herein and in the
other Loan Instruments. The proceeds of any realization on the
Collateral or from any other foreclosure or similar action or
exercise of rights by Lead Agent, Lenders and Issuing Bank shall be
applied by Lead Agent as specified in the Security Documents, or if
not so specified, for the account of Issuing Bank and Lenders in
accordance with each Lender's Proportionate Share. Borrowers shall
furthermore indemnify Lead Agent, Lenders and Issuing Bank in
accordance with Section 6.34 hereof for all costs, expenses and
losses resulting from any Default or Event of Default and for all
costs, expenses and losses incurred by them (including reasonable
attorneys' fees) in remedying or curing such Default or Event of
Default and/or in proceeding to enforce their lien on and security
interest in the Collateral.
(c) Lead Agent Attorney-in-Fact. Borrowers hereby appoint Lead
Agent as the attorney-in-fact of Borrowers, with full power of
substitution, and in the name of Borrowers, if Lead Agent elects to
do so, upon an Event of Default, to: (i) apply any monies in the
Accounts to the payment of Borrowers' obligations to Lenders,
Issuing Bank and Lead Agent (whether or not then due and payable)
under any of the Loan Instruments, in such order of application as
Lead Agent may determine in its sole discretion, (ii) disburse and
directly apply the proceeds of any Loan, to the satisfaction of any
of Borrowers' obligations hereunder, (iii) hold, use, disburse and
apply the Term Loan for payment or performance of any obligation of
Borrowers hereunder, (iv) advance and incur such expenses as Lead
Agent deems necessary to preserve the Project, (v) disburse any
portion of any Loan from time to time, to persons other than
Borrowers for the purposes specified in Section 6.1 hereof
irrespective of the provisions of any other Section hereof (and the
amount of Loans to which Borrowers shall thereafter be entitled
shall be correspondingly reduced), (vi) operate each Facility to
the satisfaction of the Governmental Authorities, (vii) execute all
applications and certificates in the name of Borrowers which may be
required for operation of each Facility, (viii) endorse the name of
Borrowers on any checks or drafts, representing proceeds of the
Insurance Policies, or other checks or instruments payable to
Borrowers with respect to the Project, (ix) do every act with
respect to the Project Documents and the operation of the Project
which Borrowers may do, (x) prosecute or defend any action or
proceeding incident to the Project, and (xi) select, for the
account of Borrowers, an
operator to operate the Project on such terms and conditions as
Lead Agent shall reasonably deem advisable. The power-of-
attorney granted hereby is a power coupled with an interest and is
irrevocable. Lead Agent, Lenders and Issuing Bank shall have no
obligation to undertake any of the foregoing actions, and, without
derogating from Lead Agent's, Lenders' or Issuing Bank's liability
for gross negligence or willful misconduct, if they take any such
action they shall have no liability to Borrowers to continue the
same or for the sufficiency or adequacy thereof.
(d) Enforcement Costs and Expenses. Any funds of Lead Agent,
Lenders or Issuing Bank (including, without limitation, any Loan by
Lead Agent) used for any purpose referred to in this Article 7,
whether or not in excess (without obligating the Lenders to fund
any loans in excess of commitments hereunder) of the Total
Commitment, shall (i) be paid by Borrowers pursuant to Section
6.34(a) hereof, (ii) be governed by the Loan Instruments, (iii)
constitute a part of the indebtedness secured by the Security
Documents, (iv) bear interest at the then-applicable Default
Interest Rate, and (v) be payable upon demand by Lead Agent to
extent permitted by applicable Law.
(e) Partners' Right to Cure. If a Default occurs, any Partner may
in its discretion take any actions necessary to cure such Default.
Notwithstanding any payment or payments made by any Partner or the
exercise by Lead Agent of any of the remedies provided under this
Agreement or any of the other Loan
Instruments, each Partner expressly, irrevocably and
unconditionally waives any and all rights of subrogation,
reimbursement, indemnity, exoneration and contribution against
Borrowers and against any collateral security and guarantee held by
Borrowers, which each Partner may now or hereafter have
against Borrowers with respect to this Agreement or any of the
other Loan Instruments, without regard to whether any such right or
claim arises expressly, implicitly, by operation of law or
otherwise.
7.3 Continuing Lien.
The Liens and security interests granted in the Loan Instruments
secure all indebtedness and all Obligations of Borrowers in
connection with the Project and Loan Instruments of whatever kind
or character, whether now owing, hereafter arising or hereafter to
be performed.
ARTICLE 8 - LEAD AGENT, ISSUING BANK, CO-AGENT,
"LEAD MANAGERS" AND RELATIONS AMONG BANKS
8.1 Appointment and Cessation.
(a) Lead Agent. Each Lender and Issuing Bank hereby appoints Lead
Agent to act as its Lead Agent under this Agreement and to act as
Lead Agent under the Security Documents as provided
therein, and irrevocably authorizes Lead Agent to take such action
on such Lender's and Issuing Bank's behalf under the provisions of
this Agreement and the other Loan Instruments (including, without
limitation, the Security Documents) and any other agreements and
instruments referred to herein and therein, and to exercise such
powers hereunder and thereunder as are specifically delegated to
Lead Agent and such powers as are reasonably incidental thereto.
Lead Agent shall exercise the same care hereunder as it exercises
in connection with similar transactions for its own account in
which no other lender
participates. In performing its function and duties hereunder and
under the Security Documents, Lead Agent shall act solely as the
Lead Agent of Lenders and Issuing Bank and does not assume and
shall not be deemed to have assumed any obligation towards or
relationship of agency or trust with or for Borrowers or any other
party to any of the Project Documents.
(b) Issuing Bank. Each Lender hereby appoints Issuing Bank to act
as Issuing Bank under this Agreement with respect to the Letters of
Credit, and irrevocably authorizes Issuing Bank to take such action
on such Lender's behalf under the provisions of this Agreement and
the other Loan Instruments and any other agreements and instruments
referred to herein, and to exercise such powers hereunder and
thereunder as are specifically
delegated to Issuing Bank and such powers as are reasonably
incidental thereto.
8.2 Majority Lenders.
(a) Lead Agent. Except where such consultation is not
contemplated in this Agreement, Lead Agent will consult with
Lenders (and Issuing Bank, where appropriate) prior to taking
action on their behalf under this Agreement or the other Loan
Instruments and, where appropriate, in acting as their Lead Agent
under the Security Documents. Whenever the consent of the
Majority Lenders is required hereunder, Lead Agent will not take
any action contrary to the written direction of the Majority
Lenders, and will take any lawful action in accordance with the
provisions of this Agreement prescribed in a written direction of
the Majority Lenders. Lead Agent may decline to take any action
except upon the written direction of the Majority Lenders, and Lead
Agent may request a ratification by the Majority Lenders of any
action taken by it under this Agreement. In each case, Lead Agent
shall have no liability to any of the Lenders or Issuing Bank for
any action taken by it or them upon the direction of the Majority
Lenders or if ratified by the Majority Lenders, nor shall Lead
Agent have any liability for any failure to act unless Lead Agent
has been instructed to act by the Majority Lenders. Except as
otherwise provided in Section 9.4 or as otherwise expressly
provided in this Agreement, the action of the Majority Lenders
shall bind all Lenders and Issuing Bank hereunder. Notwithstanding
anything herein to the contrary, Lead Agent need not take any
action on behalf of Lenders and Issuing Bank unless and until it is
indemnified to its satisfaction for any and all consequences of
such action.
(b) Issuing Bank. Except for the issuance of any Letter of Credit
in accordance with the terms of this Agreement and the payment of
drawings thereunder, Issuing Bank may decline to take any action
except upon the written direction of the Majority Lenders, and
Issuing Bank may request a ratification by the Majority Lenders of
any action taken by it under this Agreement. In each case, Issuing
Bank shall have no liability to any Lender or Lead Agent for any
action taken by Issuing Bank upon the direction of the Majority
Lenders or if ratified by the Majority Lenders, nor shall Issuing
Bank have any liability for any
failure to act unless Issuing Bank has been instructed to act by
the Majority Lenders. Notwithstanding anything herein to the
contrary, Issuing Bank need not take any action on behalf of
Lenders or Lead Agent unless and until Issuing Bank is
indemnified to its satisfaction for any and all consequences of
such action.
8.3 Liability and Credit Appraisal.
Neither Lead Agent, in its capacity as Lead Agent, nor Issuing
Bank, in its capacity as Issuing Bank, nor any of their
respective officers, directors, employees or Lead Agents shall be
liable for any action taken or omitted by it or them hereunder or
under any other Loan Instrument, or in connection herewith, except
for its or their gross negligence or willful misconduct. Neither
Lead Agent, nor Issuing Bank shall be responsible for any recitals,
statements, representations or warranties herein or for the
execution, effectiveness, genuineness, validity or
enforceability of this Agreement, the Notes, any Commercial Paper
Notes, the other Loan Instruments, Project Documents or any other
document executed in connection herewith, or be required to make
any inquiry concerning the performance or observance by Borrowers
of any of the terms, provisions or conditions of this Agreement,
the Notes, any Commercial Paper Notes, the other Loan
Instruments, Project Documents or any other document executed in
connection herewith. Each of Lenders and Issuing Bank represents
and warrants to Lead Agent that it has independently and without
reliance on Lead Agent made its own credit investigation and
appraisal of Borrowers and the transactions contemplated by the
Project Documents on the basis of such documents and information as
it has deemed appropriate and that it has entered into this
Agreement on the basis of such independent investigation and
appraisal, and each of the Lenders and Issuing Bank represents that
it will continue to make its own investigation and credit
appraisal.
8.4 Reliance by Lead Agent or Issuing Bank.
Each of Lead Agent and Issuing Bank shall be entitled to rely upon
any communication or document believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person
or Persons, including, without limitation, any thereof purporting
to be from Depositary, and to act upon the advice of legal counsel
and other experts selected by it concerning all matters pertaining
to this Agreement and its duties hereunder and shall not be liable
to any of the other parties hereto for any of the consequences of
such reliance. No such reliance shall limit or otherwise affect
the obligations of Borrowers or any Lender under this Agreement.
Each of Lead Agent and Issuing Bank may rely for the purposes of
the giving of notice or the disbursement of funds on the name and
address of Borrowers, Lead Agent,
Issuing Bank or each Lender, as appropriate, set forth in Section
9.1 hereof or as notified to Lead Agent or Issuing Bank, as the
case may be, pursuant to Section 9.1 hereof.
8.5 Other Banking.
Lead Agent, in its capacity as a Lender or Issuing Bank, shall have
the same rights, powers and obligations hereunder as any other
Lender or Issuing Bank, and each of Issuing Bank, in its capacity
as a Lender, shall have the same rights, powers and obligations
hereunder as any other Lender specifically, in each case, including
the right to give or deny consent to any action requiring consent
or direction of the Majority Lenders. Lead Agent, Issuing Bank and
their respective Affiliates may, without liability to account to
any Lender or (in the case of Lead Agent) Issuing Bank, engage in
any kind of banking, trust or other business with Borrowers as if
it were not such Lead Agent,
Issuing Bank or Affiliate. In addition, Lead Agent or Issuing
Bank, as the case may be, shall be entitled to receive from
Borrowers its portion of any fee in connection with this
transaction without any liability to account therefor to any other
Lender or (in the case of Lead Agent) Issuing Bank, except as Lead
Agent or Issuing Bank may have expressly agreed.
8.6 Payments, Notices and Determinations
by Lead Agent .
(a) Proportionate Share Distributions. Lead Agent shall
promptly distribute to each of the Lenders and Issuing Bank, as
appropriate, in like funds upon receipt each Lender's applicable
Proportionate Share of all amounts of principal and interest, and
each Lender's and Issuing Bank's applicable Proportionate Share or
other agreed share of all fees and all other amounts received by
Lead Agent from Borrowers hereunder, or from any party under the
Security Documents, on behalf of Lenders and Issuing Bank. If at
any time Lead Agent makes available to any Lender or
Issuing Bank amounts due from Borrowers hereunder which Borrowers
fail to make available to Lead Agent, such Lender or Issuing Bank
shall on request forthwith refund such amounts to Lead Agent
together with interest thereon at the Federal Funds Rate.
(b) Non-Proportionate Share Receipts. In the event that any
Lender or Issuing Bank shall at any time receive any non-
Proportionate Share payment from any source in respect of any of
Borrowers' obligations hereunder, in violation of the requirement
of this Agreement that Borrowers make such payment to Lead Agent,
such Lender or Issuing Bank shall be deemed to have received such
payment as agent for and on behalf of all Lenders and shall
immediately advise Lead Agent of the receipt of such funds and
promptly transmit the full amount thereof to Lead Agent for prompt
distribution among all Lenders and Issuing Bank in
accordance with their respective Proportionate Shares as provided
in this Agreement; provided, however, with respect only to the
relationship among the Lenders and Issuing Bank such Lender or
Issuing Bank shall be deemed not to have received, and Borrowers
shall be deemed not to have made to such Lender or Issuing Bank,
any payment transmitted to Lead Agent by such Lender or Issuing
Bank pursuant to this Section 8.6(b).
(c) Interest Period Notice. Lead Agent shall forthwith notify
Lenders by telex or telecopy of each Interest Period chosen by
Borrowers, the Interest Rate for each Interest Period, the date of
any expected payment and, to Lenders and Issuing Bank, all other
material notices transmitted by Borrowers. Determinations of
interest rates and amounts of interest and L/C Fees, Default
Interest and other sums due hereunder and contained in notices from
Lead Agent shall be conclusive and binding on Lenders and Issuing
Bank, absent manifest error in computation or
transmission.
(d) Collateral Records. Lead Agent will maintain all records as
to amount, type and value of Collateral pledged and assigned under
the Security Documents. Upon request of any Lender or Issuing
Bank, Lead Agent will give a statement to such party with respect
to the types and amounts of Collateral held pursuant to the
Security Documents, and Lead Agent will give prompt notice to such
parties of any Event of Default under the Security Documents of
which it obtains knowledge.
(e) Delivery of Information. Lead Agent shall deliver to each
Lender copies of the financial statements, and the Pro Forma
delivered to Lead Agent by Borrowers pursuant to Section 6.8 hereof
and any other information that Lenders shall reasonably request.
8.7 Successor Lead Agent.
(a) Generally. Subject to the appointment and acceptance of a
successor Lead Agent as provided below, Lead Agent may resign at
any time either under this Agreement or under the Security
Documents by giving written notice thereof to Lenders, Issuing Bank
and Borrowers, and Lead Agent may be removed at any time with or
without cause by the Majority Lenders. Upon any such resignation
or removal, the Majority Lenders shall have the right to appoint a
successor Lead Agent, which Lead Agent must be consented to by
Borrowers (such consent not to be unreasonably withheld). Upon the
acceptance of any appointment as Lead Agent hereunder by a
successor Lead Agent, such successor Lead Agent shall thereupon
succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Lead Agent, and the retiring
Lead Agent shall be discharged from its duties and obligations
hereunder. After any retiring Lead Agent's
resignation or removal hereunder as Lead Agent, the provisions of
this Article 8 shall continue in effect for such Lead Agent's
benefit in respect of any actions taken or omitted by it while it
served as Lead Agent hereunder.
(b) Required Amendment. Upon the request of Lead Agent,
Borrowers shall execute appropriate modifications to the Deed of
Trust upon any change in the identity of Lead Agent; provided,
however, that Borrowers shall not be required to pay for title
insurance endorsements in connection with such modifications to the
Deed of Trust.
8.8 Indemnification.
Lenders agree to indemnify and hold harmless Lead Agent in its
capacity as such (without limiting the obligation of Borrowers to
do so), and Issuing Bank in its capacity as such (to the extent not
reimbursed by Borrowers and without limiting the obligation of
Borrowers to do so), ratably according to each Lender's
Proportionate Share, 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 (including, without limitation, at any time following
the payment of any Reimbursement Obligation or the termination of
this Agreement) be imposed on, incurred by or asserted against Lead
Agent or Issuing Bank, as the case may be, in any way relating to
or arising out of this Agreement, or any documents contemplated by
or referred to herein or the
transactions contemplated hereby or any action taken or omitted by
Lead Agent or Issuing Bank, as the case may be, under or in
connection with any of the foregoing; provided that no Lender shall
be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely
from Lead Agent's or Issuing Bank's gross negligence or willful
misconduct or for the payment of any portion of the L/C Fees. The
agreements in this Section 8.8 shall survive the payment of the
Reimbursement Obligations and any Loans made hereunder and the
termination of this Agreement.
8.9 Co-Agent; "Lead Managers".
None of the Lenders identified on the facing page or signature
pages of this Agreement as a "Co-Agent" or "Lead Manager" shall
have any right, power, obligation, liability, responsibility or
duty under this Agreement other than those applicable to all
Lenders as such. Each Lender acknowledges that it has not
relied, and will not rely, on any of the Lenders so identified in
deciding to enter into this Agreement or in taking or not taking
action hereunder.
ARTICLE 9 - GENERAL TERMS AND CONDITIONS
9.1 Notices.
(a) Generally. All notices, demands, requests, and other
communications required or permitted hereunder shall be in
writing and shall be deemed to have been given (i) when presented
personally or actually received by addressee, (ii) when
transmitted by tested telex, if available, or otherwise
authenticated to the number specified below and the proper answer
back is received, or (iii) three (3) Banking Days after being
deposited in a regularly maintained receptacle for the United
States Postal Service, postage prepaid, registered or certified,
return receipt requested, addressed to the respective party, as the
case may be, at the following address, or such other address as any
party may from time to time designate by written notice to the
others as herein required. The telecopy (facsimile) numbers
provided below are for convenience of the parties only.
Transmission by telecopy shall constitute provision of notice under
this Agreement only if receipt thereof is acknowledged by the
addressee.
If to Borrowers:
Salton Sea Power Generation L.P./
Salton Sea Brine Processing L.P.
4365 Executive Drive, Suite 900
San Diego, California 92121
Attention: General Counsel
Telecopy: (619) 622-7822
If to Lead Agent or Issuing Bank:
Credit Suisse
Tower 49
12 East 49th Street
New York, New York 10017
Attention: Project Finance re: Salton Sea
Telecopy: (212) 238-5390
(b) Change in Deed of Trust. Upon the request of Lead Agent,
Borrowers shall execute appropriate modifications to the Deed of
Trust upon any change in the address of Lead Agent; provided,
however, that Borrowers shall not be required to pay for title
insurance endorsements in connection with such modifications to the
Deed of Trust.
9.2 Additional Lenders and Loan Participations.
(a) Additional Lenders. Subject to the consent of Borrowers and
Lead Agent, which consents shall not be unreasonably withheld,
Lenders may at any time sell to any financial institution
("Purchasing Lender") all or any part of their rights and
obligations under this Agreement and the Notes pursuant to a
Commitment Transfer Supplement in the form attached as Exhibit
9.2(a), executed by such Purchasing Lender, such transferor Lender,
Lead Agent and Borrowers which Commitment Transfer
Supplement shall provide, among other things, that such transfer
shall be made by the transferor Lender to the Purchasing Lender
without recourse, representation or warranty. Upon (A) such
execution of such Commitment Transfer Supplement, and (B)
delivery of an executed copy thereof to Borrowers and notice of the
amount of its participation to Lead Agent, such Purchasing Lender
shall for all purposes be a Lender party to this Agreement and
shall have all the rights and obligations of a Lender under this
Agreement, to the same extent as if it were an original party
hereto with the percentage of the Term Loan Facility, Working
Capital Facility as set forth in such Commitment Transfer
Supplement, which shall be deemed to amend this Agreement
(including, without limitation, Schedule 2.1 hereto) to the extent,
and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of such
Proportionate Shares arising from such purchase by such
Purchasing Lender. Upon the consummation of any transfer to a
Purchasing Lender pursuant to this Section 9.2(a), the transferor
Lender, Lead Agent and Borrowers shall make appropriate
arrangements so that, if required, (x) replacement Notes are issued
to such transferor Lender and new Notes or, as
appropriate, replacement Notes, are issued to such Purchasing
Lender upon the cancellation of any Notes being replaced, in each
case in principal amounts reflecting their Proportionate Shares of
the Total Commitment and or, as appropriate, their
Proportionate Shares of the outstanding Loans as adjusted
pursuant to such Commitment Transfer Supplement, and (y)
appropriate modifications shall be made to the Deed of Trust;
provided, however, that Borrowers shall not be required to pay for
title insurance endorsements in connection with such
modifications to the Deed of Trust.
(b) Participations. Borrowers acknowledge and agree that any
Lender may, from time to time, sell or offer to sell on a pro rata
basis a participation in the Term Loan Facility, Working Capital
Facility, the Term Loan, the Working Capital Loan and the Loan
Instruments to one or more institutions (each a
"Participant"). Any sale of a participation by a Lender to any
financial institution shall be subject to Lead Agent's consent, not
to be unreasonably withheld, and may, upon notice given by such
Lender to each other Lender, include the grant of any of the rights
(but not more than the rights) that such Lender had
hereunder. Upon notice to each other Lender, such sale shall not
relieve such Lender of its obligations, or impair the rights of
such Lender hereunder, and any agreement pursuant to which such
Lender sells a participation in such a manner shall provide that
(A) such Lender shall retain the sole right and responsibility to
exercise the rights of such Lender, and enforce the obligations of
Borrowers, including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this
Agreement or any other Loan Instrument and the right to take action
under Article 7 hereof, and (B) neither such Lender nor the
Participant shall be entitled to receive payments with
respect to the additional costs of maintaining such
participation, in excess of an amount which would be payable to
such Lender in the absence of the sale of such participation; a
recipient of such a participation (sold without Borrowers'
consent) shall not have any rights under this Agreement other than
to receive payment of principal of and interest through such
Lender; provided, that a participation agreement executed in
connection with any such sale of a participation may provide that
such Lender will not, without the consent of the participant, agree
to any modification, amendment or waiver of this Agreement that
would alter the principal of or interest on any Loan or postpone
the date fixed for any payment of principal or interest.
(c) Assignments to Federal Reserve Banks. Any Lender may at any
time (without obtaining the consent of Borrowers, Lead Agent or any
other Person) assign and pledge all or any part of its rights and
obligations under this Agreement and the Notes to any Federal
Reserve Bank or the United States Treasury, including as
collateral security pursuant to Regulation A of the Board of
Governors and any Operating Circular issued by such Federal Reserve
Bank. No such assignment shall release the assigning Lender from
its obligations hereunder.
(d) Confidentiality. Borrowers authorize each Lender to
disseminate to any Purchasing Lender, prospective Purchasing
Lender, Participant or prospective Participant any information such
Lender possesses pertaining to the Project, the Loan
Instruments and Project Documents, including, without limitation,
complete and current credit information on Borrowers and on any of
the other parties to any Loan Instrument or Project Document,
without the consent of or notice to Borrowers or any other
Lender; provided, however, that any such recipient of information
first agrees to use reasonable efforts to keep confidential all
proprietary information provided to it regarding Borrowers, the
transactions contemplated by this Agreement and the Project.
Borrowers agree to supply certain information reasonably
requested by Lead Agent or any Lender, and to execute and deliver
all such instruments and take all such further action as Lead Agent
or any Lender may from time to time reasonably request in
connection with such Purchasing Lender or participation
arrangements.
9.3 Right of Set-off.
Borrowers hereby authorize Lead Agent and only Lead Agent, at any
time and from time to time, to the fullest extent permitted by Law
(and without regard to the sufficiency of any other
collateral), to set off and apply any and all deposits (general or
special, time or demand, provisional or final), at any time held
and other indebtedness at any time owing by any Lenders to or for
the credit or the account of Borrowers against any and all of the
obligations of Borrowers now or hereafter existing under any Loan
Instrument or Project Document, irrespective of whether or not Lead
Agent shall have made any demand hereunder or
thereunder and although such obligations may be contingent or
unmatured.
9.4 Amendments and Waivers.
(a) Generally. This Agreement may only be amended by a document
signed by Lead Agent, the Majority Lenders, Issuing Bank and
Borrowers. Except as set forth in Section 2.9(b) hereto, no waiver
of any provision of this Agreement nor consent by Lenders or Lead
Agent to any departure by Borrowers therefrom shall in any event be
effective unless the same shall be in writing and signed by Lead
Agent if authorized in writing by the Majority Lenders. No such
action shall be taken hereunder if the effect thereof is to (i)(A)
alter the maturity of any Note or any
installment thereof, or alter the rate or alter the time of payment
of interest thereon, or alter the principal amount
thereof, (B) alter any repayment date, (C) alter any fee
(including, without limitation, the L/C Fee) payable to the Lenders
hereunder or under any other Loan Instrument or any date fixed for
the payment thereof, (D) alter the amount of any
Lender's Total Commitment, (E) release any Collateral, except as
provided in Section 2.9(b), (F) amend, modify or waive any
provision of this Section 9.4, (G) amend or modify the definition
of "Majority Lenders", (H) take any action which requires the
consent of all Lenders pursuant to the terms of any Loan
Instrument or (I) change the number of Lenders which shall be
required for the Lender or any of them to take any action under any
Loan Instruments, in the case of each of (A) through (I)
immediately above, without the prior written consent of each
Lender, or (ii) affect the rights or obligations of any of
Issuing Bank or Lead Agent, without the consent of the party
entitled to such rights or liable for such obligations. Any such
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. The making
of an Advance shall not constitute a waiver of any
condition precedent to the obligation of Lenders or Issuing Bank to
make any further Advance. No failure on the part of Lead Agent,
Lenders or Issuing Bank or any of them to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof
(except as provided above) nor shall any single or partial exercise
of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. This Agreement shall
be binding upon Borrowers, their successors and any permitted
assigns.
(b) Deed of Trust. ANY MODIFICATION OF THIS AGREEMENT,
INCLUDING, WITHOUT LIMITATION, CHANGES IN INTEREST RATE FORMULAE,
PARTIES AND/OR ADDRESSES FOR NOTICE, MAY AFFECT THE DEED OF TRUST.
COUNSEL AND TITLE COMPANY SHOULD BE CONSULTED BEFORE ANY CHANGE IS
MADE TO THIS AGREEMENT. In the event this Agreement is modified or
amended, Borrowers shall upon the request of Lead Agent execute
appropriate modifications to the Deed of Trust and except as
otherwise expressly provided for herein pay all costs and expenses,
including any recording costs, in connection
therewith as set forth in Section 6.34 hereof.
9.5 Election of Remedies.
The remedies herein provided are cumulative and not exclusive of
any remedies provided by Law. Lead Agent, acting on behalf of all
Lenders or Issuing Bank, shall have all of the rights and remedies
granted in the Loan Instruments and available at law or in equity,
and these same rights and remedies may be pursued separately,
successively or concurrently against Borrowers, or any Collateral
under the Loan Instruments, at the sole discretion of Lead Agent.
9.6 Severability.
Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such
prohibition, unenforceability or non-authorization, without
invalidating the remaining provisions hereof or affecting the
validity, enforceability or legality of such provision in any other
jurisdiction.
9.7 Limitation on Interest.
All agreements between Borrowers and Lenders and Issuing Bank,
whether now existing or hereafter arising and whether written or
oral, are hereby limited so that in no contingency, whether by
reason of acceleration of the maturity of any indebtedness
governed hereby or otherwise, shall the interest contracted for or
charged or received by Lenders or Issuing Bank exceed the maximum
amount permissible under applicable Law. If, from any circumstance
whatsoever, interest would otherwise be payable to Lenders or
Issuing Bank in excess of the maximum lawful amount, the interest
payable to Lenders or Issuing Bank 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. If from any
circumstance Lenders or Issuing Bank shall ever receive anything of
value deemed interest by applicable Law in excess of the maximum
lawful amount, an amount equal to any excessive interest shall be
applied to the reduction of the principal of the Loans made
hereunder and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal of the Loans made
hereunder such excess shall be refunded to Borrowers. All interest
paid or agreed to be paid to Lenders or Issuing Bank shall, to the
extent permitted by applicable Law, be amortized, prorated,
allocated and spread throughout the full period until payment in
full of the principal of the loans made hereunder (including the
period of any renewal or extension thereof) so that interest
thereon for such full period shall not exceed the maximum amount
permitted by applicable Law. This paragraph shall control all
agreements between Borrowers and Lenders and Issuing Bank.
9.8 No Third Party Beneficiary.
This Agreement is for the sole benefit of Lead Agent, Co-Agent,
Lenders, "Lead Managers", Issuing Bank and Borrowers and is not for
the benefit of any third party. This Agreement supersedes all
prior agreements among the parties with respect to the
matters addressed herein.
9.9 Borrowers in Control.
In no event shall Lead Agent's, Lenders' or Issuing Bank's rights
and interests under this Agreement and the other Loan Instruments
be construed to give any such party, or be deemed to indicate that
any such party has, control of the business, management or
properties of Borrowers or power over the daily management
functions and operating decisions made by Borrowers.
9.10 Number and Gender.
Whenever used herein, the singular number shall include the plural
and the plural the singular, and the use of any gender shall be
applicable to all genders.
9.11 Captions.
The captions, headings, table of contents and arrangements used in
this Agreement are for convenience only and do not and shall not be
deemed to affect, limit, amplify or modify the terms and provisions
hereof.
9.12 Applicable Law and Jurisdiction.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS.
(b) (i) Borrowers hereby expressly and irrevocably agree and
consent that any suit, action or proceeding arising out of or
relating to this Agreement and the transactions contemplated herein
may be instituted by Lead Agent, Lenders or Issuing Bank in either
state or federal court (at Lead Agent's, Lenders' or Issuing Bank's
option, as the case may be) sitting in the County of New York,
State of New York, and, by the execution and
delivery of this Agreement, Borrowers expressly waive any
objection which they may have now or hereafter to the venue or to
the jurisdiction of any such suit, action or proceeding, and
irrevocably submit generally and unconditionally to the
jurisdiction of any such court in any such suit, action or
proceeding.
(ii) In the case of the courts of the State of New York or of the
United States sitting in New York, Borrowers hereby
irrevocably designate, appoint and empower, The Prentice Hall
Corporation System, Inc. (the "Process Agent", which has
consented thereto) with offices on the date hereof at 15 Columbus
Circle, New York, New York 10023 as agent to receive for and on
behalf of Borrowers service of process in the State of New York.
Borrowers further agree that such service of process may be made on
Process Agent by personal service on Process Agent of a copy of the
summons and complaint or other legal process in any such suit,
action or proceeding, or by any other method of service provided
for under the applicable laws in effect in the State of New York,
and Process Agent is hereby authorized to accept such service for
and on behalf of Borrowers, and to admit service with respect
thereto.
(iii) Upon service of process being made on Process Agent as
aforesaid, a copy of the summons and complaint or other legal
process served shall be mailed by the Process Agent to Borrowers by
registered mail, return receipt requested, at their address
referred to in Section 9.1 hereof, or to such other address as
Borrowers may notify Process Agent in writing. Service upon
Process Agent as aforesaid shall be deemed to be personal service
on Borrowers and shall be legal and binding upon Borrowers for all
purposes, notwithstanding any failure of Process Agent to mail a
copy of such legal process to Borrowers, or any failure on the part
of Borrowers to receive the same.
(iv) Borrowers agree that they will at all times continuously
maintain a Process Agent to receive service of process in the
County of New York on their behalf with respect to this
Agreement. In the event that for any reason Process Agent or any
successor thereto shall no longer serve as Process Agent for
Borrowers to receive service of process in the County of New York,
or shall have changed their address without notification thereof to
Lead Agent, Borrowers will immediately after having knowledge
thereof, irrevocably designate and appoint a substitute Process
Agent acceptable to Lead Agent and advise Lead Agent.
(c) Nothing contained in subsection (b) hereof shall preclude Lead
Agent, for the account of Lenders, Issuing Bank and Lead Agent,
from bringing any suit, action or proceeding arising out of or
relating to this Agreement or the other Loan Instruments in the
courts of any jurisdiction where Borrowers or any of their property
or assets may be found or located. To the extent
permitted by the applicable laws of any such jurisdiction,
Borrowers hereby irrevocably submit to the jurisdiction of any such
court and expressly waive, in respect of any such suit, action or
proceeding, the jurisdiction of any other court or courts which now
or hereafter, by reason of their present or future domicile, or
otherwise, may be available to them.
(d) WITH REGARD TO EACH LOAN INSTRUMENT TO WHICH IT IS A PARTY,
EACH OF BORROWERS, LENDERS, ISSUING BANK AND LEAD AGENT HEREBY
WAIVES THE RIGHT TO A TRIAL BY JURY.
9.13 Certain Calculations.
All calculations of the Debt Service Coverage Ratio, Available Cash
Flow, Gross Revenues, Net Revenues, Operating Costs,
projected amounts of any of the aforesaid, Cash Expenses, Cash
Revenues and any amount due hereunder not set forth in Section
2.10(d) hereof shall be made by the party designated herein, in
accordance with the terms of this Agreement, and (a) if by
Borrowers, then as approved by Lead Agent, which approval shall not
be unreasonably withheld, and (b) if no party is designated, then
by Lead Agent. In the event any such calculation by
Borrowers is rejected by Lead Agent, or is not notified to Lead
Agent by Borrowers, Lead Agent shall make such calculation in
accordance with the provisions of this Agreement and the relevant
definition, for the relevant period. Such calculations hereunder
shall be final (provided that such calculations are made on a
reasonable basis), and, where appropriate, shall be effective
retroactively to the date such calculation was to be supplied by
Borrowers pursuant to this Agreement.
9.14 Attribution of Knowledge.
For purposes of this Agreement, Borrowers shall be deemed to have
actual knowledge of all facts of which any Person described in item
(a), (b), (c), (d) or (e) immediately below has actual knowledge:
(a) any officer or responsible employee of Borrowers, (b) any
General Partner, or any officer, director or responsible employee
thereof, (c) in the event of a transfer of a general partnership
interest in Borrowers to any Person or the issuance of such
interest, in each case to the extent permitted hereunder, then (i)
the individual or individuals satisfying the standards for
permitted transferee, (ii) the senior management of the corporation
or corporations satisfying the standards for
permitted transferee, and (iii) the senior management of any other
General Partner consented to pursuant to Section 6.15 hereof, (d)
any Limited Partner that owns more than fifty percent (50%) of the
limited partnership interests in Borrowers, or the senior
management thereof, and (e) the senior management of Magma.
9.15 Non-Recourse.
Anything herein to the contrary notwithstanding and except as
provided in (i) the Environmental Indemnity Agreement, (ii) the
Reserve Account Guaranty, (iii) the Sinclair Indemnity Agreement,
(iv) the Investment Indemnity Agreement or (v) the Pledge
Agreements, the Obligations (including, without limitation, any
indemnification obligations) of Borrowers under this Agreement and
the other Loan Instruments are obligations of Borrowers and do not
constitute a debt or obligation of (and no recourse shall be had
with respect thereto to) any Partner or Affiliate of Borrowers, or
any shareholder, partner, officer or director of any thereof as
such, and any judicial proceedings Lenders,
Issuing Bank or Lead Agent may institute against Borrowers shall be
limited to seeking the preservation, enforcement, foreclosure or
other sale or disposition of the liens and security interests now
or at any time hereafter securing the repayment of the loans made
hereunder and performance by Borrowers of their other
covenants and obligations hereunder and under the other Loan
Instruments; no judgment for any deficiency upon the obligations
hereunder or under the other Loan Instruments shall be obtainable
by Lenders, Issuing Bank or Lead Agent against any Partner or
Affiliate of Borrowers or any shareholder, partner, officer or
director of any thereof.
9.16 Absence of Fiduciary Relation.
Lead Agent and each of the Lenders and Issuing Bank undertake to
perform or to observe only such of its agreements, duties,
responsibilities and obligations as are specifically set forth in
this Agreement and the other Loan Instruments, and no implied
agreements, covenants, functions, responsibilities, duties,
liabilities or obligations with respect to Borrowers, any
Affiliate of Borrowers, Magma or any other party to any of the
Project Documents or otherwise shall be read into any of the Loan
Instruments or otherwise exist against Lead Agent, Lenders and
Issuing Bank. Lead Agent, Lenders and Issuing Bank are not
fiduciaries of and shall not owe or be deemed to owe any
fiduciary duty to Borrowers, any Affiliate of Borrowers, Magma or
any other party to any of the Project Documents, nor is Issuing
Bank a fiduciary of, nor shall Issuing Bank owe or be deemed to owe
any fiduciary duty to any Lender. Nothing contained in this
Section 9.16 shall be deemed to limit or impair the rights and
obligations of Issuing Bank under any Letter of Credit or the
rights and obligations of Lenders expressly provided herein.
9.17 Borrowers' Certificates
Any certificate required to be delivered hereunder by an officer of
one of the Borrowers shall be delivered by the appropriate officer
of General Partner, acting in General Partner's capacity as sole
managing general partner of each of the Borrowers.
9.18 Counterparts.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
9.19 Joint and Several Obligations.
The Obligations of the Borrowers are joint and several.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
BORROWERS:
SALTON SEA BRINE PROCESSING L.P.
By: SALTON SEA POWER COMPANY,
general partner
By: /s/ Jon R. Peele
Name: Jon R. Peele
Title: Vice President
SALTON SEA POWER GENERATION L.P.
By: SALTON SEA POWER COMPANY,
general partner
By: /s/ Wallace C. Dieckmann
Name: Wallace C. Dieckmann
Title: Vice President
CREDIT SUISSE, as Lender
By: /s/ Markus K. Christen
Name: Markus K. Christen
Title: Member of Senior Management
By: /s/ Bryon T. McGregor
Name: Bryon T. McGregor
Title: Associate
THE FUJI BANK, LIMITED, as Lender and Co-Agent
By: /s/ Yasuji Ikawa
Name: Yasuji Ikawa
Title: Joint General Manager
THE SUMITOMO BANK, LIMITED,
LOS ANGELES BRANCH, as Lender and "Lead Manager"
By: /s/ Jun Ogata
Name: June Ogata
Title: Joint General Manager
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Lender
and "Lead Manager"
By: /s/ Patrick Loughlin
Name: Patrick Loughlin
Title: Vice President
CREDIT SUISSE, as Issuing Bank
By: /s/ Markus K. Christen
Name: Markus K. Christen
Title: Member of Senior Management
By: /s/ Bryon T. McGregor
Name: Bryon T. McGregor
Title: Associate
CREDIT SUISSE, as Lead Agent
By: /s/ Markus K. Christen
Name: Markus K. Christen
Title: Member of Senior Management
By: /s/ Bryon T. McGregor
Name: Bryon T. McGregor
Title: Associate
THE BANK OF NOVA SCOTIA, as Lender and "Lead Manager"
By: /s/ Donald J. Dupont
Name: Donald J. Dupont
Title: Vice President
Exhibit 10.113
ASSIGNMENT AND SECURITY AGREEMENT
This ASSIGNMENT AND SECURITY AGREEMENT (this "Security
Agreement"), dated as of February 28, 1994 among SALTON SEA POWER
GENERATION L.P., a California limited partnership ("SSPG"), SALTON
SEA BRINE PROCESSING L.P., a California limited partnership
("SSBP"; together with SSPG, collectively, "Debtors"), jointly and
severally, and CREDIT SUISSE, as lead agent ("Lead Agent"), on
behalf of and for the benefit of the Secured Parties under the
Credit Agreement (as defined below).
W I T N E S S E T H :
WHEREAS, Debtors own three geothermal plants consisting
of approximately 80 megawatts in Imperial County, California;
WHEREAS, Debtors simultaneously herewith are entering
into the Credit and Reimbursement Agreement, dated as of February
28, 1994 among (i) Debtors, (ii) Credit Suisse, The Fuji Bank,
Limited, The Sumitomo Bank, Limited, Los Angeles Branch, The Bank
Of Nova Scotia and Bank Of America National Trust and Savings
Association and each additional lender from time to time party
thereto (each of the lenders, individually, a "Lender", and,
collectively, "Lenders"), (iii) Credit Suisse, as issuing bank
("Issuing Bank"), (iv) Credit Suisse, as Lead Agent for the Secured
Parties and (v) The Fuji Bank, Limited as co-agent ("Co-Agent") (as
the same may be amended, modified or supplemented from time to
time, the "Credit Agreement"), pursuant to which Lenders will make
loans to Debtors and the Issuing Bank will issue, subject to the
terms of the Credit Agreement, certain Letters of credit;
WHEREAS, it is a condition precedent to the making of
such loans by the Lenders and the issuance of such letters of
credit by the Issuing Bank under the Credit Agreement that
Debtors shall have granted the security interest contemplated by
this Security Agreement to Lead Agent for the equal and ratable
benefit of the Secured Parties to secure their obligations under
the Credit Agreement and the other Loan Instruments;
NOW, THEREFORE, in consideration of the mutual
covenants contained herein, and in order to induce the Lenders to
make such loans and the Issuing Bank to issue such letters of
credit under the Credit Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions.
For purposes of this Security Agreement and unless the
context otherwise requires, all capitalized terms used herein which
are defined in the Credit Agreement (and not otherwise defined
herein) shall have their respective meanings as therein defined.
All references to sections, schedules and exhibits in or to this
Security Agreement are to sections, schedules and exhibits in or to
this Security Agreement, unless otherwise specified. The words
"hereof," "herein" and "hereunder" and words of similar import when
used in this Security Agreement shall refer to this Security
Agreement as a whole and not to any particular provision of this
Security Agreement. For purposes of this Security Agreement, all
other terms used herein and not otherwise defined herein which are
defined in Article 9 of the Uniform Commercial Code (as the same
may be in effect in the State of New York or any other applicable
jurisdiction, the "Code"), shall have their respective meanings as
therein defined.
2. Creation of Security Interest.
(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 Obligations (as defined below) now
existing or hereafter arising, Debtors hereby grant to and create
in favor of Lead Agent, for the equal and ratable benefit of the
Secured Parties, a lien on and first priority security interest
(the "Security Interest") in all right, title and
interest of Debtors in, to and under the following collateral,
whether now existing or hereafter acquired (the "Collateral"):
(A) The following agreements:
(i) the Power Purchase Agreements;
(ii) the Plant Connection Agreements;
(iii) the Geothermal Sales Contracts;
(iv) the Joint Funding Agreement;
(v) the Funding Agreement;
(vi) the Ground Leases;
(vii) the Waste Disposal Agreement;
(viii) the Technology Transfer Agreement;
(ix) the Funding and Construction Agreement;
(x) the O&M Agreement;
(xi) the Easement Grant Deed;
(xii) the Service Agreement;
(xiii) the Partnership Agreements;
(xiv) the Transmission Service Agreements;
(xv) the consent of each party (other than
Debtors) to each of the Project Documents,
where applicable, to the assignment thereof
by Debtors to Lead Agent for the benefit of
the Secured Parties;
(xvi) the Insurance Policies;
(xvii) each Permitted Contract which does not, by
its terms, prohibit the assignment thereof
as security in the manner contemplated
herein or the assignment of which (as
contemplated herein) would constitute a
breach of or a default under such Permitted
Contract;
(xviii) each Swap Agreement; and
(xix) any other agreement, commitment or
understanding executed by (or on behalf of)
Debtors in connection with the Facilities,
the Properties or any of the Project
Documents (other than Permitted Contracts
not assigned pursuant to clause (xvii)
above);
as each such document may be amended, supplemented or otherwise
modified from time to time (said documents, as amended,
supplemented or modified, being individually referred to herein as
an "Assigned Agreement" and collectively referred to herein as the
"Assigned Agreements"), including, without limitation, (1) all
rights of Debtors to receive moneys due and to become due under or
pursuant to the Assigned Agreements, (2) all rights of Debtors to
receive proceeds of any performance or payment bond, insurance,
indemnity, warranty or guaranty with respect to the Assigned
Agreements, (3) all claims of Debtors for damages arising out of or
for breach of or default under the Assigned Agreements and (4) all
rights of Debtors to take any action to terminate, amend,
supplement, modify or waive performance of the Assigned Agreements,
to perform thereunder and to compel performance and otherwise
exercise all remedies thereunder; provided, however, unless an
Event of Default shall have occurred and be continuing, Debtors may
exercise all rights, interests and benefits under the Assigned
Agreements in any lawful manner not inconsistent with this Security
Agreement, the Credit Agreement or any of the other Loan
Instruments;
(B) (i) the Accounts (and any sub-accounts opened
within any Account) and each cash collateral account or other bank
account, if any, established by Lead Agent (and designated by Lead
Agent as an Account) on behalf of Debtors in connection with the
Loan Instruments, all sums of money, from any source whatsoever,
now or hereafter transferred to and comprising the Accounts or any
other bank account, including, without limitation, all credit
balances therein, any and all funds, cash, investments, instruments
and securities at any time on deposit in the Accounts or any other
bank account, and any and all interest and dividends or other
income derived from any such monies, credit balances, funds, cash,
investments, instruments and securities, and (ii) all statements,
certificates, passbooks and instruments representing the Accounts
and all other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for the Accounts
or any other bank account;
(C) All automobiles, trucks, boats and other rolling
stock or moveable personal property ("Rolling Stock"), including
Rolling Stock for which the title thereto is evidenced by a
certificate of title issued by the United States or a state which
permits or requires a lien thereon to be evidenced upon such
certificate, in which Debtors now or at any time in the future may
have an interest. In connection therewith, Debtors shall notify
Lead Agent before acquiring any such Rolling Stock, and provide
Lead Agent with (1) all lien entry forms and similar documents,
duly completed, executed and acknowledged, (2) the certificates of
title to such Rolling Stock and (3) such other information or
documents, in each case, to the extent required or reasonably
desirable in order to enable Lead Agent to perfect its lien on such
Rolling Stock for the equal and ratable benefit of the Secured
Parties. Upon execution of such lien entry forms and other
documents by Lead Agent, Debtors shall, at their expense, cause
such lien entry forms and other documents to be presented to the
appropriate authorities in order to perfect Lead Agent's lien on
such Rolling Stock for the equal and ratable benefit of the Secured
Parties;
(D) To the extent permitted by law, all authorizations,
consents, approvals, waivers, exemptions, variances, registrations,
leases, tariffs, certifications, franchises, permissions, permits
and licenses now or hereafter of, and filings and declarations now
or hereafter with, and rulings now or hereafter by, any
Governmental Authority (including, without limitation, the QF
Certificates), including those with respect to the reconstruction,
repair, alteration, addition, improvement, replacement, use,
operation or management of the Facilities and the Properties
(including, without limitation, all Government Approvals now or
hereafter held in the name or for the benefit of Debtors)
(collectively, the "Permits"); provided that any of the Permits
which by their terms or by operation of law would become void,
voidable, terminable or revocable or would constitute a breach or
default thereunder if pledged or assigned hereunder or if a
security interest therein were granted hereunder are expressly
excepted and excluded from the lien and terms of this Security
Agreement to the extent necessary to avoid such voidness,
violability, terminability or revocability;
(E) All equipment, machinery, apparatus, installations,
facilities and other tangible property (the "Equipment") in which
Debtors have an interest on the date hereof which is or hereafter
acquired by Debtors;
(F) All accounts (other than the Accounts) now or
wereafter owned by Debtors, including, without limitation, any and
all of Debtors' currently existing and future accounts receivable
and contract rights and all agreements, rights, interests,
inventory, goods, chattel paper, documents, instruments, general
intangibles, fixtures, trade fixtures, consumer goods, money and
other assets owned by Debtors on the date hereof or hereafter
arising or acquired, including, without limitation, the
improvements and equipment associated with the Properties and the
Facilities, and designs, plans and specifications relating to the
Properties and the Facilities owned by Debtors on the date hereof
or hereafter acquired, all acid rain allowances under the Clean Air
Act Amendments of 1990 and any implementing state Laws and any
right, title or interest of Debtors under any insurance, indemnity,
warranty or guaranty in respect of the Properties and the
Facilities or of any of the foregoing and any rents, revenues,
incomes and profits in respect of the Properties and the
Facilities; and
(G) To the extent not included in the foregoing, all
Permitted Investments of Debtors and proceeds, products and
accessions of and to any and all of the foregoing, including,
without limitation, "proceeds," as defined in Section 9-306(1) of
the Code, including, without limitation, whatever is received upon
any collection, exchange, sale or other disposition of any of the
Collateral, and any property into which any of the Collateral is
converted, whether cash or non-cash proceeds, and any and all other
amounts paid or payable under or in connection with any of the
Collateral.
It is the intention of the parties that the foregoing
description of the Collateral be sufficient, together with the
description of the Trust Property (as defined in the Deed of
Trust), to enable Lead Agent on behalf of the Secured Parties to
take possession of, or foreclose upon, all of the right, title and
interest of Debtors in and to the Properties and the Facilities and
any and all real property and personal property, tangible and
intangible, used or usable in connection therewith, and to enable
Lead Agent or its designee to operate, sell or otherwise dispose of
the entire interest of Debtors in and to the Properties and the
Facilities or any part thereof, in each case upon the occurrence
and during the continuance of an Event of Default (as defined
below); provided, however, that all of the Collateral is hereby
assigned to Lead Agent solely as security, and Lead Agent shall
have no duty, liability or obligation whatsoever with respect to
any of the Collateral, unless Lead Agent so elects in writing
consistent with its rights under this Security Agreement.
(b) This Security Agreement secures, in accordance with
the provisions hereof, the following obligations, now existing or
hereafter arising (collectively, the "Obligations"):
(i) payment and performance of each and every
obligation, indebtedness, covenant and agreement of Debtors now or
hereafter existing contained in the Credit Agreement and any of the
other Loan Instruments, including, without limitation, any
obligation to any of the Secured Parties pursuant to any Swap
Agreement with a Secured Party, in each case whether for principal,
interest, fees, expenses or otherwise pursuant thereto, and any
amendments or supplements thereto, extensions or renewals thereof
or replacements therefor;
(ii) repayment or reimbursement of all sums advanced
or to be advanced by the Secured Parties (or any of them) to
or for the account of Debtors pursuant to the Letters of
Credit;
(iii) payment of all sums advanced in accordance
herewith or in accordance with the other Security Documents by or
on behalf of the Secured Parties (or any of them) to protect any of
the collateral purported to be covered hereby or thereby, with
interest thereon at a rate per annum equal to the Default Interest
Rate from the date of demand therefor;
(iv) performance of every obligation, covenant and
agreement of Debtors contained in any agreement now or hereafter
executed by Debtors which recites that the obligations thereunder
are secured by this Security Agreement or any of the other Security
Documents; and
(v) payment of all sums, with interest thereon at a rate
per annum equal to the Default Interest Rate from the date of
demand therefor, that may become due and payable to or for the
benefit of the Secured Parties (or any of them) pursuant to the
terms of this Security Agreement or any of the other Security
Documents;
in each case whether direct or indirect, joint or several,
absolute or contingent, liquidated or unliquidated, now or
hereafter existing, renewed or restructured, whether or not from
time to time decreased or extinguished and later increased, created
or incurred, and including, without limitation, all indebtedness of
Debtors under any instrument now or hereafter evidencing or
securing any of the foregoing.
3. Delivery of Collateral; Perfection and Use
of Accounts.
(a) Delivery of Collateral. All sums of money, funds
and cash, from time to time constituting the Collateral (other than
the Project Account, the Pre-Funded Well Account and the New Well
Reserve Account), together with all certificates, instruments,
investments and securities representing or evidencing such
Collateral, shall be delivered to, dealt with and held by Lead
Agent pursuant to the terms of the Credit Agreement and the terms
hereof; provided, however, all such sums, certificates,
investments, securities or instruments representing or evidencing
the Project Account, the Pre-Funded Well Account and the New Well
Reserve Account shall be delivered to, dealt with and held by Bank
of America, or another commercial bank reasonably acceptable to
Lead Agent (the "Project Account Bank"), as agent for Lead Agent
and the Secured Parties pursuant to the terms of the Credit
Agreement and the Blocked Account Agreement. All such
certificates, investments, securities and instruments shall be in
suitable form for transfer by delivery or otherwise, or shall be
accompanied by duly executed instruments of transfer or assignment
in blank, all in form and substance satisfactory to Lead Agent.
(b) Control over Accounts. (i) Lead Agent (on behalf of
the Secured Parties) shall have exclusive possession of and sole
dominion and control over the Debt Service Reserve Account.
(ii) For the purpose of perfecting the Security
Interest of the Secured Parties in and to the Project Account, the
Pre-Funded Well Account and the New Well Reserve Account and all
funds, cash, investments, instruments and securities at any time on
deposit in such Accounts, the Lead Agent (on behalf of the Secured
Parties) has notified Bank of America pursuant to Section
9-302(1)(g) of the Uniform Commercial Code as in effect in the
State of California that Borrowers have granted to the Lead Agent
(on behalf of the Secured Parties), a Security Interest in the Pre-
Funded Well Account, the New Well Reserve Account and the Project
Account (the "Notice of Security Interest").
4. Representations, Warranties and Covenants.
Debtors hereby represent, warrant and covenant as
follows:
(a) The Security Interest granted and created pursuant
to this Security Agreement is a legal, valid and perfected first
priority security interest in the Collateral, now owned by
Debtors or hereafter acquired, prior and superior to all other
Liens (subject to Permitted Liens).
(b) Debtors are the legal and beneficial owners of the
Collateral in existence on the date hereof, and will be the sole
legal and beneficial owners of the interest in the Collateral
hereafter acquired by them, free and clear of all Liens, except for
Permitted Liens.
(c) No authorization, approval or other action by, and
no notice to or filing with, any Governmental Authority, any
regulatory body or any other Person is required of Debtors with
respect to the execution, delivery and performance of, or the grant
of the Security Interest pursuant to, this Security
Agreement.
(d) Debtors agree that from time to time, at their
expense, Debtors will upon request by Lead Agent on behalf of the
Secured Parties promptly execute and deliver all further
instruments and documents, and take all further action, that may be
necessary or reasonably advisable, or that Lead Agent may
reasonably request, in order to perfect and protect the Security
Interest granted or purported to be granted hereby or to enable
Lead Agent to exercise and enforce its rights and remedies
hereunder with respect to the Collateral. Without limiting the
generality of the foregoing, Debtors will: (i) if any Collateral
shall be evidenced by a promissory note or other instrument,
deliver and pledge to Lead 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 Lead Agent and (ii) execute and file such financing
or continuation statements, or amendments thereto, and such other
instruments, endorsements or notices, as may be necessary, or as
Lead Agent may reasonably request, in order to perfect and preserve
the Security Interest granted or purported to be granted hereby.
Debtors hereby authorize Lead Agent to file one or more financing
or continuation statements, and amendments thereto, relating to all
or any part of the Collateral without the signature of Debtors
where permitted by law.
(e) Debtors will keep and maintain at their own cost and
expense complete records of the Collateral, reasonably satisfactory
to Lead Agent. Debtors will furnish to Lead Agent from time to
time statements and schedules further identifying and describing
the Collateral and such other reports in connection with the
Collateral as Lead Agent may reasonably request, all in reasonable
detail. Subject to Section 6.10 of the Credit Agreement, Lead
Agent and the Secured Parties may inspect the Collateral at any
reasonable time and upon reasonable prior notice, wherever located.
(f) Debtors will not create, incur or permit to exist,
will defend the Collateral against, and will take such other action
as is necessary to remove, any Lien or claim on or to the
Collateral, other than Permitted Liens, and will defend the right,
title and interest of Lead Agent in and to any of the Collateral
against the claims and demands of all Persons
whomsoever.
(g) Debtors shall notify Lead Agent promptly if any
tangible items of Collateral, or any items that are to become
Collateral, are to be stored for any length of time (other than
temporary storage incident to transportation to the Project) in any
location other than the Project. The notice shall specify, in such
detail as is reasonably required by Lead Agent: (i) the items that
are to be stored, (ii) the location at which such items are to be
stored and the name and addresses of the owner and operator of the
storage facility, (iii) the length of time that such items are to
be stored at that location and (iv) the name of the Person or
entity who is the owner of such items. If reasonably required by
Lead Agent, Debtors shall execute
additional security agreements, financing statements and other
related documents, all in form reasonably satisfactory to Lead
Agent, covering the items that are to be stored. If for any reason
Lead Agent, on behalf and for the benefit of the Secured Parties,
cannot perfect a first priority security interest in the items
stored or to be stored, then upon instructions from Lead Agent,
Debtors shall promptly transport such items to the
Properties upon the request of Lead Agent. Upon instructions from
Lead Agent, Debtors shall obtain such additional insurance on the
Collateral stored at any location other than the
Properties as Lead Agent reasonably deems necessary consistent with
the requirements of the Credit Agreement to protect the Secured
Parties' interests in the Collateral.
5. Chief Executive Office and Principal Place of
Business. Debtors' chief executive office and principal place of
business and the place where Debtors' records concerning the
Collateral are kept is:
4365 Executive Drive
San Diego, California 92121
6. Default.
The occurrence of any Event of Default under the Credit
Agreement shall constitute an event of default ("Event of
Default") hereunder.
7. Rights and Remedies Upon Event of Default.
(a) Upon the occurrence and during the continuance of an
Event of Default hereunder, Lead Agent, for the equal and ratable
benefit of and on behalf of the Secured Parties, upon receiving
consent of the Majority Lenders, may, and upon the request of the
Majority Lenders, shall, do one or more of the following:
(i) Declare, without presentment, demand, protest or
notice of any kind, all of which Debtors hereby expressly
waive, the entire amount of Debtors' Obligations to be
immediately due and payable, whereupon all of such
Obligations declared due and payable shall be and become
immediately due and payable (provided that if, with respect to
Debtors, an Event of Default occurs pursuant to Section 7.1(i)
of the Credit Agreement, the acceleration provided for in this
Section 7(a)(i) shall be deemed to have been made upon the
occurrence of such Event of Default without declaration or any
other action by Lead Agent);
(ii) Subject to the terms of the Credit Agreement,
take all cash held by Lead Agent or by any Project Account
Bank as agent for Lead Agent and the Secured Parties
(including any resulting from the liquidation of Permitted
Investments) as Collateral, including any credit balances in
the Accounts, and all cash proceeds received or receivable by
Lead Agent or by any Project Account Bank as agent for Lead
Agent for the Secured Parties in respect of the
Collateral and, at the Majority Lenders' option, use such
cash for such purposes as Lead Agent and the Majority
Lenders deem appropriate and in the interest of the
Facilities and/or the Properties and/or apply the same
(after payment of any amounts payable to Lead Agent pursuant
to Section 21 hereof), in whole or in part, for the equal and
ratable benefit of the Secured Parties in satisfaction of all
or any part of the Obligations (whether or not due and
payable) in the manner specified in Section 7(b) hereof,
unless otherwise agreed by the Majority Lenders in a writing
delivered to Lead Agent;
(iii) Upon notice to Debtors, which notice need not be
in writing, make such payments and do such acts as Lead
Agent may deem necessary to protect, perfect or continue the
perfection of the Secured Parties' Security Interest in the
Collateral, including, without limitation, paying,
purchasing, contesting or compromising any Lien which is, or
purports to be, prior to or superior to the Security
Interest granted hereunder, and commencing, appearing or
otherwise participating in or controlling any action or
proceeding purporting to affect the Secured Parties'
Security Interest in or ownership of the Collateral;
(iv) Foreclose this Security Agreement as herein
provided or in any manner permitted by law and exercise any
and all of the rights and remedies conferred upon the
Secured Parties by the Loan Instruments or the Project
Documents either concurrently or in such order as Lead Agent
may determine without affecting the rights or remedies to
which the Secured Parties may be entitled under the Loan
Instruments;
(v) Require Debtors to, and Debtors hereby agree that
they will, at their expense and upon request of Lead Agent
forthwith, assemble all or part of the Collateral as
directed by Lead Agent and make it available to Lead Agent
at a place to be designated by Lead Agent which is
reasonably convenient to all parties;
(vi) Without notice or demand or legal process, enter
upon any premises of Debtors and take possession of the
Collateral;
(vii) Without notice, except as specified below, sell
the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Lead Agent's offices
or elsewhere, at such time or times, for cash, on credit or
for future delivery, and at such price or prices and upon such
other terms as Lead Agent may deem commercially
reasonable. Debtors agree that, to the extent notice of
sale shall be required by law, at least 10 days' notice to
Debtors of the time and the place of any public sale or the
time after which any private sale is to be made shall
constitute reasonable notification. At any sale of the
Collateral, if permitted by law, Lead Agent may bid (which bid
may be, in whole or in part, in the form of cancellation of
indebtedness) for the purchase of the Collateral or any
portion thereof for the account of Lead Agent (on behalf of
the Secured Parties). Lead Agent shall not be obligated to
make any sale of Collateral regardless of notice of sale
having been given. Lead Agent may adjourn any public or
private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so
adjourned. Debtors hereby waive, to the extent permitted by
applicable law, any claims against Lead Agent arising by
reason of the fact that the price at which the Collateral, or
any part thereof, may have been sold at a private sale was
less than the price which might have been obtained at public
sale or was less than the aggregate amount of the Obligations,
even if Lead Agent accepts the first offer received which Lead
Agent in good faith deems to be
commercially reasonable under the circumstances and does not
offer the Collateral to more than one offeree. To the full
extent permitted by law, Debtors shall have the burden of
proving that any such sale of the Collateral was conducted in
a commercially unreasonable manner. To the extent
permitted by law, Debtors hereby specifically waive all
rights of redemption, stay or appraisal which they have or may
have under any law now existing or hereafter enacted. Debtors
authorize Lead Agent, at any time and from time to time, to
execute, in connection with a sale of the
Collateral pursuant to the provisions of this Security
Agreement, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the
Collateral; and
(viii) Exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a
secured party after default under the Code.
(b) The proceeds of any sale or realization of the
Collateral shall be applied as follows:
(i) To the repayment of the costs and expenses of
retaking, holding and preparing for the sale and the selling
of the Collateral (including, without limitation reasonable
attorneys' fees and expenses and court costs) and the
discharge of all assessments, encumbrances, charges or
liens, if any, on the Collateral prior to the lien hereof
(except any taxes, assessments, encumbrances, charges or liens
subject to which such sale shall have been made);
(ii) To the payment in full of the Obligations in
accordance with the priority of application specified in
Section 2.10(b) of the Credit Agreement;
(iii) If the Letters of Credit have been terminated,
the Total Commitment has been terminated and all Obligations
have been indefeasibly paid, satisfied and discharged in
full, any surplus then remaining shall be paid to Debtors if
they are lawfully entitled to receive the same or shall be
paid to whomsoever a court of competent jurisdiction may
direct.
8. Assignment of Permits; Etc.
Debtors shall, upon the occurrence and during the
continuance of an Event of Default at the request of Lead Agent,
assign, transfer or otherwise furnish to Lead Agent or to any
transferee of the interest of Lead Agent (to the extent so
assignable or transferable), all of Debtors' rights and interest
in, to and under all Governmental Approvals, offsets, allowances
and similar rights issued under or in connection with applicable
Laws (including, without limitation, laws, ordinances or
regulations enacted or promulgated for the protection of the
environment or the public health), including, without limitation,
Governmental Approvals respecting air emissions (including air
emission reduction, credits, offsets or allowances), wastewater
discharge and solid or hazardous waste management, which are
required from time to time to permit the Facilities to be
operated in accordance with all applicable Laws. Upon the
request of Lead Agent upon the occurrence and during the
continuance of an Event of Default, Debtors agree to use their best
efforts to have renewed or extended in the name of Lead Agent (or
other Person operating the Facilities) or otherwise to obtain for
Lead Agent (or such other Person) the benefits of all of the
Governmental Approvals and other rights referred to in the
immediately preceding sentence to the extent that such
Governmental Approvals and other rights shall not be assignable or
transferable.
9. Security Interest Absolute.
All rights of Lead Agent and the Secured Parties
hereunder, the Security Interest and all obligations of Debtors
hereunder, shall be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of any of
the Project Documents, Loan Instruments or any of the
Collateral (including the Assigned Agreements) 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
Obligations, or any other amendment or waiver of or any
consent to any departure from any of the Project Documents,
Loan Instruments or any of the Collateral or any other
agreement or instrument related thereto (including the
Assigned Agreements);
(iii) any exchange, release or non-perfection of any
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 Obligations; or
(iv) to the fullest extent permitted by law, any other
circumstance that might otherwise constitute a defense
available to, or a discharge of, Debtors or any third party
pledge or other than payment in full of the Obligations.
10. Lead Agent Appointed Attorney-in-Fact.
Debtors hereby irrevocably constitute and appoint Lead
Agent and any officer or agent thereof to act, upon the
occurrence and during the continuance of an Event of Default, as
Debtors' attorney-in-fact (which appointment as attorney-in-fact
shall be coupled with an interest and irrevocable), with full
authority in the place and stead of Debtors and in the name of
Debtors or otherwise, from time to time in Lead Agent's
discretion, to take any action and to execute any and all
documents and instruments which Lead Agent may deem necessary or
advisable to accomplish the purposes of this Security Agreement,
including, without limitation:
(a) to receive, endorse and collect all instruments made
payable to Debtors representing any dividends, interest payments or
other distributions constituting Collateral or any part thereof and
to give full discharge for the same and to file any claim or to
take any other action or proceeding in any court of law or equity
or otherwise deemed appropriate by Lead Agent for the purpose of
collecting any and all of such dividends, payments or other
distributions;
(b) to enforce any provision of any Assigned
Agreement;
(c) to pay or discharge taxes and liens levied or placed
on the Collateral; and
(d) (i) to direct any party liable for any payment under
or with respect to any of the Collateral to make payment of any and
all moneys due or to become due thereunder or with
respect thereto directly to Lead Agent or as Lead Agent shall
direct, (ii) to ask or demand for, collect, receive payment of and
receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any
Collateral, (iii) to commence and prosecute any suits, action or
proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and to
enforce any other right in respect of any Collateral, (iv) to
defend any suit, action or proceeding brought against Debtors with
respect to any Collateral, (v) to settle, compromise or adjust any
suit, action or proceeding described in clauses (iii) and (iv)
above and, in connection therewith, to give such
discharges or releases as Lead Agent may deem appropriate and (vi)
generally, to sell, transfer, pledge and make any agreement with
respect to or otherwise deal with any of the Collateral as fully
and completely as though Lead Agent were the absolute owner thereof
for all purposes, and to do, at Lead Agent's option and at Debtors'
expense, at any time, or from time to time, all acts and things
which Lead Agent deems necessary to protect, preserve or realize
upon the Collateral and the Security Interest granted herein and to
effect the intent of this Security Agreement, all as fully and
effectively as Debtors might do.
Debtors hereby ratify all that Lead Agent shall do or
cause to be done as Debtors' attorney-in-fact consistent with the
foregoing. Debtors also authorize Lead Agent, upon the
occurrence and during the continuance of an Event of Default, to
communicate in its own name with any party to any Project
Document at any time, with regard to any matter relating to such
Project Document.
11. Lead Agent May Perform.
Upon the occurrence and during the continuance of an
Event of Default, Lead Agent, without releasing Debtors from any
obligation, covenant or condition hereof, itself may make any
payment or perform, or cause the performance of, any such
obligation, covenant, condition or agreement or any other action in
such manner and to such extent as Lead Agent may deem
necessary to protect, perfect or continue the perfection of the
Secured Parties' Security Interest in the Collateral. Any costs or
expenses incurred by Lead Agent in connection with the
foregoing shall be governed by the Loan Instruments, constitute a
part of the indebtedness secured by the Security Documents, shall
bear interest at a rate per annum equal to the Default Interest
Rate and be payable upon demand by Lead Agent.
12. Debtors Remain Liable.
Anything herein to the contrary notwithstanding,
Debtors shall remain liable under the Assigned Agreements and any
other agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations
thereunder to the same extent as if this Security Agreement had not
been executed. The exercise by Lead Agent of any of the rights or
remedies hereunder shall not release Debtors from any of their
duties or obligations under the Assigned Agreements or any other
agreements included in the Collateral, except to the extent Debtors
are expressly released therefrom in writing. Neither Lead Agent
nor any other Secured Party shall have any obligation or liability
under the Assigned Agreements or any other agreements included in
the Collateral by reason of this Security Agreement, nor shall Lead
Agent or any other Secured Party be obligated to perform any of the
obligations or duties of Debtors thereunder or to take any action
to collect or enforce any claim for payment assigned hereunder,
except to the extent Lead Agent or a Secured Party expressly
assumes such obligations or duties in writing consistent with its
rights under this
Security Agreement.
13. Reasonable Care.
Lead Agent shall exercise the same degree of care
hereunder as it exercises or would exercise in connection with
similar transactions for its own account. Lead Agent shall be
deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which
Lead Agent accords or would accord collateral held by Lead Agent in
similar transactions for its own account; provided that in respect
of any Collateral constituting "instruments" or
"chattel paper" under the Code, Lead Agent shall have no duty to
preserve any rights therein against prior parties.
Without limiting the generality of the foregoing and
except as otherwise provided by applicable law, Lead Agent shall
not be required to marshall any collateral, including, but not
limited to, the Collateral subject to the Security Interest created
hereby and any guaranties of the Obligations, or to resort to any
item of Collateral or guaranties in any particular order; and all
of its rights hereunder and in respect of such Collateral and
guaranties shall be cumulative and in addition to all other rights,
however existing or arising. To the extent that it lawfully may,
Debtors (i) hereby agree that they will not invoke any law relating
to the marshalling of collateral which might cause delay in or
impede the enforcement of Lead Agent's rights under this Security
Agreement or under any other
instrument evidencing any of the Obligations or under which any of
the Obligations is outstanding or by which any of the
Obligations is secured or guaranteed and (ii) to the extent
permitted by law, hereby irrevocably waive the benefits of all such
laws and any and all rights to equity of redemption or other rights
of redemption that it may have in equity or at law with respect to
the Collateral.
14. No Duty on Lead Agent's Part.
The powers conferred on Lead Agent hereunder are solely
to protect Lead Agent's interests in the Collateral and shall not
impose any duty upon it to exercise any such powers. Lead 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
Debtors for any act or failure to act hereunder, except for its own
gross negligence or willful misconduct.
15. Role of Lead Agent.
The rights, duties, liabilities and immunities of Lead
Agent and its appointment and replacement hereunder shall be
governed by Article 8 of the Credit Agreement.
16. Notices.
All notices, demands, requests and other communications
required or permitted hereunder shall be in writing and shall be
given and deemed to have been given in accordance with Section 9.1
of the Credit Agreement.
17. Other Remedies.
The remedies herein provided are cumulative and not
exclusive of any remedies provided by law. Lead Agent, acting on
behalf of all Secured Parties shall have all of the rights and
remedies granted under the Credit Agreement and any other Loan
Instrument and available at law or in equity, and these same rights
and remedies may be pursued separately, successively or
concurrently against Debtors or any collateral under the Loan
Instruments, at the sole discretion of Lead Agent. The
application of the Collateral to satisfy the Obligations pursuant
to the terms hereof shall not operate to release Debtors from their
Obligations until payment in full of any deficiency has been made
in cash.
18. Absence of Fiduciary Relation. Lead Agent
undertakes to perform or to observe only such of its agreements and
obligations as are specifically set forth in this Security
Agreement or any other Loan Instrument, and no implied
agreements, covenants or obligations with respect to Debtors, any
Affiliate of Debtors or any other party to any of the Assigned
Agreements shall be read into this Security Agreement against Lead
Agent or any of the Secured Parties. Neither Lead Agent nor any of
the Secured Parties in its and their capacity as such is a
fiduciary of and shall not owe or be deemed to owe any fiduciary
duty to Debtors, any Affiliate of Debtors or any other party to any
of the Assigned Agreements, except as otherwise specifically
required by applicable law.
19. Survival of Representations and Warranties. All
agreements, representations and warranties made herein or
incorporated by reference herein shall survive the execution and
delivery of this Security Agreement and the other Loan
Instruments and repayment of the Obligations, and shall be deemed
to be material and to have been relied upon by Lead Agent and the
Secured Parties, regardless of any investigation made by or on
behalf of any Lead Agent and the Secured Parties.
20. Waiver.
By exercising or failing to exercise any of its rights,
options or elections hereunder (without also expressly waiving the
same in writing), Lead Agent, on behalf of the Secured
Parties, shall not be deemed to have waived any breach or default
on the part of Debtors or to have released Debtors from any of
their obligations secured hereby. No failure on the part of Lead
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.
21. Time of Essence.
Time is of the essence with respect to this Security
Agreement and all of its provisions.
22. Binding Upon Successors.
This Security Agreement shall be binding upon and inure
to the benefit of the respective successors and permitted assigns
of each of the parties hereto (subject to Section 6.22 of the
Credit Agreement). In the event of any assignment or transfer by
any Secured Party of any instrument evidencing all or any part of
the Obligations, the holder of such instrument shall, subject to
the Credit Agreement, be entitled to the benefits of this
Security Agreement.
23. Captions.
The captions, headings and table of contents used in this
Security Agreement are for convenience only and do not and shall
not be deemed to affect, limit, amplify or modify the terms and
provisions hereof.
24. Number and Gender. Whenever used in this Security
Agreement, the singular number shall include the plural and the
plural the singular, and the use of any gender shall be
applicable to all genders.
25. Governing Law; Waiver of Trial by Jury.
(a) THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PROVISIONS OF SUCH
STATE AS TO INTERPRETATION, ENFORCEMENT, VALIDITY,
CONSTRUCTION, EFFECT AND IN ALL OTHER RESPECTS, BUT EXCLUDING
PERFECTION, WHICH SHALL BE GOVERNED BY THE LAWS OF THE
JURISDICTION RELEVANT THERETO.
(b) WITH REGARD TO THIS SECURITY AGREEMENT, EACH OF
DEBTORS AND LEAD AGENT HEREBY WAIVES THE RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING AND FOR ANY COUNTERCLAIM THEREIN.
26. Amendment.
This Security Agreement may not be amended, modified,
supplemented, canceled or terminated, and no provision of this
Security Agreement may be waived, except in accordance with Section
9.4 of the Credit Agreement.
27. Severability.
Any provision of this Security Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of
such prohibition, unenforceability or non-authorization, without
invalidating the remaining provisions hereof or affecting the
validity, enforceability or legality of such provision in any other
jurisdiction. Where provisions of any law or regulation resulting
in such prohibition or unenforceability may be waived they are
hereby waived by Debtors and Lead Agent to the full extent
permitted by law so that this Security Agreement shall be deemed a
valid, binding agreement, and the Security Interest created hereby
shall constitute a continuing first lien on and first perfected
security interest in the Collateral, in each case enforceable in
accordance with its terms.
28. Secured Parties Not Liable.
Neither this Security Agreement nor any action on the
part of Lead Agent or the Secured Parties (other than an express
written assumption) shall constitute an assumption by Lead Agent or
the Secured Parties of any of the obligations of Debtors related to
any of the Collateral, and Debtors shall continue to be liable for
all such obligations whether incurred before or after an Event of
Default.
29. Limitation of Recourse.
The obligations of Debtors under this Security
Agreement are subject to the recourse limitations set forth in
Section 9.15 of the Credit Agreement.
30. Counterparts.
This Security Agreement may be executed in any number of
counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument.
31. Continuing Assignment, Pledge and
Security Interest.
This Security Agreement shall create a continuing
assignment, pledge and first priority security interest in the
Collateral and shall remain in full force and effect for the
benefit of Lead Agent and the Secured Parties until the Issuing
Bank is no longer obligated to issue any Letter of Credit and has
no liability under any Letter of Credit and all Obligations to be
paid or performed by Debtors under the Loan Instruments have been
paid and performed in full and the Total Commitments have
terminated. Upon the happening of all such events, the Security
Interest granted hereby shall terminate. In connection with such
termination, Lead Agent shall execute such instruments of release
to evidence such termination or expiration as Debtors shall
reasonably request at Debtors' cost and expense.
32. Payments Set Aside.
To the extent that Debtors or any other Person on behalf
of Debtors makes a payment or payments to Lead Agent and/or any
other Secured Party, or Lead Agent and/or any other Secured Party
enforce their security interests or Lead Agent exercises its right
of set-off, and such payment or payments or the proceeds of such
enforcement or set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then to the
extent of such recovery, the Obligations or any part thereof
originally intended to be satisfied, and this Security Agreement
and all Liens, rights and remedies therefor, shall be revived and
continued in full force and effect as if such payment had not been
made or such enforcement or set-off had not occurred.
33. Joint and Several Obligations.
The obligations of the Debtors hereunder are joint
and several.
IN WITNESS WHEREOF, the parties hereto have caused this
Security Agreement to be duly executed as of the day and year first
written above.
SALTON SEA POWER GENERATION L.P.
By: SALTON SEA POWER COMPANY, the
general partner
By: /s/ Jon R. Peele
Name: Jon R. Peele
Title:
SALTON SEA BRINE PROCESSING L.P.
By: SALTON SEA POWER COMPANY, the
general partner
By: /s/ Wallace C. Dieckmann
Name: Wallace C. Dieckmann
Title:
CREDIT SUISSE, as Lead Agent
By: /s/ Bryon McGregor
Name: Bryon McGregor
Title:
By: /s/ Louis Iaconetti
Name: Louis Iaconetti
Title: Associate
Exhibit 10.114
DEED OF TRUST, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
THIS DEED OF TRUST made as of the 28th day of February,
1994, by and between SALTON SEA POWER GENERATION L.P., a
California limited partnership ("SSPG"), and SALTON SEA BRINE
PROCESSING L.P., a California limited partnership ("SSBP"), jointly
& severally, each having an address at 4365 Executive Drive, San
Diego, California 92121 (SSPG and SSBP, being
hereinafter collectively referred to as "Trustor") to CHICAGO TITLE
COMPANY, a California corporation, having an office at 925 B
Street, San Diego, California 92101 ("Trustee"), for the use and
benefit of CREDIT SUISSE, in its capacity as Lead Agent for the
benefit of each of the Secured Parties (defined below) with all the
powers and duties set forth in the Credit Agreement (as such terms
are defined and used in the Credit Agreement, defined below), as
Beneficiary.
W I T N E S S E T H :
WHEREAS, Trustor and (i) Credit Suisse, The Fuji Bank,
Limited, The Sumitomo Bank, Limited, The Bank of Nova Scotia, Bank
of America, National Trust and Savings Association, and each
Purchasing Lender, as lenders (each of the lenders, individually,
a "Lender", and, collectively, "Lenders"), (ii) Credit Suisse, as
issuing bank ("Issuing Bank"), (iii) Credit Suisse, as lead agent
for Lenders and Issuing Bank ("Lead Agent"), (iv) The Fuji Bank,
Limited, as co-agent ("Co-Agent") and (v) The Sumitomo Bank,
Limited, The Bank of Nova Scotia, Bank of America, National Trust
and Savings Association, as "Lead Managers" in respect of a Term
Loan Commitment and in the case of The Fuji Bank, Limited and
Credit Suisse, as working capital lenders ("Working Capital
Lenders") in respect of a Working Capital Loan Commitment are
parties to a Credit and Reimbursement Agreement (as the same may be
amended, supplemented or modified from time to time, and at any
time according to its terms, the "Credit Agreement") dated as of
the date hereof, and unless otherwise defined herein,
capitalized terms used in this Deed of Trust shall have the meaning
given such terms in the Credit Agreement (the Lenders, the Issuing
Bank, the Lead Agent, the Working Capital Lenders, together with
any party secured pari passu with such parties in their capacities
as counterparties and intermediaries to any Swap Agreement
hereinbefore and hereinafter collectively referred to as the
"Secured Parties");
WHEREAS, Lead Agent and Trustor, in conjunction with this
Deed of Trust, have executed and delivered certain Loan Instruments
relating to the extension of credit to be made under the Credit
Agreement;
WHEREAS, Secured Parties have made available to Trustor
a credit facility consisting of (a) a term loan facility in the
maximum aggregate principal of ONE HUNDRED THIRTY MILLION and
no/100 Dollars ($130,000,000)(the "Term Loan") which Term Loan
consists of (i) the Tranche A Term Loan, (ii) the Tranche B Term
Loan and (iii) Letters of Credit to be provided to Depositary and
(b) a working capital facility in the maximum aggregate principal
of FIVE MILLION and no/100 Dollars ($5,000,000)(the "Working
Capital Loan");
WHEREAS, Issuing Bank will issue the Letters of Credit in
the amount and for the purposes more particularly set forth in the
Credit Agreement and the other Loan Instruments (hereinafter
collectively referred to as the "Letters of Credit"; Trustor's
obligations under the Letters of Credit being hereinafter
collectively referred to as the "Reimbursement Obligations"; the
Reimbursement Obligations, the Term Loan and the Working Capital
Loan being hereinafter collectively referred to as the "Loans");
WHEREAS, in order to mitigate the risk of interest rate
fluctuations, Trustor and certain of the Secured Parties may enter
into Swap Agreements;
WHEREAS; SSBP is the holder of an easement in the
premises described in Exhibit A attached hereto (the "Resource
Easement Area Premises") pursuant to a certain Amended and
Restated Easement Grant Deed and Agreement Regarding Rights for
Geothermal Development given by Magma Land Company I to SSBP dated
as of February 23, 1994 and recorded immediately prior hereto (the
"Easement Grant Deed");
WHEREAS, SSPG and SSBP are the holders of a leasehold
estate in the premises described in Exhibit B attached hereto (the
"Ground Lease Premises") (the Resource Easement Area
Premises and the Ground Lease Premises being hereinafter
collectively referred to as the "Premises") pursuant to (i) a
Ground Lease dated November 24, 1993 by and between Imperial
Irrigation District, as landlord, and SSPG and SSBP, collectively
as tenant, (the "Units 1&2 Lease") and (ii) a Ground Lease dated
March 31, 1993 by and between Magma Land Company I, as landlord,
and SSPG and SSBP, collectively as tenant, (the "Unit 3 Lease")
(the Easement Grant Deed, the Units 1&2 Lease and the Unit 3 Lease
being hereinafter collectively referred to as the
"Underlying Documents");
WHEREAS, this Deed of Trust is intended to secure all of
Trustor's obligations hereunder and under the Secured Notes, the
Working Capital Notes, the Credit Agreement, the Swap
Agreements and the other Loan Instruments to which Trustor is a
party;
NOW, THEREFORE, to secure the payment and performance of
the Debt (as hereinafter defined) which Debt may increase, decrease
and increase again from time to time, Trustor has given, granted,
bargained, sold, aliened, enfeoffed, conveyed, confirmed and
assigned, and by these presents does give, grant, bargain, sell,
alien, enfeoff, convey, confirm and assign unto Trustee, its
successors and assigns, with general warranties of title, in trust
with power of sale and right of entry and possession
forever, for the benefit and security of the Secured Parties, all
right title and interest of Trustor in and to, the following
property, rights and interests, whether now owned or hereafter
acquired (such property, rights and interests being hereinbefore
and hereinafter collectively referred to as the "Trust
Property"):
(a) the Premises;
(b) all buildings, improvements and fixtures now or
hereafter located on the Premises (hereinafter referred to as
the "Improvements");
(c) the Easement Grant Deed and the rights and
interests created thereunder together with all rights of
Trustor to renew, extend, supplement, amend, cancel or
terminate the same;
(d) the Units 1&2 Lease and the Unit 3 Lease and the
rights and interests created thereunder together with all
rights of Trustor to renew, extend, supplement, amend, cancel
or terminate the same;
(e) all the estate, right, title, claim or demand of
any nature whatsoever of Trustor, either in law or in
equity, in possession or expectancy, in and to the Trust
Property and in all replacements, substitutes, renewals,
betterments and extensions of and all additions to any of the
Improvements, or any part thereof;
(f) all easements (other than as created under and
pursuant to the Easement Grant Deed), rights-of-way, gores of
land, streets, ways, alleys, passages, sewer rights, waters,
water courses, water rights and powers, and all estates,
rights, titles, interests, privileges, liberties, tenements,
hereditaments, revocable consents, options, appendages and
appurtenances of any nature whatsoever, in any way belonging,
relating or pertaining to the Trust Property (including,
without limitation, any and all
development rights, air rights, water rights or similar or
comparable rights of any nature whatsoever now or hereafter
appurtenant to the Premises or now or hereafter transferred to
the Premises) together with all rights of Trustor to renew,
extend, supplement, amend, cancel or terminate the same, and
Trustor's interest in all land lying in the bed of any street,
road or avenue, opened or proposed, in front of or adjoining
the Premises to the center line thereof;
(g) all machinery, apparatus, equipment, fittings,
fixtures and other property of every kind and nature
whatsoever owned by Trustor, or in which Trustor has or
shall have an interest, now or hereafter located upon the
Trust Property, or appurtenances thereto, and usable in
connection with the present or future operation and
occupancy of the Trust Property and all equipment,
materials, supplies, apparatus and other items now or
hereafter attached to, installed in or used (temporarily or
permanently) of any nature whatsoever, now or hereafter
located upon the Trust Property and all renewals,
replacements and substitutions thereof and additions
thereto, including but not limited to any and all
partitions, ducts, shafts, pipes, radiators, conduits,
wiring, floor coverings, awnings, motors, engines, boilers,
stokers, pumps, dynamos, transformers, turbines, generators,
fans, blowers, vents, switchboards, elevators, mail or coal
conveyors, escalators, compressors, furnaces, cleaning
equipment, call and sprinkler systems, fire extinguishing
apparatus, water and other tanks, heating, ventilating,
plumbing, laundry, incinerating, air conditioning and air
cooling systems and water, gas, telephone,
telecommunications, telemetry, electric equipment, wells,
sumps, test holes, pipelines, separators, clarifiers,
crystallizers, headers, scrubbers, demisters, cooling
towers, turbines, generators, geothermal electric generating
facilities, buildings sheds, roads, transformers and
transmission lines (hereinafter collectively referred to as
the "Equipment"), and the right, title and interest of
Trustor in and to any of the Equipment which may be subject to
any security agreements (as defined in the Uniform
Commercial Code of the State of California) superior in lien
to the lien of this Deed of Trust;
(h) all awards or payments, including interest
thereon, and the right to receive the same, which may be
made with respect to the Trust Property, whether from state
fund sharing or from the exercise of the right of eminent
domain (including any transfer made in lieu of the exercise of
said right), changes of grade of street or for any other
injury to or decrease in the value of the Trust Property now
or hereafter located thereon, whether direct or
consequential, which said awards and payments are hereby
assigned, and Lead Agent is hereby authorized to collect and
receive the proceeds thereof and to give proper receipts and
acquittances therefor;
(i) all refunds or rebates of Taxes (as hereinafter
defined) or charges in lieu of Taxes, now or hereafter
assessed or levied against the Trust Property;
(j) all leases (including oil, gas and other mineral
leases), subleases, franchises, licenses, concessions,
permits, contracts and other agreements affecting the use or
occupancy of the Trust Property now or hereafter entered into
and any renewals or extensions thereof (hereinafter referred
to as the "Leases") and the right to receive and apply the
rents, issues and profits of the Trust Property to the extent
of Trustor's interest therein, including but not limited to
the proceeds of all hydrocarbons or other
minerals produced from the Trust Property and all delay
rentals and bonuses from any oil, gas or other mineral lease
(hereinafter referred to as the "Rents") to the payment of the
Debt;
(k) all inventory, accounts and general intangibles
owned by Trustor, or in which Trustor now has or hereafter
shall have any right, title or interest, now or hereafter
located upon, arising in connection with or concerning the
Trust Property;
(l) all proceeds of and any unearned premiums on any
insurance policies covering the Trust Property, including,
without limitation, the right to receive the proceeds of any
insurance, judgments, or settlements made in lieu thereof, for
damage to the Trust Property;
(m) the right, in the name and on behalf of Trustor,
to appear in and defend any action or proceeding brought
with respect to the Trust Property and to commence any action
or proceeding to protect the interest of Lead Agent and the
Secured Parties in the Trust Property;
(n) all of Trustor's right, title and interest in and
to all plans and specifications prepared for construction of
Improvements or other development of the Trust Property
(including all amendments, modifications, supplements, general
conditions and addenda thereof or thereto) and all studies,
data and drawings related thereto, and all
contracts and agreements of Trustor relating to the
aforesaid plans and specifications or to the aforesaid
studies, data and drawings or to the construction of
Improvements on the Trust Property;
(o) all contracts with property managers, surveyors,
real estate advisors and consultants, geothermal advisors
and consultants, geothermal engineers, real estate brokers,
and other like agents and professionals that relate to any
part of the Trust Property, including without limitation, any
Improvements constructed or to be constructed on the Trust
Property, and all maps, reports, surveys, and studies of or
relating to any of the Trust Property, owned by
Trustor or in which Trustor has or shall have an interest
and now or hereafter in the possession of Trustor or any such
agent or professional;
(p) all present and future agreements, permits,
licenses and approvals, as well as all modifications,
supplements, extensions and renewals thereof, now existing
or hereafter made, in which Trustor has or shall have an
interest relating to the use, development and/or occupancy of
the Resource Easement Area Premises, the Ground Lease Premises
and/or the Improvements; and
(q) all products and proceeds of any of the Trust
Property herein described.
TO HAVE AND TO HOLD the above granted and described Trust
Property, with all rights, privileges, and appurtenances thereunto
belonging unto and to the proper use and benefit of Trustee, its
successors and assigns, in trust, forever to secure the following
obligations which shall heretofore and hereinafter collectively be
referred to as the Debt:
(i) payment of the indebtedness evidenced by the
Tranche A Notes in an aggregate principal sum not to exceed,
at any time, the Tranche A Term Loan of up to the aggregate
maximum principal sum of THIRTY SEVEN MILLION and no/100
Dollars ($37,000,000);
(ii) payment of the indebtedness evidenced by the
Tranche B Notes in an aggregate principal sum not to exceed,
at any time, the Tranche B Term Loan of up to the aggregate
maximum principal sum of NINETY THREE MILLION and no/100
Dollars ($93,000,000)(the Tranche A Notes and the Tranche B
Notes being hereinafter collectively referred to as the
"Secured Notes");
(iii) payment of the indebtedness evidenced by the
Working Capital Notes in an aggregate principal sum not to
exceed, at any time, the Working Capital Loan of up to the
aggregate maximum principal sum of FIVE MILLION and no/100
Dollars ($5,000,000);
(iv) repayment of any and all amounts drawn under the
Letters of Credit and the Reimbursement Obligations, and any
other fees and costs related thereto, all as described in
the Credit Agreement;
(v) payment of any and all amounts owing pursuant to
any Swap Agreement;
(vi) payment, performance and observance of each term,
covenant and condition to be paid, performed or observed by
Trustor under the Credit Agreement, the Project Documents
and the other Loan Instruments and any documents, agreements
or instruments securing payment of the Secured Notes
together with all renewals, replacements, extensions,
modifications and substitutions thereof;
(vii) performance and observance of each term,
covenant and condition contained in this Deed of Trust and
payment of all sums payable by Trustor as provided in this
Deed of Trust;
(viii) payment of all sums expended or advanced by any
of the Secured Parties pursuant to the terms of this Deed of
Trust, or any other instrument (including the Credit
Agreement and any and all Loan Instruments), now in
existence or hereafter executed, the purpose of which is to
secure or facilitate the payment of the Secured Notes, the
Working Capital Notes, the repayment of amounts drawn under
the Letters of Credit or the payment of any amounts owing
under any Loan Instrument; and
(ix) payment of all amounts payable to the Secured
Parties or any of them in connection with the Loans.
TO HAVE AND TO HOLD the above granted and described Trust
Property unto and to the proper use and benefit of Trustee, and the
successors and assigns of Trustee, forever,
IN TRUST, to secure the payment to the Secured Parties of
the Debt at the time and in the manner provided for its
payment in the Secured Notes, the Working Capital Notes, the Credit
Agreement, the other Loan Instruments, the Swap Agreements and in
this Deed of Trust, as any of the foregoing may be
applicable.
AND Trustor covenants with and represents and warrants to
Trustee and the Secured Parties as follows:
1. Payment of Debt. Trustor will pay the Debt at the
time and in the manner provided for its payment in the Secured
Notes, the Working Capital Notes, the Credit Agreement, the other
Loan Instruments, the Swap Agreements and in this Deed of Trust, as
any of the foregoing may be applicable.
2. Warranty of Title. Subject only to Permitted Liens,
Trustor warrants its title to the Resource Easement Area Premises,
the Ground Lease Premises, the Improvements, the
Equipment and the balance of the Trust Property and the validity
and priority of the lien of this Deed of Trust and the estate
hereof against the claims and demands of all persons whomsoever.
Trustor also represents and warrants that (i) Trustor is now, and
after giving effect to this Deed of Trust, will be, in a solvent
condition, (ii) the execution and delivery of this Deed of Trust by
Trustor does not constitute a "fraudulent conveyance" within the
meaning of Title 11 of the United States Code as now
constituted or under any other applicable statute, and (iii) no
bankruptcy or insolvency proceedings are pending or contemplated by
or, to the best of Trustor's knowledge, against Trustor.
3. Insurance. Trustor will keep the Improvements and
the Equipment insured against loss or damage by fire, standard
extended coverage perils and such other hazards as shall from time
to time be required in accordance with Section 6.16 of the Credit
Agreement. If at any time Trustor is not in compliance with
Section 6.16 of the Credit Agreement, Lead Agent shall have the
right without notice to Trustor to take such action as Lead Agent
deems necessary to protect the Trust Property, including, without
limitation, the obtaining of such insurance coverage as Lead Agent
in its sole discretion deems appropriate, and all expenses incurred
by Lead Agent in connection with such action or in obtaining such
insurance and keeping it in effect shall be paid by Trustor to Lead
Agent upon demand. Any amounts not so paid by Trustor shall be
deemed secured by this Deed of Trust. Trustor shall at all times
comply with and shall cause the
Improvements and Equipment and the use, occupancy, operation,
maintenance, alteration, repair and restoration thereof to comply
with the terms, conditions, stipulations and requirements of the
Credit Agreement. If the Premises, or any portion thereof, is
located in a Federally designated "special flood hazard area", in
addition to the other Insurance Policies required under this
paragraph, a flood insurance policy shall be delivered by Trustor
to Lead Agent. If no portion of the Premises is located in a
Federally designated "special flood hazard area", such fact shall
be substantiated by a certificate in form reasonably satisfactory
to Lead Agent from a licensed surveyor, appraiser or professional
engineer or other qualified person. If the Trust Property shall be
damaged or destroyed, in whole or in part, by fire or other
property hazard or casualty, Trustor shall give prompt notice
thereof to Lead Agent and any Proceeds received by Lead Agent shall
be held and disbursed as set forth in Section 6.17 of the Credit
Agreement.
4. Payment of Taxes, etc. Trustor shall pay all taxes
or charges in lieu of taxes, assessments, water rates, sewer rents
and other charges, including vault charges and license or permit
fees for the use of vaults, chutes and similar areas on or
adjoining the Premises, now or hereafter levied or assessed against
the Trust Property (hereinafter referred to as the
"Taxes") prior to the date upon which any fine, penalty, interest
or cost may be added thereto or imposed by law for the nonpayment
thereof, subject, in all events, to Trustor's rights to contest
Taxes in accordance with Section 6.18 of the Credit Agreement.
Trustor shall deliver to Lead Agent, upon request, receipted bills,
cancelled checks or other evidence reasonably satisfactory to Lead
Agent evidencing the payment of the Taxes prior to the date upon
which any fine, penalty, interest or cost may be added thereto or
imposed by law for the nonpayment thereof (subject, in all events,
to Trustor's rights to contest such Taxes in
accordance with said Section 6.18 of the Credit Agreement).
5. Condemnation. Notwithstanding any taking by any
public or quasi-public authority through eminent domain or
otherwise, Trustor shall continue to pay the Debt at the time and
in the manner provided for its payment in the Secured Notes, the
Working Capital Notes, the Credit Agreement, the Swap Agreements,
this Deed of Trust or the other Loan Instruments and the Debt shall
not be reduced until and only to the extent any award or payment
therefor shall have been actually received and applied by Lead
Agent to the discharge of the Debt. Lead Agent shall apply the
entire amount of any such award or payment in accordance with
Section 6.17 or any other relevant provisions of the Credit
Agreement. If the Trust Property is sold, through foreclosure or
otherwise, prior to the receipt by Lead Agent of such award or
payment, Lead Agent shall have the right, whether or not a
deficiency judgment on the Debt shall have been sought, recovered
or denied, to receive such award or payment, or a portion thereof
sufficient to pay the Debt, whichever is less. Trustor shall file
and prosecute its claim or claims for any such award or payment in
good faith and with due diligence and cause the same to be
collected and paid over to Lead Agent for application as set forth
above. Trustor hereby irrevocably authorizes and empowers Lead
Agent in the name of Trustor or otherwise to
collect and receipt for any such award or payment and to file and
prosecute such claim or claims if (i) Trustor fails to do so within
a reasonable time prior to the expiration of the period allowed
therefor by applicable law, or (ii) an Event of Default has
occurred and is continuing. Although it is hereby expressly agreed
that the same shall not be necessary in any event, Trustor shall,
upon demand of Lead Agent, make, execute and deliver any and all
assignments and other instruments sufficient for the purpose of
assigning any such award or payment to Lead Agent free and clear of
any encumbrances of any kind or nature whatsoever.
6. Leases and Rents.
(a) Trustor hereby assigns to Lead Agent as security for
the payment of the Debt and the observance and performance by
Trustor of all of the terms, covenants and provisions of the Credit
Agreement and all other Loan Instruments on Trustor's part to be
observed or performed, all of Trustor's right, title and interest
in and to the Leases and the Rents. Subject to the terms of this
paragraph, Lead Agent waives the right to enter the Trust Property
for the purpose of collecting the Rents and grants Trustor the
right to collect the Rents. Trustor shall hold the Rents, or an
amount sufficient to discharge all sums currently due on the Debt,
in trust for use in payment of the Debt. The right of Trustor to
collect the Rents may be revoked by Lead Agent upon the occurrence
and during the continuation of any Event of Default by giving
notice of such revocation to Trustor. Following such notice, Lead
Agent may retain and apply the Rents toward payment of the Debt
according to the Credit Agreement, or to the operation, maintenance
and repair of the Trust Property, as Lead Agent shall deem proper
irrespective of whether Lead Agent on behalf of the Secured Parties
shall have commenced a foreclosure of this Deed of Trust, shall
have exercised the power of sale under this Deed of Trust or shall
have applied or
arranged for the appointment of a receiver. Except to the extent
permitted or authorized by the Credit Agreement, Trustor shall not,
without the consent of Lead Agent, make, or suffer to be made, any
Leases or modify or cancel any Leases or accept
prepayments of installments of the Rents for a period of more than
one (1) month in advance (or for more than one (1) year in advance
for the agricultural leases referred to in section (f) of Schedule
2.9(b) to the Credit Agreement) or further assign the whole or any
part of the Rents. Trustor shall (i) fulfill or perform each and
every provision of the Leases on the part of Trustor to be
fulfilled or performed, (ii) promptly send copies of all notices of
default which Trustor shall send or receive under the Leases to
Lead Agent, and (iii) enforce, short of termination of the Leases,
the performance or observance of the provisions thereof by the
other parties thereto.
(b) Trustor agrees that it will not further pledge or
assign its interest in any of the Leases, or further assign the
Rents so long as any of the Debt remains unpaid except as
otherwise permitted by the Credit Agreement. Upon the occurrence
and during the continuation of an Event of Default, and if notice
has been given by Lead Agent (if notice is required to be so given
pursuant to the Credit Agreement), Trustor shall not, without the
prior consent of Lead Agent, lease all or any portion of the Trust
Property.
(c) Nothing contained in this paragraph shall be
construed as imposing on any Secured Party any of the obligations
of the parties under the Leases.
(d) The assignment of the Leases and Rents in this
paragraph 6 is intended to be an absolute assignment from Trustor
to Lead Agent on behalf of the Secured Parties and not merely the
passing of a security interest.
7. Maintenance of the Trust Property. Trustor shall
cause the Trust Property to be maintained in good condition and
repair and will not commit or suffer to be committed any waste of
the Trust Property. Except to the extent permitted or authorized
by the Credit Agreement, the Improvements and the Equipment shall
not be removed, demolished or materially altered (except for normal
replacement of the Equipment) without the consent of Lead Agent.
Except to the extent permitted or authorized by the Credit
Agreement, Trustor will not, without obtaining the prior consent of
Lead Agent, initiate, join in or consent to any
private restrictive covenant, zoning ordinance, or other public or
private restrictions, limiting or affecting the uses which may be
made of the Trust Property or any part thereof.
8. Environmental Matters. Trustor shall comply, in all
respects, and at all times, with Section 5.25 of the Credit
Agreement, and the provisions of Section 5.25 of the Credit
Agreement shall be deemed incorporated herein by reference.
9. Transfer or Encumbrance of the Trust Property.
Except to the extent permitted by the Credit Agreement, no part of
the Trust Property and no legal or beneficial interest in Trustor
shall in any manner be further encumbered (other than with
Permitted Liens), sold, transferred, assigned or conveyed, or
permitted to be further encumbered, sold, transferred,
assigned or conveyed without the prior consent of Lead Agent which
consent in any and all circumstances may be withheld in the sole
and absolute discretion of Lead Agent. The provisions of the
foregoing sentence of this paragraph shall apply to each and every
such further encumbrance, sale, transfer, assignment or conveyance,
regardless of whether or not Lead Agent has consented to, or waived
by its action or inaction its rights hereunder with respect to, any
such previous further encumbrance, sale,
transfer, assignment or conveyance and irrespective of whether such
further encumbrance, sale, transfer, assignment or
conveyance is voluntary, by reason of operation of law or
otherwise made.
10. Notice. Trustor hereby requests that a copy of
notice of default and notice of sale be mailed to it at the address
set forth below, and such address is also the mailing address of
Trustor, as debtor, under the California Uniform Commercial Code.
Lead Agent's address given below is the address for Lead Agent on
behalf of the Secured Parties, as secured party, under the
California Uniform Commercial Code. In
addition, any notice, request, demand, statement, authorization,
approval or consent made hereunder shall be made pursuant to the
provisions of the Credit Agreement as follows:
If to Trustor:
Salton Sea Power Generation L.P./
Salton Sea Brine Processing L.P.
4365 Executive Drive, Suite 900
San Diego, California 92121
Attention: President
Telecopy: (619) 622-7822
If to Trustee:
Chicago Title Insurance Company
925 "B" Street
San Diego, California 92101
Attention: Legal Department
Telecopy: (619) 544-6277
If to Lead Agent:
Credit Suisse
Tower 49
12 East 49th Street
New York, New York 10017
Attention: Project Finance re: Salton Sea
Telecopy: (212) 238-5390
11. Sale of Trust Property. If this Deed of Trust is
foreclosed, or the power of sale hereunder is exercised, the Trust
Property, or any interest therein, may, at the discretion of Lead
Agent, be sold in one or more parcels or in several interests or
portions and in any order or manner.
12. Changes in Laws Regarding Taxation. In the event of
the passage after the date of this Deed of Trust of any law of the
State of California deducting from the value of real property for
the purpose of taxation any lien or encumbrance thereon or changing
in any way the laws for the taxation of mortgages or deeds of trust
or debts secured by mortgages or deeds of trust for state or local
purposes or the manner of the collection of any such taxes, and
imposing a tax, either directly or
indirectly, on this Deed of Trust, the Secured Notes, the Working
Capital Notes, the Credit Agreement, the other Loan Instruments,
the Swap Agreements and/or the Debt, Trustor shall, if permitted by
law, pay any tax imposed as a result of any such law within the
statutory period or within fifteen (15) days after demand by Lead
Agent, whichever is less, provided, however, that if, in the
opinion of the attorneys for Lead Agent, Trustor is not permitted
by law to pay such taxes, Lead Agent shall have the right, at its
option, to declare the Debt due and payable on a date specified in
a prior notice to Trustor of not less than thirty (30) days.
Notwithstanding the foregoing, and irrespective of any
requirement of any law, if Trustor reimburses or causes the
reimbursement of any additional or increased costs incurred by the
Secured Parties to the satisfaction of Lead Agent, Lead Agent shall
not declare the Debt due and payable.
13. No Credits on Account of the Debt. Trustor will not
claim or demand or be entitled to any credit or credits on account
of the Debt for any part of the Taxes assessed against the Trust
Property or any part thereof, and no deduction shall otherwise be
made or claimed from the taxable value of the Trust Property, or
any part thereof, by reason of this Deed of Trust or the Debt.
14. Offset, Counterclaims and Defenses. Any assignee of
this Deed of Trust and the Debt secured hereby shall take the same
free and clear of all offsets, counterclaims or defenses of any
nature whatsoever which Trustor may have against any assignor of
this Deed of Trust and the Debt secured hereby, and no such offset,
counterclaim or defense shall be interposed or asserted by Trustor
in any action or proceeding brought by any such
assignee upon this Deed of Trust or the Debt secured hereby and any
such right to interpose or assert any such offset,
counterclaim or defense in any such action or proceeding is hereby
expressly waived by Trustor.
15. Other Security for the Debt. Trustor shall
observe and perform all of the terms, covenants and provisions to
be observed or performed by Trustor contained in the Secured Notes,
the Working Capital Notes, the Credit Agreement, the Swap
Agreements, this Deed of Trust and in all other Loan Instruments to
which Trustor shall be a party evidencing, securing or
guaranteeing payment of the Debt, in whole or in part, or
otherwise executed and delivered in connection with the Secured
Notes, the Working Capital Notes, the Credit Agreement, the Swap
Agreements, this Deed of Trust or the other Loan Instruments.
16. Documentary Stamps. If at any time the United
States of America, any state thereof or any governmental
subdivision of any such state, shall require revenue or other
stamps to be affixed to the Secured Notes, the Working Capital
Notes, the Credit Agreement, the Swap Agreements, the other Loan
Instruments or this Deed of Trust, Trustor will pay for the same,
with interest and penalties thereon, if any.
17. Right of Entry. Lead Agent and each of the
Secured Parties shall have the right to enter and inspect the Trust
Property at all reasonable times as provided in the Credit
Agreement.
18. Books and Records. Trustor will comply with all of
the provisions and requirements of Section 6.10(a) of the Credit
Agreement concerning its books, records and accounts reflecting all
of the financial affairs of Trustor.
19. Performance of Other Agreements.
(a) Trustor shall observe and perform each and every
term to be observed or performed by Trustor pursuant to the terms
of any agreement or recorded instrument affecting or pertaining to
the Trust Property.
(b) Trustor shall (i) pay all rents, fees,
consideration, royalties, additional rents and other sums
required to be paid by Trustor, as grantee or lessee, as the case
may be, under and pursuant to the provisions of the Underlying
Documents, (ii) diligently perform and observe all of the terms,
covenants and conditions of the Underlying Documents on the part of
Trustor, as grantee or lessee, as the case may be, to be performed
and observed, unless such performance or observance shall be
waived, excused or not required by the grantor or
lessor, as the case may be, under the Underlying Documents, to the
end that all things shall be done which are necessary to keep
unimpaired the rights of Trustor, as grantee or lessee, as the case
may be, under the Underlying Documents, and (iii) promptly notify
Lead Agent of the giving of any notice by grantor or lessor, as the
case may be, under any of the Underlying Documents to Trustor of
any default by Trustor, as grantee or lessee, as the case may be,
in the performance or observance of any of the terms, covenants or
conditions of any of the Underlying Documents on the part of
Trustor, as grantee or lessee, as the case may be, to be performed
or observed and deliver to Lead Agent a true copy of each such
notice. Trustor shall not, except to the extent permitted or
authorized by the Credit Agreement, surrender any of the Underlying
Documents or terminate or cancel any of the
Underlying Documents or take any action to modify, change,
supplement, alter or amend any of the Underlying Documents, in any
respect, either orally or in writing, and Trustor hereby assigns to
Lead Agent, as further security for the payment of the Debt and for
the performance and observance of the terms,
covenants and conditions of this Deed of Trust, the Secured Notes,
the Working Capital Notes, the Credit Agreement, the Swap
Agreements or the other Loan Instruments, all of the rights,
privileges and prerogatives of Trustor, as grantee or lessee, as
the case may be, to surrender any of the Underlying Documents or to
terminate, cancel, modify, change, supplement, alter or amend any
of the Underlying Documents, and any such surrender of any of the
Underlying Documents or termination, cancellation,
modification, change, supplement, alteration or amendment of any of
the Underlying Documents without the prior consent of Lead Agent
obtained pursuant to the provisions of the Credit Agreement shall
be void and of no force and effect. If Trustor shall default in
the performance or observance of any term, covenant or condition of
any of the Underlying Documents on the part of Trustor, as grantee
or lessee, as the case may be, to be
performed or observed, and such default continues beyond the
expiration of any applicable grace periods, then, without
limiting the generality of the other provisions of this Deed of
Trust, and without waiving or releasing Trustor from any of its
obligations hereunder, Lead Agent shall have the right, but shall
be under no obligation, to pay any sums and to perform any act or
take any action to cause all of the terms, covenants and
conditions of the Underlying Documents on the part of Trustor, as
grantee or lessee, as the case may be, to be so performed or
observed on behalf of Trustor to the end that the rights of Trustor
in, to and under the Underlying Documents shall be kept unimpaired
and free from any default. If Lead Agent shall make any payment or
perform any act or take action in accordance with the preceding
sentence, Lead Agent will notify Trustor of the making of any such
payment, the performance of any such act, or taking of any such
action. In any such event, Lead Agent and any person designated by
Lead Agent shall have, and are hereby
granted, the right to enter upon the Trust Property at any time and
from time to time for the purpose of taking or performing any such
action. If any grantor or lessor, as the case may be, under any of
the Underlying Documents shall deliver to Lead Agent a copy of any
notice of default sent by said grantor or lessor, as the case may
be, to Trustor, such notice shall constitute full protection to
Lead Agent for any action taken or omitted to be taken by Lead
Agent, in good faith, consistent with the
foregoing, in reliance thereon. Trustor shall, from time to time,
use reasonable efforts to obtain from the grantors or lessors, as
the case may be, under the Underlying Documents such certificates
of estoppel with respect to compliance by Trustor with the terms of
the Underlying Documents as may be requested by Lead Agent.
Trustor shall exercise each individual option, if any, to extend or
renew the term of any of the Underlying
Documents in conformance with such option upon demand by Lead Agent
made at any time, and Trustor hereby expressly authorizes and
appoints Lead Agent its attorney-in-fact to exercise, either
jointly or individually, any such option in the name of and upon
behalf of Trustor if Trustor fails to do so within a reasonable
time prior to the expiration thereof, which power of attorney shall
be irrevocable and shall be deemed to be coupled with an interest.
(c) Trustor shall not, without Lead Agent's prior
consent, elect to treat any of the Underlying Documents as
terminated under Subsection 365(h)(1) or any other provision of the
Bankruptcy Code, after rejection or disaffirmance of any such
Underlying Documents by the grantor or lessor, as the case may be,
thereunder or by any trustee of such party, and any such election
made without such consent shall be void and ineffective.
(d) Subject to the Trustor's right to seek and retain
certain offsets as permitted hereunder, Trustor hereby assigns,
transfers and sets over to Lead Agent as security all of
Trustor's claims and rights to the payment of damages that may
hereafter arise as a result of any rejection or disaffirmance of
any of the Underlying Documents by the grantor or lessor, as the
case may be, thereof or by any trustee of such party, pursuant to
the Bankruptcy Code. Lead Agent shall have and is hereby granted
the right to proceed, in its own name or in the name of the Trustor
in respect of any claim, suit, action or proceeding relating to the
rejection or disaffirmance of any Underlying Documents (including,
without limitation, the right to file and prosecute, to the
exclusion of Trustor, any proofs of claim, complaints, motions,
applications, notices and other documents) in any case in respect
of such grantor or lessor under the
Bankruptcy Code, if (i) Trustor fails to do so within, as the case
may be, a reasonable time prior to the expiration of the period
allowed therefor by applicable law, or (ii) an Event of Default has
occurred and is continuing. This assignment
constitutes a present, irrevocable, non-exclusive and
unconditional assignment of the foregoing claims, rights and
remedies, and shall continue in effect until the Debt secured by
this Deed of Trust shall have been satisfied and discharged in
full. Any amounts received by Lead Agent as damages arising out of
any such rejection of any Underlying Documents shall be
applied first to all costs and expenses of Lead Agent (including,
without limitation, legal fees and disbursements) incurred
pursuant to this Deed of Trust and the Credit Agreement in
connection with the exercise of its rights under this paragraph and
then, in such manner as Lead Agent shall determine, to the
reduction and payment in full of the indebtedness secured by this
Deed of Trust, and any remaining balance shall be remitted to
Trustor or to whomsoever may be lawfully entitled to receive such
balance.
(e) In the event that, pursuant to Subsection
365(h)(2) or any other provision of the Bankruptcy Code, Trustor
seeks to offset against the rent, fees, consideration, royalties or
other sums payable under any of the Underlying Documents the amount
of any damages caused by the nonperformance by the grantor or
lessor, as the case may be, of such party's obligations under any
of the Underlying Documents after rejection or disaffirmance
thereof under the Bankruptcy Code, Trustor shall, prior to
effecting such offset, notify Lead Agent in writing of Trustor's
intent to do so, setting forth the amounts proposed to be so offset
and the basis therefor. Lead Agent shall have the right to object
in writing (stating the reasons therefor) to all or any part of
such offset, and, in the event of such objection, Trustor shall not
effect any offset of the amounts so objected to by Lead Agent. If
Lead Agent shall have failed to object as aforesaid within twenty
(20) days after such notice, Lead Agent's consent will be deemed to
have been given and Trustor may proceed to effect such offset in
the amounts set forth in such notice. If, in the best business
judgment of Trustor, such offset is
justified and Lead Agent has received the aforesaid notices and has
not objected but its time to do so has not expired, Trustor shall
have the right to make such offset and Trustor shall set aside the
offset amount as a reserve to be paid only if Lead Agent objects
within the aforesaid time. Trustor shall indemnify and hold Lead
Agent and each of its officers, directors,
employees and agents harmless from and against any and all
claims, demands, actions, suits, proceedings, damages, losses,
costs and expenses of every nature whatsoever (including, without
limitation, legal fees and disbursements) arising from or
relating to any such offset by Trustor.
(f) Trustor shall, promptly after obtaining knowledge
thereof, use best efforts to give prompt oral notice to Lead Agent
of any actual or contemplated filing by or against any grantor or
lessor, as the case may be, of any Underlying Document of a
petition under the Bankruptcy Code, and give prompt written notice
thereof to Lead Agent of such actual or contemplated filing. The
aforesaid written notice shall set forth any
information reasonably available to Trustor concerning the date or
anticipated date of such filing, the court in which such petition
was filed or is expected to be filed, and the relief sought or
reasonably expected to be therein. Trustor shall, promptly after
receipt thereof, deliver to Lead Agent any and all notices,
summonses, pleadings, applications and other documents received by
Trustor in connection with any such petition and any proceedings
related thereto.
(g) Subject to the second sentence of this paragraph
(g), in the event that any action, proceeding, motion or notice
shall be commenced or filed in respect of any grantor or lessor, as
the case may be, under any Underlying Document, in connection with
any case under the Bankruptcy Code, Lead Agent shall have, and is
hereby granted, the option, to the exclusion of Trustor,
exercisable upon notice from Lead Agent to Trustor, to conduct and
control any such litigation with counsel of Lead Agent's choice.
Lead Agent may proceed, in its own name or in the name of Trustor,
in connection with any such litigation, if (i)
Trustor fails to do so within a reasonable time prior to the
expiration of the period allowed therefor by applicable law, or
(ii) an Event of Default has occurred and is continuing, and
Trustor agrees to execute any and all powers, authorizations,
consents and other documents required by Lead Agent in connection
therewith. Trustor shall, upon demand, pay to Lead Agent all costs
and expenses (including without limitation, legal fees and
disbursements) paid or incurred by Lead Agent in connection with
the prosecution or conduct of any such proceedings, and, to the
extent permitted by law, such costs and expenses shall be deemed
expenses incurred in upholding the lien of this Deed of Trust and
added to the indebtedness secured by this Deed of Trust. Trustor
shall not, without the prior consent of Lead Agent, commence any
action, suit, proceeding or case, or file any application or make
any motion, in respect of any of the Underlying Documents in any
such case under the Bankruptcy Code.
(h) In the event that a petition under the Bankruptcy
Code shall be filed by or against Trustor, and Trustor, or anyone
claiming through or under Trustor or a trustee in bankruptcy shall
have the right to reject any of the Underlying Documents pursuant
to Section 365(a) or any other provision of the
Bankruptcy Code or a successor statute, Trustor shall give Lead
Agent at least ten (10) days' prior written notice of the date on
which application shall be made to the court for authority to
reject any such Underlying Document; provided, however, that if a
trustee in bankruptcy shall have a right to reject any Underlying
Document in less than ten (10) days, then Trustor shall give such
notice to Lead Agent immediately upon Trustor's obtaining
knowledge of such application. Lead Agent shall have the right,
but not the obligation (subject to the rights of a trustee in
bankruptcy), to exercise such right and Trustor hereby assigns such
right to Lead Agent. If at any time any grantor or lessor, as the
case may be, under any Underlying Document, or anyone holding by,
through or under the grantor or lessor, as the case may be, under
any Underlying Document or a trustee in bankruptcy shall elect to
reject such Underlying Document pursuant to
Section 365(a) or any other provision of the Bankruptcy Code, or a
successor statute, thereby giving to Trustor the right to elect to
treat such Underlying Document as terminated pursuant to Section
365(h)(1) or any other provision of the Bankruptcy Code, or a
successor statute, Lead Agent shall have the right to
exercise such right if (i) Trustor fails to do so within a
reasonable time prior to the expiration of the period allowed
therefor by applicable law, or (ii) an Event of Default has
occurred and is continuing, and Trustor hereby assigns said right
to Lead Agent. If either of the assignments provided for in this
paragraph is held to be enforceable, then Trustor, anyone
claiming by, through or under Trustor or a trustee in bankruptcy,
shall not exercise rights purportedly assigned to Lead Agent
without the prior consent of Lead Agent, and if Lead Agent shall
give such consent, the Trustor, anyone claiming by, through or
under Trustor or a trustee in bankruptcy shall promptly exercise
such rights.
(i) To the extent permitted by applicable law, Trustor
hereby assigns, transfers and sets over to Lead Agent the right to
apply to the Bankruptcy Court under Subsection 365(d)(4) or any
other provision of the Bankruptcy Code for an order extending the
period during which any Underlying Document may be rejected or
assumed after the entry of any order for relief under Chapter 7 or
Chapter 11 of the Bankruptcy Code in respect thereof.
20. Defaults. The Debt shall become due at the option
of Lead Agent if any Event of Default (as defined in Section 7.1 of
the Credit Agreement) shall occur and be continuing.
21. Right to Cure Defaults. If an Event of Default in
the performance of any of the covenants of Trustor herein occurs,
Lead Agent or the Secured Parties may, at their discretion, remedy
the same in accordance with the applicable provisions of the Credit
Agreement and for such purpose shall have the right to enter upon
the Trust Property or any portion thereof without thereby becoming
liable to Trustor or any person in possession thereof holding under
Trustor in each case to the extent set forth in the Credit
Agreement. If Lead Agent, or the Secured Parties shall remedy such
a default or appear in, defend, or bring any action or proceeding
to protect their interest in the Trust Property or to foreclose
this Deed of Trust or to exercise the power of sale granted under
this Deed of Trust or to collect the Debt or to otherwise exercise
any remedies available to Lead Agent or the Secured Parties under
this Deed of Trust, the costs and expenses thereof (including
attorneys' fees to the extent permitted by law) shall be treated as
set forth in
Section 6.34(a) of the Credit Agreement.
22. Appointment of Receiver. Trustee or Lead Agent, in
any action to foreclose this Deed of Trust or exercise the power of
sale granted under this Deed of Trust or upon the actual or
threatened waste to any part of the Trust Property or upon the
occurrence of an Event of Default, shall be at liberty, without
notice, to apply for the appointment of a receiver of the Rents,
and shall be entitled to the appointment of such receiver as a
matter of right, without regard to the value of the Trust
Property as security for the Debt, or the solvency or insolvency of
any person then liable for the payment of the Debt.
23. Non-Waiver. The failure of Lead Agent to insist
upon strict performance of any term of this Deed of Trust shall not
be deemed to be a waiver of any term of this Deed of Trust.
Trustor shall not be relieved of Trustor's obligation to pay and
perform the Debt at the time and in the manner provided for its
payment in the Secured Notes, the Working Capital Notes, the Credit
Agreement, the Swap Agreements, the other Loan Instruments and this
Deed of Trust by reason of (i) failure to comply with any request
of Trustor to take any action to foreclose this Deed of Trust or
otherwise enforce any of the provisions hereof or of the Secured
Notes, the Working Capital Notes, the Credit
Agreement, the Swap Agreements, the other Loan Instruments or any
other mortgage, deed of trust, instrument or document evidencing,
securing or guaranteeing payment of the Debt or any portion
thereof, (ii) the release, regardless of consideration, of the
whole or any part of the Trust Property or any other security for
the Debt, or (iii) any agreement or stipulation between Lead Agent
and any subsequent owner or owners of the Trust Property or other
person extending the time of payment or otherwise modifying or
supplementing the terms of the Secured Notes, the Working Capital
Notes, the Credit Agreement, the Swap Agreements, the other Loan
Instruments, this Deed of Trust or any other mortgage, deed of
trust, instrument or document evidencing, securing or guaranteeing
payment of the Debt or any portion thereof, without first having
obtained the consent of Trustor (but without
prejudice to the rights of Trustor under the Credit Agreement), and
in the latter event, Trustor shall continue to be obligated to pay
and perform the Debt at the time and in the manner
provided in the Secured Notes, the Working Capital Notes, the
Credit Agreement, the Swap Agreements, the other Loan Instruments
and this Deed of Trust, as so extended, modified and
supplemented, unless expressly released and discharged from such
obligation by Lead Agent in writing. Regardless of
consideration, and without the necessity for any notice to or
consent by the holder of any subordinate lien, encumbrance, right,
title or interest in or to the Trust Property, Lead Agent or the
Secured Parties may release any person at any time liable for the
payment of the Debt or any portion thereof or all or any part of
the security held for the Debt and may extend the time of payment
or otherwise modify the terms of the Secured Notes, the Working
Capital Notes, the Credit Agreement, the Swap Agreements, the other
Loan Instruments or this Deed of Trust, including, without
limitation, a modification of the interest rate payable on the
principal balance of the Secured Notes and/or the Working Capital
Notes, without in any manner impairing or affecting this Deed of
Trust or the lien thereof or the priority of this Deed of Trust, as
so extended and modified, as security for the Debt over any such
subordinate lien, encumbrance, right, title or interest. Lead
Agent and the Secured Parties may resort for the payment of the
Debt to any other security held by Lead Agent or the Secured
Parties in such order and manner as Lead Agent or the Secured
Parties, in their discretion, may elect. Lead Agent or the Secured
Parties may take action to recover the Debt, or any portion
thereof, or to enforce any covenant hereof without
prejudice to the right of the Lead Agent thereafter to foreclose
this Deed of Trust. The Lead Agent and the Secured Parties shall
not be limited exclusively to the rights and remedies herein stated
but shall be entitled to every additional right and remedy now or
hereafter afforded by law or equity. The rights of the Lead Agent
and the Secured Parties under this Deed of Trust shall be separate,
distinct and cumulative, and none shall be given effect to the
exclusion of the others. No act of the Secured Parties or Lead
Agent shall be construed as an election to
proceed under any one provision herein to the exclusion of any
other provision.
24. Power of Sale. Upon the occurrence of an Event of
Default, Lead Agent may at any time, at its option and in its sole
discretion, declare the Debt to be due and payable and the same
shall thereupon become immediately due and payable,
including any prepayment charge or fee payable under the terms of
the Secured Notes, the Working Capital Notes, the Credit
Agreement, the Swap Agreements or the other Loan Instruments. Lead
Agent may also do any or all of the following, although it shall
have no obligation to do any of the following:
(a) Either in person or by agent, with or without
bringing any action or proceeding or by a receiver appointed by a
court and without regard to the adequacy of Lead Agent's and the
Secured Parties' security, enter upon and take possession of the
Trust Property or any part hereof and do any acts which Lead Agent
deems necessary or desirable to preserve the value,
marketability or rentability of the Trust Property or to increase
the income therefrom or to protect the security hereof and with or
without taking possession of any of the Trust Property, sue for or
otherwise collect all Rents and profits including those past due
and unpaid, and apply the same, less costs and expenses of
operation and collection including attorneys' fees and
expenses, upon the Debt, all in such order as provided in Section
2.10(b) of the Credit Agreement. The collection of Rents and
profits and the application thereof shall not cure or waive any
Event of Default or notice thereof or invalidate any act done in
response thereto or pursuant to such notice.
(b) Bring an action in any court of competent
jurisdiction to foreclose this instrument or to enforce any of the
covenants hereof.
(c) Exercise any or all of the remedies available to a
secured party under the Uniform Commercial Code.
(d) Lead Agent may elect to cause the Trust Property or
any part thereof to be sold under the power of sale herein granted
in any manner permitted by applicable law. In connection with any
sale or sales hereunder, Lead Agent may elect to treat any of the
Trust Property which consists of a right in action or which is
property that can be severed from the real property covered hereby
or any improvements thereon without causing
structural damage thereto as if the same were personal property,
and dispose of the same in accordance with applicable law,
separate and apart from the sale of real property. Any sale of any
personal property hereunder shall be conducted in any manner
permitted by Section 9501 or any other applicable sections of the
California Uniform Commercial Code. Where the Trust Property
consists of real and personal property or fixtures, whether or not
such personal property is located on or within the real property,
Lead Agent may elect in its discretion to exercise its rights and
remedies against any or all of the real property, personal
property, and fixtures in such order and manner as is now or
hereafter permitted by applicable law. Without limiting the
generality of the foregoing, Lead Agent may at its sole and
absolute discretion and without regard to the adequacy of its
security elect to proceed against any or all of the real
property, personal property and fixtures in any manner permitted
under Section 9501(4)(a) of the California Uniform Commercial Code;
and if the Lead Agent elects to proceed in the manner permitted
under Section 9501(4)(a)(ii) of the California Uniform Commercial
Code, the power of sale herein granted shall be
exercisable with respect to all or any of the real property and
fixtures covered hereby, as designated by Lead Agent, and the
Trustee is hereby authorized and empowered to conduct any such sale
of any real property and fixtures in accordance with the procedures
applicable to real property. Where the Trust Property consists of
real property and personal property, any
reinstatement of the Debt, following the occurrence of an Event of
Default and an election by the Lead Agent to accelerate the
maturity of the Debt, which is made by Trustor or any other person
or entity permitted to exercise the right of reinstatement under
Section 2924c of the California Civil Code or any successor
statute, shall, in accordance with the terms of California
Uniform Commercial Code Section 9501(4)(c)(iii), not prohibit the
Lead Agent from conducting a sale or other disposition of any
personal property or fixtures or from otherwise proceeding
against or continuing to proceed against any personal property or
fixtures in any manner permitted by the California Uniform
Commercial Code; nor shall any such reinstatement invalidate,
rescind or otherwise affect any sale, disposition or other
proceeding held, conducted or instituted with respect to any
personal property or fixtures prior to such reinstatement. Any
sums paid to Lead Agent or the Secured Parties in effecting any
reinstatement pursuant to Section 2924c of the California Civil
Code shall be applied to the Debt and to Lead Agent's, the
Secured Parties' and Trustee's reasonable costs and expenses in the
manner required by Section 2924c. Should Lead Agent elect to sell
any of the Trust Property which is real property or which is
personal property or fixtures that Lead Agent has elected under
Section 9501(4)(a)(ii) of the California Uniform Commercial Code to
sell together with real property in accordance with the laws
governing a sale of real property, such notice of default and
election to sell shall be given as may then be required by law.
Thereafter, upon the expiration of such time and the giving of such
notice of sale as may then be required by law, at the time and
place specified in the notice of sale, Trustee shall sell such
property, or any portion thereof specified by Lead Agent, at public
auction to the highest bidder for cash in lawful money of the
United States. Trustee may, and upon request of Lead Agent shall,
from time to time, postpone the sale by public
announcement thereof at the time and place noticed therefor. If
the Trust Property consists of several lots, parcels or
interests, Lead Agent may designate the order in which the same
shall be offered for sale or sold. Should Lead Agent desire that
more than one such sale or other disposition be conducted, Lead
Agent may, at its option, cause the same to be conducted
simultaneously, or successively on the same day, or at such
different days or times and in such order as Lead Agent may deem to
be in its best interest. Any person, including Trustor, Trustee,
Lead Agent or any of the Secured Parties, may purchase at the sale.
In the event Lead Agent elects to dispose of the Trust Property
through more than one sale Trustor agrees to pay the costs and
expenses of each such sale and of any judicial proceedings wherein
the same may be made, including reasonable compensation to Trustee
and Lead Agent, their agents and counsel, and to pay all expenses,
liabilities and advances made or
incurred by Trustee in connection with such sale or sales,
together with interest on all such advances made by Trustee at the
Default Interest Rate. Upon any sale Trustee shall execute and
deliver to the purchaser or purchasers a deed or deeds
conveying the property so sold but without any covenant or
warranty whatsoever express or implied whereupon such purchaser or
purchasers shall be let into immediate possession, and the recitals
in any such deed or deeds of facts such as default, the giving of
notice of default and notice of sale, and other facts affecting the
regularity or validity of such sale or disposition, shall be
conclusive proof of the truth of such facts and any such deed or
deeds shall be conclusive against all persons as to such facts
recited therein.
(e) Exercise each of its other rights and remedies under
the Secured Notes, the Working Capital Notes, this Deed of Trust,
the Credit Agreement, the Swap Agreements and each of the Loan
Instruments, including, any or all of the following:
(i) declare the Debt, with all interest thereon and
all other sums secured hereby, to be immediately due and
payable, and if the same is not paid on demand, at Lead
Agent's option, bring suit therefor and demand payment thereof
and if the same is not paid on demand, bring suit for any
delinquent installment payment under the Secured Notes, the
Working Capital Notes, the Credit Agreement, the Swap
Agreements or any of the other Loan Instruments and take any
and all steps and institute any and all other proceedings that
Lead Agent deems necessary to enforce the indebtedness and
obligations secured hereby and to protect the lien of this
Deed of Trust;
(ii) without assuming liability for the performance of
any of Trustor's obligations hereunder or under the Project
Documents, enter and take possession of the Trust Property
or any part thereof, exclude Trustor and all persons
claiming under Trustor whose claims are junior to this Deed
of Trust, wholly or partly therefrom, and use, operate,
manage and control the same either in the name of Trustor or
otherwise as Lead Agent shall deem best, and upon such entry,
from time to time at the expense of Trustor and the Trust
Property, make all such repairs, replacements,
alterations, additions or improvements to the Trust Property
or any part thereof as Lead Agent may deem proper and,
whether or not Lead Agent has so entered and taken
possession of the Trust Property or any part thereof,
collect and receive all the Rents and apply the same, to the
extent permitted by law, to the payment of all expenses
which Lead Agent may be authorized to make under this Deed of
Trust, the remainder to be applied to the payment of the Debt
until the same shall have been repaid in full; if Lead Agent
demands or attempts to take possession of the Trust Property
or any portion thereof in the proper exercise of any rights
hereunder, Trustor shall promptly turn over and deliver
complete possession thereto to Lead Agent; and
(iii) personally or by agents, with or without entry,
if Lead Agent shall deem it advisable, proceed to protect
and enforce its rights under this Deed of Trust, by suit for
specific performance of any covenant contained herein or in
the Loan Instruments or in aid of the execution of any power
granted herein or in the Loan Instruments, or for the
foreclosure of this Deed of Trust and the sale for cash of
the Trust Property under the judgment or decree of a court
of competent jurisdiction, or for the exercise of the power of
sale granted under this Deed of Trust or for the
enforcement of any other right as Lead Agent shall deem most
effectual for such purpose; provided that in the event of a
sale, by foreclosure or otherwise, of less than all of the
Trust Property, this Deed of Trust shall continue as a lien
on, and security interest in, the remaining portion of the
Trust Property and Lead Agent shall not be obligated to sell
upon credit unless Lead Agent shall have expressly consented
in writing to a sale upon credit.
(f) Except as otherwise required by law or by the Credit
Agreement, apply the proceeds of any foreclosure or
disposition hereunder to payment of the following: (i) the
expenses of such foreclosure or disposition, (ii) the cost of any
search or other evidence of title procured in connection
therewith and revenue stamps on any deed or conveyance, (iii) all
sums expended under the terms of this paragraph, not then repaid,
with accrued interest in the amount provided herein, (iv) all other
sums secured by this Deed of Trust hereby, and (v) the remainder,
if any, to the person or persons legally entitled thereto.
(g) Upon any sale or sales made under or by virtue of
this section, whether made under the power of sale or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and
sale, Lead Agent or any of the Secured Parties may bid for and
acquire the Trust Property or any part thereof. In lieu of paying
cash for the Trust Property, Lead Agent and/or any of the Secured
Parties may make settlement for the purchase price by crediting
against the Debt the sales price of the Trust Property, as adjusted
for the expenses of sale and the costs of the action and any other
sums for which Trustor is obligated to reimburse Trustee or Lead
Agent and the Secured Parties under this Deed of Trust.
25. Concerning the Trustee. Trustee shall be under no
duty to take any action hereunder except as expressly required
hereunder or by law, or to perform any act which would involve
Trustee in any expense or liability or to institute or defend any
suit in respect hereof, unless properly indemnified to Trustee's
reasonable satisfaction. Trustee, by acceptance of this Deed of
Trust, covenants to perform and fulfill the trusts herein
created, being liable, however, only for willful negligence or
misconduct, and hereby waives any statutory fee and agrees to
accept reasonable compensation, in lieu thereof, for any services
rendered by Trustee in accordance with the terms hereof. Trustee
may resign at any time upon giving thirty (30) days' notice to
Trustor and to Lead Agent. Lead Agent may remove Trustee at any
time or from time to time and select a successor trustee. In the
event of the death, removal, resignation, refusal to act, or
inability to act of Trustee, or in its sole discretion for any
reason whatsoever Lead Agent may, without notice and without
specifying any reason therefor and without applying to any court,
select and appoint a successor trustee, by an instrument recorded
wherever this Deed of Trust is recorded and all powers, rights,
duties and authority of Trustee, as aforesaid, shall thereupon
become vested in such successor. Such substitute trustee shall not
be required to give bond for the faithful performance of the duties
of Trustee hereunder unless required by Lead Agent.
26. Trustee's Fees. Trustor shall pay all costs, fees
and expenses incurred by Trustee and Trustee's agents and counsel
in connection with the performance by Trustee of Trustee's duties
hereunder and all such costs, fees and expenses shall be secured by
this Deed of Trust.
27. Proceeds of Sale.
(a) The proceeds or avails of any foreclosure sale or
other remedy exercised pursuant to paragraph 24, above, entitled
"Power of Sale" together with all other sums which then may be held
by Lead Agent under this Deed of Trust, or under a judgment, order
or decree made in any action to foreclose or to enforce this Deed
of Trust whether under the provisions of this Deed of Trust, or
otherwise, shall be distributed according to the terms of the
Credit Agreement.
(b) Subject to the provisions of paragraph 55 of this
Deed of Trust, no sale or other disposition of all or any part of
the Trust Property shall be deemed to relieve Trustor of its
obligations under the Secured Notes, the Working Capital Notes, the
Credit Agreement, the Swap Agreements, this Deed of Trust or any
other Loan Instrument except and only to the extent the proceeds
are applied to the payment of the Debt or such other obligations.
If the proceeds of sale, collection or other
realization of or upon the Trust Property are insufficient to cover
the costs and expenses of such realization and the payment in full
of the Debt, Trustor shall remain liable for any
deficiency subject, however, to the limitations set forth in
paragraph 55 of this Deed of Trust.
28. Trustor as Tenant Holding Over. In the event of any
such foreclosure or other sale by Lead Agent and/or the Secured
Parties, Trustor shall be deemed a tenant holding over and shall
forthwith deliver possession to the purchaser or
purchasers at such sale or be summarily dispossessed according to
provisions of law applicable to tenants holding over.
29. Leases. Lead Agent is authorized to subordinate
this Deed of Trust to any Leases and to foreclose this Deed of
Trust subject to the rights of any tenants of the Trust Property,
if any, and the failure to so subordinate or to make any such
tenants' parties to any such foreclosure or other proceedings and
to foreclose their rights will not be, nor be asserted to be by
Trustor, a defense to any proceedings instituted by Lead Agent to
collect the Debt.
30. Discontinuance of Proceedings. In case Lead Agent
or the Secured Parties shall have proceeded to enforce any right,
power or remedy under this Deed of Trust by foreclosure, sale,
entry or otherwise, and such proceeding shall have been
withdrawn, discontinued or abandoned for any reason, or shall have
been determined adverse to Lead Agent or the Secured
Parties, then in every such case, to the fullest extent permitted
by law, (a) Trustor and Lead Agent or the Secured Parties shall be
restored to their former positions and rights, (b) all rights,
powers and remedies of Lead Agent and the Secured Parties shall
continue as if no such proceeding had been taken, (c) each and
every Event of Default declared or occurring prior or subsequent to
such withdrawal, discontinuance or abandonment shall be or shall be
deemed to be an independent Event of Default and
(d) neither the Debt, this Deed of Trust, the Secured Notes, the
Working Capital Notes, the Credit Agreement, the Swap Agreements,
the other Loan Instruments nor any other of the documents
evidencing, securing or guaranteeing the Debt shall be or shall be
deemed to have been not reinstated or otherwise affected by such
withdrawal, discontinuance or abandonment; and to the
fullest extent permitted by law, Trustor hereby expressly waives
the benefit of any statute or rule of law now provided or which may
hereafter conflict with the above.
31. No Reinstatement. If an Event of Default shall have
occurred and Lead Agent or the Secured Parties shall have proceeded
to enforce any right, power or remedy permitted
hereunder, then a tender of payment by Trustor or by anyone on
behalf of Trustor of any amount less than the amount necessary to
satisfy the Debt in full, or the acceptance by Lead Agent or the
Secured Parties of any such payment so tendered, shall not
constitute a reinstatement of the Secured Notes, the Working
Capital Notes, the Credit Agreement, this Deed of Trust or any
other document evidencing, securing or guaranteeing the Debt.
32. Trustor's Waiver of Rights. To the fullest extent
permitted by law, Trustor waives the benefit of all laws now
existing or that hereafter may be enacted providing for (i) any
appraisal before sale of any portion of the Trust Property and (ii)
the benefit of all laws that may be hereafter enacted in any way
extending the time for the enforcement of the collection of the
Secured Notes, the Working Capital Notes, the Credit
Agreement, the Swap Agreements, the other Loan Instruments or the
debt evidenced thereby, or the Debt, or creating or extending a
period of redemption from any sale made in collecting said Debt.
To the fullest extent that Trustor may do so, Trustor agrees that
Trustor will not at any time insist upon, plead, claim or take the
benefit or advantage of any law now or hereafter in force providing
for any appraisal, valuation, stay, extension or
redemption, or any so-called "Moratorium Laws" and Trustor, for
Trustor and its successors and assigns, and for any and all persons
ever claiming any interest in the Trust Property, to the fullest
extent permitted by law, hereby waives and releases all rights of
redemption, valuation, appraisal, stay of execution, notice of
election to mature or declare due the whole of the Debt and
marshaling in the event of the exercise of the power of sale
granted under this Deed of Trust or foreclosure of the liens hereby
created. If any law referred to in this paragraph and now in
force, of which Trustor, Trustor's successors and assigns or any
other person might take advantage despite this paragraph, shall
hereafter be repealed or cease to be in force, such law shall not
thereafter be deemed to preclude the application of this paragraph.
33. Liability. If Trustor consists of more than one
person, the obligations and liabilities of each such person
hereunder shall be joint and several, subject to paragraph 55 of
this Deed of Trust.
34. Security Agreement. (a) Trustor maintains places
of business in the State of California as set forth in Paragraph 10
hereof; and Trustor will immediately notify Lead Agent in writing
of any change in such places of business.
(b) At the request of Lead Agent, Trustor shall join
Lead Agent in executing one or more financing statements and
continuations and amendments thereof pursuant to the UCC in form
reasonably satisfactory to Lead Agent; and Trustor will pay the
cost of filing the same in all public offices wherever filing is
deemed by Lead Agent to be necessary. In the event Trustor fails
to execute such documents within five (5) business days after
request by Lead Agent, Trustor hereby authorizes Lead Agent to file
such financing statements and irrevocably constitutes and appoints
Lead Agent, or any officer of Lead Agent, as its true and lawful
attorney-in-fact to execute the same on behalf of Trustor.
(c) This Deed of Trust constitutes a financing
statement filed as a fixture filing under UCC U 9402(6) in the
official records of Imperial County with respect to any and all
fixtures included within the term "Trust Property" and with respect
to any goods or other personal property that may now be or
hereafter become such a fixture.
(d) Lead Agent has no responsibility for and does not
assume any of, Trustor's obligations or duties under any
agreement or obligation which is part of the Equipment or any
obligation relating to the acquisition, preparation, custody, use,
enforcement or operation of any of the Trust Property.
(e) Trustor and Lead Agent agree that the filing of a
financing statement in the records normally having to do with
personal property shall never be construed as in any way
derogating from or impairing this Deed of Trust and the intention
of the parties that everything used in connection with the
production of income from the Trust Property or adapted for use
therein or which is described or reflected in this Deed of Trust
is, and at all times and for all purposes and in all proceedings
both legal or equitable shall be regarded as part of the real
estate subject to the lien hereof, irrespective of whether (i) any
such item is physically attached to improvements located on such
real property or (ii) any such item is referred to or
reflected in any financing statement so filed at any time.
Similarly, the mention in any such financing statement of (A) the
rights in or to the proceeds of any fire hazard insurance policy or
(B) any award in eminent domain proceedings for taking or for loss
of value or for cause of action or proceeds thereof in connection
with any damage or injury to the Trust Property or any part thereof
shall never be construed as in any way altering any of the rights
of Lead Agent and the Secured Parties as determined by this
instrument or impugning the priority of Lead Agent's and the
Secured Parties' lien granted hereby or by any other recorded
document, but such mention in such financing statement is
declared to be for the protection of Lead Agent and the Secured
Parties in the event any court shall at any time hold with
respect to matters (A) and (B) above that notice of Lead Agent's
and the Secured Parties' priority of interest, to be effective
against a particular class of persons, including, without
limitation, the Federal government and any subdivision or entity of
the Federal government must be filed in the personal property
records or other commercial code records.
35. Further Acts, etc. Trustor will, at the cost of
Trustor, and without expense to Lead Agent or the Secured
Parties, do, execute, acknowledge and deliver all and every such
further acts, deeds, conveyances, financing statements,
mortgages, deeds of trust, assignments, notices of assignments,
transfers and assurances as Lead Agent shall, from time to time,
reasonably require, for the better assuring, conveying,
assigning, transferring and confirming unto Lead Agent, the
property and rights hereby conveyed or assigned or intended now or
hereafter so to be, or which Trustor may be or may hereafter become
bound to convey or assign to Lead Agent, or for carrying out the
intention or facilitating the performance of the terms of this Deed
of Trust or for filing, registering or recording this Deed of Trust
and, on demand, will execute and deliver and hereby authorizes Lead
Agent to execute in the name of Trustor to the extent they may
lawfully do so, one or more financing statements, chattel mortgages
or comparable security instruments, to evidence and perfect more
effectively the lien hereof upon the Trust Property.
36. Headings, etc. The headings, titles and captions of
various paragraphs of this Deed of Trust are for convenience of
reference only and are not to be construed as defining or limiting,
in any way, the scope or intent of the provisions hereof.
37. Filing of Deed of Trust, etc.
(a) Trustor forthwith upon the execution and delivery of
this Deed of Trust and thereafter, from time to time, will cause
this Deed of Trust, and any security instrument creating a lien or
evidencing or perfecting the lien hereof upon the Trust Property
and each instrument of further assurance to be filed, registered or
recorded in such manner and in such places as may be required by
any present or future law in order to publish notice of and fully
to protect, preserve and perfect the lien hereof upon, and the
interest of Lead Agent and the Secured Parties in the Trust
Property. Trustor will pay all filing, registration or recording
fees, and all expenses incurred by the Lead Agent or Secured
Parties incident to the preparation,
execution and acknowledgment of this Deed of Trust, any Deed of
Trust or any mortgage or deed of trust supplemental hereto, any
security instrument with respect to the Trust Property and any
instrument of further assurance, and all Federal, state, county and
municipal taxes, duties, imposts, assessments and charges arising
out of or in connection with the execution and delivery of this
Deed of Trust, any mortgage or deed of trust supplemental hereto,
any security instrument with respect to the Trust
Property or any financing statement, continuation statement or
other instrument of further assurance. Trustor shall hold
harmless and indemnify Lead Agent and the Secured Parties, their
successors and assigns, against any liability incurred by reason of
the imposition of any tax on the making and recording of this Deed
of Trust.
(b) Trustor shall pay within thirty (30) days after the
due date therefor, any and all intangible taxes (whether annual or
otherwise) charged, assessed or imposed against the Secured Notes,
the Working Capital Notes, this Deed of Trust, the Credit
Agreement, the Swap Agreements, any other Loan Instrument, or in
any way resulting from the Debt.
38. Usury Laws. This Deed of Trust, the Credit
Agreement, the Secured Notes, the Working Capital Notes, the Swap
Agreements and the other Loan Instruments are subject to the
express condition that at no time shall Trustor be obligated or
required to pay interest on the principal balance due under the
Secured Notes, the Working Capital Notes, the Swap Agreements, the
Credit Agreement and the other Loan Instruments at a rate which
could subject the holder of the Secured Notes, the Working Capital
Notes, the Swap Agreements and any of the other Loan Instruments to
either civil or criminal liability as a result of being in excess
of the maximum interest rate which Trustor is permitted by law to
contract or agree to pay. If by the terms of this Deed of Trust,
the Credit Agreement, the Secured Notes, the Working Capital Notes,
the Swap Agreements or the other Loan Instruments Trustor is at any
time required or obligated to pay interest on the principal balance
due under the Secured Notes, the Working Capital Notes, the Credit
Agreement, the Swap
Agreements or the other Loan Instruments at a rate in excess of
such maximum rate, the rate of interest under the Secured Notes,
the Working Capital Notes, the Credit Agreement, the Swap
Agreements and the other Loan Instruments shall be deemed to be
immediately reduced to such maximum rate and the interest payable
shall be computed at such maximum rate and all prior interest
payments in excess of such maximum rate shall be applied as
provided in Section 9.7 of the Credit Agreement.
39. Recovery of Sums Required to Be Paid. Lead Agent
and the Secured Parties shall have the right pursuant to the Credit
Agreement from time to time to take action to recover any sum or
sums which constitute a part of the Debt as the same become due,
without regard to whether or not the balance of the Debt shall be
due, and without prejudice to the right of Lead Agent or the
Secured Parties thereafter to bring an action of foreclosure, or
any other action, for a default or defaults by Trustor existing at
the time such earlier action was commenced.
40. Authority. Trustor (and the undersigned acting on
behalf of Trustor) has full power, authority and legal right to
execute this Deed of Trust and to mortgage, give, grant, bargain,
sell, release, pledge, convey, confirm and assign the Trust
Property pursuant to the terms hereof and to keep and observe all
of the terms of this Deed of Trust on Trustor's part to be
performed.
41. Inapplicable Provisions. If any term, covenant or
condition of this Deed of Trust shall be held to be invalid,
illegal or unenforceable in any respect, this Deed of Trust shall
be construed to recast such term, covenant or condition in a manner
which will allow such term, covenant or condition to be valid
provided any recasting shall be in accordance with the original
intention of the parties. When recasting any term, covenant or
condition, if it is not possible to reflect the original intention
of the parties, this Deed of Trust shall be construed without such
provision.
42. Duplicate Originals. This Deed of Trust may be
executed in any number of duplicate originals and each such
duplicate original shall be deemed to constitute but one and the
same instrument.
43. Certain Definitions. Unless the context clearly
indicates a contrary intent or unless otherwise specifically
provided herein, words used in this Deed of Trust shall be used
interchangeably in singular or plural form and the word "Trustor"
shall mean each Trustor and any subsequent owner or owners of the
Trust Property or any part thereof or interest therein; the word
"Beneficiary" shall mean the Lead Agent and any of the Secured
Parties; the word "Lead Agent" shall mean Lead Agent or any
successor Lead Agent appointed by the Secured Parties; the words
"Secured Notes, the Working Capital Notes" shall mean the Secured
Notes, the Working Capital Notes or any other evidence of
indebtedness secured by this Deed of Trust; the words "Letters of
Credit" shall mean the Letters of Credit or any letter of credit
given in substitution thereof; the word "Guarantor" shall mean each
person, if any, guaranteeing payment of the Debt or any portion
thereof or performance by Trustor of any of the terms of this Deed
of Trust and their respective heirs, executors,
administrators, legal representatives, successors and assigns; the
word "person" shall include an individual, corporation,
partnership, trust, unincorporated association, government,
governmental authority, or other entity; the word "Trustee" shall
mean Trustee or any successor trustee appointed by Lead Agent; the
words "Trust Property" shall include any portion of the Trust
Property or interest therein; and the word "Debt" shall mean all
sums and performance secured by this Deed of Trust; the words
"Underlying Documents" shall mean each of the Units 1&2 Lease, the
Unit 3 Lease and the Easement Grant Deed, or all of the them if the
context so requires, and any modifications or amendments thereto to
the extent permitted in the Credit Agreement. All references to
California Statutes shall mean as the same are now constituted and
as hereafter amended from time to time. Whenever the context may
require, any pronouns used herein shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns
and pronouns shall include the plural and vice versa.
44. Waiver of Notice. Trustor shall not be entitled to
any notices of any nature whatsoever from Lead Agent or the Secured
Parties except with respect to matters for which this Deed of
Trust, the Credit Agreement, the Loan Instruments or applicable law
specifically and expressly provides for the giving of notice to
Trustor, and to the fullest extent permitted by law Trustor hereby
expressly waives the right to receive any notice from Lead Agent or
the Secured Parties with respect to any matter for which this Deed
of Trust, the Credit Agreement, the Loan Instruments or applicable
law does not specifically and expressly provide for the giving of
notice to Trustor.
45. No Oral Change. This Deed of Trust may only be
modified, amended or changed by an agreement in writing signed by
Trustor and Lead Agent, and may only be released, discharged or
satisfied of record by an instrument in writing signed by Lead
Agent. The Secured Parties shall join in any such agreement,
release, discharge or satisfaction if required for such agreement
to be effective under applicable law. No waiver of any term,
covenant or provision of this Deed of Trust shall be effective
unless given in writing by Lead Agent and if so given by Lead Agent
shall only be effective in the specific instance in which given.
Trustor acknowledges that the Secured Notes, the Working Capital
Notes, this Deed of Trust, the Credit Agreement, the Swap
Agreements and the other Loan Instruments set forth the entire
agreement and understanding of Trustor and Lead Agent with
respect to the matters set forth therein and that no oral or other
agreements, understanding, representations or warranties exist with
respect to those matters other than those set forth in the Secured
Notes, the Working Capital Notes, this Deed of Trust, the Credit
Agreement, the Swap Agreements and such other Loan Instruments.
46. Absolute and Unconditional Obligation. Trustor
acknowledges that, except as limited by paragraph 55 hereof,
Trustor's obligation to pay the Debt in accordance with the
provision of the Secured Notes, the Working Capital Notes, the
Credit Agreement, the Swap Agreements, this Deed of Trust and the
other Loan Instruments is and shall at all times continue to be
absolute and unconditional in all respects, and shall at all times
be valid and enforceable irrespective of any other
agreements or circumstances of any nature whatsoever (other than
any express written agreements to the contrary by the Secured
Parties) which might otherwise constitute a defense to the
Secured Notes, the Working Capital Notes, the Credit Agreement, the
Swap Agreements, this Deed of Trust or the other Loan
Instruments or the obligations of Trustor thereunder to pay the
Debt or the obligations of any other person relating to the Secured
Notes, the Working Capital Notes, the Credit Agreement, the Swap
Agreements, this Deed of Trust or the other Loan
Instruments or the obligations of Trustor under the Secured Notes,
the Working Capital Notes, the Credit Agreement, the Swap
Agreements, this Deed of Trust or the other Loan Instruments or
otherwise with respect to the Loan and to the fullest extent
permitted by law Trustor absolutely, unconditionally and
irrevocably waives any and all right to assert any defense, setoff,
counterclaim or crossclaim of any nature whatsoever with respect to
the obligation of Trustor to pay the Debt in
accordance with the provisions of the Secured Notes, the Working
Capital Notes, the Credit Agreement, the Swap Agreements, this Deed
of Trust or the other Loan Instruments or the obligations of any
other person relating to the Secured Notes, the Working Capital
Notes, the Credit Agreement, the Swap Agreements, this Deed of
Trust or the other Loan Instruments or the obligations of Trustor
under the Secured Notes, the Working Capital Notes, the Credit
Agreement, the Swap Agreements, this Deed of Trust or the other
Loan Instruments or otherwise with respect to the Loan, or in any
action or proceeding brought by Lead Agent to collect the Debt, or
any portion thereof, or to enforce, foreclose and
realize upon the lien and security interest created by this Deed of
Trust or any other document or instrument securing repayment of the
Debt, in whole or in part.
47. Indemnification.
(a) Trustor shall indemnify and hold harmless Lead Agent
and the Secured Partners from and against all loss, cost,
liability, other expense in the manner and to the extent required
under Section 6.34(b) or otherwise in the Credit Agreement.
(b) All sums secured by this Deed of Trust shall be paid
in accordance with the Credit Agreement, the Secured Notes, the
Working Capital Notes, the Swap Agreements, this Deed of Trust and
any other Loan Instruments, as applicable, without counterclaim,
setoff, deduction or defense and without abatement, suspension,
deferment, diminution or reduction, and the
obligations and liabilities of Trustor hereunder shall in no way be
released, discharged or otherwise affected (except as
expressly provided herein) by reason of (i) any claim which Trustor
has or might have against any of the Secured Parties or Lead Agent
or (ii) any default or failure on the part of any of the Secured
Parties or Lead Agent to perform or comply with any of the terms
hereof, of the Credit Agreement or of any other Loan Instruments.
48. Action Affecting the Trust Property.
(a) Trustor agrees to appear in and contest any action
or proceeding purporting to adversely affect the security hereof or
the rights or powers of the Secured Parties or Lead Agent and to
pay all costs and expenses of the Secured Parties and Lead Agent,
including cost of evidence of title and attorneys' fees and
expenses, in any such action or proceeding in which the Secured
Parties or Lead Agent may appear.
(b) Lead Agent shall have the right to appear in and
defend any action or proceeding brought with respect to the Trust
Property and to bring any action or proceeding, in the name and on
behalf of Trustor, Lead Agent or the Secured Parties, which Lead
Agent determines to be necessary or reasonably advisable to be
brought to protect its or the Secured Parties' interest in the
Trust Property if (i) Trustor fails to defend or bring such action
or proceeding, as appropriate, in a prompt and diligent manner, or
thereafter fails to proceed with diligence in the defense or
prosecution of the same, or (ii) an Event of Default shall have
occurred and be continuing.
49. Actions by Lead Agent to Preserve the Trust
Property. Except as hereinbefore expressly provided, should
Trustor fail to make any payment or do any act as and in the manner
provided in the Secured Notes, the Working Capital Notes, the
Credit Agreement, the Swap Agreements or in any other of the Loan
Instruments after the expiration of any applicable cure or grace
period and as a result an Event of Default shall occur and be
continuing, Lead Agent for the benefit of the Secured Parties,
without obligation so to do and without notice to or demand upon
Trustor and without releasing Trustor from any obligation, may make
or do the same in such manner and to such extent as Lead Agent may
deem necessary to protect the security hereof. In connection
therewith (without limiting any general powers of Lead Agent or the
Secured Parties), Lead Agent, for the benefit of the Secured
Parties, shall have and is hereby given the right, but not the
obligation, (i) to the fullest extent permitted by law, to make
additions, alterations, repairs and improvements to the Trust
Property which it may consider necessary to keep the Trust Property
in good condition and repair and (ii) in exercising such powers, to
pay necessary expenses, including engagement of
counsel or other necessary or desirable consultants. Trustor
shall, immediately upon demand therefor by Lead Agent, pay all
costs and expenses incurred by the Secured Parties or Lead Agent in
connection with the exercise by Lead Agent of the foregoing rights,
including without limitation, costs of evidence of title, court
costs, appraisals, surveys and attorneys' fees and
expenses.
50. Remedies Not Exclusive. Subject to the
limitations set forth in paragraph 55 of this Deed of Trust, Lead
Agent and the Secured Parties, and each of them, shall be
entitled to enforce payment and performance of any indebtedness or
obligations secured hereby and to exercise all rights and powers
granted under this Deed of Trust or under the Credit Agreement or
any other agreement or any laws now or hereafter in force,
notwithstanding some or all of the said indebtedness and
obligations secured hereby may now or hereafter be otherwise
secured, whether by mortgage, deed of trust, pledge, lien,
assignment or otherwise. Subject to the limitations set forth in
paragraph 55 of this Deed of Trust, neither the acceptance of this
Deed of Trust nor its enforcement, whether by court action or
pursuant to the power of sale or other powers herein
contained, shall prejudice or in any manner affect Lead Agent's or
the Secured Parties' right to realize upon or enforce any other
security now or hereafter held by Lead Agent or the Secured
Parties, it being agreed that Lead Agent, on behalf of the
Secured Parties collectively and individually, shall be entitled to
enforce this Deed of Trust and any other security now or hereafter
held by Lead Agent or the Secured Parties in such order and manner
as they, collectively and individually, may in their absolute
discretion determine. No remedy herein conferred upon or reserved
to Lead Agent or the Secured Parties is intended to be exclusive of
any other remedy herein or by law provided or permitted, but each
shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter
existing at law or in equity or by statute. Every right, power or
remedy given by any of the Loan Instruments to Lead Agent or the
Secured Parties, or to which either of them may be otherwise
entitled, may be exercised, concurrently or independently, from
time to time and as often as may be deemed expedient by Lead Agent
or the Secured Parties. Every right, power or remedy given by this
Deed of Trust to the Secured Parties may be exercised on their
behalf by Lead Agent, whether so expressed or not.
51. Relationship. The relationship of Lead Agent and
the Secured Parties to Trustor hereunder is strictly and solely
that of lender and borrower, and nothing contained in the Secured
Notes, the Working Capital Notes, this Deed of Trust, the Credit
Agreement, the Swap Agreements or any other Loan Instrument is
intended to create, or shall in any event or under any
circumstance be construed as creating, a partnership, joint
venture, tenancy-in-common, joint tenancy or other relationship of
any nature whatsoever between or among Lead Agent and the Secured
Parties and Trustor other than as lender and borrower.
52. Credit Agreement. This Deed of Trust is subject to
all of the terms, covenants and conditions of the Credit Agreement,
which Credit Agreement and all of the terms, covenants and
conditions thereof are by this reference incorporated herein and
made a part hereof with the same force and effect as if set forth
at length herein. The proceeds of the Loans are to be advanced by
Lead Agent on behalf of the Secured Parties to
Trustor in accordance with the provisions of the Credit
Agreement. Trustor shall observe and perform all of the terms,
covenants and conditions of the Credit Agreement on Trustor's part
to be observed or performed. All advances made and all
indebtedness arising and accruing under the Credit Agreement from
time to time shall be secured hereby.
53. Business Purpose. Trustor hereby stipulates and
warrants that the Loans are commercial or business loans and are
transacted solely for the purpose of carrying on or acquiring a
business or commercial enterprise or for a proper business
purpose under the laws of the jurisdiction in which the Trust
Property is located.
54. Time of the Essence. TIME IS OF THE ESSENCE with
respect to each and every covenant, agreement and obligation of
Trustor under this Deed of Trust, the Secured Notes, the Working
Capital Notes, the Credit Agreement, the Loan Instruments and any
and all other loan documents executed in connection therewith.
55. No Recourse. Anything in any of the Loan
Instruments to the contrary notwithstanding and except as
provided in (i) the environmental indemnity from Magma described in
Exhibit 4.1(aa) of the Credit Agreement or in (ii) the Reserve
Account Guaranty, the obligations (including, without limitation,
any indemnification obligations) of Trustor under this Deed of
Trust and the other Loan Instruments are obligations of Trustor and
do not constitute a debt or obligation of (and no recourse shall be
had with respect thereto to) any Partner or Affiliate of Trustor
(subject to the proviso set forth below in this Section 55) or
shareholder, partner, officer or director of any thereof as such,
and any judicial proceedings Lead Agent or any of the Secured
Parties may institute against Trustor shall be limited to seeking
the preservation, enforcement, foreclosure, sale or other remedy or
disposition of the liens and security interests now or at any time
hereafter securing the repayment of the Debt; no judgment for any
deficiency upon the Debt shall be obtainable by Lead Agent or any
of the Secured Parties against any Partner or Affiliate of Trustor
or any shareholder, partner, officer or director of any thereof;
provided, however, that this Section 55 shall not limit the
obligations of any party to any Loan
Instrument in its capacity as party and signatory to such loan
Instrument.
56. Severance of Counterclaims. In the event of
foreclosure of this Deed of Trust, any and all counterclaims filed
by Trustor against Lead Agent or the Secured Parties, to the extent
permitted by law, shall be severed by the court having jurisdiction
over the foreclosure action, for all purposes from the basic
foreclosure action, on an ex parte basis and without notice to
Trustor. Trustor, by its execution and delivery
hereof, hereby expressly consents and agrees to such severance.
57. WAIVER OF JURY TRIAL. AS AN INDEPENDENT COVENANT
HEREOF, TRUSTOR HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND
IRREVOCABLY WAIVES THE RIGHT IT MIGHT HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR
IN CONNECTION WITH THIS DEED OF TRUST, THE SECURED NOTES, THE
WORKING CAPITAL NOTES, THE CREDIT AGREEMENT, THE SWAP AGREEMENTS OR
THE OTHER LOAN INSTRUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PERSONS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR LEAD AGENT TO
ACCEPT DELIVERY OF THIS DEED OF TRUST, THE SECURED NOTES, THE
WORKING CAPITAL NOTES, THE CREDIT AGREEMENT, THE SWAP AGREEMENTS
AND THE OTHER LOAN INSTRUMENTS.
58. GOVERNING LAW. THIS DEED OF TRUST IS GOVERNED BY
AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA.
59. Attorneys' Fees. Attorneys shall be entitled to
fees in connection with the enforcement, amendment, extension or
modification of this Deed of Trust.
60. Shared Draftsmanship. If any ambiguity in the terms
of this Deed of Trust, the doctrine of construction which holds
that the language of the document shall be construed
against its drafter shall not apply as all parties have shared in
the drafting of this Deed of Trust.
61. No Third Party Beneficiary. This Deed of Trust, the
Credit Agreement and the other Loan Instruments are for the sole
benefit of Lead Agent and each of the Secured Parties and Trustor
(and solely to the extent set forth in Section 9.8 of the Credit
Agreement, any Participant) and are not for the benefit of any
third party and no third party shall gain any subrogation rights
against Trustor or in, to or with respect to any portion of the
Trust Property by reason of this Deed of Trust or the provisions
hereof.
62. Security Only. This Deed of Trust is granted for
security purposes only. Accordingly, except as otherwise
permitted by the Credit Agreement or as otherwise specifically
provided in this Deed of Trust, neither Lead Agent nor the
Secured Parties shall enforce Trustor's rights with respect to the
Trust Property until such time as an Event of Default shall have
occurred and be continuing.
63. Release by Lead Agent. Upon written request of Lead
Agent stating that the Debt has been paid and upon surrender by
Lead Agent and the Secured Parties of this Deed of Trust to Trustee
for cancellation and retention and upon payment by
Trustor of Trustee's fees and the costs of executing and
recording any requested reconveyance, Trustee shall reconvey,
without cost or expense to Lead Agent and any of the Secured
Parties, to Trustor or to the person or persons legally entitled
thereto, without warranty, any portion of the Trust Property then
held hereunder. The recitals in any such reconveyance of any
matter or fact shall be conclusive proof of the truthfulness
thereof. The grantee in any such reconveyance may be described as
the person or persons legally entitled thereto.
64. Waiver. Trustor waives and releases any rights or
defenses which Trustor might otherwise have (i) under California
Code of Civil Procedure Sections 726, 725a, 580a, 580b, 580c and
580d and California Civil Code Section 2889, which statutes might
otherwise limit or condition Lead Agent's and/or the Secured
Parties' exercise of certain of Lead Agent's and/or the Secured
Parties' rights and remedies in connection with the enforcement of
obligations secured by a lien on real property or (ii) under any
laws now existing or hereafter enacted providing for any appraisal
before sale of a portion of the Trust Property and (iii) to all
rights of redemption, valuation, appraisal, stay of execution,
notice of election to mature or to declare due the Debt and
marshalling in the event of the foreclosure of the liens created
under this Deed of Trust or the exercise of the power of sale
granted hereunder. To the extent, if any, which such laws may be
applicable, Trustor waives and releases any right or defense which
Trustor might otherwise have under such provisions and under any
other law of any applicable jurisdiction which might limit or
restrict the effectiveness of scope of any of Trustor's waivers or
releases hereunder.
65. Partial Release and Subordination of Trust
Property.
(a) In accordance with and subject to the applicable
provisions of Section 2.9(b) and Schedule 2.9(b) of the Credit
Agreement, Trustor may elect to prepay in full the Tranche A Term
Loan, whereupon Lead Agent shall (i) release the Trust Property
relating to the Unit 1 Facility and the Unit 2 Facility from the
lien of this Deed of Trust and (ii) consent to, execute and deliver
(in recordable form, if the same are to be recorded) such documents
and instruments as may reasonably be necessary or appropriate
(including, without limitation, intercreditor
agreements) to bifurcate and segregate the rights and interests
granted to SSBP under the Easement Grant Deed into two separate
sets of rights and interests.
(b) In accordance with and subject to the applicable
provisions of Section 2.9(b) and Schedule 2.9(b) of the Credit
Agreement, upon the exercise of the Partial Termination Option
provided in Article 16 of the Unit 3 Lease, Trustor shall have the
right to quitclaim all their right, title and interest in the
Optioned Premises Area (as defined in the Unit 3 Lease), and to
surrender and deliver possession thereof, whereupon Lead Agent
shall release the Trust Property relating to the Optioned
Premises Area from the lien of this Deed of Trust.
(c) In accordance with and subject to the applicable
provisions of Section 2.9(b) and Schedule 2.9(b) of the Credit
Agreement, Trustor shall have the right to execute and deliver a
Subordination Agreement in the form attached to the Easement Grant
Deed as Exhibit "C", in connection with any amendment, supplement,
restatement, replacement or other change in or to any of the
Geothermal Rights Documents (as that term is defined in the
Easement Grant Deed), or in connection with any new agreement with
any Geothermal Landowner (as that term is defined in the Easement
Grant Deed), in each case which applies in whole or in part to the
Resource Easement Area Premises, and Lead Agent shall execute and
Lead Agent shall execute and deliver a consent to such
subordination, so long as the same is permitted under and is in
compliance with Section 3.3.4 of the Easement Grant Deed.
66. Sole Discretion of Beneficiary or Trustee. Except
as otherwise provided in the Credit Agreement, wherever pursuant to
this Deed of Trust, Lead Agent, the Secured Parties or Trustee
exercises any right given to them to approve or disapprove, or any
arrangement or term is to be satisfactory to Lead Agent, the
Secured Parties or Trustee, the decision of Lead Agent, the Secured
Parties or Trustee to approve or disapprove or to decide that
arrangements or terms are satisfactory or not satisfactory shall be
in the sole discretion of Lead Agent, the Secured
Parties or Trustee and shall be final and conclusive.
IN WITNESS WHEREOF, Trustor has duly executed this Deed
of Trust the day and year first above written.
SALTON SEA BRINE PROCESSING L.P.
By: SALTON SEA POWER COMPANY,
general partner
By: /s/ Vincent J.
Signorotti
Name: Vincent J.
Signorotti
Title: Authorized Agent
SALTON SEA POWER GENERATION L.P.
By: SALTON SEA POWER COMPANY,
general partner
By: /s/ Vincent J.
Signorotti
Name: Vincent J.
Signorotti
Title: Authorized Agent
STATE OF CALIFORNIA )
)
COUNTY OF IPERIAL )
On February 28, 1994, before me, William V. Wooding, Sr.,
Notary Public, personally appeared Vincent J. Signorotti
_________________________________________________________________
__________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
/s/ William V. Wooding, Sr.
Notary Public
STATE OF CALIFORNIA )
)
COUNTY OF IMPERIAL )
On February 28, 1994, before me, William V. Wooding, Sr.,
Notary Public, personally appeared Vincent J. Signorotti
_________________________________________________________________
________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
/s/ William V. Wooding, Sr.
Notary Public
